CLARKSTON FINANCIAL CORP, SB-2, 1998-09-18

CLARKSTON FINANCIAL CORP
SB-2, 1998-09-18

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As filed with the Securities and Exchange Commission on September 18, 1998
Registration No. 333-_______
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CLARKSTON FINANCIAL CORPORATION
(Name of Small Business Issuer in its Charter)
-------

Michigan 6712 38-3412321
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
No.)
Clarkston Financial Corporation
P.O. Box 436
Clarkston, Michigan 48347-0436
(248) 625-0710
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

David T. Harrison
Clarkston Financial Corporation
P.O. Box 436
Clarkston, Michigan 48347-0436
(248) 625-0710

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
Donald L. Johnson
Varnum, Riddering, Schmidt & Howlett LLP
Suite 1700
333 Bridge Street, N.W.
Grand Rapids, Michigan 49504
(616) 336-6000
Donald J. Kunz
Honigman Miller Schwartz and Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226-3583
(313) 465-7000

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to be Offering Price Aggregate Offering Amount of
Being Registered Registered(1) Per Share Price Registration Fee
- ----------------------- ----------------------- ----------------------- ----------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock (no par
value) 1,092,500 $10.00 $10,925,000 $3,223
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 142,500 shares subject to the Underwriter's over-allotment option.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Legend:

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

-2-
<PAGE>
SUBJECT TO COMPLETION DATED , 1998
[legend]
PROSPECTUS
950,000 Shares

CLARKSTON FINANCIAL CORPORATION [logo]

Common Stock
-----------------------

Clarkston Financial Corporation, a Michigan corporation (the "Company"), is
offering for sale 950,000 shares of its common stock, without par value (the
"Common Stock"). The Company is a proposed bank holding company organized to own
all of the common stock of Clarkston State Bank, a Michigan banking corporation
(in organization), to be located in Clarkston, Michigan (the "Bank"). Neither
the Company nor the Bank has ever conducted any business operations other than
matters related to their initial organization and the raising of capital. See
"Business." There has been no public trading market for the Common Stock. Roney
Capital Markets, a division of First Chicago Capital Markets, Inc. (the
"Underwriter") has advised the Company that it anticipates making a market in
the Common Stock following completion of the offering, although there can be no
assurance that an active trading market will develop. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. The Company expects that the quotations for the Common Stock will be
reported on the OTC Bulletin Board. The organizers of the Bank have provided
nonbinding expressions of interest to purchase a total of approximately ____
shares of Common Stock at the public offering price.
----------------------

THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A SIGNIFICANT
AMOUNT OF RISK. INVESTORS SHOULD NOT INVEST ANY FUNDS IN THE OFFERING
UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" COMMENCING ON PAGE 6 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMPANY'S COMMON STOCK.

THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND THEY ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
----------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>

Underwriting Proceeds to
Price to Public (1) Discounts (1)(2) Company (1)(3)
<S> <C> <C> <C>
Per Share. . . . . . . . . . . $10.00
Total (1). . . . . . . . . . . $9,500,000
============================== =========================== =================== ====================
</TABLE>
(1) The Company has granted the Underwriter a 30-day option to purchase up to
142,500 additional shares of its Common Stock solely to cover
over-allotments, if any. If the Underwriter exercises such option in full,
the Price to Public, Underwriting Discounts and Proceeds to Company will be
approximately $10,925,000, $_________ and $_________ , respectively. See
"Underwriting." The Underwriter has agreed to limit the Underwriting
Discounts to 2.0% of the public offering price for up to 100,000 shares
sold by the Underwriter to organizers of the Bank or their immediate
families. See "Underwriting." Organizers of the Bank have provided
nonbinding expressions of interest to purchase a total of approximately
_____ shares. If ________ shares are so purchased. Underwriting Discounts
will be reduced by, and proceeds to the Company will be increased by
$___________.

(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(3) Before deducting estimated offering expenses payable by the Company of
$155,000.
-------------------------
The shares of Common Stock are offered by the Underwriter subject to prior
sale, when, as and if delivered to and accepted by the Underwriter, and subject
to the right of the Underwriter to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made through the facilities of The Depository Trust Company
in New York, New York, on or about __________________, 1998, against payment in
immediately available funds.
<PAGE>
RONEY CAPITAL MARKETS
a division of FIRST CHICAGO CAPITAL MARKETS, INC.
The date of this Prospectus is __________, 1998.

-4-
<PAGE>

[ MAP OF MARKET AREA]

----------------------

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements concerning
certain aspects of the business of the Company. When used in this prospectus,
words such as "believe," "anticipate," "intend," "goal," "expects," and similar
expressions may identify forward-looking statements. Forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward-looking statements.
Prospective investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Prospectus.
The Company undertakes no obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
----------------------

IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE
"UNDERWRITING."

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context clearly suggests otherwise, financial information and other
references in this Prospectus to the Company include the Bank. Except as
otherwise indicated, all information in this Prospectus assumes no exercise of
Underwriter's over-allotment option.

The Company

The Company was incorporated on May 18, 1998 under Michigan law and will be
a bank holding company owning all of the common stock of the Bank. The Bank is
organizing as a Michigan chartered bank with depository accounts to be insured
by the Federal Deposit Insurance Corporation (the "FDIC"). The Bank's initial
primary service area will be Independence Township, which includes the City of
Clarkston, and the adjacent township of Waterford, both of which are located in
North Oakland County, Michigan. The Bank intends to provide a full range of
commercial and consumer banking services, for small to medium size businesses as
well as individuals. The Bank's lending strategy will focus on commercial and
consumer lending and to a lesser extent residential mortgage lending. The Bank
intends to offer a broad array of deposit products and may also provide
customers with credit cards, trust services, insurance products and investment
products through third-party service providers. The use of third-party service
providers is expected to allow the Bank to be at the forefront of technology
while minimizing the costs of delivery. Completion of this offering will be
conditioned on the Company and the Bank having received all necessary regulatory
approvals, subject to the satisfaction of certain conditions. Management
anticipates commencing business in the first quarter of 1999.

Reason for Starting Clarkston State Bank

The expansion of interstate banking has contributed to substantial
consolidation of the banking industry in Michigan, including the Company's
market area in North Oakland County. Many of the area's locally owned or managed
financial institutions have either been acquired by large regional bank holding
companies or have been consolidated into branches of other financial
institutions. In many cases, these acquisitions and consolidations have been
accompanied by pricing changes, branch closings, the dissolution of local boards
of directors, management and personnel changes and, in the perception of the
Company's management, a decline in the level of customer service.

Although the banking industry remains competitive, management believes that
the consolidation of the banking industry has created a favorable opportunity in
the Company's market area for a new commercial bank to offer services to
customers who wish to conduct business with a locally owned and managed bank.
The Company seeks to take advantage of this opportunity by emphasizing the
Company's local management, and its strong ties and active commitment to the
community. Management believes that a community bank can help foster the
economic development of its community and create and retain wealth within that
community. Management believes that community residents will recognize the
benefits of a community bank and that the Bank will be successful in attracting
as customers individuals and small to medium sized businesses by demonstrating
an active interest in their business and personal financial affairs.

Market Area

The Bank's initial primary service area will be Independence Township,
which includes the City of Clarkston, and the adjacent township of Waterford,
both of which are located in North Oakland County, Michigan. The Bank's primary
service area has a diverse economy based primarily on manufacturing, retail and
service. According to available statistical data, Waterford and Independence
Townships have approximately _______ business establishments and 1997
unemployment rates of less than 3.5%. In 1997, the combined median household
income for Waterford and Independence Townships (including the City of
Clarkston) was approximately $59,000, compared to approximately $57,000 for all
of Oakland County, which is the nation's third wealthiest county with a
population in excess of one

3
<PAGE>
million. The Company believes that affluent households create demand for home
mortgage loans, home equity loans, certificates of deposit and individual
retirement accounts.

The Bank's primary service area is a significant banking market in the
State of Michigan. According to available industry data, as of June 30, 1997,
total deposits in Waterford and Independence Townships (including the City of
Clarkston), including those of banks, thrifts and credit unions, were
approximately $1.2 billion. As of June 30, 1997, total deposits in Oakland
County were approximately $21.0 billion.

The Bank's main office will be located in downtown Clarkston, and will
serve as the Company's corporate headquarters. The Company's address is 15 South
Main Street, Clarkston, Michigan 48346. The Company's telephone number is (248)
625-0710.

Management

The Company's officers and directors have a shared vision of focused
community banking and a commitment to the future growth and success of the Bank.
The Company's vision is to build a quality, full-service community bank that
offers competitive financial products and superior customer service. Fundamental
to the Company's vision is the building of long-term relationships with
customers.

Mr. David Harrison, the President and Chief Executive Officer of the
Company and the Bank, has 30 years of experience in the banking industry. Most
recently, Mr. Harrison served from 1989 to 1991 as the President and Chief
Executive Officer of First of America Bank-Southeast Michigan in Detroit, a
Michigan banking corporation that had over $4 billion in assets in 1991. From
1986 to 1989, Mr. Harrison served as the President and Chief Executive Officer
of First of America Bank-Oakland, a Michigan banking corporation that had over
$600 million in assets in 1989. Mr. Harrison served in various positions at
First of America Bank-Kalamazoo from 1963 to 1986, including Senior Vice
President from 1980 to 1986. Mr. Harrison's positions included senior level
responsibility for retail banking, commercial lending and assimilating mergers
and acquisitions. The First of America banks were subsidiaries of First of
America Bank Corporation, a $22 billion bank holding company headquartered in
Kalamazoo, Michigan that was acquired by National City Bancorporation in 1998.
Mr. Harrison has served as Chief Executive Officer and President of Pinnacle
Appraisal Group in Clarkston from 1991 to the present.

Mr. James Richardson, the Vice President - Finance and Operations and
Controller of the Bank, is a certified public accountant and has 14 years of
experience in the banking industry. Mr. Richardson was the controller of First
of America-Southeast Michigan from 1989 through 1991 and the controller of First
of America-Oakland County from 1986 through 1989. From 1977 through 1986, Mr.
Richardson held various executive positions, most recently as Executive Vice
President, with New Century Bank (formerly Peoples Banking Corporation) in
Frankenmuth and Bay City, Michigan, which was acquired by First of America in
1986. Mr. Richardson has served as a law firm administrator since 1991, most
recently with the law firm of Saurbier, Paradiso & Perrin, P.L.C. in St. Clair
Shores, Michigan. Mr. Richardson has a Masters in Business Administration from
the University of Michigan.

The Bank is assembling a staff of experience professionals and expects to
have approximately 12 full time employees when it opens for business. In
addition to its President and Chief Executive Officer and its Vice President
Finance and Operations, the Bank intends to recruit a senior lending officer, a
branch administration officer and an auditor. Mr. Harrison and Mr. Richardson
have chosen to join the bank at compensation levels below what they earned in
their previous positions.

Mr. Harrison has formed a Board of Directors comprised of individuals with
broad backgrounds in business, real estate and consulting. In addition to Mr.
Harrison, current directors include Edwin Adler (business and real estate),
Louis Beer (law and consulting), William Clark (real estate), Charles
Fortinberry (business), Bruce McIntyre (business), Robert Olsen (financial
planning), and John Welker (business). Mr. Harrison, the other members of the
Board of Directors, and Mr. Richardson, represent a significant asset to the
Company and the Bank.

4
<PAGE>
The Offering

Securities
offered by
the Company....... 950,000 shares of Common Stock. In addition, the Company has
granted the Underwriter an option to purchase up to an
additional 142,500 shares to cover over-allotments. See
"Description of Capital Stock."

Common Stock to
be outstanding
after the
offering (1)...... 950,000 shares (1,092,500 shares if the over-allotment
option is exercised in full).

Use of proceeds
by the Company.... Capitalization of the Bank, payment of organization and
preopening expenses and general corporate purposes. See "Use
of Proceeds."

Proposed NASD
Over the Counter
Bulletin Board
Symbol............ "CKSB"

- ------------------------
(1) Does not include _____ shares issuable upon exercise of
outstanding stock options under the Company's 1998 Founding
Directors' Stock Option Plan and the Company's Stock
Compensation Plan.

5
<PAGE>
RISK FACTORS

The Common Stock offered hereby involves a high degree of risk and should
be considered only by persons who can afford the loss of their entire
investment. The following constitute some of the potential risks of an
investment in the Common Stock and should be carefully considered by prospective
investors prior to purchasing shares of Common Stock. The order of the following
is not intended to be indicative of the relative importance of any described
risk nor is the following intended to be inclusive of all risks of investment in
the Common Stock.

Lack of Operating History

Neither the Company nor the Bank has any operating history. The business of
the Company and the Bank is subject to the risks inherent in the establishment
of a new business enterprise. Because the Company is only recently formed, the
Bank has not commenced operations and the Bank and the Company are in the
process of obtaining necessary regulatory approvals, prospective investors do
not have access to all of the information that, in assessing their proposed
investment, would be available to the purchasers of securities of a financial
institution with a history of operations.

Significant Losses Expected

As a result of the substantial start-up expenditures that must be incurred
by a new bank and the time it will take to develop its deposit base and loan
portfolio, it is expected that the Bank, and thus the Company, will operate at a
substantial loss during the start-up of the Bank. Accordingly, they are not
expected to be profitable for at least the first two years of operation.
Cumulative losses during the first two years of operation are expected to exceed
$500,000. There is no assurance that the Bank or the Company will ever operate
profitably. As a result, it is anticipated that the book value of the Common
Stock will decrease accordingly. If the Company does not reach profitability and
recover its accumulated operating losses, investors in the offering would likely
suffer a significant decline in the value of their shares of Common Stock.

Delay in Commencing Operations

Although the Company and the Bank expect to receive all regulatory
approvals and commence business in the first quarter of 1999, there can be no
assurance as to when, if at all, these events will occur. Any delay in
commencing operations will increase pre-opening expenses and postpone
realization by the Bank of potential revenues. Absent the receipt of revenues
and commencement of profitable operations, the Company's accumulated deficit
will continue to increase (and book value per share decrease) as operating
expenses such as salaries and other administrative expenses continue to be
incurred.

Government Regulation and Monetary Policy

The Bank has received all regulatory approvals required to organize and
establish the Bank, subject to the satisfaction of certain conditions. Those
conditions include, among other things, that: (i) beginning paid-in capital of
the Bank will be not less than $______ million; (ii) the Bank will maintain a
ratio of Tier 1 leverage capital to total assets for the first three years after
commencing business of at least 8% and an adequate valuation reserve; (iii) the
Bank will have its financial statements audited by a public accountant for at
least the first five years; (iv) the Bank will file its Certificate of Paid in
Capital and Surplus with the Commissioner and notify the FIB of its opening date
so the FIB can conduct its customary preopening investigation; and (v) any
changes in executive management of the Bank will be submitted to the bank
regulatory agencies in advance for their approval. Regulatory capital
requirements imposed on the Bank may have the effect of constraining future
growth, absent the infusion of additional capital.

The Company and the Bank will be subject to extensive state and federal
government supervision and regulation. Existing state and federal banking laws
will subject the Bank to substantial limitations with respect to loans, purchase
of securities, payment of dividends and many other aspects of its banking
business. There can be no assurance that future legislation or government policy
will not adversely affect the banking industry or the operations of the Bank.
Federal economic and monetary policy may affect the Bank's ability to attract
deposits, make loans and achieve satisfactory interest spreads. See "Supervision
and Regulation."

6
<PAGE>
No Assurance of Dividends

It is anticipated that no dividends will be paid on the Common Stock for
the foreseeable future. The Company will be largely dependent upon dividends
paid by the Bank for funds to pay dividends on the Common Stock, if and when
such dividends are declared. No assurance can be given that future earnings of
the Bank, and any resulting dividends to the Company, will be sufficient to
permit the legal payment of dividends to Company shareholders at any time in the
future. Even if the Company may legally declare dividends, the amount and timing
of such dividends will be at the discretion of the Company's Board of Directors.
The Board may in its sole discretion decide not to declare dividends. The Common
Stock offered hereby should not be purchased by persons who need or desire
dividend income from this investment. For a more detailed discussion of other
regulatory limitations on the payment of cash dividends by the Company, see
"Dividend Policy."

Competition

The Company and the Bank will face strong competition for deposits, loans
and other financial services from numerous Michigan and out-of-state banks,
thrifts, credit unions and other financial institutions as well as other
entities which provide financial services. Some of the financial institutions
and financial services organizations with which the Bank will compete are not
subject to the same degree of regulation as the Bank. Many of these financial
institutions aggressively compete for business in the Bank's proposed market
area. Most of these competitors have been in business for many years, have
established customer bases, are larger, have substantially higher lending limits
than the Bank and will be able to offer certain services that the Bank does not
expect to provide in the foreseeable future, including branches, trust services
and international banking services. In addition, most of these entities have
greater capital resources than the Bank, which, among other things, may allow
them to price their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. See "Business -- Market
Area" and "Business -- Competition." Additionally, federal and Michigan
legislation regarding interstate branching and banking may act to increase
competition in the future from larger out-of-state banks. See "Supervision and
Regulation."

Dependence on Management

The Company and the Bank are, and for the foreseeable future will be,
dependent upon the services of David Harrison, the President of the Bank, and
other senior managers retained by the Bank. The loss of one or more key members
of the management team could adversely affect the operations of the Company and
the Bank. While the Company will maintain key man life insurance on the life of
Mr. Harrison, the Company does not have an employment agreement with him or any
of its other officers. See "Business -- Employees" and "Management."

Discretion in Use of Proceeds

The Offering is intended to raise funds to provide for the initial
capitalization of the Bank, purchase leasehold improvements, equipment and other
assets for the Bank's operations, fund loans, provide working capital for
general corporate purposes, and pay initial operating expenses. While management
currently has no such agreements or understanding, if opportunities arise, some
of the proceeds of the Offering could also be used to finance acquisitions of
other financial institutions, branches of other institutions, or expansion into
other lines of business closely related to banking. However, management will
retain discretion in employing the proceeds of the Offering. See "Use of
Proceeds."

Lending Risks and Lending Limits

The risk of nonpayment of loans is inherent in commercial banking, and such
nonpayment, if it occurs, may have a material adverse effect on the Company's
earnings and overall financial condition as well as the value of the Common
Stock. Moreover, the Bank's focus on small-to-medium sized businesses may result
in a large concentration of loans by the Bank to such businesses. As a result,
the Bank may assume greater lending risks than banks which have a lesser
concentration of such loans and tend to make loans to larger companies.
Management will attempt to minimize the Bank's credit exposure by carefully
monitoring the concentration of its loans within specific industries and through
prudent loan application and approval procedures, but there can be no assurance
that its monitoring and procedures will reduce such lending risks sufficiently
to avoid material losses.

7
<PAGE>
The Bank's general lending limit is expected to initially be approximately
$800,000. Accordingly, the size of the loans which the Bank can offer to
potential customers will be less than the size of loans which most of the Bank's
competitors with larger lending limits are able to offer. This limit initially
may affect the ability of the Bank to seek relationships with the area's larger
businesses. The Bank expects to accommodate loan volumes in excess of its
lending limit through the sale of participations in such loans to other banks.
However, there can be no assurance that the Bank will be successful in
attracting or maintaining customers seeking larger loans or that the Bank will
be able to engage in the sale of participations in such loans on terms favorable
to the Bank.

Impact of Interest Rates and Economic Conditions

The results of operations for financial institutions, including the Bank,
may be materially and adversely affected by changes in prevailing economic
conditions, including declines in real estate market values, rapid changes in
interest rates and the monetary and fiscal policies of the federal government.
See "Supervision and Regulation." The Bank's profitability will be in part a
function of the spread between the interest rates earned on investments and
loans and the interest rates paid on deposits and other interest-bearing
liabilities. In the early 1990s, many banking organizations experienced
historically high interest rate spreads. More recently, interest rate spreads
have generally narrowed due to changing market conditions and competitive
pricing pressure, and there can be no assurance that such factors will not
continue to exert such pressure or that such high interest rate spreads will
return. Substantially all the Bank's loans will be to businesses and individuals
in North Oakland County, Michigan, and any decline in the economy of this area
could have an adverse impact on the Bank. Like most banking institutions, the
Bank's net interest spread and margin will be affected by general economic
conditions and other factors that influence market interest rates and the Bank's
ability to respond to changes in such rates. At any given time, the Bank's
assets and liabilities will be such that they are affected differently by a
given change in interest rates. As a result, an increase or decrease in rates,
the length of loan terms or the mix of adjustable and fixed rate loans in the
Bank's portfolio could have a positive or negative effect on the Bank's net
income, capital and liquidity. There can be no assurance that negative trends or
developments will not have a material adverse effect on the Bank. See
"Supervision and Regulation."

Need for Technological Change

The banking industry is undergoing rapid technological changes with
frequent introductions of new technology- driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. The Company's
future success will depend in part on its ability to address the needs of its
customers by using technology to provide products and services that will satisfy
customer demands for convenience as well as to create additional efficiencies in
the Bank's operations. Many of the Bank's competitors have substantially greater
resources to invest in technological improvements. There can be no assurance
that the Bank will be able to effectively implement new technology-driven
products and services or be successful in marketing such products and services
to its customers. See "Business -- Strategy."

Year 2000 Compliance

Because many computerized systems use only two digits to record the year in
date fields (for example, the year 1998 is recorded as 98), such systems may not
be able to accurately process dates ending in the year 2000 and after. The
effects of this issue will vary from system to system and may adversely affect
the ability of a financial institution's operations as well as its ability to
prepare financial statements. The Company and the Bank will be organized in 1998
or early 1999 and will have recently acquired their computer equipment and will
have recently contracted with a leading supplier of information processing
services. The Company expects to have written assurances from its corporate
equipment and information systems suppliers that their products are year 2000
compliant. The Company expects to assess year 2000 compliance by the Company and
its vendors. In addition, the Bank expects to require assurances from commercial
borrowers as to their year 2000 compliance as part of the loan application and
review process. Management does not anticipate that the Company will incur
material operating expenses or be required to invest heavily in computer system
improvements to be year 2000 compliant. Nevertheless, the inability of the
Company to successfully address year 2000 issues could result in interruptions
in the Company's business and have a material adverse effect on the Company's
results of operations.

8
<PAGE>
Anti-Takeover Provisions

The Company's Articles of Incorporation (the "Articles") and bylaws (the
"Bylaws") include provisions which may have the effect of delaying, deferring or
preventing certain types of transactions involving an actual or potential change
in control of the Company, including transactions in which the shareholders
might otherwise receive a premium for their shares over then current market
prices, and may limit the ability of the shareholders to approve transactions
that they may deem to be in their best interests. The Michigan Business
Corporation Act (the "MBCA") contains a Control Share Act and a Fair Price Act
intended to protect shareholders and prohibit or discourage certain types of
hostile takeover activities. Federal law requires the approval of the Federal
Reserve Board prior to acquisition of "control" of a bank holding company. These
provisions may have the effect of delaying or preventing a change in control of
the Company without action by the shareholders, and therefore could adversely
affect the price of the Common Stock. See "Description of Capital Stock --
Anti-Takeover Provisions."

Indemnification of Directors and Officers

The Company's Articles of Incorporation provide for the indemnification of
its officers and directors and insulate its officers and directors from
liability for certain breaches of the duty of care. It is possible that the
indemnification obligations imposed under these provisions could have an adverse
effect on the Company's financial position and results of operations. The Bank's
Articles of Incorporation contain similar provisions. See "Description of
Capital Stock -- Anti-Takeover Provisions."

Determination of Offering Price; Limited Trading Market Expected

The initial public offering price of $10.00 per share was determined by the
Company in consultation with the Underwriter. This price is not based upon
earnings or any history of operations and should not be construed as indicative
of the present or anticipated future value of the Common Stock. Prior to the
offering, there has been no public trading market for the Common Stock. The
price at which these shares are being offered to the public may be greater than
the market price for the Common Stock following the offering. The Underwriter
has advised the Company that, upon completion of the offering, it intends to use
reasonable efforts to initiate quotations of the Common Stock on the OTC
Bulletin Board and to act as a market maker in the Common Stock, subject to
applicable laws and regulatory requirements, although it is not obligated to do
so. Making a market in securities involves maintaining bid and ask quotations
and being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends, however, upon
the existence of willing buyers and sellers, the presence of which is not within
the control of the Company, the Bank or any market maker. Market makers on the
OTC Bulletin Board are not required to maintain a continuous two sided market,
are required to honor firm quotations for only a limited number of shares and
are free to withdraw firm quotations at any time. Even with a market maker,
factors such as the limited size of the offering, the lack of earnings history
for the Company and the absence of a reasonable expectation of dividends within
the near future mean that there can be no assurance of an active and liquid
market for the Common Stock developing in the foreseeable future. Even if a
market develops, there can be no assurance that a market will continue or that
shareholders will be able to sell their shares at or above the price at which
these shares are being offered to the public. Purchasers of Common Stock should
carefully consider the limited liquidity of their investment in the shares being
offered hereby.

Control by Management

Although the combined ownership and control over the Company's Common Stock
by the Company's officers and directors is likely to be less than 10% after this
Offering, such individuals will be able to exert a significant measure of
control over the affairs and policies of the Company. Such control could be
used, for example, to help prevent an acquisition of the Company, thereby
precluding shareholders from possibly realizing any premium which may be offered
for the Company's Common Stock by a potential acquiror. See "Principal
Shareholders."

9
<PAGE>
Regulatory Risk

The banking industry is heavily regulated. Many of these regulations are
intended to protect depositors, the public, and the FDIC, not shareholders.
Applicable laws, regulations, interpretations and enforcement policies have been
subject to significant, and sometimes retroactively applied, changes in recent
years, and may be subject to significant future changes. There can be no
assurance that such future changes will not adversely affect the business of the
Company. In addition, the burden imposed by federal and state regulations may
place banks in general, and the Company specifically, at a competitive
disadvantage compared to less regulated competitors. See "Supervision and
Regulation."

10
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 950,000 shares of
Common Stock offered hereby are estimated to be $______ ($_______ if the
Underwriter's over-allotment option is exercised in full), after deduction of
the underwriting discounts, but before deducting estimated offering expenses of
$__________. The Underwriter has agreed to limit the underwriting discounts to
2.0% of the public offering price for up to 100,000 shares sold by the
Underwriter to directors and officers of the Bank or their immediate families
and to certain persons identified on a list provided to the Underwriter by the
Company. Such persons have provided nonbinding expressions of interest to
purchase approximately ________ shares. If such persons purchase _______ shares,
underwriting discounts will be reduced by, and proceeds to the Company will be
increased by, $______ .

The Company expects to contribute approximately $8,500,000 of the net
proceeds of the offering to the Bank by purchasing all of the Bank's common
stock to be issued. This purchase of the Bank's stock is intended to provide the
Bank with the capital required by regulators to commence operations. The Bank
plans to use approximately $115,000 for leasehold improvements and related
architectural and engineering services, and approximately $130,000 to purchase
furniture, fixtures and equipment and other necessary assets for the Bank's
operations. The Company expects to use approximately $37,000 of the net proceeds
to pay for organizational expenses of the Bank. These organizational expenses,
and other preopening expenses, were financed on an interim basis from loans of
approximately $325,000 made to the Company by members of its Board of Directors.
It is anticipated that this approximately $325,000 of loans will be repaid by
the Company promptly following the completion of the offering. Preopening income
may offset some of these expenses. It is currently anticipated that the balance
of the net proceeds received by the Bank will be used to fund investments in
loans and securities and for payment of operating expenses. The remaining net
proceeds (plus any net proceeds as a result of the exercise of the Underwriter's
over-allotment option) will initially be invested by the Company in investment
grade securities and otherwise held by the Company as working capital for
general corporate purposes and to pay operating expenses, as well as for
possible future capital contributions to the Bank. The funds will also be
available to finance possible acquisitions of other branches or expansion into
other lines of business closely related to banking, although the Company
presently has no plans to do so.

DIVIDEND POLICY

The Company initially expects that Company and Bank earnings, if any, will
be retained to finance the growth of the Company and the Bank and that no cash
dividends will be paid for the foreseeable future. After the Bank achieves
profitability, recovers its operating deficit, and funds an adequate reserve for
loan and lease losses, the Company may consider payment of dividends. However,
the declaration of dividends is at the discretion of the Board of Directors, and
there is no assurance that dividends will be declared at any time. If and when
dividends are declared, the Company will be largely dependent upon dividends
paid by the Bank for funds to pay dividends on the Common Stock. It is also
possible, however, that the Company might at some time in the future pay
dividends generated from income or investments and from other activities of the
Company.

Under Michigan law, the Bank is restricted as to the maximum amount of
dividends it may pay on its Common Stock. The Bank may not pay dividends except
out of net profits after deducting its losses and bad debts. A Michigan state
bank may not declare or pay a dividend unless the bank will have a surplus
amounting to at least 20% of its capital after the payment of the dividend. If
the Bank has a surplus less than the amount of its capital, it may not declare
or pay any dividend until an amount equal to at least 10% of net profits for the
preceding one-half year (in the case of quarterly or semi-annual dividends) or
full-year (in the case of annual dividends) has been transferred to surplus. The
ability of the Company and the Bank to pay dividends is also affected by various
regulatory requirements and policies, such as the requirement to maintain
adequate capital above regulatory guidelines. See "Supervision and Regulation."
Such requirements and policies may limit the Company's ability to obtain
dividends from the Bank for its cash needs, including funds for acquisitions,
payment of dividends by the Company and the payment of operating expenses.

11
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as it is
projected to be immediately after the sale of the 950,000 shares of Common Stock
offered hereby and the application of the estimated net proceeds. See "Use of
Proceeds."

<TABLE>
<S> <C>
Long-term and short-term debt................................................... $ 0

Shareholders' equity:

Common stock, no par value, 10,000,000 shares authorized; 950,000
shares issued and outstanding.................................... 8,680,000
Retained earnings(1)................................................... (41,829)
-----------
Total shareholders' equity.................................. $8,638,171
</TABLE>

(1) Retained earnings (accumulated deficit) as of August 31, 1998.

12
<PAGE>
BUSINESS

The Company

The Company was incorporated on May 18, 1998 under Michigan law and will be
a bank holding company owning all of the common stock of the Bank. The Bank is
organizing as a Michigan chartered bank with depository accounts to be insured
by the Federal Deposit Insurance Corporation (the "FDIC"). The Bank's initial
primary service area will be Independence Township, which includes the City of
Clarkston, and the adjacent township of Waterford, both of which are located in
North Oakland County, Michigan. The Bank intends to provide a full range of
commercial and consumer banking services for small to medium size businesses as
well as individuals. The Bank's lending strategy will focus on commercial and
consumer lending and to a lesser extent residential mortgage lending. The Bank
intends to offer a broad array of deposit products and may also provide
customers with credit cards, trust services, insurance products and investment
products through third-party service providers. The use of third-party service
providers is expected to allow the Bank to be at the forefront of technology
while minimizing the costs of delivery. Completion of this offering will be
conditioned on the Company and the Bank having received all necessary regulatory
approvals, subject to the satisfaction of certain conditions. Management
anticipates commencing business in the first quarter of 1999.

The Company was incorporated as a Michigan business corporation on May 18,
1998. The Company was formed to acquire all of the Bank's issued and outstanding
stock and to engage in the business of a bank holding company under the federal
Bank Holding Company Act of 1956, as amended. On _________, 1998, the
Commissioner of the FIB issued an order approving the application to establish
the Bank. On _________, 1998, the Bank's application for FDIC deposit insurance
was approved. The Company's application to become a bank holding company for the
Bank was approved by the Federal Reserve Board on __________, 1998. These
approvals were issued subject to the satisfaction of certain conditions that the
Company believes are customary in transactions of this type, including
conditions relating to capitalization of the Bank and continuing capital
adequacy. The Company and the Bank expect to satisfy such conditions and
commence business in the first quarter of 1999. See "Risk Factors -- Delay in
Commencing Operations" and "Risk Factors -- Government Regulation and Monetary
Policy."

Reason for Starting Clarkston State Bank

Market Area

13
<PAGE>
Independence Townships (including the City of Clarkston) was approximately
$59,000, compared to approximately $57,000 for all of Oakland County, which is
the nation's third wealthiest county with a population in excess of one million.
The Company believes that affluent households create demand for home mortgage
loans, home equity loans, certificates of deposit and individual retirement
accounts.

Products and Services

Commercial Loans. Commercial loans will be made primarily to small and
mid-sized businesses. These loans will be both secured and unsecured and are
expected to be made available for general operating purposes, acquisition of
fixed assets including real estate, purchases of equipment and machinery,
financing of inventory and accounts receivable, as well as any other purposes
considered appropriate. The Bank will generally look to a borrower's business
operations as the principal source of repayment, but will also receive, when
appropriate, mortgages on real estate, security interests in inventory, accounts
receivable and other personal property and/or personal guarantees.

Although the Bank intends to take a progressive and competitive approach to
lending, it will stress high quality in its loans. Because of the Bank's local
nature, management believes that quality control should be achievable while
still providing prompt and personal service. On a bi-monthly basis, the Board of
Directors will review selected loans made in the preceding month. In addition, a
loan committee of the Board of Directors of the Bank will also review larger
loans for prior approval when the loan request exceeds the established limits
for the senior officers.

Real Estate Loans. The Bank expects to originate residential mortgage
loans, which are generally long-term with either fixed or variable interest
rates. The Bank's anticipated general policy, which is subject to review by
management as a result of changing market and economic conditions and other
factors, may be to retain all or a portion of variable interest rate mortgage
loans in the Bank's loan portfolio and to sell all fixed rate loans in the
secondary market. The Bank also expects to offer home equity loans. The Bank
expects to retain servicing rights with respect to residential mortgage loans
that it originates.

Personal Loans and Credit. The Bank will make personal loans and lines of
credit available to consumers for various purposes, such as the purchase of
automobiles, boats and other recreational vehicles, home improvements and
personal investments. The Bank expects to retain substantially all of such
loans. The Bank may also offer credit card services if requested by the Bank's
customers.

Deposit Services. The Bank intends to offer a broad range of deposit
services, including checking accounts, NOW accounts, savings accounts and time
deposits of various types. The Bank will offer a courier service for customer
convenience. Transaction accounts and time certificates will be tailored to the
principal market area at rates competitive with those offered in the area. All
deposit accounts will be insured by the FDIC up to the maximum amount permitted
by law. The Bank intends to solicit these accounts from individuals, businesses,
associations, financial institutions and government authorities. The Bank may
also use alternative funding sources as needed, including advances from Federal
Home Loan Banks, conduit financing and the packaging of loans for securitization
and sale.

Regulatory and supervisory loan-to-value limits are established by Section
304 of the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"). The Bank's internal limitations will follow those limits and in
certain cases will be more restrictive than those required by the regulators.

14
<PAGE>
The Bank may establish relationships with correspondent banks and other
independent financial institutions to provide other services requested by its
customers, including loan participations where the requested loan amounts exceed
the Bank's policies or legal lending limits.

Other Services. The Bank may consider providing additional services in the
future, such as personal computer based at-home banking. Management believes
that the Bank's personalized service approach benefits from customer visits to
the Bank. Management will continue to evaluate the desirability of adding
telephone, electronic and at-home banking services. Should the Bank choose to do
so, the Bank could provide one or more of these services at a future date using
a third-party service provider.

Investments. The principal investment of the Company will be its purchase
of all of the common stock of the Bank. Funds retained by the Company from time
to time may be invested in various debt instruments, including but not limited
to obligations of or guaranteed by the United States, general obligations of a
state or political subdivision thereof, bankers' acceptances or certificates of
deposit of United States commercial banks, or commercial paper of United States
issuers rated in the highest category by a nationally-recognized investment
rating service. Although the Company is permitted to make limited portfolio
investments in equity securities and to make equity investments in subsidiary
corporations engaged in certain non-banking activities which may include real
estate-related activities, such as mortgage banking, community development, real
estate appraisals, arranging equity financing for commercial real estate, and
owning and operating real estate used substantially by the Bank or acquired for
its future use, the Company has no present plans to make any such equity
investment. See "Supervision and Regulation -- The Company -- Investments and
Activities." The Company's Board of Directors may alter the Company's investment
policy without shareholder approval.

The Bank may invest its funds in a wide variety of debt instruments and may
participate in the federal funds market with other depository institutions.
Subject to certain exceptions, the Bank is prohibited from investing in equity
securities. Under one such exception, in certain circumstances and with the
prior approval of the FDIC, the Bank could invest up to 10% of its total assets
in the equity securities of a subsidiary corporation engaged in certain real
estate- related activities. The Bank has no present plans to make such an
investment. Real estate acquired by the Bank in satisfaction of or foreclosure
upon loans may be held by the Bank, subject to a determination by a majority of
the Bank's Board of Directors at least annually of the advisability of retaining
the property, for a period not exceeding 60 months after the date of
acquisition, or such longer period as the Commissioner may approve. The Bank is
also permitted to invest an aggregate amount not in excess of two-thirds of the
capital and surplus of the Bank in such real estate as is necessary for the
convenient transaction of its business. The Bank has no present plans to make
any such investment. The Bank's Board of Directors may alter the Bank's
investment policy without shareholder approval.

Competition

There are many thrift institution, credit union and bank offices located
within the Bank's primary market area. Most are branches of larger financial
institutions which, in management's view, are managed with a philosophy of
strong centralization. The Bank will face competition from thrift institutions,
credit unions, and other banks as well as finance companies, insurance
companies, mortgage companies, securities brokerage firms, money market funds
and other providers of financial services. Most of the Bank's competitors have
been in business a number of years, have established customer bases, are larger
and have higher lending limits than the Bank. The Bank will compete for loans
principally through its ability to communicate effectively with its customers
and understand and meet their needs. Management believes that its personal
service philosophy will enhance its ability to compete favorably in attracting
individuals and small businesses. The Bank will actively solicit retail
customers and will compete for deposits by offering customers personal
attention, professional service, off-site ATM capability, and competitive
interest rates.

Employees

The Bank is assembling a staff of experienced professionals and expects to
have approximately 12 full time employees when it opens for business. In
addition to the President and the Vice President - Finance and Operations and
the Controller, the Bank intends to recruit a senior lending officer, a branch
administration officer, an auditor and additional customer service and support
personnel. Mr. Harrison and Mr. Richardson have chosen to join the Bank at
compensation levels below what they earned in their previous positions.

15
<PAGE>
Properties

The Bank is leasing a building located at 15 South Main Street in downtown
Clarkston, Michigan for use as the Bank's main office and the Company's
headquarters. This building consists of approximately 3,890 square feet. The
building was formerly a branch of a large regional bank and has been a bank
branch since 19___. The building has a night deposit box, safe deposit boxes and
a complete security system, and will have an ATM machine. The Bank believes that
this space will be adequate for its present needs. In order to conserve the
Bank's capital, eight directors agreed to purchase the building in September,
1998 specifically for the purpose of leasing the property to the Bank. The
building will be leased on an arms-length basis from an entity owned by eight of
the Company's and the Bank's directors. (See "Certain Transactions.")

The lease for the Bank's office has an initial term of five years and the
Bank has three renewal options of five years each. The monthly lease payments
are $5,000 per month for the first two years and thereafter $5,165 per month. In
addition, the Bank will be required to make payments for taxes, insurance and
other operating expenses. The Bank expects to spend approximately $115,000 for
tenant improvements and related architectural and engineering services, and
additional funds for furniture, fixtures and other equipment.

Plan of Operation

The Company's plan of operation for the twelve months following the
completion of the offering does not contemplate the need to raise additional
funds during that period. Management has concluded, based on current pre-opening
growth projections, that the Bank is likely to have adequate funds to meet its
cash requirements for at least twelve months. Management has no specific plans
for product research or development which would be performed within the next
twelve months. Management plans to expend approximately $115,000 for leasehold
improvements and related architectural and engineering services, and
approximately $130 ,000 for furniture, fixtures, equipment and other necessary
assets, prior to commencing operation. During the first twelve months of
operation, the Company does not anticipate requiring substantial additional
equipment. No significant changes in the number of employees is anticipated in
the first twelve months of operations after the Bank commences its business and
completes the hiring of its approximately 12 initial employees.

16
<PAGE>
MANAGEMENT

Directors and Executive Officers

The directors and executive officers of the Company and the Bank are as
follows:
<TABLE>
Positions with Positions with
Name Age the Company the Bank
<S> <C> <C> <C>
David T. Harrison............... 57 Chief Executive Officer, Chief Executive Officer,
President and Director President and Director
James L. Richardson............. 66 Treasurer Vice President - Finance
and Operations and
Controller
Edwin L. Adler.................. 60 Chairman and Director Chairman and Director
Louis D. Beer................... 53 Director Director
William J. Clark................ 48 Director Director
Charles L. Fortinberry.......... 42 Director Director
Bruce H. McIntyre............... 68 Secretary and Director Secretary and Director
Robert A. Olsen................. 53 Director Director
John H. Welker.................. 58 Director Director
</TABLE>
The Company has a classified board of directors, with directors serving
staggered three-year terms that expire at the relevant annual shareholders
meeting. The terms of Messrs. Beer and Clark expire in 1999, the terms of
Messrs. Fortinberry, McIntyre and Olsen expire in 2000, and the terms of Messrs.
Harrison, Adler and Welker expire in 2001. There are no family relationships
between or among any of the directors or executive officers named above. The
Company intends to maintain at least two independent directors on its board.

Committees

The Bank has several committees, composed as follows: Loan Committee
(Messrs. Harrison, Fortinberry and Clark); Investment Committee (Messrs.
Harrison, Olsen, Beer and Welker); and Audit Committee (Messrs. Harrison,
McIntyre and Adler); and Personnel Committee (Messrs. Olsen, Harrison and
Welker).

The Company also has several committees, composed as follows: Executive
Committee (Messrs. Harrison, Adler, McIntyre and Olsen); Audit Committee
(Messrs. Harrison, McIntyre and Adler); and Personnel Committee (Messrs. Olsen,
Harrison and Welker).

Experience of Directors and Officers

The experience and backgrounds of the directors and officers of the Company
and the Bank are summarized below.

David T. Harrison is the Chief Executive Officer, President and a director
of the Company and the Bank. Mr. Harrison has 30 years of experience in the
banking industry. Mr. Harrison was employed by First of America Bank from 1963
to 1991, and most recently served from 1989 to 1991 as Chief Executive Officer
and President of First of America Bank-Southeast, in Detroit, a Michigan banking
corporation that had over $4 billion in assets in 1991. From 1986 to 1989 Mr.
Harrison served as the President and Chief Executive Officer of First of America
Bank-Oakland, a

17
<PAGE>
Michigan banking corporation that had over $600 million in assets in 1989. Mr.
Harrison served in various positions at First of America Bank-Kalamazoo from
1963 to 1986, including Senior Vice President from 1980 to 1986. Mr. Harrison's
duties included dealing with troubled acquisitions. The First of America banks
were subsidiaries of First of America Bank Corporation, a $22 billion bank
holding company headquartered in Kalamazoo, Michigan that was acquired by
National City Bank. Mr. Harrison has served as Chief Executive Officer and
President of Pinnacle Appraisal Group of Clarkston, Michigan, from 1991 to the
present. Mr. Harrison has also served as Chief Executive Officer and President
of Trophy Homes, a residential builder, of Clarkston, Michigan, from 1995 to the
present. Mr. Harrison has served as a director of Credit Acceptance Corporation
from 1991 to the present. Mr. Harrison is a member and past chairman of New
Detroit, Inc.

James L. Richardson is the Treasurer of the Company and is the Vice
President and Controller of the Bank. Mr. Richardson has been employed as a law
firm administrator since 1991, most recently with the law firm of Saurbier,
Paradiso & Perrin, P.L.C. in St. Clair Shores, Michigan. From 1977 through 1991,
Mr. Richardson held a number of positions with several banks, most recently as
the controller of First of America-Southeast Michigan (Detroit) from 1989
through 1991. Mr. Richardson was the controller of First of America-Southeast
Michigan from 1987 through 1991. From 1977 through 1986, Mr. Richardson held
various executive positions with New Century Bank (formerly Peoples National
Bank) in Frankenmuth and Bay City, Michigan, most recently as Executive Vice
President. Mr. Richardson has a Masters in Business Administration from the
University of Michigan. Mr. Richardson is a member of the American Institute of
CPAs and the Michigan Association of CPAs.

Edwin L. Adler is the Chairman and a director of the Company and the Bank.
Mr. Adler is president of Food Town Supermarkets, a chain of five stores in the
Clarkston, Michigan area, where he has been employed since 1963. Mr. Adler also
owns two Harley Davidson dealerships one in Waterford Township and one in Fort
Wayne, Indiana. Mr. Adler is also actively involved in real estate investment
and management in Oakland County Mr. Adler served as an appointee of Governor
Engler to the Silverdome Stadium Building Authority from 1972 to 1996.

Louis C. Beer is a director of the Company and the Bank. Mr. Beer has
served since 1993 as the chairman of First Public Corporation, a real estate,
financial and business consulting firm located in Saginaw, Michigan. Mr. Beer
serves on the Board of Trustees of the Detroit Symphony Orchestra Hall. Mr. Beer
is also a member of the Clarkston Foundation and the Saginaw Valley
Manufacturers Association. Mr. Beer is also an attorney and a member of the
American Bar Association and the Michigan Bar Association.

William J. Clark is a director of the Company and the Bank. Mr. Clark has
served since October 1996 as the general manager of Coldwell Banker
Professionals, a real estate brokerage firm in Clarkston, Michigan, where he
supervises approximately 53 real estate agents and nine staff members. Mr. Clark
was employed by Clarkston Real Estate Services Inc. from 1989 through October
1996, most recently as the sales manager for over 30 agents and approximately
five staff members. Mr. Clark is a member of the North Oakland County Board of
Realtors, the Michigan Association of Realtors and the National Association of
Realtors.

Charles L. Fortinberry is a director of the Company and the Bank. Mr.
Fortinberry is an automobile dealer and is the president of Clarkston Motors,
Inc., where he has been employed since 1985. Mr. Fortinberry is a member of the
Clarkston Area Chamber of Commerce and a number of automobile dealer
associations. Mr. Fortinberry serves on the boards of the Detroit Auto Dealers
Association and the Michigan Auto Dealers Association.

Bruce H. McIntyre is the Secretary and a director of the Company and the
Bank. Mr. McIntyre has served as president of McIntyre Media, LLC, a media
consulting firm, since October 1996. From 1971 through September 1996, Mr.
McIntyre was employed by Capital Cities/ABC, Inc., most recently as vice
president of the publishing division. Mr. McIntyre was the publisher of the
Oakland Press from 1977 through February 1995. Mr. McIntyre is involved in a
number of civic and business organizations, including serving as Chairman of the
Pontiac Stadium Authority and as Vice Chairman of the Orchard Lake City Planning
Commission. Mr. McIntyre is a member of the Society of Professional Journalists
and is a former president of the Michigan Press Association. Mr. McIntyre is
also a former chairman of St. Joseph Mercy Hospital.

Robert A. Olsen is a director of the Company and the Bank. Mr. Olsen is the
president of Planned Financial Services, Inc., where he has been employed since
1974. Mr. Olsen provides financial, estate and retirement planning for small
businesses and for public employers and pension plans. Mr. Olsen is a member of
the International Association for Financial Planning, the National Association
of Securities Dealers and the Michigan Association of

18
<PAGE>
Insurance Counselors. Mr. Olsen is involved in a number of civic and business
organizations, including service as a board member, past president and founder
of the Clarkston Foundation. Mr. Olsen is a member of the Clarkston Area Chamber
of Commerce and of Independence Township's Vision 20/20 Committee. Mr. Olsen is
Chairman of the Independence Township Economic Development Corporation.

John Welker is a director of the Company and the Bank. Mr. Welker is
president of Numatics, Inc., where he has been employed since 1965. Numatics,
Inc. is a global developer and manufacturer of pneumatic components for
automated machinery used in various industries. Numatics, Inc. has approximately
____ employees at 16 facilities in four countries.

Director Compensation

No salaries or other remuneration have been paid by the Company to its
directors or officers except that the Company has granted options to purchase
shares of Common Stock to each of the directors. All stock options are granted
at no cost to the recipient. See "-- Stock Option Grants." All of the directors
of the Company are also directors of the Bank, and all of the officers of the
Company are also officers of the Bank. Mr. Harrison receives compensation for
his officer positions with the Bank.

No directors' fees have been paid or will be paid during the Bank's first
year of operations. It is anticipated that after its first year of operations,
the Bank will pay each director reasonable fees for service on the Board, which
will be comparable to fees paid by other local banks.

Executive Compensation

Mr. Harrison, the Bank's Chief Executive Officer and President, is expected
to be paid a salary of $100,000 for the first year of operation. Mr. Richardson,
the Vice President and Controller of the Bank, is expected to be paid a salary
of $65,000 for the first year of operation. Their compensation in subsequent
years will be determined by the Company's and the Bank's Boards of Directors and
will be based on merit and comparable salaries in the area and industry.

Stock Option Grants

A total of 75,000 shares of Common Stock have been reserved for issuance
under the Company's 1998 Founding Directors' Stock Option Plan, and the Company
has granted to its directors and organizers options to purchase an aggregate of
75,000 shares.

Effective __________, 1998, the Company awarded stock options to purchase
an aggregate of 37,500 shares of Common Stock, 4,687 shares to each of the eight
directors of the Company. These options are subject to vesting requirements and
20% of the shares subject to each option vest in each year in which the Company
achieves a performance goal determined in advance by the Board of Directors of
the Company. Pursuant to their terms, these options will be completely vested
nine and one half years after their date of grant, regardless of whether the
Company achieves the performance goals. These stock options were granted
pursuant to the 1998 Founding Directors' Stock Option Plan have an exercise
price of $10.00 per share, and expire on __________, 2008.

Effective _____________, 1998, the Company awarded stock options to
purchase an aggregate of 37,500 shares to the directors of the Company and the
Bank in the following amounts: Mr. Harrison (_______ shares); Mr. Adler (_______
shares); Mr. Beer (_______ shares); Mr. Clark (_______ shares); Mr. Fortinberry
(_______ shares); Mr. McIntyre (_______ shares); Mr. Olsen (_______ shares); and
Mr. Welker (_______ shares). These stock options were granted pursuant to the
1998 Founding Directors' Stock Option Plan. These stock options vest 20% each
year for five years, have an exercise price of $10.00 per share, are exercisable
beginning ___________, 1999, and expire on ____________, 2008.

In addition, a total of 25,000 shares are reserved for issuance under the
Company's Stock Compensation Plan. Effective ______________, 1998, the Company
awarded stock options to purchase an aggregate of ___________ shares of Common
Stock to certain employees of the Company. These stock options were granted
pursuant to the Employee

19
<PAGE>
Stock Compensation Plan, have an exercise price of $10.00 per share, vest 10%
each year for the ten years following the grant date, and expire ten years from
the date of grant.

Stock Compensation Plan

The Company has adopted and its shareholders have approved the Clarkston
Financial Corporation Stock Compensation Plan (the "Plan"). The Plan was adopted
and approved on September 18, 1998. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of its shareholders through
stock-based compensation by aligning the personal interests of the Company's key
employees with those of its shareholders. The Plan is designed to allow key
employees of the Company and certain of its subsidiaries to participate in the
Company's future, as well as to enable the Company to attract, retain, and
reward such employees. Eligibility is determined by the Committee. As of the
date of this Prospectus, options to purchase an aggregate of ______ shares of
Common Stock at an exercise price of $10.00 per share have been granted pursuant
to the Plan.

Administration. The Plan is administered by a committee of the Board of
Directors (the "Committee"). The Committee will be composed of at least three
directors, each of whom is not an employee of the Company. Each member of the
Committee is required to be a "disinterested person" within the meaning of Rule
16b-3 of the General Rules and Regulations under the Securities and Exchange Act
of 1934, as amended, and no member of the Committee is eligible to participate
in the Plan. Subject to the Company's Articles, Bylaws, and the provisions of
the Plan, the Committee has the authority to select key employees to whom Awards
(as defined below) may be awarded; the type of Awards (or combination thereof)
to be granted; the number of shares of Common Stock to be covered by each Award;
and the terms and conditions of any Award, such as conditions of forfeiture,
transfer restrictions and vesting requirements.

The Plan provides for the granting of stock options, including incentive
stock options, as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and restricted stock. These Awards are granted at no
cost to the recipients. The term of the Plan is ten years; no Awards may be
granted under the Plan after September 17, 2008.

Types of Awards. The following types of awards ("Awards") may be granted
under the Plan:

An "Option" is a contractual right to purchase a number of shares at a
price determined at the date the Option is granted. Options include incentive
stock options, as defined in Section 422 of the Code, as well as nonqualified
stock options. The exercise price included in both incentive stock options and
nonqualified stock options must equal at least 100% of the fair market value of
the Common Stock at the date of grant. Options are granted at no cost to the
recipients.

"Restricted Stock" are shares of Common Stock granted to an employee for no
or nominal consideration. Title to the shares passes to the employee at the time
of the grant; however, the ability to sell or otherwise dispose of the shares is
subject to restrictions and conditions determined by the Committee.

Shares Subject to Plan. A total of 25,000 shares of the Company's Common
Stock are reserved for use under the Plan. The shares to be issued under the
Plan will be authorized and unissued shares, including shares reacquired by the
Company which have that status. The number of shares that may be issued under
the Plan and the number of shares subject to Options are subject to adjustments
in the event of a merger, reorganization, consolidation, recapitalization, stock
dividend, stock split or other change in corporate structure affecting the
Common Stock. Subject to certain restrictions, unexercised Options, lapsed
shares of Restricted Stock, and shares surrendered in payment for exercised
Options may be reissued under the Plan.

Eligibility. Key employees of the Company and its designated subsidiaries
are eligible to be granted Awards under the Plan. Eligibility is determined by
the Committee.

Participation and Assignability. Neither the Plan nor any Award agreement
granted under the Plan entitles any participant or other employee to any right
to continued employment by the Company or any subsidiary. Generally, no Option,
Restricted Stock, or other benefit payable under the Plan may, except as
otherwise specifically provided by law, be subject in any manner to assignment,
transfer, or encumbrance. Upon termination of employment, any portion

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<PAGE>
of unexercised Options which are exercisable on the termination date must
generally be exercised within three months of the termination date for any
termination other than as a result of the death of the employee, in which case
the Plan provides in certain circumstances for a longer exercise period.

Mandatory Exercise or Forfeiture. The Plan provides that the Federal
Reserve Board or the FDIC have the right to require Plan participants to
exercise or forfeit their Awards if the capital of the Company or the Bank falls
below the minimum capital required by applicable laws, rules and regulations.

Vesting Schedule. The Committee has the authority to include vesting
requirements in any Award. Pursuant to the Plan, each Option must include a
minimum vesting period of three years from the grant date during which the
Options must vest in approximately equal percentages for the first three years
or for such longer vesting period as the Committee may determine. If an
optionee's employment terminates for any reason other than death or disability
or upon the occurrence of a change in control, the employee forfeits the option
with respect to any shares not vested on the termination date.

Termination or Amendment of the Plan. The Board may at any time amend,
discontinue, or terminate the Plan or any part thereof; however, unless
otherwise required by law, the rights of a participant may not be impaired
without the consent of such participant. In addition, without the approval of
the Company's shareholders, no amendment may be made which would increase the
aggregate number of shares of Common Stock that may be issued under the Plan,
change the definition of employees eligible to receive Awards under the Plan,
extend the maximum option period under the Plan, decrease the Option price of
any Option to less than 100% of the fair market value on the date of grant,
otherwise materially increase the benefits to participants in the Plan or cause
the Plan not to comply with certain applicable securities and tax law
requirements. Unless terminated earlier by the Board of Directors, the Plan will
expire on September 17, 2008.

Federal Tax Consequences. The following summarizes the consequences of the
grant and acquisition of Awards under the Plan for federal income tax purposes,
based on management's understanding of existing federal income tax laws. This
summary is necessarily general in nature and does not purport to be complete.
Also, state and local income tax consequences are not discussed and may vary
from locality to locality.

Options. Plan participants will not recognize taxable income at the time an
Option is granted under the Plan unless the Option has a readily ascertainable
market value at the time of grant. Management understands that Options to be
granted under the Plan will not have a readily ascertainable market value;
therefore, income will not be recognized by participants before the time of
exercise of an Option. For nonqualified stock options, the difference between
the fair market value of the shares at the time an Option is exercised and the
Option price generally will be treated as ordinary income to the optionee, in
which case the Company will be entitled to a deduction equal to the amount of
the optionee's ordinary income. With respect to incentive stock options,
participants will not realize income for federal income tax purposes as a result
of the exercise of such Options. In addition, if common stock acquired as a
result of the exercise of an incentive stock option is disposed of more than two
years after the date the Option is granted and more than one year after the date
the Option was exercised, the entire gain, if any, realized upon disposition of
such common stock will be treated for federal income tax purposes as capital
gain. Under these circumstances, no deduction will be allowable to the Company
in connection with either the grant or exercise of an incentive stock option.
Exceptions to the general rules apply in the case of a "disqualifying
disposition." If a participant disposes of shares of common stock acquired
pursuant to the exercise of an incentive stock option before the expiration of
one year after the date of exercise or two years after the date of grant, the
sale of such stock will be treated as a "disqualifying disposition." As a
result, such a participant would recognize ordinary income and the Company would
be entitled to a deduction in the year in which such disposition occurred.

The amount of the deduction and the ordinary income recognized upon a
disqualifying disposition would generally be equal to the lesser of: (a) the
sale price of the shares sold minus the Option price, or (b) the fair market
value of the shares at the time of exercise and minus the Option price. If the
disposition is to a related party (such as a spouse, brother, sister, lineal
descendant, or certain trusts for business entities in which the seller holds a
direct or indirect interest), the ordinary income recognized generally is equal
to the excess of the fair market value of the shares at the time of exercise
over the exercise price. Any additional gain recognized upon disposition, in
excess of the

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<PAGE>
ordinary income, will be taxable as capital gain. In addition, the exercise of
incentive stock options may result in an alternative minimum tax liability.

Restricted Stock. Recipients of shares of Restricted Stock that are not
"transferable" and are subject to "substantial risk of forfeiture" at the time
of grant will not be subject to federal income taxes until the lapse or release
of the restrictions on sale of the shares, unless the recipient files a specific
election under the Code to be taxed at the time of grant. The recipient's income
and the Company's deduction will be equal to the excess of the then fair market
value (or sale price) of the shares less any purchase price.

1998 Founding Directors Stock Option Plan

The Company has adopted and its shareholders have approved the Clarkston
Financial Corporation 1998 Founding Directors' Stock Option Plan (the "Directors
Plan"). The Directors Plan was adopted and approved on September 18, 1998. The
Directors Plan is intended to encourage stock ownership by nonemployee directors
of the Company and the Bank, and to provide those individuals with additional
incentive to manage the Company and the Bank effectively and to contribute to
its success. The Directors Plan is also intended to provide a form of
compensation that will attract and retain highly qualified individuals as
nonemployee members of the Board of Directors of the Company and the Bank.

Grant of Options. Options have been granted under the Directors Plan to
each of the directors of the Company and the Bank. See "--Stock Option Grants."
Options under the Plan may only be granted to directors who are not employed by
the Company or any subsidiary. Options are granted at no cost to the recipient.

The term of each option granted under the Directors Plan is 10 years from
the date of grant subject to earlier termination at the end of three months
following the director's termination of services as a director. The option price
for each option must equal 100% of the fair market value of the Company's Common
Stock on the date the option is granted. In general, no option may be
exercisable in whole or in part prior to the first anniversary of the date of
grant of the option. The Directors Plan does not obligate the Company, its Board
of Directors or its shareholders to retain an optionee as a director of the
Company or the Bank.

Administration. The Directors Plan is administered by a committee of the
Board of Directors (the "Directors Plan Committee"). The Directors Plan
Committee will be composed of at least three directors, each of whom is not an
employee of the Company. Each member of the Directors Plan Committee is required
to be a "disinterested person" within the meaning of Rule 16b-3 of the General
Rules and Regulations under the Securities and Exchange Act of 1934, as amended.
The Directors Plan Committee's authority is limited to interpreting the
provisions of the Directors Plan and supervising its administration, including
the power to adopt procedures and regulations for administrative purposes.

Shares Subject to Directors Plan. A total of 75,000 shares of the Company's
Common Stock are reserved for issuance under the Directors Plan. The shares of
Common Stock that may be issued under the Directors Plan pursuant to the
exercise of options will consist of authorized and unissued shares, which may
include shares reacquired by the Company. The Directors Plan provides for an
equitable adjustment in the number, kind, or price of shares of Common Stock
covered by options in the event the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares of the Company through stock dividends or similar changes. Shares
previously reserved for issuance under unexercised Options which terminate,
whether by expiration or otherwise, may again be reserved for issuance under a
subsequent award.

Mandatory Exercise or Forfeiture. The Directors Plan provides that the
Federal Reserve Board or the FDIC have the right to require the Director Plan
participants to exercise or forfeit their awards if the capital of the Company
or the Bank falls below the minimum capital required by applicable laws, rules
and regulations.

Vesting Schedule. The Committee has the authority to include vesting
requirements in any award. Pursuant to the Plan, each Option must include a
minimum vesting period of three years from the grant date during which the
options must vest in approximately equal percentages for the first three years
or for such longer vesting period as the Committee may determine.

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<PAGE>
Termination or Amendment of the Plan. The Board of Directors of the Company
may amend or terminate the Directors Plan with respect to shares not subject to
options at the time of amendment or termination. The Directors Plan may not be
amended without shareholder approval if the amendment would increase the maximum
number of shares that may be issued under the Directors Plan, extend the term of
the options, decrease the price at which options may be granted, remove the
administration of the Directors Plan from the Directors Plan Committee, change
the class of persons eligible to receive options or permit the granting of
options under the Directors Plan after September 17, 2008. Unless terminated
earlier by the Board of Directors, the Directors Plan will expire on September
17, 2008.

Transferability of Options and Common Stock. Generally, options granted
under the Directors Plan may be transferred only by will or according to the
laws of descent and distribution. Options may be exercised only by an optionee
or a permitted transferee during an optionee's lifetime. Upon the death of an
optionee, all Options held by the decedent, or his or her permitted transferees,
and not yet exercisable, become fully exercisable. Before issuing any shares
upon the exercise of an option, the Company may require the optionee to
represent in writing that the shares are being acquired for investment and not
for resale. The Company may also delay issuance of the shares until all
appropriate registrations or qualifications under federal and state securities
laws have been completed.

Federal Tax Consequences. The following summarizes the consequences of the
grant and exercise of options under the Directors Plan for federal income tax
purposes, based on management's understanding of existing federal income tax
laws. This summary is necessarily general in nature and does not purport to be
complete. Also, state and local income tax consequences are not discussed and
may vary from locality to locality.

Optionees will not recognize taxable income at the time an option is
granted under the Directors Plan unless the option has a readily ascertainable
market value at the time of grant. Management understands that options granted
under the Directors Plan will not have a readily ascertainable market value;
therefore, income will not be recognized by participants before the time of
exercise of an option. Because options granted under the Directors Plan will not
qualify as incentive stock options under the Code, the difference between the
fair market value of the shares at the time an option is exercised and the
option exercise price generally will be treated as ordinary income to the
optionee. The Company is entitled to a corresponding deduction equal to the
amount of an optionee's ordinary income.

Tax consequences to the holder of the shares will arise again at the time
the shares of Common Stock are sold. In general, if the shares have been held
for more than one year, the gain or loss will be treated as long-term capital
gain or loss, but, under current law, the shares must have been held for more
than 12 months for the most advantageous tax rate. Otherwise, the gain or loss
will be treated as short-term capital gain or loss. The amount of any gain or
loss will be calculated under the general principles for determining gain and
loss, and will equal the difference between the amount realized in the sale and
the tax basis of the shares of Common Stock. The tax basis will generally equal
the cost of the shares (the option exercise price paid) plus any income
recognized upon exercise of the option.

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<PAGE>
CERTAIN TRANSACTIONS

Lease of Real Property

The Bank is leasing a building in downtown Clarkston, Michigan for use as
the Bank's main office and the Company's headquarters. See
"Business--Properties." The Bank leases the building from a limited liability
company wholly owned by Messrs. Harrison, Adler, Beer, Clark, Fortinberry,
McIntyre, Olsen and Welker, each of whom is a director of the Company and the
Bank. Management of the Company believes that the terms of the lease are no less
favorable to the Company than could be obtained from non-affiliated parties.

Loans from Organizers

Over the past several months, organizers of the Bank have loaned
approximately $325,000 in aggregate amount to the Company to cover
organizational expenses of the Bank and the Company. Interest is payable on the
loans at the rate of 5.0% per annum. All of these loans will be repaid by the
Company from the net proceeds of the offering. Each of the organizers who has
loaned money to the Company is a member of the Company's Board of Directors.

Banking Transactions

It is anticipated that the directors and officers of the Company and the
Bank and the companies with which they are associated will have banking and
other transactions with the Company and the Bank in the ordinary course of
business. Any loans and commitments to lend to such affiliated persons or
entities included in such transactions will be made in accordance with all
applicable laws and regulations and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated parties of similar creditworthiness, and will not
involve more than normal risk or present other unfavorable features to the
Company and the Bank. Transactions between the Company or the Bank, and any
officer, director, principal shareholder, or other affiliate of the Company or
the Bank will be on terms no less favorable to the Company or the Bank than
could be obtained on an arms-length basis from unaffiliated independent third
parties.

Indemnification

The Articles of Incorporation of the Company and the Bank provide for the
indemnification of directors and officers of the Company and the Bank, including
reasonable legal fees, incurred by such directors and officers while acting for
or on behalf of the Company or the Bank as a director or officer, subject to
certain limitations. See "Description of Capital Stock -- Anti-Takeover
Provisions." The Company has purchased directors' and officers' liability
insurance for directors and officers of the Company and the Bank.

Subsequent Transactions

All future material transactions between the Company and its affiliates
will be entered into on terms that are no less favorable to the Company than
those which can be obtained from unaffiliated third parties. Any such
transactions, including any issuance of preferred stock and any actions with
respect to the lease for the building, will be approved by a majority of the
Company's independent directors who do not have an interest in the transaction
and who have had access, at the Company's expense, to the Company's legal
counsel.

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<PAGE>
PRINCIPAL SHAREHOLDERS

The Company has to date issued only one share of Common Stock. The
following table sets forth certain information with respect to the anticipated
beneficial ownership of the Company's Common Stock after the sale of shares
offered hereby, by (i) each person expected by the Company to beneficially own
more than 5% of the outstanding Common Stock; (ii) each of the current directors
and executive officers of the Company; and (iii) all such directors and
executive officers of the Company as a group. Pursuant to the Underwriting
Agreement between the Company and the Underwriter (the "Underwriting
Agreement"), the Company will direct the Underwriter to offer to sell the number
of shares listed below to the directors and executive officers listed below. All
share numbers are provided based upon such directions from the Company and
non-binding expressions of interest supplied by the persons listed below.
Depending upon their individual circumstances at the time, each of such persons
may purchase a greater or fewer number of shares than indicated, and in fact may
purchase no shares.

25
<PAGE>
<TABLE>
Number of Shares Percent of
Beneficially Owned Outstanding Shares
Name and Address After Offering(1) After the Offering
<S> <C> <C>
David T. Harrison
8299 Deerwood Road
Clarkston, MI 48348...................
James L. Richardson
6628 Deer Ridge
Clarkston, MI 48348...................
Edwin L. Adler
900 Lake Angelus Shores
Lake Angelus, MI 48326................
Louis D. Beer
9100 Fox Hollow
Clarkston, MI 48348...................
William J. Clark
2575 Hathon
Waterford, MI 48329...................
Charles L. Fortinberry, II
9853 Pine Knob Road
Clarkston, MI 48348...................
Bruce H. McIntyre
4121 Pontiac Trail
Orchard Lake, MI 48323................
Robert A. Olsen
6950 Langle Drive
Clarkston, MI 48346...................
John H. Welker
3465 Whitfield
Waterford, MI 48329...................

All executive officers and directors
as a group (9 persons) (3)(4).........

- ----------------------
*Less than 1.0%
</TABLE>
(1) Some or all of the Common Stock listed may be held jointly with, or for
the benefit of, spouses and children of, or various trusts established
by, the person indicated.

(2) For purposes of this disclosure, shares are considered to be
"beneficially" owned if the person has, or shares the power to vote or
direct the voting of shares, the power to dispose of or direct the
disposition of the shares or the right to acquire beneficial ownership
within 60 days. Except as otherwise set forth in the following
footnotes, directors and officers have sole voting and investment power
or share voting and investment power with their wives.

(3) Based upon the number of shares of Common Stock that the persons
indicated have informed the Company that they intend to purchase in
this Offering.

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<PAGE>
SUPERVISION AND REGULATION

The following is a summary of certain statutes and regulations affecting
the Company and the Bank. This summary is qualified in its entirety by such
statutes and regulations. A change in applicable laws or regulations may have a
material effect on the Company, the Bank and the business of the Company and the
Bank.

General

Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Company and the Bank can be affected not only by management
decisions and general economic conditions, but also by the statutes administered
by, and the regulations and policies of, various governmental regulatory
authorities. Those authorities include, but are not limited to, the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), the FDIC,
the Commissioner of the Michigan Financial Institutions Bureau ("Commissioner"),
the Internal Revenue Service, and state taxing authorities. The effect of such
statutes, regulations and policies can be significant, and cannot be predicted
with a high degree of certainty.

Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, lending activities and practices, the nature and amount of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to the Company
and the Bank establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDIC's deposit
insurance funds, the depositors of the Bank, and the public, rather than
shareholders of the Bank or the Company.

Federal law and regulations establish supervisory standards applicable to
the lending activities of the Bank, including internal controls, credit
underwriting, loan documentation and loan-to-value ratios for loans secured by
real property.

The Company

General. The Company has applied for approval of the Commissioner, and on
_________, 1998, applied for approval of the Federal Reserve Board, to acquire
all of the capital stock to be issued by the Bank in connection with its
organization. When the Company becomes the sole shareholder of the Bank, the
Company will be a bank holding company and, as such, is registered with, and
subject to regulation by, the Federal Reserve Board under the Bank Holding
Company Act, as amended (the "BHCA"). Under the BHCA, the Company will be
subject to periodic examination by the Federal Reserve Board, and will be
required to file with the Federal Reserve Board periodic reports of its
operations and such additional information as the Federal Reserve Board may
require.

In accordance with Federal Reserve Board policy, the Company will be
expected to act as a source of financial strength to the Bank and to commit
resources to support the Bank in circumstances where the Company might not do so
absent such policy. In addition, if the Commissioner deems the Bank's capital to
be impaired, the Commissioner may require the Bank to restore its capital by a
special assessment upon the Company as the Bank's sole shareholder. If the
Company were to fail to pay any such assessment, the directors of the Bank would
be required, under Michigan law, to sell the shares of the Bank's stock owned by
the Company to the highest bidder at either a public or private auction and use
the proceeds of the sale to restore the Bank's capital.

Investments and Activities. In general, any direct or indirect acquisition
by the Company of any voting shares of any bank which would result in the
Company's direct or indirect ownership or control of more than 5% of any class
of voting shares of such bank, and any merger or consolidation of the Company
with another bank company, will require the prior written approval of the
Federal Reserve Board under the BHCA. In acting on such applications, the
Federal Reserve Board must consider various statutory factors, including among
others, the effect of the proposed transaction on competition in relevant
geographic and product markets, and each party's financial condition, managerial
resources, and record of performance under the Community Reinvestment Act.
Effective September 29, 1995, bank holding companies may acquire banks located
in any state in the United States without regard to geographic restrictions or

27
<PAGE>
reciprocity requirements imposed by state law, but subject to certain
conditions, including limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured depository institution
affiliates.

The merger or consolidation of an existing bank subsidiary of the Company
with another bank, or the acquisition by such a subsidiary of assets of another
bank, or the assumption of liability by such a subsidiary to pay any deposits in
another bank, will require the prior written approval of the responsible Federal
depository institution regulatory agency under the Bank Merger Act, based upon a
consideration of statutory factors similar to those outlined above with respect
to the BHCA. In addition, in certain such cases an application to, and the prior
approval of, the Federal Reserve Board under the BHCA and/or the Commissioner
under the Michigan Banking Code, may be required.

With certain limited exceptions, the BHCA prohibits any bank company from
engaging, either directly or indirectly through a subsidiary, in any activity
other than managing or controlling banks unless the proposed non-banking
activity is one that the Federal Reserve Board has determined to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. Under current Federal Reserve Board regulations, such permissible
non-banking activities include such things as mortgage banking, equipment
leasing, securities brokerage, and consumer and commercial finance company
operations. As a result of recent amendments to the BHCA, well- capitalized and
well-managed bank holding companies may engage de novo in certain types of
non-banking activities without prior notice to, or approval of, the Federal
Reserve Board, provided that written notice of the new activity is given to the
Federal Reserve Board within 10 business days after the activity is commenced.
If a bank company wishes to engage in a non-banking activity by acquiring a
going concern, prior notice and/or prior approval will be required, depending
upon the activities in which the company to be acquired is engaged, the size of
the company to be acquired and the financial and managerial condition of the
acquiring bank company.

In evaluating a proposal to engage (either de novo or through the
acquisition of a going concern) in a non-banking activity, the Federal Reserve
Board will consider various factors, including among others the financial and
managerial resources of the bank company, and the relative public benefits and
adverse effects which may be expected to result from the performance of the
activity by an affiliate of the bank company. The Federal Reserve Board may
apply different standards to activities proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.

Capital Requirements. The Federal Reserve Board uses capital adequacy
guidelines in its examination and regulation of bank holding companies. If
capital falls below minimum guidelines, a bank company may, among other things,
be denied approval to acquire or establish additional banks or non-bank
businesses.

The Federal Reserve Board's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: (i) a
leverage capital requirement expressed as a percentage of total assets, and (ii)
a risk-based requirement expressed as a percentage of total risk-weighted
assets. The leverage capital requirement consists of a minimum ratio of Tier 1
capital (which consists principally of shareholders' equity) to total assets of
3% for the most highly rated companies, with minimum requirements of 4% to 5%
for all others. The risk- based requirement consists of a minimum ratio of total
capital to total risk-weighted assets of 8%, of which at least one-half must be
Tier 1 capital.

The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum requirements, and higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. For example, Federal Reserve Board regulations provide that
additional capital may be required to take adequate account of, among other
things, interest rate risk and the risks posed by concentrations of credit,
nontraditional activities or securities trading activities. Further, any banking
organization experiencing or anticipating significant growth would be expected
to maintain capital ratios, including tangible capital positions (i.e., Tier 1
capital less all intangible assets), well above the minimum levels.

Dividends. The Company is a corporation separate and distinct from the
Bank. Most of the Company's revenues will be received by it in the form of
dividends, if any, paid by the Bank. Thus, the Company's ability to pay
dividends to its shareholders will indirectly be limited by statutory
restrictions on its ability to pay dividends. See "The Bank - Dividends."
Further, the Federal Reserve Board has issued a policy statement on the payment
of cash dividends by bank holding companies. In the policy statement, the
Federal Reserve Board expressed its view that a bank company

28
<PAGE>
experiencing earnings weaknesses should not pay cash dividends exceeding its net
income or which can only be funded in ways that weakened the bank company's
financial health, such as by borrowing. Additionally, the Federal Reserve Board
possesses enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or unsound
practices or violations of applicable statutes and regulations. Among these
powers is the ability to proscribe the payment of dividends by banks and bank
holding companies. Similar enforcement powers over the Bank are possessed by the
FDIC. The "prompt corrective action" provisions of federal law and regulation
authorizes the Federal Reserve Board to restrict the payment of dividends by the
Company for an insured bank which fails to meet specified capital levels.

In addition to the restrictions on dividends imposed by the Federal Reserve
Board, the Michigan Business Corporation Act provides that dividends may be
legally declared or paid only if after the distribution a corporation, such as
the Company, can pay its debts as they come due in the usual course of business
and its total assets equal or exceed the sum of its liabilities plus the amount
that would be needed to satisfy the preferential rights upon dissolution of any
holders of preferred stock whose preferential rights are superior to those
receiving the distribution. The Company is authorized to issue preferred stock
but it has no current plans to issue any such preferred stock.

The Bank

General. Upon completion of its organization, the Bank will be a Michigan
banking corporation and its deposit accounts will be insured by the Bank
Insurance Fund (the "BIF") of the FDIC. As a BIF-insured Michigan chartered
bank, the Bank will be subject to the examination, supervision, reporting and
enforcement requirements of the Commissioner, as the chartering authority for
Michigan banks, and the FDIC, as administrator of the BIF. These agencies and
the federal and state laws applicable to the Bank and its operations,
extensively regulate various aspects of the banking business including, among
other things, permissible types and amounts of loans, investments and other
activities, capital adequacy, branching, interest rates on loans and on
deposits, the maintenance of non-interest bearing reserves on deposit accounts,
and the safety and soundness of banking practices.

Deposit Insurance. As an FDIC-insured institution, the Bank will be
required to pay deposit insurance premium assessments to the FDIC. The FDIC has
adopted a risk-based assessment system under which all insured depository
institutions are placed into one of nine categories and assessed insurance
premiums, based upon their respective levels of capital and results of
supervisory evaluation. Institutions classified as well-capitalized (as defined
by the FDIC) and considered healthy pay the lowest premium while institutions
that are less than adequately capitalized (as defined by the FDIC) and
considered of substantial supervisory concern pay the highest premium. Risk
classification of all insured institutions is made by the FDIC for each
semi-annual assessment period.

The Federal Deposit Insurance Act ("FDIA") requires the FDIC to establish
assessment rates at levels which will maintain the Deposit Insurance Fund at a
mandated reserve ratio of not less than 1.25% of estimated insured deposits.
Accordingly, the FDIC established the schedule of BIF insurance assessments for
the first semi-annual assessment period of 1998, ranging from 0% of deposits for
institutions in the lowest risk category to .27% of deposits for institutions in
the highest risk category.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound practices, or have
violated any applicable law, regulation, order, or any condition imposed in
writing by, or written agreement with, the FDIC, or if the institution is in an
unsafe or unsound condition to continue operations. The FDIC may also suspend
deposit insurance temporarily during the hearing process for a permanent
termination of insurance if the institution has no tangible capital.

Commissioner Assessments. Michigan banks are required to pay supervisory
fees to the Commissioner to fund the operations of the Commissioner. The amount
of supervisory fees paid by a bank is based upon the bank's total assets, as
reported to the Commissioner.

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<PAGE>
FICO Assessments. Pursuant to federal legislation enacted September 30,
1996, the Bank, as a member of the BIF, is subject to assessments to cover the
payments on outstanding obligations of the Financing Corporation ("FICO"). FICO
was created in 1987 to finance the recapitalization of the Federal Savings and
Loan Insurance Corporation, the predecessor to the FDIC's Savings Association
Insurance Fund (the "SAIF") which insures the deposits of thrift institutions.
Until January 1, 2000, the FICO assessments made against BIF members may not
exceed 20% of the amount of FICO assessments made against SAIF members.
Currently, SAIF members pay FICO assessments at a rate equal to approximately
0.063% of deposits while BIF members pay FICO assessments at a rate equal to
approximately 0.013% of deposits. Between January 1, 2000 and the maturity of
the outstanding FICO obligations in 2019, BIF members and SAIF members will
share the cost of the interest on the FICO bonds on a pro rata basis. It is
estimated that FICO assessments during this period will be less than 0.025% of
deposits

Capital Requirements. The FDIC has established the following minimum
capital standards for state-chartered, FDIC-insured non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total assets of 3% for the most highly-rated banks with minimum requirements
of 4% to 5% for all others, and a risk-based capital requirement consisting of a
minimum ratio of total capital to total risk-weighted assets of 8%, at least
one-half of which must be Tier 1 capital. Tier 1 capital consists principally of
shareholders' equity. These capital requirements are minimum requirements.
Higher capital levels will be required if warranted by the particular
circumstances or risk profiles of individual institutions. For example, FDIC
regulations provide that higher capital may be required to take adequate account
of, among other things, interest rate risk and the risks posed by concentrations
of credit, nontraditional activities or securities trading activities. As a
condition to regulatory approval of the Bank's formation, the Bank will be
required to have an initial capitalization sufficient to provide a ratio of Tier
1 capital to total estimated assets of at least 8% at the end of the third year
of operation.

Federal law provides the federal banking regulators with broad power to
take prompt corrective action to resolve the problems of undercapitalized
institutions. The extent of the regulators' powers depends on whether the
institution in question is "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." Federal regulations define these capital categories as
follows:
<TABLE>

Total Tier 1
Risk-Based Risk-Based
Capital Ratio Capital Ratio Leverage Ratio
<S> <C> <C> <C>
Well capitalized 10% or above 6% or above 5% or above
Adequately capitalized 8% or above 4% or above 4% or above
Undercapitalized Less than 8% Less than 4% Less than 4%
Significantly undercapitalized Less than 6% Less than 3% Less than 3%
Critically undercapitalized -- -- A ratio of tangible
equity to total assets
of 2% or less
</TABLE>
Depending upon the capital category to which an institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired; restricting transactions with
affiliates; restricting the interest rate the institution may pay on deposits;
ordering a new election of directors of the institution; requiring that senior
executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain subsidiaries; prohibiting the payment of principal or interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

In general, a depository institution may be reclassified to a lower
category than is indicated by its capital levels if the appropriate federal
depository institution regulatory agency determines the institution to be
otherwise in an unsafe or unsound condition or to be engaged in an unsafe or
unsound practice. This could include a failure by the institution, following
receipt of a less-than-satisfactory rating on its most recent examination
report, to correct the deficiency.

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<PAGE>
Dividends. Under Michigan law, the Bank will be restricted as to the
maximum amount of dividends it may pay on its common stock. The Bank may not pay
dividends except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend unless the bank will have
a surplus amounting to at least 20% of its capital after the payment of the
dividend. If the Bank has a surplus less than the amount of its capital, it may
not declare or pay any dividend until an amount equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual dividends) has been transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of shareholders owning 2/3 of the stock eligible to vote increase its
capital stock by a declaration of a stock dividend, provided that after the
increase the bank's surplus equals at least 20% of its capital stock, as
increased. The Bank may not declare or pay any dividend until the cumulative
dividends on preferred stock (should any such stock be issued and outstanding)
have been paid in full. The Bank's Articles of Incorporation do not authorize
the issuance of preferred stock and there are no current plans to seek such
authorization.

Federal law generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its company if the depository institution would thereafter be
undercapitalized. The FDIC may prevent an insured bank from paying dividends if
the bank is in default of payment of any assessment due to the FDIC. In
addition, the FDIC may prohibit the payment of dividends by the Bank, if such
payment is determined, by reason of the financial condition of the Bank, to be
an unsafe and unsound banking practice.

Insider Transactions. The Bank will be subject to certain restrictions
imposed by the Federal Reserve Act on any extensions of credit to the Company or
its subsidiaries, on investments in the stock or other securities of the Company
or its subsidiaries and the acceptance of the stock or other securities of the
Company or its subsidiaries as collateral for loans. Certain limitations and
reporting requirements are also placed on extensions of credit by the Bank to
its directors and officers, to directors and officers of the Company and its
subsidiaries, to principal shareholders of the Company, and to "related
interests" of such directors, officers and principal shareholders. In addition,
federal law and regulations may affect the terms upon which any person becoming
a director or officer of the Company or one of its subsidiaries or a principal
shareholder of the Company may obtain credit from banks with which the Bank
maintains a correspondent relationship.

Safety and Soundness Standards. The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally insured depository
institutions. These guidelines establish standards for internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, fees and
benefits, asset quality and earnings. In general, the guidelines prescribe the
goals to be achieved in each area, and each institution will be responsible for
establishing its own procedures to achieve those goals. If an institution fails
to comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the institution to submit a
plan for achieving and maintaining compliance. The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such severity that it
could threaten the safe and sound operation of the institution. Failure to
submit an acceptable compliance plan , or failure to adhere to a compliance plan
that has been accepted by the appropriate regulator, would constitute grounds
for further enforcement action.

State Bank Activities. Under federal law and FDIC regulations, FDIC-insured
state banks are prohibited, subject to certain exceptions, from making or
retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. Federal law, as implemented by FDIC
regulations, also prohibits FDIC-insured state banks and their subsidiaries,
subject to certain exceptions, from engaging as principal in any activity that
is not permitted for a national bank or its subsidiary, respectively, unless the
bank meets, and continues to meet, its minimum regulatory capital requirements
and the FDIC determines the activity would not pose a significant risk to the
deposit insurance fund of which the bank is a member. Impermissible investments
and activities must be divested or discontinued within certain time frames set
by the FDIC in accordance with federal law. These restrictions are not currently
expected to have a material impact on the operations of the Bank.

31
<PAGE>
Consumer Protection Laws. The Bank's business is expected to include making
a variety of types of loans to individuals. In making these loans, the Bank will
be subject to State usury and regulatory laws and to various federal statutes,
such as the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Truth in Lending Act, the Real Estate Settlement Procedures Act, and the Home
Mortgage Disclosure Act, and the regulations promulgated thereunder, which
prohibit discrimination, specify disclosures to be made to borrowers regarding
credit and settlement costs, and regulate the mortgage loan servicing activities
of the Bank, including the maintenance and operation of escrow accounts and the
transfer of mortgage loan servicing. In receiving deposits, the Bank will be
subject to extensive regulation under State and federal law and regulations,
including the Truth in Savings Act, the Expedited Funds Availability Act, the
Bank Secrecy Act, the Electronic Funds Transfer Act, and the Federal Deposit
Insurance Act. Violation of these laws could result in the imposition of
significant damages and fines upon the Bank and its directors and officers.

Branching Authority. Michigan banks, such as the Bank, have the authority
under Michigan law to establish branches anywhere in the State of Michigan,
subject to receipt of all required regulatory approvals (including the approval
of the Commissioner and the FDIC).

Effective June 1, 1997 (or earlier if expressly authorized by applicable
state law), the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "IBBEA") allows banks to establish interstate branch networks through
acquisitions of other banks, subject to certain conditions, including certain
limitations on the aggregate amount of deposits that may be held by the
surviving bank and all of its insured depository institution affiliates. The
establishment of de novo interstate branches or the acquisition of individual
branches of a bank in another state (rather than the acquisition of an
out-of-state bank in its entirety) is allowed by IBBEA only if specifically
authorized by state law. The legislation allowed individual states to "opt-out"
of interstate branching authority by enacting appropriate legislation prior to
June 1, 1997.

Michigan did not opt out of IBBEA, and now permits both U.S. and non-U.S.
banks to establish branch offices in Michigan. The Michigan Banking Code
permits, in appropriate circumstances and with the approval of the Commissioner,
(i) the acquisition of all or substantially all of the assets of a
Michigan-chartered bank by an FDIC- insured bank, savings bank, or savings and
loan association located in another state, (ii) the acquisition by a Michigan-
chartered bank of all or substantially all of the assets of an FDIC-insured
bank, savings bank or savings and loan association located in another state,
(iii) the consolidation of one or more Michigan-chartered banks and FDIC-insured
banks, savings banks or savings and loan associations located in other states
having laws permitting such consolidation, with the resulting organization
chartered by Michigan, (iv) the establishment by a foreign bank, which has not
previously designated any other state as its home state under the International
Banking Act of 1978, of branches located in Michigan, and (v) the establishment
or acquisition of branches in Michigan by FDIC-insured banks located in other
states, the District of Columbia or U.S. territories or protectorates having
laws permitting Michigan-chartered banks to establish branches in such
jurisdiction. Further, the Michigan Banking Code permits, upon written notice to
the Commissioner, (i) the acquisition by a Michigan-chartered bank of one or
more branches (not comprising all or substantially all of the assets) of an
FDIC-insured bank, savings bank or savings and loan association located in
another state, the District of Columbia, or a U.S. territory or protectorate,
(ii) the establishment by Michigan-chartered banks of branches located in other
states, the District of Columbia, or U.S. territories or protectorates, and
(iii) the consolidation of one or more Michigan-chartered banks and FDIC-insured
banks, savings banks or savings and loan associations located in other states,
with the resulting organization chartered by one of such other states.

32
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock. As of the date of this Prospectus, there is one share of Common
Stock issued and outstanding. No shares of Preferred Stock have been issued by
the Company.

Michigan law allows the Company's Board of Directors to issue additional
shares of stock up to the total amount of Common Stock authorized without
obtaining the prior approval of the shareholders.

Common Stock

Dividend Rights. Subject to any prior rights of holders of Preferred Stock
then outstanding, the holders of the Common Stock will be entitled to dividends
when, as and if declared by the Company's Board of Directors out of funds
legally available therefor. Under Michigan law, dividends may be legally
declared or paid only if after the distribution the corporation can pay its
debts as they come due in the usual course of business and the corporation's
total assets equal or exceed the sum of its liabilities plus the amount that
would be needed to satisfy the preferential rights upon dissolution of any
holders of Preferred Stock then outstanding whose preferential rights are
superior to those receiving the distribution. See "Supervision and Regulation --
The Bank -- Dividends."

Funds for the payment of dividends by the Company are expected to be
obtained primarily from dividends of the Bank. There can be no assurance that
the Company will have funds available for dividends, or that if they are
available, that dividends will be declared by the Company's Board of Directors.
As the Bank is not expected to be profitable during its start up period, the
Company does not expect to be in a position to declare dividends at any time in
the near future.

Voting Rights. Subject to the rights, if any, of holders of shares of
Preferred Stock then outstanding, all voting rights are vested in the holders of
shares of Common Stock. Each share of Common Stock entitles the holder thereof
to one vote on all matters, including the election of directors. Shareholders of
the Company do not have cumulative voting rights.

Preemptive Rights. Holders of Common Stock do not have preemptive rights.

Liquidation Rights. Subject to any rights of any Preferred Stock then
outstanding, holders of Common Stock are entitled to share on a pro rata basis
in the net assets of the Company which remain after satisfaction of all
liabilities.

Reports to Shareholders. The Company will furnish its shareholders with
annual reports containing audited financial information and, for the first three
quarters of each fiscal year, quarterly reports containing unaudited financial
information. See "Available Information."

Shares Available for Issuance. The availability for issuance of a
substantial number of shares of Common Stock and Preferred Stock at the
discretion of the Board of Directors will provide the Company with the
flexibility to take advantage of opportunities to issue such stock in order to
obtain capital, as consideration for possible acquisitions and for other
purposes (including, without limitation, the issuance of additional shares
through stock splits and stock dividends in appropriate circumstances). There
are, at present, no plans, understandings, agreements or arrangements concerning
the issuance of additional shares of the Company capital stock, except for the
shares of Common Stock reserved for issuance under the Company's stock
compensation and stock option plans.

Uncommitted authorized but unissued shares of Common Stock may be issued
from time to time to such persons and for such consideration as the Board of
Directors of the Company may determine and holders of the then outstanding
shares of Common Stock may or may not be given the opportunity to vote thereon,
depending upon the nature of any such transactions, applicable law and the
judgment of the Board of Directors of the Company regarding the submission of
such issuance to the Company's shareholders. As noted, the Company's
shareholders will have no preemptive rights to subscribe to newly issued shares.

33
<PAGE>
Moreover, it will be possible that additional shares of Common Stock would
be issued for the purpose of making an acquisition by an unwanted suitor of a
controlling interest in the Company more difficult, time consuming or costly or
would otherwise discourage an attempt to acquire control of the Company. Under
such circumstances, the availability of authorized and unissued shares of Common
Stock may make it more difficult for shareholders to obtain a premium for their
shares. Such authorized and unissued shares could be used to create voting or
other impediments or to frustrate a person seeking to obtain control of the
Company by means of a merger, tender offer, proxy contest or other means. Such
shares could be privately placed with purchasers who might cooperate with the
Board of Directors of the Company in opposing such an attempt by a third party
to gain control of the Company. The issuance of new shares of Common Stock could
also be used to dilute ownership of a person or entity seeking to obtain control
of the Company. Although the Company does not currently contemplate taking any
such action, shares of Company capital stock could be issued for the purposes
and effects described above, and the Board of Directors reserves its rights (if
consistent with its fiduciary responsibilities) to issue such stock for such
purposes.

Transfer Agent. _______________ of ___________ serves as the transfer agent
of the Company's Common Stock.

Preferred Stock

The Company's Articles of Incorporation do not authorize any shares of
Preferred Stock.

Description of Certain Statutory and Charter Provisions

In addition to the utilization of authorized but unissued shares as
described above, the Company's Articles and the Michigan Business Corporation
Act (the "MBCA") contain other provisions which could be utilized by Company to
impede certain efforts to acquire control of the Company. Those provisions
include the following:

Control Share Act. The MBCA contains provisions intended to protect
shareholders and prohibit or discourage certain types of hostile takeover
activities. These provisions regulate the acquisition of "control shares" of
large public Michigan corporations (the "Control Share Act").

The Control Share Act establishes procedures governing "control share
acquisitions." A control share acquisition is defined as an acquisition of
shares by an acquirer which, when combined with other shares held by that person
or entity, would give the acquirer voting power at or above any of the following
thresholds: 20%, 33-1/3% or 50%. Under the Control Share Act, an acquirer may
not vote "control shares" unless the corporation's disinterested shareholders
vote to confer voting rights on the control shares. The acquiring person,
officers of the target corporation, and directors of the target corporation who
are also employees of the corporation are precluded from voting on the issue of
whether the control shares shall be accorded voting rights. The Control Share
Act does not affect the voting rights of shares owned by an acquiring person
prior to the control share acquisition.

The Control Share Act entitles corporations to redeem control shares from
the acquiring person under certain circumstances. In other cases, the Control
Share Act confers dissenters' rights upon all of a corporation's shareholders
except the acquiring person.

The Control Share Act applies only to an "issuing public corporation." The
Company falls within the statutory definition of an "issuing public
corporation." The Control Share Act automatically applies to any "issuing public
corporation" unless the corporation "opts out" of the statute by so providing in
its articles of incorporation or bylaws. The Company has not "opted out" of the
Control Share Act.

Fair Price Act. Certain provisions of the MBCA (the "Fair Price Act")
establish a statutory scheme similar to the supermajority and fair price
provisions found in many corporate charters. The Fair Price Act provides that a
supermajority vote of 90% of the shareholders and no less than two-thirds of the
votes of non-interested shareholders must approve a "business combination." The
Fair Price Act defines a "business combination" to encompass any merger,
consolidation, share exchange, sale of assets, stock issue, liquidation, or
reclassification of securities involving an "interested shareholder" or certain
"affiliates." An "interested shareholder" is generally any person who owns 10%
or

34
<PAGE>
more of the outstanding voting shares of the company. An "affiliate" is a person
who directly or indirectly controls, is controlled by, or is under common
control with a specified person.

The supermajority vote required by the Fair Price Act does not apply to
business combinations that satisfy certain conditions. These conditions include,
among others, that: (i) the purchase price to be paid for the shares of the
company is at least equal to the greater of (a) the market value of the shares
or (b) the highest per share price paid by the interested shareholder within the
preceding two-year period or in the transaction in which the shareholder became
an interested shareholder, whichever is higher; (ii) once a person has become an
interested shareholder, the person must not become the beneficial owner of any
additional shares of the company except as part of the transaction which
resulted in the interested shareholder becoming an interested shareholder or by
virtue of proportionate stock splits or stock dividends; and (iii) five (5)
years have elapsed between the date of the interested shareholder becoming an
interested shareholder and the date the business combination is consummated.

The requirements of the Fair Price Act do not apply to business
combinations with an interested shareholder that the Board of Directors has
approved or exempted from the requirements of the Fair Price Act by resolution
at any time prior to the time that the interested shareholder first became an
interested shareholder.

Classified Board. The Board of Directors of the Company is classified into
three classes, with each class serving a staggered, three-year term.
Classification of the Board could have the effect of extending the time during
which the existing Board of Directors could control the operating policies of
Company even though opposed by the holders of a majority of the outstanding
shares of Common Stock.

Under the Company's Articles, all nominations for directors by a
shareholder must be delivered to the Company in writing at least 60, but not
more than 90, days prior to the annual meeting of the shareholders. A nomination
that is not received within this period will not be placed on the ballot. The
Board believes that advance notice of nominations by shareholders will afford a
meaningful opportunity to consider the qualifications of the proposed nominees
and, to the extent deemed necessary or desirable by the Board of Directors, will
provide an opportunity to inform shareholders about such qualifications.
Although this nomination procedure does not give the Board of Directors any
power to approve or disapprove of shareholder nominations for the election of
directors, this nomination procedure may have the effect of precluding a
nomination for the election of directors at a particular annual meeting if the
proper procedures are not followed.

The Company's Articles provide that any one or more directors may be
removed at any time, with or without cause, but only by either: (i) the
affirmative vote of a majority of "Continuing Directors" and at least 80% of the
directors; or (ii) the affirmative vote, at a meeting of the shareholders called
for that purpose, of the holders of at least 80% of the voting power of the
then-outstanding shares of capital stock of the Company entitled to vote
generally in the election of directors, voting together as a single class. A
"Continuing Director" is generally defined in the Articles as any member of the
Board who is unaffiliated with any "interested shareholder" (generally, an owner
of 10% or more of the Company's outstanding voting shares) and was a member of
the Board prior to the time an interested shareholder became an interested
shareholder, and any successor of a Continuing Director who is unaffiliated with
an interested shareholder and is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board.

Any vacancies in the Board of Directors for any reason, and any newly
created directorships resulting from any increase in the number of directors,
may be filled only by the Board of Directors, acting by an affirmative vote of a
majority of the Continuing Directors and an 80% majority of all of the directors
then in office, although less than a quorum. Any directors so chosen shall hold
office until the next annual meeting of shareholders at which directors are
elected to the class to which such a director was named and until their
respective successors shall be duly elected and qualified or their resignation
or removal. No decrease in the number of directors may shorten the term of any
incumbent director.

Notice of Shareholder Proposals. Under the Company's Articles, the only
business that may be conducted at an annual or special meeting of shareholders
is business that has been brought before the meeting by or at the direction of
the majority of the directors or by a shareholder of the Company: (i) who
provides timely notice of the proposal in writing to the secretary of the
Company and the proposal is a proper subject for action by shareholders under

35
<PAGE>
Michigan law or (ii) whose proposal is included in the Company's proxy materials
in compliance with all the requirements set forth in the applicable rules and
regulations of the Securities and Exchange Commission. To be timely, a
shareholder's notice of proposal must be delivered to, or mailed to and received
at the principal executive offices of the Company not less than 60 days prior to
the date of the originally scheduled annual meeting regardless of any
postponements, deferrals or adjournments of that meeting to a later date. With
respect to special meetings, notice must be received by the Company not more
than 10 days after the Company mails notice of the special meeting. The
shareholder's notice of proposal must set forth in writing each matter the
shareholder proposes to bring before the meeting including: (i) the name and
address of the shareholder submitting the proposal, as it appears on the
Company's books and records; (ii) a representation that the shareholder: (a) is
a holder of record of stock of the Company entitled to vote at the meeting, (b)
will continue to hold such stock through the date on which the meeting is held,
and (c) intends to vote in person or by proxy at the meeting and to submit the
proposal for shareholder vote; (iii) a brief description of the proposal desired
to be submitted to the meeting for shareholder vote and the reasons for
conducting such business at the meeting; and (iv) the description of any
financial or other interest of the shareholder in the proposal. This procedure
may limit to some degree the ability of shareholders to initiate discussions at
annual shareholders meetings. It may also preclude the conducting of business at
a particular meeting if the proposed notice procedures have not been followed.

Certain Shareholder Action. The Company's Articles require that any
shareholder action must be taken at an annual or special meeting of
shareholders, that any meeting of shareholders must be called by the Board of
Directors or the Chairman of the Board, and prohibit shareholder action by
written consent. Shareholders of the Company are not permitted to call a special
meeting of shareholders or require that the Board call such a special meeting.
The MBCA permits shareholders holding in the aggregate 10% or more of all of the
shares entitled to vote at a meeting to request the Circuit Court of the County
in which the Company's principal place of business or registered office is
located to order a special meeting of shareholders for good cause shown.

Amendment or Repeal of Certain Provisions of the Articles. Under Michigan
law, the Board of Directors need not adopt a resolution setting forth an
amendment to the Articles before the shareholders may vote on it. Unless the
Articles provide otherwise, amendments of the Articles generally require the
approval of the holders of a majority of the outstanding stock entitled to vote
thereon, and if the amendment would increase or decrease the number of
authorized shares of any class or series, or the par value of such shares, or
would adversely affect the rights, powers, or preferences of such class or
series, a majority of the outstanding stock of such class or series also would
be required to approve the amendment.

The Company's Articles require that in order to amend, repeal or adopt any
provision inconsistent with Article VIII relating to the Board of Directors,
Article IX relating to shareholder proposals or Article X with respect to
certain shareholder action, the affirmative vote of at least 80% of the issued
and outstanding shares of Common Stock entitled to vote in the election of
directors, voting as a single class must be received; provided, however, that
such amendment or repeal or inconsistent provision may be made by a majority
vote of such shareholders at any meeting of the shareholders duly called and
held where such amendment has been recommended for approval by at least 80% of
all directors then holding office and by a majority of the "continuing
directors." These amendment provisions could render it more difficult to remove
management or for a person seeking to effect a merger or otherwise gain control
of the Company. These amendment requirements could, therefore adversely affect
the potential realizable value of shareholders' investments.

Board Evaluation of Certain Offers. Article XII of the Company's Articles
provides that the Board of Directors shall not approve, adopt or recommend any
offer of any person or entity (other than the Company) to make a tender or
exchange offer for any Common Stock, to merge or consolidate the Company with
any other entity, or to purchase or acquire all or substantially all of the
Company's assets, unless and until the Board has evaluated the offer and
determined that it would be in compliance with all applicable laws and that the
offer is in the best interests of the Company and its shareholders. In doing so,
the Board may rely on an opinion of legal counsel who is independent from the
offeror, and/or it may test such legal compliance in front of any court or
agency that may have appropriate jurisdiction over the matter.

In making its determination, the Board must consider all factors it deems
relevant, including but not limited to: (i) the adequacy and fairness of the
consideration to be received by the Company and/or its shareholders, considering

36
<PAGE>
historical trading prices of the capital stock of the Company, the price that
could be achieved in a negotiated sale of the Company as a whole, past offers,
and the future prospects of the Company; (ii) the potential social and economic
impact of the proposed transaction on the Company, its subsidiaries, its
employees, customers and vendors; (iii) the potential social and economic impact
of the proposed transaction on the communities in which the Company and its
subsidiaries operate or are located; (iv) the business and financial condition
and earnings prospects of the proposed acquiring person or entity; and (v) the
competence, experience and integrity of the proposed acquiring person or entity
and its or their management.

In order to amend, repeal, or adopt any provision that is inconsistent with
Article XII, at least 80% of the shareholders, voting together as a single
class, must approve the change, unless the change has been recommended for
approval by at least 80% of the directors, in which case a majority of the
voting stock could approve the action.

37
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company expects to have approximately
950,000 shares of its Common Stock outstanding. The 950,000 shares of the
Company's Common Stock purchased in this Offering (plus any additional shares
sold upon the Underwriter's exercise of its over-allotment option) have been
registered with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), and may generally
be resold without registration under the Securities Act unless they were
acquired by directors, executive officers, or other affiliates of the Company or
the Bank (collectively, "Affiliates"). Affiliates of the Company may generally
only sell shares of the Common Stock pursuant to the Commission's Rule 144.

In general, under Rule 144 as currently in effect, an affiliate (as defined
in Rule 144) of the Company may sell shares of the Common Stock within any
three-month period in an amount limited to the greater of 1.0% of the
outstanding shares of the Company's Common Stock (9,500 shares immediately after
the completion of this Offering) or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company.

The Company and the directors and officers of the Company and the Bank (who
are expected to hold an aggregate of approximately ___________ shares after this
Offering), have agreed, or will agree, that they will not issue, offer for sale,
sell, grant any options for the sale of or otherwise dispose of any shares of
Common Stock or any rights to purchase shares of Common Stock, in the open
market or otherwise, without the prior written consent of the Underwriter for a
period of 180 days from the date of this Prospectus. Prior to this Offering,
there has been no public trading market for the Common Stock, and no predictions
can be made as to the effect, if any, that sales of shares or the availability
of shares for sale will have on the prevailing market price of the Common Stock
after completion of this Offering. Nevertheless, sales of substantial amounts of
Common Stock in the public market could have an adverse effect on prevailing
market prices.

38
<PAGE>
UNDERWRITING

The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement, that it will purchase from the Company, on a firm
commitment basis, 950,000 shares of the Company's Common Stock. The Underwriting
Agreement provides that the obligations of the Underwriter thereunder are
subject to certain conditions. The Underwriting Agreement provides for the
Company's payment of certain expenses incurred in connection with the review of
the underwriting arrangements for the Offering by the National Association of
Securities Dealers, Inc. (the "NASD"). The Underwriter is obligated to purchase
all 950,000 of the shares of Common Stock offered hereby, excluding shares
covered by the over-allotment option granted to the Underwriter, if any are
purchased.

If the Underwriting Agreement is terminated, except in certain limited
cases, the Underwriting Agreement provides that the Company will reimburse the
Underwriter for all accountable out-of-pocket expenses incurred by it in
connection with the proposed purchase and sale of the Common Stock, up to a
maximum $50,000. The Company has advanced $20,000 to the Underwriter in
connection with such expense reimbursement. The Underwriting Agreement provides
that in the event the accountable out-of-pocket expenses to be reimbursed upon
such termination total an amount less than $20,000, the Underwriter shall pay
such difference to the Company.

The Company and the Underwriter have agreed that the Underwriter will
purchase the 950,000 shares of Common Stock offered hereunder at a price to the
public of $10.00 per share less underwriting discounts of $____ per share. The
Underwriter has agreed to limit the underwriting discounts to $____ per share
for up to 100,000 shares sold by the Underwriter to officers and directors of
the Company and the Bank and their immediate family members. The Underwriter
proposes to offer the Common Stock to selected dealers who are members of the
NASD, at a price of $10.00 per share less a commission not in excess of $______
per share. The Underwriter may allow, and such dealers may re-allow, concessions
not in excess of $______ per share to certain brokers and dealers.

The Underwriter has informed the Company that it does not intend to confirm
sales of the shares of Common Stock offered hereby to any accounts over which it
exercises discretionary authority.

The Company has granted the Underwriter an option, exercisable for 30 days
after the date of this Offering, to purchase up to 142,500 additional shares of
Common Stock to cover over-allotments, if any, at the same price per share to be
paid by the Underwriter for the other shares of Common Stock offered hereby. The
Underwriter may purchase such shares only to cover over-allotments, if any, in
connection with this Offering.

The Company, its directors and executive officers and those of the Bank
have agreed with the Underwriter, for a period of 180 days after the date of
this Prospectus, not to issue, sell, offer to sell, grant any options for the
sale of, or otherwise dispose of any shares of Common Stock or any rights to
purchase shares of Common Stock, in the open market or otherwise, without the
prior written consent of the Underwriter.

The Underwriting Agreement contains indemnity provisions between the
Underwriter and the Company and the controlling persons thereof against certain
liabilities, including liabilities arising under the Securities Act. The Company
is generally obligated to indemnify the Underwriter in connection with losses or
claims arising out of any untrue statement of a material fact contained in this
Prospectus or in related documents filed with the Commission or with any state
securities administrator or any omission of certain material facts from such
documents.

There has been no public trading market for the Common Stock. The initial
offering price was determined by negotiations between the Company and the
Underwriter. This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or anticipated future
value of the Common Stock. Several factors were considered in determining the
initial offering price of the Common Stock, among them the size of the Offering,
the desire that the security being offered be attractive to individuals and the
Underwriter's experience in dealing with initial public offerings for financial
institutions.

39
<PAGE>
LEGAL PROCEEDINGS

Neither the Company nor the Bank is a party to any pending legal
proceeding. Management believes there is no litigation threatened in which the
Company or the Bank faces potential loss or exposure or which will materially
affect shareholders' equity or the Company's business or financial condition
upon completion of this Offering.

LEGAL MATTERS

The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Varnum, Riddering, Schmidt & Howlett LLP, Grand Rapids,
Michigan. Honigman Miller Schwartz and Cohn, Detroit, Michigan, is acting as
counsel for the Underwriter in connection with certain legal matters relating to
the shares of Common Stock offered hereby.

EXPERTS

The financial statements of the Company included in this Prospectus have
been audited by Plante & Moran, LLP, independent public accountants, as
indicated in their report with respect thereto. Such financial statements are
included herein and in the Registration Statement in reliance upon such reports
given upon the authority of such firm as experts in auditing and accounting.

AVAILABLE INFORMATION

The Company is not currently a reporting company pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), but will be required to
file reports pursuant to the Exchange Act following the completion of the
offering. The Company, which will use a December 31 fiscal year end, intends to
furnish its shareholders with annual reports containing audited financial
information and, for the first three quarters of each fiscal year, quarterly
reports containing unaudited financial information.

Requests for such documents should be directed to Bruce H. McIntyre,
Secretary, Clarkston Financial Corporation, P. O. Box 436, Clarkston, Michigan
48347-0436.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement with the Commission in
accordance with the provisions of the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information pertaining to the shares of Common Stock
offered hereby and to the Company, reference is made to the Registration
Statement, including the Exhibits filed as a part thereof, copies of which can
be inspected at and copied at the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Room 1400, 75 Park Place, New York, New York
10007. Copies of such materials can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition the Company is required to file
electronic versions of these documents with the Commission through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
The Commission maintains a World Wide Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions discussed above under "Description of Capital Stock
- -- Anti-Takeover Provisions" or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.

40
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
FINANCIAL REPORT
August 31, 1998

INDEX

INDEPENDENT AUDITORS' REPORT............................................... F-2

FINANCIAL STATEMENTS

Balance Sheet.......................................................... F-3

Statement of Shareholder's Equity...................................... F-4

Statement of Operations................................................ F-5

Statement of Cash Flows................................................ F-6

Notes to Financial Statements.......................................... F-7
<PAGE>
INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Clarkston Financial Corporation

We have audited the accompanying balance sheet of Clarkston Financial
Corporation (a Company in the development stage) as of August 31, 1998, and the
related statements of shareholder's equity, operations and cash flows for the
period from May 18, 1998 (inception) through August 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clarkston Financial Corporation
(a Company in the development stage) as of August 31, 1998, and the results of
its operations and cash flows for the period from May 18, 1998 (inception)
through August 31, 1998, in conformity with generally accepted accounting
principles.

Plante & Moran, LLP

September 9, 1998
Bloomfield Hills, Michigan

F-2
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
BALANCE SHEET
August 31, 1998
<TABLE>

ASSETS
<S> <C>
Cash $ 93,230
Deferred offering costs 19,921
---------
Total assets 113,151
=========

LIABILITIES AND SHAREHOLDER'S EQUITY

Accounts payable 34,970

Notes payable -related parties (Note 3) 120,000

SHAREHOLDER'S EQUITY

Common stock, no par value; 60,000 shares authorized,
one share issued and outstanding 10

Accumulated deficit (41,829)
---------
Total shareholder's equity (41,819)
---------
Total liabilities and shareholder's equity $ 113,151
=========
</TABLE>
See Notes to Financial Statements.

F-3
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
STATEMENT OF SHAREHOLDER'S EQUITY
Period from May 18, 1998 (inception) to August 31, 1998
<TABLE>
DEFICIT
ACCUMULATED
DURING THE
COMMON DEVELOPMENT
STOCK STAGE TOTAL
-------------- ------------- ------------
<S> <C> <C> <C>
Balance at May 18, 1998 $ - $ - $ -

Issuance of common stock 10 - 10

Net Loss - (41,829) (41,829)
-------------- ------------ ------------
Balance at August 31, 1998 $ 10 $ (41,829) $ (41,819)
============== ============== =============
</TABLE>

See Notes to Financial Statements.

F-4
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
Period from May 18, 1998 (inception) to August 31, 1998
<TABLE>
<S> <C>
REVENUE $ -

OPERATING EXPENSES
Organizational costs 35,673
Office expenses 878
Insurance 910
Other 4,368
-----------

Total operating expenses 41,829
-----------
Loss Before Income Tazes $ (41,829)
Income Taxes (Note 4) -
-----------
NET LOSS $ (41,829)
===========
</TABLE>

See Notes to Financial Statements.

F-5
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
Period from May 18, 1998 (inception) to August 31, 1998
<TABLE>
<S> <C>
Cash flows from operating activities from development stage operations -
Net Loss (41,829)
Adjustments to reconcile net income from development stage
operations to net cash provided by operating activities:
Increase in accounts payable 34,970
---------
Net cash used in operating activities (6,859)

Cash flows from investing activities -

Cash flows from financing activities
Proceeds from related party notes payable 120,000
Deferred offering costs (19,921)
Sale of common stock 10
---------

Net cash provided by financing activities 100,089
---------

Net increase in cash 93,230

CASH - beginning balance -
---------
CASH - ending balance $ 93,230
=========
</TABLE>

See Notes to Financial Statements.

F-6
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
August 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - Clarkston Financial Corporation (the "Company") was
incorporated on May 18, 1998 as a bank holding company to establish and
operate a new bank, Clarkston State Bank (the "Bank") in Clarkston,
Michigan. The Company intends to raise a minimum of $8,730,000 in equity
capital net of underwriting discounts and offering costs, through the sale
of 950,000 shares of the Company's common stock at $10 per share. Proceeds
from the offering will be used to capitalize the Bank, lease facilities and
provide working capital.

Basis of presentation - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

Organization and preopening costs - Organization and preopening costs
represent incorporation costs, legal and accounting costs, salaries and
other costs relating to the organization. Management anticipates that
organization and preopening costs will approximate $200,000 through
commencement of operations, which will be charged to expense as incurred.

Deferred Offering Costs - Costs related to the offering of common stock
have been deferred and will be netted against the offering proceeds when
the sale of stock is completed.

NOTE 2 - NOTES PAYABLE - RELATED PARTIES

Notes payable in the amount of $120,000 are outstanding to the Company's
organizers. The notes bear interest at 5% per annum and are due on demand.
Management intends to repay the loans from the proceeds of the common stock
offering.

NOTE 3 - OPERATING LEASE - RELATED PARTIES

The Company anticipates entering into a lease for its main operating
facility under a five-year non-cancelable lease anticipated to expire on
October 1, 2003. The facility will be leased from an entity owned entirely
by the members of the Board of Directors of the Company. The lease payments
are anticipated to be $5,000 per month for the first twenty-four months and
$5,165 per month thereafter. The Company will be responsible for all taxes,
utilities and maintenance. The Company's Bank subsidiary has budgeted
$100,000 of leasehold improvements.

F-7
<PAGE>
CLARKSTON FINANCIAL CORPORATION
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
August 31, 1998

NOTE 3 - OPERATING LEASE - RELATED PARTIES (Continued)

The future minimum rental payments required under the aniticipated
non-cancelable operating lease as of August 31, 1998 are as follows:
<TABLE>
<S> <C>
1998 $ 15,000
1999 $ 60,000
2000 $ 60,495
2001 $ 61,980
2002 $ 61,980
2003 $ 46,485
</TABLE>

NOTE 4 - INCOME TAXES

At August 31, 1998, the Company had a $42,000 net operating loss
carryforward. The tax benefit of there carryforwards has been offset by a
valuation allowance.

NOTE 5 - STOCK OPTION PLANS

The Board of Directors anticipate adopting a Director's stock option plan
to purchase an aggregate of 75,000 shares. The options are anticipated to
vest over five years with one-half of the options subject to a performance
based vesting schedule, not to exceed ten years.

In addition, the Company is anticipating adopting a stock compensation plan
for its key employees with a ten-year vesting schedule.

The exercise price of all options will equal or exceed the fair market
value of the common stock at the date of grant.

F-8
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesperson or any other person has been authorized to give any
information or make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus, and if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or any Underwriter. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities offered hereby by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.

----------------

TABLE OF CONTENTS
Page

Forward-Looking Statements................................................ 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 11
Dividend Policy........................................................... 11
Capitalization............................................................ 12
Business.................................................................. 13
Management................................................................ 17
Certain Transactions...................................................... 24
Principal Shareholders.................................................... 25
Supervision and Regulation................................................ 27
Description of Capital Stock.............................................. 33
Shares Eligible for Future Sale........................................... 38
Underwriting.............................................................. 39
Legal Proceedings......................................................... 40
Legal Matters............................................................. 40
Experts................................................................... 40
Additional Information.................................................... 40
Index to Financial Statements............................................. F-1

--------------------

Until _______________, 1998 (90 days after the effective date of the
offering), all dealers effecting transactions in the Common Stock, whether or
not participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of dealers to deliver
a Prospectus when acting as underwriter and with respect to their unsold
allotments or subscriptions.

================================================================================

950,000 Shares

CLARKSTON FINANCIAL
CORPORATION

Common Stock

PROSPECTUS

RONEY CAPITAL MARKETS
A division of FIRST CHICAGO CAPITAL MARKETS, INC.

____________, 1998

================================================================================
<PAGE>
PART II

Information Not Required in Prospectus

Item 24. Indemnification of Directors and Officers.

Sections 561-571 of the Michigan Business Corporation Act, as amended (the
"MBCA"), grant the Registrant broad powers to indemnify any person in connection
with legal proceedings brought against him by reason of his present or past
status as an officer or director of the Registrant, provided that the person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Registrant, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The MBCA also gives the Registrant broad powers to indemnify any
such person against expenses and reasonable settlement payments in connection
with any action by or in the right of the Registrant, provided the person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant, except that no indemnification may be made
if such person is adjudged to be liable to the Registrant unless and only to the
extent the court in which such action was brought determines upon application
that, despite such adjudication, but in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for reasonable
expenses as the court deems proper. In addition, to the extent that any such
person is successful in the defense of any such legal proceeding, the Registrant
is required by the MBCA to indemnify him against expenses, including attorneys'
fees, that are actually and reasonably incurred by him in connection therewith.

The Registrant's Articles of Incorporation contain provisions entitling
directors and executive officers of the Registrant to indemnification against
certain liabilities and expenses to the full extent permitted by Michigan law.

Under an insurance policy maintained by the Registrant, the directors and
officers of the Registrant are insured within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of certain claims, actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such claims, actions, suits or
proceedings, which may be brought against them by reason of being or having been
such directors and officers.

The Registrant has agreed to indemnify the Underwriter, and the Underwriter
has agreed to indemnify the Registrant, against certain civil liabilities,
including liabilities under the Securities Act, as amended. Reference is made to
the Underwriting Agreement filed as Exhibit 1 herewith.

Item 25. Other Expenses of Issuance and Distribution.

Expenses in connection with the issuance and distribution of the securities
being registered are estimated as follows, all of which are to be paid by the
Company:
<TABLE>
<S> <C>
SEC Registration Fee....................................... $ 3,223
NASD Filing Fee............................................ 1,593
Printing and Mailing Expenses.............................. 30,000
Accounting Fees............................................ 25,000
Transfer and Registrar's Fees.............................. 4,000
Legal Fees and Expenses.................................... 75,000
Blue Sky Fees and Expenses................................. 15,000
Miscellaneous.............................................. 1,184
----------
$155,000
==========
</TABLE>
II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities.

During the past several months, the registrant has borrowed approximately
$325,000 from members of the registrant's Board of Directors to pay
organizational and related expenses. To the extent that such transactions would
be deemed to involve the offer or sale of a security, the registrant would claim
an exemption under Rule 504 of Regulation D or Section 4(2) of To the Securities
Act of 1933 for such transactions. In addition, the registrant sold one share of
its Common Stock to David T. Harrison, the President and Chief Executive Officer
of the Bank, for $10.00. The registrant also claims an exemption for such sale
pursuant to Rule 504 of Regulation D or Section 4(2).

Item 27. Exhibits.

Reference is made to the Exhibit Index which appears at page II-4 of the
Registration Statement.

Item 28. Undertakings.

Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Company pursuant of the foregoing provisions, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission such indemnification is against the public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

The undersigned Company hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Company pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as of the time it
was declared effective; and (2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. The
undersigned Company hereby undertakes that it will provide to the underwriter,
Roney Capital Markets, at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to such purchaser.

II-2
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Clarkston, State of Michigan, on September 18, 1998.

CLARKSTON FINANCIAL CORPORATION

By: /s/ David T. Harrison
David T. Harrison
Chief Executive Officer, President and
a Director

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edwin L. Adler and David T. Harrison, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his substitute may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Date

/s/ Edwin L. Adler September 18, 1998
Edwin L. Adler, Chairman and Director

/s/ David T. Harrison September 18, 1998
David T. Harrison, Principal
Executive Officer and a Director

/s/ James L. Richardson September 18, 1998
James L. Richardson, Principal Financial
and Accounting Officer

/s/ Louis D. Beer September 18, 1998
Louis D. Beer, Director

/s/ Charles L. Fortinberry September 18, 1998
Charles L. Fortinberry, Director

/s/ William J. Clark September 18, 1998
William J. Clark, Director

/s/ Bruce H. McIntyre September 18, 1998
Bruce H. McIntyre, Secretary and Director

/s/ Robert A. Olsen September 18, 1998
Robert A. Olsen, Director

/s/ John H. Welker September 18, 1998
John H. Welker, Director

II-3
<PAGE>
EXHIBIT INDEX

Sequentially
Numbered
Exhibit Number and Description Page

1* Form of Underwriting Agreement

3.1 Articles of Incorporation of Clarkston Financial Corporation

3.2 Bylaws of Clarkston Financial Corporation

4* Specimen stock certificate of Clarkston Financial Corporation

5 Opinion of Varnum, Riddering, Schmidt & Howlett LLP

10.1 Clarkston Financial Corporation Stock Compensation Plan

10.2 Clarkston Financial Corporation 1998 Founding Directors'
Stock Option Plan

10.3 Lease Agreement dated September 10, 1998, between Clarkston Building
Co., LLC and Clarkston State Bank for the facility located at 15 South
Main Street, Clarkston, Michigan 48346

10.4* Data Processing Agreement between Jack Henry and Associates, Inc. and
Clarkston State Bank dated __________, 1998

21 Subsidiaries of the Registrant

23.1 Consent of Plante & Moran, LLP, independent public accountants

23.2 Consent of Varnum, Riddering, Schmidt & Howlett LLP (included
in opinion filed as Exhibit 5)

24 Power of Attorney (included on the signature page on page II-3
of the Registration Statement)

27 Financial Data Schedule

* To be filed by amendment

II-4

<PAGE>
EXHIBIT 3.1

RESTATED ARTICLES OF INCORPORATION

CLARKSTON FINANCIAL CORPORATION

The following Restated Articles of Incorporation are executed by the
undersigned Corporation pursuant to the provisions of Sections 641-643, Act 284,
Public Acts of 1972, as amended.

1. The present name of the Corporation is Clarkston Financial
Corporation.

2. The identification number assigned by the Bureau is 515-318.

3. All former names of the Corporation are: None.

4. The date of filing of the original Articles of Incorporation
was May 18, 1998.

The following Restated Articles of Incorporation supersede the Articles of
Incorporation and shall be the Articles of Incorporation for the Corporation:

ARTICLE I

The name of the Corporation is Clarkston Financial Corporation.

ARTICLE II

The purpose, or purposes, for which the Corporation is organized is to
engage in the business of a bank holding company to be registered under the Bank
Holding Company Act of 1956, being 12 U.S.C. sections 1841 to 1850 (as amended
from time to time, and including any successor statutes) and, without in any way
being limited by the foregoing specific purpose, to engage in any activity
within the purposes for which corporations may be organized under the Business
Cor poration Act of Michigan.

ARTICLE III

The total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is Ten Million (10,000,000) shares
of common stock. The authorized shares of common stock are all of one class with
equal voting power, and each share shall be equal to every other share.

ARTICLE IV

The address of the registered office and mailing address is 700 East Maple
Street, Suite 303, Birmingham, Michigan 48009. The name of the resident agent is
Bruce H. McIntyre.
<PAGE>
ARTICLE V

When a compromise or arrangement, or a plan of reorganization of the
Corporation, is proposed between the Corporation and its creditors, or any class
of them, or between the Corporation and its shareholders, or any class of them,
a court of equity jurisdiction within the state, on application of the
Corporation, a creditor or shareholder thereof, or a receiver appointed for the
Corporation, may order a meeting of the creditors, or class of creditors, or of
the shareholders, or class of shareholders, to be affected by the proposed
compromise, arrangement, or reorganization, to be summoned in such manner as the
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, or of the shareholders to be affected by
the proposed compromise, arrangement, or reorganization, agree to a compromise
or arrangement or to a reorganization of the Corporation as a consequence of the
compromise or arrangement, the compromise or arrangement and the reorganization,
if sanctioned by the court to which the application has been made, shall be
binding on all the creditors or class of creditors, or on all the shareholders
or class of shareholders, and also on the Corporation.

ARTICLE VI

No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for monetary damages for a breach of
fiduciary duty as a director. However, this Article VI shall not eliminate or
limit the liability of a director for any breach of duty, act or omission for
which the elimination or limitation of liability is not permitted by the
Michigan Business Corporation Act, as amended from time to time. No amendment,
alteration, modification, repeal or adoption of any provision in these Articles
of Incorporation inconsistent with this Article VI shall have any effect to
increase the liability of any director of the Corporation with respect to any
act or omission of such director occurring prior to such amendment, alteration,
modification, repeal or adoption.

ARTICLE VII

Directors and executive officers of the Corporation shall be indemnified as
of right to the fullest extent now or hereafter permitted by law in connection
with any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding (whether brought by or in the name of the
Corporation, a subsidiary or otherwise) in which a director or executive officer
is a witness or which is brought against a director or executive officer in his
or her capacity as a director, officer, employee, agent or fiduciary of the
Corporation or of any corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which the director or executive officer was
serving at the request of the Corporation. Persons who are not directors or
executive officers of the Corporation may be similarly indemnified in respect of
such service to the extent authorized at any time by the Board of Directors of
the Corporation. The Corporation may purchase and maintain insurance to protect
itself and any such director, executive officer or other person against any
liability asserted against him or her and incurred by him or her in respect of
such service whether or not the Corporation would have the power to indemnify
him or her against such liability by law or under the provisions of this
Article. The provisions of this Article shall be applicable to actions, suits or
proceedings, arising from acts or omissions occurring after the date that this
Corporation's Articles of Incorporation were originally filed with the
Corporation, Securities and Land Development Bureau of the Michigan Department
of Consumer and Industry Services, and to directors, executive officers

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and other persons who have ceased to render such service, and shall inure to the
benefit of the heirs, executors and administrators of the directors, executive
officers and other persons referred to in this Article. The right of indemnity
provided pursuant to this Article shall not be exclusive and the Corporation may
provide indemnification to any person, by agreement or otherwise, on such terms
and conditions as the Board of Directors may approve that are not inconsistent
with the Michigan Business Corporation Act (or other law). Any amendment,
alteration, modification, repeal or adoption of any provision in the Articles of
Incorporation inconsistent with this Article VII shall not adversely affect any
indemnification right or protection of a director or executive officer of the
Corporation existing at the time of such amendment, alteration, modification,
repeal or adoption.

ARTICLE VIII

Section 1. Authority and Size of Board. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. The number of directors of the Corporation that shall constitute the
Board of Directors shall be determined from time to time by resolution adopted
by the affirmative vote of:

A. At least eighty percent (80%) of the Board of Directors, and

B. A majority of the Continuing Directors (as hereinafter defined).

Section 2. Classification of Board and Filling of Vacancies. Subject to
applicable law, the directors shall be divided into three (3) classes, each
class to be as nearly equal in number as possible. At each annual meeting of
shareholders, the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting and until their successors shall be duly elected and
qualified or their resignation or removal. Any vacancies in the Board of
Directors for any reason, and any newly created directorships resulting from any
increase in the number of directors, may be filled only by the Board of
Directors, acting by an affirmative vote of a majority of the Continuing
Directors (as hereinafter defined) and an eighty percent (80%) majority of all
of the directors then in office, although less than a quorum, and any director
so chosen shall hold office until the next election of the class for which the
director was chosen and until his successor shall be duly elected and qualified
or his resignation or removal. No decrease in the number of directors shall
shorten the term of any incumbent director.

Section 3. Removal of Directors. Notwithstanding any other provisions of
these Articles of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law or
by these Articles of Incorporation or the Bylaws of the Corporation), any one or
more directors of the Corporation may be removed at any time, with or without
cause, but only by either (i) the affirmative vote of a majority of the
Continuing Directors and at least eighty percent (80%) of the Board of Directors
or (ii) the affirmative vote, at a meeting of the shareholders called for that
purpose, of the holders of at least eighty percent (80%) of the voting power of
the then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock") voting together as a
single class.

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Section 4. Certain Definitions. For the purposes of this Article VIII:

A. A "person" shall mean any individual, firm, corporation or other
entity.

B. "Interested Shareholder" shall mean any person, other than the
Corporation or any Subsidiary, who or which:

(i) is the beneficial owner, directly or indirectly, of ten
percent (10%) or more of the voting power of the outstanding Voting
Stock; or

(ii) is an Affiliate of the Corporation and at any time within
the two (2) year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of ten percent (10%) or
more of the voting power of the then outstanding Voting Stock; or

(iii) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two (2) year period
immediately prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.

C. A person shall be a "beneficial owner" of any Voting Stock:

(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or

(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (b) the right to vote pursuant to any agreement, arrangement or
understanding; or

(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.

D. For the purposes of determining whether a person is an Interested
Shareholder pursuant to paragraph B of this Section 4, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of paragraph C of this Section 4 but shall not include
any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.

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<PAGE>
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on the date this
Article of the Articles of Incorporation is filed with the Corporation,
Securities and Land Development Bureau of the Michigan Department of
Consumer and Industry Services.

F. "Subsidiary" means any corporation of which a majority of any class
of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Shareholder set forth in paragraph B of this Section 4, the term
"Subsidiary" shall mean only a Corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.

G. "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is unaffiliated with the Interested
Shareholder and was a member of the Board prior to the time that the
Interested Shareholder became an Interested Shareholder, and any successor
of a Continuing Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Continuing Director by a
majority of Continuing Directors then on the Board.

Section 5. Powers of Continuing Directors. A majority of the Continuing
Directors of the Corporation shall have the power and duty to determine, on the
basis of information known to them after reasonable inquiry, all facts necessary
to determine compliance with this Article VIII, including without limitation (i)
whether a person is an Interested Shareholder, (ii) the number of shares of
Voting Stock beneficially owned by any person and (iii) whether a person is an
Affiliate or Associate of another; and the good faith determination of a
majority of the Continuing Directors on such matters shall be conclusive and
binding for all the purposes of this Article VIII.

Section 6. Nominations for Board. Nominations for the election of directors
may be made by the Board of Directors or by a shareholder entitled to vote in
the election of directors. A shareholder entitled to vote in the election of
directors, however, may make such a nomination only if written notice of such
shareholder's intent to do so has been given, either by personal delivery or by
United States mail, postage prepaid, and received by the Corporation (a) with
respect to an election to be held at an annual meeting of shareholders, not
later than sixty (60) nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting (or, if the date of the
annual meeting is changed by more than twenty (20) days from such anniversary
date, within ten (10) days after the date the Corporation mails or otherwise
gives notice of the date of such meeting), and (b) with respect to an election
to be held at a special meeting of shareholders called for that purpose, not
later than the close of business on the tenth (10th) day following the date on
which notice of the special meeting was first mailed to the shareholders by the
Corporation.

Each shareholder's notice of intent to make a nomination shall set forth:
(i) the name(s) and address(es) of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (ii) a representation
that the shareholder (a) is a holder of record of

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stock of the Corporation entitled to vote at such meeting, (b) will continue to
hold such stock through the date on which the meeting is held, and (c) intends
to appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination is to
be made by the shareholder; (iv) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to Regulation 14A promulgated under Section 14 of the
Securities Exchange Act of 1934, as amended, as now in effect or hereafter
modified; and (v) the consent of each nominee to serve as a director of the
Corporation if so elected. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the qualifications of such proposed nominee to serve as a director.

No person shall be eligible for election as a director unless nominated (i)
by a shareholder in accordance with the foregoing procedure or (ii) by the Board
of Directors.

ARTICLE IX

The Board of Directors of the Corporation shall submit for consideration
and vote by the shareholders, at any meetings of the shareholders, only those
proposals that are first brought before the meeting by or at the direction of
the Board of Directors, or by any shareholder entitled to vote at such meeting
(a) who submits to the Corporation a timely Notice of Proposal in accordance
with the requirements of this Article IX and the proposal is a proper subject
for action by shareholders under Michigan law, or (b) whose proposal is included
in the Corporation's proxy materials in compliance with all the requirements set
forth in the applicable rules and regulations of the Securities and Exchange
Commission.

Each shareholder's Notice of Proposal shall set forth:

(a) The name and address of the shareholder submitting the proposal,
as they appear on the Corporation's books and records;

(b) A representation that the shareholder (i) is a holder of record of
stock of the Corporation entitled to vote at such meeting, (ii) will
continue to hold such stock through the date on which the meeting is held,
and (iii) intends to appear in person or by proxy at the meeting to submit
the proposal for shareholder vote;

(c) A brief description of the proposal desired to be submitted to the
meeting for shareholder vote and the reasons for conducting such business
at the meeting; and

(d) A description of any financial or other interest of such
shareholder in the proposal.

A Notice of Proposal must be given, either by personal delivery or by
United States mail, postage prepaid, and received by the Corporation (a) with
respect to a proposal to be presented at an annual meeting of shareholders, not
later than sixty (60) nor more than ninety (90) days

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prior to the first anniversary of the preceding year's annual meeting (or, if
the date of the annual meeting is changed by more than twenty (20) days from
such anniversary date, within ten (10) days after the date the Corporation mails
or otherwise gives notice of the date of such meeting), and (b) with respect to
a proposal to be presented at a special meeting of shareholders, not later than
the close of business on the tenth (10th) day following the date on which notice
of the special meeting was first mailed to the shareholders by the Corporation.

The secretary of the Corporation shall notify a shareholder in writing
whether his or her Notice of Proposal has been made in accordance with all the
requirements of this Article IX. The chairman of the meeting may refuse to
acknowledge the proposal of any shareholder not made in compliance with all such
requirements.

ARTICLE X

Except as otherwise required by law, any action required or permitted to be
taken on or after May 1, 1999, by any shareholders of the Corporation must be
effected at a duly called annual or special meeting of such shareholders and may
not be effected by any consent in writing by such shareholders. Except as may be
otherwise required by law, special meetings of shareholders of the Corporation
may be called only by the Board of Directors or the Chairman of the Board.

ARTICLE XI

Notwithstanding anything contained in these Articles of Incorporation to
the contrary, the affirmative vote of at least 80% of the outstanding shares of
voting stock of the Corporation, voting as a single class, shall be required to
amend or repeal Article VIII, Article IX, Article X, or Article XI of these
Articles of Incorporation or to adopt any provision inconsistent therewith,
unless, such amendment or repeal or inconsistent provision has been recommended
for approval by at least 80% of all directors then holding office and by a
majority of the Continuing Directors. The term "Continuing Directors" is defined
in Article VIII.

ARTICLE XII

Section 1. Matters to be Evaluated. The Board of Directors of this
Corporation shall not approve, adopt or recommend any offer of any person or
entity, other than the Corporation, to make a tender or exchange offer for any
capital stock of the Corporation, to merge or consolidate the Corporation with
any other entity or to purchase or otherwise acquire all or substantially all of
the assets or business of the Corporation unless and until the Board of
Directors shall have first evaluated the offer and determined that the offer
would be in compliance with all applicable laws and that the offer is in the
best interests of the Corporation and its shareholders. In connection with its
evaluation as to compliance with laws, the Board of Directors may seek and rely
upon an opinion of legal counsel independent from the offeror and it may test
such compliance with laws in any state or federal court or before any state or
federal administrative agency which may have appropriate jurisdiction. In
connection with its evaluation as to the best interests of the Corporation and
its shareholders, the Board of Directors shall consider all factors which it
deems relevant, including without limitation: (i) the adequacy and fairness of
the consideration to be

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received by the Corporation and/or its shareholders under the offer considering
historical trading prices of the Corporation's stock, the price that might be
achieved in a negotiated sale of the Corporation as a whole, premiums over
trading prices which have been proposed or offered with respect to the
securities of other companies in the past in connection with similar offers and
the future prospects for this Corporation and its business; (ii) the potential
social and economic impact of the offer and its consummation on this
Corporation, and its subsidiaries and their respective employees, depositors and
other customers and vendors; (iii) the potential social and economic impact of
the offer and its consummation on the communities in which the Corporation and
any subsidiaries operate or are located; (iv) the business and financial
condition and earnings prospects of the proposed acquiror or acquirors; and (v)
the competence, experience and integrity of the proposed acquiror or acquirors
and its or their management.

Section 2. Amendment, Repeal, etc. Notwithstanding any other provision of
these Articles of Incorporation or the Bylaws of the Corporation to the contrary
(and notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the Bylaws of the Corporation), the
affirmative vote of the holders of eighty percent (80%) or more of the
outstanding shares of capital stock entitled to vote for the election of
directors, voting together as a single class, shall be required to amend, repeal
or adopt any provision inconsistent with this Article XII; provided, however,
that this Article XII shall be of no force or effect if the proposed amendment,
repeal or other action has been recommended for approval by at least eighty
percent (80%) of all directors then holding office.

These Restated Articles of Incorporation were duly adopted on the 18th day
of September, 1998, in accordance with the provisions of Section 642 of the Act
and were duly adopted by written consent of all the shareholders entitled to
vote in accordance with Section 407(2) of the Act.

Signed this 18th day of September, 1998.

By /s/ David T. Harrison
David T. Harrison
President

Document No. 173396 ver. 1
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EXHIBIT 3.2

B Y L A W S

CLARKSTON FINANCIAL CORPORATION

A Michigan corporation

ARTICLE I
OFFICES

1.1 Registered Office. The registered office of the corporation shall be
located at the address specified in the Articles of Incorporation or at such
other place as may be determined by the Board of Directors if notice thereof is
filed with the State of Michigan.

1.2 Other Offices. The business of the corporation may be transacted at
such locations other than the registered office, within or outside the State of
Michigan, as the Board of Directors may from time to time determine or as the
business of the corporation may require.

ARTICLE II
CAPITAL SHARES

2.1 Share Certificates. Certificates representing shares of the corporation
shall be in such form as is approved by the Board of Directors. Certificates
shall be signed in the name of the corporation by the Chairman of the Board of
Directors, the President or a Vice President, and may also be signed by another
officer of the corporation, and shall be sealed with the seal of the
corporation, if one is adopted. If an officer who has signed a certificate
ceases to be such officer before the certificate is issued, it may be issued by
the corporation with the same effect as if he or she were such officer at the
date of issue.

2.2 Replacement of Lost or Destroyed Certificates. If a share certificate
is lost or destroyed, no new certificate shall be issued in place thereof until
the corporation has received such assurances, representations, warranties, or
guarantees from the registered holder as the Board of Directors, in its sole
discretion, deems advisable and until the corporation receives such
indemnification against any claim that may be made on account of the lost or
destroyed certificate, or the issuance of any new certificate in place thereof,
including an indemnity bond in such amount and with such sureties, if any, as
the Board of Directors, in its sole discretion, deems advisable. Any new
certificate issued in place of any lost or destroyed certificate shall be
plainly marked "duplicate" upon its face.

2.3 Transfer of Shares; Shareholder Records. Capital shares of the
corporation shall be transferable only upon the books of the corporation. The
old certificates shall be surrendered to the corporation by delivery to the
person in charge of the transfer books of the corporation, or to such other
person as the Board of Directors may designate, properly endorsed for transfer
and the old certificates shall be cancelled before a new certificate is issued.
The corporation shall keep records containing the names and addresses of all
shareholders, the number, class, and series of shares held by each, and the date
when they respectively became holders of record thereof at its registered
office. The corporation shall be entitled to treat the person in whose name any
share, right, or option is registered as the owner thereof for all purposes,
including voting and dividends, and shall not be bound to recognize any
equitable or other claim, regardless of any notice thereof, except as may be
specifically required by the laws of the State of Michigan.

2.4 Rules Governing Share Certificates. The Board of Directors shall have
the power and authority to make such rules and regulations as they may deem
expedient concerning the issue, transfer, and registration of share
certificates.
<PAGE>
2.5 Record Date for Share Rights. The Board of Directors may fix in advance
a date not exceeding sixty (60) days preceding the date of payment of any
dividend or other distribution, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital shares shall go into
effect, as a record date for the determination of the shareholders entitled to
receive payment of any such dividend or other distribution, or any such
allotment of rights, or to exercise rights with respect to any such change,
conversion, or exchange of capital shares and, in such case, only shareholders
of record on the date so fixed shall be entitled to receive payment of such
dividend or other distribution, or allotment of rights, or exercise such rights,
as the case may be, notwithstanding the transfer of any shares on the books of
the corporation after such record date. If the Board of Directors shall fail to
fix a record date, the record date for the purposes specified herein shall be
the close of business on the date on which the resolution of the Board of
Directors relating thereto is adopted.

2.6 Dividends. The Board of Directors, in its discretion, may from time to
time declare and direct payment of dividends or other distributions upon the
corporation's outstanding shares out of funds legally available for such
purposes which may be payable in cash or other property permitted by law.

In addition to the declaration of dividends or other distributions provided
in the preceding paragraph of this Section 2.6, the Board of Directors, in its
discretion, may from time to time declare and direct payment of a dividend in
shares of this corporation, upon its outstanding shares, in accordance with and
subject to the provisions of the Business Corporation Act of Michigan.

2.8 Redemption of Control Shares. Control shares acquired in a control
share acquisition, with respect to which no acquiring person statement has been
filed with the corporation, shall, at any time during the period ending 60 days
after the last acquisition of control shares or the power to direct the exercise
of voting power of control shares by the acquiring person, be subject to
redemption by the Corporation. After an acquiring person statement has been
filed with the Corporation and after the meeting at which the voting rights of
the control shares acquired in a control shares acquisition are submitted to the
shareholders, the shares shall be subject to redemption by the Corporation
unless the shares are accorded full voting rights by the shareholders as
provided in Section 798 of the Michigan Business Corporation Act. Redemptions of
shares pursuant to this bylaw shall be at the fair value of the shares pursuant
to procedures adopted by the Board of Directors of the Corporation.

The terms "control shares", "control share acquisition", "acquiring person
statement", "acquiring person" and "fair value" as used in this bylaw, shall
have the meanings ascribed to them, respectively, in Chapter 7B (known as the
Stacey, Bennett, and Randall Shareholder Equity Act) of the Michigan Business
Corporation Act.

ARTICLE III
SHAREHOLDERS

3.1 Place of Meetings. Meetings of shareholders shall be held at the
registered office of the corporation or at such other place, within or outside
the State of Michigan, as may be determined from time to time by the Board of
Directors; provided, however, that if a shareholders meeting is to be held at a
place other than the registered office, the notice of the meeting shall
designate such place.

3.2 Annual Meeting. Annual meetings of shareholders for election of
directors and for such other business as may come before the meeting shall be
held on the third Tuesday of April in each year, but if such day is a legal
holiday, then the meeting shall be held on the first business day following, at
such time as may be fixed by the Board of Directors, or at such other date and
time within the four (4) months next succeeding the end of the corporation's
fiscal year as may be designated by the Board of Directors and stated in the
notice of the meeting. If the annual meeting is not held on the date specified,
the Board of Directors shall cause the meeting to be held as soon thereafter as
convenient.

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3.3 Special Meetings. Special meetings of shareholders may be called by the
Chairman of the Board, the President, or the Secretary and shall be called by
one of them pursuant to resolution therefor by the Board of Directors, or upon
receipt of a request in writing, stating the purpose or purposes thereof, and
signed by shareholders of record owning a majority of the issued and outstanding
voting shares of the corporation.

3.4 Record Date for Notice and Vote. The Board of Directors may fix in
advance a date not more than sixty (60) nor less than ten (10) days before the
date of a shareholders meeting as the record date for the purpose of determining
shareholders entitled to notice of and to vote at the meeting or adjournments
thereof or to express consent or to dissent from a proposal without a meeting.
If the Board of Directors fails to fix a record date as provided in this Section
3.4, the record date for determination of shareholders entitled to notice of or
to vote at a shareholders meeting shall be the close of business on the day on
which notice is given or, if no notice is given, the day next preceding the day
on which the meeting is held, and the record date for determining shareholders
entitled to express consent or to dissent from a proposal without a meeting
shall be the close of business on the day on which the resolution of the Board
of Directors relating to the proposal is adopted.

3.5 Notice of Meetings. Written notice of the time, place, and purpose of
any shareholders meeting shall be given to shareholders entitled to vote thereat
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. Such notice may be given either by delivery in person to shareholders
or by mailing such notice to shareholders at their addresses as the same appear
in the records of the cor poration; provided, however, that attendance of a
person at a shareholders meeting, in person or by proxy, constitutes a waiver of
notice of the meeting, except when the shareholder attends the meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.

3.6 Voting Lists. The corporation's officer or the agent having charge of
its share transfer books shall prepare and certify a complete list of the
shareholders entitled to vote at a shareholders meeting or any adjournment
thereof, which list shall be arranged alphabetically within each class and
series and shall show the address of, and number of shares held by, each
shareholder. The list shall be produced at the time and place of the
shareholders meeting and be subject to inspection, but not copying, by any
shareholder at any time during the meeting for the purpose of determining who is
entitled to vote at the meeting. If for any reason the requirements with respect
to the shareholder list specified in this Section 3.6 have not been complied
with, any shareholder, either in person or by proxy, who in good faith
challenges the existence of sufficient votes to carry any action at the meeting,
may demand that the meeting be adjourned and the same shall be ad journed until
the requirements are complied with; provided, however, that failure to comply
with such requirements does not affect the validity of any action taken at the
meeting before such demand is made.

3.7 Voting. Except as may be otherwise provided in the Articles of
Incorporation, each shareholder entitled to vote at a shareholders meeting, or
to express consent or dissent without a meeting, shall be entitled to one vote,
in person or by written proxy, for each share entitled to vote held by such
share holder; provided, however, that no proxy shall be voted after three (3)
years from its date unless the proxy provides for a longer period. A vote may be
cast either orally or in writing as announced or directed by the person
presiding at the meeting prior to the taking of the vote. When an action other
than the election of directors is to be taken by vote of the shareholders, it
shall be authorized by a majority of the votes cast by the holders of shares
entitled to vote thereon, unless a greater plurality is required by the express
provisions of the Michigan Business Corporation Act or the Articles of
Incorporation. Except as otherwise expressly required by the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast at an
elec tion.

3.8 Quorum. Except as may be otherwise provided in the Articles of
Incorporation, shares equaling a majority of all of the voting shares of the
corporation issued and outstanding, represented in person or by proxy, shall
constitute a quorum at a meeting. Meetings at which less than a quorum is
represented may be adjourned by a vote of a majority of the shares present to a
future date without further notice other than

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the announcement at such meeting and, when a quorum shall be present upon such
adjourned date, any business may be transacted which might have been transacted
at the meeting as originally called. Shareholders present in person or by proxy
at any shareholders meeting may continue to do business until adjournment,
notwithstanding the withdrawal of shareholders to leave less than a quorum.

3.9 Conduct of Meetings. The officer who is to preside at meetings of
shareholders pursuant to Article V of these Bylaws, or his or her designee,
shall determine the agenda and the order in which business shall be conducted
unless the agenda and the order of business have been fixed by the Board of
Directors. Such officer or designee shall call meetings of shareholders to order
and shall preside unless otherwise determined by the affirmative vote of a
majority of all the voting shares of the corporation issued and outstanding. The
secretary of the corporation shall act as secretary of all meetings of
shareholders, but in the absence of the secretary at any shareholders meeting,
or his or her inability or refusal to act as secretary, the presiding officer
may appoint any person to act as secretary of the meeting.

3.10 Inspector of Elections. The Board of Directors may, in advance of a
shareholders meeting, appoint one or more inspectors to act at the meeting or
any adjournment thereof. In the event inspectors are not so appointed, or an
appointed inspector fails to appear or act, the person presiding at the
shareholders meeting may, and on request of a shareholder entitled to vote
thereat, shall, appoint one or more persons to fill such vacancy or vacancies or
to act as inspector. The inspector(s) shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine challenges and questions arising
in connection with the right to vote, count, and tabulate votes, ballots, or
consents, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all share holders.

ARTICLE IV
DIRECTORS

4.1 Board of Directors. Except as may otherwise be provided in the Articles
of Incorporation or these Bylaws, the business and affairs of the corporation
shall be managed by a Board of Directors. The Board of Directors shall consist
of that number of directors specified in compliance with Article VIII of the
Articles of Incorporation. The Board of Directors shall be divided into three
(3) classes, each class to be as nearly equal in number as possible. The term of
office of directors of the first class shall expire at the annual meeting of
shareholders to be held in 1999 and until their respective successors are duly
elected and qualified or their resignation or removal. The term of office of
directors of the second class shall expire at the annual meeting of shareholders
to be held in 2000 and until their respective successors are duly elected and
qualified or their resignation or removal. The term of office of directors of
the third class shall expire at the annual meeting of shareholders to be held in
2001 and until their resignation or removal. Subject to the foregoing, at each
annual meeting of shareholders, commencing at the annual meeting to be held in
1999, a number of directors equal to the number of the class whose term expires
at the time of the meeting shall be elected to hold office until the third
succeeding annual meeting. Directors shall serve until their respective terms
expire and their successors are elected and qualified or until their earlier
resignation or removal.

4.2 Resignation and Removal. A director may resign by written notice to the
corporation, which resignation is effective upon its receipt by the corporation
or at a subsequent time as set forth in the notice.

Notwithstanding any other provisions of these Bylaws or the Articles of
Incorporation of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law or by these Bylaws or by the Articles of
Incorporation of the Corporation), any one or more directors of the Corporation
may be removed at any time, with or without cause, but only by either (I) the
affirmative vote of a majority of the Continuing Directors (as defined in the
Articles of Incorporation of the Corporation) and at least eighty percent (80%)
of the Board of Directors or (ii) the affirmative vote, at a meeting of the
shareholders called for that purpose, of the holders of at least eighty percent
(80%) of the voting power of the then outstanding shares

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<PAGE>
of capital stock of the Corporation entitled to vote generally in the election
of directors voting together as a single class.

4.3 Vacancies and Increase in Number. Any vacancies in the Board of
Directors for any reason, and any newly created directorships resulting from any
increase in the number of directors, may be filled only by the Board of
Directors, acting by an affirmative vote of a majority of the Continuing
Directors (as defined in the Articles of Incorporation of the Corporation) and
an eighty percent (80%) majority of all of the directors then in office,
although less than a quorum, and any director so chosen shall hold office until
the next election of the class for which the director was chosen and until his
successor shall be duly elected and qualified or his resignation or removal. No
decrease in the number of directors shall shorten the term of any incumbent
director.

4.4 Place of Meetings and Records. The directors shall hold their meetings
and maintain the minutes of the proceedings of meetings of shareholders, the
Board of Directors, and committees of the Board of Directors, if any, and keep
the books and records of account for the corporation in such place or places,
within or outside the State of Michigan, as the Board of Directors may from time
to time determine.

4.5 Annual Meetings. The annual meeting of the Board of Directors shall be
held, without notice other than this Section 4.5, at the same place and
immediately after the annual shareholders meeting. If such meeting is not so
held, whether because a quorum is not present or for any other reason, or if the
directors were elected by written consent without a meeting, the annual meeting
of the Board of Directors shall be called in the same manner as hereinafter
provided for special meetings of the Board of Directors.

4.6 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board. Any notice given of a regular meeting need not specify
the business to be transacted or the purpose of the meeting.

4.7 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board or the president and shall be called by one
of them on the written request of any five (5) directors, upon at least two (2)
days written notice to each director, or twenty-four (24) hours notice, given
personally or by telephone or telegram. The notice does not need to specify the
business to be transacted or the purpose of the special meeting. Attendance of a
director at a special meeting constitutes a waiver of notice of the meeting,
except where a director attends the meeting for the express purpose of objecting
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.

4.8 Quorum and Vote. A majority of the members of the Board then in office
constitutes a quorum for the transaction of business and the vote of a majority
of the members present at any meeting at which a quorum is present constitutes
the action of the Board of Directors, unless the vote of a larger number is
specifically required by the Articles of Incorporation or these Bylaws. If a
quorum is not present, the members present may adjourn the meeting from time to
time and to another place, without notice other than announcement at the
meeting, until a quorum is present.

4.9 Action Without a Meeting. Any action required or permitted to be taken
pursuant to authorization voted at a meeting of the Board of Directors, or any
committee thereof, may be taken without a meeting if, before or after the
action, all members of the Board of Directors, then in office, or such
committee, consent thereto in writing. The written consent shall be filed with
the minutes of the proceedings of the Board of Directors or committee and the
consent shall have the same effect as a vote of the Board of Directors or
committee for all purposes.

4.10 Report to Shareholders. The Board of Directors shall cause a financial
report of the corporation for the preceding fiscal year to be made and
distributed to each shareholder within four months after the end of each fiscal
year. The report shall include the corporation's statement of income, its
year-end balance sheet, and, if prepared by the corporation, its statement of
source and application of funds.

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<PAGE>
4.11 Corporate Seal. The Board of Directors may authorize a suitable
corporate seal, which seal shall be kept in the custody of the Secretary and
used by the Secretary.

4.12 Compensation of Directors. By resolution of the Board of Directors,
the directors may be paid their expenses, if any, of attendance at meetings of
the Board or of any committee of which they are a member. In addition thereto or
in lieu thereof, as determined by resolution of the Board of Directors, a
director may be paid a fixed sum for attendance at each meeting of the Board, or
of a committee thereof, or may be paid a stated salary for serving as a director
as well as an additional stated salary for serving on any committee of the
Board.

4.13 Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate an executive committee consisting of one
or more of the directors of the corporation. At all meetings of the executive
committee, a majority of the members of the committee shall constitute a quorum
and the act of a majority of the members present at any executive committee
meeting at which there is a quorum present shall be the act of the executive
committee. The executive committee, to the extent provided in said resolution or
in these Bylaws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation and
may authorize the seal of the corporation to be affixed to all papers which may
require it. The Board may designate one or more other committees which shall
have such powers and duties as may be determined by the Board. All committees
shall keep regular minutes of their proceedings and report to the Board when
required. No committee shall have the power or authority to amend the Articles
of Incorporation, adopt an agreement of merger or consolidation, recommend to
the shareholders the sale, lease, or exchange of all or substantially all of the
corporation's property and assets, recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, fill vacancies in the Board
of Directors, fix compensation of the directors for serving on the Board or on a
committee, amend these Bylaws, or declare a dividend or authorize the issuance
of shares unless the power to declare a dividend or to authorize the issuance of
shares is granted to such committee by specific resolution of the Board of
Directors.

4.14 Meeting Participation by Use of Communication Equipment. Members of
the Board of Directors, or of any committee designated by the Board, may
participate in a meeting of the Board or commit tee, as the case may be, by
using a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can communicate with each other.
Participation in a meeting pursuant to this Section 4.14 shall constitute
presence at the meeting.

ARTICLE V
OFFICERS

5.1 Officers. The officers of the corporation shall be a president, a
treasurer, and a secretary, all of whom shall be elected by the Board of
Directors. In addition, the Board of Directors may elect a chairman and one or
more vice presidents who shall also be officers of the corporation if elected.
Each officer shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. None of the
officers of the corporation, other than the chairman, need be directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual shareholders meeting. Any two (2) or more offices may be held by the
same person, but an officer shall not execute, acknowledge, or verify any
instrument in more than one capacity if the instrument is required by law to be
executed, acknowledged, or verified by two (2) or more officers.

5.2 Other Officers and Agents. The Board of Directors may appoint such
other officers and agents as it may deem advisable, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors. The Board may, by
specific resolution, empower the chairman, the president, or the executive
committee, if such a committee has been designated by the Board, to appoint such
subordinate officers or agents and to determine their powers and duties.

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<PAGE>
5.3 Removal. The chairman, president, any vice president, secretary, and
treasurer may be removed at any time, with or without cause, but only by the
affirmative vote of a majority of the whole Board of Directors. Any assistant
secretary or assistant treasurer, or subordinate officer or agent appointed
pursuant to Section 5.2, may be removed at any time, with or without cause, by
action of the Board of Directors or by the committee or officer, if any,
empowered to appoint such assistant secretary or assistant treasurer or
subordinate officer or agent.

5.4 Compensation of Officers. Compensation of officers for services
rendered to the corporation shall be established by the Board of Directors.

5.5 Chairman. The Chairman of the Board of Directors, if one be elected,
shall be elected by the directors from among the directors then serving. The
Chairman of the Board shall preside at all meetings of the shareholders and at
all meetings of the Board of Directors and shall perform such other duties as
may be determined by resolution of the Board of Directors including, if the
Board shall so determine, acting as the chief executive officer of the
corporation, in which case the Chairman shall have general supervision,
direction, and control of the business of the corporation and shall have the
general powers and duties of management usually vested in or incident to the
office of the chief executive officer of a corporation.

5.6 President. Unless the Board shall determine otherwise, the President
shall be the chief executive officer as well as the chief operating officer of
the corporation and shall have general supervision, direction, and control of
the business of the corporation as well as the duty and responsibility to
implement and accomplish the objectives of the corporation. In the absence or
nonelection of a chairman, the president shall preside at all meetings of
shareholders and at all meetings of the Board of Directors. The president shall
perform such other duties as may be assigned by the Board of Directors.

5.7 Vice Presidents. Each vice president shall have such power and shall
perform such duties as may be assigned by the Board of Directors and may be
designated by such special titles as the Board of Directors shall approve.

5.8 Treasurer. The treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the corporation. The treasurer shall deposit
all money and other valuables in the name and to the credit of the corporation
in such depositories as may be selected by the Board of Directors. The treasurer
shall disburse the funds of the corporation as may be ordered by the Board of
Directors, or the chief executive officer, taking proper vouchers for such
disbursements. In general, the treasurer shall perform all duties incident to
the office of treasurer and such other duties as may be assigned by the Board of
Directors.

5.9 Secretary. The secretary shall give or cause to be given notice of all
meetings of shareholders and directors and all other notices required by law or
by these Bylaws; provided, however, that in the case of the secretary's absence,
or refusal or neglect to do so, any such notice may be given by any person so
directed by the chief executive officer or by the directors, or by the
shareholders upon whose requisition the meeting is called, as provided in these
Bylaws. The secretary shall record all the proceedings of meetings of
shareholders and of the directors in one or more books provided for that purpose
and shall perform all duties incident to the office of secretary and such other
duties as may be assigned by the Board of Directors.

5.10 Assistant Treasurers and Assistant Secretaries. Assistant treasurers
and assistant secretaries, if any shall be appointed, shall have such powers and
shall perform such duties as shall be assigned to them by the Board of Directors
or by the officer or committee who shall have appointed such assistant treasurer
or assistant secretary.

5.11 Bonds. If the Board of Directors shall require, the treasurer, any
assistant treasurer, or any other officer or agent of the corporation shall give
bond to the corporation in such amount and with such surety

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<PAGE>
as the Board of Directors may deem sufficient, conditioned upon the faithful
performance of his or her respective duties and offices.

ARTICLE VI
CONTRACTS, LOANS, CHECKS, AND DEPOSITS

6.1 Contracts. The Board of Directors may authorize any officer, or
officers, or agent, or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation and such
authority may be general or confined to specific instances.

6.2 Loans. No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name, unless authorized by a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.

6.3 Checks. All checks, drafts, or other orders for the payment of money,
notes, or other evidences of indebtedness issued in the name of the corporation
shall be signed by such officer, or officers, or agent, or agents, of the
corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.

6.4 Deposits. All funds of the corporation, not otherwise employed, shall
be deposited to the credit of the corporation in such banks, trust companies, or
other depositories as the Board of Directors may select.

ARTICLE VII
MISCELLANEOUS

7.1 Fiscal Year. The fiscal year of this corporation shall be fixed by
resolution of the Board of Directors.

7.2 Notices. Whenever any written notice is required to be given under the
provisions of any law, the Articles of Incorporation, or by these Bylaws, it
shall not be construed or interpreted to mean personal notice, unless expressly
so stated, and any notice so required shall be deemed to be sufficient if given
in writing by mail, by depositing the same in a Post Office box, postage
prepaid, addressed to the person entitled thereto at his or her address as it
appears in the records of the corporation. Such notice shall be deemed to have
been given at the time and on the day of such mailing. Shareholders not entitled
to vote shall not be entitled to receive notice of any meetings, except as
otherwise provided by law or these Bylaws.

7.3 Waiver of Notice. Whenever any notice is required to be given under the
provisions of any law, the Articles of Incorporation, or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.

7.4 Voting of Securities. Securities of another corporation, foreign or
domestic, standing in the name of this corporation, which are entitled to vote
may be voted, in person or by proxy, by the chairman or the president of this
corporation or by such other or additional persons as may be designated by the
Board of Directors.

7.5 Inconsistencies with Articles of Incorporation. In the event of any
inconsistency between any provision of these Bylaws and any provision of the
corporation's Articles of Incorporation, the Articles of Incorporation shall
control.

ARTICLE VIII
INDEMNIFICATION

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<PAGE>
Indemnification of directors, officers and others shall be made by the
corporation as provided in the Articles of Incorporation.

ARTICLE IX
AMENDMENTS

These Bylaws may be amended or repealed or new Bylaws adopted by a majority
vote of the Board of Directors at any regular or special meeting, without prior
notice of intent to do so, or by vote of the holders of a majority of the
outstanding voting shares of the corporation at any annual or special meeting if
notice of the proposed amendment, repeal, or adoption is contained in the notice
of the meeting.

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I, Bruce H. McIntyre, CERTIFY that:

(1) I am the duly constituted Secretary of Clarkston Financial
Corporation, and as such officer am the official custodian of its records;

(2) The foregoing bylaws are the Bylaws of Clarkston Financial
Corporation, a Michigan corporation, and all of them, as now lawfully in force
and effect.

IN TESTIMONY WHEREOF, I have here unto affixed my official signature
and seal of the said corporation, in the city of Clarkston, Michigan, on this
18th day of September, 1998.

/s/ Bruce H. McIntyre
Secretary

(SEAL)

Document No. 200431 ver. 1
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<PAGE>
EXHIBIT 5

VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP
ATTORNEYS AT LAW

BRIDGEWATER PLACE
POST OFFICE BOX 352 - GRAND RAPID, MICHIGAN 49501-0352
TELEPHONE 616/336-6000 - FAX 616/336-7000

September 18, 1998

Clarkston Financial Corporation
P. O. Box 436
Clarkston, Michigan 48347-0436

Ladies and Gentlemen:

This opinion is rendered in connection with the proposed issue and sale by
Clarkston Financial Corporation, a Michigan corporation (the "Company") of up to
1,092,500 shares of the Company's common stock, no par value (the "Common
Stock"), upon the terms and conditions set forth in the Company's Registration
Statement on Form SB-2 (the "Registration Statement") filed by the Company with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended. We have acted as counsel for the Company in connection with the
issuance and sale of Common Stock by the Company.

In rendering the opinion contained herein, we have relied in part upon
examination of the Company's corporate records, documents, certificates and
other instruments and the examination of such questions of law as we have
considered necessary or appropriate for the purpose of rendering this opinion.

Based upon the foregoing, we advise you that, in our opinion, the shares of
Common Stock of the Company, in an amount up to 1,092,500 shares to be issued by
the Company as described in the Registration Statement in accordance with the
terms stated in the Registration Statement, including receipt by the Company of
payment for such shares of Common Stock as described in the Registration
Statement, at the time the Registration Statement becomes effective, will be
duly and legally authorized, issued and outstanding, and will be fully paid and
nonassessable.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission relating thereto.

Very truly yours,

VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP

/s/ Varnum, Riddering, Schmidt & Howlett LLP

::ODMA\PCDOCS\GRR\191504\1
<PAGE>
EXHIBIT 10.1

CLARKSTON FINANCIAL CORPORATION
STOCK COMPENSATION PLAN

ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN

1.1 Establishment of the Plan. CLARKSTON FINANCIAL CORPORATION, a Michigan
corporation (the "Company"), hereby establishes a stock compensation plan to be
known as the "Clarkston Financial Corporation Stock Compensation Plan" (the
"Plan"), as set forth in this document. The Plan permits the granting of stock
options and restricted stock to key employees of the Company and its
subsidiaries.

1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of the
Company's key employees with those of its shareholders. The Plan is also
designed to allow key employees to participate in the Company's future, as well
as to enable the Company to attract, retain and award such employees.
Compensation related to Awards under the Plan is generally intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").

1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.

ARTICLE 2
DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings set
forth below:

2.1 Award means any award under this Plan of any Options or Restricted
Stock.

2.2 Award Agreement means an agreement evidencing the grant of an Award
under this Plan. Awards under the Plan shall be evidenced by Award Agreements
that set forth the details, conditions and limitations for each Award, as
established by the Committee and shall be subject to the terms and conditions of
the Plan.

2.3 Award Date means the date that an Award is made, as specified in an
Award Agreement.
<PAGE>
2.4 Board means the Board of Directors of the Company.

2.5 Change in Control is defined in Article 11.

2.6 Code means the Internal Revenue Code of 1986, as amended.

2.7 Committee means the Committee, as specified in Article 3, appointed by
the Board to administer the Plan, no members of which shall be eligible to
receive an Award pursuant to the Plan.

2.8 Common Stock means the Common Stock, no par value per share, of the
Company.

2.9 Disability means permanent and total disability as determined under the
rules and guidelines established by the Committee for purposes of the Plan.

2.10 Effective Date means September 18, 1998.

2.11 Employee means a salaried employee (including officers and directors
who are also employees) of the Company or a Subsidiary.

2.12 Fair Market Value means, as long as the Common Stock is not actively
traded in any recognized market, the average price per share at which shares of
Common Stock were bought and sold during the three (3) preceding months in
transactions known to management of the Company involving 100 or more shares
between purchasers and sellers none of whom are directors or officers of the
Company or any Subsidiary. If there have been no such transactions, the "Fair
Market Value" shall be determined in good faith by the Committee. If the shares
of Common Stock are actively traded on the National Association of Securities
Dealers Automated Quotation System or any successor system then in use
("NASDAQ") or the OTC Bulletin Board, then Fair Market Value means, as to
Incentive Stock Options, the closing sale price per share of the Common Stock on
the relevant valuation date on the NASDAQ or the OTC Bulletin Board. If no sale
of shares of Common Stock is reflected on the NASDAQ or the OTC Bulletin Board
on a date, "Fair Market Value" shall be determined on the next preceding day on
which there was a sale of shares of Common Stock reflected on the NASDAQ or the
OTC Bulletin Board. Fair Market Value means, as to Nonqualified Stock Options,
the average NASDAQ or OTC Bulletin Board closing sale prices per share of the
Common Stock during the calendar month immediately preceding the relevant
valuation date.

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2.13 Incentive Stock Option or ISO means an option to purchase shares of
Common Stock granted under Article 6, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.

2.14 Non-Employee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.

2.15 Nonqualified Stock Option or NQSO means an option to purchase shares
of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.

2.16 Option means an Incentive Stock Option or a Nonqualified Stock Option.

2.17 Option Price means the price at which a share of Common Stock may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.

2.18 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.

2.19 Retirement (including Normal, Early and Disability Retirement) means
the termination of a Participant's employment with the Company or a Subsidiary
with eligibility for normal, early or disability retirement benefits under the
terms of the Company's profit sharing plan, as amended and in effect at the time
of such termination of employment.

2.20 Restricted Stock means an Award granted to a Participant under Article
7 of this Plan.

2.21 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Act"), as amended
from time to time or any successor rule.

2.22 Subsidiary means any corporation in which the Company owns directly,
or indirectly through subsidiaries, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns
at least fifty percent (50%) of the combined equity thereof.

2.23 Termination of Employment means the termination of a Participant's
employment with the Company or a Subsidiary. A Participant employed by a
Subsidiary shall also be deemed to incur a Termination of Employment if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an Employee of the Company or another Subsidiary.

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ARTICLE 3
ADMINISTRATION

3.1 The Committee. The Plan shall be administered by a Committee designated
by the Board consisting of not less than three (3) directors who shall be
appointed from time to time by the Board, each of whom shall qualify as a
Non-Employee Director. Initially, the Committee shall consist of all directors
of the Company who are Non-Employee Directors.

3.2 Committee Authority. Subject to the Company's Articles of
Incorporation, Bylaws and the provisions of this Plan, the Committee shall have
full authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:

(a) To select the key Employees of the Company or a Subsidiary to whom
Awards may be granted under the Plan;

(b) To determine whether and to what extent Options and Restricted
Stock, or any combination thereof, are to be granted under the Plan;

(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares Common
Stock relating thereto, based on such factors as the Committee shall
determine in its sole discretion;

(e) To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in conjunction
with or apart from other cash compensation arrangement made by Company
other than under the terms of this Plan;

(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and

(g) To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award shall be
deferred.

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<PAGE>
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously granted under the Plan or
cause the Plan or the Award not to meet the requirements of Rule 16b-3. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Award granted under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Award granted hereunder.

ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 11.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan shall not
exceed 25,000 shares, which may be either unauthorized and unissued Common Stock
or issued Common Stock reacquired by the Company ("Plan Shares"). Determinations
as to the number of Plan Shares that remain available for issuance under the
Plan shall be made in accordance with such rules and procedures as the Committee
shall determine from time to time, which shall be consistent with the
requirements of Rule 16b-3 and such interpretations thereof. If an Award expires
unexercised or is forfeited, canceled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock that were theretofore subject (or
potentially subject) to such Award may again be made subject to an Award
Agreement; provided, however, that any such shares subject to a forfeited or
canceled Award shall not again be made subject to an Award Agreement to any
Participant who received, directly or indirectly, any of the benefits of
ownership of the securities underlying such Award, excluding the right to vote
such shares.

ARTICLE 5
ELIGIBILITY

The persons who shall be eligible to receive Awards under the Plan shall be
such key Employees as the Committee shall select from time to time. In making
such selections, the Committee shall consider such factors as the Committee in
its discretion shall deem relevant. Participants may hold more than one Award,
but only on the terms and subject to the restrictions set forth in the Plan and
their respective Award Agreements.

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ARTICLE 6
STOCK OPTIONS

6.1 Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").

6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.

6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000 limitation
imposed by Section 422(d) of the Code.

6.4 Terms of Options. Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which Agreement shall comply with and be subject to the following terms and
conditions:

(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the
time of grant but shall be not less than one hundred percent (100%) of the
Fair Market Value of the Common Stock at the Award Date.

(b) Option Term. The term of each Option shall be fixed by the Commit
tee, but no Option shall be exercisable more than ten (10) years after the
date the Option is granted.

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<PAGE>
(c) Exercisability and Vesting. Except as provided in Section 11.2, no
Option shall be exercisable in either in whole or in part prior to the
first anniversary of the Award Date. Thereafter, an Option shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee and set forth in the Award
Agreement; provided, however, that each Option shall include a minimum
vesting period of three years from the Award Date during which period the
Options shall vest in approximately equal percentages for the first three
years, or such longer vesting period as the Committee may determine.
Notwithstanding the foregoing, a Participant's outstanding Options under
the Plan will be fully vested and exercisable upon the Participant's death
or Disability or upon the occurrence of a change in control as provided in
Section 11.2. In addition, the Committee may waive the vesting requirement
for Participants awarded Options on only a nominal number of shares. The
Committee may at any time waive such vesting requirements, in whole or in
part, based on such factors as the Committee may determine; provided,
however, that the Committee may not waive the minimum vesting requirements
of this Section 6.4(c).

(d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept.
Notwithstanding the foregoing, an Option shall not be exercisable with
respect to less than 100 shares of Common Stock unless the remaining shares
covered by an Option are fewer than 100 shares. If and to the extent
determined by the Committee in its sole discretion at or after grant,
payment in full or in part may also be made in the form of Common Stock
owned for at least six months by the Participant (and for which the
Participant has good title free and clear of any liens and encumbrances) or
Restricted Stock, or by reduction in the number of shares issuable upon
such exercise based, in each case, on the Fair Market Value of the Common
Stock on the last trading date preceding payment as determined by the
Committee (without regard to any forfeiture restrictions applicable to
Restricted Stock). No shares of stock shall be issued until payment has
been made. A Participant shall generally have the rights to dividends or
other rights of a shareholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid for such
shares as provided herein, and, if requested, has given the representation
described in Section 12.1 of the Plan. Notwithstanding the foregoing, if
payment in full or in part has been made in the form of Restricted Stock,
an equivalent number of shares of Common Stock issued on exercise of the
Option shall be subject to the same restrictions and conditions, and during
the remainder of

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<PAGE>
the Restriction Period (as defined in Section 7.3(a)), applicable to the
shares of Restricted Stock surrendered therefor.

(e) Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. All Options shall be
exercisable, during the Participant's lifetime, only by such Participant.
The designation of a person entitled to exercise an Option after a person's
death will not be deemed a transfer.

(f) Termination of Employment. Upon Termination of Employment for any
reason each Option held by the Participant shall, to the extent rights to
purchase shares under such Option have accrued at the date of such
Termination of Employ ment and shall not have been fully exercised, be
exercisable, in whole or in part, at any time within a period of ninety
(90) days following Termination of Employment, subject, however, to prior
expiration of the term of such Options and any other limitations on the
exercise of such Options in effect at the date of exercise.

(g) Termination of Employment for Death. Upon Termination of
Employment due to death, each Option held by such Participant shall, to the
extent rights to purchase shares under the Options have accrued at the date
of death and shall not have been fully exercised, be exercisable, in whole
or in part, by the personal representative of the Participant's estate or
by any person or persons who shall have acquired the Option directly from
the Participant by bequest or inheritance only under the following
circumstances and during the following periods: (i) if the Participant dies
while employed by the Company or a Subsidiary, at any time within ninety
(90) days after his death, or (ii) if the Participant dies during the
extended exercise period following Termination of Employment specified in
Section 6.4(f), at any time within the longer of such extended period or
six (6) months after death, subject, however, in any case, to the prior
expiration of the term of the Option and any other limitation on the
exercise of such Option in effect at the date of exercise.

(h) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f) or (g) is
applicable shall terminate upon expiration of such exercise period.

(i) Purchase and Settlement Provisions. The Committee may at any time
offer to purchase an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made.

ARTICLE 7

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<PAGE>
RESTRICTED STOCK

7.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.

7.2 Awards and Certificates. A prospective Participant selected to receive
a Restricted Stock Award shall not have any rights with respect to such Award,
unless and until such Participant has executed an Award Agreement evidencing the
Award and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:

(a) Acceptance. Awards of Restricted Stock must be accepted within a
period of 20 days (or such shorter period as the Committee may specify at
grant) after the Award Date, by executing an Award Agreement and by paying
whatever price (if any) the Committee has designated for such shares of
Restricted Stock.

(b) Legend. Each Participant receiving a Restricted Stock Award shall
be issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the Clarkston Financial Corporation
Stock Compensation Plan and related Award Agreement entered into
between the registered owner and the Company, dated . Copies of
such Plan and Agreement are on file in the offices of the
Company, ______________, Clarkston, Michigan."

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<PAGE>
(c) Custody. The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
award of Restricted Stock, the Participant shall have delivered a duly
signed stock power, endorsed in blank, relating to the Common Stock covered
by such Award.

7.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:

(a) Restriction Period. Subject to the provisions of this Plan and the
Award Agreement, during a period set by the Committee (the "Restriction
Period"), the Participant shall not be permitted to sell, transfer, pledge,
or assign shares of Restricted Stock awarded under this Plan. Subject to
these limits, the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or such
other factors or criteria as the Committee may determine. Each Award of
Restricted Stock shall include a minimum vesting period of three years from
the Award Date, during which period the shares of Restricted Stock shall
vest in approximately equal percentages for the first three years or such
longer vesting period as the Committee may determine; provided, however,
that the Committee may waive the vesting requirement for Participants
awarded only a nominal number of shares of Restricted Stock.

(b) Rights as Shareholder. Except as provided in this subsection (b)
and subsection (a) above, the Participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a holder of shares of
Common Stock of the Company including the right to receive any dividends.
The Committee, in its sole discretion, as determined at the time of Award,
may permit or require the payment of dividends to be deferred. If any
dividends or other distributions are paid in shares of Common Stock, such
shares shall be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to which they
were paid.

(c) Termination of Employment. Subject to the applicable provisions of
the Award Agreement and this Article 7, upon Termination of Employment for
any reason during the Restriction Period, all Restricted Shares still
subject to restriction will vest or be forfeited in accordance with the
terms and conditions established by the Committee as specified in the Award
Agreement.

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<PAGE>
(d) Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for
such shares shall be delivered to the Participant.

ARTICLE 8
ADDITIONAL TERMS

Notwithstanding anything to the contrary in this Plan or any Award
Agreement, the primary federal regulator of the Company or any Subsidiary that
is a depository institution shall have the right in its discretion to direct the
Company to require Participants to exercise or forfeit their Awards if the
capital of the Company or any Subsidiary that is a depository institution falls
below the minimum capital required by applicable laws, rules and regulations, as
determined by the primary state or federal regulator of the Company or the
Subsidiary.

ARTICLE 9
TERMINATION OR AMENDMENT OF THE PLAN

The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's share holders, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan (except by operation of Section
11.1); (ii) change the definition of Employees eligible to receive Awards under
this Plan; (iii) decrease the option price of any Option to less than one
hundred percent (100%) of the Fair Market Value on the date of grant for an
Option; (iv) extend the maximum option period under Section 6.4(b) of the Plan;
or (v) cause the Plan not to comply with either Rule 16b-3, or any successor
rule under the Act, or Section 162(m) of the Code. The Committee may amend the
terms of any Award theretofore granted, prospectively or retroactively, but,
subject to Section 11.2, no such amendment or other action by the Committee
shall impair the rights of any Participant without the Participant's consent.
Awards may not be granted under the Plan after the Termination Date, but Awards
granted prior to such date shall remain in effect or become exercisable pursuant
to their respective terms and the terms of this Plan.

ARTICLE 10
UNFUNDED PLAN

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<PAGE>
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.

ARTICLE 11
ADJUSTMENT PROVISIONS

11.1 Antidilution. Subject to the provisions of this Article 11, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.

11.2 Change in Control. Notwithstanding Section 11.1, upon the occurrence
of a Change in Control, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless, in
the case of a transaction described in clause (iii) or (iv) in the following
definition of Change in Control, provisions are made in connection with such
transaction for the continuance of the Plan and the assumption of or the
substitution for such Awards of new Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. As used in this
Plan, "Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act; provided that, for
purposes of this Plan, a Change in Control shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company which represent 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's stockholders, of
each new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding any individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A

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<PAGE>
promulgated under the Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the Board; (iii) there is
consummated any con solidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of
Common Stock are converted into cash, securities or other property, other than a
merger of the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is consummated
any consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of Common Stock
immediately prior to the merger do not own at least fifty percent (50%), or such
greater percentage as shall be set in any agreement with any Participant, or
more of the stock of the surviving corporation immediately after the merger; (v)
there is consummated any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.

11.3 Adjustments by Committee. Any adjustments pursuant to this Article 11
will be made by the Committee, whose determination as to what adjustments will
be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.

ARTICLE 12
GENERAL PROVISIONS

12.1 Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.

All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

12.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance

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<PAGE>
of employment by the Company or any Subsidiary, nor shall there be a limitation
in any way on the right of the Company or any Subsidiary by which an Employee is
employed to terminate his or her employment at any time.

12.3 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Unless otherwise prohibited by the Committee,
each Participant may satisfy any such withholding tax obligation by any of the
following means or by a combination of such means: (a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise issuable to
the Participant a number of shares having a Fair Market Value as of the "Tax
Date", less than or equal to the amount of the withholding tax obligation; or
(c) delivering to the Company unencumbered shares owned by the Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the withholding tax obligation. The "Tax Date" shall be the date that the
amount of tax to be withheld is determined.

12.4 No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically provided in this Plan or
as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, attach, sell,
transfer, assign, pledge, encumber or charge, any such benefits shall be void,
and any such benefit shall not in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment or legal process
for or against such person.

12.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.

12.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.

12.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.

12.8 Cancellation of Prior Plans. Upon approval of this Plan by the Board,
all prior restricted stock plans and all prior employee stock option plans shall
be cancelled,

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<PAGE>
terminated, and of no further force or effect, except insofar as any such prior
plan relates to restricted stock awards or options outstanding immediately prior
to approval of this Plan.

ARTICLE 13
SHAREHOLDER APPROVAL

The Plan received the unanimous approval of the Company's shareholders
prior to the Effective Date.

::ODMA\PCDOCS\GRR\169819\2

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<PAGE>
EXHIBIT 10.2

CLARKSTON FINANCIAL CORPORATION
1998 FOUNDING DIRECTORS' STOCK OPTION PLAN

Section 1. Establishment and Purpose.

Clarkston Financial Corporation hereby establishes a stock option plan to
be named the Clarkston Financial Corporation 1998 Founding Directors' Stock
Option Plan, for certain persons serving, or who have served, as directors of
the Company and its Subsidiaries. The purpose of the Plan is: (i) to provide a
non-cash method of compensating directors of the Company and its Subsidiaries;
(ii) to help ensure the Company's continued progress; and (iii) to compensate
directors who have placed personal funds at risk to finance the organization of
the Company and its Subsidiaries.

Section 2. Definitions.

(a) Act means the Securities Exchange Act of 1934, as amended from time to
time.

(b) Authority means the seventy-five thousand (75,000) shares of Stock
authorized for issuance pursuant to the Plan.

(d) Committee means a committee appointed by the Board of Directors to
administer the Plan as specified in Section 3.

(e) Company means Clarkston Financial Corporation, a corporation organized
and existing under the laws of the State of Michigan.

(f) Eligible Director means a person who is a director of the Company.

(g) Effective Date means September 18, 1998.

(h) Fair Market Value means, as long as the Common Stock is not actively
traded in any recognized market, the average price per share at which shares of
Common Stock were bought and sold during the three (3) preceding months in
transactions known to management of the Company involving 100 or more shares
between purchasers and sellers none of whom are directors or officers of the
Company or any Subsidiary. If there have been no such transactions, the "Fair
Market Value" shall be determined in good faith by the Board. If the shares of
Common Stock are actively traded in any recognized market, the "Fair Market
Value" as used in the Plan shall mean the average of the last reported sales
price of
<PAGE>
Common Stock as of the close of business for each of the last twenty (20)
trading days ending the day immediately preceding the day as of which "Fair
Market Value" is to be determined.

(i) Grant Date means, with respect to each Option, the day that an Eligible
Director is granted the Option.

(j) Non-employee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission

(k) Option means an option granted under this Plan to acquire Stock.

(l) Optionee means the person to whom an Option is granted.

(m) Option Agreement means an Agreement issued to each Eligible Director
with respect to each Option.

(n) Plan means the Clarkston Financial Corporation 1998 Directors' Stock
Option Plan.

(o) Post-Death Representative(s) means the executor(s) or administrator(s)
of the Optionee's estate or the person or persons to whom the Optionee's rights
under his or her Option pass by Optionee's will or the laws of descent and
distribution.

(p) Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Act, as amended from time to time or any successor rule.

(q) Shares means shares of Stock.

(r) Stock means authorized and unissued shares of common stock, no par
value, of the Company and includes Shares which may be reacquired by the
Company.

(s) Subsidiary means any banking corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty percent (50%) of
the total combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined equity thereof.

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<PAGE>
Section 3. Administration.

The Plan shall be administered by a Committee designated by the Board
consisting of not less than three (3) directors who shall be appointed from time
to time by the Board, each of whom shall qualify as a Non-Employee Director.
Initially, the Committee shall consist of all directors of the Company who are
Non-Employee Directors.

Subject to the Company's Articles of Incorporation, Bylaws and the
provisions of this Plan, the Committee shall have full authority to grant
Options to Eligible Directors. The authority of the Committee shall include the
following: (a) To select the Eligible Directors to whom Options may be granted
under the Plan; (b) To determine whether and to what extent Options are to be
granted under the Plan; (c) To determine the number of shares of Common Stock to
be covered by each Option; and (d) To determine the terms and conditions of any
Option Agreement, including, but not limited to, the Option Price, any vesting
restriction or limitation, any vesting schedule or acceleration thereof, or any
forfeiture restrictions or waiver thereof, regarding any Option and the Shares
relating thereto, based on such factors as the Committee shall determine in its
sole discretion.

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan (including any Option Agreement) and
to otherwise supervise the administration of the Plan. However, the Committee
shall take no action which will impair any Option previously granted under the
Plan or cause the Plan or the Option not to meet the requirements of Rule 16b-3.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of a quorum at any meeting, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Option granted under the Plan shall be final and
binding upon the Company, the Board and Optionees, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Option granted hereunder.

Section 4. Shares Reserved Under the Plan.

The following provisions shall govern the number of Shares issuable under
the Plan:

(a) The maximum number of Shares which may be issued in connection with
Options granted hereunder is seventy-five thousand (75,000). At any time during
the existence of the Plan, there shall be reserved for issuance upon the
exercise of Options granted under the Plan an amount of Stock (subject to
adjustment as provided in Section 10

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hereof) equal to 75,000 Shares less the total number of Shares issued pursuant
to all such exercises which shall have been made prior to such time.

(b) When an Option is granted, the total number of Shares issuable upon
complete exercise thereof shall be charged against the maximum number of Shares
of the Authority. When the Option is exercised, no additional charge shall be
made against the Authority. If an exercise price is paid in Shares owned by the
Optionee, such Shares shall not be added to the Authority.

(c) If an Option terminates in whole in part, by expiration or for any
other reason except exercise of such Option, the Shares previously charged to
the Authority upon grant of the Option shall be restored to the Authority, and
shall again be available for issuance under the Authority, for as long as such
Authority continues, as if such Shares had never been subject to an Option.

Section 5. Granting of Options.

The Committee may from time to time grant Options to such of the Eligible
Directors as the Committee may select. In making such selections, the Committee
shall consider such factors as the Committee in its discretion shall deem
relevant.

Section 6. Terms of Options.

Notwithstanding any other provisions of the Plan, each Option shall be
evidenced by an Option Agreement, which shall include the substance of the
following terms and conditions:

(a) The option price for each Share covered by an Option shall be an amount
equal to one hundred percent (100%) of the Fair Market Value of a Share on the
Grant Date of such Option.

(b) The Option by its terms shall not be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution. The
designation of a beneficiary does not constitute a transfer. The Option shall be
exercisable, during the Optionee's lifetime, only by the Optionee.

(c) No Option shall be exercisable after the expiration of ten years from
the Grant Date. Notwithstanding the foregoing, if the Optionee dies before
service as a director terminates, the Option shall be exercisable as to all
Shares, to the extent not previously exercised.

-4-
<PAGE>
(d) Options shall not be exercisable after the earlier of (i) three (3)
months after the date on which the Optionee's service as a director terminates
for any reason or (ii) the expiration of ten years from the Grant Date.

(e) Each Option shall include a minimum vesting period of three years from
the Grant Date during which period the Options shall vest in approximately equal
percentages for the first three years, or such longer vesting period as the
Committee may determine. Notwithstanding the foregoing, an Optionee's
outstanding Options under the Plan will be fully vested and exercisable upon the
Optionee's death or disability or upon the Optionee's ceasing to serve as a
director of the Company, unless the cessation was the result of the Optionee's
voluntary resignation, refusal to be nominated for an additional term, or
removal from the Board for improper or negligent actions or omissions by the
Optionee. In addition, the Committee may waive the vesting requirement for
Optionees awarded Options on only a nominal number of Shares.

Section 7. No Right to Remain a Director.

The grant of an Option shall not create any right in any person to remain
as a director of the Company.

Section 8. Exercise of Option.

(a) An Option shall be exercisable only (1) upon payment to the Company on
the exercise date of cash in the full amount of the option price of the Shares
with respect to which the Option is exercised, (2) upon delivery to the Company
on the exercise date of certificates representing unencumbered Shares, owned by
the Optionee having a Fair Market Value, on the last trading date preceding such
exercise and delivery, equal to the full amount of the purchase price of the
Shares with respect to which the Option is exercised, or (3) a combination of
(1) and (2), except that (i) any portion of the exercise price representing a
fraction of a Share shall in any event be paid in cash, and (ii) no Shares which
have been held for less than six months may be delivered in payment of the
exercise price of an Option. If and to the extent determined by the Committee,
in its sole discretion, at or after the Grant Date, payment in full or in part
may also be made by reduction in the number of Shares issuable upon exercise of
the Option based on the Fair Market Value of the Stock on the last trading date
preceding the exercise.

(b) An Optionee shall have none of the rights of a shareholder with respect
to Shares subject to the Option until Shares are issued to the Optionee upon the
exercise of an Option.

-5-
<PAGE>
Section 9. General Provisions.

The Company shall not be required to issue or deliver any certificate for
Shares to an Optionee upon the exercise of an Option prior to:

(a) If requested by the Company, the filing with the Company by the
Optionee, or the Optionee's Post-Death Representative, as the case may be, of a
representation in writing that at the time of such exercise it is their then
present intention to acquire the Shares being purchased for investment and not
for resale, and/or the completion of any registration or other qualification of
such Shares under any state or federal laws or rulings or regulations of any
governmental regulatory body, which the Company shall determine to be necessary
or advisable; and

(b) The obtaining of any other consent, approval, or permit from any state
or federal governmental agency which the Committee shall, in the Committee's
absolute discretion upon the advice of counsel, determine to be necessary or
advisable.

Section 10. Adjustment Provisions.

In the event any stock dividend is declared upon the Stock or in the event
outstanding Shares shall be changed into or exchanged for a different number,
class or kind of Shares or other securities of the Company or another
corporation, whether by reason of a split or combination of shares,
recapitalization, reclassification, reorganization, merger, consolida tion, or
otherwise, the maximum number of Shares which may be charged against the
Authority shall be appropriately and proportionately adjusted and in any such
event a corresponding adjustment shall be made changing the number, class or
kind of Shares or other securities which are deliverable upon the exercise of
any Option theretofore granted without change in the total price applicable to
the unexercised portion of such Option, but with a corresponding adjustment in
the price for each Share or other securities covered by the unexercised portion
of such Option. In the event the Company is merged, consolidated, or reorganized
with another corporation, appropriate provision shall be made for the
continuance of outstanding Options with respect to shares of the succeeding
parent corporation following a merger, or with respect to shares of the
consolidated or reorganized corporation in the case of a consolidation or
reorganization, and to prevent their dilution or enlargement compared to the
total shares issuable therein in respect of the Stock. Adjustments under this
Section 10 shall be made in an equitable manner by the Committee, whose
determination shall be conclusive and binding on all concerned.

-6-
<PAGE>
Section 11. Duration, Amendment, and Termination.

The Board of Directors may at any time terminate the Plan or make such
amendments thereof as it shall deem advisable and in the best interests of the
Company, without further action on the part of the Shareholders of the Company;
provided, however, that no such termination or amendment shall, without the
consent of the Optionee, adversely affect or impair the rights of such Optionee,
and provided further, that, unless the Shareholders of the Company shall have
first approved thereof, no amendment of this Plan shall be made whereby: (a) the
total number of Shares which may be granted under the Plan to all individuals
shall be increased, except by operation of the adjustment provisions of Section
10 hereof; (b) the term of the Options shall be extended; (c) the minimum option
price shall be decreased; or (d) the class of eligible persons to whom Options
may be granted shall be changed. The period during which Options may be granted
under the Authority shall terminate on the tenth anniversary of the Effective
Date, unless the Plan earlier shall have been terminated as provided above.

Section 12. Additional Terms.

Notwithstanding anything to the contrary in this Plan or any Option
Agreement, the primary federal regulator of the Company or any Subsidiary that
is a depository institution shall have the right in its discretion to direct the
Company to require Participants to exercise or forfeit their Options if the
capital of the Company or any Subsidiary that is a depository institution falls
below the minimum capital required by applicable laws, rules and regulations, as
determined by the primary state or federal regulator of the Company or the
Subsidiary.

Section 13. Date of Granting Options.

All Options granted under the Plan shall be in writing and shall be granted
as of a Grant Date.

Section 14. Shareholder Approval.

The Plan was unanimously approved by the Shareholders of the Company prior
to the Effective Date.

Section 15. Miscellaneous.

(a) Subject to the provisions of applicable federal law, the Plan shall be
administered, construed and enforced according to the internal laws of the State
of Michigan,

-7-
<PAGE>
excluding its conflict of law rules, and applicable federal law and in courts
situated in the State of Michigan.

(b) Transactions under this Plan are intended to comply with applicable
conditions for exemption under Rule 16b-3. To the extent any provision of this
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.

(c) The invalidity of any particular provision herein shall not invalidate
all or any part of the remainder of the Plan, but such remainder shall be and
remain valid in all respects as fully as the law will permit.

::ODMA\PCDOCS\GRR\169826\3
-8-
<PAGE>
EXHIBIT 10.3
LEASE

THIS LEASE is entered into between CLARKSTON BUILDING CO., LLC, a Michigan
limited liability company, P.O. Box 436, Clarkston, MI 48347 (the "Lessor") and
CLARKSTON STATE BANK, a Michigan banking corporation to be formed, of 15 South
Main Street, Clarkston, MI 48346 (the "Lessee"), upon the terms and conditions
stated below.

1. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor
the property located at 15 South Main Street, Clarkston, Michigan (the
"Premises").

2. Term. The term of this Lease shall be a period of five (5) years
commencing on the date that the Lessee opens for business as a bank (the
"Commencement Date").

3. Renewal of Lease. Lessee may renew the initial term of this Lease for
three (3) additional five (5) year periods upon the same terms and conditions
contained in this Lease, including, without limitation, rent. In order to
exercise such option to renew, Lessee must give written notice to Lessor of
Lessee's intention to renew at least six (6) months prior to the termination of
the then existing term. As used in this Lease, "term of this Lease" or "Lease
term" includes renewal periods unless otherwise noted or the context clearly
otherwise requires.

4. Rent.

(a) Base Rent. For the first two years of the Lease Term, Lessee shall
pay Lessor as Base Rent for the Premises the sum of Sixty Thousand Dollars
($60,000) per year, payable in equal monthly installments of Five Thousand
Dollars ($5,000) commencing on the Commencement Date. For the third year of
the Lease Term and each year of the Lease Term thereafter, Lessee shall pay
Lessor as Base Rent for the Premises the sum of Sixty-one Thousand Nine
Hundred Eighty Dollars ($61,980) per year, payable in equal monthly
installments of Five Thousand One Hundred Sixty-five Dollars ($5,165).
Monthly installments of rent shall be due and payable in advance on the
first day of each calendar month. Rent for any partial month of occupancy
shall be prorated. Rent payments shall be made to Lessor at its address
shown above or any other place designated in writing by Lessor.

(b) Additional Rent. Lessee agrees to be responsible for the payment
of all of the taxes and insurance on the Premises as required by this Lease
and all of the utility services for the Premises including water, sewer,
gas, electricity, heat and other services delivered to the Premises. All
other services contracted for by Lessee shall be paid for by Lessee
immediately upon presentation of the invoice so that no past due accounts
arise.

In addition, any fees, costs or expenses incurred by Lessor and enforcing
Lessee's obligations under this Lease, including reasonable attorney's fees,
shall be deemed to be additional rent owing under the Lease, which shall be due
and payable immediately by Lessee.
<PAGE>
5. Signs. All signs placed on the Premises shall be in keeping with the
character and decor of the Premises.

6. Acceptance of Occupancy. The Lessee shall commence occupancy of the
Premises on the Commencement Date and begin payment of rent as called for by
this Lease. Lessee acknowledges the Premises are in a state of repair acceptable
for Lessee's intended use of the Premises. The Lessee accepts the Premises "as
is."

7. Vacation of Premises. Lessee shall not vacate or abandon the Premises at
any time during the term of this Lease, and if Lessee shall abandon or vacate
the Premises, or be disposed by process of law, or otherwise, any personal
property belonging to Lessee left upon the Premises shall be deemed to be
abandoned by Lessee, at the option of Lessor.

8. Use. The Premises are to be used and occupied by Lessee for the business
of banking and such other businesses as banks organized under the laws of the
State of Michigan are permitted to conduct. To the extent of any assignment or
subletting of the Premises, they may be used for general business office
purposes. No activity shall be conducted on the Premises which does not comply
with all state and local laws, ordinances and regulations.

9. Repairs and Maintenance. Lessee shall be responsible for all maintenance
and repair of the Premises. The Lessee shall be obligated to repair and maintain
the Premises at Lessee's expense. The Premises shall be kept in good and safe
condition including any plate glass windows, the electrical wiring, the plumbing
and any other system or equipment upon the Premises, and structural members of
all buildings and other improvements on the Premises.

10. Surrender of Premises. Lessee shall surrender the Premises to Lessor at
the expiration of this Lease, broom clean and in the same or better condition as
at the Commencement Date, excepting normal wear and tear.

11. Entry and Inspection. Lessee shall permit Lessor or Lessor's agents to
enter upon the Premises at reasonable times and upon reasonable notice for the
purpose of inspection and repair of the Premises, and will permit Lessor at any
time within ninety (90) days prior to the expiration of the Lease to place upon
the Premises standard "FOR LEASE" signs and permit persons desiring to lease the
Premises to inspect the Premises during that period.

12. Taxes and Assessments. Lessee shall pay all real and personal property
taxes and assessments levied against the Premises during the term of this Lease.
All taxes levied upon the personal property owned or leased by Lessee shall be
the sole responsibility of Lessee.

13. Alterations. Lessee may remodel and make improvements to the Premises.
However, any remodeling or improvements which will significantly alter the
Premises or require an investment by Lessee in excess of Fifty Thousand Dollars
($50,000) shall require the prior written approval of the Lessor. The work shall
be done without injury to any structural portion of the building. Any

2
<PAGE>
improvements constructed on the Premises shall become the property of Lessor
upon the termination of this Lease.

14. Assignment and Subletting. Lessee may not assign, sublet or otherwise
transfer or convey its interest, or any portion of its interest, in the Premises
to any entity not affiliated with Lessee without the prior written consent of
Lessor which shall not be unreasonably withheld or delayed.

15. Trade Fixtures. All trade fixtures and moveable equipment installed by
Lessee in connection with the business conducted by it on the Premises shall
remain the property of Lessee and shall be removed by it at the expiration of
this Lease. Any damage caused by such removal shall be repaired by Lessee and
the Premises shall be restored to its original condition. Trade fixtures,
equipment and improvements located at the Premises on the date of this Lease are
the property of Lessor and included as a part of the Premises and such fixtures,
equipment and improvements shall remain with the Premises unless otherwise
agreed by Lessor in writing.

16. Insurance. Lessee shall insure the Premises including all buildings and
improvements, for the replacement cost of the buildings and improvements,
against loss or damage under a policy or policies of fire and extended coverage
insurance, including additional perils. Lessee shall obtain and maintain in full
force general liability and property damage insurance with coverage of not less
than one million dollars for injury or death to any one person, one million
dollars for injury or death to more than one person, and three hundred thousand
dollars with respect to property damage, covering any and all claims for
injuries to persons occurring in, upon or about the Premises, with such
insurance to be in an amount and issued by a company approved by the Lessor.
Each policy of insurance shall also contain a provision exempting Lessor from
any loss of coverage as an insured due to the acts of Lessee. Lessee shall
deliver to the Lessor customary insurance certifications evidencing that the
insurance is in effect at all times during the term of this Lease. All policies
must further provide for notice by the insurance company to the Lessor of any
termination or cancellation of a policy at least thirty (30) days in advance of
that event. All policies shall name both the Lessee and the Lessor as insured
parties.

17. Lessee's Liability. All Lessee's personal property of every kind and
description including trade fixtures on the Premises shall be kept at Lessee's
sole risk and Lessor shall not be responsible or liable to Lessee for any loss
of business or other loss or damage that may be occasioned by or through the
acts or omissions of persons occupying adjoining premises or any part of the
premises adjacent to or connected with the Premises.

18. Destruction of Premises. In the event the Premises are partially
damaged or destroyed through no fault of Lessee, Lessor shall, at its own
expense, promptly repair and restore the Prem ises. If the Premises is partially
damaged, rent shall not abate in whole or in part during the period of
restoration. In the event the Premises are totally destroyed through no fault of
Lessee, or if the Premises cannot be repaired and restored within one hundred
eighty (180) days after the event of destruction, then either party shall have
the right to terminate this Lease effective as of the date of the event by
giving the other party written notice of termination within ten (10) calendar
days after

3
<PAGE>
the occurrence of the event. If the notice is given within that period, this
Lease shall terminate and rent shall be adjusted between the parties to the date
of the surrender of possession. In the event the notice is not given within the
required period, this Lease shall continue, without abatement of rent, and
Lessor shall repair the Premises.

19. Mutual Releases. The Lessor and the Lessee, and all parties claiming
under them, hereby mutually release and discharge each other from all claims and
liabilities arising from or caused by any hazards covered by insurance on the
leased Premises, or covered by insurance in connection with property on or
activities conducted on the Premises regardless of the cause of the damage or
loss. Lessor and Lessee shall each cause appropriate clauses to be included in
their respective insurance policies which cover the Premises waiving subrogation
against the other party consistent with the mutual release contained in this
paragraph.

20. Condemnation. If the Premises or any part of the Premises shall be
taken for any public or quasi public purpose pursuant to any power of eminent
domain, or by private sale in lieu of eminent domain, then this Lease shall
terminate at the option of either the Lessor or Lessee, effective as of the date
the public authority takes possession. All damages for the condemnation of the
Premises, or which shall be awarded by reason of the taking, shall be payable to
and shall be the sole property of Lessor.

21. Indemnity. The Lessee agrees to indemnify and defend Lessor against and
hold Lessor harmless from any liability, loss, damage, cost or expense
(including attorney fees) based upon any claim, demand, suit or action by any
person or entity with respect to any personal injury (including death) or
property damages, from any cause whatsoever with respect to the Lessee or the
Premises, except for liability resulting from the intentional acts or gross
negligence of Lessor, its employees, agents, invitees or business visitors.

22. Default and Re-Entry. If Lessee shall neglect or fail to perform its
obligation to pay rent when due; or if Lessee shall have neglected or failed to
perform any other of the covenants con tained herein upon its part to be
observed and performed for ten (10) days after written notice by Lessor of the
default; or in the event Lessee makes any assignment for the benefit of
creditors or a receiver is appointed for Lessee or its property; or if any
proceedings are instituted by or against Lessee in bankruptcy (including
reorganization) or under any insolvency laws, then Lessor may terminate this
Lease and re-enter the Premises, and seek to re-let the Premises upon such terms
as Lessor shall in its sole discretion deem advisable. Notwithstanding re-entry
by Lessor, Lessee shall continue to be liable to Lessor for rent owed under this
Lease and for any rent deficiency which may result from a reletting of the
Premises during the term of this Lease. Notwithstanding any reletting without
termination, the Lessor may at any time elect to terminate this Lease for any
default by Lessee by giving written notice of the termination to Lessee.

In addition to Lessor's other rights and remedies as set forth in this
Lease, and without waiving any of those rights, if Lessor deems any repairs
necessary which the Lessee is required to make, or if Lessee shall be in default
in the performance of any of its obligations under this Lease, Lessor may, upon
failure of Lessee to meet the obligation, make or cause repairs to be made and

4
<PAGE>
defaults to be cured and shall not be responsible to Lessee for any loss or
damage that may occur by reason of that action, and Lessee agrees that it will
immediately upon demand pay to Lessor, as additional rent under this Lease,
Lessor's costs for curing.

23. Subordination. This Lease and Lessee's rights shall at all times be
subordinate to the lien of any mortgage or any collateral assignment of this
Lease and/or its rents which may be made by Lessor and placed upon the Premises.
However, so long as Lessee is not in default under this Lease the foreclosure of
a mortgage given by Lessor shall not disturb or affect Lessee's rights under
this Lease. Lessee agrees to provide Lessor with a customary tenant's estoppel
letter at the request of any lien holder with respect to the status of this
Lease. If Lessor shall default in the payments of its mortgage on the Premises,
then Lessee may make the monthly payment owed under the mortgage note and deduct
that amount from the rental payment owed under this Lease.

24. Notices. Any notice required under this Lease shall be in writing and
served in person or sent by registered or certified mail, return receipt
requested, to the addresses of the parties set forth in this Lease or to such
other address as a party may substitute by written notice, and shall be
effective as of the date of first attempted delivery.

25. Lessee's Possession and Enjoyment. The Lessee, on payment of the rent
at the time and in the manner stated above and on performance of all the
foregoing covenants, shall and may peacefully and quietly have, hold and enjoy
the Premises for the term of this Lease.

26. Holding Over. In the event Lessee does not vacate the Premises at the
end of the term specified, the holding over shall constitute a month-to-month
tenancy at a monthly rental rate to be set by Lessor in its sole discretion.

27. Entire Agreement. This Agreement together with the Security and Option
Agreement entered into between the Lessor and Lessee contains the entire
agreement of the parties with respect to its subject matter, and this Agreement
may not be amended or modified except by a written document signed by the
parties.

28. Waiver. The failure of the Lessor to enforce any covenant or condition
of this Lease shall not be deemed a waiver of its right to enforce each and
every covenant and condition of this Lease. No provision of this Lease shall be
deemed to have been waived unless the waiver is in writ ing.

29. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.

30. Time of the Essence. Time shall be deemed to be of the essence in the
performance of this Lease.

31. FDIC Required Lease Provisions. Notwithstanding any other provisions
contained in this Lease, in the event (a) Lessee or its successors or assignees
shall become

5
<PAGE>
insolvent or bankrupt, or if it or their interests under this Lease shall be
levied upon or sold under execution or other legal process, or (b) the
depository institution then operating on the Premises is closed, or is taken
over by any depository institution supervisory authority ("Authority"), Lessor
may, in either such event, terminate this Lease only with the concurrence of any
Receiver or Liquidator appointed by such Authority; provided, that in the event
this Lease is terminated by the Receiver or Liquidator, the maximum claim of
Lessor for rent, damages, or indemnity for injury resulting from the
termination, rejection, or abandonment of the unexpired Lease shall by law in no
event be in an amount exceeding an amount equal to all accrued and unpaid rent
to the date of termination.

This Lease has been executed September 10, 1998.

LESSOR:

CLARKSTON BUILDING CO., LLC

By /s/ David T. Harrison

Its Member

LESSEE:

CLARKSTON STATE BANK, a Michigan banking
corporation to be formed

By /s/ David T. Harrison

An Organizer

::ODMA\PCDOCS\GRR\182608\1
6
<PAGE>
EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

1. Clarkston State Bank, a banking corporation organized under the laws of the
State of Michigan.

::ODMA\PCDOCS\GRR\200201\3

II-5
<PAGE>
EXHIBIT 23.1
Independent Auditors' Consent

We consent to the use in this Registration Statement of Clarkston Financial
Corporation on Form SB-2 of our report dated September 9, 1998, on the financial
statements for the period ended August 31, 1998, appearing in this Registration
Statement. We also consent to the reference to us under the heading "Experts".

/s/ Plante & Moran, LLP
Plante & Moran, LLP
Bloomfield Hills, Michigan
September 9, 1998

<ARTICLE> 9

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> MAY-18-1998
<PERIOD-END> AUG-31-1998
<CASH> 0
<INT-BEARING-DEPOSITS> 93,230
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 113,151
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 120,000
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> (41,829)
<TOTAL-LIABILITIES-AND-EQUITY> 113,151
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
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<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 41,829
<INCOME-PRETAX> (41,829)
<INCOME-PRE-EXTRAORDINARY> (41,829)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,829)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
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<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
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<ALLOWANCE-UNALLOCATED> 0

</TABLE>