Pointe Financial Corp – ‘424B4’ on 6/15/98

As of:  Monday, 6/15/98   ·   Accession #:  1042910-98-568   ·   File #:  333-49835

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Prospectus   —   Rule 424(b)(4)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                            95    630K 

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PROSPECTUS                                                                      

869,565 SHARES

[LOGO POINTE FINANCIAL CORPORATION] 

COMMON STOCK
--------------------------- 

  All of the 869,565 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by Pointe       
Financial Corporation, a Florida corporation (the "Company"), and are being     
acquired by the Underwriters from the Company as newly issued shares of Common  
Stock.                                                                          

The Common Stock has been approved for quotation on The Nasdaq Stock  
Market's National Market ("Nasdaq") under the symbol "PNTE." Prior to this      
Offering, there has been no public trading market for the Common Stock and there
can be no assurance that an established and liquid market for the Common Stock  
will develop. The initial offering price of the Common Stock has been determined
through negotiations between the Company and the Underwriters. See              
"Underwriting."                                                                 

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT  
ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE  
BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.                             

   SEE "RISK FACTORS" BEGINNING ON PAGE 9 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF SHARES OF COMMON 
STOCK.                                                                          

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. 

                                                                [Download Table]
                                                             
              |    PRICE TO   |  UNDERWRITING  |  PROCEEDS TO
              |     PUBLIC    |  DISCOUNT(1)   |   COMPANY(2)
Per Share.... |    $15.375    |     $1.08      |    $14.295  
Total(3)..... |  $13,369,561  |    $939,130    |  $12,430,431

(1) The Company has agreed to indemnify the Underwriters against certain        
liabilities, including liabilities under the Securities Act of 1933, as 
amended (the "Securities Act"). See "Underwriting."                     

(2) Before deducting expenses of the offering payable by the Company, estimated 
at $295,070.                                                            

(3) The Company has granted the Underwriters a 30-day option to purchase up to  
   130,435 additional shares of Common Stock, on the same terms and conditions
   as set forth above, solely to cover over-allotments, if any. If such option
  is exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be approximately $15,375,000, $1,080,000 and   
$14,295,000, respectively. See "Underwriting."                          

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

   The shares of Common Stock to be distributed to the public are offered by
the Underwriters, subject to prior sale, when, as and if received and accepted  
by the Underwriters, subject to approval of certain legal matters by counsel for
the Underwriters and certain other conditions. The Underwriters reserve the     
right to withdraw or cancel such offer and to reject orders in whole or in part.
It is expected that delivery of the certificates for the shares of Common Stock 
will be made against payment thereon in New York, New York on or about June 17, 
1998.                                                                           

KEEFE, BRUYETTE & WOODS, INC.                          MCGINN, SMITH & CO., INC.

The date of this Prospectus is June 11, 1998

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   CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK     
OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING THE MARKET PRICE OF   
THE COMMON STOCK, THE PURCHASE OF COMMON STOCK TO COVER SYNDICATE SHORT         
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE        
ACTIVITIES, SEE "UNDERWRITING."                                                 

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PROSPECTUS SUMMARY

  The following is a summary of certain information contained elsewhere in
this Prospectus. This summary is provided for convenience; it should not be     
considered complete and is qualified in its entirety by reference to the more   
detailed information and the Consolidated Financial Statements (including the   
notes thereto) contained elsewhere in this Prospectus. Unless otherwise         
indicated, all share and per share information has been adjusted to give effect 
to (i) a three-for-two Common Stock split effected in the form of a stock       
dividend issued to shareholders of record as of February 27, 1998 and (ii) the  
conversion of all outstanding shares of the Company's preferred stock into      
shares of Common Stock, which conversion occurred on April 3, 1998. Cross       
references in this summary are to captions appearing in the body of this        
Prospectus. Except as otherwise noted, all information contained in this        
Prospectus assumes the underwriters' over-allotment option is not exercised.    

THE COMPANY 

GENERAL                                                                         

   Pointe Financial Corporation, a Florida corporation (the "Company"), is a
bank holding company headquartered in Boca Raton, Florida. As of March 31, 1998,
the Company had total assets of $163.770 million, net loans of $112.756 million,
total deposits of $136.148 million and total shareholders' equity of $14.107    
million. The Company had net income of $301 thousand for the period ended March 
31, 1998. All of the Company's net income is derived from the operation of its  
bank subsidiary, Pointe Bank, a Florida state-chartered commercial bank (the    
"Bank") with three full service banking facilities located in Boca Raton (Palm  
Beach County), Pembroke Pines (Broward County) and Aventura (Miami-Dade County),
Florida. The Bank also has two remote ATMs located in Boca Raton and Pembroke   
Pines. All of the Bank's ATMs are members of international networks. The Bank   
provides a full range of banking services catering to small and middle sized    
businesses, professionals, and individuals in Palm Beach, Broward and Miami-Dade
Counties, Florida.                                                              

   The strategy of the Company is to take advantage of the economic vitality
of its market by providing quality community banking services to its customers. 
The market for financial services in south Florida has been robust throughout   
the recent past. Based on information provided by the Bureau of Economic and    
Business Research, University of Florida, Broward and Palm Beach counties rank  
in the top 10 counties in Florida in per capita income and represent 9.66% and  
6.81%, respectively, of the population of Florida. Additionally, the Bank is    
benefitting from the high degree of merger consolidation in its market.         
According to the Florida Bankers Association and other industry sources, at     
year-end 1997 over 40% of the deposits in Florida have changed hands through    
acquisition during the past five years and 81% of Florida bank deposits were    
controlled by bank holding companies headquartered outside of Florida. This has 
created a favorable operating environment for community banks that provide      
personalized services to local businesses and consumers. Management believes    
that the larger banks in the Company's markets have increased the cost of       
certain banking services and have not stressed personal service to the small    
businesses and professionals who are the Company's targeted clients. The Company
markets its products and services to these customers as a community banking     
alternative to the style of banking exhibited by large out of state bank holding
companies that operate in Florida.                                              

The Company was incorporated under the laws of the State of Florida on
September 29, 1993 for the dual purpose of serving as a holding company for     
Pointe Federal Savings Bank, a federally chartered thrift (the "Thrift"), and to
facilitate the acquisition of the Bank, then known as Flamingo Bank, in         
mid-1994. Both the Bank and the Thrift were established in the mid-1980's. The  
Thrift, headquartered in Boca Raton, had been a mortgage banking thrift highly  
focused on residential mortgage lending. The Bank had focused on small business 
commercial lending, with emphasis on originating Small Business Administration  
("SBA") guaranteed loans.                                                       

  In late 1994, the Board of Directors of the Company, assisted by R. Carl
Palmer, Jr. on a consulting basis, adopted a Strategic Plan which called for a  
dramatic change in focus, shifting from the transaction orientation of mortgage 
banking and SBA lending to the relationship orientation of a community bank.    
Implementing the Strategic Plan, the Company sold a significant amount of its   
home loans and mortgage-backed securities, using the proceeds to repay Federal  
Home Loan Bank borrowings. The Company also restructured its deposit base by    
lowering rates paid on its certificates of deposit, resulting in the non-renewal
of higher cost certificates of deposit. These factors resulted in a decrease in 
the Company's total assets from $193 million at year end 1995 to $151 million at
year end 1996 and $148 million at year end 1997. R. Carl Palmer, Jr. joined the 
Company and the Bank in March of 1995 as President and Chief Executive Officer  
and began to assemble the Company's current management team and to implement the
Strategic Plan. Part of the implementation of the Strategic Plan has been       

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the streamlining of the Company's operations and the transfer in-house of       
certain support systems for which the Company had previously relied on external 
sources.                                                                        

    For example, in mid-1995 the Company purchased a software system developed
by Information Technology, Inc. ("ITI") that is designed to support the         
operations of community banks and is used by more than 300 banks throughout the 
United States. This system was initially installed in a service bureau mode, and
was brought in-house by the Company in mid-1997. Similarly, and at the same     
time, the Company transferred the servicing of its residential mortgage loan    
portfolio back in-house. These two "conversions" have given the Company access  
to a state-of-the-art software system to support a full-range of community      
banking services. The transfer to an "in-house" mode also gives the Company full
control of the quality of service that it delivers to its customers.            

    The Company further streamlined its operations through the merger in April
1997 of the Thrift into the Bank. After the acquisition of the Bank in mid-1994,
the Company had been both a bank holding company (subject to regulation by the  
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")) 
and a thrift holding company (subject to regulation by the Office of Thrift     
Supervision (the "OTS")). This was a very complex regulatory environment for the
Company. As a result of the merger of the Thrift into the Bank, the Company is  
no longer subject to regulation by the OTS, thus the merger allowed the Company 
to alleviate some of its regulatory burdens without negatively impacting its    
ability to service its customers.                                               

     This streamlining and the staged conversion to in-house systems has enabled
management of the Bank to concentrate on building a local relationship banking  
business. With the addition of seasoned managers with significant lending and   
operating experience, the Bank has been very successful in transitioning into   
the relationship management orientation called for in the 1994 Strategic Plan.  
As of December 31, 1997, the Bank's assets and liabilities were derived almost  
entirely from banking relationships. During the three years ended December 31,  
1997, the Company's deposit mix has changed significantly. Demand, savings, NOW 
and money market accounts grew from 30% of total deposits at December 31, 1995  
to 48% of total deposits at December 31, 1997. The emphasis on building customer
relationships has also resulted in a substantial growth in service charge       
income, which increased from $315,000 in 1995, to $364,000 in 1996 and $502,000 
in 1997. This trend continued in the quarter ended March 31, 1998 with service  
charge income of $195,000 compared with service charge income of $112,000 for   
the quarter ended March 31, 1997. Since 1995 management developed a successful  
expense control program. Operating expenses have been consistently reduced, from
$7.360 million in 1995, to $6.847 million in 1996 and $5.471 million in 1997.   
This favorable trend continued during the quarter ended March 31, 1998, with    
operating expenses declining to $1.308 million in the quarter compared with     
$1.328 million for the quarter ended March 31, 1997.                            

BUSINESS STRATEGY                                                               

GROWTH STRATEGY                                                             

Management believes that the Company is now in a position to grow. The
Bank's three banking center locations establish a presence in Miami-Dade,       
Broward and Palm Beach Counties. The population of these three counties exceeds 
4,000,000 people, and the market continues to experience substantial growth. The
Company's strategy for the next three years is to continue to implement its     
Strategic Plan and to build its network of banking center locations into        
communities that are consistent with the Bank's focus on small businesses,      
professionals and individuals. This expansion will be implemented by the        
establishment of new banking centers, most likely in facilities that have       
already been constructed by other banks, but have become redundant as a result  
of consolidations. The Company may also seek strategic acquisitions of smaller  
financial institutions that will complement this growth strategy.               

IMPLEMENTATION OF STRATEGIC PLAN                                            

Beginning in 1994, pursuant to the Strategic Plan, major efforts were 
undertaken to permit the Bank to become a full-service, community banking       
organization. The significant elements of the implementation of the Plan are:   

    Strengthening of Senior Management Team.  The Company has strengthened its
senior management team by supplementing the hiring of Mr. Palmer in 1995 with   
the hiring of Senior Vice Presidents Beverly Chambers in 1995, and Dennis Reed  
in 1996, both of whom are experienced bankers with whom Mr. Palmer had worked at
Southeast Banking Corporation and Naples Federal. In addition, in 1997, the     
Company hired Bradley Meredith to                                               

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serve as its new Chief Financial Officer and Senior Vice President. The new     
management's responsibilities include marketing, commercial lending, retail     
banking, operations, mortgage lending, accounting and finance.                  

 Building Full-Service Banking Relationships with Small Businesses.  The
Company's strategy is to aggressively build its number of full-service banking  
relationships by providing high quality, personal service. In furtherance of    
this strategy, the Company has continued to attract and hire seasoned,          
professional bankers with substantial commercial lending and relationship       
management experience. The consolidation occurring in the market is having two  
positive effects that enhance the Company's implementation of its strategy.     
First, a principal result of these consolidations is a steady flow of business  
clients who have been alienated from other banks by reduced service levels and  
higher prices. Second, seasoned bankers who previously worked for the acquired  
banks are released, thus, enabling the Company to hire the experienced          
professionals it seeks.                                                         

   Reducing Focus on Residential Mortgage Lending.  In mid-1996, the Company
decided to substantially reduce its focus on the residential mortgage lending   
business by limiting its activities to originating residential mortgages through
three specialists, one located in each of its three full service banking        
offices. The focus of these specialists is to originate mortgages for           
individuals who will become relationship customers of the Company.              

Broadening the Offering of Products and Services.  The Company has    
continued to broaden its offering of products and services. Particular emphasis 
has been placed on attracting transaction deposits from all three targeted      
business segments: small businesses, professionals and individuals. An example  
of the Company's efforts to broaden its offering of products and services       
occurred in early 1997 when the Company introduced its own credit card. The     
credit card has been marketed only to existing clients and those prospective    
clients that have the potential to develop into full service relationships.     
Similarly, the merchant processing of credit cards is being offered to business 
clients using the same marketing strategy. The back-office support for this     
activity has been outsourced to a nationally prominent firm that specializes in 
this business. In early 1998, the Company will be introducing its own debit     
card, with processing similarly outsourced through the same firm.               

    Reinvesting in the Company's Communities.  The Company is committed to the
communities it serves. As an example of its proactive commitment to be involved 
in its communities, the Company was awarded the lead deposit in the Ft.         
Lauderdale (Broward County) Enterprise Zone Linked Deposit Program in a 1996    
competitive bidding process. Municipal deposits, provided by the State of       
Florida, Broward County and the City of Ft. Lauderdale, were placed with three  
banks which established programs to match those funds to make loans to small    
businesses within the zone, an area targeted by the State of Florida for        
economic revitalization. Management of the Company sees this program as         
consistent with its mission to actively provide credit and other financial      
services to small and medium sized businesses as well as stimulate economic     
growth in the zone.                                                             

     Concentrating on Professionals.  The Company has concentrated its marketing
and business development efforts on the professionals who serve both the        
businesses and individuals in its markets. The attorneys, accountants and       
doctors who are within the geographic reach of the Company's banking center     
locations are both good potential customers and excellent sources of business   
referrals.                                                                      

     Reducing Expenses.  Management has focused on reducing expenses as it seeks
to improve its operating efficiency. During the last three years, operating     
expenses have declined from $7.360 million in 1995 to $6.847 million in 1996 to 
$5.471 million in 1997.                                                         

   Converting to New Operating System.  Following a full review of operating
and software support systems, a decision was made to convert to the ITI system  
throughout the organization, in a two stage process. The Bank and then the      
Thrift sequentially converted, in a service bureau mode, to the ITI system in   
late 1995 and early 1996. ITI's parent, FiServe, Inc., managed the service      
bureau for a planned eighteen month period during which time the Company and its
management became thoroughly familiar and comfortable with the operating system.
Also during this time, the Company was able to hire a number of senior          
operations officers to manage the Company's operations, loan administration and 
controller responsibilities. Thus, the mid-1997 conversion to bring the ITI     
system in-house was successful, due principally to the efforts of the Company's 
operating group who had considerable prior experience with the ITI system.      

The principal offices of the Company and the Bank are located at 21845
Powerline Road, Boca Raton, Florida 33433 and their telephone number is (561)   
368-6300.                                                                       

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THE OFFERING

Common Stock offered by the Company...................   869,565 shares         

Common Stock outstanding before the Offering..........  1,383,157 shares (1) (2)

Common Stock outstanding after the Offering...........  2,252,722 shares (1) (2)

Use of Proceeds.........................  The Company intends to contribute the 
                                         majority of the net proceeds from the
                                          Offering to the Bank. The Bank expects
                                          to use the net proceeds to fund branch
                                          expansion and to support growth in its
                                       loan and securities portfolios. The
                                          Company intends to retain a portion of
                                      the proceeds for general corporate
                                          purposes, possible future acquisitions
                                         and capital contributions to existing
                                       and possible future subsidiaries of
                                       the Company. See "Use of Proceeds."

Risk Factors............................  See "Risk Factors" for a discussion of
                                  certain factors that should be
                                  considered by each prospective
             investor.

Nasdaq Symbol...........................  "PNTE"                                

------------------                                                              
(1) Does not include 250,281 shares of Common Stock reserved for issuance upon  
    the exercise of options granted under the Company's stock option plans as of
March 31, 1998. See "Management -- Employee Stock Option Plans."        

(2) Upon consummation of this Offering, 27.70% of the issued and outstanding    
shares of Common Stock of the Company will be held by the Company's     
   executive officers and directors, assuming the exercise of all options held
by the Company's executive officers and directors.                      

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SUMMARY CONSOLIDATED FINANCIAL DATA 

     The following summary consolidated financial data of the Company is derived
from the Selected Consolidated Financial Data appearing elsewhere in this       
Prospectus, and should be read in conjunction with the Consolidated Financial   
Statements of the Company and the Notes thereto and the information contained in
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

                                                        [Enlarge/Download Table]

                                  AT OR FOR THE                                                                     
                               THREE MONTHS ENDED                                                                   
                                    MARCH 31,                     AT OR FOR THE YEAR ENDED DECEMBER 31,             
                             -----------------------  --------------------------------------------------------------
                                1998         1997        1997         1996         1995         1994         1993   
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
                                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)       
                                                                                                                    
INCOME STATEMENT DATA:                                                                                              
Total interest income......  $    3,022   $    2,965  $   11,932   $   12,186   $   14,690   $   11,966   $    9,879
Total interest expense.....       1,541        1,579       6,329        7,616        9,919        7,282        6,207
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net interest income........       1,481        1,386       5,603        4,570        4,771        4,684        3,672
Provision for loan                                                                                                  
  losses...................          65           11          80          185          336           75          120
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net interest income after                                                                                           
  provision for loan                                                                                                
  losses...................       1,416        1,375       5,523        4,385        4,435        4,609        3,552
Noninterest income.........         364          324       1,412        2,434        1,922        2,887        4,956
Noninterest expense before                                                                                          
  SAIF Recapitalization                                                                                             
  Expense (1)..............       1,308        1,328       5,471        6,847        7,360        6,273        5,729
SAIF Recapitalization                                                                                               
  Expense (1)..............          --           --          --          926           --           --           --
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
Earnings (loss) before                                                                                              
  income taxes.............         472          371       1,464         (954)      (1,003)       1,223        2,779
Income taxes (benefit).....         171          139         550         (355)        (376)         458        1,021
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net earnings (loss)........  $      301   $      232  $      914   $     (599)  $     (627)  $      765   $    1,758
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Without SAIF Assessment (1)                                                                                         
Net earnings (loss)........  $      301   $      232  $      914   $      (18)  $     (627)  $      765   $    1,758
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
PER SHARE DATA (2):                                                                                                 
Earnings (loss) per share:                                                                                          
Basic......................  $      .22   $      .19  $      .68   $     (.52)  $     (.51)  $      .72   $     2.07
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Diluted....................  $      .20   $      .18  $      .62   $     (.52)  $     (.51)  $      .72   $     2.07
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Without SAIF Assessment (1)                                                                                         
Earnings (loss) per share:                                                                                          
Basic......................  $      .22   $      .19  $      .68   $     (.01)  $     (.51)  $      .72   $     2.07
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Diluted....................  $      .20   $      .18  $      .62   $     (.01)  $     (.51)  $      .72   $     2.07
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Weighted average common                                                                                             
  shares outstanding:                                                                                               
Basic......................   1,249,949    1,219,050   1,224,441    1,219,092    1,219,092    1,062,500      849,275
Diluted....................   1,379,048    1,320,428   1,346,637    1,219,092    1,219,092    1,062,500      849,275
Total common shares                                                                                                 
  outstanding at end of                                                                                             
  period (2), (4)..........   1,249,949    1,219,092   1,247,592    1,219,092    1,219,092    1,219,092      849,627
Book value per share (2),                                                                                           
  (4)......................  $    10.39   $     9.63  $    10.23   $     9.54   $    10.27   $    10.27   $    10.36
BALANCE SHEET DATA (6):                                                                                             
Cash and cash                                                                                                       
  equivalents..............  $    3,817   $    7,804  $    2,575   $    6,663   $   10,212   $    5,857   $    8,009
Securities.................      39,873       44,726      32,079       42,790       48,542       54,674       32,639
Loans......................     112,756       94,756     105,653       90,973      104,677      123,048       97,183
Loans held for sale........       4,134        3,966       4,443        4,396       18,561        6,697       19,329
All other assets...........       3,190        5,896       3,090        6,436       11,415       11,357        5,670
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
    Total assets...........  $  163,770   $  157,158  $  147,840   $  151,258   $  193,407   $  201,633   $  162,830
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========
Deposits...................  $  136,148   $  117,130  $  124,995   $  112,498   $  142,673   $  164,087   $  107,505
Other borrowings...........      10,082       25,364       6,191       23,746       33,215       18,003       39,867
All other liabilities......       3,433        2,070       2,809        2,593        5,005        7,027        6,655
Stockholders' equity.......      14,107       12,594      13,845       12,421       12,514       12,516        8,803
                             ----------   ----------  ----------   ----------   ----------   ----------   ----------
    Total liabilities and                                                                                           
      stockholders'                                                                                                 
      equity...............  $  163,770   $  157,158  $  147,840   $  151,258   $  193,407   $  201,633   $  162,830
                             ==========   ==========  ==========   ==========   ==========   ==========   ==========

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                                                        [Enlarge/Download Table]

                                  AT OR FOR THE                                                                       
                               THREE MONTHS ENDED                                                                     
                                    MARCH 31,                      AT OR FOR THE YEAR ENDED DECEMBER 31,              
                             -----------------------   -------------------------------------------------------------- 
                                1998         1997         1997         1996         1995         1994         1993    
                             ----------   ----------   ----------   ----------   ----------   ----------   ---------- 
                                                              (DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)        
                                                                                                                      
AVERAGE BALANCE SHEET DATA:                                                                                           
Total assets...............  $  153,617   $  150,876   $  151,209   $  158,572   $  200,897   $  188,067   $  157,221 
Securities.................      34,841       43,541       38,200       41,068       52,045       56,840       29,807 
Loans......................     110,839       95,343      102,315       96,307      129,431      125,460      114,552 
Total deposits.............     129,725      114,290      119,377      115,718      157,262      135,426      108,066 
Other borrowings...........       7,473       21,771       16,879       28,348       25,749       32,685       38,232 
Stockholders' equity.......      13,976       12,508       12,982       11,519       12,515       10,963        7,912 
PERFORMANCE RATIOS:                                                                                                   
Return on average assets...         .78%         .62%         .60%        (.38%)       (.31%)        .41%        1.12%
Return on average equity...        8.61%        7.42%        7.04%       (5.20%)      (5.01%)       6.98%       22.22%
Return on average equity                                                                                              
  (4)......................        9.35%        7.94%        7.56%       (5.37%)      (5.01%)       6.98%       22.22%
Interest rate spread during                                                                                           
  the period (3)...........        3.26%        3.36%        3.30%        2.83%        2.25%        1.98%        2.07%
Net interest margin........        4.05%        3.90%        3.93%        3.19%        2.53%        2.51%        2.39%
Noninterest expense to                                                                                                
  average assets (1).......        3.40%        3.53%        3.62%        4.90%        3.66%        3.34%        3.64%
Efficiency ratio (5).......       70.89%       77.66%       78.31%      112.42%      109.98%       82.53%       69.63%
ASSET QUALITY RATIOS (6):                                                                                             
Nonperforming loans to                                                                                                
  total loans..............        2.06%        1.95%        2.34%        1.60%        2.09%         .77%        1.02%
Nonperforming loans, and                                                                                              
  foreclosed real estate as                                                                                           
  a percentage of total                                                                                               
  assets...................        1.51%        1.23%        1.76%        1.15%        1.15%         .54%         .72%
Allowance for loan losses                                                                                             
  as a percentage of total                                                                                            
  loans....................         .80%         .87%         .80%         .85%         .79%         .42%         .38%
Allowance for loan losses                                                                                             
  as a percentage of                                                                                                  
  nonperforming loans......       38.90%       44.36%       33.97%       52.97%       37.74%       55.17%       37.20%
Net charge-offs as a                                                                                                  
  percentage of average                                                                                               
  loans....................          --         (.04%)        .01%         .25%         .02%         .03%         .05%
CAPITAL RATIOS (6):                                                                                                   
Company                                                                                                               
Total capital to risk                                                                                                 
  weighted assets..........       15.27%       16.87%       16.02%       17.58%       14.09%       13.75%          -- 
Tier I capital to risk                                                                                                
  weighted assets..........       14.34%       15.84%       15.09%       16.52%       13.18%       13.19%          -- 
Tier I capital to average                                                                                             
  assets...................        9.38%        8.40%        9.10%        8.04%        6.02%        6.66%          -- 
Bank (7)                                                                                                              
Total capital to risk                                                                                                 
  weighted assets..........       15.51%       15.66%       16.00%       15.88%       17.53%       22.87%          -- 
Tier I capital to risk                                                                                                
  weighted assets..........       14.56%       14.37%       15.06%       14.67%       15.66%       22.14%          -- 
Tier I capital to average                                                                                             
  assets...................        9.05%        8.47%        8.95%        8.69%       10.53%       13.57%          -- 
Savings Bank (8)                                                                                                      
Tangible...................          --         8.29%          --         8.25%        6.00%        5.30%        5.39%
Core.......................          --         8.29%          --         8.25%        6.00%        5.30%        5.39%
Risk-based.................          --        17.64%          --        18.32%       12.77%       12.40%       12.26%
OTHERS (6):                                                                                                           
Total number of offices....           3            3            3            3            3            3            1 
Full-service banking                                                                                                  
  offices..................           3            3            3            3            3            3            1 

------------------                                                              
(1) The Bank was subject to a one-time special assessment that was paid by all  
financial institutions insured by the SAIF in 1996. The Bank's pre-tax  
assessment was $926,000 ($581,000 after taxes).                         
(2) All per share information is presented to reflect a three-for-two stock     
split effective February 1998.                                          
(3) Difference between weighted-average yield on all interest-earning assets and
weighted-average rate on all interest-bearing liabilities.              
(4) Excludes the Common Stock into which the preferred stock of the Company was 
converted on April 3, 1998.                                             
(5) Calculated by dividing total noninterest expenses by net interest income    
plus noninterest income excluding securities gains and losses.          
(6) At period end.                                                              
(7) The Bank was acquired in 1994.                                              
(8) Represents the capital ratios of the Thrift prior to its merger into the    
Bank in 1997.                                                           

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RISK FACTORS

    An investment in the Common Stock offered hereby involves a high degree of
risk, including the risks described below. In addition to the other information 
contained herein, the following factors should be considered carefully in       
evaluating the Company before purchasing the Common Stock offered hereby.       
Information contained in this Prospectus contains "forward-looking statements"  
which can be identified by the use of forward-looking terminology such as       
"believes," "expects," "may," "will," "should," "could," "intent," "estimated," 
"projected," "contemplated" or "anticipates" or the negative thereof or other   
variations thereon or comparable terminology. No assurance can be given that the
future results covered by the forward-looking statements will be achieved. These
statements, by their nature, involve substantial risks and uncertainties,       
certain of which are beyond the Company's control. The following factors and    
other factors described elsewhere in this Prospectus could cause actual         
experience to vary materially from the future results covered in such           
forward-looking statements. Other factors, such as regional and national        
economic conditions, changes in market interest rates, credit risks of lending  
activities, and competition and regulatory factors, could also cause actual     
experience to vary materially from the matters covered in such forward-looking  
statements.                                                                     

EXPOSURE TO LOCAL AND REGIONAL ECONOMIC CONDITIONS                              

 The Company's success is dependent to a significant extent upon general
economic conditions in Florida, particularly south Florida. General economic    
conditions include such factors as the south Florida real estate market,        
inflation, recession, unemployment and other factors beyond the Company's       
control. The south Florida economy is susceptible to adverse effects resulting  
from adverse conditions in the south Florida real estate markets, a decline in  
tourism, or adverse economic conditions or recession in the national economy.   
Economic recession over a prolonged period or other economic dislocation in     
south Florida could cause increases in nonperforming assets, thereby causing    
operating losses, impairing liquidity and eroding capital. There can be no      
assurance that future adverse changes in the Florida economy would not have a   
material adverse effect on the Company's financial condition, results of        
operations or cash flows.                                                       

INTEREST RATE RISK                                                              

  The Company's earnings depend to a great extent on "rate differentials,"
which are the differences between interest income that the Company earns on     
interest-bearing assets, such as loans and investments, and the interest expense
paid on interest-bearing liabilities, such as deposits and other borrowings.    
Financial institutions, including the Bank, are affected by changes in general  
interest rate levels. Fluctuations in interest rates are not predictable or     
controllable. Interest rates are highly sensitive to many factors which are     
beyond the Company's control, including general economic conditions and the     
policies of various government and regulatory authorities. For example, actions 
taken by Federal Reserve Board can lead to changes in interest rates, which     
affect the Company's interest income, interest expense and investment portfolio.
The nature, timing and effect of any future changes in federal monetary and     
fiscal policies on the Company and its results of operations are not            
predictable. From time to time, maturities of assets and liabilities are not    
balanced, and a rapid increase or decrease in interest rates could have a       
material adverse effect on the net interest margin and results of operations of 
the Company. There can be no assurance that the Company will not experience a   
material adverse effect on its net interest income in a changing rate           
environment. See "Management's Discussion and Analysis of Financial Condition   
and Results of Operations -- For the Years Ended December 31, 1997, 1996 and    
1995 -- Interest Rate Sensitivity and Liquidity."                               

COMPETITION IN THE BANK'S MARKET AREAS                                          

    Most of the financial institutions in the Bank's market areas have been in
existence for significantly longer periods of time than the Bank and are better 
established in their market areas. Many of such competitors are larger in size  
and possess substantially greater financial and other resources than the Bank.  
There is currently a trend toward consolidation of the banking industry, which  
may make it more difficult for smaller banks to operate profitability. There can
be no assurance that the Bank will be able to continue to compete successfully  
against larger institutions. See "BUSINESS -- Competition."                     

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CHANGE IN COMPOSITION OF LOAN PORTFOLIO                                         

   As part of the Company's change in focus from the transaction orientation
of mortgage banking and residential lending to the relationship orientation of  
community banking, the Company has reduced its focus on the residential mortgage
lending business and increased its commercial lending activity. While commercial
business loans generally are made for shorter terms and at higher yields than   
one- to four-family residential loans, such loans generally involve a higher    
level of risk. The commercial loan risk of borrower default is greater than in  
owner-occupied residential property loans, since the collateral may be more     
difficult to liquidate and more likely to decline in value.                     

REGULATION AND SUPERVISION                                                      

    Bank holding companies and banks operate in a highly regulated environment
and are subject to extensive supervision and examination by several federal and 
state regulatory agencies. The Company is subject to the Bank Holding Company   
Act of 1956, as amended (the "BHC"), and to regulation and supervision by the   
Federal Reserve Board. The Bank, as a Florida state bank, is subject to         
regulation and supervision by the Florida Department of Banking and Finance and,
as a result of the insurance of its deposits, by the Federal Deposit Insurance  
Corporation ("FDIC"). These regulations are intended primarily for the          
protection of depositors and customers, rather than for the benefit of          
investors. The Company and the Bank are subject to changes in federal and state 
laws, as well as changes in regulations and governmental policies, income tax   
laws and accounting principles. The effects of any potential changes cannot be  
predicted but could adversely affect the business and operations of the Company 
and the Bank in the future. See "Regulation and Supervision."                   

     The Federal Reserve Board has adopted a policy that requires a bank holding
company such as the Company to serve as a source of financial strength to its   
banking subsidiaries. The Federal Reserve Board has required bank holding       
companies to contribute cash to their troubled bank subsidiaries based upon this
"source of strength" policy, which could have the effect of decreasing funds    
available for distributions to shareholders. In addition, a bank holding company
in certain circumstances could be required to guarantee the capital plan of an  
undercapitalized banking subsidiary. See "Regulation and Supervision."          

DEPENDENCE ON KEY MANAGEMENT PERSONNEL                                          

    The Company's success depends to a significant extent upon the performance
of its executive officers, the loss of any of whom could have a materially      
adverse effect on the Company. The Company has not, however, entered into       
employment agreements with, or obtained "key man" insurance for, its executive  
officers. The Company believes that its future success will depend in large part
upon its ability to retain such personnel; however, there can be no assurance   
that the Company will be successful in doing so.                                

RESTRICTIONS ON ABILITY TO PAY DIVIDENDS                                        

The Company has not paid cash dividends on the Common Stock and at the
present time the Company does not foresee paying cash dividends to shareholders 
and intends to retain all earnings to fund the growth of the Company and the    
Bank. Any declaration and payment of dividends on the Common Stock will depend  
upon the earnings and financial condition of the Company, liquidity and capital 
requirements, the general economic and regulatory climate, the Company's ability
to service any equity or debt obligations senior to the Common Stock and other  
factors deemed relevant by the Company's Board of Directors. It is the policy of
the Federal Reserve Board that bank holding companies should pay cash dividends 
on common stock only out of income available over the past year and only if     
prospective earnings retention is consistent with the organization's expected   
future needs and financial condition. The policy provides that bank holding     
companies should not maintain a level of cash dividends that undermines the bank
holding company's ability to serve as a source of strength to its banking       
subsidiaries.                                                                   

   The Company's principal source of funds to pay dividends on the shares of
Common Stock will be cash dividends that the Company receives from the Bank. The
payment of dividends by the Bank to the Company is subject to certain           
restrictions imposed by federal and state banking laws, regulations and         
authorities. Under Florida law, a state bank may not pay dividends from its     
capital. All dividends must be paid out of current net profits then on hand plus
retained net profits of the preceding two years. See "Dividend Policy."         
Accordingly,                                                                    
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since the Bank had no net profits in either 1996 or 1995, in 1997 the Bank was  
unable to pay dividends to the Company. As of March 31, 1998, an aggregate of   
approximately $694,000 was available for payment of dividends by the Bank to the
Company under applicable restrictions without regulatory approval. The Company's
sole activity is holding all of the issued and outstanding capital stock of the 
Bank and accordingly, the Company does not anticipate paying any dividends until
it receives dividends from the Bank. See "Regulation and Supervision."          

   The federal banking statutes prohibit federally insured banks from making
any capital distributions (including a dividend payment) if, after making the   
distribution, the institution would be "undercapitalized" as defined by statute.
In addition, the relevant federal regulatory agencies also have the authority to
prohibit an insured bank from engaging in an unsafe or unsound practice, as     
determined by the agency, in conducting an activity. The payment of dividends   
could be deemed to constitute such an unsafe and unsound practice, depending on 
the financial condition of the Bank. Regulatory authorities could impose        
administratively stricter limitations on the ability of the Bank to pay         
dividends to the Company if such limits were deemed appropriate to preserve     
certain capital adequacy requirements. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Capital Resources" and      
"Regulation and Supervision."                                                   

CONCENTRATION OF OWNERSHIP; CONTROL BY MANAGEMENT                               

After the consummation of the Offering, the executive officers and    
directors of the Company will beneficially own 27.70% of the outstanding shares 
of Common Stock, and approximately 26.27% of such shares of Common Stock if the 
Underwriters' over-allotment option is fully exercised. Accordingly, these      
executive officers and directors will be able to influence, to a significant    
extent, the outcome of all matters required to be submitted to the Company's    
shareholders for approval, including decisions relating to the election of      
directors of the Company, the determination of day-to-day corporate and         
management policies of the Company and other significant corporate transactions.
See "Management," "Security Ownership of Certain Beneficial Owners and          
Management" and "Description of Capital Stock."                                 

YEAR 2000 COMPLIANCE                                                            

Almost all of the Company's operations are supported by accounting and
recordkeeping computerized systems and are dependent on the capability of       
software applications and operating systems to function properly in the year    
2000. The Company has an ongoing program designed to ensure that its operational
and financial systems will not be adversely affected by year 2000 software      
failures, due to processing errors arising from calculations using the year 2000
date. Based on current estimates, the Company expects to incur expenses of      
$50,000 over the next two years on its program to redevelop, replace, or repair 
its computer applications to make them "year 2000 compliant," and expects them  
to be so by July 1999. While the Company believes it is doing everything        
technologically possible to assure year 2000 compliance, it is to some extent   
dependent upon vendor cooperation. The Company is requiring its computer system 
and software vendors to represent that the products provided are, or will be,   
year 2000 compliant, and has planned a program of testing for compliance. While 
the Company believes that all essential computer applications will be year 2000 
compliant and that the costs associated with year 2000 compliance will not be   
material to the Company, any year 2000 compliance failure could result in       
additional expense to the Company.                                              

NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE; NO GUARANTEE OF ACTIVE AND   
LIQUID TRADING MARKET                                                           

    Before the Offering, there has been no public market for the Common Stock.
The initial public offering price will be determined through negotiations       
between the Company and the Representatives of the Underwriters based on several
factors that may not be indicative of future market prices. See "Underwriting"  
for a discussion of the factors to be considered in determining the initial     
public offering price. Although the Common Stock has been approved for quotation
on Nasdaq, there can be no assurance that it will be actively traded on such    
market or that, if active trading does develop, it will be sustained.           

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SHARES ELIGIBLE FOR FUTURE SALE                                                 

   Upon consummation of the Offering, the Company will have 2,252,722 shares
of Common Stock outstanding (2,383,157 if the over-allotment option granted to  
the Underwriters is exercised in full). Of these shares, 869,565 shares         
(1,000,000 shares if the over-allotment option granted to the Underwriters is   
exercised in full) together with 812,728 shares previously registered in        
connection with the Company's acquisition of the Bank and the Thrift, will be   
freely transferable without restriction or registration under the Securities    
Act, unless purchased by persons deemed to be "affiliates" (as that term is     
defined under the Securities Act) of the Company. All of the remaining 570,429  
shares of Common Stock will be "restricted securities," as that term is defined 
in Rule 144 promulgated under the Securities Act. The Company and its executive 
officers and directors and certain of the Company's existing shareholders have  
agreed that they will not sell or otherwise transfer any shares of Common Stock 
for 180 days after the Offering without the prior written consent of the        
Representatives. Future sales of substantial amounts of Common Stock in the     
public market, or the availability of such shares for future sale, could impair 
the Company's ability to raise capital through an offering of securities and may
adversely affect the then-prevailing market prices. See "Shares Eligible for    
Future Sale."                                                                   

ANTI-TAKEOVER PROVISIONS                                                        

  Certain provisions of the Company's Articles of Incorporation and Bylaws
could delay or frustrate the removal of incumbent directors and could make a    
merger, tender offer or proxy contest involving the Company more difficult, even
if such events could be perceived as beneficial to the interests of the         
stockholders. For example, the Company's Articles of Incorporation provide for  
classes of directors, whereby one-third of the members of the Board of Directors
are elected each year and each director of the Company is to serve for a term of
three years. In addition, options granted under the Company's stock option plan 
provide for accelerated vesting of such options in the event of a change in     
control of the Company. These provisions could have the effect of discouraging  
or prohibiting a future takeover attempt in which stockholders of the Company   
might otherwise receive a substantial premium for their shares over then-current
market prices. See "Description of Capital Stock -- Certain Anti-Takeover       
Provisions."                                                                    

REGULATION OF CONTROL                                                           

Individuals or entities, alone or acting in concert with others, who  
acquire 10% or more of any class of voting securities of the Company are        
presumed to have acquired "control" of the Company under the Change in Bank     
Control Act, which requires the prior approval of the Federal Reserve Board for 
any such acquisition. Entities, acting alone or through one or more other       
persons, seeking to acquire, directly or indirectly, 25% or more (5% or more in 
the case of an acquiror that is a bank holding company) of any class of voting  
securities of, or otherwise to control, the Company are required to obtain the  
prior approval of the Federal Reserve Board under the BHC. Accordingly,         
prospective investors need to be aware of and comply with these requirements in 
connection with any purchase of shares of the Common Stock offered hereby.      

IMMEDIATE AND SUBSTANTIAL DILUTION                                              

Purchasers of Common Stock in the Offering will experience immediate  
dilution in net tangible book value of $3.875 per share, based on the initial   
public offering price of $15.375 per share. To the extent that any options to be
granted with respect to the Common Stock are exercised, purchasers of Common    
Stock will experience additional dilution. See "Dilution" and "Management."     

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THE COMPANY 

GENERAL                                                                         

   Pointe Financial Corporation, a Florida corporation (the "Company"), is a
bank holding company headquartered in Boca Raton, Florida. As of March 31, 1998,
the Company had total assets of $163.770 million, net loans of $112.756 million,
total deposits of $136.148 million and total shareholders' equity of $14.107    
million. The Company had net income of $301 thousand for the period ended March 
31, 1998. All of the Company's net income is derived from the operation of its  
bank subsidiary, Pointe Bank, a Florida state-chartered commercial bank (the    
"Bank") with three full service banking facilities located in Boca Raton (Palm  
Beach County), Pembroke Pines (Broward County) and Aventura (Miami-Dade County),
Florida. The Bank also has two remote ATMs located in Boca Raton and Pembroke   
Pines. All of the Bank's ATMs are members of international networks. The Bank   
provides a full range of banking services catering to small and middle sized    
businesses, professionals, and individuals in Palm Beach, Broward and Miami-Dade
Counties, Florida.                                                              

   The strategy of the Company is to take advantage of the economic vitality
of its market by providing quality community banking services to its customers. 
The market for financial services in south Florida has been robust throughout   
the recent past. Based on information provided by the Bureau of Economic and    
Business Research, University of Florida, Broward and Palm Beach counties rank  
in the top 10 counties in Florida in per capita income and represent 9.66% and  
6.81%, respectively, of the population of Florida. Additionally, the Bank is    
benefitting from the high degree of merger consolidation in its market.         
According to the Florida Bankers Association and other industry sources, at     
year-end 1997 over 40% of the deposits in Florida have changed hands through    
acquisition during the past five years and 81% of Florida bank deposits were    
controlled by bank holding companies headquartered outside of Florida. This has 
created a favorable operating environment for community banks that provide      
personalized services to local businesses and consumers. Management believes    
that the larger banks in the Company's markets have increased the cost of       
certain banking services and have not stressed personal service to the small    
businesses and professionals who are the Company's targeted clients. The Company
markets its products and services to these customers as a community banking     
alternative to the style of banking exhibited by large out of state bank holding
companies that operate in Florida.                                              

The Company was incorporated under the laws of the State of Florida on
September 29, 1993 for the dual purpose of serving as a holding company for     
Pointe Federal Savings Bank, a federally chartered thrift (the "Thrift"), and to
facilitate the acquisition of the Bank, then known as Flamingo Bank, in         
mid-1994. Both the Bank and the Thrift were established in the mid-1980's. The  
Thrift, headquartered in Boca Raton, had been a mortgage banking thrift highly  
focused on residential mortgage lending. The Bank had focused on small business 
commercial lending, with emphasis on originating Small Business Administration  
("SBA") guaranteed loans.                                                       

  In late 1994, the Board of Directors of the Company, assisted by R. Carl
Palmer, Jr. on a consulting basis, adopted a Strategic Plan which called for a  
dramatic change in focus, shifting from the transaction orientation of mortgage 
banking and SBA lending to the relationship orientation of a community bank.    
Implementing the Strategic Plan, the Company sold a significant amount of its   
home loans and mortgage-backed securities, using the proceeds to repay Federal  
Home Loan Bank borrowings. The Company also restructured its deposit base by    
lowering rates paid on its certificates of deposit, resulting in the non-renewal
of higher cost certificates of deposit. These factors resulted in a decrease in 
the Company's total assets from $193 million at year end 1995 to $151 million at
year end 1996 to $148 million at year end 1997. R. Carl Palmer, Jr. joined the  
Company and the Bank in March of 1995 as President and Chief Executive Officer  
and began to assemble the Company's current management team and to implement the
Strategic Plan. Part of the implementation of the Strategic Plan has been the   
streamlining of the Company's operations and the transfer in-house of certain   
support systems for which the Company had previously relied on external sources.

    For example, in mid-1995 the Company purchased a software system developed
by Information Technology, Inc. ("ITI") that is designed to support the         
operations of community banks and is used by more than 300 banks throughout the 
United States. This system was initially installed in a service bureau mode, and
was brought in-house by the Company in mid-1997. Similarly, and at the same     
time, the Company transferred the servicing of its residential mortgage loan    
portfolio back in-house. These two "conversions" have given the Company access  
to a state-of-the-art software system to support a full-range of community      
banking services. The                                                           

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transfer to an "in-house" mode also gives the Company full control of the       
quality of service that it delivers to its customers.                           

    The Company further streamlined its operations through the merger in April
1997 of the Thrift into the Bank. After the acquisition of the Bank in mid-1994,
the Company had been both a bank holding company (subject to regulation by the  
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")) 
and a thrift holding company (subject to regulation by the Office of Thrift     
Supervision (the "OTS")). This was a very complex regulatory environment for the
Company. As a result of the merger of the Thrift into the Bank, the Company is  
no longer subject to regulation by the OTS, thus the merger allowed the Company 
to alleviate some of its regulatory burdens without negatively impacting its    
ability to service its customers.                                               

     This streamlining and the staged conversion to in-house systems has enabled
management of the Bank to concentrate on building a local relationship banking  
business. With the addition of seasoned managers with significant lending and   
operating experience, the Bank has been very successful in transitioning into   
the relationship management orientation called for in the 1994 Strategic Plan.  
As of December 31, 1997, the Bank's assets and liabilities were derived almost  
entirely from banking relationships. During the three years ended December 31,  
1997, the Company's deposit mix has changed significantly. Demand, savings, NOW 
and money market accounts grew from 30% of total deposits at December 31, 1995  
to 48% of total deposits at December 31, 1997. The emphasis on building customer
relationships has also resulted in a substantial growth in service charge       
income, which increased from $315,000 in 1995, to $364,000 in 1996 and $502,000 
in 1997. This trend continued in the quarter ended March 31, 1998 with service  
charge income of $195,000 compared with service charge income of $112,000 for   
the quarter ended March 31, 1997. Since 1995 management has developed a very    
successful expense control program. Operating expenses have been consistently   
reduced, from $7.360 million in 1995, to $6.847 million in 1996 and $5.471      
million in 1997. This favorable trend continued during the quarter ended March  
31, 1998, with operating expenses declining to $1.308 million in the quarter    
compared with $1.328 million for the quarter ended March 31, 1997.              

BUSINESS STRATEGY                                                               

GROWTH STRATEGY                                                             

Management believes that the Company is now in a position to grow. The
Bank's three banking center locations establish a presence in Miami-Dade,       
Broward and Palm Beach Counties. The population of these three counties exceeds 
4,000,000 people, and the market continues to experience substantial growth. The
Company's strategy for the next three years is to continue to implement its     
Strategic Plan and to build its network of banking center locations into        
communities that are consistent with the Bank's focus on small businesses,      
professionals and individuals. This expansion will be implemented by the        
establishment of new banking centers, most likely in facilities that have       
already been constructed by other banks, but have become redundant as a result  
of consolidations. The Company may also seek strategic acquisitions of smaller  
financial institutions that will complement this growth strategy.               

IMPLEMENTATION OF STRATEGIC PLAN                                            

Beginning in 1994, pursuant to the Strategic Plan, major efforts were 
undertaken to permit the Bank to become a full-service, community banking       
organization. The significant elements of the implementation of the Plan are:   

    Strengthening of Senior Management Team.  The Company has strengthened its
senior management team by supplementing the hiring of Mr. Palmer in 1995 with   
the hiring of Senior Vice Presidents Beverly Chambers in 1995, and Dennis Reed  
in 1996, both of whom are experienced bankers with whom Mr. Palmer had worked at
Southeast Banking Corporation and Naples Federal. In addition, in 1997, the     
Company hired Bradley Meredith to serve as its new Chief Financial Officer and  
Senior Vice President. The new management's responsibilities include marketing, 
commercial lending, retail banking, operations and mortgage lending, accounting 
and finance.                                                                    

 Building Full-Service Banking Relationships with Small Businesses.  The
Company's strategy is aggressively to build its number of full-service banking  
relationships by providing high quality, personal service. In furtherance of    
this strategy, the Company has continued to attract and hire seasoned,          
professional bankers with                                                       

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substantial commercial lending and relationship management experience. The      
consolidation occurring in the market is having two positive effects that       
enhance the Company's implementation of its strategy. First, a principal result 
of these consolidations is a steady flow of business clients who have been      
alienated from other banks by reduced service levels and higher prices. Second, 
seasoned bankers who previously worked for the acquired banks are released,     
thus, enabling the Company to hire the experienced professionals it seeks.      

   Reducing Focus on Residential Mortgage Lending.  In mid-1996, the Company
decided to substantially reduce its focus on the residential mortgage lending   
business by limiting its activities to originating residential mortgages through
three specialists, one located in each of its three full service banking        
offices. The focus of these specialists is to originate mortgages for           
individuals who will become relationship customers of the Company.              

Broadening the Offering of Products and Services.  The Company has    
continued to broaden its offering of products and services. Particular emphasis 
has been placed on attracting transaction deposits from all three targeted      
business segments: small businesses, professionals and individuals. An example  
of the Company's efforts to broaden its offering of products and services       
occurred in early 1997 when the Company introduced its own credit card. The     
credit card has been marketed only to existing clients and those prospective    
clients that have the potential to develop into full service relationships.     
Similarly, the merchant processing of credit cards is being offered to business 
clients using the same marketing strategy. The back-office support for this     
activity has been out-sourced to a nationally prominent firm that specializes in
this business. In early 1998, the Company will be introducing its own debit     
card, with processing similarly outsourced through the same firm.               

    Reinvesting in the Company's Communities.  The Company is committed to the
communities it serves. As an example of its proactive commitment to be involved 
in its communities, the Company was awarded the lead deposit in the Ft.         
Lauderdale (Broward County) Enterprise Zone Linked Deposit Program in a 1996    
competitive bidding process. Municipal deposits, provided by the State of       
Florida, Broward County and the City of Ft. Lauderdale, were placed with three  
banks which established programs to match those funds to make loans to small    
businesses within the zone, an area targeted by the State of Florida for        
economic revitalization. Management of the Company sees this program as         
consistent with its mission to actively provide credit and other financial      
services to small and medium sized businesses as well as stimulate economic     
growth in the zone.                                                             

     Concentrating on Professionals.  The Company has concentrated its marketing
and business development efforts on the professionals who serve both the        
businesses and individuals in its markets. The attorneys, accountants and       
doctors who are within the geographic reach of the Company's banking center     
locations are both good potential customers and excellent sources of business   
referrals.                                                                      

     Reducing Expenses.  Management has focused on reducing expenses as it seeks
to improve its operating efficiency. During the last three years, operating     
expenses have declined from $7.360 million in 1995 to $6.847 million in 1996 to 
$5.471 million in 1997.                                                         

  Converting to New Operating System. Following a full review of operating
and software support systems, a decision was made to convert to the ITI system  
throughout the organization, in a two stage process. The Bank and then the      
Thrift sequentially converted, in a service bureau mode, to the ITI system in   
late 1995 and early 1996. ITI's parent, FiServe, Inc., managed the service      
bureau for a planned eighteen month period during which time the Company and its
management became thoroughly familiar and comfortable with the operating system.
Also during this time, the Company was able to hire a number of senior          
operations officers to manage the Company's operations, loan administration and 
controller responsibilities. Thus, the mid-1997 conversion to bring the ITI     
system in-house was successful, due principally to the efforts of the Company's 
operating group who had considerable prior experience with the ITI system.      

MANAGEMENT AND BOARD OWNERSHIP                                                  

The Company's directors currently own 489,364 shares or 35.64% of the 
issued and outstanding Common Stock. Giving effect to the Offering, the         
conversion of all outstanding shares of Preferred Stock, and the exercise of all
options held by the Company's executive officers and directors, the Company's   
executive officers and directors would own 664,463 shares, or 27.70% of the     
issued and outstanding Common Stock. The Company believes that this ownership   
position gives management a significant incentive to increase shareholder value.

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COMPETITION                                                                     

  The banking business is highly competitive, and the profitability of the
Company will depend upon the Company's ability to compete in its market area.   
The Company competes with other commercial and savings banks, savings and loan  
associations, credit unions, finance companies, mutual funds, brokerage and     
investment banking firms, asset-based nonbank lenders and certain other         
non-financial institutions, including certain governmental organizations which  
may offer subsidized financing at lower rates than those offered by the Company.
See "Risk Factors -- Competition."                                              

EMPLOYEES                                                                       

At March 31, 1998, the Company had 59 full-time employees. None of the
employees is represented by a collective bargaining group, and the Company      
considers its relations with its employees to be good. The Company provides     
employee benefits customary in the financial institutions industry, including   
group medical and life insurance, 401(k) plan, profit-sharing plan and paid     
vacations. The Company also provides a stock option plan for certain officers,  
directors and employees, pursuant to which they may be granted options to       
purchase Common Stock of the Company.                                           

PROPERTIES                                                                      

The Company conducts its operations from three leased facilities, the 
largest of which is located at 21845 Powerline Road, Boca Raton, Florida where  
it has leased 18,929 square feet of space for its executive offices, the        
operations center and a banking center. The lease expires in 2002 and may be    
renewed for one additional five-year period. In addition, the Company has leased
5,719 square feet of space at One S.W. 129th Avenue, Pembroke Pines, Florida for
a banking center. This lease expires on February 28, 2006.                      

 The Bank also has a lease for a free-standing building containing 3,050
square feet of space and located at 2690 N.E. 203rd Street, Aventura, Florida,  
as a full service banking center. The lease expires in February 2000 and may be 
renewed for one five-year period.                                               

LEGAL PROCEEDINGS                                                               

     There are no material pending legal proceedings to which the Company or the
Bank is a party or of which any of their properties are subject; nor are there  
material proceedings known to the Company contemplated by any governmental      
authority; nor are there material proceedings known to the Company, pending or  
contemplated in which any director, officer or affiliate or any proposed        
principal security holder of the Company, or any associate of any of the        
foregoing is a party or has an interest adverse to the Company or the Bank.     

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USE OF PROCEEDS 

     The net proceeds from the sale of Common Stock offered hereby are estimated
to be $12.135 million after deduction of the underwriting discount and estimated
expenses ($14.000 million if the Underwriter's over-allotment option is         
exercised in full). The Company intends to contribute the majority of the net   
proceeds to the Bank. The Bank expects the proceeds to be used to fund branch   
expansion and support growth in the loan and securities portfolio. To the extent
proceeds are allocated to the Company, the Company intends to retain a portion  
of the proceeds for general corporate purposes including, but not limited to,   
future acquisitions and capital contributions to existing and future            
subsidiaries of the Company. The Company presently has no plans, arrangements or
understandings regarding any future acquisitions. The precise amounts and timing
of the application of cash proceeds will depend, among other things, upon the   
funding requirements of the Bank and the availability of other funds. Pending   
the application of net proceeds, the Company expects to invest the net proceeds 
in short-term government or investment grade obligations.                       

DIVIDEND POLICY 

 The Company has not paid any cash dividends on its Common Stock. At the
present time, the Company does not foresee paying cash dividends to shareholders
and intends to retain all earnings to fund the growth of the Company and the    
Bank. The payment of dividends in the future, if any, will depend upon earnings,
capital levels, cash requirements, the financial condition of the Company and   
the Bank, applicable government regulations and policies and other factors      
deemed relevant by the Company's Board of Directors, including the amount of    
cash dividends payable to the Company by the Bank. The principal source of      
income and cash flow for the Company, including cash flow to pay cash dividends 
on the Common Stock, is dividends from the Bank. The Bank will be restricted in 
its ability to pay dividends under Florida banking laws and by regulations of   
the Department. Under Florida law, a state bank may not pay dividends from its  
capital. All dividends must be paid out of current net profits then on hand plus
retained net profits of the preceding two years, after deducting bad debts,     
depreciation and other worthless assets, and after making provision for         
reasonably anticipated future losses on loans and other assets. Payments of     
dividends out of net profits is further limited by Section 658.37, Florida      
Statutes, which prohibits a bank from declaring a dividend on its shares of     
common stock until its surplus equals its stated capital, unless there has been 
transferred to surplus not less than 20% of a bank's net profits for the        
preceding year (in the case of an annual dividend). Finally, a state bank may   
not declare a dividend which would cause the capital accounts of a bank to fall 
below the minimum amount required by law, regulation, order or any written      
agreement with the Department or any Federal regulatory agency. See "Regulation 
and Supervision -- Regulation of the Bank -- Payment of Dividends."             

DILUTION

As of March 31, 1998, the tangible book value of the Common Stock was 
$10.19 per share. "Tangible book value per share" represents the amount of total
tangible assets less total liabilities divided by the number of shares of Common
Stock outstanding. After giving effect to the sale by the Company of 869,565    
shares of Common Stock offered hereby (after deducting the underwriting discount
and other estimated offering expenses to be paid by the Company), the pro forma 
tangible book value of the Company as of March 31, 1998 would have been $11.50  
per share. This represents an immediate increase in net tangible book value of  
$1.31 per share to current shareholders and an immediate dilution of $3.875 per 
share to new investors. The following table illustrates this per share dilution.

                                                                [Download Table]
                                                                             
Price to public.............................................          $15.375

     Tangible book value per share before Offering (1)......  $10.190        
     Increase per share attributable to new investors.......    1.310        
                                                              -------        
Pro forma tangible book value per share after Offering......           11.500
                                                                      -------
Dilution to new investors...................................          $ 3.875
                                                                      =======

------------------                                                              
(1) Assumes the exercise of all of the Company's outstanding stock options and  
    the conversion of all of the Company's preferred stock as of March 31, 1998.

   The foregoing computations do not take into account the possible issuance
of up to an additional 130,435 shares of Common Stock to new investors pursuant 
to the exercise of an option granted by the Company to the Representatives      
solely to cover over-allotments, if any, in connection with the Offering. See   
"Underwriting."                                                                 

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CAPITALIZATION

The following table sets forth the consolidated capitalization of the 
Company as of March 31, 1998, and as adjusted to give effect to (i) the sale by 
the Company of 869,565 shares of Common Stock offered hereby and the related    
estimated net proceeds therefrom; and (ii) the issuance by the Company of       
126,026 shares of Common Stock upon the conversion of all of the Company's      
outstanding shares of preferred stock, which conversion occurred on April 3,    
1998. The following data should be read in conjunction with the Consolidated    
Financial Statements of the Company contained elsewhere in this Prospectus.     

                                                                [Download Table]
                                                                  MARCH 31, 1998    
                                                              ----------------------
                                                               ACTUAL    AS ADJUSTED
                                                              --------   -----------
                                                              (DOLLARS IN THOUSANDS)
                                                                                    

Deposits....................................................  $136,148    $136,148  
                                                              ========    ========  
Federal Home Loan Bank Advances.............................  $  7,300    $  7,300  
                                                              ========    ========  
Stockholders' equity:                                                               
  Preferred stock, $.01 par value, 1,000,000 shares                                 
     authorized; 56,026 shares outstanding..................         1          --  
  Additional paid-in capital, preferred.....................     1,118          --  
  Common Stock, $.01 par value, 5,000,000 shares authorized;                        
     1,249,949 shares issued and outstanding(1).............        12          22  
  Additional paid-in capital, common........................     9,874      23,118  
  Retained earnings.........................................     3,313       3,313  
  Unrealized loss on securities available for sale..........      (211)       (211) 
                                                              --------    --------  
     Total Stockholders' Equity.............................  $ 14,107    $ 26,242  
                                                              ========    ========  

------------------                                                              
(1) Does not include 250,281 shares of Common Stock reserved for issuance upon  
    the exercise of options granted under the Company's stock option plans as of
March 31, 1998. See "Management -- Employee Stock Option Plans."        

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SELECTED CONSOLIDATED FINANCIAL DATA

     The following Selected Consolidated Financial Data of the Company should be
read in conjunction with the Consolidated Financial Statements of the Company,  
the information contained in "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" and other financial information included   
elsewhere in this Prospectus. The selected historical consolidated financial    
data as of and for the three years ended December 31, 1997 are derived from the 
Company's Consolidated Financial Statements which have been audited by Hacker,  
Johnson, Cohen & Grieb PA, independent certified public accountants. The        
selected historical consolidated financial data as of and for the two years     
ended December 31, 1994 are derived from the Company's Consolidated Financial   
Statements which have been audited by other independent certified public        
accountants. The selected historical consolidated financial data as of and for  
the three months ended March 31, 1998 and March 31, 1997 have not been audited  
but, in the opinion of management, contain all adjustments (consisting of normal
recurring adjustments) necessary for a fair statement of the results for the    
interim periods. The results of operations for the three months ended March 31, 
1998 are not necessarily indicative of the results of operations that may be    
expected for the year ended December 31, 1998, or for any future periods.       

                                                        [Enlarge/Download Table]

                                     AT OR FOR THE                                                                     
                                  THREE MONTHS ENDED                                                                   
                                       MARCH 31,                     AT OR FOR THE YEAR ENDED DECEMBER 31,             
                                -----------------------  --------------------------------------------------------------
                                   1998         1997        1997         1996         1995         1994         1993   
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
                                                                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)       
                                                                                                                       
All other liabilities.........       3,433        2,070       2,809        2,593        5,005        7,027        6,655
INCOME STATEMENT DATA:                                                                                                 
Total interest income.........  $    3,022   $    2,965  $   11,932   $   12,186   $   14,690   $   11,966   $    9,879
Total interest expense........       1,541        1,579       6,329        7,616        9,919        7,282        6,207
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net interest income...........       1,481        1,386       5,603        4,570        4,771        4,684        3,672
Provision for loan losses.....          65           11          80          185          336           75          120
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net interest income after                                                                                              
  provision for loan losses...       1,416        1,375       5,523        4,385        4,435        4,609        3,552
Noninterest income............         364          324       1,412        2,434        1,922        2,887        4,956
Noninterest expense before                                                                                             
  SAIF                                                                                                                 
  Recapitalization Expense                                                                                             
    (1).......................       1,308        1,328       5,471        6,847        7,360        6,273        5,729
SAIF Recapitalization                                                                                                  
  Expense(1)..................          --           --          --          926           --           --           --
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
Earnings (loss) before income                                                                                          
  taxes.......................         472          371       1,464        (954)      (1,003)        1,223        2,779
Income taxes (benefit)........         171          139         550        (355)        (376)          458        1,021
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
Net earnings (loss)...........  $      301   $      232  $      914   $    (599)   $    (627)   $      765   $    1,758
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Without SAIF Assessment                                                                                                
  Net earnings (loss).........  $      301   $      232  $      914   $     (18)   $    (627)   $      765   $    1,758
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
PER SHARE DATA (2):                                                                                                    
Earnings (loss) per share:                                                                                             
Basic.........................  $      .22   $      .19  $      .68   $    (.52)   $    (.51)   $      .72   $     2.07
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Diluted.......................  $      .20   $      .18  $      .62   $    (.52)   $    (.51)   $      .72   $     2.07
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Without SAIF Assessment (1)                                                                                            
Earnings (loss) per share:                                                                                             
Basic.........................  $      .22   $      .19  $      .68   $    (.01)   $    (.51)   $      .72   $     2.07
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Diluted.......................  $      .20   $      .18  $      .62   $    (.01)   $    (.51)   $      .72   $     2.07
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Weighted average common shares                                                                                         
  outstanding:                                                                                                         
Basic.........................   1,249,949    1,219,050   1,224,441    1,219,092    1,219,092    1,062,500      849,275
Diluted.......................   1,379,048    1,320,428   1,346,637    1,219,092    1,219,092    1,062,500      849,275
Total common shares                                                                                                    
  outstanding at end of period                                                                                         
  (2), (4)....................   1,249,949    1,219,092   1,247,592    1,219,092    1,219,092    1,219,092      849,627
Book value per share (2),                                                                                              
  (4).........................  $    10.39   $     9.63  $    10.23   $     9.54   $    10.27   $    10.27   $    10.36
BALANCE SHEET DATA (6):                                                                                                
Cash and cash equivalents.....  $    3,817   $    7,804  $    2,575   $    6,663   $   10,212   $    5,857   $    8,009
Securities....................      39,873       44,726      32,079       42,790       48,542       54,674       32,639
Loans.........................     112,756       94,756     105,653       90,973      104,677      123,048       97,183
Loans held for sale...........       4,134        3,966       4,443        4,396       18,561        6,697       19,329
All other assets..............       3,190        5,896       3,090        6,436       11,415       11,357        5,670
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
    Total assets..............  $  163,770   $  157,158  $  147,840   $  151,258   $  193,407   $  201,633   $  162,830
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========
Deposits......................     136,148      117,130     124,995      112,498      142,673      164,087      107,505
Other borrowings..............      10,082       25,364       6,191       23,746       33,215       18,003       39,867
Stockholders' equity..........      14,107       12,594      13,845       12,421       12,514       12,516        8,803
                                ----------   ----------  ----------   ----------   ----------   ----------   ----------
    Total liabilities and                                                                                              
      stockholders' equity....  $  163,770   $  157,158  $  147,840   $  151,258   $  193,407   $  201,633   $  162,830
                                ==========   ==========  ==========   ==========   ==========   ==========   ==========

                                                                     (continued)

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                                                        [Enlarge/Download Table]

                                     AT OR FOR THE                                                                       
                                  THREE MONTHS ENDED                                                                     
                                       MARCH 31,                      AT OR FOR THE YEAR ENDED DECEMBER 31,              
                                -----------------------   -------------------------------------------------------------- 
                                   1998         1997         1997         1996         1995         1994         1993    
                                ----------   ----------   ----------   ----------   ----------   ----------   ---------- 
                                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)        
                                                                                                                         
AVERAGE BALANCE SHEET DATA:                                                                                              
Total assets..................  $  153,617   $  150,876   $  151,209   $  158,572   $  200,897   $  188,067   $  157,221 
Securities....................      34,841       43,541       38,200       41,068       52,045       56,840       29,807 
Loans.........................     110,839       95,343      102,315       96,307      129,431      125,460      114,552 
Total deposits................     129,725      114,290      119,377      115,718      157,262      135,426      108,066 
Other borrowings..............       7,473       21,771       16,879       28,348       25,749       32,685       38,232 
Stockholders' equity..........      13,976       12,508       12,982       11,519       12,515       10,963        7,912 
PERFORMANCE RATIOS:                                                                                                      
Return on average assets......         .78%         .62%         .60%        (.38%)       (.31%)        .41%        1.12%
Return on average equity......        8.61%        7.42%        7.04%       (5.20%)      (5.01%)       6.98%       22.22%
Return on average equity                                                                                                 
  (4).........................        9.35%        7.94%        7.56%       (5.37%)      (5.01%)       6.98%       22.22%
Interest rate spread during                                                                                              
  the period (3)..............        3.26%        3.36%        3.30%        2.83%        2.25%        1.98%        2.07%
Net interest margin...........        4.05%        3.90%        3.93%        3.19%        2.53%        2.51%        2.39%
Noninterest expense to average                                                                                           
  assets (1)..................        3.40%        3.53%        3.62%        4.90%        3.66%        3.34%        3.64%
Efficiency ratio (5)..........       70.89%       77.66%       78.31%      112.42%      109.98%       82.53%       69.63%
ASSET QUALITY RATIOS (6):                                                                                                
Nonperforming loans to total                                                                                             
  loans.......................        2.06%        1.95%        2.34%        1.60%        2.09%         .77%        1.02%
Nonperforming loans, and                                                                                                 
  foreclosed real estate as a                                                                                            
  percentage of total                                                                                                    
  assets......................        1.51%        1.23%        1.76%        1.15%        1.15%         .54%         .72%
Allowance for loan losses as a                                                                                           
  percentage of total loans...         .80%         .87%         .80%         .85%         .79%         .42%         .38%
Allowance for loan losses as a                                                                                           
  percentage of nonperforming                                                                                            
  loans.......................       38.90%       44.36%       33.97%       52.97%       37.74%       55.17%       37.20%
Net charge-offs as a                                                                                                     
  percentage of average                                                                                                  
  loans.......................          --         (.04%)        .01%         .25%         .02%         .03%         .05%
CAPITAL RATIOS (6):                                                                                                      
Company                                                                                                                  
Total capital to risk weighted                                                                                           
  assets......................       15.27%       16.87%       16.02%       17.58%       14.09%       13.75%          -- 
Tier I capital to risk                                                                                                   
  weighted assets.............       14.34%       15.84%       15.09%       16.52%       13.18%       13.19%          -- 
Tier I capital to average                                                                                                
  assets......................        9.38%        8.40%        9.10%        8.04%        6.02%        6.66%          -- 
Bank (7)                                                                                                                 
Total capital to risk weighted                                                                                           
  assets......................       15.51%       15.66%       16.00%       15.88%       17.53%       22.87%          -- 
Tier I capital to risk                                                                                                   
  weighted assets.............       14.56%       14.37%       15.06%       14.67%       15.66%       22.14%          -- 
Tier I capital to average                                                                                                
  assets......................        9.05%        8.47%        8.95%        8.69%       10.53%       13.57%          -- 
Savings Bank (8)                                                                                                         
Tangible......................          --         8.29%          --         8.25%        6.00%        5.30%        5.39%
Core..........................          --         8.29%          --         8.25%        6.00%        5.30%        5.39%
Risk-based....................          --        17.64%          --        18.32%       12.77%       12.40%       12.26%
OTHERS (6):                                                                                                              
Total number of offices.......           3            3            3            3            3            3            1 
Full-service banking                                                                                                     
  offices.....................           3            3            3            3            3            3            1 

------------------                                                              
(1) The Bank was subject to a one-time special assessment that was paid by all  
financial institutions insured by the SAIF in 1996. The Bank's pre-tax  
assessment was $926,000 ($581,000 after taxes).                         

(2) All per share information is presented to reflect a three-for-two stock     
split effective February 1998.                                          

(3) Difference between weighted-average yield on all interest-earning assets and
weighted-average rate on all interest-bearing liabilities.              

(4) Excludes the Common Stock into which the preferred stock of the Company was 
converted on April 3, 1998.                                             

(5) Calculated by dividing total noninterest expenses by net interest income    
plus noninterest income excluding securities gains and losses.          

(6) At period end.                                                              

(7) The Bank was acquired in 1994.                                              

(8) Represents the capital ratios of the Thrift prior to its merger into the    
Bank in 1997.                                                           

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

     Management's Discussion and Analysis of Results of Operations and Financial
Condition analyzes the major elements of the Company's statement of operations  
and balance sheets. This section should be read in conjunction with the         
Company's Consolidated Financial Statements and accompanying notes and other    
detailed information appearing elsewhere in this Prospectus.                    

FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

OVERVIEW                                                                        

For the period ending March 31, 1998, the Company had consolidated net
earnings of $301,000 or $.22 basic earnings per share ($.20 diluted earnings per
share), compared to consolidated net earnings of $232,000 or $.19 basic earnings
per share ($.18 diluted earnings per share) for the period ending March 31,     
1997. The increase in net earnings reflected a combination of higher net        
interest income, increased noninterest income and lower noninterest expense,    
which was driven by growth in relationship assets and liabilities. Return on    
average assets and return on average equity were .78% and 8.61% respectively,   
for the three months ended March 31, 1998 compared to .62% and 7.42%            
respectively, for the same time period in 1997.                                 

    Total assets at March 31, 1998 increased to $163.770 million from $157.158
million at March 31, 1997, an increase of $6.612 million or 4.21%. Deposits grew
to $136.148 million at March 31, 1998 from $117.130 million at March 31, 1997,  
an increase of $19.018 million or 16.24%. Total shareholders' equity was $14.107
million at March 31, 1998, representing an increase of $1.513 million or 12.01% 
over total shareholders' equity of $12.594 million at March 31, 1997.           

RESULTS OF OPERATIONS                                                           

Net Interest Income                                                         

Net interest income represents the amount by which interest income on 
interest-earning assets, including loans and securities, exceeds interest       
expense incurred on interest-bearing liabilities, including deposits and other  
borrowings. Net interest income is the principal source of the Company's        
earnings. Interest rate fluctuations, as well as changes in the amount and type 
of earning assets and liabilities, combine to affect net interest income.       

    Net interest income for the three months ended March 31, 1998 increased to
$1.481 million from $1.386 million for the three months ended March 31, 1997, an
increase of $95,000 or 6.85%. Net interest income increased as a result of      
higher interest-earning assets derived primarily from the increase in loan      
balances and an improved liability mix. Average interest-earning assets         
increased to $146.220 million for the three months ended March 31, 1998 from    
$142.140 million for the three months ended March 31, 1997, an increase of      
$4.080 million or 2.87%. Average loans increased to $110.839 million for the    
three months ended March 30, 1998 from $95.343 million for the three months     
ended March 31, 1997, an increase of $15.496 million or 16.25%, as a result of  
internal loan growth. During this same period average securities decreased to   
$34.841 million at March 31, 1998 from $43.541 million at March 31, 1997, a     
decrease of $8.700 million or 19.98%. Noninterest bearing demand deposits       
increased $4.927 million, or 53.58%, from $9.196 million at March 31, 1997 to   
$14.123 at March 31, 1998. Lower interest expense is attributed to a decrease in
average interest-bearing liabilities from $126.865 million at March 31, 1997 to 
$123.075 million for the three months ended March 31, 1998, a decrease of $3.790
million or 2.99%.                                                               

The Company posted net interest margins of 4.05% and 3.90% and        
interest-rate spreads of 3.26% and 3.36% for the periods ended March 31, 1998   
and March 31, 1997, respectively. The 15 basis point increase in the net        
interest margin for the first quarter of 1998 as compared to 1997, is a result  
of a higher ratio of average earning assets to average costing liabilities which
increased to 1.19 at March 31, 1998 from 1.12 in March 31, 1997. The lower      
interest-rate spread in the period ended March 31, 1998 was caused by a         
combination of a seven basis point decline in yield on interest bearing assets  
and a three basis point increase in cost on interest bearing liabilities.       

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The following table sets forth for the periods indicated information  
regarding (i) the total dollar amount of interest and dividend income of the    
Company from interest-earning assets and the resultant average yields; (ii) the 
total dollar amount of interest expense on interest-bearing liabilities and the 
resultant average cost; (iii) net interest/dividend income; (iv) interest-rate  
spread; (v) net interest margin; and (vi) ratio of average interest-earning     
asset to average interest-bearing liabilities.                                  

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS ENDED MARCH 31,                     
                                         ---------------------------------------------------------------------
                                                       1998                                1997               
                                         ---------------------------------   ---------------------------------
                                                    INTEREST                            INTEREST              
                                         AVERAGE       AND       AVERAGE     AVERAGE       AND       AVERAGE  
                                         BALANCE    DIVIDENDS   YIELD/RATE   BALANCE    DIVIDENDS   YIELD/RATE
                                         --------   ---------   ----------   --------   ---------   ----------
                                                                (DOLLARS IN THOUSANDS)                        
                                                                                                              
Interest-earning assets:                                                                                      
  Loans................................  $110,839    $2,498       9.01%      $ 95,343    $2,247       9.43%   
  Securities...........................    34,841       517       5.94%        43,541       684       6.28%   
  Other interest-earning assets(1).....       540         7       5.19%         3,256        34       4.18%   
                                         --------    ------                  --------    ------               
    Total interest-earning assets......   146,220     3,022       8.27%       142,140     2,965       8.34%   
                                                     ------                              ------               
  Noninterest-earning assets(2)........     7,397                               8,736                         
                                         --------                            --------                         
    Total assets:......................  $153,617                            $150,876                         
                                         ========                            ========                         
Interest-bearing liabilities:                                                                                 
  Savings and NOW deposits.............    10,848        47       1.73%        10,449        50       1.91%   
  Money-market deposits................    37,873       436       4.60%        36,282       414       4.56%   
  Time deposits........................    66,881       957       5.72%        58,363       813       5.57%   
  Other borrowings.....................     7,473       101       5.41%        21,771       302       5.55%   
                                         --------    ------                  --------    ------               
    Total interest-bearing                                                                                    
      liabilities......................   123,075     1,541       5.01%       126,865     1,579       4.98%   
                                                     ------                              ------               
  Demand deposits......................    14,123                               9,196                         
  Noninterest-bearing liabilities......     2,443                               2,307                         
  Stockholders' equity.................    13,976                              12,508                         
                                         --------                            --------                         
    Total liabilities and stockholders'                                                                       
      equity...........................  $153,617                            $150,876                         
                                         ========                            ========                         
Net-interest income....................              $1,481                              $1,386               
                                                     ======                              ======               
Interest-rate spread(3)................                           3.26%                               3.36%   
                                                                   ====                                ====   
Net interest margin(4).................                           4.05%                               3.90%   
                                                                   ====                                ====   
Ratio of average interest-earning                                                                             
  assets to average interest-bearing                                                                          
  liabilities..........................      1.19                                1.12                         
                                         ========                            ========                         

------------------                                                              
(1) Includes interest-bearing deposits, federal funds sold and securities       
purchased under agreements to resell.                                   

(2) Includes nonaccrual loans.                                                  

(3) Interest rate spread represents the difference between the weighted-average 
yield on interest-earning assets and the weighted-average cost of       
interest-bearing liabilities.                                           

(4) Net interest margin is net interest income dividend by average              
interest-earning assets.                                                

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 The following table sets forth certain information regarding changes in
interest income and interest expense of the Company for the periods indicated.  
For each category of interest-earning assets and interest-bearing liabilities,  
information is provided on changes attributable to (1) changes in rate (change  
in rate multiplied by prior volume), (2) changes in volume (change in volume    
multiplied by prior rate) and (3) changes in rate-volume (change in rate        
multiplied by change in volume).                                                

                                                        [Enlarge/Download Table]

                                                                 THREE MONTHS ENDED MARCH 31,      
                                                                        1998 VS. 1997              
                                                                  INCREASE (DECREASE) DUE TO       
                                                           ----------------------------------------
                                                                                  RATE/            
                                                           RATE       VOLUME      VOLUME      TOTAL
                                                           -----      ------      ------      -----
                                                                        (IN THOUSANDS)             
                                                                                                   
Interest Bearing Assets:                                                                           
  Loans................................................... $ (98)      $365        $(16)      $251 
  Securities..............................................   (38)      (137)          8       (167)
  Other interest-earning assets...........................     8        (28)         (7)       (27)
                                                           -----       ----        ----       ---- 
       Total..............................................  (128)       200         (15)        57 
                                                           -----       ----        ----       ---- 
Interest bearing liabilities:                                                                      
  Deposits:                                                                                        
     Savings and NOW deposits.............................    (5)         2          (0)        (3)
     Money-market deposits................................     4         18          (0)        22 
     Time deposits........................................    22        119           3        144 
  Other borrowings........................................    (8)      (198)          5       (201)
                                                           -----       ----        ----       ---- 
       Total..............................................    13        (59)          8        (38)
                                                           -----       ----        ----       ---- 
Net change in net interest income......................... $(141)      $259        $(23)      $ 95 
                                                           =====       ====        ====       ==== 

Provision for Loan Losses                                                   

 The provision for loan losses is charged to earnings to bring the total
allowance to a level deemed appropriate by management and is based upon         
historical experience, the volume and type of lending conducted by the Bank,    
industry standards, the amounts of nonperforming loans, general economic        
conditions, particularly as they relate to the Bank's market areas, and other   
factors related to the collectibility of the Bank's loan portfolio. The         
provision for loan losses increased to $65,000 for the three months ended March 
31, 1998 from $11,000 for the same time period in 1997, an increase of $54,000  
or 491%. This significant increase is a result of management recognizing greater
potential losses from the loan portfolio as the loan volumes are shifting from  
residential towards commercial/commercial real estate lending.                  

Noninterest Income                                                          

Noninterest income is an important source of revenue for financial    
institutions in a deregulated environment. The Company's primary source of      
noninterest income is service charges on deposit accounts and other banking     
service related fees. Noninterest income for the three months ended March 31,   
1998 was $364,000, an increase of $40,000 or 12.35% from $324,000 for the same  
period in 1997. The following table presents for the periods indicated the major
categories of noninterest income:                                               

                                                                [Download Table]

                                                      THREE MONTHS ENDED 
                                                           MARCH 31,     
                                                      -------------------
                                                      1998           1997
                                                      ----           ----
                                                        (IN THOUSANDS)   
                                                                         
Noninterest income:                                                      
  Service charges on deposit accounts................ $195           $112
  Loan servicing fees................................   16             21
  Net gains from sale of loans.......................   69             95
  Net realized gains on sale of securities available                     
     for sale........................................    2              4
  Other..............................................   82             92
                                                      ----           ----
     Total noninterest income........................ $364           $324
                                                      ====           ====

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     Service charges on deposit accounts is the largest component of noninterest
income and a significant source of revenue to the Company. The increase of      
$83,000 in service charges on deposit accounts from $112,000 during the three   
months ending March 31, 1997 to $195,000 during the same period in 1998 is the  
result of an increase in the number of the Company's transaction accounts.      

Noninterest Expense                                                         

For the three month period ended March 31, 1998, noninterest expenses 
decreased to $1.308 million from $1.328 million for the period ended March 31,  
1997, a 1.51% decrease. The decrease in noninterest expenses is a result of     
management's focus on controlling expenditures and implementation of its        
Strategic Plan. The efficiency ratio, calculated by dividing total noninterest  
expenses by net interest income plus noninterest income, was 70.89% for the     
three months ended March 31, 1998 and 77.66% for the three months ended March   
31, 1997.                                                                       

     The following table presents for the periods indicated the major categories
of noninterest expense:                                                         

                                                                [Download Table]

                                                        THREE MONTHS ENDED  
                                                             MARCH 31,      
                                                       ---------------------
                                                        1998           1997 
                                                       ------         ------
                                                          (IN THOUSANDS)    
                                                                            
Noninterest expenses:                                                       
  Salaries and employee benefits...................... $  701         $  699
  Occupancy expense...................................    260            284
  Advertising and promotion...........................     59             51
  Loan servicing expense..............................     --              6
  Professional fees...................................     24             --
  Federal deposit insurance premiums..................     14             11
  Data processing.....................................     70            108
  Other...............................................    180            169
                                                       ------         ------
     Total noninterest expenses....................... $1,308         $1,328
                                                       ======         ======

Provision for Income Taxes                                                  

     Income tax expense includes the regular federal income tax at the statutory
rate. The amount of federal income tax expense is influenced by the amount of   
taxable income, the amount of tax-exempt income, the amount of non-deductible   
interest expense and the amount of other non-deductible expense. During the     
three months ended March 31, 1998, income tax expense was $171,000 compared to  
$139,000 for the three months ended March 31, 1997.                             

Impact of Inflation                                                         

The effects of inflation on the local economy and on the Company's    
operating results have been relatively modest for the past several years. Since 
substantially all of the Company's assets and liabilities are monetary in       
nature, such as cash, securities, loans and deposits, their values are less     
sensitive to the effects of inflation than to changing interest rates, which do 
not necessarily change in accordance with inflation rates. The Company tries to 
control the impact of interest rate fluctuations by managing the relationship   
between its interest rate sensitive assets and liabilities. See "-- Interest    
Rate Sensitivity and Liquidity".                                                

FINANCIAL CONDITION                                                             

Loan Portfolio                                                              

    Loans, net were $113.669 million at March 31, 1998, an increase of $18.080
million or 18.91% from $95.589 million at March 31, 1997. This increase is      
believed to be the result of the Company's increased focus on relationship      
banking, featuring professional, attentive and responsive service to customers' 
needs both in residential mortgage lending and commercial lending to middle     
market companies.                                                               

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     The following table summarizes as of the dates indicated the loan portfolio
of the Company by type of loan:                                                 

                                                        [Enlarge/Download Table]

                                                      MARCH 31, 1998               MARCH 31, 1997     
                                                 ------------------------      -----------------------
                                                  AMOUNT       % OF TOTAL      AMOUNT       % OF TOTAL
                                                 --------      ----------      -------      ----------
                                                                (DOLLARS IN THOUSANDS)                
                                                                                                      
Commercial...................................... $ 21,981         19.31%       $12,415         12.97% 
Commercial real estate..........................   19,374         17.02%        16,783         17.53% 
Residential real estate.........................   65,572         57.61%        61,027         63.75% 
Consumer........................................    6,893          6.06%         5,505          5.75% 
                                                 --------        ------        -------        ------  
  Total loans...................................  113,820        100.00%        95,730        100.00% 
                                                                 ======                       ======  

Less:                                                                                                 
Deferred loan fees..............................     (151)                        (141)               
Allowances for loan losses......................     (913)                        (830)               
                                                 --------                      -------                
Loans, net...................................... $112,756                      $94,759                
                                                 ========                      =======                

The primary lending focus of the Company is on small and medium sized 
commercial, residential mortgage and consumer loans. A substantial portion of   
the Company's loan portfolio consists of single-family residential mortgage     
loans collateralized by owner-occupied properties located in the Company's      
market area. The Company offers a variety of mortgage loan products, with both  
fixed and adjustable rates. The loans are generally amortized over fifteen to   
thirty years, although such loans often remain outstanding for significantly    
shorter periods than their contractual terms.                                   

 Loans collateralized by single-family residential real estate generally
have been originated in amounts of no more than 80% of appraised value. For     
loans in amounts greater than 80% of appraised value, the Company generally     
requires mortgage insurance. For all such loans, the Company requires mortgage  
title insurance and hazard insurance. Of the mortgages originated, the Company  
generally retains mortgage loans with variable rates or where the borrower has a
deposit relationship with the Company and sells longer term, fixed-rate, non-   
relationship loans.                                                             

    The Company offers a variety of commercial lending products including term
loans, lines of credit and fixed asset loans, including real estate and         
equipment financing. A broad range of short- to medium-term commercial loans,   
both collateralized and uncollateralized, are made available to businesses for  
working capital (including inventory and receivables), business expansion       
(including acquisitions of real estate and improvements) and the purchase of    
equipment. The purpose of the particular loan determines its structure.         

     Generally, the Company's commercial loans are underwritten in the Company's
primary market area on the basis of the borrower's ability to service such debt 
from income. As a general practice, the Company takes as collateral a lien on   
any available real estate, equipment or other assets. Working capital loans are 
primarily collateralized by short-term assets whereas term loans are primarily  
collateralized by long-term assets. While commercial business loans generally   
are made for shorter terms and at higher yields than one- to four-family        
residential loans, such loans generally involve a higher level of risk. The     
commercial loan risk of borrower default is greater than in owner-occupied      
residential properties, since the collateral may be more difficult to liquidate 
and more likely to decline in value.                                            

The Company's commercial mortgage loans are secured by liens on real  
estate, typically have variable interest rates and amortize over a ten to       
fifteen year period with balloon payments due at the end of three to five years.
In underwriting commercial mortgage loans, consideration is given to the        
property's operating history, future operating projections, current and         
projected occupancy, location and physical condition. The underwriting analysis 
also includes credit checks, appraisals, a review of the financial condition of 
the borrower and generally full recourse to the owner.                          

A number of the Company's commercial loans are underwritten under     
guidelines of the SBA loan guarantee programs. SBA loan originations were       
$941,000 and $1.125 million for the three months ended March 31, 1998 and 1997, 
respectively.                                                                   

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Consumer loans made by the Company include automobile loans, home     
improvement loans, home equity lines of credit, personal loans (collateralized  
and uncollateralized) and loans collateralized by deposit accounts. The terms of
these loans typically range from 12 to 84 months and vary based on the nature of
the collateral and size of the loan.                                            

 The contractual ranges of the commercial and residential mortgages, and
consumer loans with predetermined interest rates and floating rates in each     
maturity range as of March 31, 1998 are summarized in the following table:      

                                                        [Enlarge/Download Table]

                                                                RESIDENTIAL                     
                                                    COMMERCIAL   MORTGAGE     CONSUMER          
                                                      LOANS        LOANS       LOANS     TOTAL  
                                                    ----------  -----------   --------  --------
                                                                   (IN THOUSANDS)               
                                                                                                
Due within one year................................  $18,622      $   918      $2,744   $ 22,284
Due after one through five years...................   15,450        2,254       2,136     19,840
Due after five years...............................    7,283       62,400       2,013     71,696
                                                     -------      -------      ------   --------
       Total.......................................  $41,355      $65,572      $6,893   $113,820
                                                     =======      =======      ======   ========

  Of the $92.304 million in loans due after one year, 42.40% of such loans
have fixed rates of interest and 57.60% have adjustable rates.                  

The following table displays loan originations by type of loan and    
principal reductions during the periods indicated:                              

                                                                [Download Table]

                                                        THREE MONTHS ENDED  
                                                             MARCH 31,      
                                                        ------------------- 
                                                         1998         1997  
                                                        ------       ------ 
                                                          (IN THOUSANDS)    
                                                                            
Originations:                                                               
  Commercial loans..................................... $3,926       $6,945 
  Commerical real estate loans.........................  1,667        1,150 
  Residential real estate..............................  9,366        3,040 
  Consumer loans.......................................    374        1,439 
                                                        ------       ------ 
       Total loans originated.......................... 15,333       12,574 
Principal reductions................................... (8,172)      (8,769)
                                                        ------       ------ 
       Increase in gross loans......................... $7,161       $3,805 
                                                        ======       ====== 

 The originations noted in the table above exclude originations of loans
held for sale of $401,000 and $1.187 million for the three months ended March   
31, 1998 and 1997, respectively.                                                

Nonperforming Assets                                                        

     The Company has several procedures in place to assist it in maintaining the
overall quality of its loan portfolio. These procedures include low individual  
lending limits for officers, an independent credit analysis for all commercial  
credit relationships over $100,000, Management Loan Committee approval for all  
commercial credit relationships over $100,000, Board of Director Loan Committee 
approval for all commercial and for most residential credit relationships over  
$500,000, quality loan documentation and a periodic loan review by an           
independent consultant with considerable banking regulatory experience. The     
Board of Directors reviews all new and renewed loans on a monthly basis. The    
Company also monitors its delinquency levels for any negative or adverse trends.
There can be no assurance, however, that the Company's loan portfolio will not  
become subject to increasing pressures from deteriorating borrower credit due to
general economic conditions.                                                    

The Company generally places a loan on nonaccrual status and ceases   
accruing interest when loan payment performance is deemed unsatisfactory. All   
loans past due 90 days, however, are placed on nonaccrual status, unless the    
loan is both well collateralized and in the process of collection. Cash payments
received while a loan is classified as nonaccrual are recorded as a reduction of
principal as long as doubt exists as to collection.                             

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    The Company has historically had strong asset quality, as evidenced by its
low percentage of net charge-offs to average loans outstanding (an average of   
.07% over the last five years). See "-- Allowance for Loan Losses." Although  
nonperforming assets (nonaccrual loans and foreclosed real estate) at March 31, 
1998 increased to $2.475 million from $1.936 million at March 31, 1997, this    
increase was attributable to one residential real estate loan for $1.225 million
where the original loan to value was less than 60%. The borrowers and a number  
of businesses they own have all sought protection under the U. S. bankruptcy    
laws. While these are complex bankruptcies, during 1998 the borrowers have been 
able to bring this loan current except for one pre-petition payment which they  
are precluded from making under the U. S. bankruptcy laws. Management expects   
this loan will be fully repaid from liquidation of the underlying collateral.   
The Company's ratio of nonperforming loans and foreclosed real estate to total  
assets remained low at 1.51% at March 31, 1998 compared to 1.23% at March 31,   
1997.                                                                           

    The following table presents information regarding nonperforming assets at
March 31, 1998 and March 31, 1997.                                              

                                                                [Download Table]

                                                             AT MARCH 31,      
                                                        -----------------------
                                                          1998           1997  
                                                        --------       --------
                                                        (DOLLARS IN THOUSANDS) 
                                                                               
Nonaccrual loans                                                               
  Residential real estate loans........................  $2,068         $1,465 
  Commercial real estate...............................      --             -- 
  Commercial loans.....................................     278            400 
  Consumer loans and other.............................       1              6 
                                                         ------         ------ 
     Total nonaccrual loans............................   2,347          1,871 
                                                         ------         ------ 
     Total nonpreforming loans.........................   2,347          1,871 
                                                         ------         ------ 
     Total nonperforming loans to total loans..........    2.06%          1.95%
                                                         ======         ====== 
Foreclosed real estate:                                                        
  Real estate acquired by foreclosure or deed in lieu                          
     or                                                                        
     foreclosure.......................................     128             65 
                                                         ------         ------ 
     Total nonperforming loans and foreclosed real                             
       estate..........................................  $2,475         $1,936 
                                                         ======         ====== 
     Total nonperforming and foreclosed real estate to                         
       total assets....................................    1.51%          1.23%
                                                         ======         ====== 

     The Company would have recorded additional interest income of approximately
$83,000 in the first three months of 1998 on nonperforming loans if the loans   
had been current in accordance with original terms. Interest income recorded on 
nonperforming loans for the first three months of 1998 was approximately        
$39,000.                                                                        

Allowance for Loan Losses                                                   

   The allowance for loan losses is a reserve established through charges to
earnings in the form of a provision for loan losses. Based on an evaluation of  
the loan portfolio, management presents a monthly review of the allowance for   
loan losses to the Board of Directors, indicating any changes in the allowance  
since the last review and any recommendations as to adjustments in the          
allowance. In making its evaluation, management considers the diversification by
industry of the Company's commercial loan portfolio, the significant proportion 
of single family, owner-occupied residential real estate loans in the portfolio,
the effect of changes in the local real estate market on collateral values, the 
effects on the loan portfolio of current economic indicators and their probable 
impact on borrowers, the amount of charge-offs for the period, the amount of    
nonperforming loans and related collateral security, the evaluation of its loan 
portfolio by the independent loan review function and the annual examination of 
the Company's financial statements by its independent auditors. Charge-offs     
occur when loans are deemed to be uncollectible.                                

    The Company maintains an internally classified loan list which, along with
the delinquency list of loans, helps management assess the overall quality of   
the loan portfolio and the adequacy of the allowance for loan losses. Loans     
classified as "substandard" are those loans with clear and defined weaknesses   
such as a highly-leveraged position, unfavorable financial ratios, uncertain    
repayment sources or poor financial condition, which may jeopardize             
recoverability of the debt. At March 31, 1998, the Company had $1.070 million of
such loans, excluding loans on nonaccrual, which were primarily residential and 
commercial real estate loans.                                                   

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   Loans classified as "doubtful" are those loans which have characteristics
similar to substandard accounts but with an increased risk that a loss may      
occur, or at least a portion of the loan may require a charge-off if liquidated 
at present. Although loans classified as substandard do not duplicate loans     
classified as doubtful, both substandard and doubtful loans include some loans  
that are delinquent at least 30 days or on nonaccrual status. Loans classified  
as "loss" are those loans which are in the process of being charged off. At     
March 31, 1998, the Company had $293,000 of loans with a doubtful               
classification.                                                                 

    In addition to the internally classified loan list and delinquency list of
loans, the Company maintains a separate "watch list" which further aids the     
Company in monitoring loan portfolios. Watch list loans show warning elements   
where the present status portrays one or more deficiencies that require         
attention in the short term or where pertinent ratios of the loan account have  
weakened to a point where more frequent monitoring is warranted. These loans do 
not have all of the characteristics of a classified loan (substandard or        
doubtful) but do show weakened elements as compared with those of a satisfactory
credit. The Company reviews these loans to assist in assessing the adequacy of  
the allowance for loan losses. At March 31, 1998, the Company had $98,000 of    
such loans, which were primarily commercial loans.                              

In order to determine the adequacy of the allowance for loan losses,  
management considers the risk classification or delinquency status of loans and 
other factors, such as collateral value, portfolio composition, trends in       
economic conditions and the financial strength of borrowers. Management         
establishes specific allowances for loans which management believes require     
reserves greater than those allocated according to their classification or      
delinquent status. An unallocated allowance is also established based on the    
Company's historical charge-off experience. The Company then charges to         
operations a provision for loan losses to maintain the allowance for loan losses
at an adequate level determined by the foregoing methodology.                   

    For the three months ended March 31, 1998 and March 31, 1997 there were no
loan charge-offs. There were no recoveries for March 31, 1998, however,         
recoveries for the same period ending March 31, 1997 was $42,000. During the    
three months ended March 31, 1998, the Company recorded a provision for loan    
losses of $65,000 compared to $11,000 for the three months ended March 31, 1997.
At March 31, 1998, the allowance totaled $913,000, or .80% of total loans       
resulting in an allowance to nonperforming loans of 38.90%. Management feels the
allowance for loan losses is appropriate given the fact that one nonperforming  
residential real estate loan totaling $1.225 million represents 49.08% of the   
nonperforming loans. The original loan to value was less than 60% and the       
collateral is involved in a complex bankruptcy. The borrowers and a number of   
businesses they own have all sought protection under the U. S. bankruptcy laws. 
While these are complex bankruptcies, during 1998 the borrowers have been able  
to bring this loan current except for one pre-petition payment which they are   
precluded from making under the U. S. bankrupty laws. Management expects this   
loan will be fully repaid from liquidation of the underlying collateral.        

     The following table presents, for the periods indicated, an analysis of the
allowance for loan losses and other related data:                               

                                                                [Download Table]

                                                        THREE MONTHS ENDED    
                                                            MARCH 31,         
                                                      ----------------------  
                                                        1998          1997    
                                                      --------      --------  
                                                      (DOLLARS IN THOUSANDS)  
                                                                              
Average loans outstanding, net....................... $110,839      $ 95,343  
                                                      ========      ========  
Allowance at beginning of year.......................      848           777  
Recoveries...........................................       --            42  
                                                      --------      --------  
Net charge offs......................................       --           (42) 
Provision for loan losses charged to operating                                
  expenses...........................................       65            11  
                                                      --------      --------  
Allowance at end of period........................... $    913      $    830  
                                                      ========      ========  
Net charge-offs to average loans outstanding.........     0.00%        (0.04)%
                                                      ========      ========  
Allowance as a percent of total loans................      .80%          .87% 
                                                      ========      ========  
Allowance as a percent of nonperforming loans........    38.90%        44.36% 
                                                      ========      ========  
     Total loans at end of period.................... $113,820      $ 95,730  
                                                      ========      ========  

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The following table describes the allocation of the allowance for loan
losses among various categories of loans and certain other information for the  
dates indicated. The allocation is made for analytical purposes and is not      
necessarily indicative of the categories in which future losses may occur. The  
total allowance is available to absorb losses from any segment of loans.        

                                                        [Enlarge/Download Table]

                                                        AT MARCH 31, 1998     AT MARCH 31, 1997 
                                                       -------------------   -------------------
                                                                % OF LOANS            % OF LOANS
                                                                 TO TOTAL              TO TOTAL 
                                                       AMOUNT     LOANS      AMOUNT     LOANS   
                                                       ------   ----------   ------   ----------
                                                                (DOLLARS IN THOUSANDS)          
                                                                                                
Commercial loans......................................  $176       19.31%     $108       12.97% 
Commercial real estate loans..........................   156       17.02%      146       17.53% 
Residential real estate loans.........................   526       57.61%      529       63.75% 
Consumer loans........................................    55        6.06%       47        5.75% 
                                                        ----     -------      ----     -------  
     Total allowance for loan losses..................  $913      100.00%     $830      100.00% 
                                                        ====     =======      ====     =======  

Securities                                                                  

   The Company uses its securities portfolio primarily as a source of income
and secondarily as a source of liquidity. At March 31, 1998, investment         
securities totaled $39.873 million, a decrease of $4.853 million from $44.726   
million at March 31, 1997. The decrease was primarily attributable to the       
repositioning of the investments from less desirable mortgage backed securities 
to more liquid United States government direct obligations. At March 31, 1998,  
investment securities represented 24.34% of total assets compared to 28.46% of  
total assets at March 31, 1997. The yield on the investment portfolio for the   
three months ended March 31, 1998 was 5.94% compared to a yield of 6.28% for the
three months ended March 31, 1997.                                              

     The following table presents the amortized cost of securities classified as
Available-for-Sale and held to Maturity indicating their approximate fair values
at March 31, 1998:                                                              

                                                        [Enlarge/Download Table]

                                                                   GROSS        GROSS            
                                                      AMORTIZED  UNREALIZED   UNREALIZED   FAIR  
                                                        COST       GAINS        LOSSES     VALUE 
                                                      ---------  ----------   ----------  -------
                                                                    (IN THOUSANDS)               
                                                                                                 
Available for Sale:                                                                              
     U.S. Treasury securities........................  $19,142      $ 10        $ (34)    $19,118
     U.S. Government agency securities...............    3,449        --          (12)      3,437
     Mortgage-backed securities......................    3,206        --         (119)      3,087
     Mutual funds....................................    5,137        --         (175)      4,962
                                                       -------      ----        -----     -------
       Total.........................................  $30,934      $ 10        $(340)    $30,604
                                                       =======      ====        =====     =======
Held to Maturity:                                                                                
     U.S. Government agency securities...............  $ 1,235      $ 81        $  --     $ 1,316
     Mortgage-backed securities......................    6,325        23         (230)      6,118
     Other...........................................      175        --           --         175
                                                       -------      ----        -----     -------
       Total.........................................  $ 7,735      $104        $(230)    $ 7,609
                                                       =======      ====        =====     =======

    The above table does not include the Federal Reserve and Federal Home Loan
Bank Stock.                                                                     

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The following table sets forth, by maturity distribution, certain     
information pertaining to the securities portfolio:                             

                                                        [Enlarge/Download Table]

                                                  AFTER ONE YEAR                                           
                             ONE YEAR OR LESS     TO FIVE YEARS       AFTER FIVE YEARS         TOTAL       
                            ------------------  ------------------   ------------------  ------------------
                            CARRYING   AVERAGE  CARRYING   AVERAGE   CARRYING   AVERAGE  CARRYING   AVERAGE
                             VALUE      YIELD    VALUE      YIELD     VALUE      YIELD    VALUE      YIELD 
                            --------   -------  --------   -------   --------   -------  --------   -------
                                                        (DOLLARS IN THOUSANDS)                             
                                                                                                           
At March 31, 1998:                                                                                         
  U.S. Government agency                                                                                   
    securities............. $    --        --%  $ 4,436      6.59%   $   236      6.09%  $ 4,672      6.56%
  U.S. Treasury                                                                                            
    securities.............   4,010      5.95    15,108      5.95         --        --    19,118      5.95 
  Mortgage-backed                                                                                          
    securities.............   3,664      6.19     1,984      5.57      3,764      5.37     9,412      5.73 
  Mutual funds.............   4,962      5.95        --        --         --        --     4,962      5.95 
  Other(1).................      --        --        25      7.88      1,684      7.08     1,709      7.11 
                            -------             -------              -------             -------           
      Total                 $12,636      6.02%  $21,553      6.05%   $ 5,684      5.91%  $39,873      6.02%
                            =======             =======              =======             =======           

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

(1) Includes Federal Reserve and Federal Home Loan Bank stock.                  

Deposits                                                                    

 The Company offers a variety of deposit accounts having a wide range of
interest rates and terms. The Company's deposits consist of demand, NOW,        
savings, money market and time accounts. The Company relies primarily on        
competitive pricing policies and customer service to attract and retain these   
deposits. The Company does not have any brokered deposits.                      

   The Company's average total deposits for the three months ended March 31,
1998 were $129.725 million or 13.51% over average total deposits during the same
period in 1997. The Company's total deposits at March 31, 1998, were $136.148   
million, up $19.018 million or 16.24% over total deposits at March 31, 1997.    

  The Company's lending and investing activities are funded principally by
deposits, approximately 20.91% of which are demand, NOW and savings deposits.   
Average noninterest-bearing deposits at March 31, 1998 were $14.123 million as  
compared to $9.196 million for the first three months of 1997, an increase of   
$4.927 million or 53.58%. Approximately 10.89% of average deposits for the three
months ended March 31, 1998 were noninterest-bearing. The amount of deposits    
grew due to management efforts to build relationship Banking.                   

The following table shows the distribution of, and certain other      
information relating to, deposit accounts by type.                              

                                                        [Enlarge/Download Table]

                                                                      AT MARCH 31,                 
                                                      ---------------------------------------------
                                                        1998        % OF        1997        % OF   
                                                      BALANCE      TOTAL      BALANCE      TOTAL   
                                                      --------   ----------   --------   ----------
                                                                 (DOLLARS IN THOUSANDS)            
                                                                                                   
Demand deposits...................................... $ 15,587      11.45%    $  9,791       8.36% 
Savings and NOW deposits.............................   12,879       9.46%      12,095      10.32% 
Money market deposits................................   40,253      29.56%      37,223      31.78% 
Time deposits........................................   67,429      49.53%      58,021      49.54% 
                                                      --------    -------     --------    -------  
       Total deposits................................ $136,148     100.00%    $117,130     100.00% 
                                                      ========    =======     ========    =======  

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   Jumbo certificates ($100,000 and over) indicated above mature as follows:

                                                                [Download Table]

                                                          AT MARCH 31,  
                                                              1998      
                                                         ---------------
                                                         (IN THOUSANDS) 
                                                                        
Due three months or less...............................      $ 1,123    
Due over three months to six months....................          422    
Due over six months to one year........................        1,220    
Due over one year......................................        9,235    
                                                             -------    
     Total.............................................      $12,000    
                                                             =======    

The scheduled maturities of time deposits are as follows:             

                                                                [Download Table]

                                                      AT MARCH 31, 1998
                                                      -----------------
                                                       (IN THOUSANDS)  
                                                                       
Due in one year or less.............................       $23,336     
Due in more than one year less than three years.....        24,136     
Due in more than three but less than five years.....        19,957     
                                                           -------     
     Total..........................................       $67,429     
                                                           =======     

  The following table sets for the net deposit flows of the Company during
the periods indicated:                                                          

                                                                [Download Table]

                                    FOR THREE MONTHS ENDED   FOR THREE MONTHS ENDED
                                        MARCH 31, 1998           MARCH 31, 1997    
                                    ----------------------   ----------------------
                                                    (IN THOUSANDS)                 
                                                                                   
Net increase before interest               $ 9,697                   $3,211        
  credited.........................                                                
Net credited.......................          1,456                    1,421        
                                           -------                   ------        
     Net deposit increase..........        $11,153                   $4,632        
                                           =======                   ======        

The following table indicates the daily average balances and weighted 
average interest rates paid on interest bearing deposits for the periods        
indicated:                                                                      

                                                        [Enlarge/Download Table]

                                                               FOR THE THREE MONTHS ENDED                        
                                                                        MARCH 31,                                
                                        -------------------------------------------------------------------------
                                                      1998                                    1997               
                                        ---------------------------------      ----------------------------------
                                        AVERAGE        % OF       AVERAGE      AVERAGE        % OF        AVERAGE
                                        BALANCE       TOTAL        YIELD       BALANCE        TOTAL        YIELD 
                                        --------      ------      -------      --------      -------      -------
                                                                 (DOLLARS IN THOUSANDS)                          
                                                                                                                 
Savings and NOW deposits............... $ 10,848        8.36%     1.73%        $ 10,449        9.14%        1.91%
Money market deposits..................   37,873       29.19%     4.60%          36,282       31.75%        4.56%
Time deposits..........................   66,881       51.56%     5.72%          58,363       51.07%        5.57%
                                        --------      ------                   --------      ------              
Total interest-bearing deposits........  115,602       89.11%                   105,094       91.96%             
Non-interest bearing...................   14,123       10.89%                     9,196        8.04%             
                                        --------      ------                   --------      ------              
    Total.............................. $129,725      100.00%                  $114,290      100.00%             
                                        ========      ======                   ========      ======              

Borrowings                                                                  

Advances from the Federal Home Loan Bank (the "FHLB"), securities sold
under repurchase agreements and for investment and repurchase agreements offered
to the Company's commercial deposit customers provide the Company with          
short-term and long-term sources of funds. FHLB advances have decreased from    
$24.711 million to $7.300 million at March 31, 1997 and March 31, 1998,         
respectively. Other borrowings have increased from $653,000 at March 31, 1997 to
$2.782 million at March 31, 1998. It is the strategy of the Company to fund     
asset growth from its deposit base; however, the Company may, from time to time,
borrow from wholesale sources of funds to fund such growth as market conditions 
warrant. As the Company shifts the balance sheet from long-term fixed rate      
investments to shorter term relationship assets, management expects the Company 
to become less dependent on wholesale sources of funds.                         

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 Maturities and interest rates of advances from the FHLB were as follows
(dollars in thousands):                                                         

                                                                [Download Table]

                                          INTEREST  AT MARCH 31,  AT MARCH 31,
MATURITY                                    RATE        1998          1997    
--------                                  --------  ------------  ------------
                                                                              
1997.....................................    6.00%    $    --       $ 1,300   
1997.....................................    6.89%         --         5,000   
1997.....................................    5.65%         --        18,411   
1998.....................................    6.23%      2,300            --   
2007.....................................    5.47%      5,000            --   
                                                      -------       -------   
Total....................................             $ 7,300       $24,711   
                                                      =======       =======   

At March 31, 1998, pursuant to a collateral agreement with the FHLB,  
advances are collateralized by the Company's FHLB stock and a blanket lien on   
the Company's qualifying first mortgage, one- to four-family residential loans. 

Interest Rate Sensitivity and Liquidity                                     

   Asset and liability management is concerned with the timing and magnitude
of repricing assets compared to liabilities. It is the objective of the Company 
to generate stable growth in net interest income and to attempt to control risks
associated with interest rate movements. In general, management's strategy is to
reduce the impact of changes in interest rates on its net interest income by    
maintaining a favorable match between the maturities or repricing dates of its  
interest-earning assets and interest-bearing liabilities. The Company's asset   
and liability management strategy is formulated and monitored by the Asset      
Liability Committee ("ALCO"), which is composed of senior officers of the       
Company, in accordance with policies approved by the Company's Board of         
Directors. ALCO meets regularly to review, among other things, the sensitivity  
of the Company's assets and liabilities to interest rate changes, the book and  
market values of assets and liabilities, unrealized gains and losses, purchase  
and sale activity, maturities of investments, deposits and borrowing. ALCO also 
approves and establishes pricing and funding decisions with respect to the      
Company's overall asset and liability composition. ALCO reviews the Company's   
liquidity, cash flow flexibility, maturities of investments, deposits and       
borrowings, retail and institutional deposit activity, current market conditions
and interest rates on both a local and national level.                          

    The interest rate sensitivity ("GAP") is defined as the difference between
interest-earning assets and interest-bearing liabilities maturing or repricing  
within a given time period. A GAP is considered positive when the amount of     
interest rate sensitive assets exceeds the amount of interest rate sensitive    
liabilities. A GAP is considered negative when the amount of interest rate      
sensitive liabilities exceeds interest rate sensitive assets. During a period of
rising interest rates, a negative GAP would tend to adversely affect net        
interest income, while a positive GAP would tend to result in an increase in net
interest income. During a period of falling interest rates a negative GAP would 
tend to result in an increase in net interest income while a positive GAP would 
tend to affect net interest income adversely. While GAP is a useful measurement 
and contributes toward effective assets and liabilities management, it is       
difficult to predict the effect of changing interest rates solely on that       
measure. Different types of assets and liabilities with the same or similar     
maturities may react differently to changes in overall market rates or          
conditions. Changes in interest rates may affect net interest income positively 
or negatively even if an institution were perfectly matched in each maturity    
category.                                                                       

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  The following table sets forth an interest rate sensitivity analysis for
the Company at March 31, 1998:                                                  

                                                        [Enlarge/Download Table]

                                            MORE                                                     
                                            THAN        MORE                                         
                                           THREE      THAN SIX         MORE                          
                                           MONTHS      MONTHS        THAN ONE      MORE              
                               THREE       TO SIX      TO ONE        YEAR TO       THAN              
                               MONTHS      MONTHS       YEAR        FIVE YEARS  FIVE YEARS   TOTAL   
                              --------    --------    --------      ----------  ----------  -------- 
                                                        (DOLLARS IN THOUSANDS)                       
                                                                                                     
Loans (1), (2)............... $ 41,324    $  7,149    $ 17,378       $ 21,446    $ 30,657   $117,954 
Securities (3)...............    8,279         114       4,243         21,553       4,150     39,873 
Interest bearing deposits....      452          --          --             --          --        452 
                              --------    --------    --------       --------    --------   -------- 
Total rate-sensitive                                                                                 
  assets.....................   50,055       7,263      21,621         42,999      34,807    158,279 
                              --------    --------    --------       --------    --------   -------- 
Deposit accounts (4):                                                                                
  Savings and NOW............   12,879          --          --             --          --     12,879 
  Money market...............   40,253          --          --             --          --     40,253 
  Time deposits..............    7,026       6,612       9,699         31,698      12,394     67,429 
                              --------    --------    --------       --------    --------   -------- 
Total deposit accounts.......   60,158       6,612       9,699         31,698      12,394    120,561 
Other borrowings.............    5,082          --          --             --       5,000     10,082 
                              --------    --------    --------       --------    --------   -------- 
Total rate-sensitive                                                                                 
  liabilities................   65,240       6,612       9,699         31,698      17,394    130,643 
                              --------    --------    --------       --------    --------   -------- 
GAP.......................... $(15,185)   $    651    $ 11,922       $ 11,301    $ 17,413   $ 27,636 
                              ========    ========    ========       ========    ========   ======== 
Cumulative GAP............... $(15,185)   $(14,534)   $ (2,612)      $  8,689    $ 26,102   $ 53,738 
                              ========    ========    ========       ========    ========   ======== 
Cumulative GAP/total                                                                                 
  assets.....................    (9.27%)     (8.87%)     (1.59%)         5.31%      15.94%     32.81%
                              ========    ========    ========       ========    ========   ======== 

------------------                                                              
(1) In preparing the table above, adjustable-rate loans are included in the     
   period in which the interest rates are next scheduled to adjust rather than
in the period in which the loans mature. Fixed-rate loans are scheduled,
including repayment, according to their contractual maturities.         

(2) Includes nonaccrual loans and loans held for sale.                          

(3) Securities are scheduled according to their respective repricing and        
maturity dates.                                                         

(4) Savings, NOW and money market accounts are regarded as readily accessible   
 withdrawable accounts. All other time accounts are scheduled according to
their respective maturity dates.                                        

Shortcomings are inherent in any GAP analysis since certain assets and
liabilities may not move proportionally as interest rates change.               

Liquidity                                                                   

  Liquidity involves the Company's ability to raise funds to support asset
growth or reduce assets to meet deposit withdrawals and other payment           
obligations, to maintain reserve requirements and otherwise to operate the      
Company on an ongoing basis. During the past three years, the Company's         
liquidity needs have been met primarily by financing activities through FHLB    
advances, growth in core deposits and other short term borrowing sources. In the
Company's investing activities, highly liquid securities have provided          
flexibility in meeting the Company's cash needs. Access to purchased funds from 
correspondent banks is available and has been utilized to take advantage of     
investment opportunities.                                                       

 A Florida chartered commercial bank is required to maintain a liquidity
reserve of at least 15% of its total transaction accounts and 8% of its total   
nontransaction accounts less deposits of certain public funds. The liquidity    
reserve may consist of cash on hand, cash on demand with other correspondent    
banks and other investments and short-term marketable securities as determined  
by the rules of the Department, such as federal funds sold and United States    
government securities or securities guaranteed by the United States or agencies 
thereof. As of March 31, 1998 and March 31, 1997, the Bank had liquidity of     
approximately $34.344 million and $30.569 million, or approximately 25.23% and  
26.12% of total deposits combined with borrowings, respectively. Management     
believes the Company has adequate resources to fund all of its commitments, that
substantially all of its existing commitments will be funded within the next    
twelve months and, if so desired, that it can adjust the rates on certificates  
of deposit to retain deposits in a changing interest rate environment.          

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Capital Resources                                                           

     Capital management consists of providing equity to support both current and
future operations. The Company is subject to capital adequacy requirements      
imposed by the Federal Reserve Board and the Bank is subject to capital adequacy
requirements imposed by the FDIC and the Department. Both the Federal Reserve   
Board and the FDIC have adopted risk-based capital requirements for assessing   
the capital adequacy of bank holding companies and banks. These standards define
capital and establish minimum capital requirements in relation to assets and    
off-balance sheet exposure, adjusted for credit risk. The risk-based capital    
standards currently in effect are designed to make regulatory capital           
requirements more sensitive to differences in risk profiles among bank holding  
companies and banks, to account for off balance sheet exposure and to minimize  
disincentives for holding liquid assets. Assets and off balance sheet items are 
assigned to broad risk categories, each with appropriate relative risk weights. 
The resulting capital ratios represent capital as a percentage of total         
risk-weighted assets and off-balance sheet items.                               

 Bank regulatory authorities in the United States have issued risk-based
capital standards by which all bank holding companies and banks are evaluated in
terms of capital adequacy. The risk-based capital standards issued by the       
Federal Reserve Board apply to the Company. These guidelines relate a financial 
institution's capital to the risk profile of its assets. The risk-based capital 
standards require all financial institutions to have "Tier 1 capital" of at     
least 4.0% and "total risk-based" (Tier 1 and Tier 2) capital of at least 8.0%  
of total risk-adjusted assets. "Tier 1 capital" generally includes common       
shareholders' equity and qualifying perpetual preferred stock, together with    
related surpluses and retained earnings, less deductions for goodwill and       
various other intangibles. "Tier 2 capital" may consist of a limited amount of  
intermediate term preferred stock, a limited amount of term subordinated debt,  
certain hybrid capital instruments and other debt securities, perpetual         
preferred stock not qualifying as Tier 1 capital, and a limited amount of the   
general valuation allowance for loan losses. The sum of Tier 1 capital and Tier 
2 capital is "total risk-based capital."                                        

    The Federal Reserve Board has also adopted guidelines which supplement the
risk-based capital guidelines with a minimum ratio of Tier 1 capital to average 
total consolidated assets ("leverage ratio") of 3.0% for institutions with well 
diversified risk, including no undue interest rate exposure; excellent asset    
quality; high liquidity; good earnings; and that are generally considered to be 
strong banking organizations, rated composite 1 under applicable federal        
guidelines, and that are not experiencing or anticipating significant growth.   
Other banking organizations are required to maintain a leverage ratio of at     
least 4.0% to 5.0%. These rules further provide that banking organizations      
experiencing internal growth or making acquisitions will be expected to maintain
capital positions substantially above the minimum supervisory levels and        
comparable to peer group averages, without significant reliance on intangible   
assets.                                                                         

   Pursuant to Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), each federal banking agency revised its risk-based capital standards
to ensure that those standards take adequate account of interest rate risk,     
concentration of credit risk and the risks of nontraditional activities, as well
as reflect the actual performance and expected risk of loss on multifamily      
mortgages. The Bank is subject to capital adequacy guidelines of the FDIC that  
are substantially similar to the Federal Reserve Board's guidelines. Also       
pursuant to FDICIA, the FDIC has promulgated regulations setting the levels at  
which an insured institution such as the Bank would be considered "well         
capitalized," "adequately capitalized," "undercapitalized," "significantly      
undercapitalized" and "critically undercapitalized." The Bank is classified     
"well capitalized" for purposes of the FDIC's prompt corrective action          
regulations.                                                                    

  Shareholders' equity increased from $12.594 million at March 31, 1997 to
$14.107 million at March 31, 1998, an increase of $1.513 million or 12.01%. This
increase was primarily the result of net income of $983,000.                    

 The following table provides a comparison of the Company's leverage and
risk-weighted capital ratios as of March 31, 1998 to the minimum and            
well-capitalized regulatory standards:                                          

                                                        [Enlarge/Download Table]

                                                     AT MARCH 31,  MINIMUM      WELL    
                                                         1998      REQUIRED  CAPITALIZED
                                                     ------------  --------  -----------
                                                                                        
Total Capital to Risk Weighted Assets...............    15.27%       3.00%       N/A    
Tier I Capital to Risk Weighted Assets..............    14.34%       4.00%       N/A    
Tier I Capital to Average Assets....................     9.38%       8.00%       N/A    

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FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

OVERVIEW                                                                        

For the year ended December 31, 1997, the Company had consolidated net
earnings of $914,000 or $.68 basic earnings per share ($.62 diluted earnings per
share), compared to a consolidated net loss of $599,000 or $.52 basic and       
diluted loss per share for 1996. The consolidated net loss for the year ended   
December 31, 1996 included the effect of the SAIF special assessment of $926,000
before taxes ($581,000 after taxes). The consolidated net loss for the year     
ended December 31, 1995 was $627,000.                                           

     At December 31, 1997, the Company had total consolidated assets of $147.840
million, a decrease of 2.26% over total assets of $151.258 million at December  
31, 1996. During the year ended December 31, 1997 loans receivable increased    
$14.727 million (15.44%), while the Company's portfolio of securities declined  
$10.711 million (25.03%) to $32.079 million. The Company's deposits increased to
$124.995 million as of December 31, 1997, from $112.498 million as of December  
31, 1996, an 11.11% increase. Other borrowings, principally borrowings from the 
FHLB, were $6.191 million as of December 31, 1997, a decrease of $17.555 million
(73.93%) from December 31, 1996.                                                

     At December 31, 1996, the Company had total consolidated assets of $151.258
million, a decrease of 21.79% over total assets of $193.407 million at December 
31, 1995. During the year ended December 31, 1996, loans receivable decreased   
$27.869 million (22.61%) to $95.369 million and the Company's portfolio of      
securities declined $5.752 million (11.85%) to $42.790 million. The Company's   
deposits decreased to $112.498 million at December 31, 1996 from $142.673       
million at December 31, 1995. Other borrowings, principally borrowings from the 
FHLB, were $23.746 million at December 31, 1996, a decrease of $9.469 million   
(28.51%) from December 31, 1995.                                                

RESULTS OF OPERATIONS                                                           

Net Interest Income                                                         

Net interest income represents the amount by which interest income on 
interest-earning assets, including loans and securities, exceeds interest       
expense incurred on interest-bearing liabilities, including deposits and other  
borrowings. Net interest income is the principal source of the Company's        
earnings. Interest rate fluctuations, as well as changes in the amount and type 
of earning assets and liabilities, combine to affect net interest income.       

Net Interest Income 1997 versus 1996. Net interest income for the year
ended December 31, 1997 increased to $5.603 million from $ 4.570 million in     
1996, an increase of $1.033 million or 22.60%. This resulted in a net interest  
margin of 3.93% and 3.19% and a net interest spread of 3.30% and 2.83% for the  
years ended December 31, 1997 and 1996, respectively. The increase in the net   
interest margin and net interest spread was primarily the result of a decrease  
in the cost of interest-bearing liabilities to 5.07% for 1997 from 5.67% for    
1996.                                                                           

    The increase in net interest income was driven almost exclusively by lower
cost of interest-bearing liabilities, which decreased to $6.329 million in 1997,
from $7.616 million in 1996 a decrease of $1.287 million or 16.90%. This        
improvement was caused by a more favorable mix of deposits. Lower costing       
average demand deposits, savings and NOW deposits and money market deposits grew
by $1.557 million (15.87%), $1.743 million (20.42%) and $7.774 million (26.19%),
respectively, from 1996 to 1997. This growth allowed the Company to reduce the  
levels of higher-costing time deposits and other borrowings by $7.415 million   
(10.95%) and $11.469 million (40.46%), respectively, from 1996 to 1997.         
Management attributes this improvement to its success in developing more        
full-service banking relationships with its targeted business, professional and 
individual clients. This allowed the Company to replace borrowings and          
rate-driven time deposits with transaction deposit accounts. The increase in net
interest income was also positively impacted by the increase in the ratio of    
average interest earning assets to average interest bearing liabilities which   
improved to 1.14 at December 31, 1997 from 1.07 at December 31, 1996. This      
resulted in a substantial decline in the level of non-interest earning assets to
$8.609 million in 1997, from $15.127 million in 1996, a decrease of $6.518      
million or 43.09%.                                                              

Net Interest Income 1996 versus 1995. Net interest income for the year
ended December 31, 1996 decreased to $4.570 million, from $4.771 million in     
1995, a decrease of approximately $201,000 or 4.21%. This decline in net        
interest income was directly attributable to a substantial decline in the       
Company's average total assets, which decreased to $158.572 million from        
$200.897 million in 1995, a decrease of $42.325 million or 21.07%. During 1996, 
the Company embarked upon a program to use the proceeds from the decrease of    
average loans and                                                               

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securities, which declined $33.124 million (25.59%) and $10.977 million         
(21.09%), respectively, during 1996 to reduce higher costing time deposits. Time
deposits averaged $67.688 million in 1996, as compared to $121.708 million in   
1995, a decrease of $54.020 million or 44.38%. These changes in the balance     
sheet resulted in a net interest margin of 3.19% and 2.53% and a net interest   
spread of 2.83% and 2.25% for the years ended December 31, 1996 and 1995,       
respectively. The improved net interest margin and net spread was primarily the 
result of improved yields on interest earning assets, which were 8.50% for the  
year ended December 31, 1996 from 7.78% for the year ended December 31, 1995.   

The following table sets forth for the periods indicated, information 
regarding (i) the total dollar amount of interest and dividend income of the    
Company from interest-earning assets and the resultant average yields; (ii) the 
total dollar amount of interest expense on interest-bearing liabilities and the 
resultant average cost; (iii) net interest/dividend income; (iv) interest-rate  
spread; (v) net interest margin; and (vi) ratio of average interest-earning     
asset to average interest-bearing liabilities.                                  

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED DECEMBER 31,                                     
                               ------------------------------------------------------------------------------------------------
                                            1997                             1996                             1995             
                               ------------------------------   ------------------------------   ------------------------------
                                          INTEREST    AVERAGE              INTEREST    AVERAGE              INTEREST    AVERAGE
                               AVERAGE       AND      YIELD/    AVERAGE       AND      YIELD/    AVERAGE       AND      YIELD/ 
                               BALANCE    DIVIDENDS    RATE     BALANCE    DIVIDENDS    RATE     BALANCE    DIVIDENDS    RATE  
                               --------   ---------   -------   --------   ---------   -------   --------   ---------   -------
                                                                    (DOLLARS IN THOUSANDS)                                     
                                                                                                                               
Interest-earning assets:                                                                                                       
  Loans......................  $102,315    $ 9,427      9.21%   $ 96,307    $ 9,001      9.35%   $129,431    $11,024      8.52%
  Securities.................    38,200      2,402      6.29      41,068      2,872      6.99      52,045      3,256      6.26 
  Other interest-earning                                                                                                       
    assets(1)................     2,085        103      4.94       6,070        313      5.16       7,416        410      5.53 
                               --------    -------              --------    -------              --------    -------           
  Total interest-earning                                                                                                       
    assets...................   142,600     11,932      8.37     143,445     12,186      8.50     188,892     14,690      7.78 
                                           -------                          -------                          -------           
Noninterest-earning                                                                                                            
  assets(2)..................     8,609                           15,127                           12,005                      
                               --------                         --------                         --------                      
Total assets.................  $151,209                         $158,572                         $200,897                      
                               ========                         ========                         ========                      
Interest-bearing liabilities:                                                                                                  
  Savings and NOW deposits...    10,278        203      1.98       8,535        180      2.11       8,441        161      1.91 
  Money-market deposits......    37,457      1,731      4.62      29,683      1,381      4.65      23,568      1,084      4.60 
  Time deposits..............    60,273      3,434      5.70      67,688      4,253      6.28     121,708      6,987      5.74 
  Other borrowings...........    16,879        961      5.69      28,348      1,802      6.36      25,749      1,687      6.55 
                               --------    -------              --------    -------              --------    -------           
Total interest-bearing                                                                                                         
  liabilities................   124,887      6,329      5.07     134,254      7,616      5.67     179,466      9,919      5.53 
                                           -------                          -------                          -------           
Demand deposits..............    11,369                            9,812                            3,545                      
Noninterest-bearing                                                                                                            
  liabilities................     1,971                            2,987                            5,371                      
Stockholders' equity.........    12,982                           11,519                           12,515                      
                               --------                         --------                         --------                      
  Total liabilities and                                                                                                        
    stockholders' equity.....  $151,209                         $158,572                         $200,897                      
                               ========                         ========                         ========                      
Net interest income..........              $ 5,603                          $ 4,570                          $ 4,771           
                                           =======                          =======                          =======           
Interest-rate spread(3)......                           3.30%                            2.83%                            2.25%
                                                       =====                            =====                            ===== 
Net interest margin(4).......                           3.93%                            3.19%                            2.53%
                                                       =====                            =====                            ===== 
Ratio of average                                                                                                               
  interest-earning assets to                                                                                                   
  average interest-bearing                                                                                                     
  liabilities................      1.14                             1.07                             1.05                      
                               ========                         ========                         ========                      

------------------                                                              
(1) Includes interest-bearing deposits, federal funds sold and securities       
purchased under agreements to resell.                                   

(2) Includes nonaccrual loans.                                                  

(3) Interest rate spread represents the difference between the weighted-average 
yield on interest-earning assets and the weighted-average cost of       
interest-bearing liabilities.                                           

(4) Net interest margin is net interest income dividend by average              
interest-earning assets.                                                

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 The following table sets forth certain information regarding changes in
interest income and interest expense of the Company for the periods indicated.  
For each category of interest-earning assets and interest-bearing liabilities,  
information is provided on changes attributable to (i) changes in rate (change  
in rate multiplied by prior volume), (ii) changes in volume (change in volume   
multiplied by prior rate) and (iii) changes in rate-volume (change in rate      
multiplied by change in volume).                                                

                                                        [Enlarge/Download Table]

                                                                  YEAR ENDED DECEMBER 31,       
                                                                       1997 VS. 1996            
                                                            ----------------------------------- 
                                                                INCREASE (DECREASE) DUE TO      
                                                            ----------------------------------- 
                                                                               RATE/            
                                                             RATE     VOLUME   VOLUME    TOTAL  
                                                            -------   ------   ------   ------- 
                                                                      (IN THOUSANDS)            
                                                                                                
Interest earning assets:                                                                        
  Loans.................................................... $  (128)  $ 562    $  (8)   $   426 
  Securities...............................................    (289)   (201)      20       (470)
  Other interest-earning assets............................     (13)   (206)       9       (210)
                                                            -------   -----    -----    ------- 
     Total.................................................    (430)    155       21       (254)
                                                            -------   -----    -----    ------- 
Interest-bearing liabilities:                                                                   
  Deposits:                                                                                     
     Savings and NOW deposits..............................     (11)     36       (2)        23 
     Money-market deposits.................................      (9)    362       (3)       350 
     Time deposits.........................................    (397)   (466)      44       (819)
  Other borrowings.........................................    (188)   (729)      76       (841)
                                                            -------   -----    -----    ------- 
     Total.................................................    (605)   (797)     115     (1,287)
                                                            -------   -----    -----    ------- 
Net change in net interest income.......................... $   175   $ 952    $ (94)   $ 1,033 
                                                            =======   =====    =====    ======= 

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,        
                                                                      1996 VS. 1995             
                                                           ------------------------------------ 
                                                                INCREASE (DECREASE) DUE TO      
                                                           ------------------------------------ 
                                                                               RATE/            
                                                            RATE     VOLUME    VOLUME    TOTAL  
                                                           -------   -------   ------   ------- 
                                                                      (IN THOUSANDS)            
                                                                                                
Interest earning assets:                                                                        
  Loans................................................... $ 1,073   $(2,821)  $(275)   $(2,023)
  Securities..............................................     384      (687)    (81)      (384)
  Other interest-earning assets...........................     (28)      (74)      5        (97)
                                                           -------   -------   -----    ------- 
     Total................................................   1,429    (3,582)   (351)    (2,504)
                                                           -------   -------   -----    ------- 
Interest-bearing liabilities:                                                                   
  Deposits:                                                                                     
     Savings and NOW deposits.............................      17         2       0         19 
     Money-market deposits................................      13       281       3        297 
     Time deposits........................................     660    (3,101)   (293)    (2,734)
  Other borrowings........................................     (50)      170      (5)       115 
                                                           -------   -------   -----    ------- 
     Total................................................     640    (2,648)   (295)    (2,303)
                                                           -------   -------   -----    ------- 
Net change in net interest income......................... $   789   $  (934)  $ (56)   $  (201)
                                                           =======   =======   =====    ======= 

Provision for Loan Losses                                                   

 The provision for loan losses is charged to earnings to bring the total
allowance to a level deemed appropriate by management and is based upon         
historical experience, the volume and type of lending conducted by the Bank,    
industry standards, the amounts of nonperforming loans, general economic        
conditions, particularly as they relate to the Bank's market areas, and other   
factors related to the collectibility of the Bank's loan portfolio. The         
provision decreased to $80,000 in 1997 from $185,000 in 1996, a decrease of     
$105,000 or 56.76%,                                                             

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reflecting improved portfolio quality. The provision decreased to $185,000 in   
1996 from $336,000 in 1995, a decrease of $151,000 or 44.94%.                   

Noninterest Income                                                          

 Total noninterest income decreased to $1.412 million for the year ended
December 31, 1997 from $2.434 million reported in 1996, a decrease of $1.022    
million or 41.99%, principally due to a decrease in net gain on sale of loans   
and loan servicing rights to $508,000 in 1997 from $1.179 million in 1996, and  
$365,000 in earnings from a limited partnership during 1996, compared to no such
amounts during the comparable period in 1997. This decrease was the result of   
management's focus on its three primary business lines, a shift away from the   
wholesale mortgage business and the sale of the limited partnership in late     
1996. An increase in service charges on deposit accounts of $138,000 from the   
year ended December 31, 1996 to the year ended December 31, 1997, was the result
of increased attention to relationship banking and core noninterest income      
opportunities. The increase in other noninterest income is partially related to 
additional product introductions such as merchant card services which will      
improve noninterest income going forward.                                       

  Total noninterest income increased to $2.434 million in 1996 from $1.922
million in 1995, an increase of $512,000 or 26.64% primarily due to an increase 
in the net gain on sale of loans of $488,000 during the year ended December 31, 
1996, when compared to 1995.                                                    

    The following table presents for the period indicated the major categories
of noninterest income:                                                          

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31, 
                                                             ------------------------
                                                              1997     1996     1995 
                                                             ------   ------   ------
                                                                  (IN THOUSANDS)     
                                                                                     
Noninterest income:                                                                  
  Service charges on deposit accounts....................... $  502   $  364   $  315
  Gain on sale of loan servicing rights.....................     29      131      192
  Loan servicing fees.......................................     70      170      180
  Net gains from sale of loans..............................    479    1,048      560
  Net realized gains on sale of securities available for                             
     sale...................................................     29       91        1
  Equity in earnings of limited partnership.................     --      365      507
  Other.....................................................    303      265      167
                                                             ------   ------   ------
     Total noninterest income............................... $1,412   $2,434   $1,922
                                                             ======   ======   ======

Noninterest Expense                                                         

 Total noninterest expense declined to $5.471 million for the year ended
December 31, 1997 from $6.847 million for the year ended December 31, 1996, a   
decrease of $1.376 million or 20.10%. Salaries and employee benefits declined to
$2.657 million in 1997, from $3.169 million in 1996, a decrease of $512,000 or  
16.16%, reflecting the change in the business plan to reduce activities in      
mortgage banking, with its emphasis on origination and sales of mortgage loans. 
The remaining items in noninterest expense decreased to $2.814 million in 1997  
from $3.678 million in 1996, a decrease of $864,000 or 23.49%, as a result of   
management's focus on all areas of expense to improve the Company's operating   
efficiency.                                                                     

    Noninterest expense declined to $6.847 million for year ended December 31,
1996 from $7.360 million for the year ended December 31, 1995, a decrease of    
$513,000 or 6.97%, due primarily to reductions in other expenses. These         
reductions were related to amortized purchased servicing rights and expenses in 
the limited partnership which were eliminated in 1996.                          

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     The following table presents for the periods indicated the major categories
of noninterest expense:                                                         

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31, 
                                                             ------------------------
                                                              1997     1996     1995 
                                                             ------   ------   ------
                                                                  (IN THOUSANDS)     
                                                                                     
Noninterest expenses:                                                                
  Salaries and employee benefits............................ $2,657   $3,169   $3,165
  Occupancy expense.........................................  1,100    1,251    1,169
  Advertising and promotion.................................    257      142      226
  Loan servicing expense....................................     36      150       88
  Professional fees.........................................    157      286      225
  Federal deposit insurance premiums........................     82      283      390
  Data processing...........................................    403      428      275
  Other.....................................................    779    1,138    1,822
  Noninterest expenses before SAIF recapitalization                                  
     assessment.............................................  5,471    6,847    7,360
  SAIF recapitalization assessment..........................     --      926       --
                                                             ------   ------   ------
  Total noninterest expenses................................ $5,471   $7,773   $7,360
                                                             ======   ======   ======

Provision (Credit) for Income Taxes                                         

The provision for income taxes increased to $550,000 in 1997 from a   
$355,000 credit during the year ended December 31, 1996. The effective tax rate 
increased to 37.57% during the year ended December 31, 1997 from 37.21% for the 
year ended December 31, 1996.                                                   

 The credit for income taxes decreased to $355,000 during the year ended
December 31, 1996 from $376,000 during the year ended December 31, 1995, a      
decrease of $ 21,000 or 5.59%. The effective tax rate decreased to 37.21% for   
the year ended December 31, 1996 from 37.49% for the year ended December 31,    
1995.                                                                           

FINANCIAL CONDITION                                                             

Loan Portfolio                                                              

Total loans were $106.659 million at December 31, 1997, an increase of
$14.734 million or l6.03% from $91.925 million at December 31, 1996. This       
increase is believed to be the result of the Company's increased focus on       
relationship banking, featuring professional, attentive and responsive service  
to customers' needs both in residential mortgage lending and commercial lending 
to middle market companies.                                                     

     The following table summarizes the loan portfolio of the Company by type of
loan as of December 31, 1997, 1996, 1995, 1994 and 1993:                        

                                                        [Enlarge/Download Table]

                                                                 AT DECEMBER 31,                                          
                        ------------------------------------------------------------------------------------------------- 
                              1997                1996                1995                1994                1993        
                        -----------------   -----------------   -----------------   -----------------   ----------------- 
                                    % OF                % OF                % OF                % OF                % OF  
                         AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL     AMOUNT    TOTAL  
                        --------   ------   --------   ------   --------   ------   --------   ------   --------   ------ 
                                                             (DOLLARS IN THOUSANDS)                                       
                                                                                                                          
Commercial............. $ 19,832    18.59%  $ 16,711    18.18%  $ 15,401    14.49%  $ 11,645     9.34%  $  3,135     3.12%
Commercial real                                                                                                           
  estate...............   17,628    16.53     10,894    11.85      2,572     2.42      2,097     1.69        922      .92 
Residential real                                                                                                          
  estate...............   61,827    57.97     60,716    66.05     86,971    81.80    110,005    88.26     96,093    95.54 
Consumer...............    7,372     6.91      3,604     3.92      1,371     1.29        887      .71        428      .42 
                        --------   ------   --------   ------   --------   ------   --------   ------   --------   ------ 
    Total loans........  106,659   100.00%    91,925   100.00%   106,315   100.00%   124,634   100.00%   100,578   100.00%
                                   ======              ======              ======              ======              ====== 
Less:                                                                                                                     
Deferred loan fees.....     (158)               (175)                (71)               (109)                (92)         
Undisbursed portion of                                                                                                    
  loans in process.....       --                  --                (727)               (949)             (2,921)         
Allowance for loan                                                                                                        
  losses...............     (848)               (777)               (840)               (528)               (382)         
                        --------            --------            --------            --------            --------          
    Loans, net......... $105,653            $ 90,973            $104,677            $123,048            $ 97,183          
                        ========            ========            ========            ========            ========          

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The primary lending focus of the Company is on small and medium sized 
commercial, residential mortgage and consumer loans. A substantial portion of   
the Company's loan portfolio consists of single-family residential mortgage     
loans collateralized by owner-occupied properties located in the Company's      
market area. The Company offers a variety of mortgage loan products, with both  
fixed and adjustable rates. The loans are generally amortized over fifteen to   
thirty years, although such loans often remain outstanding for significantly    
shorter periods than their contractual terms.                                   

 Loans collateralized by single-family residential real estate generally
have been originated in amounts of no more than 80% of appraised value. For     
loans in amounts greater than 80% of appraised value, the Company generally     
requires mortgage insurance. For all such loans, the Company requires mortgage  
title insurance and hazard insurance. Of the mortgages originated, the Company  
generally retains mortgage loans with variable rates or where the borrower has a
deposit relationship with the Company and sells longer term, fixed-rate, non-   
relationship loans.                                                             

    The Company offers a variety of commercial lending products including term
loans, lines of credit and fixed asset loans, including real estate and         
equipment financing. A broad range of short- to medium-term commercial loans,   
both collateralized and uncollateralized, are made available to businesses for  
working capital (including inventory and receivables), business expansion       
(including acquisitions of real estate and improvements) and the purchase of    
equipment. The purpose of the particular loan determines its structure.         

     Generally, the Company's commercial loans are underwritten in the Company's
primary market area on the basis of the borrower's ability to service such debt 
from income. As a general practice, the Company takes as collateral a lien on   
any available real estate, equipment or other assets. Working capital loans are 
primarily collateralized by short-term assets whereas term loans are primarily  
collateralized by long-term assets. While commercial business loans generally   
are made for shorter terms and at higher yields than one- to four-family        
residential loans, such loans generally involve a higher level of risk. The     
commercial loan risk of borrower default is greater than in owner-occupied      
residential property loans, since the collateral may be more difficult to       
liquidate and more likely to decline in value.                                  

The Company's commercial mortgage loans are secured by liens on real  
estate, typically have variable interest rates and amortize over a ten to       
fifteen year period with balloon payments due at the end of three to five years.
In underwriting commercial mortgage loans, consideration is given to the        
property's operating history, future operating projections, current and         
projected occupancy, location and physical condition. The underwriting analysis 
also includes credit checks, appraisals, a review of the financial condition of 
the borrower and generally full recourse to the owner.                          

A number of the Company's commercial loans are underwritten under     
guidelines of the SBA loan guarantee programs. SBA loan originations were $2.878
million for 1997, $2.329 million for 1996 and $4.261 million for 1995.          

Consumer loans made by the Company include automobile loans, home     
improvement loans, home equity lines of credit, personal loans (collateralized  
and uncollateralized) and loans collateralized by deposit accounts. The terms of
these loans typically range from 12 to 84 months and vary based on the nature of
the collateral and size of the loan.                                            

Total loans decreased to $91.925 million at December 31, 1996, from   
$106.315 million at December 31, 1995, a decrease of $14.390 million, or 13.54%.
The decrease was primarily the result of the shift away from the transaction    
orientation of mortgage banking to a relationship driven approach to the        
origination of loans. At December 31, 1996, residential real estate loans were  
$60.716 million or 66.05% of total loans as compared to $86.971 million or      
81.80% of total loan outstandings at December 31, 1995.                         

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  The following table reflects the contractual principal repayments of the
Company's loan portfolio at December 31, 1997:                                  

                                                        [Enlarge/Download Table]

                                                                RESIDENTIAL                     
                                                     CONSUMER    MORTGAGE     CONSUMER          
                                                      LOANS        LOANS       LOANS     TOTAL  
                                                    ----------  -----------   --------  --------
                                                                   (IN THOUSANDS)               
                                                                                                
Due within one year................................  $14,595      $   926      $2,734   $ 18,255
Due after one through five years...................   15,977          767       1,762     18,506
Due after five years...............................    6,888       60,134       2,876     69,898
                                                     -------      -------      ------   --------
     Total.........................................  $37,460      $61,827      $7,372   $106,659
                                                     =======      =======      ======   ========

  Of the $87.278 million in loans due after one year, 39.20% of such loans
have fixed rates of interest and 60.80% have adjustable rates.                  

The following table displays loan originations by type of loan and    
principal reductions during the periods indicated:                              

                                                        [Enlarge/Download Table]

                                                         YEAR ENDED DECEMBER 31,                  
                                        --------------------------------------------------------- 
                                          1997        1996        1995        1994        1993    
                                        ---------   ---------   ---------   ---------   --------- 
                                                             (IN THOUSANDS)                       
                                                                                                  
Originations:                                                                                     
  Commercial loans..................... $  19,720   $   1,085   $     676   $   1,610   $   1,092 
  Commercial real estate loans.........     8,360       3,205       1,214          --          -- 
  Residential real estate..............    10,507       7,480       5,528      35,436      40,662 
  Consumer loans.......................     3,564       1,497         553         293          52 
                                        ---------   ---------   ---------   ---------   --------- 
     Total loans originated............    42,151      13,267       7,971      37,339      41,806 
Principal reductions...................   (27,417)    (27,657)    (26,290)    (13,283)    (25,551)
                                        ---------   ---------   ---------   ---------   --------- 
     Increase (decrease) in gross                                                                 
       loans........................... $  14,734   $ (14,390)  $ (18,319)  $  24,056   $  16,255 
                                        =========   =========   =========   =========   ========= 

 The originations noted in the table above exclude originations of loans
held for sale of $9.005 million, $51.533 million, and $55.650 million for       
periods ended December 31, 1997, 1996 and 1995, respectively.                   

Nonperforming Assets                                                        

     The Company has several procedures in place to assist it in maintaining the
overall quality of its loan portfolio. These procedures include low individual  
lending limits for officers, an independent credit analysis for all commercial  
credit relationships over $100,000, Management Loan Committee approval for all  
commercial credit relationships over $100,000, Board of Director Loan Committee 
approval for all commercial and for most residential credit relationships over  
$500,000, quality loan documentation and a periodic loan review by an           
independent consultant with considerable OCC experience. The Board of Directors 
reviews all new and renewed loans on a monthly basis. The Company also monitors 
its delinquency levels for any negative or adverse trends. There can be no      
assurance, however, that the Company's loan portfolio will not become subject to
increasing pressures from deteriorating borrower credit or general economic     
conditions.                                                                     

The Company generally places a loan on nonaccrual status and ceases   
accruing interest when loan payment performance is deemed unsatisfactory. All   
loans past due 90 days, however, are placed on nonaccrual status, unless the    
loan is both well collateralized and in the process of collection. Cash payments
received while a loan is classified as nonaccrual are recorded as a reduction of
principal as long as doubt exists as to collection.                             

    The Company has historically had strong asset quality, as evidenced by its
low percentage of net charge-offs to average loans outstanding (an average of   
.07% over the last five years). See "-- Allowance for Loan Losses." Although  
nonperforming assets (nonaccrual loans and foreclosed real estate) at December  
31, 1997 increased to $2.601 million from $1.737 million at December 31, 1996,  
this increase was primarily attributable to one residential real estate loan for
$1.225 million where the original loan to value was less than 60%. The          
collateral is involved in a complex bankruptcy. A trustee has been appointed and
was recently granted permission to retain a                                     

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broker to sell the property. This action will accelerate the liquidation of the 
collateral and management expects a full recovery.                              

    The following table presents information regarding nonperforming assets at
December 31, 1997, 1996, 1995, 1994 and 1993:                                   

                                                        [Enlarge/Download Table]

                                                                      AT DECEMBER 31,                     
                                                   ------------------------------------------------------ 
                                                    1997        1996        1995        1994        1993  
                                                   ------      ------      ------      ------      ------ 
                                                                   (DOLLARS IN THOUSANDS)                 
                                                                                                          
Nonaccrual loans:                                                                                         
  Residential real estate loans................... $1,918      $1,282      $1,573      $  932      $1,026 
  Commercial real estate..........................     --          --         302          --          -- 
  Commercial loans................................    577         182         351          25          -- 
  Consumer loans and other........................      1           3          --          --           1 
                                                   ------      ------      ------      ------      ------ 
     Total nonaccrual loans.......................  2,496       1,467       2,226         957       1,027 
                                                   ------      ------      ------      ------      ------ 
     Total nonperforming loans....................  2,496       1,467       2,226         957       1,027 
                                                   ------      ------      ------      ------      ------ 
     Total nonperforming loans to total loans.....   2.34%       1.60%       2.09%        .77%       1.02%
                                                   ======      ======      ======      ======      ====== 
Foreclosed real estate:                                                                                   
  Real estate acquired by foreclosure or deed in                                                          
     lieu of foreclosure..........................    105         270          --         127         145 
                                                   ------      ------      ------      ------      ------ 
  Total nonperforming loans and foreclosed real                                                           
     estate....................................... $2,601      $1,737      $2,226      $1,084      $1,172 
                                                   ======      ======      ======      ======      ====== 
  Total nonperforming and foreclosed real estate                                                          
     to total assets..............................   1.76%       1.15%       1.15%        .54%        .72%
                                                   ======      ======      ======      ======      ====== 

   Interest income that would have been recorded under the original terms of
nonaccrual loans and the interest income actually recognized are summarized     
below:                                                                          

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,     
                                                             --------------------------------
                                                             1997   1996   1995   1994   1993
                                                             ----   ----   ----   ----   ----
                                                                      (IN THOUSANDS)         
                                                                                             
Interest income that would have been recognized............. $343   $200   $203   $117   $110
Interest income recognized..................................  123      3    103     28     19
                                                             ----   ----   ----   ----   ----
Interest income forgone..................................... $220   $197   $100   $ 89   $ 91
                                                             ====   ====   ====   ====   ====

Allowance for Loan Losses                                                   

    The Company maintains an internally classified loan list which, along with
the delinquency list of loans, helps management assess the overall quality of   
the loan portfolio and the adequacy of the allowance for loan losses. Loans     
classified as "substandard" are those loans with clear and defined weaknesses   
such as a highly-leveraged position, unfavorable financial ratios, uncertain    
repayment sources or poor financial condition, which may jeopardize             
recoverability of the debt. At December 31, 1997, the Company had $134,000 of   
such loans, excluding loans on nonaccrual, of which one loan for $119,200 was   
upgraded to a performing asset within thirty days.                              

   Loans classified as "doubtful" are those loans which have characteristics
similar to substandard loans but with an increased risk that a loss may occur,  
or at least a portion of the loan may require a charge-off if liquidated at     
present. Although loans classified as substandard do not duplicate loans        
classified as doubtful, both substandard and doubtful loans include some loans  
that are delinquent at least 30 days or on nonaccrual status. Loans classified  
as "loss" are those loans which are in the process of being charged off. At     
December 31, 1997, the Company had four loans classified as doubtful with       
aggregate balances of $965,400. One loan carries an SBA guarantee in the amount 
of $609,400, reducing the Company's exposure to $356,000.                       

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    In addition to the internally classified loan list and delinquency list of
loans, the Company maintains a separate "watch list" which further aids the     
Company in monitoring loan portfolios. Watch list loans show warning elements   
where the present status portrays one or more deficiencies that require         
attention in the short term or where pertinent ratios of the loan have weakened 
to a point where more frequent monitoring is warranted. These loans do not have 
all of the characteristics of a classified loan (substandard or doubtful) but do
show weakened elements as compared with those of a satisfactory credit. The     
Company reviews these loans to assist in assessing the adequacy of the allowance
for loan losses. At December 31, 1997, the Company had four loans with aggregate
balances of $796,000 on the watch list. Each of the four loans is guaranteed    
under SBA loan programs in an aggregate amount of $665,000, reducing the        
Company's exposure to $131,000.                                                 

In order to determine the adequacy of the allowance for loan losses,  
management considers the risk classification or delinquency status of loans and 
other factors, such as collateral value, portfolio composition, trends in       
economic conditions and the financial strength of borrowers. Management         
establishes specific allowances for loans which management believes require     
reserves greater than those allocated according to their classification or      
delinquent status. An unallocated allowance is also established based on the    
Company's historical charge-off experience. The Company then charges to         
operations a provision for loan losses to maintain the allowance for loan losses
at an adequate level determined by the foregoing analysis.                      

   For the year ended December 31, 1997, net loan charge-offs totaled $9,000
or .01% of average loans outstanding for the period, compared to $248,000 in net
charge-offs or .25% of average loans outstanding for the year ended December 31,
1996. During the year ended December 31, 1997, the Company recorded a provision 
for loan losses of $80,000, compared to $185,000 for the year ended December 31,
1996. At December 31, 1997, the allowance totaled $848,000 or .80% of total     
loans resulting in an allowance to nonperforming loans of 33.97%.               

    The following table sets forth information with respect to activity in the
Bank's allowance for loan losses during the periods indicated:                  

                                                        [Enlarge/Download Table]

                                                                            YEAR ENDED DECEMBER 31,                     
                                                        --------------------------------------------------------------- 
                                                          1997         1996          1995          1994          1993   
                                                        --------      -------      --------      --------      -------- 
                                                                            (DOLLARS IN THOUSANDS)                      
                                                                                                                        
Average loans outstanding, net......................... $102,315      $96,307      $129,431      $125,460      $114,552 
                                                        ========      =======      ========      ========      ======== 
Allowance at beginning of year.........................      777          840           528           382           322 
                                                        --------      -------      --------      --------      -------- 
Charge-offs:                                                                                                            
  Residential real estate..............................       --           (2)          (27)          (51)          (66)
  Commercial real estate...............................      (48)        (238)           --            (2)           -- 
  Consumer loans.......................................      (10)          (8)           (2)           --            -- 
                                                        --------      -------      --------      --------      -------- 
    Total loans charged-off............................      (58)        (248)          (29)          (53)          (66)
Recoveries.............................................       49           --             5            10             6 
                                                        --------      -------      --------      --------      -------- 
Net charge-offs........................................       (9)        (248)          (24)          (43)          (60)
Provision for loan losses charged to operating                                                                          
  expenses.............................................       80          185           336            75           120 
Amount attributable to Pointe Bank at acquisition......       --           --            --           114            -- 
                                                        --------      -------      --------      --------      -------- 
Allowance at end of year............................... $    848      $   777      $    840      $    528      $    382 
                                                        ========      =======      ========      ========      ======== 
Net charge-offs to average loans outstanding...........      .01%         .25%          .02%          .03%          .05%
                                                        ========      =======      ========      ========      ======== 
Allowance as a percent of total loans..................      .80%         .85%          .79%          .42%          .38%
                                                        ========      =======      ========      ========      ======== 
Allowance as a percent of nonperforming loans..........    33.97%       52.97%        37.74%        55.17%        37.20%
                                                        ========      =======      ========      ========      ======== 
  Total loans at end of year........................... $106,659      $91,925      $106,315      $124,634      $100,578 
                                                        ========      =======      ========      ========      ======== 

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The following table presents information regarding the Company's total
allowance for loan losses as well as the allocation of such amounts to the      
various categories of loans:                                                    

                                                        [Enlarge/Download Table]

                                                                  AT DECEMBER 31,                                         
                         -------------------------------------------------------------------------------------------------
                               1997                1996                1995                1994                1993       
                         -----------------   -----------------   -----------------   -----------------   -----------------
                                    % OF                % OF                % OF                % OF                % OF  
                                  LOANS TO            LOANS TO            LOANS TO            LOANS TO            LOANS TO
                                   TOTAL               TOTAL               TOTAL               TOTAL               TOTAL  
                         AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS  
                         ------   --------   ------   --------   ------   --------   ------   --------   ------   --------
                                                              (DOLLARS IN THOUSANDS)                                      
                                                                                                                          
Commercial loans........  $158      18.59%    $135      17.35%    $122      14.49%    $ 33       6.26%    $ 12       3.12%
Commercial real estate                                                                                                    
  loans.................   140      16.53       88      11.31       20       2.42       25       4.77        3        .92 
Residential real estate                                                                                                   
  loans.................   492      57.97      525      67.60      687      81.80      466      88.26      365      95.53 
Consumer loans..........    58       6.91       29       3.74       11       1.29        4        .71        2        .43 
                          ----     ------     ----     ------     ----     ------     ----     ------     ----     ------ 
  Total allowance for                                                                                                     
    loan losses.........  $848     100.00%    $777     100.00%    $840     100.00%    $528     100.00%    $382     100.00%
                          ====     ======     ====     ======     ====     ======     ====     ======     ====     ====== 

Securities                                                                  

At December 31, 1997 securities totaled $32.079 million, from $42.790 
million in 1996, a decrease of $10.711 million, or 25.03%. The decrease is a    
result of the Company's planned sale in 1997 of mortgage backed securities      
products and re-positioning into United States Treasury securities. During 1996,
securities decreased to $42.790 million from $48.542 million at December 31,    
1995, a decrease of $5.752 million or 11.85%. The yields on the securities      
portfolio were 6.29%, 6.99% and 6.26% for 1997, 1996 and 1995, respectively.    

                                                        [Enlarge/Download Table]

                                                                       AT DECEMBER 31,                         
                                               --------------------------------------------------------------- 
                                                     1997                   1996                   1995        
                                               -----------------      -----------------      ----------------- 
                                               CARRYING    % OF       CARRYING    % OF       CARRYING    % OF  
                                                VALUE     TOTAL        VALUE     TOTAL        VALUE     TOTAL  
                                               --------   ------      --------   ------      --------   ------ 
                                               (DOLLARS IN THOUSANDS)                                          
                                                                                                               
U.S. Government agency securities............. $ 1,253      3.91%     $ 2,311      5.40%     $ 3,295      6.79%
U.S. Treasury securities......................   9,039     28.18       11,497     26.87        3,027      6.24 
Mortgage-backed securities....................  15,177     47.31       22,390     52.32       35,536     73.20 
Mutual funds..................................   4,965     15.47        4,851     11.34        4,943     10.18 
Other.........................................   1,645      5.13        1,741      4.07        1,741      3.59 
                                               -------    ------      -------    ------      -------    ------ 
  Total....................................... $32,079    100.00%     $42,790    100.00%     $48,542    100.00%
                                               =======    ======      =======    ======      =======    ====== 

The following table sets forth, by maturity distribution, certain     
information pertaining to the securities portfolio:                             

                                                        [Enlarge/Download Table]

                                                         AFTER ONE YEAR                                           
                                    ONE YEAR OR LESS     TO FIVE YEARS       AFTER FIVE YEARS         TOTAL       
                                   ------------------  ------------------   ------------------  ------------------
                                   CARRYING   AVERAGE  CARRYING   AVERAGE   CARRYING   AVERAGE  CARRYING   AVERAGE
                                    VALUE      YIELD    VALUE      YIELD     VALUE      YIELD    VALUE      YIELD 
                                   --------   -------  --------   -------   --------   -------  --------   -------
                                                               (DOLLARS IN THOUSANDS)                             
                                                                                                                  
At December 31, 1997:                                                                                             
  U.S. Government agency                                                                                          
    securities.................... $    --       --%   $   779     8.45%    $   474     7.91%   $ 1,253     8.24% 
  U.S. Treasury securities........      --       --      9,039     5.93          --       --      9,039     5.93  
  Mortgage-backed securities......   7,328     6.45      3,080     6.30       4,769     5.92     15,177     6.25  
  Mutual funds....................   4,965     6.94         --       --          --       --      4,965     6.94  
  Other...........................      --       --         25     8.00       1,620     7.04      1,645     7.06  
                                   -------             -------              -------             -------           
    Total......................... $12,293     6.65%   $12,923     6.17%    $ 6,863     6.12%   $32,079     6.36% 
                                   =======             =======              =======             =======           
At December 31, 1996:                                                                                             
  U.S. Government agency                                                                                          
    securities.................... $   983     7.77%   $   488     7.89%    $   840     7.45%   $ 2,311     7.78% 
  U.S. Treasury securities........      --       --     11,497     5.65          --       --     11,497     5.65  
  Mortgage-backed securities......  14,462     6.20      4,098     5.84       3,830     6.60     22,390     6.20  
  Mutual funds....................   4,851     6.30         --       --          --       --      4,851     6.30  
  Other...........................      --       --         25     7.88       1,716     7.08      1,741     7.09  
                                   -------             -------              -------             -------           
    Total......................... $20,296     6.31%   $16,108     5.78%    $ 6,386     6.84%   $42,790     6.19% 
                                   =======             =======              =======             =======           

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 The following table summarizes the carrying value and classification of
securities as of the dates shown:                                               

                                                                [Download Table]

                                                     YEAR ENDED DECEMBER 31,  
                                                   ---------------------------
                                                    1997      1996      1995  
                                                   -------   -------   -------
                                                         (IN THOUSANDS)       
                                                                              
Available for Sale...............................  $22,745   $32,920   $38,065
Held to Maturity.................................    9,334     9,870    10,477
                                                   -------   -------   -------
  Total securities...............................  $32,079   $42,790   $48,542
                                                   =======   =======   =======

Deposits                                                                    

   Average total interest bearing deposits during 1997 increased to $108.008
million in 1997, from $105.906 million in 1996, an increase of $2.102 million or
1.98%. The increase was primarily attributed to the growth in the Company's     
transaction accounts as the Company became less dependent on certificates of    
deposit. In implementing its Strategic Plan, to restructure its deposit base the
Company reduced its rates paid on certificates of deposits, which resulted in   
the non-renewal of higher costing time deposits, and total deposits declined to 
$112.498 million in 1996 from $142.673 million in 1995, a decrease of $30.175   
million or 21.15%. Average interest bearing transaction balances at December 31,
1997 were $47.735 million as compared to $38.218 million in 1996 and $32.009    
million in 1995. The Company's percentage of non-interest bearing demand        
deposits to average total deposits for years ending 1997, 1996 and 1995 were    
9.52%, 8.48% and 2.25%, respectively, as the Company's emphasis changed to      
relationship banking.                                                           

The following table shows the distribution of, and certain other      
information relating to, deposit accounts by type:                              

                                                        [Enlarge/Download Table]

                                                                  AT DECEMBER 31,                           
                                       ---------------------------------------------------------------------
                                               1997                    1996                    1995         
                                       ---------------------   ---------------------   ---------------------
                                       BALANCE    % OF TOTAL   BALANCE    % OF TOTAL   BALANCE    % OF TOTAL
                                       --------   ----------   --------   ----------   --------   ----------
                                                              (DOLLARS IN THOUSANDS)                        
                                                                                                            
Demand deposits....................... $ 12,136       9.71%    $  9,386       8.34%    $  6,484       4.54% 
Savings and NOW deposits..............    9,834       7.87%      11,324      10.07%       8,680       6.08% 
Money-market deposits.................   38,326      30.66%      34,803      30.94%      27,470      19.25% 
Time deposits.........................   64,699      51.76%      56,985      50.65%     100,039      70.13% 
                                       --------     ------     --------     ------     --------     ------  
  Total deposits...................... $124,995     100.00%    $112,498     100.00%    $142,673     100.00% 
                                       ========     ======     ========     ======     ========     ======  

  Jumbo certificates ($100,000 and over) included above mature as follows:

                                                                [Download Table]

                                                    AT DECEMBER 31, 1997
                                                    --------------------
                                                       (IN THOUSANDS)   
                                                                        
Due three months or less..........................        $ 1,558       
Due over three months to six months...............          1,123       
Due over six months to one year...................          1,640       
Due over one year.................................          6,720       
                                                          -------       
  Total...........................................        $11,041       
                                                          =======       

The scheduled maturities of time deposits are as follows:             

                                                                [Download Table]

                                                    AT DECEMBER 31, 1997
                                                    --------------------
                                                       (IN THOUSANDS)   
                                                                        
Due in one year or less...........................        $32,999       
Due in more than one but less than three years....         24,136       
Due in more than three but less than five years...          7,564       
                                                          -------       
  Total...........................................        $64,699       
                                                          =======       

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    The following table sets forth the net deposit flows of the Company during
the periods indicated:                                                          

                                                        [Enlarge/Download Table]

                                                           YEAR ENDED DECEMBER 31,     
                                                       ------------------------------- 
                                                        1997       1996        1995    
                                                       -------   ---------   --------- 
                                                               (IN THOUSANDS)          
                                                                                       
Net increase (decrease) before interest credited...... $ 6,849   $ (37,026)  $ (29,138)
Net credited..........................................   5,648       6,851       7,724 
                                                       -------   ---------   --------- 
Net deposit increase (decrease)....................... $12,497   $ (30,175)  $ (21,414)
                                                       =======   =========   ========= 

The following table indicates the daily average balances and weighted 
average interest rates paid on interest bearing deposits for each of the three  
years ended December 31, 1997, 1996 and 1995:                                   

                                                        [Enlarge/Download Table]

                                                               YEARS ENDED DECEMBER 31,                                      
                          ---------------------------------------------------------------------------------------------------
                                       1997                              1996                              1995              
                          -------------------------------   -------------------------------   -------------------------------
                          AVERAGE                 AVERAGE   AVERAGE                 AVERAGE   AVERAGE                 AVERAGE
                          BALANCE    % OF TOTAL    YIELD    BALANCE    % OF TOTAL    YIELD    BALANCE    % OF TOTAL    YIELD 
                          --------   ----------   -------   --------   ----------   -------   --------   ----------   -------
                                                                (DOLLARS IN THOUSANDS)                                       
                                                                                                                             
Savings and NOW           $ 10,278       8.61%      1.98%   $  8,535       7.38%      2.11%   $  8,441       5.37%      1.91%
  deposits...............                                                                                                    
Money market deposits....   37,457      31.38%      4.62%     29,683      25.65%      4.65%     23,568      14.99%      4.60%
Time deposits............   60,273      50.49%      5.70%     67,688      58.49%      6.28%    121,708      77.39%      5.74%
                          --------     ------               --------     ------               --------     ------            
Total interest-bearing                                                                                                       
  deposits...............  108,008      90.48%      4.97%    105,906      91.52%      5.49%    153,717      97.75%      5.36%
Non-interest bearing.....   11,369       9.52%                 9,812       8.48%                 3,545       2.25%           
                          --------     ------               --------     ------               --------     ------            
Total.................... $119,377     100.00%              $115,718     100.00%              $157,262     100.00%           
                          ========     ======               ========     ======               ========     ======            

Borrowings                                                                  

FHLB advances, securities sold under repurchase agreements and for    
investment and repurchase agreements offered to the Company's commercial deposit
customers provide the Company with short-term and long-term sources of funds.   
FHLB advances have decreased from $27.190 million to $22.972 million to $4.400  
million at years ended December 31, 1995, 1996 and 1997, respectively. Other    
borrowings have changed from $ 6.025 million to $774,000 to $1.791 million at   
years ended December 31, 1995, 1996 and 1997, respectively. It is the strategy  
of the Company to fund asset growth from its deposit base; however, the Company 
may, from time to time, borrow from wholesale sources of funds to fund such     
growth as market conditions warrant. As the Company shifts the balance sheet    
from long-term fixed rate investments to shorter term relationship assets,      
management expects the Company to become less dependent on wholesale sources of 
funds.                                                                          

 Maturities and interest rates of advances from the FHLB were as follows
(dollars in thousands):                                                         

                                                                [Download Table]

                                                      AT DECEMBER 31,               
                              INTEREST  --------------------------------------------
YEAR ENDED DECEMBER 31          RATE     1997              1996               1995  
----------------------        --------  ------            -------            -------
                                                                                    
1996.........................   6.76%   $   --            $    --            $ 8,000
1996.........................   6.25%       --                 --              4,000
1996.........................   5.95%       --                 --              5,000
1996.........................   5.93%       --                 --              2,000
1996.........................   6.00%       --                 --              4,500
1996.........................   5.77%       --                 --              3,000
1996.........................   5.43%       --                 --                690
1997.........................   5.44%       --              5,000                 --
1997.........................   5.37%       --              5,000                 --
1997.........................   6.95%       --              1,672                 --
1997.........................   5.97%       --              5,000                 --
1997.........................   6.00%       --              1,300                 --
1997.........................   6.89%       --              5,000                 --
1998.........................   6.50%    4,400                 --                 --
                                        ------            -------            -------
Total........................           $4,400            $22,972            $27,190
                                        ======            =======            =======

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 At December 31, 1997, pursuant to a collateral agreement with the FHLB,
advances are collateralized by the Company's FHLB stock and a blanket lien on   
the Company's qualifying first mortgage, one- to four-family residential loans. 

Interest Rate Sensitivity and Liquidity                                     

The following table sets forth certain information relating to the    
Company's interest-earning assets and interest-bearing liabilities at December  
31, 1997 that are estimated to mature or are scheduled to reprice within the    
period shown.                                                                   

                                                        [Enlarge/Download Table]

                                                       MORE                                               
                                                       THAN       MORE       MORE                         
                                                      THREE     THAN SIX   THAN ONE                       
                                                      MONTHS     MONTHS    YEAR TO                        
                                           THREE      TO SIX     TO ONE      FIVE     MORE THAN           
                                          MONTHS      MONTHS      YEAR      YEARS     FIVE YEARS   TOTAL  
                                         ---------   --------   --------   --------   ----------  --------
                                                               (DOLLARS IN THOUSANDS)                     
                                                                                                          
Loans (1), (2).......................... $  37,201   $ 10,857   $ 17,647   $20,552     $ 24,845   $111,102
Securities(3)...........................    10,936        570        787    12,923        6,863     32,079
Interest Bearing Deposits...............       303         --         --        --           --        303
                                         ---------   --------   --------   --------    --------   --------
  Total rate-sensitive assets...........    48,440     11,427     18,434    33,475       31,708    143,484
                                         ---------   --------   --------   --------    --------   --------
Deposit accounts (4):                                                                                     
  Savings and NOW.......................     9,834         --         --        --           --      9,834
  Money market..........................    38,326         --         --        --           --     38,326
  Time deposits.........................     9,664      7,026     16,309    31,700           --     64,699
                                         ---------   --------   --------   --------    --------   --------
Total deposit accounts..................    57,824      7,026     16,309    31,700           --    112,859
Other borrowings........................     6,191         --         --        --           --      6,191
                                         ---------   --------   --------   --------    --------   --------
  Total rate-sensitive liabilities......    64,015      7,026     16,309    31,700           --    119,050
                                         ---------   --------   --------   --------    --------   --------
Gap (repricing differences)............. $ (15,575)  $  4,401   $  2,125   $ 1,775     $ 31,708   $ 24,434
                                         =========   ========   ========   ========    ========   ========
Cumulative GAP.......................... $ (15,575)  $(11,174)  $ (9,049)  $(7,274)    $ 24,434           
                                         =========   ========   ========   ========    ========           
Cumulative GAP/total assets.............    (10.54)%    (7.56)%    (6.12)%   (4.92)%      16.53%          
                                         =========   ========   ========   ========    ========           

------------------                                                              
(1) In preparing the table above, adjustable-rate loans are included in the     
   period in which the interest rates are next scheduled to adjust rather than
in the period in which the loans mature. Fixed-rate loans are scheduled,
including repayment, according to their contractual maturities.         

(2) Includes nonaccrual loans and loans held for sale.                          

(3) Securities are scheduled according to their respective repricing and        
maturity dates.                                                         

(4) Savings, NOW and money market accounts are regarded as readily accessible   
 withdrawable accounts. All other time accounts are scheduled according to
their respective maturity dates.                                        

Shortcomings are inherent in any GAP analysis since certain assets and
liabilities may not move proportionally as interest rates change. See           
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations for the Three Months Ended March 31, 1998 and 1997 -- Interest Rate  
Sensitivity and Liquidity" for a discussion of the Company's policies regarding 
asset and liability risk management.                                            

Liquidity                                                                   

  As of December 31, 1997 and December 31, 1996, the Bank had liquidity of
approximately $27.728 million and $38.768 million, or approximately 22.41% and  
34.65% of total deposits combined with borrowings, respectively. Management     
believes the Company has adequate resources to fund all of its commitments, that
substantially all of its existing commitments will be funded within the next    
twelve months and, if so desired, that it can adjust the rates on certificates  
of deposit to retain deposits in a changing interest rate environment.          

     Shareholders' equity increased from $12.421 million at December 31, 1996 to
$13.845 million at December 31, 1997, an increase of $1.424 million or 11.46%.  
This increase was primarily the result of net income of                         

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$914,000, net preferred stock issuance of $228,000 and $190,000 in proceeds from
the exercise of common stock options.                                           

Capital Resources                                                           

    The following table summarizes the regulatory capital requirements for the
Company and the Company's risk-based and leverage capital ratios at year end for
1997 (dollars in thousands):                                                    

                                                        [Enlarge/Download Table]

                                                                                            TO BE WELL    
                                                                                            CAPITALIZED   
                                                                                               UNDER      
                                                                                              PROMPT      
                                                                          FOR CAPITAL       CORRECTIVE    
                                                                           ADEQUACY           ACTION      
                                                          ACTUAL           PURPOSES         PROVISIONS:   
                                                      ---------------   ---------------   --------------- 
                                                      AMOUNT    RATIO   AMOUNT    RATIO   AMOUNT    RATIO 
                                                      -------   -----   -------   -----   -------   ----- 
                                                                                                          
At December 31, 1997:                                                                                     
Total Capital (to Risk-Weighted Assets).............. $14,565   16.02%  $ 7,227    8.00%  $ 9,033   10.00%
Tier I Capital (to Risk-Weighted Assets).............  13,718   15.09     3,613    4.00     5,420    6.00 
Tier I Capital (to Average Assets)...................  13,718    9.10     6,030    4.00     7,537    5.00 

CREDIT RISK                                                                     

  The Bank's primary business is making commercial, business, consumer and
real estate loans. That activity entails potential loan losses, the magnitude of
which depends on a variety of economic factors affecting borrowers which are    
beyond the control of the Bank. While management has instituted underwriting    
guidelines and credit review procedures to protect the Bank from avoidable      
credit losses, some losses will inevitably occur.                               

MARKET RISK                                                                     

   Market risk is the risk of loss from adverse changes in market prices and
rates. The Company's market risk arises primarily from interest rate risk       
inherent in its lending and deposit taking activities. To that end, management  
actively monitors and manages its interest rate risk exposure. The measurement  
of market risk associated with financial instruments is meaningful only when all
related and offsetting on- and off-balance-sheet transactions are aggregated,   
and the resulting net positions are identified. Disclosures about the fair value
of financial instruments, which reflect changes in market prices and rates, can 
be found in Note 10 of Notes to Consolidated Financial Statements.              

The Company's primary objective in managing interest-rate risk is to  
minimize the adverse impact of changes in interest rates on the Bank's net      
interest income and capital, while adjusting the Company's asset-liability      
structure to obtain the maximum yield-cost spread on that structure. The Company
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates may adversely      
impact the Company's earnings, to the extent that the interest rates borne by   
assets and liabilities do not change at the same speed, to the same extent, or  
on the same basis. The Company does not engage in trading activities.           

IMPACT OF INFLATION AND CHANGING PRICES                                         

The financial statements and related data presented herein have been  
prepared in accordance with generally accepted accounting principles, which     
require the measurement of financial position and operating results in terms of 
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation. Unlike most industrial companies,          
substantially all of the assets and liabilities of the Company are monetary in  
nature. As a result, interest rates have a more significant impact on the       
Company's performance than the effects of general levels of inflation. Interest 
rates do not necessarily move in the same direction or with the same magnitude  
as the prices of goods and services, since such prices are affected by inflation
to a larger extent than interest rates.                                         

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REGULATION AND SUPERVISION

GENERAL                                                                         

As a one-bank holding company registered under the BHC, the Company is
subject to regulation and supervision by the Federal Reserve Board. Under the   
BHC, the Company's activities are limited to banking, managing or controlling   
banks, furnishing services to or performing services for its subsidiaries and   
engaging in any other activity that the Federal Reserve Board determines to be  
so closely related to banking or managing or controlling banks as to be a proper
incident thereto. As a state-chartered commercial bank, the Bank is subject to  
extensive regulation by the Department and the FDIC.                            

The Company and the Bank are required to file reports with the Federal
Reserve Board, the Department and the FDIC concerning their activities and      
financial condition, in addition to obtaining regulatory approvals prior to     
entering into certain transactions such as mergers with or acquisitions of other
financial institutions. Periodic examinations are performed by the Federal      
Reserve Board, the Department and the FDIC to monitor the Company's and the     
Bank's compliance with the various regulatory requirements. Deposits held by the
Bank are insured up to the applicable limits by the FDIC under the Bank         
Insurance Fund ("BIF"). The Bank is subject to regulation of the Federal Reserve
Board and the Department with respect to reserves required to be maintained     
against transaction deposit accounts and certain other matters.                 

REGULATION OF THE COMPANY                                                       

 Acquisitions by Bank Holding Companies.  The BHC prohibits bank holding
companies such as the Company from acquiring direct or indirect control of more 
than 5% of any class of outstanding voting stock or acquiring substantially all 
of the assets of any bank or merging or consolidating with another bank holding 
company without prior approval of the Federal Reserve Board. Additionally, the  
BHC prohibits bank holding companies such as the Company from engaging in or    
from acquiring ownership or control of more than 5% of the outstanding voting   
stock of any company engaged in a non-banking business, unless such business is 
determined by the Federal Reserve Board to be so closely related to banking or  
managing or controlling banks as to be properly incident thereto.               

     Transactions between the Bank and the Company.  Sections 23A and 23B of the
Federal Reserve Act (the "Act") restrict certain transactions between banks (and
their subsidiaries) and companies affiliated with such institutions. Sections   
23A and 23B generally define an "affiliate" as any company that controls or is  
under common control with an institution. Accordingly, the Company is an        
affiliate of the Bank for purposes of Sections 23A and 23B. Subsidiaries of a   
bank, however, are generally exempted from the definition of "affiliate."       
Section 23A limits the aggregate amount of a bank's transactions restricted by  
Section 23A with any individual affiliate to 10% of the capital and surplus of  
the bank and also limits the aggregate amount of such transactions of a bank    
with all affiliates to 20% of the capital and surplus of the bank. Certain      
transactions with affiliates, such as loans to affiliates or guarantees,        
acceptances and letters of credit issued by a bank on behalf of affiliates, are 
required to be collateralized by collateral in an amount and of a type described
in the Act. The purchase by a bank of low quality assets from affiliates is     
generally prohibited. Section 23B provides that certain transactions of a bank  
with affiliates, including loans and asset purchases, must be on terms and under
circumstances, including credit standards, that are substantially the same or at
least as favorable to the institution as those prevailing at the time for       
comparable transactions with nonaffiliated companies. In the absence of         
comparable transactions, such transactions may only occur under terms and       
circumstances, including credit standards, that in good faith would be offered  
to or would apply to nonaffiliated companies.                                   

     Support of Subsidiary Depository Institutions.  Under Federal Reserve Board
policy, the Company is expected to act as a source of financial strength and to 
commit resources to support the Bank. This support may be required at times when
the Company might not be inclined to provide such support. In addition, any     
capital loans by a bank holding company to any of its subsidiary banks must be  
subordinate in right of payment to depositors and to certain other indebtedness 
of such subsidiary banks. In the event of a bank holding company's bankruptcy   
under Chapter 11 of the U.S. Bankruptcy Code, the trustee will be deemed to have
assumed and is required to cure immediately any deficit under any commitment by 
the debtor holding company to any of the federal banking agencies to maintain   
the capital of an insured depository institution, and any claim for breach of   
that obligation will generally have priority over most other unsecured claims.  

  Under the Federal Deposit Insurance Act ("FDIA"), a subsidiary bank of a
bank holding company can be held liable for any loss incurred by, or reasonably 
expected to be incurred by, the FDIC in connection with (i) the                 

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default of a commonly controlled FDIC-insured depository institution or (ii) any
assistance provided by the FDIC to any commonly controlled FDIC insured         
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or a receiver and "in danger of default" is    
defined generally as the existence of certain conditions indicating that a      
default is likely to occur in the absence of regulatory assistance.             

    Control of a Bank Holding Company.  The Change in Bank Control Act and the
Federal Reserve Board's Regulation Y, require persons acting directly or        
indirectly or in concert with one or more persons to give the Federal Reserve   
Board 60 days written notice before acquiring control of a bank holding company.
Under the regulation, control is defined as the ownership or control with the   
power to vote 25% or more of any class of voting securities of the bank holding 
company. The regulation also provides for a presumption of control if a person  
owns, controls, or holds with the power to vote 10% or more (but less than 25%) 
of any class of voting securities, and if (i) the bank holding company's        
securities are registered securities under Section 12 of the Securities and     
Exchange Act of 1934, as amended; or (ii) no other person owns a greater        
percentage of that class of voting securities.                                  

REGULATION OF THE BANK                                                          

 General.  From time to time, various bills are introduced in the United
States Congress with respect to the regulation of financial institutions. Recent
banking legislation, particularly the Financial Institutions Reform, Recovery   
and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance        
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory    
powers of the federal bank regulatory agencies and restructured the nation's    
banking system.                                                                 

FDICIA revised sections of the FDIA affecting bank regulation, deposit
insurance and provisions for funding of the BIF administered by the FDIC. FDICIA
also revised bank regulatory structures embodied in several other federal       
banking statutes, strengthened the bank regulators' authority to intervene in   
cases of deterioration of a bank's capital level, placed limits on real estate  
lending and imposed detailed audit requirements.                                

   Prompt Corrective Action.  A central feature of FDICIA is the requirement
that the federal banking agencies take "prompt corrective action" with respect  
to insured depository institutions that do not meet minimum capital             
requirements. Pursuant to FDICIA, the federal bank regulatory authorities have  
adopted regulations setting forth a five-tiered system for measuring the capital
adequacy of the depository institutions they supervise. Under these regulations,
a depository institution is classified in one of the following capital          
categories: "well capitalized," "adequately capitalized," "undercapitalized,"   
"significantly undercapitalized," and "critically undercapitalized." FDICIA     
imposes progressively more restrictive constraints on operations, management,   
and capital distributions depending on the category in which an institution is  
classified. Pursuant to FDICIA, undercapitalized institutions must submit       
recapitalization plans to their respective federal bank regulatory agencies, and
a company controlling a failing institution must guarantee such institution's   
compliance with its recapitalization plan in order for the plan to be accepted. 

     The FDIC's prompt corrective action regulations define, among other things,
the relevant capital measures for the five capital categories. For example, a   
bank is deemed to be "well-capitalized" if it has a total risk-based capital    
ratio (total capital to risk-weighted assets) of 10% or greater, a Tier I       
risk-based capital ratio (Tier I capital to risk-weighted assets) of 6% or      
greater, and a Tier I leverage capital ratio (Tier I capital to adjusted total  
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A bank is deemed to be "adequately capitalized" if it has a total risk-based    
capital ratio of 8% or greater, and (generally) a Tier I leverage capital ratio 
of 4% or greater, and the bank does not meet the definition of a                
"well-capitalized" institution. A bank is deemed to be "critically              
undercapitalized" if it has a ratio of tangible equity (as defined in the       
regulations) to total assets that is equal to or less than 2%. In addition, the 
FDIC is authorized effectively to downgrade a bank to a lower capital category  
than the bank's capital ratios would otherwise indicate, based upon safety and  
soundness considerations (such as when the bank has received a less than        
satisfactory examination rating for certain of the CAMELS rating categories     
other than capital: i.e., Asset Quality, Management, Earnings or Liquidity). As 
a bank drops to lower capital levels, the extent of action to be taken by the   
appropriate regulator increases, restricting the types of transactions in which 
the bank may engage. The new capital standards are designed to bolster and      
protect the deposit insurance fund. The Bank is considered to be well           
capitalized as of March 31, 1998.                                               

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    Insurance on Deposit Accounts.  FDICIA also provided for increased funding
of the BIF. Under the FDIC's risk-based insurance premium assessment system,    
each bank whose deposits are insured by the BIF is assigned one of the nine risk
classifications based upon certain capital and supervisory measures and,        
depending upon its classification, is assessed premiums. On November 14, 1995,  
the FDIC board of directors voted to lower the BIF premium range to zero from   
 .27% effective January 1996. The rate schedule is subject to future adjustments
by the FDIC. In addition, the FDIC has the authority to impose special          
assessments from time to time. As a result of the enactment of the Deposit      
Insurance Funds Act of 1996 on September 30, 1996, commercial banks are now     
required to pay part of the interest on the Financing Corporation's ("FICO")    
bonds issued to deal with the savings and loan crisis of the late 1980s. As a   
result, commercial bank deposits are now also subject to assessment by FICO     
("FICO Assessment") upon the approval by the FDIC Board of such assessment.     
Beginning in 1997 and continuing until the earlier of December 31, 1999 or the  
date on which the last saving association ceases to exist, the assessment rate  
FICO imposes on a commercial bank must be at a rate equal to one-fifth the      
assessment rate applicable to deposits assessable by the SAIF. It is estimated  
that the annual assessment for BIF insured institutions will be approximately   
1.2 cents per $100 of deposits, while SAIF insured institutions will pay 6.5    
cents per $100 of deposits. These payments began in 1997 and run through 1999.  
Beginning in the year 2000 and continuing through the year 2017, banks and      
thrifts will each pay 2.43 cents per $100 of deposits. These assessments will be
in addition to any regular deposit insurance assessments imposed by the FDIC    
under FDICIA. On September 30, 1996, President Clinton signed into law an act   
that contained a comprehensive approach to recapitalizing the SAIF and to assure
the payment of the FICO bond obligations. Under this act, banks insured under   
the BIF are required to pay a portion of the interest due on bonds that were    
issued by FICO to support the Federal Savings and Loan Insurance Corporation in 
1987. The BIF rate must equal one-fifth of the SAIF rate through year-end 1999, 
or until the insurance funds are merged, whichever occurs first. Thereafter, BIF
and SAIF payers will be assessed pro rata for the FICO bond obligations. With   
regard to the assessment for the FICO obligation, the current BIF rate is .0126%
of deposits and the SAIF rate is .0630% of deposits.                            

     After the merger of the Thrift into the Bank in April 1997, the Bank became
an Oakar Bank, in that the Bank belonged to one insurance fund, the BIF, and the
Thrift belonged to a secondary insurance fund, the SAIF. The result of the      
merger produced an adjusted attributed deposit amount (AADA) to the Bank.       
Approximately 63% of the total deposits are subjected to SAIF FICO premiums and 
the remaining 37% is subjected to BIF FICO premiums. At March 31, 1998, the     
blended FICO for the Bank was .0437%. The Bank's FICO Assessment for 1997 was   
$59,000, and the Bank believes it will be at least $59,000 for 1998.            

   Standards for Safety and Soundness.  FDICIA requires each federal banking
agency to prescribe for all insured depository institutions and their holding   
companies, standards relating to internal controls, information systems and     
audit systems, loan documentation, credit underwriting, interest rate risk      
exposure, asset growth, compensation, fees and benefits and such other          
operational and managerial standards as the agency deems appropriate. In        
addition, the federal banking agencies are required to prescribe by regulation  
standards specifying: (i) maximum classified assets to capital ratios; (ii)     
minimum earnings sufficient to absorb losses without impairing capital; (iii) to
the extent feasible, a minimum ratio of market value to book value for publicly 
traded shares of depository institutions or the depository institution holding  
companies; and (iv) such other standards relating to asset quality, earnings and
valuation as the agency deems appropriate. Finally, each federal banking agency 
is required to prescribe standards for employment contracts and other           
compensation arrangements of executive officers, employees, directors and       
principal shareholders of insured depository institutions that would prohibit   
compensation and benefits and other arrangements that are excessive or that     
could lead to a material financial loss for the institution. If an insured      
depository institution or its holding company fails to meet any of its standards
described above, it will be required to submit to the appropriate federal       
banking agency a plan specifying the steps that will be taken to cure the       
deficiency. If an institution fails to submit an acceptable plan or fails to    
implement the plan, the appropriate federal banking agency will require the     
institution or holding company to correct the deficiency and, until corrected,  
may impose restrictions on the institution or the holding company including any 
of the restrictions applicable under the prompt corrective action provisions of 
FDICIA.                                                                         

FDICIA also requires each appropriate federal banking agency to adopt 
uniform regulations prescribing standards for extensions of credit secured by   
real estate or made for the purpose of financing the construction of            
improvements on real estate. In prescribing these standards, the federal banking
agencies must consider the risk posed to the deposit insurance funds by real    
estate loans, the need for safe and sound operation of insured depository       
institutions and the availability of credit.                                    

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    Capital Requirements.  The Federal Reserve Board and the FDIC have adopted
capital regulations which establish a Tier 1 core capital definition and a      
minimum 3% leverage capital ratio requirement for the most highly-rated bank    
holding companies and state nonmember banks, respectively (i.e., those bank     
holding companies and state nonmember banks with a composite CAMELS rating of 1 
under the Uniform Financial Institutions Rating System established by the       
Federal Financial Institutions Examination Council) that are not anticipating or
experiencing significant growth. All other state nonmember banks are required to
meet a minimum leverage ratio that is at least 100 to 200 basis points above 3%.
A bank holding company or state nonmember bank that is not in the highest-rated 
category or that is anticipating or experiencing significant growth will have to
meet a minimum leverage ratio of at least 4%.                                   

Under the applicable risk-based regulations, a bank holding company or
state nonmember bank must classify its assets and certain off-balance sheet     
activities into categories and maintain specified levels of capital for each    
category. The least capital is required for the category deemed by the Federal  
Reserve Board and the FDIC to have the least risk, and the most capital is      
required for the category deemed by the Federal Reserve Board and the FDIC to   
have the greatest risk. The regulations require a bank holding company or state 
nonmember bank to have a total risk-based capital ratio of 8% and a Tier I      
risk-based capital ratio of 4%. Under the statement of policy, certain assets   
are required to be deducted from risk-based capital. Such assets include        
intangible assets, unconsolidated banking and finance subsidiaries, investments 
in securities subsidiaries, ineligible equity investments and reciprocal holding
of capital instruments with other banks. In addition, the Federal Reserve Board 
or the FDIC may consider deducting other assets on a case-by-case basis or      
investments in other subsidiaries on a case-by-case basis or based on the       
general characteristics or functional nature of the subsidiaries.               

     Loans to One Borrower.  Florida law allows a state bank to extend credit to
any one borrower in an amount up to 25% of its capital accounts, which are      
defined as unimpaired capital, surplus and undivided profits, provided that the 
unsecured portion may not exceed 15% of the capital accounts of the bank. The   
law permits exemptions for loans collateralized by accounts maintained with the 
Bank and for loans guaranteed by the SBA, the Federal Housing Administration and
the Veterans Administration. The Bank is subject to these limits.               

Payment of Dividends.  The primary source of income to the Company is 
dividends from the Bank. Under Florida law, a Florida chartered commercial bank 
may not pay cash dividends that would cause the bank's capital to fall below the
minimum amount required by federal or Florida law. Otherwise, a commercial bank 
may pay a dividend out of the total of current net profits plus retained net    
profits of the preceding two years to the extent it deems expedient, except as  
described below. Twenty percent of the net profits in the preceding two-year    
period may not be paid in dividends, but must be retained to increase capital   
surplus until such surplus equals the amount of common and preferred stock      
issued and outstanding. In addition, no bank may pay a dividend at any time that
net income in the current year when combined with retained net income from the  
preceding two years produces a loss. The ability of the Bank to pay dividends to
the Company will depend in part on the FDIC capital requirements in effect at   
such time and the ability of the Bank to comply with such requirements.         

 Brokered Deposits.  In accordance with FDICIA, the FDIC has implemented
restrictions on the acceptance of brokered deposits. In general, an             
"undercapitalized" institution may not accept, renew or roll over any brokered  
deposits. "Adequately capitalized" institutions may request a waiver from the   
FDIC to do so, while "well-capitalized" institutions may accept, renew or roll  
over such deposits without restriction. The rule requires registration of       
deposit brokers and imposes certain recordkeeping requirements. Institutions    
that are not "well-capitalized" (even if meeting minimum capital requirements)  
are subject to limits on rates of interest they may pay on brokered and other   
deposits.                                                                       

     Liquidity.  A state-chartered commercial bank is required under Florida law
to maintain a liquidity reserve of at least 15% of its total transaction        
accounts and 8% of its total nontransaction accounts, subject to certain        
restrictions. This reserve may consist of cash-on-hand, demand deposits due from
correspondent banks, and other investments and short-term marketable securities.

    Community Reinvestment.  Under the Community Reinvestment Act of 1977 (the
"CRA"), as implemented by Federal Reserve Board and FDIC regulations, state     
nonmember banks have a continuing and affirmative obligation consistent with    
their safe and sound operation to help meet the credit needs of their entire    
community, including low- and moderate-income neighborhoods. The CRA does not   
establish specific lending requirements or programs for financial institutions  
nor does it limit an institution's discretion to develop the types of products  
and services that it believes are best suited to its particular community       
consistent with the CRA. The                                                    

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CRA requires the FDIC, in connection with its examination of state nonmember    
banks, to assess an institution's record of meeting the credit needs of its     
communities and to take such record into account in its evaluation of certain   
applications by such institution to establish branches, merge or acquire the    
assets and assume the liabilities of another bank. FIRREA requires federal      
banking agencies to make public a rating of a bank's performance under the CRA. 
In the case of a bank holding company, the CRA performance records of the banks 
involved in the transaction are reviewed and taken into account by the Federal  
Reserve Board when considering applications to acquire ownership or control of  
shares or assets of a bank or to merge with any other bank holding company. An  
unsatisfactory record can substantially delay or block the transaction. Under   
the Bank's most recent CRA examination, conducted in October 1996, the Bank     
received a "satisfactory" rating from the FDIC.                                 

Interstate Banking.  Effective September 29, 1995, the Riegle-Neal    
Interstate Banking and Branching Efficiency Act of 1994 (the "RNA") permits     
adequately capitalized and managed bank holding companies to acquire control of 
banks in any state. Additionally, beginning on June 1, 1997, the RNA provides   
for banks to branch across state lines, although individual states were allowed 
to authorize interstate branches earlier or elect to opt-out entirely. The RNA  
authorizes de novo branching by an out-of-state bank only if expressly permitted
by the laws of the host state. Florida has allowed bank holding companies from  
the southeastern United States to acquire banks in Florida since 1984, and in   
1994 this was expanded to include bank holding companies from other parts of the
United States as well. In 1996, Florida enacted legislation, effective as of    
June 1, 1997 which allows out-of-state banks to enter Florida by merging with an
existing Florida-based bank, and thereafter to branch throughout the state, and 
also allows Florida-based banks to establish branches in other states by merging
with out-of-state banks. Such legislation may further increase competition for  
the Bank by allowing large banks from other parts of the United States to       
operate directly in Florida.                                                    

  Department Assessment.  State-chartered commercial banks are required by
Department regulation to pay assessments to the Department to fund the          
operations of the Department. The general assessment, to be paid semi-annually, 
is computed based upon a bank's total assets, including consolidated            
subsidiaries, as reported in the bank's latest quarterly call report. The Bank  
is required to pay such assessments semi-annually.                              

   Reserve Requirements.  Federal Reserve Board regulations require banks to
maintain non interest-earning reserves against their transaction accounts       
(primarily NOW and regular checking accounts). The Federal Reserve Board        
regulations generally require that reserves of 3% must be maintained against    
aggregate transaction accounts of $47.8 million or less (subject to adjustment  
by the Federal Reserve Board) and an initial reserve of $1.434 million plus 10% 
(subject to adjustment by the Federal Reserve Board between 8% and 14%) against 
that portion of total transaction accounts in excess of $47.8 million. The first
$4.7 million of otherwise reservable balances (subject to adjustments by the    
Federal Reserve Board) are exempted from the reserve requirements. The balances 
maintained to meet the reserve requirements imposed by the Federal Reserve Board
may be used to satisfy liquidity requirements. Because required reserves must be
maintained in the form of either vault cash, a noninterest-bearing account at a 
Federal Reserve Bank or a pass-through account as defined by the Federal Reserve
Board, interest-earning assets of the Bank are reduced.                         

FEDERAL SECURITIES LAWS                                                         

The Company, in connection with this Offering, has filed with the     
Securities and Exchange Commission a registration statement under the Securities
Act for the registration of the Company's Common Stock. The registration under  
the Securities Act of shares of the Common Stock issued in this Offering does   
not cover the resale of such shares. Shares of the Common Stock purchased by    
persons who are not affiliates of the Company may be resold without further     
registration. Shares purchased by an affiliate of the Company will be subject to
the resale restrictions of Rule 144 under the Securities Act. If the Company    
meets the current public information requirements of Rule 144 under the         
Securities Act, each affiliate of the Company who complies with the other       
conditions of Rule 144 (including the holding period and those that require the 
affiliate's sale to be aggregated with those of certain other persons) may be   
able to sell in the public market, without registration, a number of shares not 
to exceed, in any three-month period, the greater of (i) 1% of the outstanding  
shares of the Company, or (ii) the average weekly volume of trading in such     
shares during the preceding four calendar weeks.                                

The scope of regulation, supervision and permissible activities of the
Company and the Bank is subject to change by future federal and state           
legislation.                                                                    

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                                 

Information about the current directors and executive officers of the 
Company is set forth below. The Company's Board of Directors currently consists 
of seven members. Four of the Directors of the Company are also Directors of the
Bank.                                                                           

                                                        [Enlarge/Download Table]

NAME                                                    POSITION                       AGE 
----                                                    --------                       --- 
                                                                                           
Roberto Kassin.................... Chairman of the Company and Director of the Bank      47
Morris Massry..................... Director of the Company and Chairman of the Bank      68
Timothy McGinn.................... Director and Vice-Chairman of the Company and the     49
                                   Bank                                                    
R. Carl Palmer, Jr................ Director and President and Chief Executive Officer    57
                                   of the Company and the Bank                             
Beverly P. Chambers............... Senior Vice President of the Company and the Bank     47
Bradley R. Meredith............... Senior Vice President and Chief Financial Officer     44
                                   of the Company and the Bank                             
Dennis Reed....................... Senior Vice President of the Company and the Bank     54
Steven A. Elias................... Director                                              51
D. Richard Mead, Jr............... Director                                              67
Parker D. Thomson................. Director                                              65

   Roberto Kassin.  Mr. Kassin has been Chairman of the Board of the Company
and a director of the Bank since 1994. He was a director of Pointe Federal in   
1986 and Chairman in 1993. He has been President of American Land Management    
Group, Inc. since 1986 and President of Foreign Financial Investment, Inc. since
1979. Mr. Kassin is President of the Greater Miami Jewish Federation-Latin      
Division, Acting President of Aish H'Torah, and director of the Michael-Ann     
Russell Jewish Community Center. Mr. Kassin is a resident of Miami-Dade County. 

   Morris Massry.  Mr. Massry has been a director of the Company since 1994.
He became a director of Flamingo Bank in 1988 and Chairman of the Board in 1989.
Mr. Massry has been a partner in the real estate investment firm of Albert,     
Kirsch, Massry & Massry, in Albany, New York, since 1964. Mr. Massry serves as a
director of the State University Foundation, a director and former Chairman of  
the Center for the Disabled, a director and former Chairman of The United Way,  
and a trustee of Russell Sage College, all in Albany, New York. Mr. Massry      
resides part of the year in Albany, New York and part of the year in Miami-Dade 
County.                                                                         

  Timothy McGinn.  Mr. McGinn became a director of the Company in 1994. He
has been a director and Chairman of McGinn, Smith & Co., Inc., investment       
bankers and brokers, since 1980. Mr. McGinn serves as director and Chairman of  
Health Enterprises Management, Inc. and as a director of Same Day Surgery, Inc. 
Mr. McGinn resides in Albany, New York and has a home in Palm Beach County.     

R. Carl Palmer, Jr.  Mr. Palmer joined the Company and Bank in 1995 as
Chief Executive Officer, President and director. He began his banking career at 
Chemical Bank in New York in 1964. In 1979, he moved to south Florida as an     
Executive Vice President for Southeast Bank Banking Corporation, where he first 
became associated with Beverly Chambers and Dennis Reed. During his tenure at   
that bank with $17 billion in assets, he had responsibilities for business      
development, commercial banking and retail banking. From 1988 to 1991, he was   
President, Chief Operating Officer and director of Naples Federal Savings & Loan
and NAFCO Financial Corporation. He became a Senior Associate with Martin W.    
Taplin & Associates, Inc., a real estate investment firm, in 1991. Mr. Palmer   
received an M.B.A. from Dartmouth College, Amos Tuck School and a J.D. from New 
York Law School. Mr. Palmer resides in Miami-Dade County.                       

Beverly P. Chambers.  Ms. Chambers joined the Company in 1995 with    
twenty-five years of banking experience and manages business banking, loan      
administration, marketing and human resources. Prior to joining the Company, she
spent three years as a Senior Vice President and Manager of Private Banking for 
NationsBank                                                                     

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of Florida. Prior to that position, Ms. Chambers was a Senior Vice President of 
Southeast Banking Corporation managing commercial banking, and private banking  
departments. Ms. Chambers resides in Broward County.                            

    Bradley R. Meredith.  Mr. Meredith joined the Company in 1997, after eight
years as Executive Vice President and Chief Financial Officer for First Family  
Financial Corporation in central Florida. The majority of his seventeen years of
banking experience has been with community banks. Mr. Meredith graduated from   
DePaul University with a B.S. in Finance in 1982. Mr. Meredith resides in Palm  
Beach County.                                                                   

     Dennis Reed.  Mr. Reed joined the Company in 1996 with twenty-nine years of
banking experience, primarily in operations, retail banking and residential     
mortgage lending. His most recent experience was five years as Senior Vice      
President of Bank Operations and Retail Lending with BancFlorida, FSB, preceded 
by six years as Senior Vice President of Bank Operations with Southeast Bank.   
Mr. Reed manages operations, retail banking and residential mortgage lending.   
Mr. Reed resides in south Florida.                                              

Steven A. Elias.  Mr. Elias has been president of Steven Allan Elias &
Associates, Inc., registered real estate brokers, since 1976. He has extensive  
knowledge of real estate in Miami-Dade, Broward and Palm Beach counties. Prior  
to forming his company, Mr. Elias was a manufacturer's representative for three 
and one half years. Mr. Elias graduated from the University of Miami in 1968,   
after which he joined the U.S. Coast Guard. He has been a resident of south     
Florida since 1953.                                                             

   D. Richard Mead, Jr.  Mr. Mead retired from Southeast Banking Corporation
as a Senior Vice President and manager of the Commercial Real Estate Division in
1991. From 1976 to 1991 he was also President and Chief Executive Officer of    
Southeast Mortgage Company. Prior to joining Southeast Bank, he was an officer  
of D. R. Mead & Co., a commercial mortgage banking firm, which was sold to      
Southeast Banking Corporation in 1970. Mr. Mead received his undergraduate      
degree from Duke University in 1950 and a graduate degree from Harvard Business 
School in 1954. He is currently a director and Chairman of the Audit Committee  
of Consolidated Paper Company. Mr. Mead resides in Miami-Dade County.           

 Parker D. Thomson.  Mr. Thomson is the Senior Partner of Thomson Muraro
Razook & Hart, P.A., a law firm in Miami-Dade County, and has been a partner in 
such firm for the past five years. He was admitted to the Florida bar in 1961   
and is a member of the bar of several federal courts, including the United      
States Supreme Court. He is a special Assistant Attorney General for the State  
of Florida and a member of the Florida Taxation and Budget Reform Commission.   
Mr. Thomson was Chairman of the Advocacy Center for Persons with Disabilities,  
Inc. from 1979 to 1997 and is now Chairman Emeritus, and was a member of the    
American Bar Association Commission on Mental and Physical Disability Law from  
1991 to 1996. Mr. Thomson received an undergraduate degree from Princeton       
University and an LL.B. from Harvard University. He resides in Miami-Dade       
County.                                                                         

    Directors are elected for three year terms, classified into Classes I, II,
and III. Messrs. Massry and Thomson are Class I directors with terms of office  
expiring on the date of the Company's annual meeting of shareholders in 2001;   
Messrs. Elias and Mead are Class II directors with terms of office expiring on  
the date of the Company's annual meeting of shareholders in 1999; and Messrs.   
Kassin, McGinn and Palmer are Class III directors with terms of office expiring 
on the date of the Company's annual meeting of shareholders in 2000. Each       
officer of the Company is elected by the Board of Directors and holds office    
until his successor is duly elected and qualified or until his earlier death,   
resignation or removal.                                                         

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EXECUTIVE COMPENSATION AND OTHER INFORMATION                                    

The following table provides certain summary information regarding    
compensation paid or accrued by the Company to or on behalf of the Company's    
Chief Executive Officer and President. No other executive officer received      
compensation for the fiscal year ended December 31, 1997 which exceeded         
$100,000.                                                                       

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION 

                                                        [Enlarge/Download Table]

                                                                       OTHER      SECURITIES
                                                                       ANNUAL     UNDERLYING
NAME AND PRINCIPAL POSITION                       YEAR  SALARY($)   COMPENSATION  OPTIONS(#)
---------------------------                       ----  ----------  ------------  ----------
                                                                                            
                                                  1997   $202,000      $2,375       19,500  
R. Carl Palmer, Jr. ............................. 1996   $202,000      $1,775       30,000  
  Chief Executive Officer and President           1995   $200,000          $0            0  

  The amount shown for cash compensation does not include amounts expended
for perquisites and other personal benefits, which in the aggregate do not      
exceed the lesser of $50,000 or 10% of the cash compensation reported for the   
executive named above.                                                          

Consists of the Company's contribution to the Company's 401(k) Plan.  

   The following table sets forth stock options exercised during 1997 by the
executive officers, including the value realized upon exercise. In addition,    
this table describes the number of unexercised options and the value of         
unexercised in-the-money options at the end of the 1997 fiscal year.            

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL-YEAR-END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                                        NUMBER OF                    
                                                                       SECURITIES        VALUE OF    
                                                                       UNDERLYING       UNEXERCISED  
                                                SHARES                 UNEXERCISED     IN-THE-MONEY  
                                               ACQUIRED                OPTIONS AT       OPTIONS AT   
                                                  ON        VALUE    FISCAL-YEAR-END  FISCAL-YEAR-END
                                               EXERCISE    REALIZED   EXERCISABLE/     EXERCISABLE/  
NAME                                               #         ($)      UNEXERCISABLE    UNEXERCISABLE 
----                                          -----------  --------  ---------------  ---------------
                                                                                                     
Beverly Chambers.............................      0          $0       4,378/5,522     $2,991/$3,774 
Bradley R. Meredith..........................      0          $0         976/8,024     $  667/$5,483 
R. Carl Palmer, Jr...........................      0          $0      41,070/8,430     $7,564/$5,761 
Dennis Reed..................................      0          $0       1,632/5,868     $1,115/$4,010 

  There is currently no trading market for the Company's Common Stock. The
value of unexercised in-the-money options was calculated based on the difference
between the book value per share at December 31, 1997 ($10.23) and the exercise 
price of the options. Book value per share is not necessarily indicative of the 
actual market value per share.                                                  

DIRECTOR COMPENSATION                                                           

     Directors who are not also employees receive annual retainers of $6,000 for
serving on the board of directors of both the Company and the Bank. The Chairman
of the Board of the Company receives an annual stipend of $10,000 and the       
Chairman of the Board of the Bank receives an annual stipend of $5,000. In      
addition, committee chairmen receive annual retainers of $3,000. Directors may  
elect to receive their retainers and stipends in the form of cash or a          
combination of cash, stock options and stock grants, the latter two of which are
granted after the end of each year for the prior year's service. In addition,   
each non-employee director receives an annual stock option award and receives   
meeting fees of $100.00 per board meeting and $200.00 per committee meeting. For
1997, total cash payments to directors were $68,400 and the Company granted     
non-employee Directors five year stock options to purchase 17,313 shares at     
$10.03 per share.                                                               

EMPLOYEE STOCK OPTION PLANS                                                     

 The Company has two employee stock option plans. The 1994 Non-Statutory
Stock Option Plan (the "1994 Plan") authorizes the issuance of up to 300,000    
shares of common Stock pursuant to "non-qualified" options granted to key       
employees of the Company. These options to acquire the Company's Common Stock   
are granted for terms of five years. Option grant letters may contain vesting   
requirements. All options vest immediately upon                                 

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a change in control of the Company. The options terminate upon the termination  
of the option holder's employment with the Company although the option agreement
provides for one year extensions of the period of exerciseability of the options
in the event of termination by retirement, disability or death. The purchase    
price of the shares is the fair market value per share of the Common Stock on   
the date of grant. In the absence of any arm's length trades in the three months
preceding the date of grant, "fair market value per share" is the total equity  
available to holders of common stock divided by the total number of outstanding 
shares of common stock.                                                         

At March 31, 1998, options to purchase 250,281 shares of Common Stock 
granted to 21 employees and non-employee directors were outstanding under the   
1994 Plan, with per share exercise prices ranging from $9.55 to $10.52, 21,219  
shares of Common Stock remained available for future grants, and 28,500 shares  
of Common Stock had been issued upon exercise of stock options.                 

    The following table sets forth information regarding stock options granted
to executive officers during 1997.                                              

OPTION GRANTS IN LAST FISCAL YEAR                                               

                                                        [Enlarge/Download Table]

                                                                  PERCENT OF                         
                                                   NUMBER OF     TOTAL OPTIONS                       
                                                   SECURITIES     GRANTED TO                         
                                                   UNDERLYING      EMPLOYEES    EXERCISE             
                                                    OPTIONS        IN FISCAL      PRICE    EXPIRATION
NAME                                             GRANTED (#)(1)      YEAR       ($/SHARE)     DATE   
----                                             --------------  -------------  ---------  ----------
                                                                                                     
Beverly Chambers................................      9,900          8.45%        $9.55    05/21/2002
Bradley R. Meredith.............................      9,000          7.68%        $9.55    05/21/2002
R. Carl Palmer, Jr..............................     19,500         16.65%        $9.55    05/21/2002
Dennis Reed.....................................      7,500          6.40%        $9.55    05/21/2002

------------------                                                              
(1) Granted under the 1994 Plan.                                                

The Company's shareholders adopted the 1998 Incentive Compensation and
Stock Award Plan (the "1998 Plan") on April 27, 1998. The 1998 Plan authorizes  
the issuance of up to 200,000 shares of Common Stock under both "non-qualified" 
and "incentive stock" options and a variety of other stock-related awards. The  
1998 Plan is intended to provide flexible terms to permit the Board of Directors
(or any committee designated by the Board to administer the 1998 Plan) to enter 
into compensatory arrangements that promote the Board's compensation, goals and 
policies. No grants of stock or options have yet been made under the 1998 Plan. 

THE DEFERRED COMPENSATION PLAN                                                  

    In 1993, the Company adopted a Deferred Compensation Plan (the "Plan") for
certain directors. Under the Plan a portion of each participant's compensation  
can be deferred and the Company makes annual contributions, which are subject to
an annual increase of 4%. Upon retirement, disability, death, or termination of 
service, the participant has the option to take a lump sum payment or receive   
monthly installments for a period of ten years. In 1997, the Company made       
contributions aggregating $21,889 to the Plan and participants deferred $12,091 
in fees as contributions.                                                       

At December 31, 1997 and 1996, approximately $118,000 and $177,000,   
respectively, were deferred and included in Other Liabilities on the Company's  
Consolidated Balance Sheet.                                                     

   During 1997, two directors received lump sum payments under the Plan and,
in early 1998, one other director received a lump sum payment.                  

401(K) PLAN                                                                     

The Company has adopted a contributory profit sharing plan pursuant to
Internal Revenue Code Section 401(k) covering substantially all employees (the  
"401(k) Plan"). Each year the Company determines, at its discretion, the amount 
of the Company's contributions to the 401(k) Plan. Expenses relating to the     
Company's contributions to the 401(k) Plan for 1997, 1996 and 1995 were         
approximately $1,000, $4,400 and $15,800, respectively.                         

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 30, 1998 by (i) each director of the Company; (ii)     
each executive officer of the Company; (iii) all directors and executive        
officers as a group; and (iv) each person known to the Company to be the        
beneficial owner of more than 5% of the outstanding shares of the Company's     
Common Stock. All shares are owned directly unless otherwise indicated.         

                                                        [Enlarge/Download Table]

                                                                                  PERCENTAGE OF     
                                                                                   COMMON STOCK     
                                                                              BENEFICIALLY OWNED(1) 
                                                                              ----------------------
                                                         NUMBER OF SHARES      BEFORE        AFTER  
NAME AND ADDRESS OF BENEFICIAL OWNER                   BENEFICIALLY OWNED(1)  OFFERING      OFFERING
------------------------------------                   ---------------------  --------      --------
                                                                                                    
Roberto Kassin (2)....................................        272,407          19.49%        12.02% 
21471 Highland Lakes Boulevard                                                                      
North Miami, FL 33179                                                                               

Morris Massry (3).....................................        215,008          15.47%         9.52% 
Executive Park North                                                                                
Stuyvesant Plaza                                                                                    
Albany, NY 12203                                                                                    

Timothy McGinn (4)....................................         27,740           2.00%         1.23% 
15 Marion Avenue                                                                                    
Albany, NY 12203                                                                                    

R. Carl Palmer, Jr. (5)...............................         82,866           5.70%         3.57% 
10231 East Bay Harbor Dr.                                                                           
Apartment #6B                                                                                       
Bay Harbor, FL 33154                                                                                

Beverly Chambers (6)..................................         20,548           1.47%          .90% 
2633 Oakbrook Drive                                                                                 
Ft. Lauderdale, FL 33332                                                                            

Bradley M. Meredith (7)...............................         19,015           1.36%          .84% 
2302 N.W. 25th Way                                                                                  
Boca Raton, FL 33434                                                                                

Dennis Reed (8).......................................         20,321           1.45%          .90% 
2015 Timberline Drive                                                                               
Naples, FL 34109                                                                                    

D. Richard Mead, Jr...................................          6,558            .47%          .29% 
4990 S.W. 72nd Street                                                                               
Unit 105                                                                                            
Miami, FL 33155                                                                                     

Steven A. Elias.......................................             --             --            --  
115 N.W. 167 St., #300                                                                              
North Miami Beach, FL 33169                                                                         

Parker D. Thomson.....................................             --             --            --  
1 S. E. 3rd Avenue                                                                                  
Miami, FL 33131                                                                                     

All directors and executive officers, as a group (10                                                
  persons) (9)........................................        664,463          43.44%        27.70% 

------------------                                                              
(1) The nature of reported beneficial ownership, as such term is defined in Rule
   13d-3 under the Securities Exchange Act of 1934, as amended, is sole voting
  and investment power unless otherwise indicated. Common Stock ownership of
 the persons listed reflects, as indicated, shares of the Company's Common

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Stock that would be issued upon the exercise of options granted to such 
persons to acquire such Common Stock.                                   

(2) Reflects 160,849 shares held jointly by Roberto Kassin and his wife; 15,624 
 shares held by Foreign Financial Investment, Inc., of which Mr. Kassin is
president; 75,624 shares held by a trust for the benefit of Mr. Kassin's
 father-in-law, Leon Papu, the co-trustees of which are Mr. Kassin and his
   wife; and 14,192 shares that may be acquired by Mr. Kassin upon exercise of
options.                                                                

(3) Reflects 62,969 shares owned by KAM, Inc., controlled by Mr. Massry; and    
6,802 shares that may be acquired by Mr. Massry upon exercise of his    
   options. Does not include 10,680 shares owned or controlled by Mr. Massry's
family members.                                                         

(4) Reflects 6,420 shares held by McGinn, Smith & Co., Inc.; 456 shares owned by
    Mr. McGinn and his wife; 277 shares held by Kathleen McGinn; 242 shares held
   by Matthew McGinn; and 4,797 shares that may be acquired by Mr. McGinn upon
the exercise of his options.                                            

(5) Reflects 69,750 shares that may be acquired by Mr. Palmer upon exercise of  
his options.                                                            

(6) Reflects 19,350 shares that may be acquired by Ms. Chambers upon exercise of
her options.                                                            

(7) Reflects 16,500 shares that may be acquired by Mr. Meredith upon exercise of
his options.                                                            

(8) Reflects 15,000 shares that may be acquired by Mr. Reed upon exercise of his
options.                                                                

(9) Includes an aggregate of 146,391 shares that may be acquired by the group   
upon the exercise of options.                                           

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The Company, through the Bank, from time to time, makes loans and extends
credit to certain of its directors and officers and their affiliates. The       
aggregate amount of loans to related parties at March 31, 1998 totaled          
approximately $737,000 or 5.22% of shareholders' equity.                        

     In addition, during 1997 the Bank had outstanding a line of credit to First
American Railway, Inc. in the amount of $1,000,000. Mr. Raymond Monteleone, a   
director of the Company until January 1998, served as a director and president  
of First American Railway, Inc. until November 1997.                            

   All of the above loans were made in the ordinary course of business, were
made on substantially the same terms, including interest rates and collateral,  
as those prevailing at the time for comparable transactions with other persons, 
and did not involve more than the normal risk of collectibility or present other
unfavorable features.                                                           

DESCRIPTION OF CAPITAL STOCK

  Set forth below is a summary of all material terms and provisions of the
Company's capital stock, which is qualified in its entirety by reference to the 
Company's Articles of Incorporation. A copy of the Articles of Incorporation has
been attached as an exhibit to the Registration Statement of which this         
Prospectus forms a part, and is incorporated herein by reference.               

Under the Articles of Incorporation, the authorized but unissued and  
unreserved shares of the Company's capital stock will be available for issuance 
for general corporate purposes, including, but not limited to, possible stock   
dividends, future mergers or acquisitions, or private or public offerings.      
Except as may otherwise be required, shareholder approval will not be required  
for the issuance of those shares.                                               

    The following table sets forth all classes of stock outstanding, and stock
options held, as of April 30, 1998, as well as the amount of Common Stock which 
would be outstanding upon exercise of all outstanding options:                  

                                                                [Download Table]

                                                            TOTAL SHARES
                                        SHARES AND OPTIONS    ASSUMING  
                                           OUTSTANDING        EXERCISE  
                                        ------------------  ------------
                                                                        
Common Stock...........................     1,383,157        1,383,157  
Stock Options..........................       243,099          243,099  
                                            ---------        ---------  
  Total................................     1,626,256        1,626,256  
                                            =========        =========  

     The authorized capital stock of the Company consists of 5,000,000 shares of
Common Stock, $.01 par value, of which 1,383,157 shares are presently issued and
outstanding, and 1,000,000 shares of preferred stock, $.01 par value, none of   
which is outstanding. At April 30, 1998 there were approximately 214 holders of 
Common Stock.                                                                   

COMMON STOCK                                                                    

   Dividends.  The holders of the Common Stock are entitled to dividends and
other distributions if, as, and when declared by the Board of Directors out of  
assets legally available therefor. Upon the liquidation, dissolution or winding 
up of the Company, the holder of each share of Common Stock will be entitled to 
share equally in the distribution of the Company's assets. The holders of Common
Stock are not entitled to the benefit of any sinking fund provision. The shares 
of Common Stock of the Company are not subject to any redemption provisions, nor
are they convertible into any other security or property of the Company.        

Voting Rights.  The holders of Common Stock are entitled to elect the 
members of the Board of Directors of the Company and such holders are entitled  
to vote as a class on all matters required or permitted to be submitted to the  
shareholders of the Company.                                                    

   Stock Options.  The Company has two employee stock option plans. The 1994
Plan authorizes the issuance of up to 300,000 shares of Common Stock pursuant to
"non-qualified" options granted to key employees of the Company. These options  
to acquire the Company's Common Stock are granted for terms of five years.      
Option grant letters may contain vesting requirements. All options vest         
immediately upon a change in control of the                                     

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Company. The options terminate upon the termination of the option holder's      
employment with the Company although the option agreement provides for one year 
extensions of the period of exerciseability of the options in the event of      
termination by retirement, disability or death. The purchase price of the shares
is the fair market value per share of the Common Stock on the date of grant. In 
the absence of any arm's length trades in the three months preceding the date of
grant, "fair market value per share" is the total equity available to holders of
common stock divided by the total number of outstanding shares of common stock. 

At March 31, 1998, options to purchase 250,281 shares of Common Stock 
granted to 21 employees and non-employee directors were outstanding, with per   
share exercise prices ranging from $9.55 to $10.52, 21,219 shares of Common     
Stock remained available for future grants, and 28,500 shares of Common Stock   
had been issued upon exercise of stock options.                                 

 The 1998 Plan authorizes the issuance of up to 200,000 shares of Common
Stock under both "non-qualified" and "incentive stock" options and a variety of 
other stock-related awards. The 1998 Plan is intended to provide flexible terms 
to permit the Board of Directors (or any committee designated by the Board to   
administer the 1998 Plan) to enter into compensatory arrangements that promote  
the Board's compensation, goals and policies. No grants of stock or options have
yet been made under the 1998 Plan.                                              

PREFERRED STOCK                                                                 

    The Company's Articles of Incorporation authorize the issuance, in series,
of up to 1,000,000 shares of preferred stock and permits the Company's Board of 
Directors to establish the rights and preference of each of such series and to  
increase the number of shares in any of the series. The Company had issued a    
total of 56,026 shares of preferred stock, all of which shares were converted   
into Common Stock pursuant to their terms on April 3, 1998. There are no shares 
of preferred stock currently outstanding.                                       

CERTAIN ANTI-TAKEOVER PROVISIONS                                                

   Certain provisions of the Company's Articles of Incorporation and Bylaws,
as well as certain provisions of Florida law, could have the effect of deterring
takeovers. The Board of Directors believes that the provisions of the Company's 
Articles of Incorporation and Bylaws described below are prudent and in the best
interests of the Company and its shareholders. Although these provisions may    
discourage a future takeover attempt in which shareholders might receive a      
premium for their shares over the then current market price and may make removal
of incumbent management more difficult, the Board of Directors believes that the
benefits of these provisions outweigh their possible disadvantages. Management  
is not aware of any current effort to effect a change in control of the Company.
In addition, the Company has opted not to be governed by the affiliated         
transactions and control-share acquisitions sections of the Florida Business    
Corporation Act.                                                                

Directors.  The Board of Directors is divided into three classes of   
directors serving staggered three-year terms. Vacancies on the Board may be     
filled for the remainder of the unexpired term by a majority vote of the        
directors then in office. The maximum number of members of the Company's Board  
of Directors is 12.                                                             

Shareholders entitled to vote may nominate persons for election as    
directors only if written notice is given to the Secretary of the Company at    
least five days prior to the date of an annual meeting.                         

Cumulative Voting.  Shareholders may not cumulate their votes in the  
election of directors.                                                          

Capital Structure.  The Board of Directors may authorize for issuance 
various series of Preferred Stock with different voting rights. The Board of    
Directors is authorized to establish the rights and preferences of such stock   
and issue such shares, subject to shareholder approval in certain circumstances.

LIMITED LIABILITY AND INDEMNIFICATION                                           

    Under the Florida Business Corporation Act (the "FBCA"), a director is not
personally liable for monetary damages to the corporation or any other person   
for any statement, vote, decision or failure to act unless (i) the director     
breached or failed to perform his duties as a director and (ii) a director's    
breach of, or failure to perform, those duties constitutes (1) a violation of   
the criminal law, unless the director had reasonable cause to believe his       
conduct was lawful or had no reasonable cause to believe his conduct was        
unlawful, (2) a transaction from which                                          

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the director derived an improper personal benefit, either directly or           
indirectly, (3) a circumstance under which an unlawful distribution is made, (4)
in a proceeding by or in the right of the corporation to produce a judgement in 
its favor or by or in the right of a shareholder, conscious disregard for the   
best interest of the corporation or willful misconduct, or (5) in a proceeding  
by or in the right of someone other than the corporation or a shareholder,      
recklessness or an act or omission which was committed in bad faith or with     
malicious purpose or in a manner exhibiting wanton and willful disregard of     
human rights, safety or property. A corporation may purchase and maintain       
insurance on behalf of any director or officer against any liability asserted   
against him and incurred by him in his capacity or arising out of his status as 
such, whether or not the corporation would have the power to indemnity him      
against such liability under the FBCA.                                          

     Article X of the Articles of Incorporation of the Company provides that the
Company shall indemnify and may insure its officers and directors to the fullest
extent permitted by law.                                                        

TRANSFER AGENT                                                                  

  The Company's transfer agent is American Stock Transfer & Trust Company,
New York, New York.                                                             

SHARES ELIGIBLE FOR FUTURE SALE 

    Upon consummation of this Offering, the Company will have 2,252,722 shares
of Common Stock outstanding (2,383,157 shares if the over-allotment option      
granted to the Underwriters is exercised in full). Of these shares, the 869,565 
shares sold in this Offering (1,000,000 shares if the over-allotment option is  
exercised in full), together with 812,728 shares previously registered in       
connection with the Company's acquisition of the Bank and the Thrift, will be   
freely transferable without restriction or registration under the Securities    
Act, unless purchased by persons deemed to be "affiliates" (as that term is     
defined under the Securities Act) of the Company. The remaining 570,429 shares  
of Common Stock to be outstanding immediately following the Offering may only be
sold in the public market if such shares are registered under the Securities Act
or sold in accordance with Rule 144 promulgated under the Securities Act.       

In general, under Rule 144 a person (or persons whose shares are      
aggregated), including an affiliate, who has beneficially owned his shares for  
one year may sell in the open market within any three-month period a number of  
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of the Company's Common Stock (approximately 22,527 shares immediately after    
this Offering, 23,831 if the over-allotment option is exercised in full) or (ii)
the average weekly trading volume in the Common Stock in the over-the-counter   
market during the four calendar weeks preceding such sale. Sales under Rule 144 
are also subject to certain limitations on the manner of sale, notice           
requirements and availability of current public information about the Company. A
person (or persons whose shares are aggregated) who is deemed not to have been  
an "affiliate" of the Company at any time during the 90 days preceding a sale by
such person and who has beneficially owned his shares for at least two years may
sell such shares in the public market under Rule 144(k) without regard to the   
volume limitations, manner of sale provisions, notice requirements or           
availability of current information referred to above. Shares properly sold in  
reliance upon Rule 144 are thereafter freely tradable without restrictions or   
registration under the Securities Act, unless thereafter held by an "affiliate" 
of the Company.                                                                 

     The Company has reserved an aggregate of 500,000 shares of Common Stock for
issuance pursuant to the 1994 Plan and the 1998 Plan (collectively, the         
"Plans"). The Company intends to register eligible shares of Common Stock       
issuable upon the exercise of options under the Plans on Form S-8 following this
offering. Subject to restrictions imposed pursuant to the Plans, such eligible  
shares of Common Stock issued pursuant to the Plans after the effective date of 
any Registration Statement on Form S-8 will be available for sale in the public 
market without restriction to the extent they are held by persons who are not   
affiliates of the Company. See "Management -- Employee Stock Option Plans."     

 Prior to this Offering, there has been no trading market for the Common
Stock. No prediction can be made as to the effect, if any, that future sales of 
shares pursuant to Rule 144 or otherwise will have on the market price          
prevailing from time to time. Sales of substantial amounts of the Common Stock  
in the public market following this Offering could adversely affect the then    
prevailing market price. The Company and its executive officers, directors and  
certain of the Company's existing shareholders are agreeing that they will not  
sell or otherwise                                                               

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transfer any shares of Common Stock for 180 days after this Offering without the
prior written consent of the Representatives. See "Risk Factors' Shares Eligible
for Future Sale" and "Underwriting."                                            

UNDERWRITING

   Subject to the terms and conditions of the Purchase Agreement between the
Company and the underwriters named below (the "Underwriters"), for whom Keefe,  
Bruyette & Woods, Inc. and McGinn, Smith & Co., Inc. are acting as              
representatives (the "Representatives"), the Underwriters have severally agreed 
to purchase from the Company, and the Company has agreed to sell to the         
Underwriters, the following respective number of shares of Common Stock at the  
initial public offering price less the underwriting discounts set forth on the  
cover page of this Prospectus.                                                  

                                                                [Download Table]

                                                              NUMBER OF
NAME                                                           SHARES  
----                                                          ---------
                                                                       
Keefe, Bruyette & Woods, Inc................................    534,533
McGinn, Smith & Co., Inc....................................    335,032
                                                              ---------
  Total.....................................................    869,565

  The Purchase Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will      
purchase all such shares of Common Stock if any of such shares are purchased.   
The Underwriters are obligated to take and pay for all of the shares of Common  
Stock offered hereby (other than those covered by the over-allotment option     
described below) if any are taken.                                              

 The Company has been advised by the Representatives of the Underwriters
that the Underwriters propose to offer such shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus and 
to certain dealers at such price less a concession not in excess of $0.65 per   
share. The Underwriters may allow, and such dealers may re-allow, a concession  
not in excess of $0.10 per share to certain other dealers. After the initial    
public offering, the offering price and other selling terms may be changed by   
the Representatives of the Underwriters.                                        

Pursuant to the Purchase Agreement, the Company has granted to the    
Underwriters an option, exercisable not later than 30 days after the date of    
this Prospectus, to purchase up to 130,435 additional shares of Common Stock at 
the public offering price, less the underwriting discounts set forth on the     
cover page of this Prospectus, solely to cover over-allotments. To the extent   
that the Underwriters exercise such option, each Underwriter will become        
obligated, subject to certain conditions, to purchase approximately the same    
percentage of such additional shares as the number set forth next to such       
Underwriter's name in the preceding table bears to the total number of shares in
such table, and the Company will be obligated, pursuant to the option, to sell  
such shares to the Underwriters.                                                

   The Company, each of its directors and executive officers, and certain of
the shareholders of the Company have agreed not to sell or otherwise dispose of 
any shares of Common Stock for a period of 180 days after the date of this      
Prospectus without the prior written consent of the Representatives of the      
Underwriters, except that the Company may issue shares of Common Stock upon the 
exercise of currently outstanding options. See "Risk Factors -- Shares Eligible 
for Future Sale."                                                               

   The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any account over which they      
exercise discretionary authority.                                               

The Company has agreed to indemnify the Underwriters against certain  
liabilities, including liabilities under the Securities Act.                    

Until the distribution of the Common Stock is completed, rules of the 
Securities and Exchange Commission (the "Commission") may limit the ability of  
the Underwriters and certain selling group members to bid for and purchase the  
Common Stock. As an exception to these rules, the Underwriters are permitted to 
engage in certain transactions that stabilize the price of the Common Stock.    
Such transactions consist of bids or purchases for the purpose of pegging,      
fixing or maintaining the price of the Common Stock.                            

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If the Underwriters create a short position in the Common Stock in    
connection with the Offering, i.e., if they sell a greater aggregate number of  
shares of Common Stock than is set forth on the cover page of this Prospectus,  
the Underwriters may reduce the short position by purchasing shares of Common   
Stock in the open market. The Underwriters may also elect to reduce any short   
position by exercising all or part of the over-allotment option described above.

 The Underwriters may also impose a penalty bid on certain selling group
members. This means that if the Underwriters purchase Common Stock in the open  
market to reduce the selling group members' short position or to stabilize the  
price of the Common Stock, they may reclaim the amount of the selling concession
from the selling group members who sold those shares of Common Stock as part of 
the Offering.                                                                   

    In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than 
it might be in the absence of such purchases. The imposition of a penalty bid   
might also have an effect on the price of a security to the extent that it were 
to discourage resales of the security.                                          

Neither the Company nor the Representatives make any representation or
prediction as to the direction or magnitude of any effect that the transactions 
described above may have on the price of the Common Stock. In addition, neither 
the Company nor the Representatives make any representation that the            
Underwriters will engage in such transactions or that such transactions, once   
commenced, will not be discontinued without notice.                             

Prior to the Offering, there has been no public market for the Common 
Stock. Consequently, the initial public offering price for the Common Stock has 
been determined by negotiations between the Company and the Representatives of  
the Underwriters. Among the factors considered in such negotiations were        
prevailing market and general economic conditions, the market capitalizations,  
trading histories and stages of development of other traded companies that the  
Company and the Representatives of the Underwriters believed to be comparable to
the Company, the results of operations of the Company in recent periods, the    
current financial position of the Company, estimates of the business potential  
of the Company and the present state of the Company's development and the       
availability for sale in the market of a significant number of shares of Common 
Stock. Additionally, consideration has been given to the general status of the  
securities market, the market conditions for new issues of securities and the   
demand for securities of comparable companies at the time the Offering was made.

     Timothy McGinn is the Chairman of the Board of McGinn, Smith & Co., Inc. He
has also served as a director of the Company since 1994 and is a shareholder of 
the Company. See "Management -- Directors and Executive Officers of the         
Company."                                                                       

The Common Stock has been approved for quotation on Nasdaq.           

LEGAL MATTERS 

  The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Stuzin and Camner, P.A., 550 Biltmore Way, Suite 700,   
Coral Gables, Florida 33134, counsel to the Company. Certain legal matters with 
respect to the Common Stock offered hereby will be passed upon for the          
Underwriters by Brown & Wood LLP.                                               

EXPERTS 

  The consolidated financial statements of the Company and subsidiaries at
December 31, 1997 and 1996 and for each of the three years in the period ended  
December 31, 1997, included elsewhere in the Registration Statement have been   
included in reliance upon the report of Hacker, Johnson, Cohen & Grieb PA,      
independent certified public accountants, given upon the authority of said firm 
as experts in accounting and auditing matters.                                  

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AVAILABLE INFORMATION 

  Prior to the Offering, the Company has not been required to file reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").     

    The Company has filed with the Commission a Registration Statement on Form
SB-2 (together with all exhibits and schedules thereto, the "Registration       
Statement") under the Securities Act with respect to the registration of the    
shares offered by this Prospectus. This Prospectus does not contain all of the  
information set forth in such Registration Statement and the exhibits thereto,  
certain parts of which are omitted in accordance with the rules and regulations 
of the Commission. For further information pertaining to the shares offered by  
this Prospectus and related matters, reference is made to such Registration     
Statement, including the exhibits filed as a part thereof. Each statement in    
this Prospectus referring to a document filed as an exhibit to such Registration
Statement is qualified by reference to the exhibit for a complete statement of  
its terms and conditions.                                                       

     The Registration Statement filed by the Company can be inspected and copies
at the public reference facilities maintained by the Commission at its Public   
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The          
Commission maintains a web site that contains registration statements, reports, 
proxy and information statements and other information regarding registrants    
that file electronically with the Commission. The address of such Web Site is   
http://www.sec.gov. Copies of exhibits may also be obtained by written request  
addressed to: Bradley R. Meredith, Chief Financial Officer, 21845 Powerline     
Road, Boca Raton, Florida 33433.                                                

 The Company intends to furnish annual reports to its shareholders which
will contain audited financial statements and quarterly reports which will      
contain unaudited financial statements. In addition, the Company will be        
required, under section 15(d) of the Exchange Act, to file annual and quarterly 
reports with the Commission. Copies of such reports will be available to the    
Company's shareholders.                                                         

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                                 PAGE   
                                                                 ----   
                                                                        
CONSOLIDATED FINANCIAL STATEMENTS                                       

Independent Auditors' Report................................      F-2   

Consolidated Balance Sheets, At March 31, 1998 (unaudited)              
  and At December 31, 1997 and 1996.........................      F-3   

Consolidated Statements of Operations for the Three Months              
  Ended March 31, 1998 and 1997 (unaudited) and the Years               
  Ended December 31, 1997, 1996 and 1995....................      F-4   

Consolidated Statements of Comprehensive Income for the                 
  Three Months Ended March 31, 1998 and 1997 (unaudited) and            
  the Years Ended December 31, 1997, 1996 and 1995..........      F-5   

Consolidated Statements of Stockholders' Equity for the                 
  Three Months Ended March 31, 1998 (unaudited) and the                 
  Years Ended December 31, 1997, 1996 and 1995..............      F-6   

Consolidated Statements of Cash Flows for the Three Months              
  Ended March 31, 1998 and 1997 (unaudited) and the Years               
  Ended December 31, 1997, 1996 and 1995....................   F-7 - F-8

Notes to Consolidated Financial Statements for the Three                
  Months Ended March 31, 1998 and 1997 (unaudited) and the              
  Years Ended December 31, 1997, 1996 and 1995..............  F-9 - F-29

  All schedules are omitted because of the absence of the conditions under
which they are required or because the required information is included in the  
financial statements and related notes.                                         

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INDEPENDENT AUDITORS' REPORT

Board of Directors                                                              
Pointe Financial Corporation                                                    
Boca Raton, Florida:                                                            

We have audited the consolidated balance sheets of Pointe Financial Corporation 
and Subsidiaries (the "Company") at December 31, 1997 and 1996, and the related 
consolidated statements of operations, comprehensive income, stockholders'      
equity and cash flows for each of the years in the three-year period ended      
December 31, 1997. 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 audits.                                       

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of the Company at      
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1997 in       
conformity with generally accepted accounting principles.                       

HACKER, JOHNSON, COHEN & GRIEB PA                                               
Tampa, Florida                                                                  
February 14, 1998                                                               

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                  AT                           
                                                               MARCH 31,     AT DECEMBER 31,   
                                                              -----------  ------------------- 
                                                                 1998        1997       1996   
                                                              -----------  --------   -------- 
                                                              (UNAUDITED)                      
                                                                                               
                           ASSETS                                                              
Cash and due from banks.....................................   $  3,365    $  2,272   $  2,861 
Interest bearing deposits with banks........................        452         303      3,802 
                                                               --------    --------   -------- 
      Total cash and cash equivalents.......................      3,817       2,575      6,663 
Securities available for sale...............................     30,604      22,745     32,920 
Securities held to maturity (market value of $7,609                                            
  (unaudited) in 1998, $7,478 in 1997 and $7,879 in 1996)...      7,735       7,764      8,204 
Loans receivable, net of allowance for loan losses of $913                                     
  (unaudited) in 1998, $848 in 1997 and $777 in 1996........    112,756     105,653     90,973 
Loans held for sale.........................................      4,134       4,443      4,396 
Accrued interest receivable.................................      1,059       1,027      1,181 
Premises and equipment, net.................................      1,135       1,225      1,275 
Restricted securities:                                                                         
  Federal Home Loan Bank stock..............................      1,235       1,271      1,555 
  Federal Reserve Bank stock................................        299         299        111 
Foreclosed real estate......................................        128         105        270 
Deferred income tax asset...................................        263         224        621 
Other assets................................................        605         509      3,089 
                                                               --------    --------   -------- 
      Total.................................................   $163,770    $147,840   $151,258 
                                                               ========    ========   ======== 

            LIABILITIES AND STOCKHOLDERS' EQUITY                                               
Liabilities:                                                                                   
  Demand deposits...........................................     15,587      12,136      9,386 
  Savings and NOW deposits..................................     12,879       9,834     11,324 
  Money-market deposits.....................................     40,253      38,326     34,803 
  Time deposits.............................................     67,429      64,699     56,985 
                                                               --------    --------   -------- 
      Total deposits........................................    136,148     124,995    112,498 
  Official checks...........................................      1,605       1,320      1,263 
  Advances from Federal Home Loan Bank......................      7,300       4,400     22,972 
  Other borrowings..........................................      2,782       1,791        774 
  Accrued interest payable..................................        657         673        953 
  Advance payments by borrowers for taxes and insurance.....        689         333         30 
  Other liabilities.........................................        482         483        347 
                                                               --------    --------   -------- 
      Total liabilities.....................................    149,663     133,995    138,837 
                                                               --------    --------   -------- 
Commitments and contingencies (Notes 5, 9 and 10)                                              
Stockholders' equity:                                                                          
  Preferred stock, $.01 par value, 1,000,000 shares                                            
    authorized, 60,000 shares designated as Series A,                                          
    convertible and cumulative, 56,026 (unaudited), 54,116                                     
    and 39,250 shares issued and outstanding (aggregate                                        
    liquidation value $1,121 (unaudited), $1,082 and                                           
    $785)...................................................          1           1          1 
  Common stock, $.01 par value, 5,000,000 shares authorized;                                   
    1,249,949 (unaudited), 831,728 and 812,728 shares issued                                   
    and outstanding.........................................         12           8          8 
  Additional paid-in capital................................     10,992      10,935     10,452 
  Retained earnings.........................................      3,313       3,039      2,206 
  Accumulated other comprehensive income, unrealized loss on                                   
    securities available for sale, net of taxes of $119                                        
    (unaudited) in 1998, $83 in 1997 and $146 in 1996.......       (211)       (138)      (246)
                                                               --------    --------   -------- 
      Total stockholders' equity............................     14,107      13,845     12,421 
                                                               --------    --------   -------- 
      Total.................................................   $163,770    $147,840   $151,258 
                                                               ========    ========   ======== 

See Accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS 
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                THREE                                         
                                                             MONTHS ENDED                                     
                                                              MARCH 31,           YEAR ENDED DECEMBER 31,     
                                                          ------------------  ------------------------------- 
                                                           1998        1997    1997        1996        1995   
                                                          ------      ------  ------      ------      ------- 
                                                             (UNAUDITED)                                      
                                                                                                              
Interest income:                                                                                              
  Loans receivable....................................... $2,498      $2,247  $9,427      $9,001      $11,024 
  Securities available for sale..........................    401         543   1,892       2,330        1,759 
  Securities held to maturity............................    116         141     510         542        1,497 
  Other interest earning assets..........................      7          34     103         313          410 
                                                          ------      ------  ------      ------      ------- 
      Total interest income..............................  3,022       2,965  11,932      12,186       14,690 
                                                          ------      ------  ------      ------      ------- 
Interest expense:                                                                                             
  Deposits...............................................  1,440       1,277   5,368       5,814        8,232 
  Borrowings.............................................    101         302     961       1,802        1,687 
                                                          ------      ------  ------      ------      ------- 
      Total interest expense.............................  1,541       1,579   6,329       7,616        9,919 
                                                          ------      ------  ------      ------      ------- 
Net interest income......................................  1,481       1,386   5,603       4,570        4,771 
      Provision for loan losses..........................     65          11      80         185          336 
                                                          ------      ------  ------      ------      ------- 
Net interest income after provision for loan losses......  1,416       1,375   5,523       4,385        4,435 
                                                          ------      ------  ------      ------      ------- 
Noninterest income:                                                                                           
  Service charges on deposit accounts....................    195         112     502         364          315 
  Gain on sale of loan servicing rights..................     --          --      29         131          192 
  Loan servicing fees....................................     16          21      70         170          180 
  Net gains from sale of loans...........................     69          95     479       1,048          560 
  Net realized gains on sale of securities available for                                                      
    sale.................................................      2           4      29          91            1 
  Equity in earnings of limited partnership..............     --          --      --         365          507 
  Other..................................................     82          92     303         265          167 
                                                          ------      ------  ------      ------      ------- 
      Total noninterest income...........................    364         324   1,412       2,434        1,922 
                                                          ------      ------  ------      ------      ------- 
Noninterest expenses:                                                                                         
  Salaries and employee benefits.........................    701         699   2,657       3,169        3,165 
  Occupancy expense......................................    260         284   1,100       1,251        1,169 
  Advertising and promotion..............................     59          51     257         142          226 
  Loan servicing expense.................................     --           6      36         150           88 
  Professional fees......................................     24          --     157         286          225 
  Federal deposit insurance premiums.....................     14          11      82         283          390 
  Data processing........................................     70         108     403         428          275 
  Other..................................................    180         169     779       1,138        1,822 
                                                          ------      ------  ------      ------      ------- 
      Noninterest expenses before SAIF                                                                        
         recapitalization assessment.....................  1,308       1,328   5,471       6,847        7,360 
  SAIF recapitalization assessment.......................     --          --      --         926           -- 
                                                          ------      ------  ------      ------      ------- 
      Total noninterest expenses.........................  1,308       1,328   5,471       7,773        7,360 
                                                          ------      ------  ------      ------      ------- 
      Earnings (loss) before income taxes (benefit)......    472         371   1,464        (954)      (1,003)
Income taxes (benefit)...................................    171         139     550        (355)        (376)
                                                          ------      ------  ------      ------      ------- 
      Net earnings (loss)................................ $  301      $  232  $  914      $ (599)     $  (627)
                                                          ======      ======  ======      ======      ======= 
Earnings (loss) per share:                                                                                    
  Basic.................................................. $  .22      $  .19  $  .68      $ (.52)     $  (.51)
                                                          ======      ======  ======      ======      ======= 
  Diluted................................................ $  .20      $  .18  $  .62      $ (.52)     $  (.51)
                                                          ======      ======  ======      ======      ======= 

See Accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                            THREE                                
                                                         MONTHS ENDED                            
                                                          MARCH 31,      YEAR ENDED DECEMBER 31, 
                                                         ------------   -------------------------
                                                         1998   1997     1997      1996     1995 
                                                         ----   -----   -------   ------   ------
                                                         (UNAUDITED)                             
                                                                                                 
Net earnings (loss)..................................... $301   $ 232   $  914    $(599)   $(627)

Other comprehensive income -- Change in unrealized                                               
  losses arising during period, net of tax (benefit) of                                          
  $(36) and $(60) for the three months ended March 31,                                           
  1998 and 1997 (unaudited), and $63, $(122) and $312                                            
  for the years ended December 31, 1997, 1996 and                                                
  1995..................................................  (73)   (128)     108     (196)     625 
                                                         ----   -----   ------    -----    ----- 

Comprehensive income.................................... $228   $ 104   $1,022    $(795)   $  (2)
                                                         ====   =====   ======    =====    ===== 

See Accompanying Notes to Consolidated Financial Statements 

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                ACCUMULATED                
                                                                                   OTHER                   
                                                                               COMPREHENSIVE               
                                                                                  INCOME,                  
                                                                                UNREALIZED                 
                                                                                  LOSS ON                  
                                    CONVERTIBLE          ADDITIONAL             SECURITIES        TOTAL    
                                     PREFERRED   COMMON   PAID-IN    RETAINED    AVAILABLE    STOCKHOLDERS'
                                       STOCK     STOCK    CAPITAL    EARNINGS    FOR SALE        EQUITY    
                                    -----------  ------  ----------  --------  -------------  -------------
                                                                                                           
Balance at December 31, 1994......      $--       $ 8     $ 9,716     $3,467       $(675)        $12,516   
Net loss..........................       --        --          --       (627)         --            (627)  
Other comprehensive income........       --        --          --         --         625             625   
                                        ---       ---     -------     ------       -----         -------   
Balance at December 31, 1995......       --         8       9,716      2,840         (50)         12,514   
Sale of preferred stock net of                                                                             
  offering costs..................        1        --         736         --          --             737   
Cash dividends declared on                                                                                 
  preferred stock.................       --        --          --        (35)         --             (35)  
Net loss..........................       --        --          --       (599)         --            (599)  
Other comprehensive income........       --        --          --         --        (196)           (196)  
                                        ---       ---     -------     ------       -----         -------   
Balance at December 31, 1996......        1         8      10,452      2,206        (246)         12,421   
To adjust 1996 preferred dividend                                                                          
  for portion paid in preferred                                                                            
  stock (1,398 shares)............       --        --          27         --          --              27   
Cash dividends on preferred                                                                                
  stock...........................       --        --          --        (16)         --             (16)  
Stock dividends on preferred stock                                                                         
  (3,218 shares)..................       --        --          65        (65)         --              --   
Proceeds from issuance of                                                                                  
  preferred stock, net of offering                                                                         
  costs (10,250 shares)...........       --        --         201         --          --             201   
Common stock options exercised                                                                             
  (19,000 shares).................       --        --         190         --          --             190   
Net earnings......................       --        --          --        914          --             914   
Other comprehensive income........       --        --          --         --         108             108   
                                        ---       ---     -------     ------       -----         -------   
Balance at December 31, 1997......        1         8      10,935      3,039        (138)         13,845   
Three-for-two stock split (415,828                                                                         
  shares) (unaudited).............       --         4          (4)        --          --              --   
Stock dividends on preferred stock                                                                         
  (1,410 shares) (unaudited)......       --        --          27        (27)         --              --   
Proceeds from issuance of common                                                                           
  stock, net of offering costs                                                                             
  (2,393 shares) (unaudited)......       --        --          24         --          --              24   
Proceeds from issuance of                                                                                  
  preferred stock, net of offering                                                                         
  costs (500 shares)                                                                                       
  (unaudited).....................       --        --          10         --          --              10   
Other comprehensive income                                                                                 
  (unaudited).....................       --        --          --         --         (73)            (73)  
Net earnings (unaudited)..........       --        --          --        301          --             301   
                                        ---       ---     -------     ------       -----         -------   
Balance at March 31, 1998                                                                                  
  (unaudited).....................      $ 1       $12     $10,992     $3,313       $(211)        $14,107   
                                        ===       ===     =======     ======       =====         =======   

See Accompanying Notes to Consolidated Financial Statements 

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CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                              THREE                                         
                                                           MONTHS ENDED                                     
                                                            MARCH 31,           YEAR ENDED DECEMBER 31,     
                                                        ------------------   ------------------------------ 
                                                          1998      1997       1997       1996       1995   
                                                        --------   -------   --------   --------   -------- 
                                                           (UNAUDITED)                                      
                                                                                                            
Cash flows from operating activities:                                                                       
  Net earnings (loss).................................  $    301   $   232   $    914   $   (599)  $   (627)
  Adjustments to reconcile net earnings (loss) to net                                                       
    cash provided by (used in) operating activities:                                                        
      Provision for loan losses.......................        65        11         80        185        336 
      Depreciation and amortization...................        97        91        414        555        536 
      Provision (credit) for deferred income taxes....       (39)      139        334       (355)      (376)
      (Increase) decrease in other assets.............       (60)      364      2,580       (224)       590 
      Equity in earnings of limited partnership.......        --        --         --       (365)      (507)
      Gain on sale of securities available for sale...        (2)       (4)       (29)       (91)        (1)
      Gain on sale of loans and loan servicing                                                              
         rights.......................................       (69)      (95)      (508)    (1,179)      (752)
      Originations of loans held for sale.............      (401)   (1,187)    (9,005)   (51,533)   (55,650)
      Proceeds from sale of loans held for sale.......       779     1,712      9,437     66,746     44,346 
      Increase (decrease) in official checks..........       285      (366)        57       (755)      (997)
      (Decrease) increase in accrued interest                                                               
         payable......................................       (16)     (144)      (280)    (1,037)       508 
      (Decrease) increase in other liabilities........        (1)     (302)       132       (215)      (563)
      (Increase) decrease in accrued interest                                                               
         receivable...................................       (32)       34        154          1       (109)
      Net amortization of fees, premiums, discounts                                                         
         and other....................................       (26)      (24)      (134)       156        177 
                                                        --------   -------   --------   --------   -------- 
         Net cash provided by (used in) operating                                                           
           activities.................................       881       461      4,146     11,290    (13,089)
                                                        --------   -------   --------   --------   -------- 
Cash flows from investing activities:                                                                       
  Purchase of securities available for sale...........   (18,564)   (4,073)    (5,098)   (19,539)    (4,711)
  Purchase of securities held to maturity.............      (100)       --         --         --         -- 
  Proceeds from sale of available-for-sale                                                                  
    securities........................................     9,549       504     13,578     20,157      8,852 
  Purchase of premises and equipment, net.............        (7)       (2)      (364)      (221)      (555)
  Principal repayments on securities available for                                                          
    sale..............................................        43       341      1,029      2,036      2,826 
  Principal repayments on securities held to                                                                
    maturity..........................................       132        75        440        608         -- 
  Proceeds from sale of limited partnership...........        --        --         --      5,872         -- 
  Net (increase) decrease in loans....................    (7,261)   (3,753)   (14,816)    13,331     18,423 
  Net proceeds from sale of foreclosed real estate....        99       194        253         --        243 
  Investment in limited partnership...................        --        --         --         --       (462)
  Maturities of securities available for sale.........     1,000     1,000      1,000      2,264         -- 
  Net decrease in restricted securities...............        36        --         96         --         -- 
                                                        --------   -------   --------   --------   -------- 
         Net cash (used in) provided by investing                                                           
           activities.................................   (15,073)   (5,714)    (3,882)    24,508     24,616 
                                                        --------   -------   --------   --------   -------- 
Cash flows from financing activities:                                                                       
  Net increase in demand, savings, NOW and                                                                  
    money-market deposits.............................     8,423     3,596      4,783     12,879      8,169 
  Net increase (decrease) in time deposits............     2,730     1,036      7,714    (43,054)   (29,583)
  Net increase (decrease) in advances from Federal                                                          
    Home Loan Bank....................................     2,900     1,739    (18,572)    (4,218)    17,000 
  Net increase (decrease) in other borrowings.........       991      (121)     1,017     (5,251)    (1,788)
  Decrease in federal funds purchased.................        --        --         --         --       (800)
  Increase (decrease) in advance payments by borrowers                                                      
    for taxes and insurance...........................       356        75        303       (440)      (170)
  Proceeds from issuance of preferred stock net of                                                          
    offering costs....................................        10        69        201        737         -- 
  Proceeds from issuance of common stock..............        24        --        190         --         -- 
  Cash dividends paid on preferred stock..............        --        --         12         --         -- 
                                                        --------   -------   --------   --------   -------- 
         Net cash provided by (used in) financing                                                           
           activities.................................    15,434     6,394     (4,352)   (39,347)    (7,172)
                                                        --------   -------   --------   --------   -------- 
         Net increase (decrease) in cash and cash                                                           
           equivalents................................     1,242     1,141     (4,088)    (3,549)     4,355 
Cash and cash equivalents at beginning of period......     2,575     6,663      6,663     10,212      5,857 
                                                        --------   -------   --------   --------   -------- 
Cash and cash equivalents at end of period............  $  3,817   $ 7,804   $  2,575   $  6,663   $ 10,212 
                                                        ========   =======   ========   ========   ======== 

                                                                     (continued)

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                              THREE                                        
                                                           MONTHS ENDED                                    
                                                            MARCH 31,           YEAR ENDED DECEMBER 31,    
                                                        ------------------   ------------------------------
                                                          1998      1997       1997       1996       1995  
                                                        --------   -------   --------   --------   --------
                                                           (UNAUDITED)                                     
                                                                                                           
Supplemental disclosure of cash flow information:                                                          
  Cash paid (received) during the period for:                                                              
    Interest..........................................  $  1,557   $ 1,723   $  6,609   $  8,653   $  9,411
                                                        ========   =======   ========   ========   ========
    Income taxes......................................  $     --   $   (53)  $    160   $    200   $    179
                                                        ========   =======   ========   ========   ========
  Noncash transactions:                                                                                    
    Reclassification of loans receivable to foreclosed                                                     
      real estate.....................................  $    122   $    57   $    156   $    270   $    102
                                                        ========   =======   ========   ========   ========
    Reclassification of foreclosed real estate to                                                          
      loans receivable................................  $     --   $    68   $     68   $     --   $     --
                                                        ========   =======   ========   ========   ========
    Accumulated other comprehensive income, change in                                                      
      unrealized loss on securities available for                                                          
      sale............................................  $    (73)  $  (128)  $    108   $   (196)  $    625
                                                        ========   =======   ========   ========   ========
    Dividend payable on preferred stock...............  $     --   $    --   $      4   $     35   $     --
                                                        ========   =======   ========   ========   ========
    Stock dividends paid on preferred stock...........  $     27   $    --   $     65   $     --   $     --
                                                        ========   =======   ========   ========   ========
    Conversion of mortgage loans to mortgage-backed                                                        
      securities......................................  $     --   $    --   $     --   $     --   $  3,214
                                                        ========   =======   ========   ========   ========

See Accompanying Notes to Consolidated Financial Statements.

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      

   General.  The accompanying consolidated financial statements at March 31,
1998 and for the three-month periods ended March 31, 1998 and 1997 are          
unaudited; however, in the opinion of management, all adjustments necessary for 
the fair presentation of the consolidated financial statements have been        
included. All such adjustments are of a normal recurring nature. The results for
the three months ended March 31, 1998 are not necessarily indicative of the     
results which may be expected for the entire year.                              

Pointe Financial Corporation (the "Holding Company") was formed in    
September 1993 and received approval from the appropriate authorities to become 
both a savings and loan holding company and a bank holding company. Prior to    
April 14, 1997, the Holding Company owned 100% of Pointe Federal Savings Bank   
("Pointe Federal"), a federally-chartered thrift, Pointe Bank (the "Bank"), a   
state-chartered commercial bank, and Pointe Financial Services, Inc.            
(collectively the "Company"). On April 14, 1997, Pointe Federal was merged into 
the Bank. The Bank provides a wide range of community banking services to small 
and middle-market businesses and individuals through its three banking offices  
located in Broward, Dade and Palm Beach counties, Florida. Pointe Financial     
Services, Inc. is an inactive subsidiary.                                       

    Basis of Presentation.  The accompanying consolidated financial statements
include the Holding Company and its subsidiaries. All significant intercompany  
accounts and transactions have been eliminated in consolidation.                

   The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practices within the banking      
industry. The following summarizes the more significant of these policies and   
practices.                                                                      

Estimates.  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates  
and assumptions that affect the reported amounts of assets and liabilities and  
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from those estimates.             

 Securities.  The Company may classify its securities as either trading,
held to maturity or available for sale. Trading securities are held principally 
for resale and recorded at their fair values. Unrealized gains and losses on    
trading securities are included immediately in earnings. Held-to-maturity       
securities are those which the Company has the positive intent and ability to   
hold to maturity and are reported at amortized cost. Available-for-sale         
securities consist of securities not classified as trading securities nor as    
held-to-maturity securities. Unrealized holding gains and losses, net of tax, on
available-for-sale securities are reported as a net amount in a separate        
component of stockholders' equity until realized. Gains and losses on the sale  
of available-for-sale securities are determined using the                       
specific-identification method. Premiums and discounts on securities available  
for sale and held to maturity are recognized in interest income using the       
interest method over the period to maturity.                                    

    Loans Held for Sale.  Loans held for sale are carried at the lower of cost
or estimated market value in the aggregate. Net unrealized losses are recognized
through a valuation allowance by charges to earnings. At March 31, 1998         
(unaudited), December 31, 1997 and 1996 the book value of loans held for sale   
approximated market value in the aggregate.                                     

    Loan origination fees and direct loan origination costs are deferred until
the related loan is sold, at which time the net fees are included in the gain on
sale of loans in the consolidated statements of operations.                     

Loans Receivable.  Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off are     
reported at their outstanding principal adjusted for any charge-offs, the       
allowance for loan losses, and any deferred fees or costs on originated loans.  

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING               
POLICIES -- (CONTINUED)                                                 

    Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield of the related loan.               

The accrual of interest on impaired loans is discontinued when, in    
management's opinion, the borrower may be unable to meet payments as they become
due. When interest accrual is discontinued, all unpaid accrued interest is      
reversed. Interest income is subsequently recognized only to the extent cash    
payments are received.                                                          

The allowance for loan losses is increased by charges to earnings and 
decreased by charge-offs (net of recoveries). Management's periodic evaluation  
of the adequacy of the allowance is based on the Company's past loan loss       
experience, known and inherent risks in the portfolio, adverse situations that  
may affect the borrower's ability to repay, the estimated value of any          
underlying collateral, and current economic conditions.                         

Investment in Limited Partnership.  The Company accounted for its     
investment in a limited partnership by the equity method. In accordance with    
this method, the Company included its share of partnership's earnings or losses 
in the determination of the Company's net earnings or loss and adjusted its     
recorded investment in the partnership by a corresponding amount. Distributions 
from the partnership reduced the Company's recorded investment. This investment 
was sold in 1996.                                                               

 Foreclosed Real Estate.  Real estate properties acquired through, or in
lieu of, loan foreclosure are to be sold and are initially recorded at fair     
value at the date of foreclosure establishing a new cost basis. After           
foreclosure, valuations are periodically performed by management and the real   
estate is carried at the lower of carrying amount or fair value less cost to    
sell. Revenue and expenses from operations and changes in the valuation         
allowance are included in the consolidated statements of operations.            

Premises and Equipment.  Premises, furniture, fixtures, equipment and 
leasehold improvements are carried at cost, less accumulated depreciation and   
amortization computed by the straight-line method.                              

Income Taxes.  Deferred tax assets and liabilities are reflected at   
currently enacted income tax rates applicable to the period in which the        
deferred tax assets or liabilities are expected to be realized or settled. As   
changes in tax laws or rates are enacted, deferred tax assets and liabilities   
are adjusted through the provision for income taxes.                            

    Stock-Based Compensation.  Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("Statement 123") establishes a  
"fair value" based method of accounting for stock-based compensation plans and  
encourages all entities to adopt that method of accounting for all of their     
employee stock compensation plans. However, it also allows an entity to continue
to measure compensation cost for those plans using the intrinsic value based    
method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock    
Issued to Employees" ("Opinion 25"). The Company has elected to follow Opinion  
25 and related interpretations in accounting for its employee stock options.    
Statement 123 requires the disclosure of proforma net earnings and earnings per 
share determined as if the Company accounted for its employee stock options     
under the fair value method of that Statement.                                  

 Earnings (Loss) Per Share.  Earnings (loss) per share ("EPS") of common
stock has been computed on the basis of the weighted-average number of shares of
common stock outstanding. For purposes of calculating diluted EPS, because there
is no active trading market for the Company's common stock, the average book    
value per share was used. For 1996 and 1995, outstanding stock options were not 
dilutive due to the net loss incurred by the Company. The weighted-average      
number of shares outstanding for 1996 and 1995 was 1,219,092 shares and the net 
loss used in the computation of basic EPS was $634,000 in 1996 which takes into 
effect the dividend                                                             

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING               
POLICIES -- (CONTINUED)                                                 

declared on the preferred stock. There was no outstanding preferred stock in    
1995. All per share amounts reflect the three-for-two stock split declared in   
February, 1998 (dollars in thousands, except per share amounts).                

                                                        [Enlarge/Download Table]

                                         FOR THE THREE MONTHS ENDED MARCH 31,                          FOR THE           
                             -------------------------------------------------------------     YEAR ENDED DECEMBER 31,   
                                         1998                            1997                           1997             
                             -----------------------------   -----------------------------  -----------------------------
                                        WEIGHTED     PER                WEIGHTED     PER               WEIGHTED     PER  
                                         AVERAGE    SHARE                AVERAGE    SHARE               AVERAGE    SHARE 
                             EARNINGS    SHARES     AMOUNT   EARNINGS    SHARES     AMOUNT  EARNINGS    SHARES     AMOUNT
                             --------   ---------   ------   --------   ---------   ------  --------   ---------   ------
                                                      (UNAUDITED)                                                        
                                                                                                                         
Basic EPS:                                                                                                               
  Net earnings..............   $301                            $232                           $914                       
  Less preferred stock                                                                                                   
    dividends...............    (27)                             --                            (81)                      
                               ----                            ----                           ----                       
  Net earnings available to                                                                                              
    common stockholders.....    274     1,249,949    $.22       232     1,219,050    $.19      833     1,224,441    $.68 
                                                     ====                            ====                           ==== 
Effect of dilutive                                                                                                       
  securities-                                                                                                            
  Incremental shares from                                                                                                
    assumed exercise of                                                                                                  
    options.................                3,040                           5,415                            435         
  Incremental shares from                                                                                                
    assumed conversion of                                                                                                
    preferred stock.........              126,059                          95,963                        121,761         
                                        ---------                       ---------                      ---------         
Diluted EPS:                                                                                                             
  Net earnings available to                                                                                              
    common stockholders and                                                                                              
    assumed conversions.....   $274     1,379,048    $.20      $232     1,320,428    $.18     $833     1,346,637    $.62 
                               ====     =========    ====      ====     =========    ====     ====     =========    ==== 

Off-Balance-Sheet Financial Instruments.  In the ordinary course of   
business the Company has entered into off-balance-sheet financial instruments   
consisting of commitment to extend credit, unused lines of credit and           
stand-by-letters of credit. Such financial instruments are recorded in the      
consolidated financial statements when they are funded or related fees are      
incurred or received.                                                           

Fair Values of Financial Instruments.  The following methods and      
assumptions were used by the Company in estimating fair values of financial     
instruments:                                                                    

Cash and Cash Equivalents.  The carrying amounts of cash and cash     
equivalents approximate their fair value.                                       

Securities Available for Sale and Held to Maturity.  Fair values for  
securities are based on quoted market prices, where available. If quoted market 
prices are not available, fair values are based on quoted market prices of      
comparable instruments.                                                         

    Restricted Securities.  Book value for these securities approximates their
fair value.                                                                     

Loans.  For variable-rate loans that reprice frequently and have no   
significant change in credit risk, fair values are based on carrying values.    
Fair values for fixed-rate mortgage (e.g. one-to-four family residential),      
commercial real estate and commercial loans are estimated using discounted cash 
flow analyses, using interest rates currently being offered for loans with      
similar terms to borrowers of similar credit quality.                           

Accrued Interest Receivable.  Book value approximates fair value.     

Deposit Liabilities.  The fair values disclosed for demand, NOW,      
money-market and savings deposits are, by definition, equal to the amount       
payable on demand at the reporting date (that is, their carrying amounts). Fair 
values for fixed-rate certificates of deposit are estimated using a discounted  
cash flow calculation that applies                                              

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING               
POLICIES -- (CONTINUED)                                                 

interest rates currently being offered on certificates to a schedule of         
aggregated expected monthly maturities on time deposits.                        

   Off-Balance-Sheet Instruments.  Fair values for off-balance-sheet lending
commitments are based on fees currently charged to enter into similar           
agreements, taking into account the remaining terms of the agreements and the   
counterparties' credit standing.                                                

Advertising.  The Company expenses all advertising as incurred.       

(2) SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY                          

Securities have been classified according to management's intent. The 
carrying amount of securities and their approximate fair values are summarized  
as follows (in thousands):                                                      

                                                        [Enlarge/Download Table]

                                                                   GROSS       GROSS            
                                                      AMORTIZED  UNREALIZED  UNREALIZED   FAIR  
                                                        COST       GAINS       LOSSES     VALUE 
                                                      ---------  ----------  ----------  -------
                                                                                                
Available for Sale:                                                                             
  At March 31, 1998 (unaudited):                                                                
     U.S. Treasury securities........................  $19,142      $ 10       $ (34)    $19,118
     U.S. Government agency securities...............    3,449        --         (12)      3,437
     Mortgage-backed securities......................    3,206        --        (119)      3,087
     Mutual funds....................................    5,137        --        (175)      4,962
                                                       -------      ----       -----     -------
       Total.........................................  $30,934      $ 10       $(340)    $30,604
                                                       =======      ====       =====     =======
  At December 31, 1997:                                                                         
     U.S. Treasury securities........................    9,003        36          --       9,039
     Mortgage-backed securities......................    8,826        45        (130)      8,741
     Mutual funds....................................    5,137        --        (172)      4,965
                                                       -------      ----       -----     -------
       Total.........................................  $22,966      $ 81       $(302)    $22,745
                                                       =======      ====       =====     =======
  At December 31, 1996:                                                                         
     U.S. Treasury securities........................   11,496        19         (18)     11,497
     U.S. Government agency securities...............    1,000        --         (17)        983
     Mortgage-backed securities......................   15,777       113        (301)     15,589
     Mutual funds....................................    5,039        --        (188)      4,851
                                                       -------      ----       -----     -------
       Total.........................................  $33,312      $132       $(524)    $32,920
                                                       =======      ====       =====     =======

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(2) SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY -- (CONTINUED)           

                                                        [Enlarge/Download Table]

                                                                    GROSS       GROSS           
                                                       AMORTIZED  UNREALIZED  UNREALIZED   FAIR 
                                                         COST       GAINS       LOSSES    VALUE 
                                                       ---------  ----------  ----------  ------
                                                                                                
Held to Maturity:                                                                               
  At March 31, 1998 (unaudited):                                                                
     U.S. Government agency securities................    1,235        81          --      1,316
     Mortgage-backed securities.......................    6,325        23        (230)     6,118
     Other............................................      175        --          --        175
                                                        -------      ----       -----     ------
       Total..........................................  $ 7,735      $104       $(230)    $7,609
                                                        =======      ====       =====     ======
  At December 31, 1997:                                                                         
     U.S. Government agency securities................    1,253        11          --      1,264
     Mortgage-backed securities.......................    6,436         7        (304)     6,139
     Other............................................       75        --          --         75
                                                        -------      ----       -----     ------
       Total..........................................  $ 7,764      $ 18       $(304)    $7,478
                                                        =======      ====       =====     ======
  At December 31, 1996:                                                                         
     U.S. Government agency securities................    1,328        43          --      1,371
     Mortgage-backed securities.......................    6,801        21        (389)     6,433
     Other............................................       75        --          --         75
                                                        -------      ----       -----     ------
       Total..........................................  $ 8,204      $ 64       $(389)    $7,879
                                                        =======      ====       =====     ======

During the quarter ended December 31, 1995, the Company adopted the   
provisions of SFAS No. 115 Questions and Answers Guide ("SFAS No. 115 Q&A")     
which allowed a one-time reclassification of securities between held to maturity
and available for sale between November 15, 1995 and December 31, 1995. The     
Company reclassified U.S. Government agency securities and mortgage-backed      
securities with market values of approximately $248,000 and $15,975,000,        
respectively, and amortized cost of $241,000 and $16,081,000, respectively.     

  At March 31, 1998 (unaudited), December 31, 1997 and 1996, approximately
$498,000, $711,000 and $245,000, respectively, of securities were pledged for   
the Company's treasury tax and loan account, approximately $3,200,000,          
$3,011,000 and $4,001,000 were pledged as collateral for investment repurchase  
agreements, approximately $0, $277,000 and $6,276,000 were pledged as collateral
for Federal Home Loan Bank advances and approximately $6,683,000, $7,270,000 and
$2,209,000 were pledged for public deposits.                                    

The Company currently invests in two mutual funds, the Short U.S.     
Government Securities Portfolio and the Intermediate Mortgage Securities        
Portfolio. The Short U.S. Government Securities Portfolio pursues its investment
objective by investing in high-quality assets, primarily in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalties with        
remaining maturities of 5 years or less that qualify as "liquid assets" for     
savings associations under the regulations of the Office of Thrift Supervision  
of the Department of the Treasury and that, if included in the portfolio, will  
qualify its shares as "liquid assets." The Company's net investment at March 31,
1998 (unaudited), December 31, 1997 and 1996 was $3,963,000, $3,966,000 and     
$3,875,000, respectively. The Intermediate Mortgage Securities Portfolio pursues
its investment objective by investing primarily in intermediate-term            
mortgage-related securities paying fixed or adjustable rates of interest. The   
Company's net investment at March 31, 1998 (unaudited), December 31, 1997 and   
1996 was $999,000, $999,000 and $976,000, respectively.                         

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(2) SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY -- (CONTINUED)           

The following summarizes sales of securities available for sale (in   
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                            THREE                                         
                                                         MONTHS ENDED                                     
                                                          MARCH 31,          YEAR ENDED DECEMBER 31,      
                                                       ----------------  -------------------------------- 
                                                        1998       1997   1997         1996         1995  
                                                       ------      ----  -------      -------      ------ 
                                                         (UNAUDITED)                                      
                                                                                                          
Proceeds from sale of securities available for sale... $9,549      $504  $13,578      $20,157      $8,852 
                                                       ======      ====  =======      =======      ====== 
Gross gains from sale of securities available for                                                         
  sale................................................     56         4       95           92           4 
Gross losses from sale of securities available for                                                        
  sale................................................    (54)       --      (66)          (1)         (3)
                                                       ------      ----  -------      -------      ------ 
Net gains............................................. $    2      $  4  $    29      $    91      $    1 
                                                       ======      ====  =======      =======      ====== 

The scheduled maturities of securities are as follows (in thousands): 

                                                        [Enlarge/Download Table]

                                                           AVAILABLE-FOR-           HELD-TO-      
                                                           SALE SECURITIES    MATURITY SECURITIES 
                                                         -------------------  --------------------
                                                         AMORTIZED    FAIR    AMORTIZED     FAIR  
                                                           COST       VALUE      COST       VALUE 
                                                         ---------   -------  ----------   -------
                                                                                                  
At March 31, 1998 (unaudited):                                                                    
  Due in less than one year.............................  $ 4,003    $ 4,010    $   --     $   -- 
  Due from one to five years............................   18,588     18,545     1,024      1,089 
  Due from five to ten years............................       --         --       386        402 
  Mortgage-backed securities............................    3,206      3,087     6,325      6,118 
  Mutual funds..........................................    5,137      4,962        --         -- 
                                                          -------    -------    ------     ------ 
                                                          $30,934    $30,604    $7,735     $7,609 
                                                          =======    =======    ======     ====== 
At December 31, 1997:                                                                             
  Due from one to five years............................    9,003      9,039       804        808 
  Due from five to ten years............................       --         --       524        531 
  Mortgage-backed securities............................    8,826      8,741     6,436      6,139 
  Mutual funds..........................................    5,137      4,965        --         -- 
                                                          -------    -------    ------     ------ 
                                                          $22,966    $22,745    $7,764     $7,478 
                                                          =======    =======    ======     ====== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(3) LOANS RECEIVABLE                                                            

   The components of loans in the consolidated balance sheets are summarized
as follows (in thousands):                                                      

                                                        [Enlarge/Download Table]

                                                                AT          AT DECEMBER 31,    
                                                             MARCH 31,   --------------------- 
                                                               1998        1997         1996   
                                                            -----------  --------      ------- 
                                                            (UNAUDITED)                        
                                                                                               
Residential real estate....................................  $ 65,572    $ 61,827      $60,716 
Commercial real estate.....................................    19,374      17,628       10,894 
Commercial loans...........................................    21,981      19,832       16,711 
Consumer loans.............................................     6,893       7,372        3,604 
                                                             --------    --------      ------- 
                                                              113,820     106,659       91,925 
Deferred loan fees.........................................      (151)       (158)        (175)
Allowance for loan losses..................................      (913)       (848)        (777)
                                                             --------    --------      ------- 
                                                             $112,756    $105,653      $90,973 
                                                             ========    ========      ======= 

An analysis of the change in the allowance for loan losses follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                           THREE                                
                                                        MONTHS ENDED                            
                                                         MARCH 31,     YEAR ENDED DECEMBER 31,  
                                                       --------------  ------------------------ 
                                                       1998      1997  1997      1996      1995 
                                                       ----      ----  ----      ----      ---- 
                                                        (UNAUDITED)                             
                                                                                                
Balance at beginning of period........................ $848      $777  $777      $840      $528 
                                                       ----      ----  ----      ----      ---- 
Loans charged-off.....................................   --        --   (58)     (248)      (29)
Recoveries............................................   --        42    49        --         5 
                                                       ----      ----  ----      ----      ---- 
  Net loan recoveries (charge-offs)...................   --        42    (9)     (248)      (24)
                                                       ----      ----  ----      ----      ---- 
Provision for loan losses.............................   65        11    80       185       336 
                                                       ----      ----  ----      ----      ---- 
Balance at end of period.............................. $913      $830  $848      $777      $840 
                                                       ====      ====  ====      ====      ==== 

     The following summarizes the collateral dependent amounts of impaired loans
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                                 AT       AT DECEMBER 31,  
                                                              MARCH 31,   ---------------- 
                                                                1998       1997       1996 
                                                             -----------  ------      ---- 
                                                             (UNAUDITED)                   
                                                                                           
Loans identified as impaired:                                                              
  Gross loans with no related allowance for losses..........   $   --     $   --      $ -- 
  Gross loans with related allowance for losses recorded....    1,428      1,428       222 
  Less: Allowances on these loans...........................     (163)      (163)     (111)
                                                               ------     ------      ---- 
Net investment in impaired loans............................   $1,265     $1,265      $111 
                                                               ======     ======      ==== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(3) LOANS RECEIVABLE -- (CONTINUED)                                             

     The average net investment in impaired loans and interest income recognized
and received on impaired loans is as follows (in thousands):                    

                                                        [Enlarge/Download Table]

                                                          THREE                                
                                                       MONTHS ENDED                            
                                                        MARCH 31,      YEAR ENDED DECEMBER 31, 
                                                     ----------------  ------------------------
                                                      1998       1997  1997      1996      1995
                                                     ------      ----  ----      ----      ----
                                                       (UNAUDITED)                             
                                                                                               
Average investment in impaired loans................ $1,265      $110  $392      $111      $238
                                                     ======      ====  ====      ====      ====
Interest income recognized on impaired loans........ $   18      $ --  $ --      $ 32      $ --
                                                     ======      ====  ====      ====      ====
Interest income received on impaired loans.......... $   18      $ --  $ --      $ 32      $ --
                                                     ======      ====  ====      ====      ====

 Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The unpaid principal balances of these loans are   
summarized as follows (in thousands):                                           

                                                        [Enlarge/Download Table]

                                                                 AT         AT DECEMBER 31,   
                                                              MARCH 31,   --------------------
                                                                1998       1997         1996  
                                                             -----------  -------      -------
                                                             (UNAUDITED)                      
                                                                                              
Mortgage loan portfolios serviced for:                                                        
  FHLMC.....................................................   $   --     $    --      $ 1,136
  FNMA......................................................       --          --        4,937
  Other investors...........................................    5,118      11,969        8,732
                                                               ------     -------      -------
                                                               $5,118     $11,969      $14,805
                                                               ======     =======      =======

    Custodial escrow balances maintained in connection with the foregoing loan
servicing was approximately $54,600, $28,200 and $6,400 at March 31, 1998       
(unaudited), December 31, 1997 and 1996, respectively.                          

(4) INVESTMENT IN LIMITED PARTNERSHIP                                           

    In late 1994 and early 1995, the Company invested a total of $5,000,000 to
acquire a 12.5% limited partner interest in Tranche VII of Dovenmuehle Mortgage 
Company, L.P., a partnership whose primary asset is mortgage servicing rights.  
The servicing rights in Tranche VII, were acquired during the latter months of  
1994 and early 1995, were being amortized in proportion to and over the period  
of estimated net servicing income and were subjected to an independent valuation
each calendar quarter. During 1995, the Company recorded $507,000 as its share  
of partnership earnings and received no cash distributions from the partnership.
In 1996, the Company recorded $365,000 as its share of partnership earnings and 
sold its interest in the partnership for book value.                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(5) PREMISES AND EQUIPMENT                                                      

Premises and equipment is summarized as follows (in thousands):       

                                                        [Enlarge/Download Table]

                                                                 AT        AT DECEMBER 31,   
                                                              MARCH 31,   ------------------ 
                                                                1998       1997        1996  
                                                             -----------  ------      ------ 
                                                             (UNAUDITED)                     
                                                                                             
Leasehold improvements......................................   $1,000     $1,000      $  904 
Furniture, fixtures and equipment...........................    3,115      3,108       2,873 
                                                               ------     ------      ------ 
  Total, at cost............................................    4,115      4,108       3,777 
Less accumulated depreciation and amortization..............   (2,980)    (2,883)     (2,502)
                                                               ------     ------      ------ 
  Net book value............................................   $1,135     $1,225      $1,275 
                                                               ======     ======      ====== 

  The Company leases its banking offices. Rental expense was approximately
$107,000, $70,000, $420,000, $314,000 and $406,000 for the three months ended   
March 31, 1998 and 1997 (unaudited) and the years ended December 31, 1997, 1996 
and 1995, respectively. Approximate future minimum annual rental payments under 
these noncancellable leases are as follows (in thousands):                      

                                                        [Enlarge/Download Table]

                                    AT                                            AT     
                                 MARCH 31,                                   DECEMBER 31,
YEAR ENDING MARCH 31,              1998      YEAR ENDING DECEMBER 31,            1997    
---------------------           -----------  ------------------------        ------------
                                (UNAUDITED)                                              
                                                                                         
1999...........................    $  557    1998...........................    $  554   
2000...........................       561    1999...........................       563   
2001...........................       424    2000...........................       514   
2002...........................       441    2001...........................       512   
2003...........................       183    2002...........................       371   
Thereafter.....................       340    Thereafter.....................       368   
                                   ------                                       ------   
Total..........................    $2,506    Total..........................    $2,882   
                                   ======                                       ======   

(6) DEPOSITS                                                                    

The aggregate amount of jumbo certificates of deposit with a minimum  
denomination of $100,000 was approximately $12.0 million, $11.1 million and $9.5
million at March 31, 1998 (unaudited), December 31, 1997 and 1996, respectively.

The scheduled maturities of certificates of deposit are as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                    AT                                            AT     
                                 MARCH 31,                                   DECEMBER 31,
YEAR ENDING MARCH 31,              1998      YEAR ENDING DECEMBER 31,            1997    
---------------------           -----------  ------------------------        ------------
                                (UNAUDITED)                                              
                                                                                         
1999...........................   $23,336    1998...........................   $32,999   
2000...........................    12,068    1999...........................    19,000   
2001...........................    12,068    2000...........................     5,136   
2002...........................     7,562    2001...........................       402   
2003 and thereafter............    12,395    2002 and thereafter............     7,162   
                                  -------                                      -------   
Total..........................   $67,429    Total..........................   $64,699   
                                  =======                                      =======   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(7) OTHER BORROWINGS                                                            

    In 1996, the Company began entering into investment repurchase agreements.
These agreements require the Company to pledge securities as collateral for the 
balance in the accounts. At March 31, 1998 (unaudited), December 31, 1997 and   
1996 the balance totaled $2,782,000, $1,791,000 and $774,000, respectively, and 
the Company pledged as collateral for these agreements securities with a book   
value of approximately $3,200,000, $3,011,000 and $4,001,000, respectively.     

  During 1996 and 1995, the Company entered into sales of securities under
agreements to repurchase ("reverse repurchase agreements"). Fixed-coupon reverse
repurchase agreements are treated as financings. The securities underlying the  
reverse repurchase agreements and the obligations to repurchase securities sold 
are reflected as assets and liabilities, respectively, in the consolidated      
balance sheets. During the years ended December 31, 1996 and 1995 all of the    
Company's transactions were fixed-coupon reverse repurchase agreements. At      
December 31, 1996 there were no securities sold under reverse repurchase        
agreements.                                                                     

                                                                [Download Table]

                                                                   YEAR ENDED       
                                                                  DECEMBER 31,      
                                                             -----------------------
                                                               1996          1995   
                                                             --------      ---------
                                                             (DOLLARS IN THOUSANDS) 
                                                                                    
Maximum borrowing at any month-end within the year..........  $1,385        $19,608 
Average borrowing during the year...........................     803          7,643 
Average interest cost during the year.......................    5.17%          6.27%
Average interest cost at end of the year....................    5.08%          6.23%

(8) ADVANCES FROM FEDERAL HOME LOAN BANK                                        

   Maturities and interest rates of advances from the Federal Home Loan Bank
("FHLB") were as follows (dollars in thousands):                                

                                                        [Enlarge/Download Table]

                                                                   AT         AT DECEMBER 31,  
                                                                MARCH 31,   -------------------
                                                     INTEREST  -----------                     
YEAR ENDING DECEMBER 31,                               RATE       1998       1997        1996  
------------------------                             --------  -----------  ------      -------
                                                               (UNAUDITED)                     
                                                                                               
1997................................................  5.44%      $   --     $   --      $ 5,000
1997................................................  5.37%          --         --        5,000
1997................................................  6.95%          --         --        1,672
1997................................................  5.97%          --         --        5,000
1997................................................  6.00%          --         --        1,300
1997................................................  6.89%          --         --        5,000
1998................................................  6.50%          --      4,400           --
1998................................................  6.23%       2,300         --           --
2007................................................  5.47%       5,000         --           --
                                                                 ------     ------      -------
  Total.............................................             $7,300     $4,400      $22,972
                                                                 ======     ======      =======

At March 31, 1998 (unaudited) and December 31, 1997, pursuant to the  
collateral agreement with the FHLB, advances are collateralized by the Company's
FHLB stock and a blanket lien on the Company's qualifying first mortgage,       
one-to-four family residential loans.                                           

(9) COMMITMENTS AND CONTINGENCIES                                               

 In the ordinary course of business, the Company has various outstanding
commitments and contingent liabilities that are not reflected in the            
accompanying consolidated financial statements.                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(10) FINANCIAL INSTRUMENTS                                                      

     The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.  
These financial instruments are commitments to extend credit and standby letters
of credit and may involve, to varying degrees, elements of credit and           
interest-rate risk in excess of the amount recognized in the consolidated       
balance sheet. The contract amounts of these instruments reflect the extent of  
involvement the Company has in these financial instruments.                     

     The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and    
standby letters of credit is represented by the contractual amount of those     
instruments. The Company uses the same credit policies in making commitments as 
it does for on-balance-sheet instruments.                                       

   Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.          
Commitments generally have fixed expiration dates or other termination clauses  
and may require payment of a fee. Since some of the commitments are expected to 
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained if deemed 
necessary by the Company upon extension of credit is based on management's      
credit evaluation of the counterparty.                                          

     Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. The credit risk    
involved in issuing letters of credit is essentially the same as that involved  
in extending loans to customers.                                                

  The estimated fair values of the Company's financial instruments were as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                                  AT                    
                                                  AT                         DECEMBER 31,               
                                               MARCH 31,       -----------------------------------------
                                                 1998                 1997                  1996        
                                          -------------------  -------------------   -------------------
                                          CARRYING     FAIR    CARRYING     FAIR     CARRYING     FAIR  
                                           AMOUNT     VALUE     AMOUNT     VALUE      AMOUNT     VALUE  
                                          --------   --------  --------   --------   --------   --------
                                              (UNAUDITED)                                               
                                                                                                        
Financial assets:                                                                                       
  Cash and cash equivalents.............. $  3,817   $  3,817  $  2,575   $  2,575   $  6,663   $  6,663
  Securities available for sale..........   30,604     30,604    22,745     22,745     32,920     32,920
  Securities held to maturity............    7,735      7,609     7,764      7,478      8,204      7,879
  Loans receivable, net..................  112,756    113,990   105,653    107,076     90,973     91,084
  Loans held for sale....................    4,134      4,134     4,443      4,443      4,396      4,396
  Accrued interest receivable............    1,059      1,059     1,027      1,027      1,181      1,181
  Restricted securities..................    1,534      1,534     1,570      1,570      1,666      1,666

Financial liabilities:                                                                                  
  Deposit liabilities....................  136,148    136,402   124,995    126,537    112,498    112,474
  Other borrowings.......................    2,782      2,782     1,791      1,791        774        774
  Advances from Federal Home Loan Bank...    7,300      7,300     4,400      4,400     22,972     22,972

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(10) FINANCIAL INSTRUMENTS -- (CONTINUED)                                       

   A summary of the notional amounts of the Company's financial instruments,
which approximate fair value, with off balance sheet risk follows (in           
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                AT            AT     
                                                             MARCH 31,   DECEMBER 31,
                                                               1998          1997    
                                                            -----------  ------------
                                                                                     
Unfunded loan commitments at fixed rates...................   $   --        $1,930   
                                                              ======        ======   
Unfunded loan commitments at variable rates................   $  633        $  118   
                                                              ======        ======   
Available lines of credit..................................   $6,329        $8,237   
                                                              ======        ======   
Standby letters of credit..................................   $  682        $  600   
                                                              ======        ======   

(11) CREDIT RISK                                                                

   The Company grants a majority of its loans to borrowers primarily in Palm
Beach, Broward and Dade Counties, Florida. Although the Company has a           
diversified loan portfolio, a significant portion of its borrowers' ability to  
honor their contracts is dependent upon the economy of these counties in        
Florida. The contractual amounts of credit-related financial instruments such as
commitments to extend credit and standby letters of credit represent the amounts
of potential accounting loss should the contract be fully drawn upon, the       
customer default and the value of any existing collateral become worthless.     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(12) INCOME TAXES                                                               

The income taxes (benefit) consisted of the following (in thousands): 

                                                        [Enlarge/Download Table]

                                                             CURRENT  DEFERRED  TOTAL 
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)                -------  --------  ----- 
                                                                                      
  Federal...................................................  $185     $ (33)   $ 152 
  State.....................................................    25        (6)      19 
                                                              ----     -----    ----- 
     Total..................................................  $210     $ (39)   $ 171 
                                                              ====     =====    ===== 
THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED):                                        
  Federal...................................................    --       121      121 
  State.....................................................    --        18       18 
                                                              ----     -----    ----- 
     Total..................................................  $ --     $ 139    $ 139 
                                                              ====     =====    ===== 
YEAR ENDED DECEMBER 31, 1997:                                                         
  Federal...................................................   199       277      476 
  State.....................................................    17        57       74 
                                                              ----     -----    ----- 
     Total..................................................  $216     $ 334    $ 550 
                                                              ====     =====    ===== 
YEAR ENDED DECEMBER 31, 1996:                                                         
  Federal...................................................    --      (295)    (295)
  State.....................................................    --       (60)     (60)
                                                              ----     -----    ----- 
     Total..................................................  $ --     $(355)   $(355)
                                                              ====     =====    ===== 
YEAR ENDED DECEMBER 31, 1995:                                                         
  Federal...................................................    --      (321)    (321)
  State.....................................................    --       (55)     (55)
                                                              ----     -----    ----- 
     Total..................................................  $ --     $(376)   $(376)
                                                              ====     =====    ===== 

  The reasons for the differences between the statutory Federal income tax
rate and the effective tax rate are summarized as follows:                      

                                                        [Enlarge/Download Table]

                                                            THREE MONTHS                            
                                                               ENDED              YEAR ENDED        
                                                             MARCH 31,           DECEMBER 31,       
                                                           --------------  ------------------------ 
                                                           1998      1997  1997      1996      1995 
                                                           ----      ----  ----      ----      ---- 
                                                            (UNAUDITED)                             
                                                                                                    
Tax provision at statutory rate...........................  34%       34%   34%      (34)%     (34)%
Increase (decrease) in taxes resulting from:                                                        
  State taxes.............................................   3         3     3        (4)       (4) 
  Other...................................................  (1)       --     1         1         1  
                                                            --        --    --       ---       ---  
Income taxes (benefit)....................................  36%       37%   38%      (37)%     (37)%
                                                            ==        ==    ==       ===       ===  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(12) INCOME TAXES -- (CONTINUED)                                                
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities relate to the following (in 
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                               AT      
                                                                  AT      DECEMBER 31, 
                                                              MARCH 31,   -------------
                                                                 1998     1997    1996 
                                                              ---------   ----   ------
                                                             (UNAUDITED)               
                                                                                       
Deferred tax assets:                                                                   
  Allowance for loan losses.................................     $269     $241   $  207
  Depreciation..............................................      139      145      176
  Net operating loss carryforwards..........................       --       --      461
  Purchase accounting adjustments...........................       40       43      180
  Other.....................................................      176      174      146
                                                                 ----     ----   ------
     Total gross deferred tax assets........................      624      603    1,170
                                                                 ----     ----   ------
Deferred tax liabilities:                                                              
  FHLB stock................................................       26       27      104
  Deferred loan fees........................................      332      349      418
  Other.....................................................        3        3       27
                                                                 ----     ----   ------
     Total gross deferred tax liabilities...................      361      379      549
                                                                 ----     ----   ------
     Net deferred tax asset.................................     $263     $224   $  621
                                                                 ====     ====   ======

(13) RELATED PARTIES                                                            

The Company has entered into transactions with officers, directors and
principal stockholders in the ordinary course of business. Loans to such related
parties amounted to approximately $737,000, $546,000 and $1,138,000 at March 31,
1998 (unaudited), December 31, 1997 and 1996, respectively, and deposits from   
such related parties were approximately $2,277,000, $3,043,000 and $3,150,000,  
respectively.                                                                   

(14) PROFIT SHARING PLAN                                                        

     The Company sponsors a 401(k) profit sharing plan (the "Plan"). The Plan is
available to all employees electing to participate after meeting certain        
length-of-service requirements. The Company's contributions to the Plan are     
discretionary and are determined annually. Expense relating to the Company's    
contributions to the Plan included in the accompanying consolidated financial   
statements was $4,300, $250, $1,000, $4,400 and $15,800 for the three months    
ended March 31, 1998 and 1997 (unaudited) and the years ended December 31, 1997,
1996 and 1995, respectively.                                                    

(15) DEFERRED COMPENSATION PLANS                                                

The Company has deferred compensation plans for certain directors that
allow for a portion of the participants earned compensation to be deferred and  
paid upon retirement, disability, death or termination of service at which time 
accrued benefits are payable in a lump-sum payment or in monthly installments   
for a period of 10 years. At March 31, 1998 (unaudited), December 31, 1997 and  
1996, approximately $88,000, $118,000 and $177,000, respectively was deferred   
and included in other liabilities on the consolidated balance sheets for the    
Company's obligations under these agreements. During the three months ended     
March 31, 1998 (unaudited) and the year ended December 31, 1997, certain        
directors received lump-sum payments under these plans.                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(16) STOCK OPTIONS                                                              

     Certain key employees and directors of the Company have options to purchase
shares of the Company's common stock under its stock option plan. Under the     
plan, the total number of shares which may be issued is 300,000. At March 31,   
1998 (unaudited) and December 31, 1997, 21,219 and 65,919 remain available for  
grant. All per share amounts reflect the three-for-two stock split declared in  
February, 1998. A summary of stock option transactions follows (dollars in      
thousands, except per share amounts):                                           

                                                        [Enlarge/Download Table]

                                                                           RANGE                         
                                                                          OF PER     WEIGHTED-           
                                                                           SHARE      AVERAGE   AGGREGATE
                                                             NUMBER OF    OPTION     PER SHARE   OPTION  
                                                              SHARES       PRICE       PRICE      PRICE  
                                                             ---------  -----------  ---------  ---------
                                                                                                         
Outstanding at December 31, 1994 and 1995...................   60,000   $6.67-10.52   $ 8.50     $  510  
Options granted.............................................   50,451    9.67-10.45    10.14        512  
Expired options.............................................   (2,100)         8.67     8.67        (18) 
                                                              -------                            ------  

Outstanding at December 31, 1996............................  108,351    6.67-10.45     9.27      1,004  
Options granted.............................................  135,963    9.55-10.03     9.61      1,307  
Options exercised...........................................  (28,500)         6.67     6.67       (190) 
Options forfeited...........................................  (10,233)   6.67-10.52     9.69        (99) 
                                                              -------                            ------  

Outstanding at December 31, 1997............................  205,581    9.55-10.52     9.84      2,022  
Options granted (unaudited).................................   44,700         10.03    10.03        448  
                                                              -------                            ------  

Outstanding at March 31, 1998 (unaudited)...................  250,281   $9.55-10.52   $ 9.87     $2,470  
                                                              =======                            ======  

  The weighted-average remaining contractual life of the outstanding stock
options at March 31, 1998 (unaudited), December 31, 1997, 1996 and 1995 was     
forty-eight months, forty-nine months, thirty-five months and thirty-two months,
respectively.                                                                   

These options are exercisable as follows:                             

                                                        [Enlarge/Download Table]

                   AT MARCH 31, 1998                                        AT DECEMBER 31, 1997                  
--------------------------------------------------------  --------------------------------------------------------
                                                                                                                  
YEAR ENDING           NUMBER            WEIGHTED-AVERAGE  YEAR ENDING           NUMBER            WEIGHTED-AVERAGE
 MARCH 31            OF SHARES           EXERCISE PRICE    MARCH 31            OF SHARES           EXERCISE PRICE 
   ----               -------                ------          ----               -------                ------     
                    (UNAUDITED)                             1998                127,341                $10.09     
  1999                142,139                $10.00         1999                 23,430                  9.55     
  2000                 32,370                  9.68         2000                 23,430                  9.55     
  2001                 31,320                  9.68         2001                 19,230                  9.55     
  2002                 25,725                  9.71         2002                  9,450                  9.55     
  2003                 18,727                  9.78         2003                  2,700                  9.55     
                      -------                ------                             -------                ------     
                      250,281                $ 9.87                             205,581                $ 9.84     
                      =======                ======                             =======                ======     

   On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," which establishes 
financial accounting and reporting standards for stock-based employee           
compensation plans. As permitted by this Statement, the Company has elected to  
continue utilizing the intrinsic value method of accounting defined in APB      
Opinion No. 25. Due to the exercise price of the options approximating the      
market value of the common stock at the date of grant, no compensation expense  
has been recognized in the consolidated statements of operations.               

  The Statement requires pro forma fair value disclosures if the intrinsic
value method is being utilized. In order to calculate the fair value of the     
options, it was assumed that the risk-free interest rate was 6.0%, there would  
be no dividends paid by the Company over the exercise period, the expected life 
of the options would be                                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(16) STOCK OPTIONS -- (CONTINUED)                                               

the entire exercise period and stock volatility would be zero due to the lack of
an active market for the stock. For purposes of pro forma disclosures, the      
estimated fair value is included in expense in the period vesting occurs. The   
following information pertains to the options granted to purchase common stock  
(in thousands, except per share amounts):                                       

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS                
                                                                 ENDED       YEAR ENDED  
                                                               MARCH 31,    DECEMBER 31, 
                                                             -------------  ------------ 
                                                             1998    1997   1997   1996  
                                                             -----   -----  ----   ----- 
                                                              (UNAUDITED)                
                                                                                         
Weighted-average grant-date fair value of options issued     $ 29      --   $147   $ 133 
  during the period.........................................                             
                                                             ====    ====   ====   ===== 
Pro forma net earnings (loss)............................... $272      --   $767   $(732)
                                                             ====    ====   ====   ===== 
Pro forma basic earnings (loss) per share................... $.20      --   $.56   $(.60)
                                                             ====    ====   ====   ===== 

(17) PREFERRED STOCK                                                            

The Company has 56,026 and 54,116 outstanding shares at March 31, 1998
(unaudited) and December 31, 1997 of convertible, redeemable, cumulative        
preferred stock Series A, $.01 par value ("preferred stock"). The preferred     
stock can be redeemed by the Company at $20 per share. The preferred stock has a
8.5% cumulative dividend rate payable based on the $20 redemption value. Each   
share of preferred stock is convertible at the option of the stockholder into   
2.25 shares of common stock any time. For the three months ended March 31, 1998 
(unaudited) the Company paid stock dividends on preferred stock of 1,410 shares 
of preferred stock. During the quarter ended March 31, 1997 (unaudited), the    
Company did not pay a dividend on preferred stock. In 1997, the Company paid    
dividends on preferred stock in a combination of both preferred stock and cash  
based on the preference of the individual stockholders. The total preferred     
stock issued was 3,218 shares and the total cash was approximately $16,000. A   
preferred stock dividend was declared in 1996 of approximately $35,000 which was
initially recorded as a cash dividend. Subsequently, it was decided to pay the  
dividend in a combination of preferred stock and cash, based on the preference  
of the individual stockholder. The total preferred stock issued was 1,398 shares
and the total cash was $8,000.                                                  

(18) REGULATORY MATTERS                                                         

    The Bank is subject to restrictions on the amount of dividends that it may
declare without prior regulatory approval.                                      

     The Bank is subject to various regulatory capital requirements administered
by the regulatory agencies. Failure to meet minimum capital requirements can    
initiate certain mandatory and possibly additional discretionary actions by     
regulators that, if undertaken, could have a direct material effect on the      
Company's financial statements. Under capital adequacy guidelines and the       
regulatory framework for prompt corrective action, the Bank must meet specific  
capital guidelines that involve quantitative measures of the Bank's assets,     
liabilities, and certain off-balance-sheet items as calculated under regulatory 
accounting practices. The Bank's capital amounts and classification are also    
subject to qualitative judgements by the regulators about components, risk      
weightings, and other factors.                                                  

    Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the tables
below). Management believes, as of March 31, 1998 (unaudited) and December 31,  
1997, that the Bank meet all capital adequacy requirements to which they are    
subject.                                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(18) REGULATORY MATTERS -- (CONTINUED)                                          

 As of March 31, 1998 (unaudited) and December 31, 1997, the most recent
notification from the regulatory authorities categorized the Bank as well       
capitalized under the regulatory framework for prompt corrective action. To be  
categorized as well capitalized the Bank must maintain minimum total risk-based,
Tier I risk-based, and Tier I leverage ratios as set forth in the table. There  
are no conditions or events since that notification that management believes    
have changed the Bank's category. The Bank's actual capital amounts and ratios  
are also presented in the table (dollars in thousands).                         

                                                        [Enlarge/Download Table]

                                                                             FOR CAPITAL        FOR WELL     
                                                                              ADEQUACY         CAPITALIZED   
                                                             ACTUAL           PURPOSES:         PURPOSES:    
                                                         ---------------   ---------------   --------------- 
                                                         AMOUNT      %     AMOUNT      %     AMOUNT      %   
                                                         -------   -----   -------   -----   -------   ----- 
                                                                                                             
As of March 31, 1998 (unaudited):                                                                            
  Total capital (to Risk Weighted Assets).............. $14,897    15.51%  $7,681     8.00%  $9,602    10.00%
  Tier I Capital (to Risk Weighted Assets).............  13,984    14.56    3,841     4.00    5,761     6.00 
  Tier I Capital (to Average Assets)...................  13,984     9.05    6,181     4.00    7,726     5.00 

As of December 31, 1997:                                                                                     
  Total capital (to Risk Weighted Assets).............. $14,529    16.00%  $7,264     8.00%  $9,080    10.00%
  Tier I Capital (to Risk Weighted Assets).............  13,681    15.06    3,632     4.00    5,448     6.00 
  Tier I Capital (to Average Assets)...................  13,681     8.95    6,117     4.00    7,646     5.00 

As of December 31, 1996:                                                                                     
  Total capital (to Risk Weighted Assets)..............  $4,216    15.88%  $2,134     8.00%  $2,667    10.00%
  Tier I Capital (to Risk Weighted Assets).............   3,913    14.67    1,067     4.00    1,600     6.00 
  Tier I Capital (to Average Assets)...................   3,913     8.69    1,801     4.00    2,252     5.00 

  As of December 31, 1996, the most recent notification from the Office of
Thrift Supervision categorized Pointe Federal as well capitalized under the     
regulatory framework for prompt corrective action. To be categorized as well    
capitalized Pointe Federal had to maintain minimum regulatory capital as set    
forth in the table. There were no conditions or events since that notification  
that management believed changed Pointe Federal's category prior to being merged
with the Bank. Pointe Federal's actual capital amounts and ratios are also      
presented in the table (dollars in thousands).                                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(18) REGULATORY MATTERS -- (CONTINUED)                                          

                                                        [Enlarge/Download Table]

                                                                                                 TO BE WELL    
                                                                                MINIMUM          CAPITALIZED   
                                                                              FOR CAPITAL        FOR PROMPT    
                                                                               ADEQUACY       CORRECTIVE ACTION
                                                            ACTUAL             PURPOSES          PROVISIONS    
                                                      -------------------  -----------------  -----------------
                                                        %         AMOUNT     %        AMOUNT    %        AMOUNT
                                                      -----      --------  -----      ------  -----      ------
                                                                                                               
At December 31, 1996:                                                                                          
Stockholders' equity, and ratio to total assets......  8.25%     $  8,744     --         --      --          --
Intangible assets....................................                  --     --         --      --          --
                                                                 --------                                      
Tangible capital, and ratio to adjusted total                                                                  
  assets.............................................  8.25%     $  8,744    1.5%     $1,589     --          --
                                                                 ========             ======                   
Tier 1 (core) capital, and ratio to adjusted total                                                             
  assets.............................................  8.25%     $  8,744    4.0%     $3,179    5.0%     $5,299
                                                                 ========             ======             ======
Tier 1 capital, and ratio to risk--weighted assets... 17.38%        8,744     --         --     6.0%     $3,019
                                                                 --------                                ======
Allowance for loan losses............................    --           474     --         --      --          --
                                                                 --------                                      
Tier 2 capital.......................................    --           474     --         --      --          --
                                                                 --------                                      
Total risk-based capital, and ratio to risk-weighted                                                           
  assets............................................. 18.32%     $  9,218    8.0%     $4,025   10.0%     $5,031
                                                                 ========             ======             ======
Total assets.........................................            $105,977                                      
                                                                 ========                                      
Adjusted total assets................................            $105,977                                      
                                                                 ========                                      
Risk-weighted assets.................................            $ 50,311                                      
                                                                 ========                                      

(19) SAIF RECAPITALIZATION ASSESSMENT                                           

On September 30, 1996, a law was enacted which imposed a one-time     
assessment on all SAIF insured deposits as of March 31, 1995. The effect on the 
Company was a pretax charge in 1996 of $926,000.                                

(20) STOCKHOLDERS' EQUITY                                                       

    The Board of Directors voted to split the common shares on a three-for-two
basis effective in February, 1998. All per share amounts reflect this split.    

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(21) HOLDING COMPANY FINANCIAL INFORMATION                                      

   The Holding Company's financial information is as follows (in thousands):

CONDENSED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                  AT        AT DECEMBER 31, 
                                                              MARCH 31,    -----------------
                                                                 1998       1997      1996  
                                                             ------------  -------   -------
                                                             (UNAUDITED)                    
                                                                                            
                           ASSETS                                                           

Cash and cash equivalents...................................   $   102     $   127   $   110
Investment in subsidiaries..................................    13,957      13,722    12,419
Other assets................................................       104          94       148
                                                               -------     -------   -------
     Total assets...........................................   $14,163     $13,943   $12,677
                                                               =======     =======   =======

            LIABILITIES AND STOCKHOLDERS' EQUITY                                            

Other liabilities...........................................        56          98       256
Stockholders' equity........................................    14,107      13,845    12,421
                                                               -------     -------   -------
     Total liabilities and stockholders' equity.............   $14,163     $13,943   $12,677
                                                               =======     =======   =======

CONDENSED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                    THREE MONTHS                                   
                                                       ENDED              FOR THE YEAR ENDED       
                                                     MARCH 31,               DECEMBER 31,          
                                                   --------------   ------------------------------ 
                                                   1998      1997    1997        1996        1995  
                                                   ----      ----   ------      ------      ------ 
                                                    (UNAUDITED)                                    
                                                                                                   
Revenues.......................................... $ --      $435   $  665      $2,101      $1,353 
Expenses..........................................    7       467      752       2,182       1,653 
                                                   ----      ----   ------      ------      ------ 
  Loss before earnings (loss) of subsidiaries.....   (7)      (32)     (87)        (81)       (300)
  Earnings (loss) of subsidiaries.................  308       264    1,001        (518)       (327)
                                                   ----      ----   ------      ------      ------ 
  Net earnings (loss)............................. $301      $232   $  914      $ (599)     $ (627)
                                                   ====      ====   ======      ======      ====== 

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(21) HOLDING COMPANY FINANCIAL INFORMATION -- (CONTINUED)                       

CONDENSED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                               THREE MONTHS                             
                                                                  ENDED           FOR THE YEAR ENDED    
                                                                MARCH 31,            DECEMBER 31,       
                                                             ----------------   ----------------------- 
                                                             1998       1997     1997     1996    1995  
                                                             -----      -----   -------   -----   ----- 
                                                               (UNAUDITED)                              
                                                                                                        
Cash flows from operating activities:                                                                   
  Net earnings (loss)....................................... $ 301      $ 232   $   914   $(599)  $(627)
  Adjustments to reconcile net earnings (loss) to net cash                                              
    provided by (used in) operating activities:                                                         
    (Increase) decrease in other assets.....................   (10)       133        54       7    (151)
    (Decrease) increase in due to subsidiaries..............    --         --        --    (295)    271 
    (Decrease) increase in other liabilities................   (42)      (111)     (143)     14     207 
                                                             -----      -----   -------   -----   ----- 
      Net cash provided by (used in) operating activities...   249        254       825    (873)   (300)
                                                             -----      -----   -------   -----   ----- 
Cash flows from investing activities:                                                                   
  Net (increase) decrease in investment in subsidiaries.....  (308)      (264)   (1,187)    217      79 
  Dividends from subsidiary.................................    --         --        --      --     250 
                                                             -----      -----   -------   -----   ----- 
      Net cash (used in) provided by investing activities...  (308)      (264)   (1,187)    217     329 
                                                             -----      -----   -------   -----   ----- 
Cash flows from financing activities:                                                                   
  Proceeds from issuance of preferred stock.................    10         69       201     737      -- 
  Proceeds from issuance of common stock....................    24         --       190      --      -- 
  Cash dividends paid in preferred stock....................    --         --       (12)     --      -- 
                                                             -----      -----   -------   -----   ----- 
      Net cash provided by investing activities.............    34         69       379     737      -- 
                                                             -----      -----   -------   -----   ----- 
Net (decrease) increase in cash and cash equivalents........   (25)        59        17      81      29 
Cash and cash equivalents at beginning of the period........   127        110       110      29      -- 
                                                             -----      -----   -------   -----   ----- 
Cash and cash equivalents at end of period.................. $ 102      $ 169   $   127   $ 110   $  29 
                                                             =====      =====   =======   =====   ===== 
Noncash transactions:                                                                                   
  Change in investment in subsidiaries due to change in                                                 
    accumulated other income, unrealized gain (loss) on                                                 
    securities available for sale, net of                                                               
    income tax.............................................. $ (73)     $(128)  $   108   $(196)  $ 625 
                                                             =====      =====   =======   =====   ===== 
  Dividends payable on preferred stock...................... $  --      $  --   $     4   $  35   $  -- 
                                                             =====      =====   =======   =====   ===== 
  Stock dividends paid on preferred stock................... $  27      $  --   $    65   $  --   $  -- 
                                                             =====      =====   =======   =====   ===== 

(22) COMPREHENSIVE INCOME                                                       

During the year ended December 31, 1997, the Company adopted Financial
Accounting Standards Board Statement No. 130, Reporting Comprehensive Income.   
This Statement requires the reporting of comprehensive income in addition to net
earnings from operations. Comprehensive income is a more inclusive financial    
reporting methodology that includes disclosure of certain financial information 
that historically has not been recognized in the calculation of net earnings.   

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POINTE FINANCIAL CORPORATION AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)

(22) COMPREHENSIVE INCOME -- (CONTINUED)                                        

   During the three months ended March 31, 1998 and 1997 (unaudited) and the
years ended December 31, 1997, 1996 and 1995, the Company held securities       
classified as available-for-sale, which had unrealized gains (losses) of        
$(73,000), $(128,000), $108,000, $(196,000), $625,000 before tax, respectively. 
The before tax and after tax amount of these gains (losses), as well as the tax 
(expense) benefit is summarized below (in thousands).                           

                                                        [Enlarge/Download Table]

                                                                        TAX           
                                                             BEFORE  (EXPENSE)  AFTER 
                                                              TAX     BENEFIT    TAX  
                                                             ------  ---------  ----- 
                                                                                      
At March 31, 1998 (unaudited):                                                        
  Unrealized holding losses................................. $(107)    $  36    $ (71)
  Reclassification adjustment for gains included in net                               
     earnings...............................................    (2)       --       (2)
                                                             -----     -----    ----- 
                                                             $(109)    $  36    $ (73)
                                                             =====     =====    ===== 

At March 31, 1997 (unaudited):                                                        
  Unrealized holding losses.................................  (184)       59     (125)
  Reclassification adjustment for gains included in net                               
     earnings...............................................    (4)        1       (3)
                                                             -----     -----    ----- 
                                                             $(188)    $  60    $(128)
                                                             =====     =====    ===== 

At December 31, 1997:                                                                 
  Unrealized holding gains..................................   200       (74)     126 
  Reclassification adjustment for gains included in net                               
     earnings...............................................   (29)       11      (18)
                                                             -----     -----    ----- 
                                                             $ 171     $ (63)   $ 108 
                                                             =====     =====    ===== 

At December 31, 1996:                                                                 
  Unrealized holding losses.................................  (227)       88     (139)
  Reclassification adjustment for gains included in net                               
     earnings...............................................   (91)       34      (57)
                                                             -----     -----    ----- 
                                                             $(318)    $ 122    $(196)
                                                             =====     =====    ===== 

At December 31, 1995:                                                                 
  Unrealized holding gains..................................   938      (312)     626 
  Reclassification adjustment for gains included in net                               
     earnings...............................................    (1)       --       (1)
                                                             -----     -----    ----- 
                                                             $ 937     $(312)   $ 625 
                                                             =====     =====    ===== 

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

TABLE OF CONTENTS 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
Prospectus Summary....................     3
Summary Consolidated Financial Data...     7
Risk Factors..........................     9
Company...............................    13
Use of Proceeds.......................    17
Dividend Policy.......................    17
Dilution..............................    17
Capitalization........................    18
Selected Consolidated Financial             
  Data................................    19
Management's Discussion and Analysis        
  of Results of Operations and              
  Financial Condition.................    21
Regulation and Supervision............    49
Management............................    54
Security Ownership of Certain               
  Beneficial Owners and Management....    58
Certain Relationships and Related           
  Transactions........................    60
Description of Capital Stock..........    60
Shares Eligible for Future Sale.......    62
Underwriting..........................    63
Legal Matters.........................    64
Experts...............................    64
Available Information.................    65
Index to Consolidated Financial             
  Statements..........................   F-1

    Until July 6, 1998 (25 days after the date of this Prospectus) all dealers
effecting transactions in the registered securities, whether or not             
participating in this distribution, may be required to deliver a Prospectus.    
This is in addition to the obligation of dealers to deliver a Prospectus when   
acting as Underwriters and with respect to their unsold allotments or           
subscriptions.                                                                  

869,565 SHARES

[LOGO POINTE FINANCIAL CORPORATION] 

COMMON STOCK

--------------------- 
PROSPECTUS
--------------------- 

KEEFE, BRUYETTE & WOODS, INC. 

MCGINN, SMITH & CO., INC. 

June 11, 1998 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		2/28/06		16
		12/31/99		51					10-K
		12/31/98		19					10-K
		7/6/98		95
		6/17/98		1
		6/16/98
Filed on:		6/15/98
		6/11/98		1		95
		4/30/98		58		60
		4/27/98		57
		4/3/98		3		61
		3/31/98		3		94
		3/30/98		21
		2/27/98		3
		2/14/98		67
		12/31/97		4		94
		6/1/97		53
		4/14/97		74
		3/31/97		4		94
		12/31/96		35		94
		9/30/96		51		91
		1/1/96		88
		12/31/95		4		94
		11/15/95		78
		11/14/95		51
		9/29/95		53
		3/31/95		91
		12/31/94		19		88
		12/31/93		39		42
		9/29/93		3		13
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