8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: May 12, 2006

CLARKSTON FINANCIAL CORPORATION
(Exact name of registrant as
specified in its charter)

Michigan
(State or other
jurisdiction of
incorporation) 333-63685
(Commission
File Number) 38-3412321
(IRS Employer
Identification No.)

6600 Highland Road, Suite 24
Waterford, Michigan
(Address of principal executive office) 48327
(Zip Code)

Registrant’s telephone number,
including area code: (248) 625-8585

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[_]     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[_]     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
[_]     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).
[_]     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Item 2.02.      Results of Operations and Financial Condition.

On May 15, 2006, Clarkston Financial Corporation issued a press release announcing revised results for the first quarter ended March 31, 2006. A copy of the press release is attached as Exhibit 99.1.

The information in this Form 8-K and the attached Exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 2.06      Material Impairments.

On May 12, 2006, the Board of Directors of Clarkston State Bank (the “Bank”), the wholly owned subsidiary of Clarkston Financial Corporation (the “Corporation”), authorized an aggregate provision for loan losses of $832,000 for the quarter ended March 31, 2006. Of this provision, approximately $559,000 relates primarily to an aggregate principal balance of approximately $1.01 million of impaired loans to three commercial borrowers. The borrowers have been unable to meet the repayment terms of the loans as a result of severe deterioration in the financial condition of the businesses. The loans are secured by liens on commercial real estate, accounts receivable, and inventory, but in all cases the collateral is no longer of a sufficient value to cover the outstanding principal balances on the loans. In addition to specific reserves, these impairments have affected the Corporation’s loss history resulting in additional provision requirements for loan losses.

The level of the provision made in connection with the loans reflects the amount necessary to maintain the allowance for loan losses at an adequate level, based upon the Bank’s current analysis of losses inherent in its loan portfolio, with respect to loans held at March 31, 2006. Bank management is continuing to evaluate the financial condition of the borrowers and the value of the collateral. The impairment charge is based on the information currently available and may change as new information is received. The ultimate amount of the impairment, and the potential losses to the Bank, may be higher or lower depending on the realizable value of the collateral. The Bank may be required to make additional provisions with respect to these loans if the realizable value of the collateral is less than presently estimated. The Bank may recognize a recovery of the provision if the realizable value is higher than anticipated.

The Bank’s out-of-pocket expenditures in connection with the resolution of the loans could vary, depending on the length of time, and number of hours of professional assistance required to finally resolve the loans, the nature of the proceedings in which the loans are resolved, and other factors not susceptible to precise estimation, and they could be higher or lower. Such costs are added to the balance of the outstanding loans and are subject to recovery if there is sufficient realizable value.

Item 9.01.      Financial Statements and Exhibits.

Exhibit

99.1      Press release dated May 15, 2006.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 15, 2006 CLARKSTON FINANCIAL CORPORATION
(Registrant)


By: /S/ James W. Distelrath
——————————————
      James W. Distelrath
      Chief Financial Officer

EX-99

Clarkston Financial Increases Q1-2006 Loan Loss Provision.
Results Revised.

        CLARKSTON, Mich., May 15 /PRNewswire-FirstCall/ -- Clarkston Financial Corporation (OTC Bulletin Board: CKSB), the holding company for Clarkston State Bank and Huron Valley State Bank, announced today that it is revising its first quarter-2006 results to reflect a higher loan loss provision.

        On April 27, 2006 the Corporation reported net income of $119,000, or $0.10 per diluted share, for the three months ended March 31, 2006. The results included a loan loss provision of $116,000. Subsequent to the close of the quarter, this provision was increased to $832,000. As a result of the additional provision, the Corporation incurred a net loss of $354,000, or $0.28 per diluted share, for the first quarter of 2006.

        Of the total first quarter loan loss provision of $832,000, approximately $559,000 relates primarily to an aggregate principal balance of approximately $1.01 million of impaired loans to three commercial borrowers. The borrowers have been unable to meet the repayment terms of the loans and one of the borrowers has filed for Chapter 7 bankruptcy. The loans are secured by liens on commercial real estate and other collateral, but in all cases the collateral is no longer considered of sufficient value to cover the outstanding principal balance on the loans. In addition to specific reserves, these impairments have affected the Corporation's loss history resulting in additional provision requirements for loan losses.

        The level of the provision made in connection with the loans reflects the amount necessary to maintain the allowance for loan losses at an adequate level, based on the Bank's current analysis of probable incurred losses in its loan portfolio, with respect to loans held at March 31, 2006. Bank management is continuing to evaluate the financial condition of the borrowers and the value of the collateral. The impairment charge is based on the information currently available and may change as new information is received.

        The after tax impact on net income of the additional $559,000 provision for loan losses is approximately $369,000, or approximately $0.29 per diluted share.

        J. Grant Smith, President & COO, commented, "The impaired loans and revision to our results are distressing and disappointing. However, we continue to aggressively pursue these borrowers and have implemented enhancements to our policies and procedures and made personnel changes within our lending team in order to augment our credit administration. While we regret the need for these financial adjustments, we have full confidence in our management team and lending personnel, going forward."

        Clarkston State Bank remains "well capitalized" under regulatory capital requirements.

        The additional provision is included in the financial statements in the Corporation's first quarter Form 10-Q report filed today with the Securities and Exchange Commission.

        Safe Harbor. This news release contains comments or information that may constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in the forward-looking statements. Factors that may cause such a difference include: changes in interest rates and interest-rate relationships; demand for products and services; the degree of competition by traditional and non- traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior and their ability to repay loans; changes in the national and local economy; and other factors included in the Corporation's filings with the Securities and Exchange Commission, available via EDGAR. The Corporation assumes no responsibility to update forward-looking statements.

CLARKSTON FINANCIAL CORP
Historical Financial Data
000's Omitted

	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended		Year Ended December 31,
	03/31/06		12/31/05		09/30/05		06/30/05		2005		2004		2003		2002		2001
Total Assets		201,887		195,576		188,265		186,153		195,576		163,379		142,617		115,335		83,920
Total Loans, Net of Unearn. Disc		139,319		133,544		131,231		130,242		133,230		111,542		83,830		54,722		34,455
Loans HFS (Excl From Above)		294		314		621		945		314		644		222		0		0
Loan Loss Reserve		2,118		1,930		1,879		1,506		1,930		1,280		1,092		696		419
Non-accrual Loans		1,142		1,066		0		0		1,066		0		0		0		146
Renegotiated Loans		0		0		0		0		0		0		0		0		0
Loans 90 days + Still Accruing		2,978		1,413		0		0		1,413		532		0		0		0
Total Non-performing Loans		4,120		2,479		0		0		2,479		532		0		0		146
Total Securities		49,948		48,982		43,071		37,344		48,982		44,384		49,064		54,742		42,510
Premises/Furniture & Fixtures		4,882		3,911		2,861		2,819		3,911		2,395		1,428		1,400		794
Repossessed Assets		186		205		205		0		205		0		0		0		0
Noninterest-bearing Deposits		22,491		23,633		22,666		26,207		23,633		19,766		18,231		14,797		9,230
Interest bearing Deposits		141,305		137,699		134,564		129,774		137,699		113,500		108,412		90,126		64,930
Total Deposits		163,796		161,332		157,230		155,981		161,332		133,266		126,643		104,923		74,160
CD's>$100K		40,006		37,668		30,700		30,490		37,668		27,598		24,712		24,155		19,983
Trust Preferred		4,000		4,000		4,000		4,000		4,000		4,000		4,000		0		0
Common Equity		14,667		15,131		15,291		12,460		15,131		12,201		11,232		9,758		8,667
Common Shares Outstanding at End of Period		1,246		1,246		1,235		1,049		1,246		1,046		1,039		1,027		1,026
Goodwill/Intangibles		0		0		0		0		0		0		0		0		0
Total borrowings (incl FHLB)		10,200		10,200		7,200		12,200		10,200		12,200		0		0		0

CLARKSTON FINANCIAL CORP
Historical Income Stmt Data
000's Omitted

	Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended			Year Ended December 31,
	03/31/06			12/31/05			09/30/05			06/30/05			2005			2004			2003			2002			2001
Total Interest Income		3,016			2,985			2,830			2,699			11,014			8,233			6,736			5,942			4,733
Interest Expense		1,467			1,347			1,302			1,170			4,838			2,996			2,566			2,709			2,638
Net Interest Income		1,549			1,638			1,528			1,529			6,176			5,237			4,170			3,233			2,095
Provision for Loan Losses		832			104			908			260			1,367			330			496			243			90
Security Gains		3			-2			0			0			-1			-26			532			205			249
Gain on loan sales		22			8			34			28			117			94			128			0			0
Service fees on loan and deposit accounts		200			157			175			221			744			637			473			387			300
Other Income		2			-24			1			4			-14			12			1			-2			4
Total Other Income		227			139			210			253			846			717			1,134			590			553
Salary & Benefit Expense		791			728			692			783			2,947			1,908			1,508			1,294			846
Occupancy Expense		254			256			209			201			849			509			381			452			346
Other Expense		488			558			648			412			2,042			1,552			1,084			829			748
Total Other Expense		1,533			1,542			1,549			1,396			5,838			3,969			2,973			2,575			1,940
EBIT		-589			132			-719			125			-183			1,655			1,835			1,005			618
Tax		-167			113			-242			10			-19			378			367			204			195
Minority Interest		68			140			0			0			140			0			0			0			0
Net Income		-354			159			-477			115			-24			1,277			1,468			801			423
Reported EPS (diluted)		-$0.28		$	0.09			-$0.38		$	0.10			-$0.02		$	1.20		$	1.41		$	0.78		$	0.41
Dividends Per Share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00
Selected Financial Ratios:
Total Risk Based Capital		14.28	%		14.82	%		15.19	%		12.82	%		14.82	%		14.50	%		12.59	%		14.76	%		19.91	%
Return on Average Assets		-0.71%			0.33	%		-1.02%			0.26	%		-0.01%			0.83	%		1.14	%		0.80	%		0.59	%
Return on Average Equity		-9.50%			4.18	%		-13.75%			3.74	%		-0.18%			10.90	%		13.99	%		8.69	%		4.99	%
Net Interest Margin		3.27	%		3.55	%		3.36	%		3.64	%		3.51	%		3.54	%		3.34	%		3.29	%		3.13	%
Average Assets		198,732			191,921			187,209			179,801			179,478			152,998			128,976			99,628			72,070
Net charge-offs ($)		644			53			535			117			717			142			100			-34			50
Gross charge-offs ($)		651			55			535			117			720			254			144			13			51