<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

For the Quarterly period ended    September 30, 2002.
                                  -------------------

Commission file number 000-24478.

                             DEARBORN BANCORP, INC.
                             ----------------------
             (Exact name of registrant as specified in its charter)

           Michigan                                     38-3073622
           --------                                     ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                 22290 Michigan Avenue, Dearborn, MI 48123-2247
                 ----------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (313) 274-1000
                                 --------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes       X      No
    -----------     ------------

Indicate by check mark whether the registrant is an accelerated filer (as
defined by rule 12b-2 of the Exchange Act).

Yes               No      X
    ------------     ------------

Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of October 31, 2002.

            Class                                     Shares Outstanding
            -----                                     -------------------
        Common Stock                                      2,488,945




<PAGE>


                             DEARBORN BANCORP, INC.
                                      INDEX

<TABLE>
<CAPTION>
Part I.           Financial Information:

Item 1.           Financial Statements

                  The following consolidated financial statements of Dearborn
                  Bancorp, Inc. and its subsidiary included in this report are:                  Page
                                                                                                 ----
<S>                                                                                              <C>
                  Independent Accountants' Report                                                  3

                  Consolidated Balance Sheets - September 30, 2002,
                          December 31, 2001 and September 30, 2001                                 4

                  Consolidated Statements of Income - For the Three and Nine
                  Months Ended September 30, 2002 and 2001                                         5

                  Consolidated Statements of Comprehensive Income  - For
                  the Three and Nine Months Ended September 30, 2002 and 2001                      6

                  Consolidated Statements of Cash Flows - For the
                  Nine  Months Ended September 30, 2002 and 2001                                   7

                  Notes to Consolidated Financial Statements                                      8-11

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                            12-24

Item 3.           Quantitative and Qualitative Disclosures about Market Risk                     25-26

Item 4.           Controls and Procedures                                                          27

Part II.          Other Information:

         Pursuant to SEC rules and regulations, the following item is included
         with the Form 10-Q Report:

                  Item 6.   Exhibits and Reports on Form 8-K                                       28

         Pursuant to SEC rules and regulations, the following items are omitted
         from this Form 10-Q as inapplicable or to which the answer is negative:

                  Item 1.   Legal Proceedings
                  Item 2.   Changes in Securities and Use of Proceeds
                  Item 3.   Defaults upon Senior Securities
                  Item 4.   Submission of Matters to a Vote of Security Holders
                  Item 5.   Other Information

   SIGNATURES                                                                                     29

   CERTIFICATIONS                                                                                30-35
</TABLE>



                                       2
<PAGE>


                         INDEPENDENT ACCOUNTANTS' REPORT



Board of Directors and Shareholders
Dearborn Bancorp, Inc.
Dearborn, Michigan


We have reviewed the consolidated balance sheets of Dearborn Bancorp, Inc. as of
September 30, 2002 and 2001, and the related consolidated statements of income
and comprehensive income for the three and nine month periods ended September
30, 2002 and 2001, and the related statements of cash flows for the nine month
periods ended September 30, 2002 and 2001. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.






                                           /s/ Crowe, Chizek and Company LLP

Grand Rapids, Michigan
October 14, 2002











                                       3
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars, in thousands)

<TABLE>
<CAPTION>
                                                                   09/30/02             12/31/01             09/30/01
                                                               ------------------   ------------------   ------------------
<S>                                                            <C>                  <C>                  <C>
ASSETS
Cash and cash equivalents
          Cash and due from banks                                         $4,176               $3,600               $2,525
          Federal funds sold                                               9,670                4,887                2,527
          Interest bearing deposits with banks                             6,751                7,387                4,220
                                                               ------------------   ------------------   ------------------
                    Total cash and cash equivalents                       20,597               15,874                9,272

Mortgage loans held for sale                                                 380                2,915                3,150
Securities available for sale                                             19,624               21,652               33,320
Federal Home Loan Bank stock                                               1,033                1,000                  450
Loans
          Loans                                                          251,174              180,892              153,637
          Allowance for loan losses                                       (2,700)              (1,922)              (1,571)
                                                               ------------------   ------------------   ------------------
                    Net loans                                            248,474              178,970              152,066

Premises and equipment, net                                                5,033                4,746                4,406
Accrued interest receivable                                                1,197                1,085                1,095
Other assets                                                                 600                  623                  396
                                                               ------------------   ------------------   ------------------

          Total assets                                                  $296,938             $226,865             $204,155
                                                               ==================   ==================   ==================

LIABILITIES
Deposits
          Non-interest bearing deposits                                  $36,038              $21,441              $21,672
          Interest bearing deposits                                      209,534              156,040              152,671
                                                               ------------------   ------------------   ------------------
                    Total deposits                                       245,572              177,481              174,343

Other liabilities
          Federal Home Loan Bank advances                                 20,660               20,000                  ---
          Mortgage payable                                                   ---                  ---                  446
          Accrued interest payable                                           609                  804                  836
          Other liabilities                                                  302                  677                  515
                                                               ------------------   ------------------   ------------------
                    Total liabilities                                    267,143              198,962              176,140

STOCKHOLDERS' EQUITY
          Common stock - 5,000,000 shares authorized,
                   2,481,609 shares at 09/30/02, 2,471,609 at
                   12/31/01; and  2,501,481 shares at 09/30/01            28,667               27,675               27,335
          Retained earnings                                                1,078                  168                  425
          Accumulated other comprehensive income                              50                   60                  255
                                                               ------------------   ------------------   ------------------
                    Total stockholders' equity                            29,795               27,903               28,015

                    Total liabilities and stockholders' equity          $296,938             $226,865             $204,155
                                                               ==================   ==================   ==================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                       4
<PAGE>


                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                       Three Months Ended            Nine Months Ended
                                                                     09/30/02      09/30/01         09/30/02     09/30/01
                                                                    -----------  -------------     -----------  -----------
<S>                                                                 <C>          <C>               <C>          <C>
Interest income
          Interest on loans, including fees                             $4,443         $3,155         $12,123       $9,055
          Interest on securities available for sale                        296            370             870        1,040
          Interest on interest bearing deposits with banks                  25             40              83          214
          Interest on federal funds                                         37            116             167          554
                                                                    -----------  -------------     -----------  -----------
                    Total interest income                                4,801          3,681          13,243       10,863

Interest expense
          Interest on deposits                                           1,655          1,781           4,859        5,782
          Interest on other borrowings                                     230              7             679           23
                                                                    -----------  -------------     -----------  -----------
                    Total interest expense                               1,885          1,788           5,538        5,805

                    Net interest income                                  2,916          1,893           7,705        5,058
Provision for loan losses                                                  400            250             888          505
                                                                    -----------  -------------     -----------  -----------

Net interest income after provision for loan losses                      2,516          1,643           6,817        4,553
                                                                    -----------  -------------     -----------  -----------

Non-interest income
          Service charges on deposit accounts                               97             62             261          192
          Fees for other services to customers                               7              6              23           22
          Gain on the sale of loans                                        321            222             676          663
          Gain (loss) on the sale of securities available for sale         138            --              138          (5)
          Other income                                                      16              2              32            4
                                                                    -----------  -------------     -----------  -----------
                    Total non-interest income                              579            292           1,130          876

Non-interest expenses
          Salaries and employee benefits                                 1,156            843           3,260        2,442
          Occupancy and equipment expense                                  240            183             683          424
          Advertising and marketing                                         28             24             147          107
          Stationery and supplies                                           43             49             156          142
          Professional services                                             59             54             181          200
          Data processing                                                   62             43             184          141
          FDIC insurance premiums                                           10              8              25           22
          Other operating expenses                                         182            113             478          326
                                                                    -----------  -------------     -----------  -----------
                    Total non-interest expenses                          1,780          1,317           5,114        3,804
                                                                    -----------  -------------     -----------  -----------

Income before income tax provision                                       1,315            618           2,833        1,625
Income tax provision                                                       447            217             962          558
                                                                    -----------  -------------     -----------  -----------

Net income                                                                $868           $401          $1,871       $1,067
                                                                    ===========  =============     ===========  ===========

Share and per share data:
Net income - basic                                                       $0.35          $0.16           $0.76        $0.41
Net income - diluted                                                     $0.33          $0.15           $0.72        $0.40

Weighted average number of shares outstanding - basic                2,472,393      2,556,088       2,471,870    2,586,532
Weighted average number of shares outstanding - diluted              2,613,226      2,634,625       2,591,538    2,635,064
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements


                                       5
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

<TABLE>
<CAPTION>
                                                                      Three Months Ended           Nine Months Ended
                                                                     09/30/02     09/30/01      09/30/02       09/30/01
                                                                    -----------  -----------   -----------    -----------
<S>                                                                 <C>          <C>           <C>            <C>
Net income                                                                $868         $401        $1,871         $1,067
Other comprehensive income (loss), net of tax
     Unrealized gains (losses) on securities
          Unrealized holding gains (losses) arising during period           (6)         338           123            621
          Less:  reclassification adjustment for (gains) losses
               Included net income                                        (138)         --           (138)             5
          Tax effects                                                       49         (119)            5           (212)
                                                                    -----------  -----------   -----------    -----------
Other comprehensive income (loss)                                          (95)         219           (10)           414
                                                                    -----------  -----------   -----------    -----------

Comprehensive income                                                      $773         $620        $1,861         $1,481
                                                                    ===========  ===========   ===========    ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



                                       6
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

<TABLE>
<CAPTION>
                                                                                 9/30/02               9/30/01
                                                                             -----------------    ------------------
<S>                                                                          <C>                  <C>
Cash flows from operating activities
          Interest and fees received                                                  $13,131               $11,302
          Interest paid                                                                (5,733)               (5,835)
          Taxes paid                                                                     (709)               (1,030)
          Proceeds from sale of mortgages held for sale                                45,690                49,054
          Origination of mortgages held for sale                                      (42,479)              (50,456)
          Cash paid to suppliers and employees                                         (4,972)               (3,279)
                                                                             -----------------    ------------------
          Net cash provided by (used in) operating activities                           4,928                 (244)

Cash flows from investing activities
          Proceeds from maturities of securities available for sale                    20,574                37,880
          Proceeds from sales of securities available for sale                         12,044                13,755
          Proceeds from repayments of securities available for sale                       454                   --
          Purchases of securities available for sale                                  (31,050)              (32,504)
          Purchase of Federal Home Loan Bank stock                                        (33)                  --
          Increase in loans, net of payments received                                 (70,392)              (25,719)
          Purchases of property and equipment                                            (584)               (1,502)
                                                                             -----------------    ------------------
          Net cash used in investing activities                                       (68,987)               (8,090)

Cash flows from financing activities
          Net increase in non-interest bearing deposits                                14,597                 2,519
          Net increase in interest bearing deposits                                    53,494                 7,703
          Principal payments on mortgage payable                                          --                    (21)
          Proceeds from Federal Home Loan Bank advances                                   660                   --
          Repurchase of common stock                                                      --                 (1,229)
          Issuance of shares upon exercise of stock options                                31                   --
                                                                             -----------------    ------------------
          Net cash provided by financing activities                                    68,782                 8,972

Increase in cash and cash equivalents                                                   4,723                   638
Cash and cash equivalents at the beginning of the period                               15,874                 8,634
                                                                             -----------------    ------------------

Cash and cash equivalents at the end of the period                                    $20,597                $9,272
                                                                             =================    ==================

Reconciliation of net income to net cash provided by
  (used in) operating activities
Net income                                                                             $1,871                $1,067
          Adjustments to reconcile net income to net cash
                    provided by (used in) operating activities
                    Provision for loan losses                                             888                   505
                    Depreciation and amortization expense                                 297                   255
                    Accretion of discount on securities available for sale                 (7)                  (15)
                    Amortization of premium on securities available for sale              136                   100
                    (Gain) loss on the sale of securities available for sale             (138)                    5
                    (Increase) decrease in mortgages held for sale                      2,535                (2,065)
                    (Increase) decrease in interest receivable                           (112)                  439
                    Increase (decrease) in interest payable                              (195)                   10
                    (Increase) decrease in other assets                                    28                  (359)
                    Decrease in other liabilities                                        (375)                 (186)
                                                                             -----------------    ------------------

Net cash provided by (used in) operating activities                                    $4,928                 ($244)
                                                                             =================    ==================

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.




                                       7
<PAGE>

DEARBORN BANCORP, INC.
FORM 10-Q  (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.       Accounting and Reporting Policies

         The consolidated financial statements of Dearborn Bancorp, Inc. (the
         "Corporation") include the consolidation of its only subsidiary,
         Community Bank of Dearborn (the "Bank"). The accounting and reporting
         policies of the Corporation are in accordance with generally accepted
         accounting principles and conform to practice within the banking
         industry.

         The consolidated financial statements of the Corporation as of
         September 30, 2002 and 2001, and December 31, 2001 and for the three
         and nine month periods ended September 30, 2002 and 2001 reflect all
         adjustments, consisting of normal recurring items which are in the
         opinion of management, necessary for a fair presentation of the results
         for the interim period. The operating results for the periods are not
         necessarily indicative of results of operations for the entire year.

         The consolidated financial statements as of September 30, 2002 and
         2001, and for the three and nine months ended September 30, 2002 and
         2001 included herein have been prepared by the Corporation, without an
         audit, pursuant to the rules and regulations of the Securities and
         Exchange Commission. Certain information and footnote disclosures
         normally included in interim financial statements prepared in
         accordance with generally accepted accounting principles have been
         condensed or omitted pursuant to such rules and regulations. These
         financial statements should be read in conjunction with the financial
         statements and notes thereon included in the Corporation's 2001 Annual
         Report to Stockholders on Form 10-K.



                                       8
<PAGE>

B.       Securities Available For Sale

         The amortized cost and estimated market value of securities available
         for sale are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                         September 30, 2002
                                                ----------------------------------------------------------------------
                                                                        Gross            Gross           Estimated
                                                   Amortized         Unrealized       Unrealized          Market
                                                      Cost              Gains           Losses             Value
                                                -----------------  ---------------- ----------------  ----------------
<S>                                             <C>                <C>              <C>               <C>
         US Treasury securities                           $2,021                $5             $--             $2,026
         Mortgage backed securities                        2,517                97              --              2,614
         Municipal securities                              5,000               --               --              5,000
         Corporate debt securities                         6,010                13              (39)            5,984
         Preferred stock                                   4,000               --               --              4,000
                                                -----------------  ---------------- ----------------  ----------------

                   Totals                                $19,548              $115             ($39)          $19,624
                                                =================  ================ ================  ================
</TABLE>

<TABLE>
<CAPTION>

                                                                          December 31, 2001
                                                ----------------------------------------------------------------------
                                                                        Gross            Gross           Estimated
                                                   Amortized         Unrealized       Unrealized          Market
                                                      Cost              Gains           Losses             Value
                                                -----------------  ---------------- ----------------  ----------------
<S>                                             <C>                <C>              <C>                <C>
         US Treasury securities                           $2,069              $--              $--             $2,069
         Mortgage backed securities                        2,970                50               (7)            3,013
         Municipal securities                              1,476                 1              --              1,477
         Corporate debt securities                        11,046                73              (26)           11,093
         Preferred stock                                   4,000               --               --              4,000
                                                -----------------  ---------------- ----------------  ----------------

                   Totals                                $21,561              $124             ($33)          $21,652
                                                =================  ================ ================  ================
</TABLE>

         The amortized cost and estimated market value of securities available
         for sale at September 30, 2002 by contractual maturity are shown below
         (in thousands):

<TABLE>
<CAPTION>

                                                                                                         Estimated
                                                                                       Amortized          Market
                                                                                         Cost              Value
                                                                                    ----------------  ----------------
<S>                                                                                 <C>               <C>
         Due in three months or less                                                           $--               $--
         Due in three months through one year                                                 4,021             4,038
         Due in one year through five years                                                   9,010             8,972
         Due in over ten years                                                                4,000             4,000
         Mortgage backed securities                                                           2,517             2,614
                                                                                    ----------------  ----------------

                   Totals                                                                   $19,548           $19,624
                                                                                    ================  ================
</TABLE>



                                       9
<PAGE>

C.       Stock Option Plan

         Options to buy common stock are granted to officers and employees under
         a Stock Option Plan which provides for issue of up to 578,813 shares.
         Exercise price is the market price at date of grant. The maximum option
         term is ten years, and options become exercisable six months after the
         date of grant. If an option expires or terminates without having been
         exercised, shares covered by such option becomes available for future
         grant under the Plan.

         A summary of the option activity for the nine months ended September
         30, 2002 is as follows:

<TABLE>
<CAPTION>
                                                                                                         Weighted
                                                                                       Weighted        Average Fair
                                                          Available                     Average          Value of
                                                             For         Options       Exercise           Options
                                                            Grant      Outstanding       Price            Granted
                                                            -----      -----------       -----            -------
<S>                                                       <C>          <C>             <C>             <C>
         Outstanding at January 1, 2002                      243,643        312,016        $8.10
         Granted                                           (125,225)        125,225        11.46
         Exercised                                               --         (10,000)        7.70             $4.93
                                                      --------------- --------------  -----------
         Outstanding at September 30, 2002                   118,418        427,241        $9.09
</TABLE>

         For the options outstanding at September 30, 2002, the range of
         exercise prices was $5.88 to $13.25 per share with a weighted-average
         remaining contractual term of 7.6 years. At September 30, 2002, 420,141
         options were exercisable at weighted average exercise price of $9.03
         per share.

         Had compensation cost for stock options been measured using the fair
         value method of FASB Statement No. 123, net income and earnings per
         share would have been the pro forma amounts indicated below for the
         nine months ended September 30, 2002 and 2001 (in thousands, except per
         share data). The pro forma effects may increase in the future if more
         options are granted.

<TABLE>
<CAPTION>
                                                              For the Nine Months Ended September 30,
                                                               2002                            2001
                                                     --------------------------    -----------------------------
<S>                                                  <C>                           <C>
         Net income
                   As reported                                          $1,871                           $1,067
                   Pro forma                                             1,252                              728
         Basic income per share
                   As reported                                           $0.76                            $0.41
                   Pro forma                                              0.51                             0.28
         Diluted income per share
                 As reported                                              0.72                             0.40
                 Pro forma                                                0.48                             0.28
</TABLE>


                                       10
<PAGE>

         The pro forma effects are computed with option pricing models, using
         the following weighted average assumptions as of grant date for grants
         during the nine month periods ended September 30, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                   2002                  2001
                                                             ------------------   -------------------
<S>                                                          <C>                  <C>
          Risk-free interest rate                                        4.76%                 5.12%
          Expected option life                                         8 years               8 years
          Dividend yield                                                 0.00%                 0.00%
          Expected volatility of stock price                            26.06%                25.65%
</TABLE>

           All share and per share amounts have been adjusted for stock
           dividends.


                                       11
<PAGE>

PART I  -  FINANCIAL INFORMATION

ITEM 2. -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis are intended to address significant
factors affecting the financial condition and results of operations of the
Corporation. The discussion provides a more comprehensive review of the
financial position and operating results than can be obtained from a reading of
the financial statements and footnotes presented elsewhere in this report.

Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that are based on management's
beliefs, assumptions, current expectations, estimates and projections about the
financial services industry, the economy, and about the Corporation and Bank.
Words such as "anticipates", "believes", "estimates", "expects", "forecasts",
"intends", "is likely", "plans", "projects", variations of such words and
similar expressions are intended to identify such forward- looking statements.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions ("Future Factors") that are difficult to
predict with regard to timing, extent, likelihood and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what may be
expressed or forecasted in such forward-looking statements. The Corporation
undertakes no obligation to update, amend or clarify forward-looking statements,
whether as a result of new information, future events (whether anticipated or
unanticipated), or otherwise.

Future Factors 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 as well as their ability to repay
loans; and changes in the national and local economy. These are representative
of the Future Factors that could cause a difference between an ultimate actual
outcome and a preceding forward-looking statement.



                                       12
<PAGE>


GENERAL

The Corporation was formed in 1992 and the Bank was formed in 1993. Principal
operations of the Bank commenced on February 28, 1994 when the Bank opened for
business at its main office. Subsequently, branch offices were opened in
Dearborn Heights and Plymouth Township. During 2001, the Bank opened its fourth
and fifth offices, located at 1325 N. Canton Center Road, Canton Township,
Michigan and 45000 River Ridge Drive in Clinton Township, Michigan,
respectively. Additionally, Community Bank Mortgage, Inc., a mortgage company,
was formed and began operations in 2001. The Bank formed Community Bank Audit
Services, Inc., a subsidiary that offers internal audit and compliance services,
on March 26, 2002. Additionally, the Bank intends to open an office at 19100
Hall Road in Clinton Township during November of 2002 and an office at 12820
Fort Street in Southgate during the first quarter of 2003.

RESULTS OF OPERATIONS

The Corporation reported net income of $868,000 and $1,871,000 for the three and
nine month periods ended September 30, 2002, compared to net income of $401,000
and $1,067,000 for the three and nine month periods ended September 30, 2001.
The increase in net income was primarily due to the improvements in net interest
income, which is partially offset by the increase in non-interest expense. The
improvement in net interest income was primarily due to the increase in the
commercial real estate loan and other commercial loan portfolios and the
decreasing cost of deposits during the period. Management expects net interest
income to continue to increase during 2002 due to the continued growth in the
loan portfolio and the continued diversification of the deposit mix with
emphasis on the growth of savings, interest checking and money market accounts.

NET INTEREST INCOME

2002 Compared to 2001. As noted on the charts on the following pages, net
interest income for the three and nine month periods ended September 30, 2002,
was $2,916,000 and $7,705,000, respectively, compared to $1,893,000 and
$5,058,000 for the same periods ended September 30, 2001, an increase of
$1,023,000 or 54% and $2,647,000 or 52%, respectively. This increase was caused
primarily by an increase in the volume of interest earning assets and the net
interest rate spread during the periods. The Corporation's interest rate spread
was 3.50% and 3.29%, respectively, for the three and nine month periods ended
September 30, 2002, compared to 2.92% and 2.53% for the same periods in 2001.
The Corporation's net interest margin on earning assets was 4.12% and 3.88%,
respectively, for the three and nine month periods ended September 30, 2002
compared to 3.87% and 3.63% for the same periods in 2001. The Corporation's
improvement in interest rate spread and net interest margin was primarily the
result of the Bank's ability to originate commercial loans and fund those loans
with lower yielding liquid assets and lower costing deposits. Additionally, the
cost of the Bank's deposits have continued to decrease as a result of the Bank's
ability to adjust the deposit mix by increasing the balances in savings and
other transaction-based deposit products relative to total deposits.
Additionally, general industry rates have remained low throughout 2002.
Management expects that both the net interest margin on earning assets and the
net interest rate spread will increase during 2002 as the Bank converts funds
currently held in federal funds, interest bearing deposits with banks and
securities available for sale into loans.


                                       13
<PAGE>

Average Balances, Interest Rates and Yields. Net interest income is affected by
the difference ("interest rate spread") between rates of interest earned on
interest-earning assets and rates of interest paid on interest-bearing
liabilities and the relative amounts of interest-bearing liabilities and
interest-earning assets. When the total of interest-earning assets approximates
or exceeds the total of interest-bearing liabilities, any positive interest rate
spread will generate net interest income. Financial institutions have
traditionally used interest rate spreads as a measure of net interest income.
Another indication of an institution's net interest income is its "net yield on
interest-earning assets" or "net interest margin," which is net interest income
divided by average interest-earning assets.

The following tables set forth certain information relating to the Corporation's
consolidated average interest-earning assets and interest-bearing liabilities
and reflects the average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average daily balance of assets or liabilities, respectively, for
the periods presented. During the periods indicated, non-accruing loans, if any,
are included in the loan category.

<TABLE>
<CAPTION>
                                                                Three months ended September 30,    Three months ended September 30,
                                                                               2002                               2001
                                                                ---------------------------------  ---------------------------------
                                                                 Average                Average     Average                Average
(In thousands)                                                   Balance     Interest    Rate       Balance     Interest     Rate
                                                                -----------  --------  ----------  -----------  ---------  ---------
<S>                                                             <C>          <C>       <C>         <C>          <C>        <C>
Assets
          Interest-bearing deposits with banks                      $6,124       $25       1.62%       $3,998        $40      3.98%
          Federal funds sold                                         8,488        37       1.73%       12,927        116      3.57%
          Securities, available for sale                            30,127       296       3.91%       29,606        370      4.97%
          Loans                                                    236,991     4,443       7.46%      148,033      3,155      8.48%
                                                                -----------  --------  ----------  -----------  ---------  ---------
             Total earning assets                                  281,730     4,801       6.78%      194,564      3,681      7.53%
          Other assets                                               8,980                             10,323
                                                                -----------                        -----------

             Total assets                                         $290,710                           $204,887
                                                                ===========                        ===========

Liabilities and stockholders' equity
          Interest bearing deposits                               $208,687    $1,655       3.15%     $153,919     $1,781      4.60%
          Other borrowings                                          20,229       230       4.52%          448          7      6.22%
                                                                -----------  --------  ----------  -----------  ---------  ---------
             Total interest bearing liabilities                    228,916     1,885       3.28%      154,367      1,788      4.61%
          Non-interest bearing deposits                             31,071                             20,875
          Other liabilities                                          1,362                              1,334
          Stockholders' equity                                      29,361                             28,311
                                                                -----------                        -----------

             Total liabilities and stockholders' equity           $290,710                           $204,887
                                                                ===========                        ===========

             Net interest income                                              $2,916                              $1,893
                                                                             ========                           =========

             Net interest rate spread                                                      3.50%                              2.92%
                                                                                       ==========                          =========

             Net interest margin on earning assets                                         4.12%                              3.87%
                                                                                       ==========                          =========

</TABLE>



                                       14
<PAGE>


<TABLE>
<CAPTION>
                                                                Nine months ended September 30,     Nine months ended September 30,
                                                                             2002                                 2001
                                                              ----------------------------------   ---------------------------------
                                                               Average                 Average      Average                Average
(In thousands)                                                 Balance     Interest     Rate        Balance     Interest     Rate
                                                              -----------  ---------  ----------   -----------  ---------  ---------
<S>                                                           <C>          <C>        <C>          <C>          <C>        <C>
Assets
          Interest-bearing deposits with banks                    $7,322        $83       1.52%        $6,429       $214      4.46%
          Federal funds sold                                      12,694        167       1.76%        16,462        554      4.51%
          Securities available for sale                           30,907        870       3.77%        25,836      1,040      5.40%
          Loans                                                  215,454     12,123       7.54%       137,906      9,055      8.80%
                                                              -----------  ---------  ----------   -----------  ---------  ---------
             Total earning assets                                266,377     13,243       6.67%       186,633     10,863      7.80%
          Other assets                                             9,230                               10,776
                                                              -----------                          -----------

             Total assets                                       $275,607                             $197,409
                                                              ===========                          ===========

Liabilities and stockholders' equity
          Interest bearing deposits                             $199,336     $4,859       3.27%      $147,100     $5,782      5.27%
          Other borrowings                                        20,077        679       4.53%           455         23      6.78%
                                                              -----------  ---------  ----------   -----------  ---------  ---------
             Total interest bearing liabilities                  219,413      5,538       3.38%       147,555      5,805      5.27%
          Non-interest bearing deposits                           26,223                               20,352
          Other liabilities                                        1,174                                1,336
          Stockholders' equity                                    28,797                               28,166
                                                              -----------                          -----------

             Total liabilities and stockholders' equity         $275,607                             $197,409
                                                              ===========                          ===========

             Net interest income                                             $7,705                               $5,058
                                                                           =========                            =========

             Net interest rate spread                                                     3.29%                               2.53%
                                                                                      ==========                           =========

             Net interest margin on earning assets                                        3.88%                               3.63%
                                                                                      ==========                           =========
</TABLE>



                                       15
<PAGE>

Rate/Volume Analysis. The following table analyzes net interest income in terms
of changes in the volume of interest-earning assets and interest-bearing
liabilities and changes in yields and rates. The table reflects the extent to
which changes in the interest income and interest expense are attributable to
changes in volume (changes in volume multiplied by prior year rate) and changes
in rate (changes in rate multiplied by prior year volume). Changes attributable
to the combined impact of volume and rate have been allocated proportionately to
changes due to volume and changes due to rate.


<TABLE>
<CAPTION>
                                                               Three Months ended                      Nine Months Ended
                                                             September 30, 2002/2001                September 30, 2002/2001
                                                            Change in Interest Due to:             Change in Interest Due to:
                                                        ----------------------------------    ---------------------------------
                                                         Average      Average      Net         Average     Average      Net
(In thousands)                                           Balance       Rate      Change        Balance      Rate      Change
                                                        -----------  ---------- ----------    ----------- ---------- ----------
<S>                                                     <C>          <C>        <C>           <C>         <C>        <C>
Assets
          Interest bearing deposits with banks                  $9       ($24)      ($15)          ($36)      ($95)     ($131)
          Federal funds sold                                  (20)        (59)       (79)          (163)      (224)      (387)
          Securities available for sale                          5        (79)       (74)             33      (203)      (170)
          Loans                                              1,666       (378)      1,288          3,901      (833)      3,068
                                                        -----------  ---------- ----------    ----------- ---------- ----------
Total earning assets                                        $1,660      ($540)     $1,120         $3,735   ($1,355)     $2,380
                                                        ===========  ========== ==========    =========== ========== ==========

Liabilities
          Interest bearing deposits                           $431      ($557)     ($126)           $549   ($1,472)     ($923)
          Other borrowings                                     225         (2)        223            661        (5)        656
                                                        -----------  ---------- ----------    ----------- ---------- ----------
Total interest bearing liabilities                            $656      ($559)        $97         $1,210   ($1,477)     ($267)
                                                        ===========  ========== ==========    =========== ========== ==========

                Net interest income                                                $1,023                               $2,647
                                                                                ==========                           ==========

                Net interest rate spread                                            0.58%                                0.76%
                                                                                ==========                           ==========

                Net interest margin on earning assets                               0.25%                                0.25%
                                                                                ==========                           ==========
</TABLE>


PROVISION FOR LOAN LOSSES

2002 Compared to 2001. The provision for loan losses was $400,000 and $888,000
for the three and nine month period ended September 30, 2002, compared to
$250,000 and $505,000 for the same periods in 2001, an increase of $150,000 or
60% for the three month period and $383,000 or 76% for the nine month period.
The provision for loan losses for the three and nine months ended September 30,
2002 is based on internal analysis of the adequacy of the allowance for loan
losses which considers the size and composition of the loan portfolio as well as
other factors, including types and amounts of non-performing loans, historical
and anticipated loss experience on such types of loans, and current and
projected economic conditions.


                                       16
<PAGE>

NON-INTEREST INCOME

2002 Compared to 2001. Non-interest income was $579,000 and $1,130,000 for the
three and nine month periods ended September 30, 2002, compared to $292,000 and
$876,000 for the same periods in 2001, an increase of $287,000 or 98% for the
three month period and $254,000 or 29% for the nine month period. The increase
for the three month period was primarily due to increases in the gain on the
sale of securities available for sale and gain on the sale of loans during the
period. The increase for the nine month period was primarily due to increases in
the gain on the sale of securities available for sale and service charges on
deposit accounts. The securities were sold to provide additional liquidity that
will be utilized to fund loan demand during the fourth quarter of 2002.

NON-INTEREST EXPENSE

2002 Compared to 2001. Non-interest expense was $1,780,000 and $5,114,000 for
the three and nine month periods ended September 30, 2002, compared to
$1,317,000 and $3,804,000 for the same periods in 2001, an increase of $463,000
or 35% for the three month period and $1,310,000 or 34% for the nine month
period. The largest component of non-interest expense was salaries and employee
benefits which amounted to $1,156,000 and $3,260,000 for the three and nine
month periods ended September 30, 2002, compared to $843,000 and $2,442,000 for
the same periods in 2001, an increase of $313,000 or 37% for the three month
period and $818,000 or 33% for the nine month period. The primary factor in the
increase in salaries and benefits expense was the addition of two branch offices
during the second half of 2001, the expansion of the lending and operations
departments and general staff increases. As of September 30, 2002, the number of
full time equivalent employees was 81 compared to 55 as of September 30, 2001.
Salaries and employee benefits will continue to increase with the opening of a
branch office during the fourth quarter of 2002, preparation for the opening of
a branch office during the first quarter of 2003 and general staff increases.

Two other components of the increase in non-interest expense were occupancy and
equipment expense and other operating expense. Occupancy and equipment expense
amounted to $240,000 and $683,000 for the three month and nine month periods
ended September 30, 2002, compared to $183,000 and $424,000 for the same periods
in 2001, an increase of $57,000 or 31% for the three month period and $259,000
or 61% for the six month period. Other operating expense amounted to $182,000
and $478,000 for the three month period and nine month period ended September
30, 2002, compared to $113,000 and $326,000 for the same periods in 2001, an
increase of $57,000 or 31% for the three month period and $259,000 or 61% for
the nine month period. The primary factor in the increase in occupancy and
equipment expense and other operating expense was the opening of branch offices
in Canton Township, Michigan and Clinton Township, Michigan. The Bank also
completed the construction of an addition to the Bank's main office in Dearborn,
Michigan in December 2001. During 2002, the Bank will open a retail branch at
19100 Hall Road in Clinton Township in front of the current offices in the River
Ridge Corporate Office Center Building. Construction of this project commenced
during the second quarter of 2002. Upon completion during the fourth quarter of
2002, the retail branch staff will move to the retail branch office while loan,
operations and administrative personnel will remain in the existing building.
Additionally, the Bank expects to open a branch office in Southgate during the
first quarter of 2003.


                                       17
<PAGE>

INCOME TAX PROVISION

2002 Compared to 2001. Income tax expense was $447,000 and $962,000 for the
three and nine month periods ended September 30, 2002, compared to $217,000 and
$558,000 for the same periods in 2001, an increase of $230,000 or 106% for the
three month period and $404,000 or 72% for the nine month period. The increase
was primarily a result of increased pre-tax income and the effective tax rate
was approximately 34% in all periods.




                                       18
<PAGE>

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001

Assets. Total assets at September 30, 2002 were $296,938,000 compared to
$226,865,000 at December 31, 2001, an increase of $70,073,000 or 31%. The
increase was primarily due to the increase in loans. The increase in loans was
funded primarily with deposits.

Federal Funds Sold. Total federal funds sold at September 30, 2002 were
$9,670,000 compared to $4,887,000 at December 31, 2001, an increase of
$4,783,000 or 98%. The increase was primarily due to the short term deployment
of funds that were received as a result of an increase in deposits and the sale
of securities available for sale during the period. These funds are deployed
into federal funds sold until they can be utilized to fund loan volume.

Interest bearing deposits with banks. Total interest bearing deposits with banks
at September 30, 2002 were $6,751,000 compared to $7,387,000 at December 31,
2001, a decrease of $636,000 or 9%. This decrease was due to the deployment of
these funds into loans. This investment was established to provide the
Corporation with an alternate short term investment option. This short term
investment is a variable-rate certificate of deposit with the Federal Home Loan
Bank of Indianapolis that carries a similar rate of return to federal funds
sold.

Mortgage Loans Held for Sale. Total mortgage loans held for sale at September
30, 2002 were $380,000 compared to $2,915,000 at December 31, 2001, a decrease
of $2,535,000 or 87%. This decrease was primarily due to the Bank's ability to
receive funding more rapidly. The Bank has accelerated this process by selling
mortgage loans to correspondents that complete these transactions more rapidly.

Securities Available for Sale. Total securities available for sale at September
30, 2002 were $19,624,000 compared to $21,652,000 at December 31, 2001, a
decrease of $2,028,000 or 9%. The decrease was due to the sale of securities
available for sale during the period. The securities were sold during the third
quarter of 2002 with a realized gain of $138,000 and the funds from the sale of
these securities will be utilized to a fund loans during the fourth quarter of
2002.

The entire portfolio has a net unrealized gain of $76,000. The Corporation does
not hold any securities in the "Held to Maturity" category nor does the
Corporation hold or utilize derivatives.

Please refer to Note B for the amortized cost and estimated market value of
securities, available for sale.

Federal Home Loan Bank Stock. Federal Home Loan Bank stock was valued at
$1,033,000 at September 30, 2002, compared to $1,000,000 at December 31, 2001,
an increase of $33,000 or 3%.


                                       19
<PAGE>

Loans. Total loans at September 30, 2002 were $251,174,000 compared to
$180,892,000 at December 31, 2001, an increase of $70,282,000 or 39%. The
increase was primarily due to the expansion of the commercial lending department
during 2001. This expansion included the addition of two experienced commercial
loan officers at the Bank's branch office in Clinton Township, Michigan and the
development of the surrounding region. This expansion continued in 2002, with
the addition of an experienced commercial loan officer at the main office in
Dearborn, Michigan during the second quarter of 2002 and an experienced
commercial loan officer at the Clinton Township branch office during the third
quarter of 2002. Major categories of loans included in the loan portfolio are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                               09/30/02          12/31/01           09/30/01
                                                           -----------------  ----------------  ------------------
<S>                                                        <C>                <C>               <C>
Consumer loans                                                      $22,326           $18,773             $18,189
Commercial, financial, & other                                      $44,109            28,920              24,075
Commercial real estate construction                                 $23,514            10,463               7,711
Commercial real estate mortgages                                   $129,141            90,200              70,693
Residential real estate mortgages                                    32,084            32,536              32,969
                                                           -----------------  ----------------  ------------------

                                                                    251,174           180,892             153,637
Allowance for loan losses                                           (2,700)           (1,922)             (1,571)
                                                           -----------------  ----------------  ------------------

                                                                   $248,474          $178,970            $152,066
                                                           =================  ================  ==================
</TABLE>

The following is a summary of non-performing assets and problems loans (in
thousands):

<TABLE>
<CAPTION>
                                                               09/30/02          12/31/01           09/30/01
                                                           -----------------  ----------------  ------------------
<S>  <C>                                                   <C>                <C>               <C>
Over 90 days past due and still accruing                                 $2              $364                $314
Non-accrual loans                                                     2,743               427                 720
                                                           -----------------  ----------------  ------------------

                                                                     $2,745              $791              $1,034
                                                           =================  ================  ==================
</TABLE>


Non-accrual loans at September 30, 2002 were $2,743,000, of which, $1,955,000
was related to one commercial loan relationship that is well secured. The
remaining non-accrual loans consisted of two residential mortgage loans in
bankruptcy proceedings with balances of $289,000 and $45,000 and two slow paying
commercial loans with balances of $278,000 and $176,000.



                                       20
<PAGE>

Allowance for Loan Losses. The allowance for loan losses was $2,700,000 at
September 30, 2002 compared to $1,922,000 at December 31, 2001, an increase of
$778,000 or 40%. The allowance for loan losses was based upon management's
assessment of relevant factors, including loan growth, types and amounts of
non-performing loans, historical and anticipated loss experience on such types
of loans, and current and projected economic conditions.

The following is an analysis of the allowance for loan losses (in thousands):

<TABLE>
<CAPTION>
                                                 Nine Months Ended          Year Ended          Nine Months Ended
                                                     09/30/02                12/31/01                09/30/01
                                              ------------------------  -------------------  -------------------------
<S>                                           <C>                       <C>                  <C>
Balance, beginning of year                                     $1,922               $1,252                     $1,252

Charge-offs:
          Consumer loans                                         (20)                 (43)                       (43)
          Commercial loans                                      (133)                (251)                      (180)
Recoveries:
          Consumer loans                                            4                   32                         27
          Commercial loans                                         39                   12                         10
                                              ------------------------  -------------------  -------------------------

Net charge-offs                                                 (110)                (250)                      (186)

Additions charged to operations                                   888                  920                        505
                                              ------------------------  -------------------  -------------------------

Balance, end of period                                         $2,700               $1,922                     $1,571
                                              ========================  ===================  =========================

Allowance to total loans                                        1.07%                1.06%                      1.02%
                                              ========================  ===================  =========================

Allowance to nonperforming assets                              98.36%              242.98%                    151.93%
                                              ========================  ===================  =========================

Net charge-offs to average loans                                0.05%                0.17%                      0.13%
                                              ========================  ===================  =========================
</TABLE>

Premises and Equipment. Bank premises and equipment at September 30, 2002 was
$5,033,000 compared to $4,746,000 at December 31, 2001, an increase of $287,000
or 6%.

Accrued Interest Receivable. Accrued interest receivable at September 30, 2002
was $1,197,000 compared to $1,085,000 at December 31, 2001, an increase of
$112,000 or 10%. The increase was primarily due to the increase in the Bank's
loan portfolio.

Other Assets. Other assets at September 30, 2002 were $600,000 compared to
$623,000 at December 31, 2001, a decrease of $23,000 or 4%. The increase was
primarily due to changes in deferred tax assets.



                                       21
<PAGE>


Deposits. Total deposits at September 30, 2002 were $245,572,000 compared to
$177,481,000 at December 31, 2001, an increase of $62,046,000 or 38%. The
following is a summary of the distribution of deposits (in thousands):

<TABLE>
<CAPTION>
                                                       09/30/02               12/31/01              09/30/01
                                                -----------------------  --------------------  --------------------
<S>                                             <C>                      <C>                   <C>
Non-interest bearing:
          Demand                                               $36,038               $21,441               $21,672
                                                -----------------------  --------------------  --------------------


Interest bearing:
          Checking                                              12,419                 9,263                 8,577
          Money market                                          15,744                20,545                21,093
          Savings                                               56,499                37,429                39,628
          Time, under $100,000                                  63,703                38,667                39,203
          Time, $100,000 and over                               61,169                50,136                44,170
                                                -----------------------  --------------------  --------------------
                                                               209,534               156,040               152,671
                                                -----------------------  --------------------  --------------------

Total deposits                                                $245,572              $177,481              $174,343
                                                =======================  ====================  ====================
</TABLE>

The increase in deposits was primarily due to normal business development,
marketing, telemarketing, referral programs and growth strategies which included
a grand opening promotion for the Bank's branch office in Clinton Township,
Michigan, which targeted time deposit growth and an annual birthday celebration
and marketing campaign in March 2002. Management also continued the
implementation of a strategy during 2002 to change the mix of the deposit
portfolio by focusing more heavily on demand, interest bearing checking, savings
and money market, while reducing its reliance on time deposits. The
implementation of this strategy will continue during the remainder of 2002.

Federal Home Loan Bank Advances. Federal Home Loan Bank advances at September
30, 2002 were $20,660,000 compared to $20,000,000 at December 31, 2001, an
increase of $660,000 or 3%. The funds from this Federal Home Loan Bank advance
were utilized to provide funding for a commercial loan.

Accrued Interest Payable. Accrued interest payable at September 30, 2002 was
$609,000 compared to $804,000 at December 31, 2001, a decrease of $195,000 or
24%. The decrease was primarily due to the decreasing cost of interest bearing
deposits during the period.

Other Liabilities. Other liabilities at September 30, 2002 were $302,000
compared to $677,000 at December 31, 2001, a decrease of $375,000 or 55%. The
decrease was primarily due to the decrease in expenses payable during the
period.



                                       22
<PAGE>

CAPITAL

Stockholders' equity at September 30, 2002 was $29,795,000 compared to
$27,903,000 as of December 31, 2001, an increase of $1,892,000 or 7%. In prior
years, the Corporation had announced that it would repurchase up to 406,874
shares of its outstanding common stock under three stock repurchase programs.
Through December 31, 2001, the Corporation was able to repurchase 393,624 shares
within Securities and Exchange Commission guidelines primarily related to the
volume of market activity. Considering that the Corporation's stock closed at
$13.130 per share on September 30, 2002, representing a 109 percent market to
book ratio and the Corporation's plans for continued expansion, the Corporation
is not planning to repurchase shares during 2002. No shares were repurchased
during the first nine months of 2002.

The following is a presentation of the Corporation's and Bank's regulatory
capital ratios (in thousands):

<TABLE>
<CAPTION>
                                                                                                  Minimum
                                                                                           To Be Well Capitalized
                                                               Minimum for Capital         Under Prompt Corrective
                                           Actual               Adequacy Purposes             Action Provisions
                                   ----------------------   -------------------------    -------------------------
                                     Amount      Ratio         Amount       Ratio           Amount       Ratio
                                   ----------------------   -------------------------    -------------------------
<S>                                <C>           <C>        <C>             <C>          <C>             <C>
As of September 30, 2002
     Total capital
        (to risk weighted assets)
               Consolidated             32,446     12.5%           20,687       8.0%            25,859      10.0%
               Bank                     26,827     10.5%           20,354       8.0%            25,442      10.0%
    Tier 1 capital
        (to risk weighted assets)
               Consolidated             29,746     11.5%           10,344       4.0%            15,515       6.0%
               Bank                     24,127      9.5%           10,177       4.0%            15,265       6.0%
    Tier 1 capital
        (to average assets)
               Consolidated             29,746     10.2%           11,628       4.0%            14,536       5.0%
               Bank                     24,127      8.5%           11,418       4.0%            14,273       5.0%


As of December 31, 2001
     Total capital
        (to risk weighted assets)
               Consolidated             29,765     14.2%           16,735       8.0%            20,939      10.0%
               Bank                     20,170     10.1%           16,056       8.0%            20,090      10.0%
    Tier 1 capital
        (to risk weighted assets)
               Consolidated             27,843     13.3%            8,367       4.0%            12,563       6.0%
               Bank                     18,249      9.1%            8,028       4.0%            12,054       6.0%
    Tier 1 capital
        (to average assets)
               Consolidated             27,843     12.9%            8,654       4.0%            10,817       5.0%
               Bank                     18,249      8.9%            8,183       4.0%            10,229       5.0%

</TABLE>

Based on the respective regulatory capital ratios at September 30, 2002 and
December 31, 2001, the Corporation and Bank are considered well capitalized.


                                       23
<PAGE>

LIQUIDITY AND ASSET AND LIABILITY MANAGEMENT

Liquidity refers to readily available funds to meet the needs of borrowers and
depositors. Levels of liquidity are closely monitored in conjunction with loan
funding requirements and deposit outflows. Adequate liquidity protects
institutions from raising funds under duress at excessive expense and provides a
necessary cushion for occasional unpredictable aberrations in demand. While
adequate liquidity is imperative, excessive liquidity in lower yielding cash
investments or other easily marketable assets reduces potential interest income.
Thus, an appropriate balance must be maintained to protect the institution and
at the same time, prudently maximize income opportunities. Sources of liquidity
from both assets and liabilities include federal funds sold, securities
available for sale, loan repayments, core deposits and a federal funds purchase
credit facility.




                                       24
<PAGE>

PART I  -   FINANCIAL INFORMATION

ITEM 3.  -   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
             RISK

Interest Rate Sensitivity Analysis. The Corporation has sought to manage its
exposure to changes in interest rates by matching the effective maturities or
repricing characteristics of the Corporation's interest-earning assets and
interest-bearing liabilities. The matching of the assets and liabilities may be
analyzed by examining the extent to which the assets and liabilities are
interest rate sensitive and by monitoring the expected effects of interest rate
changes on net interest income.

An asset or liability is interest rate sensitive within a specific time period
if it will mature or reprice within that time period. If the Corporation's
assets mature or reprice more quickly or to a greater extent that its
liabilities, the Corporation's net portfolio value and net interest income would
tend to increase during periods of rising interest rates but decrease during
periods of falling interest rates. If the Corporation's assets mature or reprice
more slowly or to a lesser extent than its liabilities, its net portfolio value
and net interest income would tend to decrease during periods of rising interest
rates but increase during periods of falling interest rates.

The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific period if it
will mature or reprice within that period. The interest rate sensitivity "gap"
is the difference between the amount of interest-earning assets maturing or
repricing within a specific time period and the amount of interest-bearing
liabilities maturing or repricing within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities, and is considered negative when the amount
of interest rate sensitive liabilities exceed the amount of interest rate
sensitive assets. During a period of rising interest rates, a negative gap would
be expected to adversely affect net interest income while a positive gap would
be expected to result in an increase in net interest income, while conversely
during a period of declining interest rates, a negative gap would be expected to
result in an increase in net interest income and a positive gap would be
expected to adversely affect net interest income.



                                       25
<PAGE>

Different types of assets and liabilities with the same or similar maturities
may react differently to changes in overall market rates or conditions, and thus
changes in interest rates may affect net interest income positively or
negatively even if an institution were perfectly matched in each maturity
category. Additionally, the gap analysis does not consider the many factors as
banking interest rates move. While the interest rate sensitivity gap is a useful
measurement and contributes toward effective asset and liability management, it
is difficult to predict the effect of changing interest rates solely on that
measure, without accounting for alterations in the maturity or repricing
characteristics of the balance sheet that occur during changes in market
interest rates. During periods of rising interest rates, the Corporation's
assets tend to have prepayments that are slower than those in an interest rate
sensitivity gap and would increase the negative gap position. Conversely, during
a period of declining interest rates, the Corporation's assets would tend to
prepay faster than originally expected thus decreasing the negative gap
position. In addition, some of the Corporation's assets, such as adjustable rate
mortgages, have caps on the amount by which their interest rates can change in
any single period, and therefore may not reprice as quickly as liabilities in
the same maturity category.

The following table sets forth the amounts of interest earning assets and
interest bearing liabilities outstanding at September 30, 2002, which are
expected to mature or reprice in each of the time periods shown below.

<TABLE>
<CAPTION>
                                                  -----------------------------------------------------------------
(In thousands)                                       1-90         91-365         1-5         Over
                                                     Days          Days         Years       5 Years       Total
                                                  ------------  ------------  ----------  ------------ ------------
<S>                                               <C>           <C>           <C>         <C>          <C>
Earning assets
          Federal funds sold                           $9,670          $---        $---          $---       $9,670
          Interest bearing deposits with banks          6,751           ---         ---           ---        6,751
          Mortgage loans held for sale                    380           ---         ---           ---          380
          Securities available for sale                 5,928         9,071       2,440         2,185       19,624
          Federal Home Loan Bank stock                  1,033           ---         ---           ---        1,033
          Total loans (1)                              71,849        16,543     147,545        12,494      248,431
                                                  ------------  ------------  ----------  ------------ ------------
Total earning assets                                   95,611        25,614     149,985        14,679      285,889

Interest bearing liabilities
          Time deposits                                16,662        94,639      13,571           ---      124,872
          Other interest bearing deposits              84,662           ---         ---           ---       84,662
          Federal Home Loan Bank advances                 ---           ---      10,660        10,000       20,660
                                                  ------------  ------------  ----------  ------------ ------------
Total interest bearing liabilities                    101,324        94,639      24,231        10,000      230,194

Net asset (liability) funding gap                     (5,713)      (69,025)     125,754         4,679      $55,695
                                                  ------------  ------------  ----------  ------------ ============

Cumulative net asset (liability) funding gap         ($5,713)     ($74,738)     $51,016       $55,695
                                                  ============  ============  ==========  ============
</TABLE>

(1)  Total loans do not include non-accrual loans.



                                       26
<PAGE>

PART I  -   FINANCIAL INFORMATION

ITEM 4.  -   DISCLOSURE CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing date of this report, an evaluation
was carried out under the supervision and with the participation of Dearborn
Bancorp Inc.'s management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures are, to the best of their knowledge, effective to ensure
that information required to be disclosed by Dearborn Bancorp Inc. in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that
there were no significant changes in Dearborn Bancorp Inc.'s internal controls
or in other factors that could significantly affect its internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.





                                       27
<PAGE>

DEARBORN BANCORP, INC. AND SUBSIDIARY
FORM 10-Q  (continued)

PART II  -  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS IN FORM 8-K.

(a)      A Form 8-K Report was not filed during the three months ended September
         30, 2002.




                                       28
<PAGE>


DEARBORN BANCORP, INC.
FORM 10-Q  (continued)


                                   SIGNATURES


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.



                             Dearborn Bancorp, Inc.
                                  (Registrant)





                               /s/ John E. Demmer
                         -------------------------------
                                 John E. Demmer
                                    Chairman



                               /s/ Michael J. Ross
                         -------------------------------
                                 Michael J. Ross
                      President and Chief Executive Officer



                              /s/ Jeffrey L. Karafa
                         -------------------------------
                                Jeffrey L. Karafa
                      Treasurer and Chief Financial Officer




Date:  November 12, 2002



                                       29
<PAGE>





DEARBORN BANCORP, INC.
FORM 10-Q (continued)

                                  CERTIFICATION



I, Michael J. Ross, certify that:


1.       I have reviewed this quarterly report on Form 10-Q of Dearborn Bancorp,
         Inc. (the "registrant");

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date.

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and


                                       30
<PAGE>

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



Date:    November 12, 2002

                                                  /s/  Michael J. Ross
                                              --------------------------------
                                                     Michael J. Ross
                                           President and Chief Executive Officer
                                                  Dearborn Bancorp, Inc.


                                       31
<PAGE>

DEARBORN BANCORP, INC.
FORM 10-Q (continued)


                                  CERTIFICATION



I, Jeffrey L. Karafa, certify that:


1.       I have reviewed this quarterly report on Form 10-Q of Dearborn Bancorp,
         Inc. (the "registrant");

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date.

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons
         performing the equivalent function):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and


                                       32
<PAGE>

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



Date:    November 12, 2002

                                                   /s/  Jeffrey L. Karafa
                                              --------------------------------
                                                      Jeffrey L. Karafa
                                          Treasurer and Chief Financial Officer,
                                                    Dearborn Bancorp, Inc.






                                       33
<PAGE>

                               10-Q EXHIBIT INDEX


EXHIBIT NO.           DESCRIPTION


EX-99.1               Certification pursuant to 18 U.S.C. Section 1350, as
                      adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                      of 2002

EX-99.2               Certification pursuant to 18 U.S.C. Section 1350, as
                      adopted pursuant to Section 906 of the Sarbanes-Oxley
                      Act of 2002