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                                                                   EXHIBIT 10(b)

                         SOUTHERN MICHIGAN BANCORP, INC.

                             2000 STOCK OPTION PLAN


         1.   Purpose. The purpose of the Southern Michigan Bancorp, Inc. 2000
Stock Option Plan (this "Plan") is to advance the interests of Southern Michigan
Bancorp, Inc., a Michigan corporation (the "Corporation"), and its subsidiaries
by providing a larger personal and financial interest in the success of the
Company and its subsidiaries to employees and directors upon whose judgment,
interest and special efforts the Company and its subsidiaries are dependent for
the successful conduct of its and their operations and to enable the Company and
its subsidiaries to attract and retain key employees and directors.

         2.   Participants. Options may be granted under this Plan to any
employee or director of the Company and its subsidiaries. The employees and
directors of the Company and its subsidiaries to whom options are granted and
the terms of such options shall be determined by the Board of Directors. A
grantee may hold more than one option. Nothing contained in this Plan, nor in
any option granted pursuant to this Plan, shall confer upon any employee or
director any right to the continuation of his or her employment or directorship
nor limit in any way the right of the Company or its subsidiaries to terminate
such employment or directorship at any time. As used herein, the term
"subsidiary" shall mean any present or future entity that is controlled by the
Company, directly or through one or more intermediaries.

         3.   Effectiveness and Termination of Plan. This Plan shall become
effective upon approval thereof by the shareholders of the Company at a meeting
held, among other things, for such purpose. The adoption date of this Plan shall
be March 20, 2000, the date of its adoption by the Board of Directors of the
Company. This Plan shall terminate on the earliest of: (i) ten (10) years from
its adoption date; (ii) when all shares of Common Stock (as defined in Section 4
hereof) that may be issued under this Plan shall have been issued through
exercise of options granted under this Plan; or (iii) at any earlier time that
the Board of Directors may determine. Any option outstanding under this Plan at
the time of its termination shall remain in effect in accordance with its terms
and conditions and those of this Plan.

         4.   Common Stock. The aggregate number of shares of common stock,
$2.50 par value per share, of the Company (the "Common Stock") that may be
issued under this Plan shall consist of 110,000 shares, subject to further
adjustment as provided in Section 7 hereof. Such number of shares may be set
aside out of the authorized but unissued shares of Common Stock of the Company
not reserved for any other purpose or out of shares of Common Stock acquired by
the Company. All or any shares of Common Stock subjected under this Plan to an
option that, for any reason, is canceled, terminates, lapses or expires
unexercised as to such shares may again be subjected to an option under this
Plan.

         5.   Types of Options and Terms and Conditions.

              (a)  Options granted under this Plan shall be in the form of: (i)
incentive stock options ("Incentive Stock Options") as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"); or (ii) options not
qualifying under Section 422 of the Code ("Nonstatutory Stock Options"), all in
such amounts as determined by the Board of Directors.

              (b)  Options may be granted at any time and from time to time
prior to the termination of this Plan. Except as hereinafter provided, all
options granted pursuant to this Plan shall be subject to the following terms
and conditions:

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              (i)   Price. The purchase price of the shares of Common Stock
         issuable upon exercise of options granted under this Plan shall be not
         less than 100% of the fair market value of the Common Stock on the date
         of the grant of the option. For purposes of this Plan, "fair market
         value" of the Common Stock shall mean: (A) the mean between the closing
         high bid and low asked prices as reported by the National Association
         of Securities Dealers Automated Quotation System (or, if not so
         reported, by the system then regarded as the most reliable source of
         such quotation); or (B) if the Common Stock is quoted in the domestic
         over-the-counter market, but there are not reported quotations on the
         given date, the value determined pursuant to (A) above using the
         reported quotations on the last previous date on which so reported; or
         (C) if neither of the foregoing clauses apply, the price determined in
         good faith by the Board of Directors.

         The purchase price shall be paid in full at the time of such purchase,
         in: (A) cash; (B) shares of Common Stock of the Company valued at the
         fair market value of the Common Stock on the date of purchase; or (C)
         any combination of cash and Common Stock. Notwithstanding the
         foregoing, the Board of Directors may, in order to prevent any possible
         violation of law, require the purchase price to be paid in cash and
         further provide that the right to deliver Common Stock in payment of
         the purchase price may be limited or denied in any Option Agreements
         (as defined in Section 11 hereof). The purchase price shall be subject
         to adjustment, but only as provided in Section 7 hereof.

              (ii)  Duration and Exercise of Options. Options may be granted for
         terms of up to but not exceeding ten (10) years from the date the
         particular option is granted. Options shall be exercisable as provided
         by the Board of Directors at the time of grant thereof.

              (iii) Termination of Employment or Service as a Director. Upon the
         termination of the grantee's employment or service as a director, his
         or her rights to exercise an option shall be only as follows:

                    (1)  Death, Disability or Retirement. If the grantee's
              employment or service as a director is terminated by reason of
              death or disability (as described in Section 22(e)(3) of the
              Code), the grantee or the grantee's estate may, within one (1)
              year following such termination, exercise the option with respect
              to only such number of shares of Common Stock as to which the
              right of exercise had accrued on or before the last day on which
              the grantee was either an employee or director of the Company or
              any subsidiary. If the grantee's employment or service as a
              director is terminated by reason of retirement, the grantee or the
              grantee's estate (in the event of the grantee's death after such
              termination) may, within three (3) months following such
              termination, exercise the option with respect to only such number
              of shares of Common Stock as to which the right of exercise had
              accrued on or before the last day on which the grantee was either
              an employee or director of the Company or any subsidiary. For
              purposes of this Plan, "retirement" shall mean termination of
              employment or service as a director with the Company and/or its
              subsidiaries on or after the grantee's 65th birthday or the
              grantee's 60th birthday if the grantee has completed ten (10)
              years of service with the Company and/or its subsidiaries.

                    (2)  Other Reasons. If the grantee ceases to be an employee
              or director for any reason other than those provided above under
              "Death, Disability or Retirement," the grantee or the grantee's
              estate (in the event of the grantee's death after such
              termination) may, within the one (1) month period following such
              termination, exercise the option with respect to only such number
              of shares of Common Stock as to which the right of exercise had
              accrued on or before the last day on which the grantee was either
              an employee or director of the Company or any subsidiary.

                    (3)  General. Notwithstanding the foregoing, no option shall
              be exercisable in whole or in part: (A) after the termination date
              provided in the option; or (B) except as provided in the

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              second paragraph of Section 10, for one (1) year following the
              date the option was granted. A grantee's "estate" shall mean the
              grantee's legal representatives upon the grantee's death or any
              person who acquires the right under the laws of descent and
              distribution to exercise an option by reason of the grantee's
              death.

              (iv)  Transferability of Option. Except as otherwise provided
         herein, options shall be transferable only by will or the laws of
         descent and distribution and shall be exercisable during the grantee's
         lifetime only by him or her. An option and all rights thereunder shall
         terminate immediately if the holder attempts to or does sell, assign,
         transfer, pledge, hypothecate or otherwise dispose of the option or any
         rights thereunder to any person except as permitted herein.

              (v)  Other Terms and Conditions. Options may also contain such
         other provisions, which shall not be inconsistent with any of the
         foregoing terms, as the Board of Directors shall deem appropriate.

              (c)  Incentive Stock Options granted pursuant to this Plan shall
be subject to all the terms and conditions included in subsection (b) and to the
following terms and conditions:

              (i)   No Incentive Stock Option shall be granted to an individual
         who is not an employee of the Company or a "subsidiary corporation" as
         defined in Section 424(f) of the Code;

              (ii)  No Incentive Stock Option shall be granted to an employee
         who owns stock possessing more than 10% of the total combined voting
         power of all classes of stock of the Company unless the grant complies
         with the requirements of Section 422(c)(5) of the Code;

              (iii) The aggregate fair market value (determined as of the date
         the option is granted) of the shares of Common Stock with respect to
         which Incentive Stock Options are exercisable for the first time by any
         grantee during any calendar year (under all plans of the Company) shall
         not exceed $100,000 or such other amount as may subsequently be
         specified by the Code; provided that, to the extent that such
         limitation is exceeded, any excess options (as determined by the Code)
         shall be deemed to be Nonstatutory Stock Options; and

              (iv)  No Incentive Stock Option may be granted under this Plan if
         such grant, together with any applicable prior grants that are
         Incentive Stock Options within the meaning of Section 422(b) of the
         Code, would exceed any maximum established under the Code for incentive
         stock options that may be granted to an individual employee.

         6.   Rights of a Shareholder. A recipient of an option shall have no
rights as a shareholder with respect to any shares issuable or transferable upon
exercise thereof until the date of issuance of a stock certificate for such
shares. Except as otherwise provided pursuant to Section 7 hereof, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of such stock certificate.

         7.   Adjustment of and Changes in Common Stock. In the event that the
shares of Common Stock of the Company, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split-up, combination
of shares, or otherwise) or if the number of such shares of Common Stock shall
be increased through the payment of a stock dividend or a dividend on the shares
of Common Stock of rights or warrants to purchase securities of the Company
shall be made, then there shall be substituted for or added to each share of
Common Stock theretofore appropriated or thereafter subject or that may become
subject to an option under this Plan, the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock of the
Company shall be so changed, or for

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which each such share shall be exchanged, or to which each such share shall be
entitled, as the case may be, and references herein to the Common Stock shall be
deemed to be references to any such stock or other securities as appropriate.
Outstanding options shall also be appropriately amended as to price and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of the
Common Stock of the Company, or of any stock or other securities into which such
Common Stock shall have been changed or for which it shall have been exchanged,
then if the Board of Directors shall, in its sole discretion, determine that
such change equitably requires an adjustment in any option theretofore granted
or that may be granted under this Plan, such adjustments shall be made in
accordance with such determination. Fractional shares resulting from any
adjustment in options pursuant to this Section 7 may be settled in cash or
otherwise as the Board of Directors shall determine. Notice of any adjustment
shall be given by the Company to each holder of an option that shall have been
so adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of this Plan. Any options granted or
which may be granted pursuant to this Plan, and which such options are or are
intended to be Incentive Stock Options within the meaning of Section 422 of the
Code, shall, to the extent it is reasonably feasible to do so (determined in the
sole discretion of the Board of Directors), be adjusted or modified pursuant to
this Section 7 in a manner which will allow such options to continue to be
classified as Incentive Stock Options within the meaning of Section 422 of the
Code or successor legislation.

         8.   Securities Act Requirements. No option granted pursuant to this
Plan shall be exercisable in whole or in part, and the Company shall not be
obligated to sell any shares of Common Stock subject to any such option, if such
exercise and sale would, in the opinion of counsel for the Company, violate the
Securities Act of 1933 (or other Federal or State statutes having similar
requirements), as in effect at that time. Each option shall be subject to the
further requirement that, if at any time the Board of Directors shall determine
in its discretion that the listing or qualification of the shares of Common
Stock subject to such option under any securities exchange requirements or under
any applicable law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
issue of shares thereunder, such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Board of Directors.

         9.   Withholding. Appropriate provision (which may, in accordance with
rules determined by the Board of Directors, include the election by the grantee
to have the Company withhold from the Common Stock to be issued upon exercise of
an option a number of shares having an aggregate fair market value that would
satisfy the withholding amount due or to deliver to the Company shares of Common
Stock already owned having such aggregate fair market value to satisfy the
withholding amount) shall be made for all taxes required to be withheld from
shares of Common Stock issued under this Plan under the applicable laws or other
regulations of any governmental authority, whether federal, state or local, and
domestic or foreign. To that end, the Company may at any time take such steps as
it may deem necessary or appropriate (including sale or retention of shares) to
provide for payment of such taxes.

         10.   Administration and Amendment of Plan. The Board of Directors from
time to time may adopt rules and regulations for carrying out this Plan. The
interpretation and construction by the Board of Directors of any provision of
this Plan or any option granted pursuant hereto shall be final and conclusive.
No member of the Board of Directors shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
pursuant thereto. The Board of Directors may from time to time make such changes
in and additions to this Plan as it may deem proper and in the best interests of
the Company, without further action on the part of the shareholders of the
Company except as required by law, regulation or by the rules of the principal
trading market of the Company's Common Stock at that time; provided, however,
that, unless the shareholders of the Company shall have first approved thereof:
(i) except as provided in Section 7 hereof, the total number of shares of Common
Stock subject to this Plan shall not be increased and the minimum purchase price
shall not be changed; (ii) no option shall be exercisable more than ten (10)
years after the date it is granted; and (iii) the expiration date of this Plan
shall not be extended.

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         The Board of Directors shall have the power, in the event of any
disposition of substantially all of the assets of the Company, its dissolution
or of any consolidation or merger of the Company with and into any other
corporation, to amend all outstanding options to permit the exercise of all such
options prior to the effectiveness of any such transaction and to terminate such
options as of such effectiveness. If the Board of Directors shall exercise such
power, all options then outstanding and subject to such requirement shall be
deemed to have been amended to permit the exercise thereof in whole or in part
by the grantee at any time or from time to time as determined by the Board of
Directors prior to the effectiveness of such transaction and such options shall
be deemed to terminate upon such effectiveness.

         11.  Miscellaneous.

              (a)   Separate Plan. This Plan is separate and independent from
any other stock option plan or similar plan of the Company.

              (b)   Option Agreements. Options granted hereunder shall be
evidenced by option agreements ("Option Agreements") containing such terms and
conditions as the Board of Directors shall establish from time to time
consistent with this Plan. Option Agreements need not be identical but each
Option Agreement shall contain, without limitation, language including the
substance of the following provisions:

              (i)   Number of Shares and Exercise Price. Each Option Agreement
         shall state the number of shares to which it pertains and the exercise
         price therefor.

              (ii)  Exercise of Options. Options may be exercised only in
         accordance with the terms of each Option Agreement which shall include
         the period of time during which the option may be exercised.

              (iii) Method of Exercise and Payment of Purchase Price. An option
         may be exercised, as to all or part of the shares covered by the
         option, by the grantee delivering to the Board of Directors: (A) a
         written notice identifying the option being exercised, stating the
         number of shares being purchased and enclosing payment to the Company
         of the purchase price for the number of shares being exercised; and (B)
         such items as the Company may reasonably request. If the option is
         being exercised by any person or persons other than the grantee, the
         written notice exercising the option shall be accompanied by
         appropriate proof of the right of such person or persons to exercise
         the option.

              (iv)  Additional Terms and Conditions. The Board of Directors may
         specify such additional terms and conditions as it deems appropriate.

              (c)   Loans.  Subject to the sole discretion of the Board of
Directors, the Company may loan the grantee funds to finance the exercise of any
option.

              (d)   Governing Law.  This Plan and the Option Agreements shall be
interpreted and enforced in accordance with the laws of the State of Michigan.

         IN WITNESS WHEREOF, this Plan has been executed by the Company on the
20th day of March, 2000.

                                  SOUTHERN MICHIGAN BANCORP, INC.


                                  By:   /s/ James T. Grohalski
                                        ----------------------------------------
                                        James T. Grohalski
                                  Its:  President and Chief Executive Officer