U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(MARK  ONE)                      FORM 10-QSB

   X            QUARTERLY  REPORT  UNDER  SECTION  13  OR  15(d)
-------              OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       OR

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
-------        THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

              FOR THE TRANSITION PERIOD FROM _________TO_________

                          Commission File No. 333-30182

                              SUN BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)


             South Carolina                             58-2466380
      (State or other jurisdiction                   (I.R.S. Employer
            of incorporation)                       Identification No.)


                              4367 RIVERWOOD DRIVE
                          MURRELLS INLET, SC 29576-1359
                        (Address of principal executive
                          offices, including zip code)

                                 (843) 357-7007
              (Registrant's telephone number, including area code)
                ------------------------------------------------

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          NO  X
                                    ---         ---

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  stock  as  of  the  latest  practicable  date.

    715,000 SHARES OF COMMON STOCK, NO STATED PAR VALUE ON NOVEMBER 12, 2002

Transitional Small Business Disclosure Format (check one):    Yes [ ]   No [X]

                                  PAGE 1 OF 14
                            EXHIBIT INDEX ON PAGE 2


<PAGE>
                              SUN BANCSHARES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


                                      INDEX

<TABLE>
<CAPTION>
                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                         (UNAUDITED)


                                            INDEX



PART I.FINANCIAL RESULTS                                                                           Page No.
------------------------
<S>                                                                                                <C>
Item 1. Financial Statements (Unaudited)

        Condensed Consolidated Balance Sheets -- September 30, 2002 and December 31, 2001. . . . . .   3

        Condensed Consolidated Statements of Income -- Nine months ended
          September 30, 2002 and 2001 and three
          Months ended September 30, 2002 and 2001 . . . . . . . . . . . . . . . . . . . . . . . . .   4

        Condensed Consolidated Statement of Shareholders' Equity
          and Comprehensive Income --
          Nine months ended September 30, 2002 and 2001. . . . . . . . . . . . . . . . . . . . . . .   5

        Condensed Consolidated Statements of Cash Flows --
          Nine months ended September 30, 2002 and 2001. . . . . . . . . . . . . . . . . . . . . . .   6

        Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . 7-8

Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . . . . . . . . .9-15

Item 3. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

PART II. OTHER INFORMATION
--------------------------

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

        (a) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

        (b) Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-20
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                      SUN BANCSHARES, INC.

                             CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                           September 30,  December 31,
                                                                                2002          2001
                                                                            ------------  ------------
<S>                                                                         <C>           <C>
ASSETS:                                                                      (Unaudited)
  Cash and cash equivalents:
   Cash and due from banks                                                  $ 1,256,202   $ 1,025,008
   Federal funds sold                                                         1,654,000     1,304,000
                                                                            ------------  ------------
    Total cash and cash equivalents                                           2,910,202     2,329,008
                                                                            ------------  ------------

Investment securities:
   Securities available-for-sale                                              7,230,741     4,384,229
   Nonmarketable equity securities                                              195,000       195,000
                                                                            ------------  ------------
    Total investment securities                                               7,425,741     4,579,229
                                                                            ------------  ------------

Loans receivable:                                                            23,962,701    16,238,315
   Less allowance for loan losses                                              (279,787)     (164,787)
                                                                            ------------  ------------
    Loans, net                                                               23,682,914    16,073,528

Premises, furniture and equipment, net                                        2,190,964     1,661,354
Accrued interest receivable                                                     154,291       122,234
Other assets                                                                    807,036       583,689
                                                                            ------------  ------------
    Total assets                                                            $37,171,148   $25,349,042
                                                                            ============  ============

LIABILITIES:
  Deposits:
  Noninterest-bearing transaction accounts                                  $ 6,437,936   $ 4,210,483
  Interest-bearing transaction accounts                                       1,262,525       878,031
  Savings                                                                     7,462,401     4,038,849
  Time deposits $100,000 and over                                             7,569,357     4,911,008
  Other time deposits                                                         9,044,332     5,161,743
                                                                            ------------  ------------
    Total deposits                                                           31,776,551    19,200,114

Securities sold under agreement to repurchase                                         -       500,000
Accrued interest payable                                                        169,544       188,144
Other liabilities                                                                69,597        18,501
                                                                            ------------  ------------
    Total liabilities                                                        32,015,692    19,906,759
                                                                            ------------  ------------

SHAREHOLDERS' EQUITY:
Preferred stock, par value not stated; 2,000,000 shares
  authorized and unissued                                                                           -
Common stock, par value not stated; 10,000,000 shares authorized; 715,000
  issued and outstanding at September 30, 2002 and December 31, 2001          6,779,216     6,779,216
Retained earnings (deficit)                                                  (1,652,564)   (1,350,396)
Accumulated other comprehensive income                                           28,804        13,463
                                                                            ------------  ------------
    Total shareholders' equity                                                5,155,456     5,442,283
                                                                            ------------  ------------

    Total liabilities and shareholders' equity                              $37,171,148   $25,349,042
                                                                            ============  ============
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                        SUN BANCSHARES, INC.

                             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                             (UNAUDITED)

                                                         Nine Months Ended        Three Months Ended
                                                            September 30,            September 30,
                                                      ------------------------  ---------------------
                                                         2002         2001        2002        2001
                                                      -----------  -----------  ---------  ----------
<S>                                                   <C>          <C>          <C>        <C>
INTEREST INCOME
  Loans, including fees                               $1,138,418   $  452,813   $421,004   $ 230,560
  Investment securities, taxable                         157,840       78,262     57,512      34,225
  Nonmarketable Securities                                11,700        5,850      5,850       5,850
  Federal funds sold                                      37,280      179,728     16,265      58,116
                                                      -----------  -----------  ---------  ----------
    Total income                                       1,345,238      716,653    500,631     328,751
                                                      -----------  -----------  ---------  ----------

INTEREST EXPENSE
  Time deposits $100,000 and over                        223,812      102,306     83,868      68,730
  Other deposits                                         319,926      150,764    114,469      85,301
  Other borrowings                                         2,445            -          -           -
                                                      -----------  -----------  ---------  ----------
    Total                                                546,183      253,070    198,337     154,031
                                                      -----------  -----------  ---------  ----------

NET INTEREST INCOME                                      799,055      463,583    302,294     174,720
Provision for loan losses                                115,000      105,000     35,000      35,000
                                                      -----------  -----------  ---------  ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      684,055      358,583    267,294     139,720
                                                      -----------  -----------  ---------  ----------

OTHER INCOME
  Service charges on deposit accounts                     90,678       18,393     36,837       9,166
  Gain on sale of securities                              33,783            -     17,265           -
  Residential mortgage origination fees                   50,809       14,058     30,162      10,234
  Other service charges, commissions, and fees            24,885       10,305      1,990       6,039
                                                      -----------  -----------  ---------  ----------
    Total                                                200,155       42,756     86,254      25,439
                                                      -----------  -----------  ---------  ----------

OTHER OPERATING EXPENSES
  Salaries and employee benefits                         617,694      529,824    195,269     209,921
  Occupancy expense                                      243,321      196,393     99,610      62,160
  Furniture and fixture expense                           87,405       59,273     35,719      21,579
  Other operating expenses                               415,195      415,309    119,883     153,787
                                                      -----------  -----------  ---------  ----------
    Total                                              1,363,615    1,200,799    450,481     447,447
                                                      -----------  -----------  ---------  ----------

INCOME (LOSS) BEFORE TAXES                              (479,405)    (799,460)   (96,933)   (282,288)

Income tax expense (benefit)                            (177,237)    (298,847)   (35,866)   (112,762)
                                                      -----------  -----------  ---------  ----------

NET INCOME (LOSS)                                     $ (302,168)  $ (500,613)  $(61,067)  $(169,526)
                                                      ===========  ===========  =========  ==========

Weighted average share                                   715,000      715,000    715,000     715,000

EARNINGS PER SHARE
  Basic earnings (losses) per share                   $    (0.42)  $    (0.70)  $  (0.09)  $   (0.24)
  Diluted earnings (losses) per share                 $    (0.42)  $    (0.70)  $  (0.09)  $   (0.24)
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                     SUN BANCSHARES, INC.

CONDENSED  CONSOLIDATED  STATEMENT  OF  SHAREHOLDERS'  EQUITY  AND  COMPREHENSIVE  INCOME
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                         (UNAUDITED)

                                                                  Accumulated
                                 Common Stock                        Other
                              -------------------    Retained    Comprehensive
                              Shares     Amount      Earnings        Income         Total
                              -------  ----------  ------------  --------------  -----------
<S>                           <C>      <C>         <C>           <C>             <C>
BALANCE, DECEMBER 31, 2000    715,000  $6,779,216  $  (719,617)  $            -  $6,059,599

Net loss for the period                               (500,613)                    (500,613)

Other comprehensive income,
 net of tax $18,007                                                      30,660      30,660
                                                                                 -----------

Comprehensive income (loss)         -           -            -                -    (469,953)
                              -------  ----------  ------------  --------------  -----------

BALANCE, SEPTEMBER 30, 2001   715,000  $6,779,216  $(1,220,230)  $       30,660  $5,589,646
                              =======  ==========  ============  ==============  ===========


BALANCE, DECEMBER 31, 2001    715,000  $6,779,216  $(1,350,396)  $       13,463  $5,442,283

Net loss for the period                               (302,168)                    (302,168)

Other comprehensive income,
 net of tax $9,010                                                       15,341      15,341
                                                                                 -----------

Comprehensive income (loss)         -           -            -                -    (286,827)
                              -------  ----------  ------------  --------------  -----------

BALANCE, SEPTEMBER 30, 2002   715,000  $6,779,216  $(1,652,564)  $       28,804  $5,155,456
                              =======  ==========  ============  ==============  ===========
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                     SUN BANCSHARES, INC.
                       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)

                                                                         Nine Months Ended
                                                                            September 30,
                                                                    ----------------------------
                                                                        2002           2001
                                                                    -------------  -------------
<S>                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss)                                                        $   (302,168)  $   (500,613)
  Adjustments to reconcile net income to net cash (used) provided
   by operating activities:
    Depreciation and amortization                                        112,772         77,624
    Provision for loan losses                                            115,000        105,000
    Accretion and premium amortization                                    17,019         (1,725)
    Gain on sale of securities                                           (33,783)             -
    Deferred income tax benefit                                         (177,237)      (298,848)
    Increase in interest receivable                                      (32,057)       (89,270)
    Increase (decrease) in interest payable                              (18,600)       123,570
    Increase in other assets                                             (38,205)       (19,682)
    Increase in other liabilities                                         34,179         28,498
                                                                    -------------  -------------
      Net cash used by operating activities                             (323,080)      (575,446)
                                                                    -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of securities available-for-sale                          (6,142,360)    (4,092,753)
  Maturities of securities available-for-sale                          1,587,392        996,140
  Proceeds from sales of securities available-for-sale                 1,749,573              -
  Net increase in loans made to customers                             (7,724,386)   (11,028,386)
  Purchases of premises and equipment                                   (642,382)    (1,165,598)
                                                                    -------------  -------------
    Net cash used by investing activities                            (11,172,163)   (15,290,597)
                                                                    -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in demand deposits, interest-bearing transaction
   accounts and savings accounts                                       6,035,499      6,855,090
  Net increase in certificates of deposit and other time deposits      6,540,938      9,640,494
  Decrease in securities sold under agreement to repurchase             (500,000)             -
                                                                    -------------  -------------
    Net cash provided by financing activities                         12,076,437     16,495,584
                                                                    -------------  -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                581,194        629,541

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD                          2,329,008      6,173,515
                                                                    -------------  -------------

CASH AND CASH EQUIVALENTS END OF PERIOD                             $  2,910,202   $  6,803,056
                                                                    =============  =============

CASH PAID DURING THE PERIOD FOR:
  Income taxes                                                      $          -   $          -
  Interest                                                          $    564,783   $    129,499
</TABLE>


                                        6
<PAGE>
                              SUN BANCSHARES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE  1  -  BASIS  OF  PRESENTATION
-----------------------------------

The  accompanying financial statements have been prepared in accordance with the
requirements  for  interim  financial  statements  and,  accordingly,  they  are
condensed  and  omit  disclosures  which  would  substantially  duplicate  those
contained  in  the most recent annual report to shareholders on Form 10KSB.  The
financial  statements as of September 30, 2002 and for the interim periods ended
September  30,  2002  and  2001 are unaudited and, in the opinion of management,
include  all  adjustments  (consisting  of normal recurring accruals) considered
necessary for a fair presentation.  The financial information as of December 31,
2001  has  been  derived  from the audited financial statements as of that date.
For  further  information,  refer  to  the  financial  statements  and the notes
included  in  Sun  Bancshares,  Inc.'s  2001  Form  10KSB.

NOTE  2  -  EARNINGS  PER  SHARE
--------------------------------

Net income (loss) per share - basic is computed by dividing net income (loss) by
the weighted average number of common shares outstanding.  Net income (loss) per
share  -  diluted  is  computed  by  dividing  net income (loss) by the weighted
average  number  of  common  shares  outstanding  and  dilutive  common  share
equivalents  using the treasury stock method.  Dilutive common share equivalents
include common shares issuable upon exercise of outstanding stock options. There
were  no  dilutive  common  share  equivalents outstanding during the first nine
months of 2002 and 2001; therefore basic earnings per share and diluted earnings
per  share  were  the  same.

NOTE  3  -  COMPREHENSIVE  INCOME
---------------------------------

Comprehensive  income includes net income (loss) and other comprehensive income,
which  is  defined  as  non-owner related transactions in equity.  The following
table  sets  forth  the amounts of other comprehensive income included in equity
along  with  the  related  tax effect for the nine and three months period ended
September  30,  2002  and  2001.

<TABLE>
<CAPTION>
                                                                                 Tax
                                                                    Pre-tax   (Expense)    Net-of-tax
                                                                    Amount     Benefit       Amount
                                                                   ---------  ----------  ------------
<S>                                                                <C>        <C>         <C>
  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002:
Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during the period      $ 58,134   $ (21,510)  $    36,624
  Reclassification adjustment for (gains) realized in net income    (33,783)     12,500       (21,283)
                                                                   ---------  ----------  ------------
Net unrealized gains (losses) on securities                          24,351      (9,010)       15,341
                                                                   ---------  ----------  ------------

Other comprehensive income                                         $ 24,351   $  (9,010)  $    15,341
                                                                   =========  ==========  ============


  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001:
Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during the period      $ 48,667   $ (18,007)  $    30,660
  Plus: reclassification adjustment for (gains)
    realized in net income                                                -           -             -
                                                                   ---------  ----------  ------------
Net unrealized gains (losses) on securities                          48,667     (18,007)       30,660
                                                                   ---------  ----------  ------------

Other comprehensive income                                         $ 48,667   $ (18,007)  $    30,660
                                                                   =========  ==========  ============
</TABLE>


                                        7
<PAGE>
                              SUN BANCSHARES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE  3  -  COMPREHENSIVE  INCOME  -  (continued)
---------------------------------

<TABLE>
<CAPTION>
                                                                             Tax
                                                                Pre-tax   (Expense)    Net-of-tax
                                                                Amount     Benefit       Amount
                                                               ---------  ----------  ------------
<S>                                                            <C>        <C>         <C>
  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002:
Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during the period  $ 24,666   $  (9,126)  $    15,540
  Reclassification adjustment for (gains)
    realized in net income                                      (17,265)      6,388       (10,877)
                                                               ---------  ----------  ------------
Net unrealized gains (losses) on securities                           -           -             -
                                                               ---------  ----------  ------------

Other comprehensive income                                     $  7,401   $  (2,738)  $     4,663
                                                               =========  ==========  ============


FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001:
Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during the period  $ 39,433   $ (14,590)  $    24,843
  Plus: reclassification adjustment for (gains)
    realized in net income                                            -           -             -
                                                               ---------  ----------  ------------
Net unrealized gains (losses) on securities                      39,433     (14,590)       24,843
                                                               ---------  ----------  ------------

Other comprehensive income                                     $ 39,433   $ (14,590)  $    24,843
                                                               =========  ==========  ============
</TABLE>

Accumulated  other  comprehensive  income consists solely of the unrealized gain
(loss)  on  securities  available-for-sale,  net  of  the  deferred tax effects.


                                        8
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION
--------------------------------------------------------------------------

The  following  is  a  discussion of our financial condition as of September 30,
2002  compared to December 31, 2001, and the results of operations for the three
and  nine  months ended September 30, 2002 compared to the three and nine months
ended September 30, 2001.  These comments should be read in conjunction with our
condensed  financial  statements  and  accompanying  footnotes appearing in this
report.  It  should  be  understood in reading this discussion and comparing the
periods  presented that the Bank opened for business on November 15, 2000.  This
report  contains  "forward-looking  statements" relating to, without limitation,
future  economic  performance,  plans  and  objectives  of management for future
operations, and projections of revenues and other financial items that are based
on the beliefs of our management, as well as assumptions made by and information
currently  available  to  our  management.  The  words  "expect",  "estimate",
"anticipate",  and  "believe",  as  well as similar expressions, are intended to
identify  forward-looking  statements.  Our actual results may differ materially
from  the results discussed in the forward-looking statements, and our operating
performance  each quarter is subject to various risks and uncertainties that are
discussed  in detail in our filings with the Securities and Exchange Commission.

RESULTS  OF  OPERATIONS
-----------------------

NET  INTEREST  INCOME
---------------------

For  the  nine  months  ended  September 30, 2002, net interest income increased
$335,472  or  72.37%, to $799,055 as compared to $463,583 for the same period in
2001.

Interest income for the nine months ended September 30, 2002 totaled $1,345,238,
an  increase  of 628,585 or 87.71% when compared to the same period in 2001. The
main  component  of  interest  income  was interest and fees derived from loans.
Interest income from loans, including fees, increased $685,605, or 151.41%, from
the nine months ended September 30, 2001 to $1,138,418 for the comparable period
in  2002.  This  increase  is mainly attributable to the continued growth in our
loan  portfolio.

Interest  expense  for  the nine months ended September 30, 2002 was $546,183 as
compared to $253,070 for the same period in 2001.  The increase in the volume of
interest-bearing deposits between the two periods was the primary reason for the
increase  in  interest  expense.

The  net interest margin realized on earning assets decreased from 4.58% for the
nine  months ended September 30, 2001 to 3.83% for the same period in 2002.  The
interest  rate  spread  increased from 2.61% for the nine months ended September
30,  2001  to  3.05%  for  the  same  period  in  2002.

For  the quarter ended September 30, 2002, net interest income totaled $302,294,
an  increase  of  $127,574,  or  73.02%, when compared to the same quarter ended
September  30,  2001.

Total  interest  income  for  the  quarter ended September 30, 2002 and 2001 was
$500,631  and  $328,751,  respectively.  Interest  income  totaling $421,004 was
generated  from  loans,  including  fees, during the quarter ended September 30,
2002,  as  compared  to  $230,560  during  the  comparable  period  in  2001.

Total  interest  expense  for  the quarter ended September 30, 2002 and 2001 was
$198,337  and  $154,031,  respectively.  Interest  expense  for  both  periods
consisted  only  of  interest  expense  on  deposit  accounts.

The  net  interest  margin  realized on earning assets was 3.75% for the quarter
ended  September  30, 2002, as compared to 3.45% during the same period in 2001.
The  interest rate spread was 3.11% for the quarter ended September 30, 2002, as
compared  to  1.70%  for  the  quarter  ended  September  30,  2001.


                                        9
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

PROVISION  AND  ALLOWANCE  FOR  LOAN  LOSSES
--------------------------------------------

The  provision  for  loan  losses  is  the  charge  to  operating  earnings that
management  believes  is  necessary  to maintain the allowance for possible loan
losses  at  an  adequate  level  to  reflect  the  losses  inherent  in the loan
portfolio.  For  the nine months ended September 30, 2002, the provision charged
to  expense  was  $115,000,  as  compared  to $105,000 in the same period a year
earlier.  Management  continues to fund the allowance for loan losses at a level
believed  to  be  adequate  to  match the growth in the loan portfolio.  For the
quarter  ended September 30, 2002, the provision charged to expense was $35,000,
as compared to $35,000 for the same period in 2001.  There are risks inherent in
making  all loans, including risks with respect to the period of time over which
loans  may  be  repaid,  risks  resulting  from changes in economic and industry
conditions,  risks  inherent  in  dealing with individual borrowers, and, in the
case  of  a  collateralized  loan,  risks resulting from uncertainties about the
future  value of the collateral.  We maintain an allowance for loan losses based
on,  among  other  things,  historical  experience,  an  evaluation  of economic
conditions,  and  regular  reviews  of delinquencies and loan portfolio quality.
Our  judgment  about  the  adequacy  of  the allowance is based upon a number of
assumptions  about  future  events, which we believe to be reasonable, but which
may  not prove to be accurate.  Thus, there is a risk that charge-offs in future
periods  could  exceed  the  allowance  for  loan  losses  or  that  substantial
additional  increases  in  the  allowance  for  loan  losses  could be required.
Additions to the allowance for loan losses would result in a decrease of our net
income  and,  possibly,  our  capital.

NONINTEREST  INCOME
-------------------

Noninterest  income  increased  $157,399,  or  368.13%  to $200,155 for the nine
months  ended  September 30, 2002 as compared to the same period ended September
30, 2001.  The primary source of this income was the increase in service charges
on  deposit  accounts  of  $72,285,  or 393.00%, to $90,678 for the period ended
September  30,  2002,  when  compared  to the same period in 2001.  In addition,
income  from  residential mortgage origination fees increased $36,751 to $50,809
for  the period ended September 30, 2002 as compared to the same period in 2001.
Gains  on  sales  of  available-for-sale securities totaled $33,783 for the nine
months  ended  September 30, 2002, there were no gains during the same period in
2001.

For  the  quarter  ended  September 30, 2002, noninterest income was $86,254, an
increase  of  $60,815, or 239.06% from the same period ended September 30, 2001.
The  largest  component  of  noninterest  income  was service charges on deposit
accounts,  which  totaled  $36,837  for the quarter ended September 30, 2002, as
compared  to  $9,166  for  the  quarter  ended  September 30, 2001.  Income from
residential  mortgage  origination  fees  totaled  $30,162 for the quarter ended
September  30, 2002, as compared to $10,234 for the same period in 2001.  Income
from  gains  on  sales  of available-for-sale securities totaled $17,265 for the
quarter  ended September 30, 2002, there were no gains during the same period in
2001.

NONINTEREST  EXPENSE
--------------------

For  the period ended September 30, 2002, noninterest expense was $1,363,615, an
increase of $162,816, or 13.56% when compared to the same period ended September
30,  2001.  Salaries  and  employee benefits and occupancy and equipment expense
increased  from  $529,824  and $255,666, respectively, for the nine months ended
September  30,  2001 to $617,694 and $330,726, respectively, for the nine months
ended  September  30,  2002.  The  increases  were  largely  attributable to the
Georgetown  office  which  opened  in  July  2001.

For  the quarter ended September 30, 2002, noninterest expense increased $3,034,
or 0.68% as compared to the same period ended September 30, 2001.  Occupancy and
equipment  expense increased $51,590 to $135,329 for the quarter ended September
30, 2002.  This increase was mainly due to the Georgetown office which opened in
July  2001.


                                       10
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

INCOME  TAXES
-------------

The income tax benefit for the nine months ended September 30, 2002 was $177,237
as  compared  to  $298,847  for the same period in 2001.  The loss before income
taxes  decreased  from  $799,460 for the nine months ended September 30, 2001 to
$479,405  for  the  same period in 2002.  The effective tax rate was 37% for the
nine  months  ended  September 30, 2002, as compared to an effective tax rate of
37%  for  the  nine months ended September 30, 2001.  The effective tax rate was
37%  and  40%  for  the quarter ended September 30, 2002 and 2001, respectively.

NET  INCOME  (LOSS)
-------------------

The  combination of the above factors resulted in a net loss for the nine months
ended September 30, 2002 of $302,168 as compared to $500,613 for the same period
in  2001.  The  net  loss  before taxes of $479,405 was offset by the income tax
benefit  of  $177,237  during the nine months ended September 30, 2002.  The net
loss  before taxes for the same period in 2001 was $500,613, which was offset by
the  income  tax benefit of $298,847.  For the quarter ended September 30, 2002,
the  net  loss was $61,067, as compared to $169,526 for the same period in 2001.

ASSETS  AND  LIABILITIES
------------------------

The  growth  in  assets  and liabilities was significant in most areas since the
Bank  opened  for  business  on  November  15,  2000.

During  the  first  nine  months  of 2002, total assets increased $11,822,106 or
46.64%,  when  compared  to  December  31,  2001.  The  increase  in  investment
securities  and  loans  accounted for the significant portion of the increase in
total  assets,  which  increased  $2,846,512  and  $7,724,386,  respectively, to
$7,230,741  and  $23,962,701  as  of  September  30,  2002,  respectively.

The  increase  in  total  assets  was  funded primarily by the increase in total
deposits,  which  increased  by $12,576,437 or 65.50% from the December 31, 2001
amount  of  $19,200,114.

SECURITIES  AVAILABLE-FOR-SALE
------------------------------

Investment  securities  increased  from  $4,384,229  at  December  31,  2001  to
$7,230,741  at  September 30, 2002.  All of our marketable investment securities
were  designated  as  available-for-sale  at  September  30,  2002.

NONMARKETABLE  EQUITY  SECURITIES
---------------------------------

Nonmarketable  equity securities include the cost of our investment in the stock
of  the Federal Reserve Bank.  The stock has no quoted market value and no ready
market  exists.  Investment  in Federal Reserve Bank stock is required by law of
every national bank.  At September 30, 2002 and December 31, 2001 our investment
in  this  stock  totaled  $195,000.


                                       11
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

LOANS
-----

We  continued  our  trend  of  growth  during  the  first  nine  months of 2002,
especially  in the loan area.  Net loans increased $7,609,386, or 47.34%, during
the  period.  As shown below, the main component of growth in the loan portfolio
was  commercial and industrial loans which increased 55.63%, or $4,819,766, from
December  31,  2001  to  September  30,  2002.  Balances  within the major loans
receivable  categories  as  of  September  30, 2002 and December 31, 2001 are as
follows:


                                              September 30,   December 31,
                                                   2002           2001
                                              --------------  -------------
Real estate:
  Construction                                $    1,690,808  $     996,432
  Mortgage - residential                           6,160,961      4,700,606
Commercial and industrial                         13,483,143      8,663,377
Consumer and other                                 2,627,789      1,877,900
                                              --------------  -------------

                                              $   23,962,701  $  16,238,315
                                              ==============  =============


RISK  ELEMENTS  IN  THE  LOAN  PORTFOLIO
----------------------------------------

As of September 30, 2002, the only risk element identified in our loan portfolio
were  criticized loans totaling $92,561.  There were no risk elements identified
in  our  loan  portfolio  as  of  September  30,  2001.

Activity  in  the  Allowance  for  Loan  Losses  is  as  follows:

<TABLE>
<CAPTION>
                                                    September 30,   September 30,
                                                        2002             2001
                                                   ---------------  --------------
<S>                                                <C>              <C>
Balance, January 1,                                $      164,787   $       15,000
                                                   ---------------  --------------
Provision for loan losses for the period                  115,000          105,000
Net loans (charged-off) recovered for the period               -                -
                                                   ---------------  --------------

Balance, end of period                             $      279,787   $      120,000
                                                   ===============  ==============

Gross loans outstanding, end of period             $   23,962,701   $   11,933,533

Allowance for loan losses to loans outstanding               1.17%            1.01
</TABLE>


                                       12
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

DEPOSITS
--------

During  the  first nine months of 2002, total deposits increased by $12,576,437,
or  65.50%,  from  December  31,  2001.  The  largest increase was in other time
deposits,  which  increased  $3,882,589  or  75.22%,  from  December 31, 2001 to
September  30,  2002.  Time  deposits $100,000 and over increased $2,658,349, or
54.13%, non-interest bearing demand deposits increased $2,227,453 or 52.90%, and
savings  deposits  increased  $3,423,552  or 84.77%.  Expressed as a percentage,
total  interest  bearing  deposits  increased  69.04%.

Balances  within  the  major  deposit  categories  as  of September 30, 2002 and
December  31,  2001  were  as  follows:

                                             September 30,   December 31,
                                                  2002           2001
                                             --------------  -------------
Noninterest-bearing demand deposits          $    6,437,936  $   4,210,483
                                             --------------  -------------
Interest-bearing demand deposits                  1,262,525        878,031
Savings deposits                                  7,462,401      4,038,849
Time deposits $100,000 and over                   7,569,357      4,911,008
Other time deposits                               9,044,332      5,161,743
                                             --------------  -------------

                                             $   31,776,551  $  19,200,114
                                             ==============  =============

LIQUIDITY
---------

We  meet  our  liquidity  needs  through  scheduled  maturities  of  loans  and
investments on the asset side and through pricing policies on the liability side
for  interest-bearing  deposit  accounts.  The level of liquidity is measured by
the  loan-to-total  borrowed  funds  ratio, which was at 75.41% at September 30,
2002  and  84.57%  at  December  31,  2001.

Securities  available-for-sale,  which totaled $7,230,741 at September 30, 2002,
serve  as  a  ready source of liquidity.  We also have lines of credit available
with correspondent banks to purchase federal funds for periods from one to seven
days.  At  September  30,  2002,  unused  lines  of  credit  totaled $4,241,000.

CRITICAL  ACCOUNTING  POLICIES
------------------------------

We  have  adopted  various  accounting  policies which govern the application of
accounting principles generally accepted in the United States in the preparation
of  our financial statements.  Our significant accounting policies are described
in  the  footnotes to the consolidated financial statements at December 31, 2001
as  filed  on  our  annual  report  on Form 10-KSB.  Certain accounting policies
involve significant judgments and assumptions by us which have a material impact
on  the  carrying  value  of  certain assets and liabilities.  We consider these
accounting  policies  to  be  critical  accounting  policies.  The judgments and
assumptions  we  use are based on historical experience and other factors, which
we  believe  to be reasonable under the circumstances.  Because of the nature of
the  judgments  and  assumptions we make, actual results could differ from these
judgments  and  estimates  which  could  have  a material impact on our carrying
values  of  assets  and  liabilities  and  our  results  of  operations.

We  believe  the  allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
consolidated financial statements.  Refer to the portion of this discussion that
addresses  our  allowance for loan losses for a description of our processes and
methodology  for  determining  our  allowance  for  loan  losses.


                                       13
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

CAPITAL  RESOURCES
------------------

Total  shareholders'  equity  decreased  from $5,442,283 at December 31, 2001 to
$5,155,454 at September 30, 2002.  The decrease is primarily due to the net loss
for  the  period  of  $302,168.

The  Federal  Reserve  Board  and  bank regulatory agencies require bank holding
companies  and  financial  institutions  to  maintain capital at adequate levels
based  on  a  percentage of assets and off-balance sheet exposures, adjusted for
risk-weights ranging from 0% to 100%.  Under the risk-based standard, capital is
classified  into  two  tiers.  Tier  1  capital consists of common shareholders'
equity,  excluding  the unrealized gain (loss) on available-for-sale securities,
minus certain intangible assets.  Tier 2 capital consists of the general reserve
for  loan  losses  subject  to certain limitations.  An institutions' qualifying
capital base for purposes of its risk-based capital ratio consists of the sum of
its  Tier  1 and Tier 2 capital.  The regulatory minimum requirements are 4% for
Tier  1  and  8%  for  total  risk-based  capital.

Banks  and  bank  holding companies are also required to maintain a capital at a
minimum  level  based  on  total  average assets, which is known as the leverage
ratio.  The  minimum  requirement  for the leverage ratio is 3%, but all but the
highest  rated  institutions  are  required  to maintain ratios 100 to 200 basis
point  above  the minimum.  Both the Company and the Bank exceeded their minimum
regulatory  capital  ratios  as  of  September  30,  2002.

The  following  table  summarizes the Bank's risk-based capital at September 30,
2002:

Shareholders' equity                         $     5,018,471
  Less: disallowed deferred taxes                   (789,118)
                                             ---------------
  Tier 1 capital                                   4,229,353

  Plus: allowance for loan losses (1)                279,787
                                             ---------------

    Total capital                            $     4,509,140
                                             ===============

Risk-weighted assets                        $     27,608,058
                                             ===============

Risk-based  capital  ratios
  Tier 1 capital (to risk-weighted assets)            15.32%

  Total capital (to risk-weighted assets)             16.33%

  Tier 1 (to total average assets)                    13.47%


(1)  limited  to  1.25%  of  risk-weighted  assets

The  Federal  Reserve Board has similar requirements for bank holding companies.
The  Company  is currently not subject to these requirements because the Federal
Reserve  guidelines contain an exemption for bank holding companies of less than
$150,000,000  in  consolidated  assets.


                                       14
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- continued
-------------------------------------------------------------------

OFF-BALANCE  SHEET  RISK
------------------------

Through  the  operations  of  our  Bank, we have made contractual commitments to
extend  credit  in  the  ordinary  course  of  our  business  activities.  These
commitments  are  legally  binding  agreements to lend money to our customers at
predetermined  interest  rates for a specified period of time.  At September 30,
2002,  we  had  issued  commitments  to  extend credit of $2,454,778 and standby
letters  of  credit  of  $43,000  through  various  types  of commercial lending
arrangements.  We  evaluate  each customer's credit worthiness on a case-by-case
basis.  The  amount  of  collateral  obtained,  if  deemed  necessary by us upon
extension  of  credit,  is  based  on  our  credit  evaluation  of the borrower.
Collateral  varies  but  may  include  accounts receivable, inventory, property,
plant  and  equipment,  commercial  and  residential  real  estate.

REGULATORY  MATTERS
-------------------

From  time  to  time, various bills are introduced in the United States Congress
with  respect  to  the  regulation  of financial institutions.  Certain of these
proposals,  if  adopted,  could significantly change the regulation of banks and
the  financial  services  industry.  We  cannot  predict  whether  any  of these
proposals  will  be adopted or, if adopted, how these proposals would affect us.


                                       15
<PAGE>
                              SUN BANCSHARES, INC.

ITEM  3.  CONTROLS  AND  PROCEDURES.
------------------------------------

(a)  Based  on  their  evaluation  of  the  issuer's  disclosure  controls  and
procedures (as defined in 17 C.F.R. Sections 240.13a-14(c) and 240.15d-14(c)) as
of  a  date  within  90  days  prior to the filing of this quarterly report, the
issuer's chief executive officer and chief financial officer concluded that such
controls  and  procedures  are  effective  in  timely  alerting them to material
information  relating to the issuer and the Bank that is required to be included
in  the  issuer's  periodic filings with the Securities and Exchange Commission.

(b)  There were no significant changes in the issuer's internal controls, to its
knowledge,  or  in  other factors that could significantly affect these controls
subsequent  to  the  date of their evaluation, corrective actions with regard to
significant  deficiencies  or  material  weaknesses.


                                       16
<PAGE>
PART  II  -  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS
----------------------------

Not  applicable.

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS
---------------------------------------------------------

Not  applicable.

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES
--------------------------------------------

Not  applicable.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
---------------------------------------------------------------------

Not  applicable.

NOTE  5.  OTHER  INFORMATION
----------------------------

Not  applicable.

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

(a)     Exhibits

        None

Reports  on  Form  8-K
----------------------

       (b)  Reports  on  Form  8-K  -  None


                                       17
<PAGE>
                                    SIGNATURE


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



                                     By:     /s/  THOMAS  BOUCHETTE
                                             -----------------------------------
                                             Thomas Bouchette
                                             President & Chief Executive Officer



Date:  November  13,  2002           By:     /s/  RANDY  L.  CARMON
                                             -----------------------------------
                                             Randy L. Carmon
                                             Chief Financial Officer


                                       18
<PAGE>
                                 CERTIFICATIONS

I,  Thomas  Bouchette,  certify  that:

1.   I have reviewed this quarterly report on Form 10-Q of Sun Bancshares, Inc.;

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  officer  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 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 officer and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

          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

          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  officer  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  13,  2002                  /s/ Thomas Bouchette
      -------------------                  -------------------------------------
                                           Thomas Bouchette
                                           President and Chief Executive Officer


                                       19
<PAGE>
                                 CERTIFICATIONS

I,  Randy  L.  Carmon,  certify  that:

1.   I have reviewed this quarterly report on Form 10-Q of Sun Bancshares, Inc.;

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  officer  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 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 officer and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

          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

          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  officer  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  13,  2002                  /s/ Randy L. Carmon
     --------------------                  -------------------------------------
                                           Randy L. Carmon
                                           Chief Financial Officer


                                       20
<PAGE>