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 JUNE 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 AUGUST 9, 2002

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

                                  PAGE 1 OF 14
                             EXHIBIT INDEX ON PAGE 2


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

                             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 -- June 30, 2002 and December 31, 2001. . . . . . . . . .         3

        Condensed Consolidated Statements of Income -- Six months ended June 30, 2002 and three months
          ended June 30, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         4

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

        Condensed Consolidated Statement of Cash Flows -- Six months ended June 30, 2002. . . . . . . .         6

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

        Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . .      9-14

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

Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . .        15

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15

        (a) Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15

        (b) Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        16
</TABLE>


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

                                CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                            June 30,     December 31,
                                                                              2002           2001
                                                                          ------------  --------------
ASSETS:                                                                    (Unaudited)
<S>                                                                       <C>           <C>
   Cash and cash equivalents:
   Cash and due from banks                                                $ 2,692,652   $   1,025,008
   Federal funds sold                                                       6,277,000       1,304,000
                                                                          ------------  --------------
    Total cash and cash equivalents                                         8,969,652       2,329,008
                                                                          ------------  --------------

Investment securities:
   Securities available-for-sale                                            4,110,069       4,384,229
   Nonmarketable equity securities                                            195,000         195,000
                                                                          ------------  --------------
    Total investment securities                                             4,305,069       4,579,229
                                                                          ------------  --------------

Loans receivable:                                                          20,762,905      16,238,315
   Less allowance for loan losses                                            (244,787)       (164,787)
                                                                          ------------  --------------
    Loans, net                                                             20,518,118      16,073,528

Premises, furniture and equipment, net                                      1,891,173       1,661,354
Accrued interest receivable                                                   126,762         122,234
Other assets                                                                  767,509         583,689
                                                                          ------------  --------------
    Total assets                                                          $36,578,283   $  25,349,042
                                                                          ============  ==============

LIABILITIES:
  Deposits:
  Noninterest-bearing transaction accounts                                $ 6,744,913   $   4,210,483
  Interest-bearing transaction accounts                                     1,192,200         878,031
  Savings                                                                   6,763,029       4,038,849
  Time deposits $100,000 and over                                           7,555,047       4,911,008
  Other time deposits                                                       8,941,449       5,161,743
                                                                          ------------  --------------
    Total deposits                                                         31,196,638      19,200,114
                                                                          ------------  --------------

Securities sold under agreement to repurchase                                       -         500,000
Accrued interest payable                                                      110,538         188,144
Other liabilities                                                              59,247          18,501
                                                                          ------------  --------------
    Total liabilities                                                      31,366,423      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 June 30, 2002 and December 31, 2001     6,779,216       6,779,216
Retained earnings (deficit)                                                (1,591,497)     (1,350,396)
Accumulated other comprehensive income                                         24,141          13,463
                                                                          ------------  --------------
    Total shareholders' equity                                              5,211,860       5,442,283
                                                                          ------------  --------------

    Total liabilities and shareholders' equity                            $36,578,283   $  25,349,042
                                                                          ============  ==============
</TABLE>


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

                                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                     (UNAUDITED)


                                                        Six Months Ended June 30,      Three Months Ended June 30,
                                                     ------------------------------  --------------------------------
                                                         2002            2001             2002             2001
                                                     ------------  ----------------  --------------  ----------------
<S>                                                  <C>           <C>               <C>             <C>
INTEREST INCOME
  Loans, including fees                              $   717,414   $       222,253   $     378,614   $       151,153
  Investment securities
    Taxable                                              100,328            44,037          53,560            28,144
    Nonmarketable equity securities                        5,850                 -               -                 -
  Federal funds sold                                      21,015           121,612          16,450            40,691
                                                     ------------  ----------------  --------------  ----------------
    Total income                                         844,607           387,902         448,624           219,988
                                                     ------------  ----------------  --------------  ----------------

INTEREST EXPENSE
  Time deposits $100,000 and over                        139,944            33,576          75,446            24,183
  Other deposits                                         205,457            65,463         115,684            37,385
  Other interest expense                                   2,445                 -               -                 -
                                                     ------------  ----------------  --------------  ----------------
    Total                                                347,846            99,039         191,130            61,568
                                                     ------------  ----------------  --------------  ----------------

NET INTEREST INCOME                                      496,761           288,863         257,494           158,420
Provision for loan losses                                 80,000            70,000          32,000            35,000
                                                     ------------  ----------------  --------------  ----------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      416,761           218,863         225,494           123,420
                                                     ------------  ----------------  --------------  ----------------

OTHER INCOME
  Service charges on deposit accounts                     53,841             9,227          28,130             7,196
  Residential mortgage origination fees                   20,647             3,824          11,014             3,824
  Gain on sale of available-for sale securities           16,518                 -          15,112                 -
  Other service charges, commissions,
   and fees                                               22,895             4,266          11,881             2,745
                                                     ------------  ----------------  --------------  ----------------
    Total                                                113,901            17,317          66,137            13,765
                                                     ------------  ----------------  --------------  ----------------

OTHER OPERATING EXPENSES
  Salaries and employee benefits                         422,425           319,903         194,861           155,797
  Occupancy expense                                      143,711           134,233          74,663            63,142
  Furniture and fixture expense                           51,686            37,694          25,908            21,734
  Other operating expenses                               295,312           261,522         161,213           147,281
                                                     ------------  ----------------  --------------  ----------------
    Total                                                913,134           753,352         456,645           387,954
                                                     ------------  ----------------  --------------  ----------------

LOSS BEFORE TAXES                                       (382,472)         (517,172)       (165,014)         (250,769)

Income tax benefit                                      (141,371)         (186,085)        (65,328)          (86,438)
                                                     ------------  ----------------  --------------  ----------------

NET LOSS                                             $  (241,101)  $      (331,087)  $     (99,686)  $      (164,331)
                                                     ============  ================  ==============  ================

EARNINGS PER SHARE
  Basic earnings (losses) per share                  $     (0.34)  $         (0.46)  $       (0.14)  $         (0.23)
  Diluted earnings (losses) per share                $     (0.34)  $         (0.46)  $       (0.14)  $         (0.23)
</TABLE>


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

CONDENSED  CONSOLIDATED  STATEMENT  OF  SHAREHOLDERS'  EQUITY  AND  COMPREHENSIVE  INCOME
                         FOR THE SIX MONTHS ENDED JUNE 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                                   (331,087)                    (331,087)

Other comprehensive
 income, net of tax $3,417                                                    5,817       5,817
                                                                                     -----------

Comprehensive income                  -            -             -                -    (325,270)
                            ------------  -----------  ------------  --------------  -----------

BALANCE, JUNE 30, 2001          715,000   $6,779,216   $(1,050,704)  $        5,817  $5,734,329
                            ============  ===========  ============  ==============  ===========

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

Net loss for the period                                   (241,101)                    (241,101)

Other comprehensive
 income, net of tax $6,272                                                   10,678      10,678
                                                                                     -----------

Comprehensive income                  -            -             -                -    (230,423)
                            ------------  -----------  ------------  --------------  -----------

BALANCE, JUNE 30, 2002          715,000   $6,779,216   $(1,591,497)  $       24,141  $5,211,860
                            ============  ===========  ============  ==============  ===========
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                              SUN BANCSHARES, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)


                                                                       Six Months Ended
                                                                            June 30,
                                                                   --------------------------
                                                                       2002          2001
                                                                   ------------  ------------
<S>                                                                <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                         $  (241,101)  $  (331,087)
  Adjustments to reconcile net income to net cash (used) provided
   by operating activities:
    Depreciation and amortization                                       51,685        37,693
    Provision for loan losses                                           80,000        70,000
    Accretion and premium amortization                                  11,601        (8,668)
    Deferred income tax benefit                                       (141,371)     (186,085)
    Gain on sale of securities                                         (16,518)            -
    Increase in interest receivable                                     (4,528)      (52,200)
    Increase (decrease) in interest payable                            (77,606)       63,601
    Decrease in other assets                                           (34,542)      (19,322)
    Increase in other liabilities                                       26,568        12,143
                                                                   ------------  ------------
      Net cash used by operating activities                           (345,812)     (413,925)
                                                                   ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of securities available-for-sale                        (1,351,129)   (2,579,858)
  Proceeds from maturities of securities available-for-sale            414,848       811,931
  Proceeds from sales of securities available-for-sale               1,232,307             -
  Net increase in loans made to customers                           (4,524,590)   (7,300,653)
  Purchases of premises and equipment                                 (281,504)     (912,105)
                                                                   ------------  ------------
    Net cash used by investing activities                           (4,510,068)   (9,980,685)
                                                                   ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in demand deposits, interest-bearing transaction
   accounts and savings accounts                                     5,572,779     4,623,137
  Net increase in certificates of deposit and other time deposits    6,423,745     8,556,213
  Decrease in securities sold under agreement to repurchase           (500,000)            -
                                                                   ------------  ------------
    Net cash provided by financing activities                       11,496,524    13,179,350
                                                                   ------------  ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                            6,640,644     2,784,740

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

CASH AND CASH EQUIVALENTS END OF PERIOD                            $ 8,969,652   $ 8,958,255
                                                                   ============  ============

CASH PAID DURING THE PERIOD FOR:
  Income taxes                                                     $         -   $         -
  Interest                                                         $   425,452   $    35,438
</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 June 30, 2002 and for the interim period ended June
30,  2002  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 per share - basic is computed by dividing net income by the weighted
average  number of common shares outstanding.  Net income per share - diluted is
computed  by dividing net income 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 six months of 2002; therefore basic
earnings  per  share  and  diluted  earnings  per  share  were  the  same.

NOTE 2 - COMPREHENSIVE INCOME
-----------------------------

Comprehensive  income  includes net income 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 three and six months period ended June 30,
2002:

<TABLE>
<CAPTION>
                                                                            TAX
                                                               PRE-TAX   (EXPENSE)   NET-OF-TAX
                                                                AMOUNT    BENEFIT      AMOUNT
                                                               --------  ----------  -----------
<S>                                                            <C>       <C>         <C>
 FOR THE SIX MONTHS ENDED JUNE 30, 2002:
Unrealized gains (losses) on securities:
 Unrealized holding gains (losses) arising during the period   $ 16,950  $  (6,272)  $    10,678
 Plus: reclassification adjustment for gains (losses)
    realized in net income                                            -          -             -
                                                               --------  ----------  -----------
Net unrealized gains (losses) on securities                      16,950     (6,272)       10,678
                                                               --------  ----------  -----------

Other comprehensive income                                     $ 16,950  $  (6,272)  $    10,678
                                                               ========  ==========  ===========
</TABLE>
<TABLE>
<CAPTION>
                                                                            TAX
                                                               PRE-TAX   (EXPENSE)   NET-OF-TAX
                                                                AMOUNT    BENEFIT      AMOUNT
                                                               --------  ----------  -----------
<S>                                                            <C>       <C>         <C>
FOR THE SIX MONTHS ENDED JUNE 30, 2001:
Unrealized gains (losses) on securities:
 Unrealized holding gains (losses) arising during the period   $  9,234  $  (3,417)  $     5,817
 Plus: reclassification adjustment for gains (losses)
    realized in net income                                            -          -             -
                                                               --------  ----------  -----------

Net unrealized gains (losses) on securities                       9,234     (3,417)        5,817
                                                               --------  ----------  -----------

Other comprehensive income                                     $  9,234  $  (3,417)  $     5,817
                                                               ========  ==========  ===========
</TABLE>


                                        7
<PAGE>
<TABLE>
<CAPTION>
                              SUN BANCSHARES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 2 - COMPREHENSIVE INCOME - (continued)
-----------------------------
                                                                              TAX
                                                                PRE-TAX     (EXPENSE)    NET-OF-TAX
                                                                 AMOUNT      BENEFIT       AMOUNT
                                                               ----------  ------------  -----------
<S>                                                            <C>         <C>           <C>
FOR THE THREE MONTHS ENDED JUNE 30, 2002:
Unrealized gains (losses) on securities:
 Unrealized holding gains (losses) arising during the period   $   16,400  $    (6,069)  $    10,331
 Plus: reclassification adjustment for gains (losses)
    realized in net income                                              -            -             -
                                                               ----------  ------------  -----------
Net unrealized gains (losses) on securities                        16,400       (6,069)       10,331
                                                               ----------  ------------  -----------

Other comprehensive income                                     $   16,400  $    (6,069)  $    10,331
                                                               ==========  ============  ===========

                                                                              TAX
                                                                PRE-TAX     (EXPENSE)    NET-OF-TAX
                                                                 AMOUNT      BENEFIT       AMOUNT
                                                               ----------  ------------  -----------
FOR THE THREE MONTHS ENDED JUNE 30, 2001:
Unrealized gains (losses) on securities:
 Unrealized holding gains (losses) arising during the period   $    8,684  $    (3,214)  $     5,470
 Plus: reclassification adjustment for gains (losses)
    realized in net income                                              -            -             -
                                                               ----------  ------------  -----------
Net unrealized gains (losses) on securities                         8,684       (3,214)        5,470
                                                               ----------  ------------  -----------

Other comprehensive income                                     $    8,684  $    (3,214)  $     5,470
                                                               ==========  ============  ===========
</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 June 30, 2002
compared  to  December 31, 2001, and the results of operations for the three and
six  months  ended  June 30, 2002.  These comments should be read in conjunction
with  our condensed financial statements and accompanying footnotes appearing in
this  report.  It  should  be  understood  that  this discussion is based on the
Bank's  opening  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 six months ended June 30, 2002, net interest income increased $207,898,
or  71.97%,  to  $496,761  as  compared to $288,863 for the same period in 2001.
Interest income from loans, including fees, increased $495,161, or 222.79%, from
the  six  months  ended  June  30,  2001 to the comparable period in 2002, as we
continued  to experience growth in our loan portfolio.  Interest expense for the
six  months ended June 30, 2002 was $347,846 as compared to $99,039 for the same
period  in  2001.  The  increase  in  interest-bearing  deposits between the two
periods  resulted  in  increased  interest  expense.  The  net  interest  margin
realized  on  earning  assets decreased from 4.72% for the six months ended June
30,  2001  to  3.88%  for  the  same  period  in 2002.  The interest rate spread
decreased  from  3.80%  for  the six months ended June 30, 2001 to 2.96% for the
same  period  in  2002.

For  the  quarter  ended June 30, 2002, net interest income totaled $257,494, an
increase of $99,074, or 62.54%, when compared to the same quarter ended June 30,
2001.  Interest  income  totaling  $378,614  was generated from loans, including
fees, during the quarter ended June 30, 2002, as compared to $151,153 during the
comparable  period  in  2001.  Interest expense on deposit accounts was $191,130
for  the quarter ended June 30, 2002, as compared to $61,568 for the same period
in  2001.  The  net interest margin realized on earning assets was 3.60% for the
quarter  ended  June  30,  2002,  as compared to 4.27% during the same period in
2001.  The  interest  rate spread was 2.84% for the quarter ended June 30, 2002,
as  compared  to  3.43%  for  the  quarter  ended  June  30,  2001.

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  six  months  ended June 30, 2002, the provision charged to
expense  was  $80,000, as compared to $70,000 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
June  30,  2002,  the  provision  charged to expense was $32,000, 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.


                                        9
<PAGE>
                              SUN BANCSHARES, INC.


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

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

Noninterest  income increased $96,584, or 557.74% to $113,901 for the six months
ended  June  30,  2002  as compared to the same period ended June 30, 2001.  The
primary  source  of  this  income was the increase in service charges on deposit
accounts  of $44,614, or 483.52%, to $53,841 for the period ended June 30, 2002,
when  compared to the same period in 2001.  In addition, income from residential
mortgage origination fees increased $16,823 to $20,647 for the period ended June
30,  2002  as  compared  to  the  same  period  in  2001.  Gains  on  sales  of
available-for-sale  securities totaled $16,518 for the six months ended June 30,
2002,  there  were  no  gains  during  the  same  period  in  2001.

For the quarter ended June 30, 2002, noninterest income was $66,137, an increase
of  $52,372,  or  380,47% from the same period ended June 30, 2001.  The largest
component  of  noninterest income was service charges on deposit accounts, which
totaled  $28,130  for the quarter ended June 30, 2002, as compared to $7,196 for
the  quarter  ended June 30, 2001.  Income from residential mortgage origination
fees  totaled $11,014 for the quarter ended June 30, 2002, as compared to $3,824
for  the  same period in 2001.  Income from gains on sales of available-for-sale
securities  totaled  $15,112  for the quarter ended June 30, 2002, there were no
gains  during  the  same  period  in  2001.

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

For  the  period  ended  June  30,  2002,  noninterest  expense was $913,134, an
increase  of $159,782, or 21.21% when compared to the same period ended June 30,
2001.  The  largest  increase  was  in  salaries  and  employee  benefits, which
increased  from  $319,903 for the six months ended June 30, 2001 to $422,425 for
the  six  months ended June 30, 2002.  The increase was largely the result of an
increase  in  personnel  in  support  functions  for  the  Georgetown  office.

For  the  quarter ended June 30, 2002, noninterest expense increased $68,691, or
17.71%  as  compared  to  the  same  period  ended  June  30, 2001.  The largest
increase,  increased  from  $155,797  for  the  quarter  ended  June 30, 2001 to
$194,861  for  the  quarter  ended June 30, 2002.  This increase was largely the
result  of  an  increase  in  personnel  in support functions for the Georgetown
office.

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

The  income  tax  benefit for the six months ended June 30, 2002 was $141,371 as
compared  to $186,085 for the same period in 2001.  The loss before income taxes
decreased  from  $517,172 for the six months ended June 30, 2001 to $382,472 for
the  same  period  in  2002.  The  effective tax rate was 37% for the six months
ended  June  30,  2002,  as compared to an effective tax rate of 36% for the six
months  ended  June  30,  2001.  The  effective tax rate was 40% for the quarter
ended  June  30,  2002  and  34%  for  the  quarter  ended  June  30,  2001.

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

The  combination  of the above factors resulted in a net loss for the six months
ended  June  30, 2002 of $241,101 as compared to $331,087 for the same period in
2001.  The  net loss before taxes of $382,472 was partially offset by the income
tax benefit of $141,371 during the six months ended June 30, 2002.  The net loss
before  taxes  for  the  same  period  in 2001 was $517,172, which was partially
offset  by  the  income tax benefit of $186,085.  For the quarter ended June 30,
2002,  the  net loss was $99,686, as compared to $164,331 for the same period in
2001.


                                       10
<PAGE>
                              SUN BANCSHARES, INC.


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

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 six months of
2002,  total  assets  increased $11,229,241 or 44.30%, when compared to December
31, 2001.  The primary sources of growth in assets were federal funds sold which
increased  $4,973,000,  or  381.37%  from  the  December  31,  2001  amount  of
$1,304,000,  and  gross  loans  which  increased  $4,524,590, or 27.87% from the
December  31,  2001 amount of $16,238,315.  Total deposits increased $11,996,524
or  62.49% from the December 31, 2001 amount of $19,200,114.  Within the deposit
area,  other time deposits increased $3,779,706 or 73.23% from December 31, 2001
to  June  30,  2002.  Time  deposits  $100,000  and over increased $2,644,039 or
53.84%  during  the  first six months of 2002.  Noninterest-bearing deposits and
savings  deposits  increased  $2,534,430  and  $2,724,180,  respectively,  from
December  31,  2001  to  June  30,  2002.

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

Investment  securities  decreased  from  $4,384,229  at  December  31,  2001  to
$4,110,069  at  June 30, 2002.  All of our marketable investment securities were
designated  as  available-for-sale  at  June  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 June 30, 2002 and December 31, 2001 our investment in
this  stock  totaled  $195,000.

LOANS
-----

We continued our trend of growth during the first six months of 2002, especially
in the loan area.  Net loans increased $4,444,590, or 27.66%, during the period.
As  shown  below,  the  main  component  of  growth  in  the  loan portfolio was
commercial  and  industrial  loans  which  increased 32.87%, or $2,847,338, from
December  31, 2001 to June 30, 2002.  Balances within the major loans receivable
categories  as  of  June  30,  2002  and  December  31,  2001  are  as  follows:

<TABLE>
<CAPTION>
                             June 30,    December 31,
                               2002          2001
                            -----------  -------------
<S>                         <C>          <C>
 Real estate:
   Construction             $   996,301  $     996,432
   Mortgage - residential     5,954,765      4,700,606
 Commercial and industrial   11,510,715      8,663,377
 Consumer and other           2,301,124      1,877,900
                            -----------  -------------
                            $20,762,905  $  16,238,315
                            ===========  =============
</TABLE>


                                       11
<PAGE>
                              SUN BANCSHARES, INC.


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

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

There were no risk elements identified in our loan portfolio as of June 30, 2002
and  2001.

Activity  in  the  Allowance  for  Loan  Losses  is  as  follows:

<TABLE>
<CAPTION>
                                                     June 30,     June 30,
                                                       2002         2001
                                                   ------------  -----------
<S>                                                <C>           <C>
 Balance, January 1,                               $   164,787   $   15,000
 Provision for loan losses for the period               80,000       70,000
 Net loans (charged-off) recovered for the period            -            -
                                                   ------------  -----------

 Balance, end of period                            $   244,787   $   85,000
                                                   ============  ===========

 Gross loans outstanding, end of period            $20,762,905   $8,205,800

 Allowance for loan losses to loans outstanding           1.18%        1.04%
</TABLE>

DEPOSITS
--------

During the first six months of 2002, total deposits increased by $11,996,524, or
62.49%, from December 31, 2001.  The largest increase was in other time deposits
which  increased  $3,779,706 or 73.23%, from December 31, 2001 to June 30, 2002.
Time deposits $100,000 and over increased $2,644,039, or 53.84% and non-interest
bearing  demand  deposits  increased  $2,534,430  or  60.20%.  Savings  deposits
increased  $2,724,180  or  67.45%.  Expressed  as  a  percentage, total interest
bearing  deposits  increased  63.12%.

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

<TABLE>
<CAPTION>
                                                   June 30,    December 31,
                                                     2002          2001
                                                  -----------  -------------
<S>                                               <C>          <C>
 Noninterest-bearing demand deposits              $ 6,744,913  $   4,210,483
 Interest-bearing demand deposits                   1,192,200        878,031
 Savings deposits                                   6,763,029      4,038,849
 Time deposits $100,000 and over                    7,555,047      4,911,008
 Other time deposits                                8,941,449      5,161,743
                                                  -----------  -------------

                                                  $31,196,638  $  19,200,114
                                                  ===========  =============
</TABLE>

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 66.56% at June 30, 2002 and
84.58%  at  December  31,  2001.

Securities  available-for-sale, which totaled $4,110,069 at June 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  June  30,  2002,  unused  lines  of  credit  totaled  $4,241,000.


                                       12
<PAGE>
                              SUN BANCSHARES, INC.


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

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.

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

Total  shareholders'  equity  decreased  from $5,442,283 at December 31, 2001 to
$5,211,860  at June 30, 2002.  The decrease is primarily due to the net loss for
the  period  of  $241,101.

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 capital at a
minimum  level based on total assets, which is known as the leverage ratio.  The
minimum  requirement  for  the leverage ratio is 3%, however 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  June  30,  2002.

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

<TABLE>
<CAPTION>

<S>                                                               <C>
Shareholders' equity                                              $ 5,187,719
 Less: intangibles - Deferred Taxes                                  (674,544)
                                                                  ------------
 Tier 1 capital                                                     4,513,175

 Plus: allowance for loan losses (1)                                  244,787
                                                                  ------------
     Total capital                                                $ 4,757,962
                                                                  ============

 Risk-weighted assets                                             $22,908,402
                                                                  ============

 Risk-based capital ratios
   Tier 1 capital (to risk-weighted assets)                             19.70%
   Total capital (to risk-weighted assets)                              20.77%
   Tier 1 (to total average assets)                                     14.28%
</TABLE>

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


                                       13
<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 June 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.


                                       14
<PAGE>
                              SUN BANCSHARES, INC.


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

On  May  13,  2002,  the Company held the Annual Meeting of Shareholders for the
purpose  of  electing  five  Class  I  directors  to serve for three-year terms.

The  five  nominees  for  director  received  the number of affirmative votes of
shareholders  required for such nominee's election in accordance with the Bylaws
of  the  Company.  Of  the  715,000  outstanding  shareholders  of  the Company,
shareholders  voted  for  the  election  of  each  director  as follows:  Thomas
Bouchette,  Edsel  J. (Coupe) DeVille, John S. Divine, III, Dalton B. Floyd, Jr.
and  Jeanne  Louise  Fourrier  -  Eggart  all received 686,771 votes for his/her
election, 500 votes were withheld on each director and there were no abstentions
and  no  votes  against  any  director.

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

Not applicable.

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

(a)  Exhibits

     Exhibit 99.1 - Certification of Chief Executive Officer and Chief Financial
     Officer.

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

(b)  Reports  on  Form  8-K  -  None


                                       15
<PAGE>
                              SUN BANCSHARES, INC.

                                    SIGNATURE


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



Date:  August 13, 2002                   By: /s/ THOMAS BOUCHETTE
                                             -----------------------------------
                                             Thomas Bouchette
                                             President & Chief Executive Officer



                                         By: /s/ RANDY L. CARMON
                                             ----------------------------------
                                             Randy L. Carmon
                                             Chief Financial Officer


                                       16
<PAGE>