<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

             [X] ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1999
                           Commission File No. 0-25079

                       MICHIGAN COMMUNITY BANCORP LIMITED
                 (Name of small business issuer in its charter)

       Michigan                                             38-3390193
(State of Incorporation)                      I.R.S. Employer Identification No.


                              43850 Schoenherr Road
                           Sterling Heights, MI 48313
                    (Address of principal executive offices)

                                  810-532-8000
                         (Registrant's Telephone Number)
--------------------------------------------------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

     Title of each class               Name of each exchange on which registered
 Common Stock, no par value                      OTC Bulletin Board

Check whether the issuer (1) filed all reports to be filed by Section 13 or 15
(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure or delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Registrants revenues for its most recent fiscal year. $2,594,000

The aggregate market value of the voting stock held by non-affiliates was
approximately $3,287,526 as of March 28, 2000 based on the closing bid and
ask prices ($6.00) on that date.



<PAGE>   2

         As of March 28, 2000 756,000 shares of Common Stock of the Registrant
         were outstanding.

         Transitional Small Business Disclosure Format:    Yes  [    ]    No
         [ X ]

Portions of the Registrant's Proxy Statement for its 2000 Annual Meeting of
         Shareholders, to the extent expressly so stated herein, are
         incorporated by reference into Part I of this Report.






<PAGE>   3


<TABLE>
<CAPTION>
                                    CONTENTS

         <S>         <C>
         Part I:

           Item 1    Description of Business
           Item 2    Description of Property
           Item 3    Legal Proceedings
           Item 4    Submissions of Matters to a Vote of Security Holders

         Part II:

           Item 5    Market for Common Equity and Related Stockholder Matters
           Item 6    Management's Discussion and Analysis of Financial Condition and
                        Results of Operations
           Item 7    Financial Statements
           Item 8    Changes in and Disagreements with Accountants on Accounting and
                        Financial Disclosure

         Part III:

           Item 9    Directors, Executive Officers, Promoters and Control Persons: Compliance
                        With Section 16(A) of the Exchange Act
           Item 10  Executive Compensation
           Item 11  Security Ownership of Certain Beneficial Owners and Management
           Item 12  Certain Relationships and Related Transactions
           Item 13  Exhibits and Reports on Form 8-K
</TABLE>



               With the exception of the statements regarding historical matters
          and statements regarding the Company's current status, certain matters
          discussed herein are forward-looking statements that involve
          substantial risks and uncertainties. Such forward-looking statements
          may be identified by the use of the words "anticipate", "believe",
          "estimate", "plan", "expect", "intend" and similar expressions. Actual
          results, performance or achievements could differ materially from
          these forward-looking statements. Factors that could cause or
          contribute to such material differences are described in the section
          entitled "Risk Factors that may effect Future Results."



<PAGE>   4


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

THE CORPORATION

         Michigan Community Bancorp Limited ("MCB") is a bank holding company
organized under the Bank Holding Company Act of 1956, as amended (the Bank
Holding Company Act). As a bank holding company, MCB is subject to regulation by
the Federal Reserve Board. MCB was organized January, 1998, under the laws of
the State of Michigan, and organized Lakeside Community Bank ("LCB") and North
Oakland Community Bank ("NOCB") (collectively, "the Banks") effective January 5,
1999. MCB exists primarily for the purpose of holding all the stock
of the Banks, and of such other subsidiaries as it may acquire or establish.

         The expenses of MCB have generally been paid using the proceeds of its
initial public stock offering, and a private stock offering. MCB's principal
source of future operating funds is expected to be fees charged and dividends
from the Banks.

         The Banks' present lending activities are primarily focused on
commercial and real estate lending to businesses secured by the assets of the
borrower. The Banks originate loans primarily through third party referral
sources, many of whom are known to management.

         The Banks' retail strategy focuses on mortgage loans, home equity
loans, and, to a lesser extent, other forms of consumer lending. The Banks offer
ATM cards, competitive rates on various deposit products and other attractive
products and services. These services reflect MCB's intended strategy of serving
small to medium-sized businesses and individual customers in its market area.

         The Banks provide a wide range of commercial and consumer banking
services in northeast Oakland County, and northern Macomb County, including
Sterling Heights and Rochester Hills.

THE BANKS

         The Banks are state banking corporations which operate under the laws
of the United States of America, pursuant to a charter issued by the State of
Michigan. The Bank's deposits are insured to the maximum extent allowed by the
Federal Deposit Insurance Corporation.

         The Banks provide a wide variety of commercial banking services to
individuals, businesses, governmental units, and other institutions. The
services provided by the Banks include accepting time, demand and savings
deposits, including regular checking accounts, NOW and money market accounts,
and certificates of deposit. In addition, the Banks make secured and unsecured
commercial, construction, mortgage and consumer loans and provide safe deposit
facilities. The Banks have one automated teller machine (ATM) per bank which
participate in the Magic Line system, a regional network, as well as other ATM
networks throughout the country.



<PAGE>   5


EFFECT OF GOVERNMENT MONETARY POLICIES

         The earnings of MCB are affected by domestic economic conditions and
the monetary and fiscal policies of the United States Government, its agencies,
and the Federal Reserve Board. The Federal Reserve Board's monetary policies
have had, and will likely continue to have, an important impact on the operating
results of commercial banks through its power to implement national monetary
policy. Monetary policy is used to, among other things, attempt to curb
inflation or combat a recession. The policies of the Federal Reserve Board have
a major effect upon the levels of bank loans, investments and deposits through
its open market operations in United States Government securities, and through
its regulation of, among other things, the discount rate on borrowings of member
banks and the reserve requirements against member bank deposits. It is not
possible to predict the nature and impact of future changes in monetary and
fiscal policies.

REGULATION AND SUPERVISION

         MCB, as a bank holding company under the Bank Holding Company Act, is
required to file an annual report with the Federal Reserve Board. It may be
required to file additional information as the Federal Reserve Board may
require, pursuant to the Bank Holding Company Act, and is subject to examination
by the Federal Reserve Board.

         The Bank Holding Company Act limits the activities which may be engaged
in by MCB (and its subsidiaries) to those of banking and the management of
banking organizations, and to certain non-banking activities, including those
activities which the Federal Reserve Board may find, by order or regulation, to
be closely related to banking or managing or controlling banks. The Federal
Reserve Board is empowered to differentiate between activities by a bank holding
company, or a subsidiary thereof, and activities commenced by acquisition of a
going concern.


         With respect to non-banking activities, the Federal Reserve Board has,
by regulation, determined that certain non-banking activities are closely
related to banking within the meaning of the Bank Holding Company Act. These
activities include, among other things, operating a mortgage company, finance
company, credit card company or factoring company, performing certain data
processing operations, providing certain investment and financial advice, acting
as an insurance agent for certain types of credit related insurance, leasing
property on a full-payout, non-operating basis; and, subject to certain
limitations, providing discount securities brokerage services for customers. MCB
has no current plans to engage in non-banking activities.

         The Banks are subject to certain restrictions imposed by federal law on
any extension of credit to MCB for investments in stock or other securities, and
on the taking of such stock or securities as collateral for loans to any
borrower. Federal law prevents the MCB from borrowing from the Banks unless the
loans are secured in designated amounts.

         With respect to the acquisition of banking organizations, MCB is
required to obtain the prior approval of the Federal Reserve Board before it can
acquire all or substantially all of the assets of any bank, or acquire ownership
or control of any voting shares of any bank, if, after such acquisition, it will
own or control more than 5% of the voting shares of such bank. Acquisitions
across state lines are subject to certain state and Federal Reserve Board
restrictions.



<PAGE>   6


EMPLOYEES

         As of December 31, 1999, MCB and the Banks employed 28 persons (full
time equivalent).

COMPETITION

         All phases of the business of the Banks are highly competitive. The
Banks compete with numerous financial institutions, including other commercial
banks, in the Macomb County, Oakland County and metropolitan Detroit area. The
Banks along with other commercial banks, compete with respect to their lending
activities, and compete in attracting demand deposits with savings banks,
savings and loan associations, insurance companies, small loan companies, credit
unions and with the issuers of commercial paper and other securities, such as
various mutual funds. Many of these institutions are substantially larger and
have greater financial resources than the Banks.

         The competitive factors among financial institutions can be classified
into two categories; competitive rates and competitive services. Interest rates
are widely advertised and thus competitive, especially in the area of time
deposits. From a service standpoint, financial institutions compete against each
other in types and quality of services. The Banks are generally competitive with
other financial institutions in its area with respect to interest rates paid on
time and savings deposits, fees charged on deposit accounts, and interest rates
charged on loans. With respect to services, the Banks offer a customer service
oriented atmosphere which management believes is better suited to its customers'
needs than that which is offered by other institutions in the local market.

LEGAL LENDING LIMIT

         Pursuant to state regulations, the Banks are limited in the amount that
they may lend to a single borrower, per Bank. As of December 31, 1999 the legal
lending limit was approximately $900,000 per bank.



ITEM 2.  DESCRIPTION OF PROPERTY

         MCB has a ten year lease for approximately 6,000 square feet in a one
story building located at 43850 Schoenherr Road, Sterling Heights, MI 48313. Of
the 6,000 square feet leased, 4,000 are used as the main office of Lakeside
Community Bank. MCB utilizes the remaining 2,000 square feet for its
headquarters. Monthly rent is approximately $8,400 for the first five years and
$8,900 for the remaining five years. The facility is equipped with an automated
teller machine ("ATM"), a drive-through teller window and teller stations inside
the building. It is expected that the space provided by this building will be
adequate for the needs of MCB and LCB for the foreseeable future.

         MCB also leases a building with approximately 3,100 square feet of
office space located at 1467 North Rochester Road, Rochester Hills, MI 48307
until December 31, 2004 which serves as the main office of North Oakland
Community Bank. MCB prepaid the entire amount of the lease by making a single
payment of $250,000 in August 1998. MCB is also obligated to make monthly ground
lease payments of $600 until December 31, 2004. The facility is equipped with an
ATM, a drive through teller window and teller stations inside the building. It
is expected that the space provided by this building will be adequate for the
needs of NOCB for the foreseeable future.




<PAGE>   7

ITEM 3.  LEGAL PROCEEDINGS

         As a depository of funds, the Bank could occasionally be named as a
defendant in a lawsuit (such as garnishment proceedings) involving claims to the
ownership of funds in particular accounts. All such litigation is incidental to
the Bank's business.

         Management believes that there is no litigation threatened or pending
in which MCB, or the Banks, are likely to experience loss or exposure which
would materially affect MCB's capital resources, results of operations, or
liquidity as presented herein.

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

         None

                                     Part II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         MCB common stock is traded under the symbol "MCBP" in the
over-the-counter market and transactions are reported in the National
Association of Securities Dealers reporting system known as the "OTC Bulletin
Board". As of March 28, 2000, there were approximately 21 record holders of
the Company's Common Stock according to the records maintained by MCB's stock
transfer agent. The following table sets forth, for the periods indicated, the
range of sales prices as reported on the OTC Bulletin Board for each quarter
since the completing of the Company's initial public offering on December 4,
1998.

<TABLE>
<CAPTION>

                                            High / Low

         <S>                            <C>
         1999:
                  4th Quarter           $10.00    $ 6.13
                  3rd Quarter           $12.00    $ 9.00
                  2nd Quarter           $14.50    $10.00
                  1st Quarter           $16.00    $12.00


         1998:
                  4th Quarter           $15.50    $14.50
</TABLE>


Since the completion of its initial public offering, MCB has not paid or
declared cash dividends with respect to its Common Stock, and does not expect to
pay any cash dividends in the foreseeable future. The Company's ability to pay
cash dividends in the future will depend upon the future earnings, results of
operations, capital requirements and financial condition of Lakeside Community
Bank and North Oakland Community Bank and other factors as MCB's Board of
Directors may deem relevant.





<PAGE>   8


ITEM 6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS

         The following analysis of MCB's operating results and financial
condition for the periods ended December 31, 1999, should be read in conjunction
with the financial statements and statistical data presented elsewhere. The
discussion and analysis contains forward-looking statements that are based on
management's beliefs, assumptions, current expectations, and projections. These
statements are not guarantees of future performance, and involve certain risks
and uncertainties. Actual results may materially differ from what may be
expressed herein. See "Risk Factors that may effect Future Results."

RESULTS OF OPERATIONS

         MCB had a net loss of $1.8 million in 1999 as compared to $560,000 in
1998. The reasons for the increased losses in 1999 can be primarily attributed
to costs and expenses relating to the commencement of operations of the Banks.
MCB had revenues of $2.6 million for the year ended December 31, 1999, which was
derived primarily from interest and fee income.

         MCB expects net interest income to be its principal source of future
income. Interest expense for the year ended December 31, 1999 totaled $1.2
million, which resulted in a net interest income total of $1.3 million. MCB's
net interest spread for the year was 4.13%. Net interest income can be expected
to increase in the future, as funds continue to be moved from short term
investments into higher yielding, longer term loans and securities. This will be
accomplished as the Corporation develops its deposit base and loan portfolio.

         Operating expenses for the year ended December 31, 1999 totaled $2.5
million which included $1.3 million in salaries and benefits and $437,000 of
occupancy expenses.

ASSETS

         MCB's total assets have increased to $59.8 million at December 31,
1999, compared with $8.9 million at December 31, 1998.

         During the year ended December 31, 1999, total deposits were $51.6
million, while total loans were $46.6 million. Increased liquidity was provided
by a private placement offering of common stock during the fourth quarter of
1999.

         During the year ended December 31, 1999, MCB built its loan base
through additions to commercial loans totaling $38.9 million, real estate
mortgage loans totaling $5.0 million and installment loans of $2.6 million.

         Loans are placed in non-accrual status when, in the opinion of
management, uncertainty exists as to the ultimate collection of principal and
interest. No loans have been placed in non-accrual status by MCB through
December 31, 1999. Subsequent to December 31, 1999, the Banks classified a loan
as non-accrual totaling $1,450,000. Management believes that the loan in
non-accrual status in adequately secured by underlying collateral.




<PAGE>   9
         At December 31, 1999, there were no significant loans where known
information about possible credit problems of borrowers causes management to
have serious doubts as to the ability of the borrower to comply with present
loan repayment terms. Furthermore, management is not aware of any potential
problem loans which could have a material effect on MCB's operating results,
liquidity or capital resources.

         In each accounting period, management evaluates the problems and
potential losses in the loan portfolio. Consideration is also given to
off-balance sheet items that may involve credit risk, such as commitments to
extend credit and financial guarantees. Management's evaluation of the allowance
is further based on consideration of actual loss experience, the present and
prospective financial conditions of borrowers adequacy of collateral, industry
concentrations within the portfolio, and general economic conditions. The
results of these evaluations are reflected in the allowance and periodic
provision for credit losses. Management believes that the present allowance is
adequate, based on the broad range of considerations listed above.

         The primary risk element considered by management regarding each
installment and residential real estate loan is lack of timely payment.
Management has a reporting system that monitors past due loans and has adopted
policies to pursue its creditor's rights in order to preserve the Banks'
position. The primary risk elements concerning commercial loans are the
financial condition of the borrower, the sufficiency of collateral, and lack of
timely payment. Management has a policy of requesting and reviewing annual
financial statements from its commercial loan customers, and periodically
reviews existence of collateral and its value.

         Although management believes that the allowances for credit losses is
adequate to absorb losses as they arise, there can be no assurance that the
Banks will not sustain losses in any given period that could be substantial in
relation to the size of the allowances for credit losses. Management is not
aware of any factors that would cause future net loan charge-offs, in total or
by loan category, to significantly differ from those experienced by institutions
of similar size.

LIABILITIES

         During the year ended December 31, 1999, total deposits were $51.6
million. MCB did not have short-term borrowing as of December 31, 1999.


CAPTIAL

         On October 1, 1999, MCB sold 91,000 common stock units at a price of
$11.00 per unit. Each unit consists of one share of MCB's common stock and one
redeemable common stock purchase warrant. Each warrant entitles the holder
thereof to purchase one and one half shares of common stock at $11.00 per share
subject to adjustment in certain circumstances for 36 months. The warrants may
be immediately separated from the common stock. The warrants will be redeemable
at five cents per warrant upon 30 days notice mailed within 20 days after the
closing bid price of the common stock has equaled or exceeded $15.00 per share
for a period of twenty consecutive trading days.

         The units constitute "restricted" securities and cannot be resold or
transferred without registration under the Securities Act of 1933, the Michigan
Uniform Securities Act and the securities law of any other applicable
jurisdiction, unless an exception from registration under each such applicable
act is available.
<PAGE>   10
         The net proceeds to MCB (after deducting offering costs) were
approximately $980,000. The proceeds from the offering were used to repay the
indebtedness to Lakeside Community Bank and North Oakland Community Bank with
the remaining amounts being used to provide MCB with additional working capital.


AVERAGE BALANCE SHEET

         The following table shows MCB's consolidated average balances of
assets, liabilities, and equity. The table also details the amount of interest
income or interest expense and the average yield or rate for each category of
interest earning asset or interest bearing asset or interest bearing liability,
and the net interest margin for the periods indicated. The average balance of
securities represents amortized cost. Interest income on loans includes loan
fees.



<PAGE>   11
<TABLE>
<CAPTION>
        Year Ended December 31, 1999
               (In thousands)
                                                       Average          Interest          Average Rate
                                                       Balance       Income/Expense        Earned/Paid
<S>                                               <C>               <C>                 <C>
Assets
    Purchased CD's                                         81              4                 4.94%
    Federal Funds Sold                                  9,651            477                 4.94%
    Securities                                          1,252             71                 5.67%
    Loans                                              21,100          1,992                 9.44%
                                                       ------          -----                 ----
    Total Earning Assets/
       Total Interest Income                           32,084          2,544                 7.93%

    Cash and due from banks                             1,250              -                     -
    All other assets                                    1,830              -                     -

    Total Assets                                       35,164
                                                       ======
Liabilities and Equity
    Now and money market accounts                       3,760            137                 3.64%
    Savings deposits                                      851             25                 2.94%
    Time deposits                                      19,320          1,057                 5.47%
                                                       ------          -----                 ----

    Total Interest Bearing Liabilities/
      Total Interest Expense                           23,931          1,219                 5.09%

Non-interest bearing
    demand deposits                                     3,170
All other liabilities                                     221
Stockholders' equity                                    7,842
                                                       ------
    Total liabilities and Stockholder'
       Equity                                          35,164
                                                       ======
Net Interest Income                                                    1,325
                                                                       =====
Net Interest Margin (Net Interest
   Income/Total Earning Assets)                                                              4.13%
                                                                                             ====
</TABLE>

Note:  Data for the year ended  December  31,  1998 is not  presented  since the
subsidiary Banks did not commence operations until January, 1999.

<PAGE>   12

LIQUIDITY AND ASSET/LIABILITY MANAGEMENT

         The liquidity of a bank allows it to provide funds to meet loan
requests, to accommodate possible outflows in deposits, and to take advantage of
other investment opportunities. Funding of loan requests, providing for
liability outflows, and managing interest rate risk require continuous analysis
to match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity depends upon the mix
of the major sources of liquidity have been deposit growth, federal funds sold,
loans and securities which mature within one year. Additional liquidity is
provided by a $1.8 million secured federal funds borrowing facility, and $2.0
million secured line of credit with the FHLB. MCB's large deposits which might
fluctuate in response to interest rate changes are closely monitored. These
deposits consist mainly of jumbo time certificates of deposit.

         Managing rates on earning assets and interest bearing liabilities
focuses on maintaining stability in the net interest margin, an important factor
in earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in margins and to manage risk
due to changes in interest rates.

         The following table shows the maturity and repricing distribution of
MCB's interest earning assets and interest bearing liabilities as of December
31, 1999, the interest rate sensitivity gap (i.e., interest rate sensitive
assets less interest rate sensitive liabilities), cumulative interest rate
sensitivity gap, then interest rate sensitivity gap ratio (i.e., interest rate
sensitive assets divided by interest rate sensitive liabilities), and the
cumulative interest rate sensitivity gap ratio. For the purposes of the
following table, an asset or liability is considered rate sensitive within a
period when it matures or could be repriced within such period, generally
according to its contractual terms.


<PAGE>   13

<TABLE>
<CAPTION>
                                                         After Three         After One
                                            Within       Months But           Year But           After
                                            Three        within One         Within Five          Five
                                            Months          Year               Years             Years          Total

                                                                         (In Thousands)

<S>                                    <C>              <C>              <C>                <C>            <C>
Interest earning assets
    Federal Funds Sold                       6,550                                                            6,550
                                                               -                -                 -
    Securities, at amortized cost                                           2,974               103           3,077
                                                 -             -
    Loans                                   20,954         1,995           19,365             4,313          46,627
                                           -------        ------          -------            ------

      Total                                $27,504        $1,995          $22,339            $4,416          56,254
                                           -------        ------          -------            ------
Interest bearing liabilities
    NOW and money market accounts            4,117           672            1,343                             6,132
                                                                                                  -
    Savings deposits                                         289              576                               865
                                                 -                                                -
    Jumbo time deposits                      9,580         4,173              400                            14,153
                                                                                                  -
    Time deposits < $100,000                 5,134        15,145            4,971                            25,250
                                             -----        ------            -----            ------


      Total                                 18,831        20,279            7,290                            46,400
                                            ------        ------            -----            ------

Rate sensitivity gap                         8,673       (18,284)          15,049             4,416

Cumulative rate sensitivity gap                           (9,611)           5,438             9,854
                                                 -

Rate sensitivity gap ratio                   14.51        (10.91)          148.44            100.00

Cumulative rate sensitivity gap                           (16.08)            9.10             16.49
ratio                                            -
</TABLE>

<PAGE>   14


         The table above indicates the time periods in which interest earning
assets and interest bearing liabilities will mature or may be repriced,
generally in accordance with their contractural terms. However, this table does
not necessarily indicate the impact of general interest rate movements on MCB's
net interest yield because the repricing of various categories of assets and
liabilities is discretionary and is subject competitive and other pressures. As
a result, various assets and liabilities indicated as repricing within the same
period may in fact reprice at different times and at different rate levels.

         Based in the table above, MCB is considered to be liability sensitive
in the one-year maturity range at December 31, 1999. In a rising rate
environment, MCB might not be able to increase prices on interest earning assets
faster then the increase in rates on interest bearing liabilities.

          MCB has developed a model to simulate the effects of possible interest
rate changes. MCB's, estimated negative exposure to changing interest rates has
been set at a target of 10% of net interest income. The exposure estimate has
been established on a variety of assumptions built into the model, and assumed
interest rate changes of plus or minus 100 basis points. The results of this
analysis will be reported to the Asset/Liability Committee to assist in the
interest rate risk management process.

YEAR 2000 DISCLOSURE

         MCB and the Banks, being new businesses, did not have any material
issues regarding Year 2000 compliance. During 1999, the cost for becoming fully
compliant was not material. To date, MCB has not experienced any Year 2000
issues with either vendors or customers.

RISK FACTORS THAT MAY EFFECT FUTURE RESULTS

We have Experienced Significant Losses from Operations

         Lakeside and North Oakland have been operating since January 5, 1999
and to date have not been able to generate sufficient revenue to fund
operations. Through December 31, 1999, MCB has experienced operating losses of
$1,832,000 or $2.66 per share. While MCB cannot accurately predict the pace and
extent of revenue growth, MCB expects to continue to experience operating losses
for the foreseeable future. As a result, of start-up expenditures and the time
it takes to develop a deposit base and loan portfolio, it is expected that the
Banks, and thus MCB, will operate at a loss during the start-up period of the
Banks. MCB does not expect the Banks to be profitable for at least the first two
years of operation. There can be no assurance that the Banks or MCB will ever
operate profitably.

We have a limited Operating History

         Prior to December 4, 1998, neither MCB nor the Banks had an operating
history and were Development Stage Companies. MCB and the Banks are subject to
the risks inherent in the establishment of a new business enterprise. MCB was
only recently formed and the Banks have only operated since January 5, 1999. It
will be a period of time before shareholders have all of the information to
assess their investment that would be available to owners of securities issued
by a financial institution with a history of operations.



<PAGE>   15


We are Exposed to a Cyclical Local Economy

         MCB's success and profitability is directly dependent on the success
and profitability of the Banks. The operations of Lakeside and North Oakland are
materially dependent upon and sensitive to the economy of their market areas in
southeastern Michigan. Adverse economic developments can impact the
collectability of loans and have a negative effect on earnings and financial
condition. The economies of Macomb and Oakland County include many businesses
that manufacture products for, or provide goods or services to, the automobile
industry. No assurance can be made that future economic changes will not have a
significant adverse effect on MCB.


We are Subject to Government Regulation and Monetary Policy

         MCB and the Banks have received all regulatory approvals and satisfied
all conditions necessary to organize and establish the Banks. These conditions
included, among other things, that: (i) beginning paid-in capital of North
Oakland not be less than $4.6 million and beginning paid-in-capital of LCB not
be less than $4.55 million; (ii) each Bank maintains a ratio of Tier 1 leverage
capital to total assets for the first three years after commencing business of
at least 8.0% and an adequate valuation reserve; (iii) each Bank has its
financial statements audited by a public accountant for at least the first three
years; (iv) each Bank file its Certificate of Paid in Capital and Surplus with
the FIB; and (v) any changes in executive management of each Bank be submitted
to the bank regulatory agencies in advance for their approval. Regulatory
capital requirements imposed on the Banks may have the effect of constraining
future growth, absent the infusion of additional capital.

         MCB and each of the Banks is subject to extensive state and federal
government supervision and regulation. State and federal banking laws subject
the Banks to substantial limitations with respect to loans, purchase of
securities, payment of dividends and many other aspects of their banking
business. Applicable laws, regulations, interpretations and enforcement policies
have been subject to significant and sometimes retroactively applied changes and
may be subject to significant future changes. Many of these regulations are
intended to protect depositors, the public, and the FDIC, not shareholders.
There can be no assurance that future legislation or government policy will not
adversely affect the banking industry, the operations of the Banks, or
shareholders. The burden imposed by federal and state regulations may place
banks in general, and MCB and the Banks specifically, at a competitive
disadvantage compared to less regulated competitors. Federal economic and
monetary policy may affect the Banks' ability to attract deposits, make loans
and achieve satisfactory interest rate spreads.

We Don't Anticipate Paying Dividends for the Foreseeable Future

         MCB anticipates that no dividends will be paid on the Common Stock for
the foreseeable future. MCB will be largely dependent upon the dividends paid by
Lakeside and North Oakland to provide funds to pay cash dividends if and when
such dividends are declared. No assurance can be given that future earnings of
the Banks, and resulting dividends to MCB will be sufficient to permit the legal
payment of dividends to shareholders at any time in the future. Even if MCB may
legally declare dividends, the amount and timing of such dividends will be at
the discretion of MCB's Board of Directors. The Board may in its sole discretion
decide not to declare dividends.



<PAGE>   16


MCB is Dependent Upon the Banks' Operations for Operating Funds

         MCB is a bank holding company and substantially dependent upon
dividends from Lakeside and North Oakland, for funds to pay its expenses,
including debt repayment, and to pay cash dividends to shareholders. Lakeside
and North Oakland are subject to regulatory limitations upon the payment of
dividends. No cash dividends are anticipated from the Banks during the initial
years of operation.

We Face Strong Competition from a Variety of Competitors

         MCB faces strong competition for deposits, loans and other financial
services from other community banks, regional banks, out-of-state national
banks, savings banks, thrifts, credit unions and other financial institutions as
well as other entities which provide financial services, including consumer
finance companies, securities brokerage firms, mortgage brokers, insurance
companies, mutual funds, and other lending sources and investment alternatives.
Some of these financial institutions and financial services organizations are
not subject to the same degree of regulation as the Banks. Many financial
institutions aggressively compete for business in the market areas of the Banks.
Most of these competitors have been in business for many years, have established
customer bases, are larger, have substantially higher lending limits than the
Banks will have in the foreseeable future, and will be able to offer certain
services that the Banks do not expect to provide in the foreseeable future,
including multiple branches, trust services, and international banking services.
In addition, most of these entities have greater capital resources than the
Banks, which among other things, may allow them to price their services at
levels more favorable to the customer and to provide larger credit facilities
than will be available from the Banks.

We are Dependent on the Experience and Expertise of our Current Management

         MCB and the Banks are dependent primarily upon the services of David A.
McKinnon, the Chairman of the Board, Chief Executive Officer and President of
the Company, Frank D. Blowers, Chief Executive Officer and President of
Lakeside, William L. Carley, Vice President and Chief Financial Officer of MCB,
Kim Schauer, Secretary and Vice President of Administration of MCB and Gail L.M.
DiFranco, Vice President - Operations of MCB. If the services of these
individuals were to become unavailable to MCB or the Banks for any reason, or if
MCB or the Banks were unable to hire highly qualified and experienced personnel
either to replace Mr. McKinnon, Mr. Blowers, Mr. Carley or Ms. DiFranco or Ms.
Schauer to adequately staff for the anticipated growth, the operating results of
MCB and the Banks could be adversely affected. Neither MCB or the Banks have
employment agreements with, or key man life insurance for, these or any other
officers.

We Face Lending Risks and Lending Limits

         The risk of nonpayment of loans is inherent in commercial banking, and
nonpayment, if it occurs, would likely have a material adverse effect on MCB's
earnings and overall financial condition as well as the value of the Common
Stock. Because Lakeside and North Oakland do not have an operating history, none
of their customers have an established credit history with the Banks. Management
attempts to minimize credit exposure by carefully monitoring the concentration
of loans within specific industries and through prudent loan application and
approval procedures, but there can be no assurance that such monitoring and
procedures will reduce such lending risks. Credit losses can cause insolvency
and failure of a financial institution, and in such event, shareholders could
lose their entire investment. The general per customer lending limit of each
Bank is approximately $900,000. Accordingly, the size of the loans which the
Banks can offer to potential customers is less than the size of loans which most
of the Banks' competitors with larger lending limits are able to offer. This
limit initially may affect the ability of the Banks to seek relationships with
the area's

<PAGE>   17

larger businesses. The Banks expect to accommodate loan volumes in
excess of its lending limit through the sale of participations in such loans to
other banks. However, there can be no assurance that the Banks will be
successful in attracting or maintaining customers seeking larger loans or that
the Banks will be able to engage in participations of such loans on terms
favorable to the Banks.

We Could be Negatively Impacted by Changes in Interest Rates and Economic
Conditions

         The results of operations for financial institutions, including the
Banks, may be materially and adversely affected by changes in prevailing
economic conditions, including declines in real estate market values, rapid
changes in interest rates and the monetary and fiscal policies of the federal
government. Profitability is partly a function of the spread between the
interest rates earned on investments and loans and the interest rates paid on
deposits and other interest-bearing liabilities. In the early 1990s, many
banking organizations experienced historically high interest rate spreads. More
recently, interest rate spreads have generally narrowed due to changing market
conditions and competitive pricing pressure. There can be no assurance that such
factors will not continue to exert such pressure or that high interest rate
spreads will return. Although economic conditions in the Banks' target market
areas have been generally favorable, there can be no assurance that such
conditions will continue to prevail. Like most banking institutions, the net
interest spread and margin are affected by general economic conditions and other
factors that influence market interest rates and the Banks' ability to respond
to changes in such rates. At any given time, the Banks' assets and liabilities
will be such that they are affected differently by a given change in interest
rates. As a result, an increase or decrease in rates could have a material
adverse effect on the Banks' net income, capital and liquidity. While management
takes measures to guard against interest rate risk, there can be no assurance
that such measures will be effective in minimizing the exposure to interest rate
risk.

We May Need to Spend Significant Money to Keep up with Technology so we can
Remain Competitive

         The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to providing better service to customers, the effective use of
technology increases efficiency and enables financial institutions to reduce
costs. MCB's future success depends in part on its ability to address the needs
of its customers by using technology to provide products and services that will
satisfy customer demands for convenience as well as to create additional
efficiencies in the operation of the Banks. Many of MCB's competitors have
substantially greater resources to invest in technological improvements. Such
technology may permit competitors to perform certain functions at a lower cost
than the Banks. There can be no assurance that the Banks will be able to
effectively implement new technology-driven products and services or be
successful in marketing such products and services to its customers.



ITEM 7.  FINANCIAL STATEMENTS

           The financial statements of MCB together with the report of Plante &
Moran, LLP, included in this report under this Item are listed under Item 13 of
this report and can be found beginning on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None

<PAGE>   18

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTOERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The information required by this Item is included in the Proxy
Statement under the captions "Information About Directors and Nominees as
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance". As
permitted by the rules of the Securities and Exchange Commission it is
incorporated into this document by reference.

ITEM 10.  EXECUTIVE COMPENSATION

         The Information required by this Item is included in the Proxy
Statement under the caption "Compensation of Executive Officers". As permitted
by the rules of the Securities and Exchange Commission it is incorporated into
this document by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item is included in the Proxy
Statement under the caption "Stock Ownership of Certain Beneficial Owners and
Management". As permitted by the rules of the Securities and Exchange Commission
it is incorporated into this document by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is included in the Proxy
Statement under the caption "Related Party Transactions". As permitted by the
rules of the Securities and Exchange Commission it is incorporated into this
document by reference.


<PAGE>   19


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT                           EXHIBIT DESCRIPTION
NUMBER

3.1      Restated Articles of Incorporation as amended to date (previously filed
         as Exhibit No. 3.1 to MCB's Registration Statement on Form SB-2, File
         No. 333-17317, and incorporated herein by reference).

3.2      Bylaws (previously filed as Exhibit No. 3.1 to MCB's Registration
         Statement on Form SB-2, File No. 333-17317, and incorporated herein by
         reference).

10.5     Non-Employee Director Stock Option Plan (previously filed as Exhibit
         10.5 to MCB's Registration Statement on Form SB-2, File No. 333-17317,
         and incorporated herein by reference).

10.6     1998 Employee Stock Option Plan (previously filed as Exhibit 10.6 to
         MCB's Registration Statement on Form SB-2, File No. 333-17617, and
         incorporated herein by reference).

11       Statement re: Computation of Per Share Earnings (filed herewith).

22       Subsidiaries of MCB (previously filed as Exhibit 22 to MCB's
         Registration Statement on Form SB-2, File No. 333-17317, and
         incorporated herein by reference).

27       Financial Data Schedule (EDGAR filing only, filed herewith).


(a)      Reports on Form 8-K
(b)      MCB has not filed any reports on Form 8-K during the last quarter of
         the period covered by this Report.

<PAGE>   20
                               MICHIGAN COMMUNITY

                                 BANCORP LIMITED


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


                          CONSOLIDATED FINANCIAL REPORT


                                DECEMBER 31, 1999


<PAGE>   21

<TABLE>
<CAPTION>

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                                                        CONTENTS



<S>                                                                     <C>
REPORT LETTER                                                              1


CONSOLIDATED FINANCIAL STATEMENTS

    Balance Sheet                                                          2

    Statement of Changes in Stockholders' Equity                           3

    Statement of Operations                                                4

    Statement of Cash Flows                                                5

    Notes to Consolidated Financial Statements                           6-23

</TABLE>


                                                             Plante & Moran, LLP
<PAGE>   22



                          Independent Auditor's Report



To the Board of Directors
Michigan Community Bancorp Limited


We have audited the consolidated balance sheet of Michigan Community Bancorp
Limited and subsidiaries as of December 31, 1999 and 1998 and the related
consolidated statements of changes in stockholders' equity, operations and cash
flows for the year ended December 31, 1999 and the period from January 28, 1998
(inception) through December 31, 1998. These consolidated financial statements
are the responsibility of the Bancorp's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Michigan Community Bancorp Limited and subsidiaries at December 31, 1999 and
1998 and the consolidated results of their operations and cash flows for the
year ended December 31, 1999 and the period from January 28, 1998 (inception)
through December 31, 1998, in conformity with generally accepted accounting
principles.



/s/ PLANTE & MORAN, LLP
Bloomfield Hills, Michigan
February 28, 2000


<PAGE>   23


MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                                      CONSOLIDATED BALANCE SHEET
                                           (000s OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                               December 31
                                                                                                    ------------------------------
                                                                                                         1999             1998
                                                                                                    ---------------  -------------

                                                             ASSETS

<S>                                                                                                 <C>              <C>
Cash and due from banks (Note 11)                                                                     $  2,078           $    67
Interest-bearing deposits in other banks                                                                    -              7,839
Federal funds sold                                                                                       6,550                -
                                                                                                      --------           -------
                     Total cash and cash equivalents                                                     8,628             7,906

Securities available for sale (Note 3)                                                                   2,974                -
Federal Home Loan Bank stock - At cost                                                                     103                -

Loans (Note 4)                                                                                          46,627                -
Less reserve for possible loan losses (Note 4)                                                             715                -
                                                                                                      --------           -------
                     Net loans                                                                          45,912                -

Premises and equipment (Note 5)                                                                          1,596               767
Interest receivable and other assets                                                                       552               290
                                                                                                      --------           -------
                     Total assets                                                                     $ 59,765           $ 8,963
                                                                                                      ========           =======
                                              LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
    Deposits (Note 6):
        Noninterest-bearing                                                                           $  5,237           $    -
        Interest-bearing                                                                                46,400                -
                                                                                                      --------           -------
                  Total deposits                                                                        51,637                -

    Interest payable and other liabilities                                                                 340               318
                                                                                                      --------           -------
                  Total liabilities                                                                     51,977               318

STOCKHOLDERS' EQUITY (Note 13)
    Preferred stock, no par value, 1,000,000 shares authorized, none issued                                 -                 -
    Common stock - $5 par value (Note 8):
       Authorized - 9,000,000 shares
       Issued and outstanding - 756,000 shares and 665,000 shares at
            December 31, 1999 and 1998, respectively                                                     3,780             3,325
    Capital surplus                                                                                      6,410             5,880
    Accumulated deficit                                                                                 (2,392)             (560)
    Accumulated other comprehensive loss                                                                   (10)               -
                                                                                                      --------           -------
                Total stockholders' equity                                                               7,788             8,645
                                                                                                      --------           -------
                Total liabilities and stockholders' equity                                            $ 59,765           $ 8,963
                                                                                                      ========           =======
</TABLE>


See Notes to Consolidated Financial
    Statements.

                                                             Plante & Moran, LLP

                                       2

<PAGE>   24


MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                            CONSOLIDATED STATEMENT OF CHANGES IN
                                                            STOCKHOLDERS' EQUITY
                                           (000s OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                                                                       Other            Total
                                                           Common       Capital      Accumulated   Comprehensive     Stockholders'
                                                           Stock        Surplus        Deficit         Loss             Equity
                                                      ------------- -------------- -------------- ---------------- -----------------

<S>                                                   <C>           <C>            <C>            <C>              <C>
BALANCE - January 28, 1998 (inception)                  $    -        $    -         $    -            $     -      $      -

Public stock offering                                     3,325         6,102             -                  -          9,427

Cost of stock offering                                       -           (222)            -                  -           (222)

Comprehensive loss - Net loss                                -             -            (560)                -           (560)
                                                        -------       -------        -------           -------      ---------
BALANCE - December 31, 1998                               3,325         5,880           (560)                -          8,645

Private placement of stock                                  455           546             -                  -          1,001

Cost of private placement                                    -            (16)            -                  -            (16)

Comprehensive loss
  Net loss                                                   -             -          (1,832)                -         (1,832)
  Change in unrealized loss on
    securities available for sale                            -             -              -                (10)           (10)
                                                                                                                    ---------
       Total comprehensive loss                                                                                        (1,842)
                                                        -------       -------        --------          -------      ---------
BALANCE - December 31, 1999                             $ 3,780       $ 6,410        $ (2,392)         $   (10)     $   7,788
                                                        =======       =======        ========          =======      =========

</TABLE>






See Notes to Consolidated Financial
  Statements.
                                                             Plante & Moran, LLP


                                       3
<PAGE>   25

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                            CONSOLIDATED STATEMENT OF OPERATIONS
                                           (000s OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>


                                                                                             Period from
                                                                                           January 28, 1998
                                                                                             (Inception)
                                                                             Year Ended        Through
                                                                            December 31,      December 31,
                                                                                1999              1998
                                                                            -------------   ---------------
<S>                                                                         <C>             <C>
INTEREST INCOME
    Interest and fees on loans                                              $      1,992    $           -
    Interest-bearing deposits with other banks                                        -                 27
    Interest on investment securities                                                 75
    Interest on federal funds sold                                                   477                -
                                                                            -------------   ---------------
                Total interest income                                              2,544                27

INTEREST EXPENSE
    Interest on deposits                                                           1,219                -
    Interest on borrowed funds                                                        -                 16
                                                                            -------------   ---------------
                Total interest expense                                             1,219                16
                                                                            -------------   ---------------
NET INTEREST INCOME                                                                1,325                11

PROVISION FOR POSSIBLE LOAN LOSSES (Note 4)                                          715                -
                                                                            -------------   ---------------
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES                         610                11

OTHER INCOME
   Service charges on deposits                                                        18                -
   Loss on sale of securities                                                        (12)               -
   Other service charges and fees                                                     23                -
   Other                                                                              21                -
                                                                            -------------   ---------------
                 Total other income                                                   50                -

OTHER EXPENSES
   Salaries and employee benefits                                                  1,313               270
   Occupancy expense                                                                 437                45
   Equipment expense                                                                 119                14
   Advertising                                                                        99                 6
   Organizational expenses                                                            -                153
   Professional fees                                                                 165                -
   Contract labor                                                                     -                 18
   Office expense                                                                    106                -
   Miscellaneous expense                                                             253                65
                                                                            -------------   ---------------
                 Total other expenses                                              2,492               571
                                                                            -------------   ---------------
LOSS - Before federal income tax                                                  (1,832)             (560)

PROVISION FOR FEDERAL INCOME TAX (Note 7)                                              -                 -
                                                                            -------------   ---------------
NET LOSS                                                                     $    (1,832)   $         (560)
                                                                            -------------   ---------------
NET LOSS PER COMMON SHARE - BASIC AND FULLY DILUTED (NOTE 14)                $      2.66    $        10.16
                                                                            ============    ===============
</TABLE>

See Notes to Consolidated Financial
  Statements.
                                                             Plante & Moran, LLP

                                       4

<PAGE>   26


MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                            CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                  (000s OMITTED)

<TABLE>
<CAPTION>

                                                                                                               Period from
                                                                                                             January 28, 1998
                                                                                                               (Inception)
                                                                                                                 Through
                                                                                              Year Ended       December 31,
                                                                                           December 31, 1999       1998
                                                                                           ----------------- ---------------
<S>                                                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                 $         (1,832) $         (560)
   Adjustments to reconcile net loss to net cash from
        operating activities:
            Depreciation and amortization                                                                220              10
            Loss on sale of securities                                                                    12             --
            Provision for loan losses                                                                    715             --
            Net amortization and accretion of securities                                                  (3)            --
            Increase in accrued interest receivable and other assets                                    (262)           (290)
            Increase in accrued interest payable and other liabilities                                    22             117
                                                                                           ----------------- ---------------
                Net cash used in operating activities                                                 (1,128)           (723)

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sales of securities available for sale                                                1,980             --
   Purchase of securities available for sale                                                          (4,973)            --
   Purchase of other securities                                                                         (103)            --
   Net increase in loans                                                                             (46,627)            --
   Premises and equipment expenditures                                                                (1,049)           (576)
                                                                                           ----------------- ----------------
                Net cash used in investing activities                                                (50,772)           (576)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in interest-bearing and noninterest-bearing
         demand accounts                                                                              11,369              --
   Net increase in savings and time deposits                                                          40,268              --
   Proceeds from public stock offering                                                                   985            9,205
                                                                                           ----------------- -----------------
                Net cash provided by financing activities                                             52,622            9,205
                                                                                           ----------------- -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                722            7,906

CASH AND CASH EQUIVALENTS - Beginning of year                                                          7,906              --

CASH AND CASH EQUIVALENTS - End of year                                                     $          8,628  $         7,906
                                                                                           ----------------- -----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid
    for interest                                                                            $            921  $            16

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES -
    Liability incurred for the acquisition of premises and equipment                                     --               201


</TABLE>

See Notes to Consolidated Financial
  Statements.
                                                             Plante & Moran, LLP

                                       5
<PAGE>   27


MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
         include the accounts of Michigan Community Bancorp Limited (the
         "Corporation") and its wholly owned subsidiaries, Lakeside Community
         Bank and North Oakland Community Bank (collectively, the "Banks"). All
         significant intercompany accounts and transactions have been eliminated
         in consolidation. The tabular presentations omit 000s.

         NATURE OF OPERATIONS - Michigan Community Bancorp Limited was
         incorporated on January 28, 1998 as a bank holding company to establish
         and operate two new banks, Lakeside Community Bank (LCB) in Sterling
         Heights, Michigan and North Oakland Community Bank (NOCB) in Rochester
         Hills, Michigan. In December 1998, the Corporation completed an initial
         public offering for the sale of 665,000 shares of common stock, raising
         $9.2 million, net of offering costs. LCB and NOCB were opened in
         January 1999. The Banks operate and serve customers in Oakland and
         Macomb counties in the state of Michigan. The Banks are engaged in the
         business of general commercial and retail banking. The Banks offer a
         variety of deposit products including checking accounts, saving
         accounts and time deposits. The Banks conduct lending activities in the
         residential and commercial mortgage markets, in the general commercial
         market and in the consumer installment marketplace.

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with generally accepted accounting principles requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosure of contingent assets
         and liabilities at the date of the consolidated financial statements
         and the reported amounts of revenue and expenses during the reporting
         period. Actual results could differ from those estimates.

         SECURITIES - Securities that the Corporation intends to hold for an
         indefinite period of time, but not necessarily to maturity, are
         classified as "available for sale" and recorded at market value. Any
         decision to sell a security available for sale will be based on various
         factors, including significant movements in interest rates, changes in
         the maturity mix of the Corporation's assets and liabilities, liquidity
         demands, regulatory capital considerations and other similar factors.
         Cost is adjusted for amortization of premiums and accretion of
         discounts to maturity. Unrealized gains and losses for
         available-for-sale securities are excluded from earnings and recorded,
         net of tax, as a component of comprehensive income in stockholders'
         equity.

                                                             Plante & Moran, LLP

                                       6
<PAGE>   28

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         INTEREST INCOME ON LOANS - Interest on loans is accrued and credited to
         income based on the principal amount outstanding. The accrual of
         interest on loans is discontinued when, in the opinion of management,
         there is an indication that the borrower may be unable to meet payments
         as they become due. Upon such discontinuance, all unpaid interest
         accrued during the current year is reversed. Interest accruals are
         generally resumed when all delinquent principal and/or interest has
         been brought current, and in the opinion of management, the borrower
         has demonstrated the ability to meet the terms and conditions of the
         agreement.

         LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES - The reserve for possible
         loan losses is established through a provision for possible loan losses
         charged to expense. Loans are charged against the reserve for possible
         loan losses when management believes collection of the principal is
         unlikely. The reserve for possible loan losses is an amount management
         believes will be adequate to absorb losses inherent in existing loans
         based on evaluations of the anticipated repayment and prior loss
         experience. The evaluations take into consideration such factors as
         changes in the nature, volume and quality of the portfolio, loan
         concentrations, specific problem loans and current and anticipated
         economic conditions that may affect the borrowers' ability to pay.

         PREMISES AND EQUIPMENT - Premises and equipment are stated at cost,
         less accumulated depreciation. The provision for depreciation is
         computed using primarily the straight-line method. Building
         improvements and furniture and equipment are amortized over their
         estimated useful lives.

         EARNINGS PER SHARE - Basic earnings per share is based on the weighted
         average number of shares outstanding during the period.

         STOCK OPTIONS - The Corporation has two stock option plans (see Note
         9). Options granted to directors and key employees under both plans are
         accounted for using the intrinsic value method, under which
         compensation expense is recorded at the amount by which the market
         price of the underlying stock at grant date exceeds the exercise price
         of an option. Under the Corporation's plans, the exercise price on all
         options granted equals or exceeds the fair value of the stock at the
         grant date. Accordingly, no compensation cost is recorded as a result
         of the stock option awards under the plan.

                                                             Plante & Moran, LLP


                                       7
<PAGE>   29

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         INCOME TAXES - The Corporation files a consolidated federal income tax
         return with its subsidiary banks. The Corporation uses the asset and
         liability method of accounting for income taxes. Current taxes are
         measured by applying the provisions of enacted tax laws to taxable
         income to determine the amount of taxes receivable or payable. Deferred
         tax assets and liabilities are recorded based on the difference between
         the tax bases of assets and liabilities and their carrying amounts for
         financial reporting purposes.

         OTHER COMPREHENSIVE INCOME - Accounting principles generally require
         that recognized revenue, expenses, gains and losses be included in net
         income. Certain changes in assets and liabilities, however, such as
         unrealized gains and losses on available-for-sale securities, are
         reported as a direct adjustment of the equity section of the balance
         sheet. Such items, along with net income, are components of
         comprehensive income. The only item included in "accumulated other
         comprehensive income" at December 31, 1999 and 1998 is the net
         unrealized gains and losses on available-for-sale securities.

         RECLASSIFICATION - Certain items in the prior year amounts have been
         reclassified to conform with the current year presentation.

         RECENT ACCOUNTING PRONOUNCEMENTS - In June 1998, Statement of Financial
         Standards No. 133 Accounting for Derivative Instruments and Hedging
         Activities ("SFAS 133"), was issued. SFAS 133 requires all derivative
         instruments to be recorded on the balance sheet at estimated fair
         value. Changes in the fair value of derivative instruments are to be
         recorded each period either in current earnings or other comprehensive
         income, depending on whether a derivative is designated as part of a
         hedge transaction and, if it is, on the type of hedge transaction. SFAS
         133 is effective for the year 2000. The Corporation is currently
         evaluating the impact of SFAS 133; at present, the Corporation does not
         believe implementation will have a material effect on its consolidated
         financial position or results of operations.


                                                             Plante & Moran, LLP

                                       8
<PAGE>   30

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 2 - MICHIGAN COMMUNITY BANCORP (PARENT CORPORATION ONLY)

         The condensed financial information that follows presents the financial
         condition of the parent corporation only, along with the results of its
         operations and its cash flows. The parent corporation has recorded its
         investment in the subsidiaries at cost plus its share of the
         undistributed earnings of each subsidiary since it was acquired. The
         parent corporation recognizes dividends from the subsidiaries as
         revenue and undistributed earnings of the subsidiaries as other income.
         The parent corporation financial information should be read in
         conjunction with the Corporation's consolidated financial statements.


                                  BALANCE SHEET
                      (000s OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                             December 31
                                                                                      ------------------------
                                                                                         1999           1998
                                                                                      ------------------------
<S>                                                                                   <C>            <C>

                                                    ASSETS

Cash and due from banks                                                               $    348       $   7,906
Investment in subsidiaries                                                                 7,357              -
Premises and equipment                                                                     104             767
Other assets                                                                                 6             290
                                                                                      --------       ---------
                Total assets                                                          $  7,815       $   8,963
                                                                                      ========       =========
                                       LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES - Interest payable and other liabilities                                  $     27        $    318

STOCKHOLDERS' EQUITY
    Common stock - $5 par value                                                          3,780           3,325
    Capital surplus                                                                      6,410           5,880
    Accumulated deficit                                                                 (2,392)           (560)
    Accumulated other comprehensive loss                                                   (10)             -
                                                                                      --------       ---------
                Total stockholders' equity                                               7,788           8,645
                                                                                      --------       ---------
                Total liabilities and stockholders' equity                            $  7,815         $ 8,963
                                                                                      ========       =========
</TABLE>


                                                             Plante & Moran, LLP

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 2 - MICHIGAN COMMUNITY BANCORP (PARENT CORPORATION ONLY)
         (CONTINUED)

                             STATEMENT OF OPERATIONS
                                 (000s OMITTED)
<TABLE>
<CAPTION>

                                                                                      Year Ended December 31
                                                                                      ----------------------
                                                                                         1999         1998
                                                                                      ---------   ----------

<S>                                                                                   <C>         <C>
INTEREST INCOME                                                                        $     9    $       27

INTEREST EXPENSE                                                                            -             16
                                                                                      ---------   ----------
NET INTEREST INCOME                                                                          9            11

OTHER INCOME
   Management fees                                                                         660            -
   Data processing fees                                                                     96            -
   Miscellaneous income                                                                      4            -
                                                                                      ---------   ----------
                 Total other income                                                        760            -

OTHER OPERATING EXPENSES
   Salaries and employee benefits                                                          434           270
   Occupancy                                                                               125            45
   Equipment expense                                                                        60            14
   Advertising                                                                              12             6
   Organizational expenses                                                                  -            153
   Professional fees                                                                        62            -
   Contract labor                                                                           -             18
   Miscellaneous expense                                                                   124            65
                                                                                      ---------   ----------
                  Total other operating expenses                                           817           571
                                                                                      ---------   ----------
LOSS - Before equity in losses of subsidiary
   banks and federal taxes                                                                  (48)        (560)

PROVISION FOR FEDERAL INCOME TAXES                                                           -            -
                                                                                      ---------   ----------
LOSS - Before equity in losses of subsidiary banks                                          (48)        (560)

EQUITY IN LOSSES OF SUBSIDIARY BANKS                                                     (1,784)          -
                                                                                      ---------   ----------
NET LOSS                                                                               $ (1,832)  $     (560)
                                                                                      =========   ==========
</TABLE>


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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 2 - MICHIGAN COMMUNITY BANCORP (PARENT CORPORATION ONLY)
         (CONTINUED)


                                            STATEMENT OF CASH FLOWS
                                                 (000s OMITTED)
<TABLE>
<CAPTION>

                                                                                         Year Ended December 31
                                                                                         ----------------------
                                                                                           1999         1998
                                                                                         ----------  ----------
<S>                                                                                      <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                               $  (1,832) $     (560)
   Adjustments to reconcile net loss to net
       cash from operating activities:
            Undistributed earnings of subsidiary banks                                        1,784          -
            Depreciation                                                                          1          10
            Increase (decrease) in other assets                                                 284        (290)
            Increase (decrease) in other liabilities                                           (291)        117
                                                                                         ----------  ----------
                Net cash used in operating activities                                           (54)       (723)

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to premises and equipment                                                          (44)       (576)
   Investment in subsidiary banks                                                            (8,445)          -
                                                                                         ----------  ----------
                Net cash used in investing activities                                        (8,489)       (576)

CASH FLOWS FROM FINANCING ACTIVITIES - Proceeds from
   public stock offering                                                                        985       9,205
                                                                                         ----------  ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         (7,558)      7,906

CASH AND CASH EQUIVALENTS - Beginning of year                                                 7,906          -
                                                                                         ----------  ----------
CASH AND CASH EQUIVALENTS - End of year                                                   $     348  $    7,906
                                                                                         ==========  ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
   Noncash investing activities - Net fixed assets
   transferred to subsidiary                                                              $     706  $       -
                                                                                         ==========  ==========
</TABLE>



                                                             Plante & Moran, LLP


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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998

NOTE 3 - SECURITIES

         The amortized cost and estimated market value of securities available
         for sale are as follows (000s omitted):
<TABLE>
<CAPTION>
                                                                       1999
                                             -------------------------------------------------------
                                                               Gross         Gross
                                             Amortized      Unrealized    Unrealized    Estimated
                                               Cost            Gains        Losses     Market Value
                                             -----------  --------------  -----------  -------------
<S>                                          <C>          <C>             <C>          <C>
         U.S. Treasury securities and
         obligations of U.S. government
         corporations and agencies           $     2,984  $           -   $       (10) $       2,974
                                             ===========  ==============  ===========  =============
</TABLE>

         The amortized cost and estimated market value of securities available
         for sale at December 31, 1999, by contractual maturity, are shown
         below. Expected maturities will differ from contractual maturities
         because issuers may have the right to call or prepay obligations with
         or without call or prepayment penalties (000s omitted):
<TABLE>
<CAPTION>

                                                                          Amortized      Estimated
                                                                            Cost       Market Value
                                                                          ----------   ------------

<S>                                                                       <C>          <C>
         Due in one year or less                                          $      -     $         -
         Due after one year through five years                                2,984           2,974
         Due after five years through ten years                                  -               -
         Due after ten years                                                     -               -
                                                                          ----------   ------------
                          Total                                           $   2,984    $      2,974
                                                                          ==========   ============

</TABLE>


         At December 31, 1999, U.S. government agency securities carried at
         $1,983,000 with a market value of $1,983,000 were pledged to secure the
         right to participate in the overnight Federal Funds market.

         Other than securities of the U.S. government agency, there were no
         investment securities of any one issuer aggregating 10 percent of
         consolidated stockholders' equity at December 31, 1999.


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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 4 - LOANS

         Major classifications of loans are summarized as follows (000s
         omitted):
<TABLE>
<CAPTION>

                                                                                1999      1998
                                                                              --------  --------

<S>                                                                           <C>       <C>
         Commercial                                                           $ 38,960  $     -
         Real estate mortgage                                                    5,090        -
         Installment                                                             2,577        -
                                                                              --------  -------
                          Total loans                                           46,627        -

         Less reserve for possible loan losses                                     715        -
                                                                              --------  -------
                          Net loans                                           $ 45,912  $     -
                                                                              ========  =======
</TABLE>



         At December 31, 1999, approximately $2,857,000 of loans were
         outstanding to officers, bank directors, principal stockholders and
         their associated companies. In 1999, additions and reductions were
         $5,277,000 and $2,420,000, respectively. In the opinion of management,
         such loans were made on the same terms and conditions as those to other
         borrowers and did not involve more than the normal risk of
         collectibility. Approximately 40 percent of the banks' loan portfolio
         is extended to businesses in the building development and construction
         industries. Additionally, approximately 13 percent of the Banks'
         portfolio is extended to businesses in the retail/wholesale trade
         industry.

         Transactions in the reserve for possible loan losses were as follows
         (000s omitted):
<TABLE>
<CAPTION>
                                                                                1999     1998
                                                                              -------- --------

<S>                                                                           <C>      <C>
         BALANCE - Beginning of year                                          $     -  $     -

         Provision charged to operations                                           715       -
         Loans charged off                                                          -        -
         Recoveries                                                                 -        -
                                                                              -------- --------
         BALANCE - End of year                                                $    715  $    -
                                                                              ======== ========
         Reserve as a percentage of total loans                                  1.53%       -
                                                                              ======== ========
</TABLE>



                                                             Plante & Moran, LLP


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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 5 - PREMISES AND EQUIPMENT

         Bank premises and equipment at December 31, 1999 and 1998 consisted of
         the following (000s omitted)

<TABLE>
<CAPTION>

                                                                  1999                  1998
                                                                --------              --------
<S>                                                             <C>                   <C>
Leasehold improvements                                          $    874              $     65
Construction in process                                                -                   545
Furniture                                                             44                     3
Equipment                                                            908                   164
                                                                --------              --------
         Total premises and equipment                              1,826                   777

Less accumulated depreciation                                        230                    10
                                                                --------              --------
         Net carrying amount                                    $  1,596              $    767
                                                                ========              ========
</TABLE>


NOTE 6 - DEPOSITS

         The following is a summary of the interest-bearing deposits at December
         31, 1999 and 1998 (000s omitted):

<TABLE>
<CAPTION>

                                                                  1999                1998
                                                                --------            --------
<S>                                                             <C>                 <C>
 NOW accounts                                                   $  1,689            $      -
 Savings                                                             865                   -
 Money market demand                                               4,443                   -
 Individual Retirement Accounts                                      552                   -
 Time:                                                                                     -
     $100,000 and over                                            14,153                   -
      Under $100,000                                              24,698                   -
                                                                --------            --------
                   Total                                        $ 46,400            $      -
                                                                ========            ========
</TABLE>




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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 6 - DEPOSITS (CONTINUED)

         The maturities of time deposits outstanding at December 31, 1999 are as
         follows (000s omitted):



<TABLE>
<CAPTION>

                                                             $100,000               Under
                                                             and Over             $100,000
                                                             --------             --------
<S>                                                          <C>                  <C>
2000                                                         $ 13,751             $ 19,864
2001                                                              302                4,636
2002                                                              100                  198
                                                             --------             --------
         Total                                               $ 14,153             $ 24,698
                                                             ========             ========
</TABLE>


         Interest expense related to certificates of deposit in denominations in
         excess of $100,000 throughout the year was approximately $435,000 in
         1999, which is included in interest on deposits in the accompanying
         consolidated statement of operations.

NOTE 7 - INCOME TAXES

         No tax benefit has been provided for the future benefit of deferred tax
         assets. The Corporation does not have a history of earnings and,
         accordingly, a valuation allowance has been recognized for the full
         amount of the net deferred tax asset.

         Deferred income taxes are provided for the temporary differences
         between the financial reporting basis and the tax basis of the
         Corporation's assets and liabilities. The sources of such temporary
         differences and the resulting net deferred tax expense for the year
         ended December 31, 1999 and the period from January 28, 1998
         (inception) through December 31, 1998 are as follows (000s omitted):

<TABLE>
<CAPTION>

                                                                                 1999               1998
                                                                               --------           --------
<S>                                                                            <C>                <C>
Capitalized preopening and organizational expenses                             $     84           $   (145)
Net operating loss carryforward                                                    (445)               (51)
Bad debts                                                                          (243)                 -
Depreciation                                                                        (16)                 6
Accretion of securities                                                               1                  -
Unrealized loss on available-for-sale securities                                     (3)
Increase in valuation allowance                                                     622                190
                                                                               --------           --------
         Net deferred tax expense                                              $      -           $      -
                                                                               ========           ========
</TABLE>



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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998

NOTE 7 - INCOME TAXES (CONTINUED)

         The temporary differences and carryforwards that comprise deferred tax
         assets and liabilities at December 31, 1999 and 1998 are as follows
         (000s omitted):

<TABLE>
<CAPTION>

                                                                             1999              1998
                                                                           --------          --------
<S>                                                                        <C>               <C>
Deferred tax assets:
   Capitalized preopening and organizational expenses                      $     61          $    145
   Net operating loss carryforward                                              496                51
   Bad debts                                                                    243                 -
   Depreciation                                                                  10                 -
   Unrealized loss on available-for-sale securities                               3                 -
                                                                           --------          --------
        Total deferred tax asset                                                813               196

Valuation allowance                                                            (812)             (190)

Deferred tax liabilities:
    Depreciation                                                                  -                (6)
    Accretion of securities                                                      (1)                -
                                                                           --------          --------
        Net deferred tax asset                                             $      -          $      -
                                                                           ========          ========
</TABLE>


NOTE 8 - COMMON STOCK

         On October 1, 1999, the Corporation sold 91,000 common stock units at a
         price of $11.00 per unit. Each unit consists of one share of the
         Corporation's common stock and one redeemable common stock purchase
         warrant. Each warrant entitles the holder thereof to purchase one and
         one half shares of common stock at $11.00 per share, subject to
         adjustment in certain circumstances, for a period of 36 months, at
         which time the warrants expire. The warrants outstanding at December
         31, 1999 entitle the holders to purchase 136,500 shares of the
         Corporation's common stock. The warrants may be immediately separated
         from the common stock. The warrants are redeemable by the Corporation
         at five cents per warrant upon 30 days' notice mailed within 20 days
         after the closing bid price of the common stock has equaled or exceeded
         $15.00 per share for a period of 20 consecutive trading days.



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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 8 - COMMON STOCK (CONTINUED)

         The units constitute "restricted" securities and cannot be resold or
         transferred without registration under the Securities Act of 1933, the
         Michigan Uniform Securities Act and the securities law of any other
         applicable jurisdiction, unless an exception from registration under
         each such applicable act is available.

NOTE 9 - STOCK-BASED COMPENSATION

         The Corporation has two stock-based compensation plans. Under the 1998
         Employee Stock Compensation Plan ("Employee Plan"), the Corporation may
         grant options to key employees for up to 29,000 shares of common stock.
         Under the 1998 Nonemployee Director Plan ("Nonemployee Plan"), the
         Corporation may grant options for up to 73,000 shares of common stock.
         Options granted under the Nonemployee Plan totaled 26,664 during the
         year ended December 31, 1998. There were 14,667 stock options granted
         under the Employee Plan during 1998. No options were granted under
         either plan in 1999. Under both plans, there is a minimum vesting
         period of between one to three years before the options may be
         exercised, and all options expire 10 years after the date of their
         grant. Under both plans, the exercise price of each option equals the
         market price of the Corporation's common stock on the date of the
         grant. The options vest as follows: 70 percent on the effective date of
         the initial public offering, 15 percent on the first anniversary of the
         initial public offering, 5 percent on the second anniversary and 10
         percent on the third anniversary.

         The Corporation has adopted the disclosure-only provisions of Statement
         of Financial Accounting (SFAS) No. 123, Accounting for Stock-Based
         Compensation, but applies APB 25 and related interpretations in
         accounting for its plan. The Corporation estimated the fair value of
         the options issued in 1998 at $4.00 per share, using the Black-Scholes
         option pricing model. If the Corporation had elected to recognize
         compensation costs for the plans based on the fair value of awards at
         the grant date, net loss per share on a pro forma basis would have been
         as follows (000s omitted, except per share data):

<TABLE>
<CAPTION>

                                                            1999                             1998
                                                ----------------------------     ---------------------------
                                                As Reported       Pro Forma      As Reported      Pro Forma
                                                -----------      -----------     -----------     -----------
<S>                                             <C>              <C>             <C>             <C>
Net loss                                        $   (1,832)      $   (1,857)     $     (560)     $     (675)
Net loss per common share                            (2.66)           (2.70)         (10.16)         (12.22)

</TABLE>




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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE  9  - STOCK-BASED COMPENSATION (CONTINUED)

         The following table summarizes stock transactions for both plans and
         the related average exercise price for the period from January 28, 1998
         (inception) through December 31, 1999:

<TABLE>
<CAPTION>

                                                                1999                              1998
                                                     -----------------------------    -----------------------------
                                                                       Weighted                         Weighted
                                                     Number of         Average        Number of         Average
                                                      Shares        Exercise Price     Shares        Exercise Price
                                                     ---------      --------------    ---------      --------------
<S>                                                  <C>            <C>               <C>            <C>
Options outstanding at beginning
   of period                                           41,331          $ 15.00               -          $     -
Options granted                                             -                -          41,331            15.00
Options exercised                                           -                -               -                -
Options expired                                             -                -               -                -
                                                     --------          -------        --------          -------
Options outstanding at end of period                   41,331          $ 15.00          41,331          $ 15.00
                                                     ========          =======        ========          =======
</TABLE>


         The following table shows summary information about fixed stock options
         outstanding at December 31, 1999 and 1998:

<TABLE>
<CAPTION>

                          Stock Options Outstanding                         Stock Options Exercisable
         --------------------------------------------------------------   -----------------------------
         Range of                   Weighted Average       Weighted                        Weighted
         Exercise     Number of        Remaining       Average Exercise   Number of    Average Exercise
          Prices        Shares      Contractual Life        Price           Shares          Price
         --------     ----------    ----------------   ----------------   ---------    ----------------
<S>                   <C>           <C>                <C>                <C>          <C>
         $ 15.00        26,644         8.9 Years          $ 15.00          22,664         $ 15.00
           15.00        14,667         8.9 Years            15.00          12,467           15.00
</TABLE>

NOTE 10 - OPERATING LEASE

          The Corporation has entered into an assignment of a lease for a
          building to be utilized for NOCB's branch operations. The assignment
          required the prepayment of the lease totaling $250,000 and an ongoing
          monthly rental payment of $600. The prepayment of the rent will be
          expensed over the lease assignment term that expires on December 31,
          2004.

          The Corporation has entered into a lease for a building to be utilized
          for LCB's branch operations and the Corporation's headquarters. During
          the first five-year period, the lease requires an $8,392 monthly
          payment. A credit of $4,196 for the first 16 months will be given for
          tenant improvements. The last five-year period of the lease requires
          an $8,890 monthly payment. The lease expires December 1, 2008.



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--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 10 - OPERATING LEASE (CONTINUED)

          The annual future minimum lease payments required under these
          noncancelable operating leases as of December 31, 1999 are as follows:

<TABLE>
<S>                                                      <C>
                       2000                              $   95,316
                       2001                                 107,904
                       2002                                 107,904
                       2003                                 108,402
                       2004                                 113,800
                        Thereafter                          421,510
                                                         ----------
                               Total                     $  954,836
                                                         ==========
</TABLE>



          Total rent expense for 1999 was approximately $217,000.

NOTE 11 - RESTRICTIONS ON CASH BALANCES AND UNDIVIDED PROFITS

          The Banks are required to maintain legal reserve requirements based on
          the level of balances in deposit categories. Reserve requirements vary
          according to the amount and type of deposit and generally range from 3
          percent to 10 percent.

          Federal and state banking regulations place certain restrictions on
          dividends paid and loans or advances made by the banks to the
          Corporation. Currently, the banks and the Corporation are restricted
          from paying dividends and the Corporation is restricted from borrowing
          funds, unless federal and state approval is obtained.

NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>

                                                                  1999                            1998
                                                        -------------------------       ------------------------
                                                        Carrying       Estimated        Carrying      Estimated
                                                         Amount        Fair Value        Amount       Fair Value
                                                        --------       ----------       --------      ----------
<S>                                                     <C>            <C>              <C>           <C>
Assets:
Cash and cash equivalents                               $ 8,628         $ 8,628         $ 7,906         $ 7,906
Securities                                                3,077           3,077               -               -
Loans:
Commercial                                               38,360          38,310               -               -
Real estate mortgage                                      5,014           5,006               -               -
Installment                                               2,538           2,528               -               -
Accrued interest receivable                                 318             318               -               -

Liabilities - Deposits:
Interest-bearing                                         46,400          46,327               -               -
Noninterest-bearing                                       5,237           5,237               -               -
Accrued interest payable                                    285             285               -               -
</TABLE>



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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

          The following methods and assumptions were used in estimating the fair
          values of financial instruments:

          CASH AND CASH EQUIVALENTS - The carrying amounts reported in the
          balance sheet for cash and short-term instruments approximate those
          assets' fair values.

          SECURITIES - Fair values for investment securities are based on quoted
          market prices.

          LOANS - For variable rate loans that reprice frequently and with no
          significant change in credit risk, fair values are based on carrying
          amounts. The fair values for other loans are estimated using
          discounted cash flow analysis, using interest rates currently being
          offered for loans with similar terms to borrowers of similar credit
          quality. The carrying amount of accrued interest receivable
          approximates its fair value.

          OFF-BALANCE-SHEET INSTRUMENTS - The fair value of loan commitments and
          standby letters of credit, valued on the basis of fees currently
          charged for commitments for similar loan terms to new borrowers with
          similar credit profiles, is not considered material.

          DEPOSIT LIABILITIES - The fair values disclosed for demand deposits
          are, by definition, equal to the amount payable on demand at the
          reporting date. The carrying amounts for variable rate, fixed-term
          money market accounts and certificates of deposit approximate their
          fair values at the reporting date. Fair values for fixed rate
          certificates of deposit are estimated using a discounted cash flow
          calculation that applies interest rates currently being offered on
          similar certificates. The carrying amount of accrued interest payable
          approximates its fair value.

          LIMITATIONS - Fair value estimates are made at a specific point in
          time, based on relevant market information and information about the
          financial instrument. These estimates do not reflect any premium or
          discount that could result from offering for sale at one time entire
          holdings of a particular financial instrument. Because no market
          exists for a significant portion of the financial instruments, fair
          value estimates are based on judgments, current economic conditions,
          risk characteristics and other factors. These estimates are subjective
          in nature and involve uncertainties and matters of significant
          judgment and therefore cannot be determined with precision. Changes in
          assumptions could significantly affect the estimates.


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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

          OFF-BALANCE-SHEET RISK - The Corporation is party to financial
          instruments with off-balance-sheet risk in the normal course of
          business to meet the financing needs of its customers and to reduce
          its own exposure to fluctuations in interest rates. These financial
          instruments include commitments to extend credit and financial
          guarantees. These instruments involve, to varying degrees, elements of
          credit and interest rate risk that are not recognized in the
          consolidated balance sheet.

          Commitments to extend credit are agreements to lend to a customer as
          long as there are no violations of any condition established in the
          contract. Commitments generally have fixed expiration dates or other
          termination clauses and may require payment of a fee. Fees from
          issuing these commitments to extend credit is recognized over the
          period to maturity. Since a portion of the commitments is expected to
          expire without being drawn upon, the total commitments do not
          necessarily represent future cash requirements. The Corporation
          evaluates each customer's creditworthiness on a case-by-case basis.
          The amount of collateral obtained upon extension of credit is based on
          management's credit evaluation of the customer.

          Exposure to credit loss in the event of nonperformance by the other
          party to the financial instrument for commitments to extend credit and
          financial guarantees written is represented by the notional contract
          amount of those items. The Corporation generally requires collateral
          to support such financial instruments in excess of the notional
          contract amount of those instruments.

          The Corporation had outstanding loan origination commitments
          aggregating approximately $42,641,000 on December 31, 1999, on which
          loans of $34,277,000 were outstanding at year end and included in the
          Corporation's consolidated balance sheet.

NOTE 13 - REGULATORY MATTERS

          The Banks are subject to various regulatory capital requirements
          administered by federal banking agencies. Failure to meet minimum
          capital requirements can initiate certain mandatory and discretionary
          actions by regulators that could have a direct material effect on the
          Banks' financial statements. As of December 31, 1999, the most recent
          notification from the Federal Deposit Insurance Corporation (FDIC)
          categorized the banks as well-capitalized. There are no conditions or
          events since that notification that management believes have changed
          the banks' capital category.



                                                             Plante & Moran, LLP

                                       21

<PAGE>   43

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 13 - REGULATORY MATTERS (CONTINUED)

          Quantitative measures established by regulation to ensure capital
          adequacy require the Banks to maintain minimum amounts and ratios,
          which are shown in the table below:

<TABLE>
<CAPTION>

                                                                            To be Adequately         To be Well
                                                          Actual               Capitalized           Capitalized
                                                   --------------------     ------------------   -------------------
                                                    Amount       Ratio      Amount      Ratio     Amount      Ratio
                                                   --------     -------     ------     -------   --------    -------
<S>                                                <C>          <C>         <C>        <C>       <C>         <C>
As of December 31, 1999:
  Total risk based capital
    (to risk-weighted assets)
    Consolidated                                   $ 8,513       16.9%     $ 4,023       8.0%    $ 5,029      10.0%
    Lakeside Community Bank                        $ 4,066       15.5%     $ 2,101       8.0%    $ 2,626      10.0%
    North Oakland Bank                             $ 4,015       16.8%       $ 321       8.0%    $ 2,394      10.0%
  Tier I capital
    (to risk-weighted assets)
    Consolidated                                   $ 7,798       15.5%     $ 2,011       4.0%    $ 3,017       6.0%
    Lakeside Community Bank                        $ 3,686       14.0%     $ 1,051       4.0%    $ 1,576       6.0%
    North Oakland Bank                             $ 3,680       15.4%       $ 958       4.0%    $ 1,437       6.0%
  Tier I capital
    (to average assets)
    Consolidated                                   $ 7,798       22.2%     $ 1,407       4.0%    $ 1,758       5.0%
    Lakeside Community Bank                        $ 3,686       19.5%       $ 756       4.0%      $ 946       5.0%
    North Oakland Bank                             $ 3,680       22.1%       $ 665       4.0%      $ 832       5.0%

As of December 31, 1998:
  Total capital
    (to risk-weighted assets)                      $ 8,645      263.0%       $ 263       8.0%      $ 329      10.0%
  Tier I capital
    (to risk-weighted assets)                      $ 8,645      263.0%       $ 131       4.0%      $ 197       6.0%
  Tier I capital
    (to average assets)                            $ 8,645      737.6%        $ 47       4.0%       $ 59       5.0%
</TABLE>


NOTE 14 - EARNINGS (LOSS) PER SHARE

          Earnings (loss) per share is calculated in accordance with SFAS No.
          128. Accordingly, for basic earnings per share, the weighted average
          number of shares outstanding is based on the actual number of shares
          issued and outstanding during the period. For fully diluted earnings
          per share, the dilutive potential common shares from the Corporation's
          stock option plan and the warrants issued would be added to the
          weighted average shares using the treasury stock method. Those
          potential shares have not been included in 1999 or 1998 because the
          effect would be antidilutive.


                                                             Plante & Moran, LLP

                                       22
<PAGE>   44

MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 1999 AND 1998


NOTE 14 - EARNINGS (LOSS) PER SHARE (CONTINUED)

          For the period from January 28, 1998 (inception) through the Company's
          initial public offering on December 3, 1998, there was one share of
          stock outstanding. As a result, the weighted average calculation that
          includes the nonpublic time period when only one share was outstanding
          is significantly lower, resulting in a significantly higher per share
          effect, than will occur in future years.



                                                             Plante & Moran, LLP

                                       23

<PAGE>   45

SIGNATURES

    In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 30, 2000.

MICHIGAN COMMUNITY BANCORP

                                   By: /s/ DAVID A. MCKINNON
                                      --------------------------------------
                                   David A. McKinnon, Chairman and Chief
                                   Executive Officer

    In accordance with the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of MCB in the capacities indicated on
March 30, 2000.



         Signature                                    Capacity

   /s/ David A. McKinnon          Chairman, Chief Executive Officer and Director
-------------------------------   (Principal Executive and Operating Officer)
       David A. McKinnon

   /s/ William L. Carley
-------------------------------   Chief Financial Officer
       William L. Carley

   /s/ Paul E. Baltzer
-------------------------------   Director
       Paul E. Baltzer

   /s/ Frank D. Blowers
-------------------------------   Director
       Frank D. Blowers

   /s/ Anthony J. Ferlito
-------------------------------   Director
       Anthony J. Ferlito

   /s/ Phillip T. Hernandez
-------------------------------   Director
       Phillip T. Hernandez

   /s/ Joseph S. Lentine
-------------------------------   Director
       Joseph S. Lentine

   /s/ John W. Melstrom
-------------------------------   Director
       John W. Melstrom

   /s/ Robert R. Peleman
-------------------------------   Director
       Robert R. Peleman

   /s/ Russell M. Shelton
-------------------------------   Director
       Russell M. Shelton

   /s/ David F. Shellenbarger
-------------------------------   Director
       David F. Shellenbarger

   /s/ William Sumner
-------------------------------   Director
       William Sumner

   /s/ Gerald A. Tarquino
-------------------------------   Director
       Gerald A. Tarquino


<PAGE>   46


                                 Exhibit Index
                                 -------------

<TABLE>
<CAPTION>
Exhibit No.                   Description
-----------                   -----------
<S>                           <C>
    11                        Computation of Per Share Earnings
    27                        Financial Data Schedule
</TABLE>