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                                  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, 2001          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)

                                  586-532-8000
                         (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) has filed all reports required 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 of 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.  $6,456,000

    As of March 14, 2002, 1,159,389 shares of common stock of the registrant
were outstanding. The aggregate market value of the voting stock of the
registrant held by non-affiliates was approximately $4,300,434 as of March 14,
2002; based on the average of the bid and asked prices (4 1/2) on that date.

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

    Portions of the registrant's Proxy Statement of its 2002 Annual Meeting of
Shareholders to the extent expressly so stated herein, are incorporated by
reference into Part I of this Report.



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                                    CONTENTS
<TABLE>

<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>




                                     PART I


ITEM 1:      Business


Subsequent Events

             On February 13, 2002 the Board of Directors of Michigan Community
    Bancorp Limited accepted the resignation of David A. McKinnon, as President,
    Chief Executive Officer and Director of the Company. At the same time, Mr.
    McKinnon tendered his resignation as the President, Chief Executive Officer
    and Director of Lakeside Community Bank and as a Director of North Oakland
    Community Bank. To replace Mr. McKinnon, J. William Sumner was appointed as
    Chairman of Board of Directors and Frank Blowers was appointed President and
    Chief Executive Officer.


The Corporation

        Michigan Community Bancorp Limited (the "Corporation") was incorporated
    in January 28, 1998 under Michigan law and is a bank holding company, owning
    all of the outstanding common stock of Lakeside Community Bank ("Lakeside")
    and North Oakland Community Bank ("North Oakland"), (collectively, the
    "Banks"). The Banks were organized as Michigan chartered Banks with
    depository accounts insured by the Federal Deposit Insurance Corporation
    (the "FDIC"). The Banks opened for business on January 5, 1999.






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        Lakeside Community Bank offers its banking services throughout Macomb
    County, Michigan, but primarily in Clinton Township, Macomb Township, Ray
    Township, Shelby Township, Washington Township, Mt. Clemens, Sterling
    Heights and Utica. North Oakland Community Bank offers its banking services
    throughout Oakland County, Michigan, but primarily in Rochester, Rochester
    Hills, Pontiac, Troy, Auburn Hills, Oakland Township, Orion Township and
    Lake Orion Village.

        Lakeside and North Oakland are both approved by the Financial
    Institutions Bureau of the State of Michigan. In January 1999 Lakeside
    received an initial capitalization of $4,550,000 and North Oakland received
    an initial capitalization of $4,600,000 from the proceeds of the initial
    public offering, which we completed in December 1998. The Corporation and
    the Banks have also been approved by the FDIC and the Board of Governors of
    the Federal Reserve System.

        Our office and the office of Lakeside are located at 43850 Schoenherr
    Road, Sterling Heights, Michigan 48313. The main office of North Oakland is
    located at 1467 North Rochester Road, Rochester Hills, Michigan 48307.

        As of December 31, 2001, the Corporation had total assets of $77.3
    million, total deposits of $69.5 million, and shareholders' equity of $7.0
    million.


    Products and Services

          Commercial Loans. Commercial loans are made primarily to small and
    mid-sized businesses. These loans maybe either secured or unsecured and are
    made available for general operating purposes, acquisition of fixed assets
    including real estate, purchases of equipment and machinery, financing of
    inventory and accounts receivable, as well as any other purposes considered
    appropriate. The Banks generally look to a borrower's business operations as
    the principal source of repayment, but will also receive, when appropriate,
    mortgages on real estate, security interests in inventory, accounts
    receivable and other personal property and/or personal guarantees.

         Commercial real estate lending involves more risk than residential
    lending, because loan balances are greater and repayment is dependent upon
    the borrower's operation. In making such loans, the Banks are subject to
    written policies, reviewed and approved at least annually by the Banks'
    Board of Directors, pursuant to federal law and regulations. The policies
    address loan portfolio diversification and prudent underwriting standards,
    loan administration procedures, and documentation, approval and reporting
    requirements. In addition, federal regulations impose supervisory
    loan-to-value applicable to each type of loan secured by real estate.

         Residential Real Estate Loans. From time to time the Banks originate
    residential mortgage loans, which are generally short-term with maturates of
    five years or less. The Banks' general policy is subject to review by
    management as a result of changing market and economic conditions. Requests
    for long-term fixed rate mortgages are generally originated and subsequently
    sold with servicing released to an unrelated mortgage company. Requests for
    these long-term fixed rate mortgages while held by the Banks pending sale
    are subject to interest rate risk and if rates increase before the loans are
    sold, a loss may be recognized. The Banks also offer equity lines of credit
    loans.

         Personal Loans. The Banks make personal loans and lines of credit
    available to consumers for various purposes, such as the purchase of
    automobiles, boats and other recreational vehicles, home improvements and
    personal investments. The Banks retain substantially all of these loans.

         Consumer loans generally have shorter terms and higher interest rates
    than residential mortgage loans and usually involve more credit risk than
    mortgage loans because of the type and nature of the collateral. While the
    Banks do not use a formal credit scoring system, the Bank underwrites their
    loans carefully, with a strong emphasis on the amount of the down payment,
    credit quality, employment stability and monthly income. These loans are,
    generally expected, to be repaid on a monthly repayment schedule with the
    source of repayment tied to the borrower's periodic income. In addition
    consumer collections are dependent on the borrower's continuing financial
    stability, and are thus likely to be adversely affected by job loss, illness
    and personal bankruptcy. In many cases, repossessed collateral for a
    defaulted consumer loan will not provide an adequate source of repayment of
    the outstanding loan balance because of depreciation of the underlying
    collateral. The Banks believe that the generally higher yields earned on
    consumer loans help compensate for the increased credit risk associated with
    such loans and that consumer loans are important to their efforts to serve
    the credit needs of the communities and customers that they serve.





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         Loan Policy. As a routine part of the Banks business, the Banks make
    loans to individuals and businesses located within the Banks market areas.
    The Banks have adopted a Loan Policy that contains general lending
    guidelines and is subject to review and revision by the Board of Directors
    from time to time. The Banks seek to make sound loans, while recognizing
    that lending money involves a degree of business risk.

         Regulatory and supervisory loan-to-value limits are established by
    Section 304 of the Federal Deposit Insurance Corporation Improvement Act of
    1991 ("FDICIA"). The Banks internal limitations follow those limits and in
    certain cases are more restrictive than those required by the regulators.

         Deposit Services. The Banks offer a broad range of deposit services,
    including interest bearing and non-interest bearing checking accounts, money
    market savings accounts, regular savings accounts and time deposits of
    various types. Transaction accounts and time certificates are tailored to
    the principal market area at rates competitive with those offered in the
    area. All deposit accounts are insured by the FDIC up to the maximum amount
    permitted by law. The Banks solicit these accounts from individuals,
    businesses, associations, financial institutions and government authorities.

        Throughout the year 2001, the Banks have relied on out-of-market or
    internet certificates of deposit as a source of liquidity. These funds are
    generally higher in rate and more volatile than a certificate of deposit
    gathered from the local communities of the Banks marketing areas. During the
    coming year, the Banks will be focused on increasing the core deposits and
    relying less on out-of-market and internet certificates of deposits.

         Other Services. The Banks may establish relationships with
    correspondent banks and other independent financial institutions to provide
    other services requested by its customers, including loan participations
    where the requested loan amounts exceed the Banks policies or legal lending
    limits. The Banks also provided personal computer based at-home banking.
    Management believes that the Banks personalized service approach benefits
    from customer visits to the Banks.

         Competition. The Banks face competition from thrift institutions,
    credit unions, and other banks as well as finance companies, insurance
    companies, mortgage companies, securities brokerage firms, money market
    funds and other providers of financial services. Most of the Banks
    competitors have been in business a number of years, have established
    customer bases, are larger and have higher lending limits than the Banks.
    The Banks compete for loans principally through its ability to communicate
    effectively with their customers and understand and meet their needs.
    Management believes that the Banks personal service philosophy enhances
    their ability to compete favorably in attracting individuals and small
    businesses. The Banks actively solicit retail customers and will compete for
    deposits by offering customers personal attention, professional service, ATM
    capability, and competitive interest rates.

    Market Area

       Lakeside Community Bank provides banking services to Macomb County,
    primarily Clinton Township, Shelby Township, Washington Township, Sterling
    Heights, Ray Township, Mt. Clemens and Utica. Macomb County is comprised of
    27 cities, villages or townships, ranks third in population out of
    Michigan's 83 counties and covers 482 square miles. North Oakland Community
    Bank provides banking services to Oakland County, primarily Rochester,
    Rochester Hills, Troy, Auburn Hills, Pontiac, Oakland Township, Orion
    Township and Lake Orion Village. Oakland County is comprised of 61 cities,
    villages, and townships, ranks second in population out of Michigan's 83
    counties and covers 910 square miles.

    Environmental Matters

         The Corporation does not believe that existing environmental
    regulations will have any material effect upon the capital expenditures,
    earnings, and competitive position of the Corporation.

    Employees

         As of December 31, 2001, Michigan Community Bancorp, Limited has 9
    full-time and 3 part-time employees. In addition, the Banks employs
    experienced professional staff. Lakeside currently has 9 full-time
    employees, while North Oakland currently has 7 full-time employees.







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    Business Strategy

        The Corporation emphasizes experienced local management with a strong
    commitment to the communities located within the primary market areas served
    by the Banks. The Banks are located in communities that are growing quickly
    and where there has been a significant impact from the consolidation in the
    banking industry. They are communities that have a history of community
    banking but no longer have as many community banks. The Corporation believes
    that the small to medium-sized industrial and commercial businesses that
    have been targeted as our future customers are not being adequately served
    by the larger banks. The Corporation also believes that it has chosen
    communities where the officers and directors of Michigan Community Bancorp,
    Lakeside Community Bank and North Oakland Community Bank are active in the
    community and where community and business leaders are anxious to welcome a
    locally owned and managed financial institution. The Corporation is
    committed to providing outstanding customer service and banking products and
    intend to compete aggressively for banking business through a systematic
    program of directly calling on both customers and referral sources such as
    attorneys, accountants, mortgage brokers, insurance agents and other
    business people, many of whom are already known to our officers and
    directors.

        Our experienced staff provides personalized service and generates
    competitively priced loans and deposits. The staff is provided with access
    to current software and database systems so that they can more easily
    deliver high-quality products and provide responsive service to customers.
    Lakeside and North Oakland have entered into agreements with third-party
    service providers that enable customers to have convenient electronic access
    to their accounts and other bank products through debit cards, voice
    response and home banking. The Banks use these third-party service providers
    to deliver the most up to date services so that they can be at the forefront
    of technology while minimizing the costs of delivering services to our
    customers.

    Investments

       The principal investment of the Corporation is the ownership of all the
    common stock of the Banks. Any funds retained by the Corporation from time
    to time may be invested in various debt instruments, including but not
    limited to obligations of, or guaranteed by the United States, general
    obligations of states or political subdivisions thereof, bankers'
    acceptances or certificates of deposit of U.S. commercial banks, or
    commercial paper of U.S. issuers rated in the highest category by a
    nationally-recognized investment rating service. Although the Corporation is
    permitted to make limited portfolio investments in equity securities and to
    make equity investments in subsidiary corporations engaged in certain
    non-banking activities, which may include real estate-related activities,
    such as mortgage banking, community development, real estate appraisals,
    arranging equity financing for commercial real estate, and owning and
    operating real estate used substantially by the Banks or acquired for its
    future use, the Corporation has no present plans to do so. The Corporation's
    Board of Directors may alter the investment policy without shareholder
    approval.

        The Banks may invest their funds in a variety of debt instruments and
    may participate in the federal funds market with other depository
    institutions. Subject to certain exceptions, the Banks are prohibited from
    investing in equity securities. Under one such exception, in certain
    circumstances and with the prior approval of the FDIC, a Bank can invest up
    to 10% of its total assets in the equity securities of a subsidiary
    corporation engaged in certain real estate-related activities. The Banks
    have no present plans to make such an investment. Real estate acquired by
    the Banks in satisfaction of or in foreclosure upon loans may be held by the
    Banks, subject to a determination by a majority of the respective Bank's
    Board of Directors as to the advisability of retaining the property, for a
    period not to exceed 60 months after the date of acquisition or such longer
    period as the appropriate regulators may approve. The Banks are also
    permitted to invest an aggregate amount not in excess of two-thirds of the
    capital and surplus of the Banks in such real estate as is necessary for the
    convenient transaction of its business. The Banks have no present plans to
    make any such investment. The Board of Directors of each Bank may alter the
    Bank's investment policy without shareholder approval.

    Community Involvement

        In order to assure that the Banks are true community banks, the
    Corporation has sought local community leaders to serve as members of the
    Board of Directors of each bank.

    Lakeside Community Bank. The following individuals serve on the Board of
    Directors of Lakeside Community Bank:

         PAUL "BUD" E. BALTZER, JR, is President of Pebco Sales, Inc. a Michigan
    corporation located in Clinton Township primarily engaged in the
    representation of manufacturers in the installation and design of
    specialized industrial products. Mr. Baltzer is active in the community and
    is treasurer of Epiphany Lutheran Church and a member of the Construction
    Association of Michigan.






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         GARY DAVISON, is owner of Davison & Associates, P.C., a Troy, Michigan
    based accounting firm with numerous clients located in the target market
    areas of LCB. Mr. Davison was previously a partner with Grant Thornton in
    Southfield, Michigan.

         PHILLIP T. HERNANDEZ, is currently a business consultant and was
    previously President of Efficient Sanitation, a division of Waste
    Management, Inc. located in Clinton Township, Michigan. Mr. Hernandez is a
    member of the board of directors of Mt. Clemens General Hospital and a past
    director of Macomb Community Bank.

         GERALD KRUEGER, is President/Owner of American Community Developers,
    Inc., a Real Estate Development Company. Mr. Krueger specializes in
    developing and maintaining subsidized housing complexes.

         JOSEPH S. LENTINE, is Vice President of Golden Dental Plans, Inc. a
    dental delivery system located in Warren, Michigan and President of LeCom,
    Inc. a communications contracting firm located in Warren, Michigan.

         ROBERT R. PELEMAN, M.D., is head of the anesthesiology department at
    St. Joseph's Hospital, Clinton Township, Michigan. Dr. Peleman is a past
    director of Macomb Community Bank, a board member of St. Joseph's Mercy
    Foundation and the past secretary of the Mt. Clemens Medical Association.

         J. WILLIAM SUMNER, is President of Health Management Systems located in
    Eastpointe, Michigan. Health Management Systems provide employee health care
    administration and behavioral health programs to various businesses
    nationwide. Mr. Sumner is also a member of the Employee Assistance
    Professionals Association and the St. John Hospital Men's Guild.

        JEFF TAMAROFF, is President of Jeffrey Buick-Nissan, Tamaroff Dodge and
    Tamaroff Buick automobile dealerships located in Southfield and Roseville,
    Michigan.

         FRANK D. BLOWERS, is the President and Chief Executive Officer of
    Michigan Community Bancorp Limited, Lakeside Community Bank and North
    Oakland Community Bank. Prior to joining Lakeside, Mr. Blowers was employed
    by First of America Bank, N.A. as a Senior Vice President where he was
    responsible for branch product sales for a region with approximately $750
    million in assets. Mr. Blowers has over 30 years of banking experience and
    previously served as Senior Vice President for Security Bank, St. Clair
    Shores, Michigan.


    North Oakland Community Bank. In addition to Mr. Blowers, the following
    individuals serve on the board of directors of North Oakland Community Bank:

         FREDERICK MAIBAUER, M.D., is President of Rochester Hills Orthopaedics,
    P.C.

         JOHN W. MELSTROM, is an accountant and partner in the certified public
    accounting firm of Fenner, Melstrom & Dooling, located in Auburn Hills,
    Michigan. Mr. Melstrom works with businesses in the market area and is
    active in the community and serves on a variety of community boards.

        VERNON PIXLEY, is the President of the Pixley Funeral Home, Rochester,
    Michigan.

        DAVID F. SHELLENBARGER, is President of Macro Computer Products, a
    Rochester, Michigan based software/systems integration company which
    provides imaging services to financial institutions.



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                           SUPERVISION AND REGULATION


  The following is a summary of certain statutes and regulations affecting the
Corporation and the Banks. This summary is qualified in its entirety by such
statutes and regulations. A change in applicable laws or regulations may have a
material effect on the Corporation, the Banks and the business of the
Corporation and the Banks.

General

     Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Corporation and the Banks can be affected not only by
management decisions and general economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental
regulatory authorities. Those authorities include, but are not limited to, the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
the FDIC, the Commissioner of the Michigan Office of Financial and Insurance
Services, Department of Financial Institutions ("Commissioner"), the Internal
Revenue Service, and state taxing authorities. The effect of such statutes,
regulations and policies can be significant, and cannot be predicted with a high
degree of certainty.

     Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, lending activities and practices, the nature and amount of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to the
Corporation and the Banks establishes a comprehensive framework for their
respective operations and is intended primarily for the protection of the FDIC's
deposit insurance funds, the depositors of the Banks, and the public, rather
than shareholders of the Corporation.

     Federal law and regulations establish supervisory standards applicable to
the lending activities of the Banks, including internal controls, credit
underwriting, loan documentation and loan-to-value ratios for loans secured by
real property.

The Corporation

     General. The Corporation is a bank holding company and, as such, is
registered with, and subject to regulation by, the Federal Reserve Board under
the Bank Holding Company Act, as amended (the "BHCA"). Under the BHCA, the
Corporation is subject to periodic examination by the Federal Reserve Board, and
is required to file with the Federal Reserve Board periodic reports of its
operations and such additional information as the Federal Reserve Board may
require.

     In accordance with Federal Reserve Board policy, the Corporation is
expected to act as a source of financial strength to the Banks and to commit
resources to support the Banks in circumstances where the Corporation might not
do so absent such policy. In addition, if the Commissioner deems the Banks
capital to be impaired, the Commissioner may require the Banks to restore their
capital by a special assessment upon the Corporation as the Banks sole
shareholder. If the Corporation were to fail to pay any such assessment, the
directors of the Banks would be required, under Michigan law, to sell the shares
of the Bank' stock owned by the Corporation to the highest bidder at either a
public or private auction and use the proceeds of the sale to restore the Banks'
capital.

     Investments and Activities. In general, any direct or indirect acquisition
by the Corporation of any voting shares of any bank which would result in the
Corporations direct or indirect ownership or control of more than 5% of any
class of voting shares of such bank, and any merger or consolidation of the
Corporation with another bank company, will require the prior written approval
of the Federal Reserve Board under the BHCA. In acting on such applications, the
Federal Reserve Board must consider various statutory factors, including among
others, the effect of the proposed transaction on competition in relevant
geographic and product markets, and each party's financial condition, managerial
resources, and record of performance under the Community Reinvestment Act.
Effective September 29, 1995, bank holding companies may acquire banks located
in any state in the United States without regard to geographic restrictions or
reciprocity requirements imposed by state law, but subject to certain
conditions, including limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured depository institution
affiliates.

     The merger or consolidation of an existing bank subsidiary of the
Corporation with another bank, or the acquisition by such a subsidiary of assets
of another bank, or the assumption of liability by such a subsidiary to pay any
deposits in another bank, will require the prior written approval of the
responsible Federal depository institution regulatory agency under the Bank
Merger Act,







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based upon a consideration of statutory factors similar to those outlined above
with respect to the BHCA. In addition, in certain such cases an application to,
and the prior approval of, the Federal Reserve Board under the BHCA and/or the
Commissioner under the Michigan Banking Code, may be required.

     With certain limited exceptions, the BHCA prohibits any bank company from
engaging, either directly or indirectly through a subsidiary, in any activity
other than managing or controlling banks unless the proposed non-banking
activity is one that the Federal Reserve Board has determined to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. Under current Federal Reserve Board regulations, such permissible
non-banking activities include such things as mortgage banking, equipment
leasing, securities brokerage, and consumer and commercial finance company
operations. As a result of recent amendments to the BHCA, well-capitalized and
well-managed bank holding companies may engage de novo in certain types of
non-banking activities without prior notice to, or approval of, the Federal
Reserve Board, provided that written notice of the new activity is given to the
Federal Reserve Board within 10 business days after the activity is commenced.
If a bank holding company wishes to engage in a non-banking activity by
acquiring a going concern, prior notice and/or prior approval will be required,
depending upon the activities in which the company to be acquired is engaged,
the size of the company to be acquired and the financial and managerial
condition of the acquiring bank holding company.

     In evaluating a proposal to engage (either de novo or through the
acquisition of a going concern) in a non-banking activity, the Federal Reserve
Board will consider various factors, including among others the financial and
managerial resources of the bank company, and the relative public benefits and
adverse effects which may be expected to result from the performance of the
activity by an affiliate of the bank company. The Federal Reserve Board may
apply different standards to activities proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.

     Capital Requirements. The Federal Reserve Board uses capital adequacy
guidelines in its examination and regulation of bank holding companies. If
capital falls below minimum guidelines, a bank company may, among other things,
be denied approval to acquire or establish additional banks or non-bank
businesses.

     The Federal Reserve Board's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: (i) a
leverage capital requirement expressed as a percentage of total assets, and (ii)
a risk-based requirement expressed as a percentage of total risk-weighted
assets. The leverage capital requirement consists of a minimum ratio of Tier 1
capital (which consists principally of shareholders' equity) to total assets of
3% for the most highly rated companies, with minimum requirements of 4% to 5%
for all others. The risk-based requirement consists of a minimum ratio of total
capital to total risk-weighted assets of 8%, of which at least one-half must be
Tier 1 capital.

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum requirements, and higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. For example, Federal Reserve Board regulations provide that
additional capital may be required to take adequate account of, among other
things, interest rate risk and the risks posed by concentrations of credit,
nontraditional activities or securities trading activities. Further, any banking
organization experiencing or anticipating significant growth would be expected
to maintain capital ratios, including tangible capital positions (i.e., Tier 1
capital less all intangible assets), well above the minimum levels. The Federal
Reserve Board ("FRB") had advised the Corporation of a specific minimum Tier 1
Capital leverage ratio of 8.0% during the Banks' De novo status. The Banks are
no longer under a De novo status as of January 2002. It is the Banks intent to
continue to maintain a capital ratio no lower then a minimum of 8.0% to continue
to be considered adequately capitalized by the FRB. The Federal Reserve Board
continues to have the regulatory authority to impose a specific minimum Tier 1
Capital leverage ratio should the situation require it.

     Dividends. The Corporation is a separate and distinct company from the
Banks. Most of the Corporation's revenues will be received by it in the form of
dividends, if any, paid by the Banks. Thus, the Corporation's ability to pay
dividends to its shareholders will indirectly be limited by statutory
restrictions on its ability to pay dividends. See "Supervision and Regulation
-the Bank - Dividends." Further, the Federal Reserve Board has issued a policy
statement on the payment of cash dividends by bank holding companies. In the
policy statement, the Federal Reserve Board expressed its view that a bank
company experiencing earnings weaknesses should not pay cash dividends exceeding
its net income or which can only be funded in ways that weakened the
corporation's financial health, such as by borrowing. Additionally, the Federal
Reserve Board possesses enforcement powers over bank holding companies and their
non-bank subsidiaries to prevent or remedy actions that represent unsafe or
unsound practices or violations of applicable statutes and regulations. Among
these powers is the ability to proscribe the payment of dividends by banks and
bank holding companies. Similar enforcement powers over the Banks are possessed
by the FDIC. The "prompt corrective action" provisions of federal law and
regulation authorizes the Federal Reserve Board to restrict the payment of
dividends by the Corporation for an insured bank which fails to meet specified
capital levels.






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     In addition to the restrictions on dividends imposed by the Federal Reserve
Board, the Michigan Business Corporation Act provides that dividends may be
legally declared or paid only if after the distribution a corporation, such as
this Corporation, can pay its debts as they come due in the usual course of
business and its total assets equal or exceed the sum of its liabilities plus
the amount that would be needed to satisfy the preferential rights upon
dissolution of any holders of preferred stock whose preferential rights are
superior to those receiving the distribution. The Corporation is authorized to
issue preferred stock and may issue preferred stock with the Board of Directors
approval.

The Banks

     General. The Banks are Michigan banking corporations and their deposit
accounts are insured by the Bank Insurance Fund (the "BIF") of the FDIC. As a
BIF-insured Michigan chartered bank, the Banks are subject to the examination,
supervision, reporting and enforcement requirements of the Commissioner, as the
chartering authority for Michigan banks, and the FDIC, as administrator of the
BIF. These agencies and the federal and state laws applicable to the Banks and
their operations, extensively regulate various aspects of the banking business
including, among other things, permissible types and amounts of loans,
investments and other activities, capital adequacy, branching, interest rates on
loans and on deposits, the maintenance of non-interest bearing reserves on
deposit accounts, and the safety and soundness of banking practices.

     Deposit Insurance. As an FDIC-insured institution, the Banks are required
to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance premiums, based upon
their respective levels of capital and results of supervisory evaluation.
Institutions classified as well capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all insured
institutions are made by the FDIC for each semi-annual assessment period.

     The Federal Deposit Insurance Act ("FDIA") requires the FDIC to establish
assessment rates at levels, which will maintain the Deposit Insurance Fund at a
mandated reserve ratio of not less than 1.25% of estimated insured deposits.
Accordingly, the FDIC established the schedule of BIF insurance assessments for
the first semi-annual assessment period of 1998, ranging from 0% of deposits for
institutions in the lowest risk category to .27% of deposits for institutions in
the highest risk category.

     The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institutions or
their directors have engaged or are engaging in unsafe or unsound practices, or
have violated any applicable law, regulation, order, or any condition imposed in
writing by, or written agreement with, the FDIC, or if the institution is in an
unsafe or unsound condition to continue operations. The FDIC may also suspend
deposit insurance temporarily during the hearing process for a permanent
termination of insurance if the institution has no tangible capital.

     Commissioner Assessments. Michigan banks are required to pay supervisory
fees to the Commissioner to fund the operations of the Commissioner. The amount
of supervisory fees paid by a bank is based upon the bank's total assets, as
reported to the Commissioner.

     FICO Assessments. Pursuant to federal legislation enacted September 30,
1996, the Banks, as a member of the BIF, is subject to assessments to cover the
payments on outstanding obligations of the Financing Corporation ("FICO"). FICO
was created in 1987 to finance the re-capitalization of the Federal Savings and
Loan Insurance Corporation, the predecessor to the FDIC's Savings Association
Insurance Fund (the "SAIF"), which insures the deposits of thrift institutions.
Until January 1, 2000, the FICO assessments made against BIF members may not
exceed 20% of the amount of FICO assessments made against SAIF members.
Currently, SAIF members pay FICO assessments at a rate equal to approximately
0.063% of deposits while BIF members pay FICO assessments at a rate equal to
approximately 0.013% of deposits. Between January 1, 2000 and the maturity of
the outstanding FICO obligations in 2019, BIF members and SAIF members will
share the cost of the interest on the FICO bonds on a pro rata basis. It is
estimated that FICO assessments during this period will be less than 0.025% of
deposits.

     Capital Requirements. The FDIC has established the following minimum
capital standards for state-chartered, FDIC-insured non-member banks, such as
the Banks: a leverage requirement consisting of a minimum ratio of Tier 1
capital to total assets of 3% for the most highly-rated banks with minimum
requirements of 4% to 5% for all others, and a risk-based capital requirement
consisting of a minimum ratio of total capital to total risk-weighted assets of
8%, at least one-half of which must be Tier 1 capital. Tier 1 capital consists
principally of shareholders' equity. These capital requirements are minimum
requirements. Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual institutions. For
example, FDIC regulations provide







                                        9
<PAGE>

that higher capital may be required to take adequate account of, among other
things, interest rate risk and the risks posed by concentrations of credit,
nontraditional activities or securities trading activities. As a condition to
regulatory approval of the Bank's formation, the Banks was required to have an
initial capitalization sufficient to provide a ratio of Tier 1 capital to total
estimated assets of at least 8% at the end of the third year of operation.

     Federal law provides the federal banking regulators with broad power to
take prompt corrective action to resolve the problems of undercapitalized
institutions. The extent of the regulators' powers depends on whether the
institution in question is "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." Federal regulations define these capital categories as
follows:

<TABLE>
<CAPTION>
                                               Total              Tier 1
                                             Risk-Based         Risk-Based
                                           Capital Ratio       Capital Ratio    Leverage Ratio
                                         ------------------------------------------------------


<S>                                     <C>                   <C>              <C>
         Well capitalized                   10% or above         6% or above       5% or above
         Adequately capitalized              8% or above         4% or above       4% or above
         Undercapitalized                   Less than 8%        Less than 4%      Less than 4%
         Significantly undercapitalized     Less than 6%        Less than 3%      Less than 3%
         Critically undercapitalized               --             --              A ratio of tangible
                                                                                 equity to total assets
                                                                                  of 2% or less

</TABLE>

     Depending upon the capital category to which an institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired; restricting transactions with
affiliates; restricting the interest rate the institution may pay on deposits;
ordering a new election of directors of the institution; requiring that senior
executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain subsidiaries; prohibiting the payment of principal or interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

     In general, a depository institution may be reclassified to a lower
category than is indicated by its capital levels if the appropriate federal
depository institution regulatory agency determines the institution to be
otherwise in an unsafe or unsound condition or to be engaged in an unsafe or
unsound practice. This could include a failure by the institution, following
receipt of a less-than-satisfactory rating on its most recent examination
report, to correct the deficiency.

     Dividends. Under Michigan law, the Banks are restricted as to the maximum
amount of dividends it may pay on their common stock. The Banks may not pay
dividends except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend unless the bank will have
a surplus amounting to at least 20% of its capital after the payment of the
dividend. If the Bank has a surplus less than the amount of its capital, it may
not declare or pay any dividend until an amount equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual dividends) has been transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
the vote of shareholder's owning 2/3 of the stock eligible to vote increase its
capital stock by a declaration of a stock dividend, provided that after the
increase the banks surplus equals at least 20% of their capital stock, as
increased. The Banks may not declare or pay any dividend until the cumulative
dividends on preferred stock (should any such stock be issued and outstanding)
have been paid in full.

     Federal law generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its company if the depository institution would thereafter be
undercapitalized. The FDIC may prevent an insured bank from paying dividends if
the bank is in default of payment of any assessment due to the FDIC. In
addition, the FDIC may prohibit the payment of dividends by the Banks, if such
payment is determined, by reason of the financial conditions of the Banks, to be
an unsafe and unsound banking practice.

     Insider Transactions. The Banks are subject to certain restrictions imposed
by the Federal Reserve Act on any extensions of credit to the Corporation, on
investments in the stock or other securities of the Corporation and the
acceptance of the stock or other securities of the Corporation as collateral for
loans. Certain limitations and reporting requirements are also placed on
extensions of credit by the Banks to their directors and officers, to directors
and officers of the Corporation, to principal shareholders of the Corporation,
and to "related interests" of such directors, officers and principal
shareholders. In addition, federal law and regulations may affect the terms









                                       10
<PAGE>
upon which any person becoming a director or officer of the Corporation or one
of its subsidiaries or a principal shareholder of the Corporation may obtain
credit from banks with which the Banks maintain a correspondent relationship.

     Safety and Soundness Standards. The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally insured depository
institutions. These guidelines establish standards for internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, fees and
benefits, asset quality and earnings. In general, the guidelines prescribe the
goals to be achieved in each area, and each institution will be responsible for
establishing its own procedures to achieve those goals. If an institution fails
to comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the institution to submit a
plan for achieving and maintaining compliance. The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such severity that it
could threaten the safe and sound operation of the institution. Failure to
submit an acceptable compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate regulator, would constitute grounds
for further enforcement action.

     State Bank Activities. Under federal law and FDIC regulations, FDIC-insured
state banks are prohibited, subject to certain exceptions, from making or
retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. Federal law, as implemented by FDIC
regulations, also prohibits FDIC-insured state banks and their subsidiaries,
subject to certain exceptions, from engaging as principal in any activity that
is not permitted for a national bank or its subsidiary, respectively, unless the
banks meets, and continues to meet, their minimum regulatory capital
requirements and the FDIC determines the activity would not pose a significant
risk to the deposit insurance fund of which the banks are a member.
Impermissible investments and activities must be divested or discontinued within
certain time frames set by the FDIC in accordance with federal law. These
restrictions are not currently expected to have a material impact on the
operations of the Banks.

     Consumer Protection Laws. The Banks business includes making a variety of
types of loans to individuals. In making these loans, the Banks are subject to
State usury and regulatory laws and to various federal statutes, such as the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, and the Home Mortgage
Disclosure Act, and the regulations promulgated there under, which prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and
settlement costs, and regulate the mortgage loan servicing activities of the
Banks, including the maintenance and operation of escrow accounts and the
transfer of mortgage loan servicing. In receiving deposits, the Banks are
subject to extensive regulation under State and federal law and regulations,
including the Truth in Savings Act, the Expedited Funds Availability Act, the
Bank Secrecy Act, the Electronic Funds Transfer Act, and the Federal Deposit
Insurance Act. Violation of these laws could result in the imposition of
significant damages and fines upon the Banks and their directors and officers.

     Branching Authority. Michigan banks, such as the Banks, have the authority
under Michigan law to establish branches anywhere in the State of Michigan,
subject to receipt of all required regulatory approvals (including the approval
of the Commissioner and the FDIC).

     Effective June 1, 1997 (or earlier if expressly authorized by applicable
state law), the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "IBBEA") allows banks to establish interstate branch networks through
acquisitions of other banks, subject to certain conditions, including certain
limitations on the aggregate amount of deposits that may be held by the
surviving bank and all of its insured depository institution affiliates. The
establishment of de novo interstate branches or the acquisition of individual
branches of a bank in another state (rather than the acquisition of an
out-of-state bank in its entirety) is allowed by IBBEA only if specifically
authorized by state law. The legislation allowed individual states to "opt-out"
of interstate branching authority by enacting appropriate legislation prior to
June 1, 1997.

     Michigan did not opt out of IBBEA, and now permits both U.S. and non-U.S.
banks to establish branch offices in Michigan. The Michigan Banking Code
permits, in appropriate circumstances and with the approval of the Commissioner,
(i) the acquisition of all or substantially all of the assets of a
Michigan-chartered bank by an FDIC-insured bank, savings bank, or savings and
loan association located in another state, (ii) the acquisition by a
Michigan-chartered bank of all or substantially all of the assets of an
FDIC-insured bank, savings bank or savings and loan association located in
another state, (iii) the consolidation of one or more Michigan-chartered banks
and FDIC-insured banks, savings banks or savings and loan associations located
in other states having laws permitting such consolidation, with the resulting
organization chartered by Michigan, (iv) the establishment by a foreign bank,
which has not previously designated any other state as its home state under the
International Banking Act of 1978, of branches located in Michigan, and (v) the
establishment or acquisition of branches in Michigan by FDIC-insured banks
located in other states, the District of Columbia or U.S. Territories or
protectorates having laws permitting Michigan-chartered banks to establish
branches in such jurisdiction. Further, the Michigan Banking Code permits, upon
written notice to the Commissioner, (i) the


                                       11
<PAGE>

acquisition by a Michigan-chartered bank of one or more branches (not comprising
all or substantially all of the assets) of an FDIC-insured bank, savings bank or
savings and loan association located in another state, the District of Columbia,
or a U.S. territory or protectorate, (ii) the establishment by
Michigan-chartered banks of branches located in other states, the District of
Columbia, or U.S. territories or protectorates, and (iii) the consolidation of
one or more Michigan-chartered banks and FDIC-insured banks, savings banks or
savings and loan associations located in other states, with the resulting
organization chartered by one of such other states.


ITEM 2.  PROPERTY

        The Corporation has a ten-year lease for approximately 11,000 square
    feet in a one-story building located at 43850 Schoenherr, Sterling Heights,
    Michigan. Effective August 4, 2000, the Corporation leased additional space
    adjacent to the existing facility. Accordingly, the amended lease requires a
    monthly rent of $11,080 and expires on August 1, 2008. The facility is
    equipped with an automated teller machine ("ATM"), a drive through teller
    window and teller stations inside the building. The space provided by this
    building is expected to be adequate for our needs and the needs of Lakeside
    Community Bank for the foreseeable future.

        The Corporation has entered into an assignment of a lease for a building
    which is utilized for North Oakland's branch operations with approximately
    3,100 square feet of office space located at 1467 North Rochester Road,
    Rochester Hills, Michigan, until December 31, 2004. This facility serves as
    the main office of North Oakland Community Bank. North Oakland prepaid the
    entire amount of the lease by making a single payment of $250,000 in August
    1998. The prepayment of the rent will be expensed over the lease assignment
    term that expires on December 31, 2004. North Oakland 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. The space provided by this building is
    expected to be adequate for the needs of North Oakland Community Bank for
    the foreseeable future.

        The Corporation has a lease for a building in St. Clair County, Michigan
    that it planned to utilize for possible future expansion. During 2001, the
    Corporation decided to exit from the St. Clair County project. Management
    concluded that expansion into St. Clair County was not economically feasible
    at that time. The Corporation has charged-off expenditures related to the
    abandoned project totaling approximately $290,000 related to development
    costs. The Corporation remains liable for the lease of the St. Clair County
    building at December 31, 2001. Management has included in its charged-off
    expenditures an accrual of six months related to remaining lease obligations
    it expects to pay as it vigorously pursues options regarding lease
    termination or sublease of the building. There are eight years remaining on
    the lease term. The lease requires a monthly payment of $3,750 for the next
    three years and $4,125 per month for the last five-year period.

        The Corporation believes its facilities are well maintained and
adequately insured.


ITEM 3. LEGAL PROCEEDINGS

             As a depository of funds, the Banks may 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 business of the Banks. The following are descriptions of legal
    proceeding in which MCB is named:

Roy W. Klecha, Jr. and Christine J. Klecha v Michigan Community Bancorp, Ltd

             This is a conversion, unjust enrichment, promissory estoppel,
    breach of express and implied warranty, and intentional and innocent
    misrepresentation case brought by Roy and Christine Klecha against Michigan
    Community Bancorp filed on August 28, 2001 in the Circuit Court of St. Clair
    County Michigan (Case No. D 01002373-CZ). Michigan Community Bancorp has
    filed a counterclaim against Roy W. Klecha, Jr. for breach of fiduciary
    duty, breach of duties under Michigan's Uniform Trade Secrets Act, tortious
    interference with business expectancy, misappropriation, and breach of
    contract. In their complaint, the Klechas are demanding $60,000, plus
    interest, costs and attorney fees. Currently, the case is in the discovery
    phase, with limited discovery having taken place.








                                       12
<PAGE>


Daniel J. DuVernay, Joseph C. Fournier and Dennis Guiser v Michigan Community
Bancorp, Ltd

             This is an intentional misrepresentation, innocent
    misrepresentation, statutory violations and unjust enrichment case brought
    by Daniel J. DuVernay, Joseph C. Fournier and Dennis Guiser against Michigan
    Community Bancorp filed on August 6, 2001 in the Circuit Court of St. Clair
    County Michigan (Case No. D 01002114). In their complaint, the Plaintiffs
    are demanding $140,000, plus interest, costs and attorney fees. Currently,
    the case is in the discovery phase, with limited discovery having taken
    place. No trial date has been set.



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

    None


                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


    Michigan Community Bancorp Limited 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 December 31,2001, there were approximately 400 record
holders of the Corporation's Common Stock according to the records maintained by
Michigan Community Bancorp Limited'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 for the last two years.

<TABLE>
<CAPTION>


      2001:                         High         Low
<S>                              <C>          <C>
      4th Quarter                 $   4.75     $   3.80
      3rd Quarter                 $   5.50     $   4.25
      2nd Quarter                 $   6.13     $   5.05
      1st Quarter                 $   6.38     $   5.06


      2000:
      4th Quarter                 $   7.00     $   4.81
      3rd Quarter                 $   7.75     $   4.63
      2nd Quarter                 $   8.00     $   5.88
      1st Quarter                 $   8.75     $   5.00

</TABLE>


     No cash dividends have been declared to date on the Corporation's common
stock. The Corporation expects that all earnings, if any, will be retained to
finance the growth of the Corporation and the Banks and that no cash dividend
will be paid for the foreseeable future. If and when dividends are declared, the
Corporation will be dependent upon dividends paid to it by the Banks for funds
to pay dividends on the common stock.

     Information required by Item 701 of Regulation SB regarding unregistered
securities sales are listed in the Management Discussion and Anaylsis ("MD&A")
under capital and is incorporated herein by reference.



                                       13
<PAGE>

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

                           Forward Looking Statements

     This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Corporation intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Corporation, are
generally identifiable by use if the words "believe," "expect," " intend,"
"anticipate," "estimate," "project," or similar expressions. The Corporation's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on the
operations and future prospects of the Corporation and the subsidiaries include,
but are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S. Board,
the quality or composition of the loan or investment portfolios, demand for
loan products, deposit flows, competition, demand for financial services in the
Corporation's market area and accounting principles, policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Corporation and it business, including additional
factors that could materially affect the Corporation's financial results, is
included in the Corporation's filings with the Securities and Exchange
Commission.

    Management's discussion and analysis of financial condition and results of
operations contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from those projected in such forward-looking statements.

    The following section presents additional information to assess the
financial condition and results of operations of the Corporation and the Banks.
This section should be read in conjunction with the consolidated financial
statements and the supplemental financial data contained elsewhere in this
Appendix.

    OVERVIEW

    Michigan Community Bancorp Limited (the "Corporation") was incorporated on
January 28,1998 under Michigan law and is a bank holding company, owning all of
the outstanding common stock of Lakeside Community Bank and North Oakland
Community Bank, (collectively, the "Banks"). The Banks were organized as
Michigan chartered banks with depository accounts insured by the Federal Deposit
Insurance Corporation. The Banks opened for business on January 5, 1999. The
Banks provide a full range of commercial and consumer banking services,
primarily in Sterling Heights and Rochester and their surrounding market areas.

    The Corporation's plan of operation has been to establish its management
team and to grow in a prudent manner, primarily providing prompt, quality
service. Management believes that it has been successful in establishing a
management team that can administer the Corporation's growth in such a manner.

    Discussions on the corporation's significant accounting policies is
presented in the financial statements.


    FINANCIAL CONDITION

    Summary. Total Assets of the Corporation decreased to $77.3 million at
December 31, 2001, from $83.2 million at December 31, 2000. The decrease in
assets is primarily attributable to the Banks decrease in deposits from $75.1
million at December 31, 2000 to $69.5 million as of December 31, 2001. The
decrease in deposits was part of a plan to reduce the "out-of-market time
deposits of the Banks. Management believes that the year 2002 will bring an
increase in assets through growth of core deposits.

    Cash and Cash Equivalents. Cash and cash equivalents, which include federal
funds sold and short-term investments, decreased $8.8 million, or 61.8% to $5.4
million at December 31, 2001, from $14.2 million at December 31, 2000. The
decrease was primarily the result of the decrease in deposits.







                                       14
<PAGE>


    Securities. All securities were classified as "Available for Sale."
Securities available for sale were $5.0 million for December 31, 2002 and 2001.
The securities may be sold to meet the Banks' liquidity needs. The primary
objective of the Banks' investing activities is to provide for the safety of the
principal invested. Secondary considerations include earnings, liquidity and
overall exposure to changes in interest rates.

    Maturities of securities and the weighted average yield for each range of
maturities as of December 31, 2001 and December 31, 2000 are disclosed in the
table below. Yields are computed without respect to tax equivalency. The Banks
have no tax-exempt securities in their portfolios.

<TABLE>
<CAPTION>
                                                                        December 31,
                                               -------------------------------------------------------------
                                                             2001                            2000
                                               -------------------------------------------------------------
                                                   Amortized                         Amortized
                                                      Cost           Yield              Cost        Yield
                                               -------------------------------------------------------------
<S>                                           <C>                   <C>          <C>               <C>
Due in one year or less                        $      1,001          6.56 %       $     3,977       6.30 %
Due after one year through five years                 3,566          3.26               1,003       6.56
Due after five years through ten years                  406          2.93                   -          -
                                               ---------------------------------------------------------
Total                                          $      4,973          3.91 %       $     4,980       6.35 %

</TABLE>

    Loans Held for Sale. At December 31, 2001, the Banks had $2.9 million in
loans classified as loans held for sale. The fair value of the loans held for
sale is based on commitments on hand from investors or prevailing market prices.
The loans held for sale are subject to interest rate risk. If rates increase
before the loans are sold a loss may be recognized. Loans held for sale
increased because the Corporation actively originated mortgages held for sale in
2001. The Corporation did not engage in this activity in 2000.

    Loan Portfolio. The loan portfolio grew $694,000, or 1.1% to $63.3 million
at December 31, 2001 from $62.6 million at December 31, 2000. The majority of
loans are made to businesses in the form of commercial real estate mortgages and
commercial non-real estate loans. As of December 31, 2001 commercial real
estate loans accounted for approximately 49.8% of the Banks total loan
portfolio, commercial non-real estate accounts for 24.1% of the portfolio, and
residential real estate loans account for 8.2% of the portfolio. The following
table shows the loan portfolio composition at December 31, 2001 and December 31,
2000.

<TABLE>
<CAPTION>

(000's omitted)                                          AT DECEMBER 31,
                                         ------------------------------------------------------
                                               2001                          2000
                                         ------------------------------------------------------
                                               AMOUNT         %              AMOUNT       %
                                         ------------------------------------------------------

<S>                                     <C>                <C>          <C>          <C>
Mortgage loans on real estate:
Residential 1 - 4 family                  $     5,200         8.2%       $   4,998        8.0%
Commercial                                     31,486        49.8%          28,342       45.3%
Construction                                    4,575         7.2%           4,369        7.0%
Equity lines of credit                          3,100         4.9%           2,452        3.9%
                                          ----------------------------------------------------
                                               44,361        70.1%          40,161       64.2%

Commercial loans                               15,261        24.1%          17,907       28.6%
Consumer installment                            3,661         5.8%           4,521        7.2%
                                          ----------------------------------------------------
Total loans                                    63,283       100.0%          62,589      100.0%
                                                            ======                      ======
Allowance for loan losses                       1,398                          835
                                          -----------                    ---------
Net loans                                 $    61,885                    $  61,754
                                          ===========                    =========
</TABLE>









                                       15
<PAGE>




    The following is a schedule of the loan amounts maturing or repricing which
are also classified according to their sensitivity to changes in interest rates.

<TABLE>
<CAPTION>
                                                   December 31, 2001
                              -----------------------------------------------------------
                                  Within          One to          After
                                 One Year       Five Years      Five Years       Total
                              -----------------------------------------------------------

<S>                            <C>              <C>             <C>             <C>
Residential 1 - 4 family         $ 1,781         $ 3,298         $   121         $ 5,200
Commercial Mortgage               14,458          15,271           1,757          31,486
Commercial                        11,454           3,567             240          15,261
Construction Mortgage              4,336             239                           4,575
Equity lines of credit             2,928             130              42           3,100
Consumer installment               1,284           2,199             178           3,661
----------------------------------------------------------------------------------------
Total                            $36,241         $24,704         $ 2,338         $63,283
========================================================================================



Loans above with:
Fixed rates                      $ 5,588         $22,283         $ 2,217         $30,088
Floating rates                    30,653           2,421             121          33,195
----------------------------------------------------------------------------------------
Total                            $36,241         $24,704         $ 2,338         $63,283
========================================================================================

</TABLE>


    Non-performing Assets. Nonperforming assets are made up of impaired loans in
nonaccrual status, loans past due 90 days or more and other repossessed assets.
A loan is considered impaired when, based on current information and events, it
is probable a creditor will be unable to pay all amounts due (interest as well
as principal) according to the contractual terms of the loan agreement.

    As of December 31, 2001, there were eight commercial loans totaling $1.2
million classified as nonaccrual loans. At December 31, 2000 there was a single
commercial loan for $41,000 in a nonaccrual status. Management actively manages
the loan portfolio, seeking to identify and resolve problem assets at an early
stage.




Nonperforming Assets
<TABLE>
<CAPTION>
                                                           December 31,
                                                   --------------------------
                                                      2001             2000
                                                   --------------------------
<S>                                                <C>            <C>
Nonaccrual loans
Commercial loans                                      $1,215         $   41
Residential loans
Consumer loans                                            77
---------------------------------------------------------------------------
Total nonaccrual loans                                 1,292             41

Accruing loans past due 90 days or more
Commercial loans                                         248
Residential loans
Consumer loans                                            18
---------------------------------------------------------------------------
Total accruing loans past due 90 days or more            266             --
---------------------------------------------------------------------------
Total nonperforming loans                              1,558             41

Other repossessed assets                                 176
---------------------------------------------------------------------------
Total nonperforming assets                            $1,734         $   41
===========================================================================
</TABLE>



                                       16
<PAGE>



    If the loans shown above had been paying in agreement with their contractual
terms, an additional $64,890 would have been recorded in interest income.
Management knows of no other loans that have not been disclosed above that
caused them to have doubts about the ability of such borrowers to comply with
the contractual loan terms or which may have a material affect on the
Corporations balance sheet or results of operations.

    The Banks' policies regarding nonaccrual loans reflect the importance of
identifying troubled loans early. Consumer loans are normally charged off no
later than 120 days past due, or earlier if deemed uncollectible. Loans other
than consumer loans are generally placed on nonaccrual status when management
determines that principal or interest may not be fully collectible, unless it is
fully collateralized and in the process of collection. Interest previously
accrued but not collected on nonaccrual loans is charged against current income.
Income on such loans is then recognized only to the extent that cash is received
and where the future collection of principle is probable.

    Allowance for Possible Loan Losses. The following table shows the allocation
of the allowance for possible loan losses by specific category as of the dates
indicated. Management considers various qualitative and quantitative factors in
its determination of the level of the allowance for loan losses.

<TABLE>
<CAPTION>

(dollars in thousands)                                                         December 31,
                                       -------------------------------------------------------------------------------------------
                                                           2001                                              2000
                                       -------------------------------------------------------------------------------------------
                                                      Percent of                                      Percent of
                                                      Allocated      Percent of                       Allocated        Percent of
                                                      Reserve to     Allocated                        Reserve to       Allocated
                                                      Total Loans    Reserve to                       Total Loans      Reserve to
                                          Amount      Outstanding    Total Reserve         Amount     Outstanding    Total Reserve
                                       -------------------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>                 <C>          <C>             <C>
Commercial Loans                        $ 1,281          2.0%           91.6 %            $  615         1.0%           73.6 %
Residential Real Estate Loans                16          0.0%            1.2                  22         0.0%            2.7
Consumer Loans                               62          0.1%            4.4                  59         0.1%            7.1
Unallocated                                  39          0.1%            2.8                 139         0.2%           16.6
                                       -------------------------------------------------------------------------------------------
Total                                   $ 1,398          2.2%          100.0 %            $  835         1.3%          100.0 %

</TABLE>

    The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any future loans without regard
to loan type.

     Loan quality is continually monitored and is reviewed by management on a
monthly basis. Additions to the allowance for loan losses, which are charged to
earnings through the provision for loan losses, is determined based on a variety
of factors, including assessment of the credit risk of the portfolio, analysis
of individual loans via a loan review process, delinquent loans, evaluation of
current economic conditions in the market area, actual charge-offs during the
year and historical loss experience. The unallocated portion of the reserve
involves the exercise of judgment by management and reflects various
considerations, including management's view that the reserve should have a
margin that recognizes the imprecision inherent in the process of estimating
credit losses.

    The Banks maintain an allowance for loan losses believed to be sufficient to
absorb credit losses inherent in their loan portfolio. The allowance for loan
losses represents an estimate of probable losses in the portfolio at each
balance sheet date and is supported by all the relevant information available to
management. The allowance contains provisions for probable losses that have been
identified relating to specific borrowing relationships as well as probable
losses believed to be inherent in our loan portfolio and credit undertakings
that are not specifically identified. We believe that the allowance for loan
losses will be adequate to provide for estimated probable credit losses inherent
in our existing loan portfolio.

    The allowance for loan losses as a percentage of total loans was 2.2% at
December 31, 2001 and 1.3% as of December 31, 2000. Net charge offs for the
years 2001 and 2000 were $432,000 and $21,000, respectively. Net charge offs to
average total loans were 0.68% and .04% for the year ended December 31, 2001 and
2000, respectively. There were four commercial loan relationships that resulted
in charge offs totaling $339,000 or 78.5% of the losses for the year ending
December 31, 2001. Accordingly, management increased the provision for possible
loan losses to offset these charge offs. The allowance as a percentage of total
loans increased due to the increase in non-performing assets. Management
believes the current allowance is adequate at December 31, 2001.




                                       17
<PAGE>


    Deposits. Deposits decreased by 7.4%, or $5.6 million, to $69.5 million at
December 31, 2001, from $75.1 million at December 31, 2000.

    The following table sets forth the average deposit balances and the weighted
average rates paid thereon.

<TABLE>
<CAPTION>
                                                                                December 31,
                                               ------------------------------------------------------------------------------
                                                                  2001                                       2000
                                               ------------------------------------------------------------------------------
(in thousands)                                   Average                      Average    Average                     Average
                                                 Balance      Interest         Rate      Balance     Interest          Rate
                                               ------------------------------------------------------------------------------
<S>                                             <C>           <C>              <C>     <C>            <C>              <C>
Non-interest bearing demand deposits            $ 8,510       $    --          0.00%   $  8,028       $    --          0.00%
Interest-bearing demand and money markets        16,748           565          3.37%      9,860           505          5.12%
Savings accounts                                  1,425            37          2.60%      1,041            30          2.89%
Time deposits less than $100,000                 28,200         1,005          3.56%     31,753         2,000          6.30%
Time deposits $100,000 and over                  18,829         1,665          8.84%     17,458         1,082          6.20%
                                               --------------------------------------------------------------
  Total Average Deposits                         73,712         3,272          4.44%     68,140         3,617          5.31%
                                               -------------------------------         ----------------------
</TABLE>

    The Banks operate in very competitive environments. Management monitors
rates at other financial institutions in the Banks' market areas to ascertain
whether its rates are competitive with the market. Management also attempts to
offer a wide variety of products to meet the needs of its customers. The Banks
offer business and consumer checking accounts, regular and money market savings
accounts and certificates having many options in their terms.

    Premises and Equipment. The Banks total premises and equipment was $1.2
million at December 31, 2001 and $1.5 million at December 31, 2000.

    Capital. To be considered a "well-capitalized" bank by the FDIC, the
institution must have a total risk-based capital ratio of at least 10%, a Tier 1
capital ratio of at least 6%, and a leverage ratio of at least 5%, and must not
be subject to any written agreement from any regulatory agency requiring it to
meet or maintain any specific capital levels. As of December 31, 2001, the Banks
are both considered well capitalized. Banks, which are well capitalized, are
permitted to pay lower FDIC insurance premiums. See Note 13 of "Notes to
Consolidated Financial Statements".

    On October 1, 1999, the Corporation sold 91,000 common stock units, in a
private offering, at a price of $11.00 per unit. Each unit consisted of one
share of MCB common stock and one redeemable common stock purchase warrant. Each
warrant entitled 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 are 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.

    On September 27, 2000, the Corporation sold 34,043 shares of common stock to
one investor, in a private offering, at a price of $5.875 per share. On November
8, 2000, the Corporation sold 25,000 shares of common stock to one investor at a
price of $10.00 per share in private offering.

    On February 9, 2001, the Corporation sold 15,674 shares of common stock to
one investor, in a private offering, at a price of $6.38 per share. On May 11,
2001, the Corporation sold 3,750 shares of common stock to one investor, in a
private offering, at a price of $6.00 per share. On May 24, 2001, the
Corporation issued 9,804 shares of common stock to one investor, in a private
offering, at a price of $5.10 per share. On June 12, 2001, the Corporation sold
5,000 shares of common stock to one investor, in a private offering, at a price
of $6.00 per share.





                                       18
<PAGE>



    The private sales 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.

    Rights Offering. Effective August 23, 2001, the Corporation granted rights
to its stockholders to purchase up to 335,787 units. Each unit consisted of two
shares of its common stock and one class A common stock purchase warrant and was
offered at a price of $9.00 per unit. Each warrant entitles the holder thereof
to purchase 1.2 shares of common stock at $5.50 per share, subject to adjustment
in certain circumstances, for a period of 60 months, at which tine the warrant
expires. In addition, at the same time it was granting rights to its existing
shareholders, the Corporation also offered 100,000 units on a best efforts basis
to the general public. Both offerings expired on December 31, 2001.

    As of December 31, 2001 the Corporation had sold 155,059 units representing
310,118 shares of common stock.




                              RESULTS OF OPERATIONS

    Summary of Results. The Corporation incurred a net loss of $1.9 million, or
($2.17) per share in 2001 as compared to a net loss of $840,000, or ($1.09) per
share in 2000. Significant additions to the allowance for possible loan losses
contributed to the net loss in 2001. The provision for possible loan losses was
$995,000 for the year ended December 31, 2001 as compared to $141,000 for the
year ended December 31, 2000. Total salaries and employee benefits decreased by
13.0% in 2001 as compared to the previous year's increase of 67.5% from 1999 to
2000. Management expects even further decreases in salaries and employee
benefits during 2002 and believes that expenditures made in 2001 have created
the infrastructure for future growth and profitability in subsequent years.

    The following table contains selected performance ratios (in thousands,
except per share data).

<TABLE>
<CAPTION>
                                                      December 31,
                                              --------------------------
        Earnings (Loss) ratios:                  2001              2000
                                              --------------------------
<S>                                           <C>               <C>
        Return on average assets                -2.3%             -1.1%
        Return on average equity               -26.7%            -11.2%
        Average equity to average assets         8.6%              9.9%
        Dividend payout ratio                     NA                NA

</TABLE>







                                       19
<PAGE>


      Net Interest Income. The following table presents our consolidated average
balances of earning assets, interest bearing liabilities and the amount of
interest income or interest expense attributable to each category, the average
yield or rate for each category and the net interest margin for the periods
indicated. Average loans are presented net of unearned income and gross of the
allowance for loan losses. Interest on loans includes loan fees. Interest income
is presented on a non-tax equivalent basis.

<TABLE>
<CAPTION>




For the year ended December 31                                        2001                                     2000
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands)                                       Average                      Average      Average                     Average
                                                     Balance        Interest       Rate        Balance       Interest        Rate
                                                  ------------     ---------     ---------   ----------     ---------     ---------

<S>                                               <C>             <C>             <C>        <C>            <C>             <C>
Assets
Interest-bearing balances w/banks                  $    681        $     7         1.03%      $     --       $    --         0.00%
Federal funds sold                                    6,844            287         4.19%         9,491           597         6.29%
Securities                                            5,517            307         5.56%         4,556           288         6.32%
Loans, including fees                                63,767          5,574         8.74%        57,426         5,717         9.96%
                                                   --------        -------        ------      --------       -------        ------

Total earning assets/interest income                 76,809          6,175         8.04%        71,473         6,602         9.24%

Cash and due from banks                               3,675                                      2,499
Allowance for loan losses                            (1,062)                                      (796)
Other assets                                          2,016                                      2,958
                                                   --------                                   --------
  Total assets                                     $ 81,438                                   $ 76,134
                                                   ========                                   ========

Liabilities and Equity
Interest-bearing demand and money markets          $ 16,748        $   565         3.37%      $  9,860       $   505         5.12%
Savings accounts                                      1,425             37         2.60%         1,041            30         2.89%
Time deposits less than $100,000                     28,200          1,665         5.90%        31,753         2,000         6.30%
Time deposits $100,000 and over                      18,829          1,005         5.34%        17,458         1,082         6.20%
                                                   --------        -------        ------      --------       -------        ------
  Total interest-bearing liabilities interest
   expense                                           65,202          3,272         5.02%        60,112         3,617         6.02%
                                                   --------        -------                    --------       -------

Non-interest bearing demand deposits                  8,510                                      8,028
Other liabilities                                       705                                        490
Shareholders' equity                                  7,021                                      7,504
                                                   --------                                   --------
Total liabilities and shareholders'
 equity                                            $ 81,438                                   $ 76,134
                                                   ========                                   ========
Net interest income                                                $ 2,903                                   $ 2,985
                                                                   =======                                   =======
Net interest spread                                                                3.02%                                     3.22%
                                                                                  ======                                    ======
Net interest margin                                                                3.78%                                     4.18%
                                                                                  ------                                    ------
</TABLE>








                                       20
<PAGE>

    Volume/Rate Analysis of Net Interest Income. The following table shows the
dollar amount of changes in net interest income for each major category of
interest earning asset and interest bearing liability, and the amount of change
attributable to changes in average balances (Volume) or average rates
(Rate/Yield) for the periods shown.

<TABLE>
<CAPTION>
                                                               2001/2000                                2000/1999
                                       ------------------------------------------------------------------------------------
(Dollars in thousands)                          Increase/(Decrease)* In                     Increase/(Decrease)* In
                                         Volume      Rate/Yield            Net         Volume       Rate/Yield       Net
                                       ------------------------------------------------------------------------------------

<S>                                   <C>        <C>                     <C>          <C>           <C>           <C>
Interest-bearing balances w/banks            7            --                  7            (2)           (2)           (4)
Federal Funds Sold                        (141)         (169)              (310)           (8)          128           120
Securities                                  44           (25)                19           208             9           217
Loans, including fees                    1,368        (1,511)              (143)        3,610           115         3,725
                                       ------------------------------------------------------------------------------------
Total interest income                    1,278        (1,705)              (427)        3,808           250         4,058


Interest-bearing demand and MMDA           118           (58)                60           294            74           368
Savings accounts                            10            (3)                 7             6            (1)            5
Time deposits < $100,000                   (69)         (266)              (335)        1,476            90         1,566
Time deposits > $100,000                   (12)          (65)               (77)          380            79           459
                                       ------------------------------------------------------------------------------------
Total interest expense                      47          (392)              (345)        2,156           242         2,398
                                       ------------------------------------------------------------------------------------
Net interest income                      1,231        (1,313)               (82)        1,652             8         1,660

</TABLE>

* The change in interest due to both volume and rate has been allocated
  between the factors in proportion to the relationship of the absolute
  dollar amounts of the change in each.

    Allowance for Possible Loan Losses. The Corporation had an allowance for
possible loan losses of approximately 2.2% and 1.3% of total loans at December
31, 2001 and 2000, respectively. The provision for possible loan losses for the
year ended December 31, 2001 and 2000 was $995,000 and $141,000, respectively.

     Non-Interest Income. Non-interest income for the year ended December 31,
2001 and 2000 were $281,000 and $170,000, respectively. The Corporation during
the last half of 2001 actively originated residential mortgage loans primarily
classified as Held for Sale. This resulted in a gain on sale of these loans of
$71,000 for the year ended December 31, 2001. Service charges on deposit
accounts also increase by 36.1% or $35,000 when comparing the year ended 2001
and 1999.

    Non-Interest Expense. Non-interest expense for the year ended December 31,
2001, was $4.1 million and December 31, 2000 was $3.9 million. The main
components of non-interest expense were salaries and benefits, which totaled
$1.9 million for the year-ended December 31, 2001 and $2.2 million for the year
ended December 31, 2000. The decrease in salaries and benefits was offset by the
increase in occupancy expense of $377,000 from 2000 to 2001. The Corporation
accrued approximately $290,000 to occupancy expense for possible costs related
to the abandoned expansion project in St Clair County Michigan. Other
significant components of non-interest expense consisted of professional fees,
data processing fees and marketing expenses.


                         Liquidity and Capital Resources

    The Corporation obtained its initial equity capital in an initial public
offering of its common stock in December 1998. The Corporation's plan of
operation for the next twelve months does not contemplate the need to raise
additional capital during that period. Management believes that its current
capital and liquidity will provide the Corporation with adequate capital to
support its expected level of deposit and loan growth and to otherwise meet its
cash and capital requirements for at least the next twelve months.

<TABLE>
<CAPTION>

As of December 31, 2001:                                                 To be adequately            To be well
 Total risk based capital                             Actual                Capitalized              Capitalized
                                              ---------------------     -------------------    ---------------------
       (to risk-weighted assets)                Amount      Ratio         Amount     Ratio        Amount      Ratio
                                              ---------------------     -------------------    ---------------------

<S>                                         <C>             <C>        <C>           <C>      <C>          <C>
           Consolidated                       $  6,940       10.5%      $  5,296       8.0%    $  6,620     10.0%
           Lakeside Community Bank            $  4,417       11.9%      $  2,964       8.0%    $  3,705     10.0%
           North Oakland Community Bank       $  3,463       11.9%      $  2,322       8.0%    $  2,903     10.0%

</TABLE>



                                       21
<PAGE>


    The Corporation's sources of liquidity include loan payments by borrowers,
maturity and sales of securities available for sale, growth of deposits and
deposits equivalents, federal funds sold, and the issuance of common stock. An
additional source of liquidity, as the need arises, is out-of-market or internet
certificates of deposits. The out-of-market and internet certificates of
deposits usually require a higher interest rate and are a more volatile source
of liquidity. As of December 31, 2001 the Banks have $14.5 million in
out-of-market certificates of deposits. Management is formulating plans to
minimize the use of out-of-market certificates of deposits in 2002. The
Corporation had borrowing capability on an unused line of credit with FHLB at
December 31, 2001 of $489,433. Liquidity management involves the ability to meet
the cash flow requirements of the Banks' customers. These customers may be
either borrowers with credit needs or depositors wanting to withdraw funds.

    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 margins 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 banking institution's potential sources and uses of funds. The major
sources of liquidity have been deposits, federal funds sold, loans which mature
within one year, and advances from the Federal Home Loan Bank of Indianapolis
("FHLB"). Our larger deposit balances, which might be more likely to fluctuate
in response to rate changes, are closely monitored. These deposits consist
mainly of certificates of deposit over $100,000.



               Asset Liability Management and Market Risk Analysis

    Asset liability management aids the Corporation in maintaining liquidity
while maintaining a balance between interest earning assets and interest bearing
liabilities. Management of interest rate sensitivity attempts to avoid widely
varying net interest margins and to achieve consistent net interest income
through periods of changing interest rates. Management monitors the
Corporation's exposure to interest rate change using a rate sensitive GAP
analysis.





                                       22
<PAGE>


    The following table shows the maturity and re-pricing distribution of the
Corporation's interest-earning assets and interest-bearing liabilities as of
December 31, 2001. This table displays the interest rate sensitivity gap (i.e.,
interest rate sensitive assets less interest rate sensitive liabilities),
cumulative interest rate sensitivity gap, the interest rate sensitivity gap
ratio (i.e., interest rate sensitive assets divided by interest rate sensitive
liabilities), and cumulative interest rate sensitivity gap ratio. For purposes
of this table, an asset or liability is considered rate sensitive within a
period when it matures or could be re-priced within such period, generally
according to its contractual terms.

<TABLE>
<CAPTION>
                                                       After three    After one
(in thousands)                             Within       months but     year but          After
                                           three        within one     within five       five
Interest earning assets                    months          year          years           years          Total
                                       -------------------------------------------------------------------------

<S>                                   <C>            <C>             <C>               <C>           <C>

  Federal funds sold                    $  3,100                                                       $  3,100
  Securities, at fair value                             $  1,030        $  3,594        $    407          5,031
  Federal Home Loan Bank stock               108                                                            108
  Loans, excluding non-accrual            28,782           1,981          29,478           3,042         63,283
                                       -------------------------------------------------------------------------
Total                                   $ 31,990        $  3,011        $ 33,072        $  3,449       $ 71,522
                                       -------------------------------------------------------------------------


Interest bearing liabilities


NOW and money market accounts           $ 20,547                                                        $ 20,547
Savings deposits                           2,359                                                           2,359
Time deposits less than $100,000           6,595        $  6,225        $ 12,841                          25,661
Time deposits of $100,000 or more          8,356           6,578           2,298                          17,232
                                       -------------------------------------------------------------------------
Total                                   $ 37,857        $ 12,803        $ 15,139        $     --        $ 65,799
                                       -------------------------------------------------------------------------


Rate sensitivity gap                    $ (5,867)       $ (9,792)       $ 17,933        $  3,449        $  5,723
                                       -------------------------------------------------------------------------
Cumulative rate sensitivity gap         $ (5,867)       $(15,659)       $  2,274        $  5,723
                                       -------------------------------------------------------------------------


Rate sensitivity gap ratio                  -7.9%          -13.2%           24.1%            4.6%
                                       -----------------------------------------------------------
Cumulative rate sensitivity gap             -7.9%          -21.0%            3.1%            7.7%
                                       -----------------------------------------------------------

</TABLE>



    The table above does not necessarily indicate the impact that general
interest rate movements would have on our net interest margin, because the
re-pricing of various categories of assets and liabilities is discretionary, and
is subject to competitive and other pressures. As a result, various assets and
liabilities indicated as re-pricing within the same period may, in fact,
re-price at different times and by different increments. At December 31, 2001,
we are considered "liability sensitive" within the one-year window according to
the preceding table. In a rising rate environment, we might not be able to
increase rates on interest-earning assets as fast as the increase in rates on
interest-bearing liabilities.

    The Corporation uses various modeling techniques to measure sensitivity to
changes in interest rates in addition to the schedule of maturities and
re-pricing shown above. Our internal policy limits our exposure to a 100 basis
point change in interest rates in one year, to 5% of net interest income. At
December 31, 2001 based upon our calculations, we are within our policy
guidelines. We also have policies limiting our exposure to changes in the
economic value of equity, (often referred to as the "EVE" analysis) whereby its
policy states that the change in the economic value of our equity shall be
limited to 20% in an environment where there is a 100 basis point change in
interest rates and 30% where there is a 200 basis point change in interest
rates. At December 31, 2001 the Banks are well within these policy limits.





                                       23
<PAGE>

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

The Corporation has 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, 2001, 2000 and 1999, MCB has experienced
operating losses of $1.9 million, $840,000 and $1.8 million or ($2.17), ($1.09)
and ($2.66) per share respectively. As a result of start-up expenditures and the
time it takes to develop a deposit base and loan portfolio, MCB cannot
accurately predict the pace and extent of revenue growth.

The Corporation is 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.

The Corporation is 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. The Tier 1 capital to
average assets ratio at December 31, 2001 was 8.6% for Lakeside Community Bank
and North Oakland Community Bank.

         MCB and each of the Banks are 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.

The Corporation doesn'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.

The Corporation 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.







                                       24
<PAGE>


The Corporation faces 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.

The Corporation faces 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. Lakeside and North Oakland have a limited operating history and therefore
our customers do not have a long 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 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.

The Corporation 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.

The Corporation may need to spend significant money to keep up with technology
to 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






                                       25
<PAGE>



ITEM 7. FINANCIAL STATEMENTS

    The financial statements of Michigan Community Bancorp Limited together with
the report of Plante & Moran, LLP, can be found beginning on page F-1.


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

    There have been no disagreements with the Corporation's independent public
accountants.



                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS 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.







                                       26
<PAGE>


ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K.


             EXHIBIT              EXHIBIT DESCRIPTION
             NUMBER

              3.1*       Restated Articles of Incorporation of the Corporation.

              3.2*       Bylaws of the Corporation.

              4.1*       See Exhibits 3.1 and 3.2 for provisions of the Restated
                         Articles of Incorporation and Restated Bylaws of the
                         Corporation defining rights of the holders of Common
                         Stock of the Corporation.


              10.1*      Sublease between the Corporation and Rite Aid of
                         Michigan, Inc. for the property located at 43850
                         Schoenherr, Sterling Heights, Michigan



              10.2*      Assignment and Acceptance of Lessee's Interest with
                         Lessor's Consent between the Corporation, First of
                         America, national Association and North Hill Center,
                         for property located at 1467 North Rochester Road,
                         Rochester Hills, Michigan.




              10.3*      Data Processing Agreement between Lakeside Community
                         Bank and Rurbanc Data Services, Inc.


              10.4*      Data Processing Agreement between North Oakland
                         Community Bank and Rurbanc Data Services, Inc.


              10.5*      1998 Non-Employee Director Stock Option Plan

              10.6*      1998 Employee Incentive Stock Option Plan

              10.7**     Lease Agreement between the Corporation and Nimrod
                         Corp. for property located at 800 Pointe Tremble Road,
                         St. Clair County, Michigan

              10.8**     Amendment to Lease* between the Corporation and Rite
                         Aid of Michigan for property located at 43850
                         Schoenherr, Sterling Heights, Michigan.

              22*        Subsidiaries of the Registrant

* Incorporated by Reference from the Registrant's Registration Statement on Form
SB-2, Commission File Number 333-17317.


** Incorporated by reference from the Registrant's Form 10KSB for the year
ended December 31, 2000, Commission File Number 0-25079.









                                       27
<PAGE>
                               MICHIGAN COMMUNITY
                                 BANCORP LIMITED

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

                          CONSOLIDATED FINANCIAL REPORT
                                DECEMBER 31, 2001



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



REPORT LETTER                                                               F-1


CONSOLIDATED FINANCIAL STATEMENTS

    Balance Sheet                                                           F-2

    Statement of Changes in Stockholders' Equity                            F-3

    Statement of Operations                                                 F-4

    Statement of Cash Flows                                                 F-5

    Notes to Consolidated Financial Statements                        F-6 - F-27
<PAGE>

                        [PLANTE & MORAN, LLP LETTERHEAD]




                          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, 2001 and 2000 and the related
consolidated statements of changes in stockholders' equity, operations, and cash
flows for each year in the three-year period ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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 as of December 31, 2001 and
2000 and the consolidated results of their operations and their cash flows for
each year in the three-year period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.

                                                       /s/ PLANTE & MORAN, LLP


Auburn Hills, Michigan
February 20, 2002


                                      F-1
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------

                                                      CONSOLIDATED BALANCE SHEET
                                           (000S OMITTED, EXCEPT PER SHARE DATA)




<TABLE>
<CAPTION>
                                                                                  December 31
                                                                              --------------------
                                                                                2001        2000
                                                                              --------    --------
<S>                                                                           <C>         <C>
                                     ASSETS
Cash and due from banks                                                       $  2,201    $  4,282
Federal funds sold                                                               3,100       9,900
Interest-bearing deposits in banks                                                 137          36
                                                                              --------    --------

                Total cash and cash equivalents                                  5,438      14,218

Securities available for sale (Note 3)                                           5,031       5,002
Federal Home Loan Bank stock - At cost                                             108         103
Loans held for sale                                                              2,946        --

Loans (Note 4)                                                                  63,283      62,589
Less allowance for possible loan losses (Note 4)                                 1,398         835
                                                                              --------    --------

                Net loans                                                       61,885      61,754

Premises and equipment - Net (Note 5)                                            1,189       1,457
Interest receivable and other assets                                               700         709
                                                                              --------    --------

                Total assets                                                  $ 77,297    $ 83,243
                                                                              ========    ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY


LIABILITIES
   Deposits (Note 6) :
        Noninterest-bearing                                                   $  3,739    $  9,317
        Interest-bearing                                                        65,799      65,788
                                                                              --------    --------

                Total deposits                                                  69,538      75,105

    Interest payable and other liabilities                                         762         708
                                                                              --------    --------

                Total liabilities                                               70,300      75,813

STOCKHOLDERS' EQUITY (Note 13)
    Preferred stock, no par value, 1,000,000 shares authorized, none issued       --          --
    Common stock-$5.00 stated value (Note 8):
        Authorized-9,000,000 shares
        Issued and outstanding-1,159,389 shares and 815,043 shares at
              December 31, 2001 and 2000, respectively                           5,797       4,075
    Capital surplus                                                              6,250       6,565
    Accumulated deficit                                                         (5,108)     (3,232)
    Accumulated other comprehensive income                                          58          22
                                                                              --------    --------

                Total stockholders' equity                                       6,997       7,430
                                                                              --------    --------

                Total liabilities and stockholders' equity                    $ 77,297    $ 83,243
                                                                              ========    ========
</TABLE>




See Notes to Consolidated Financial    F-2
    Statements.
<PAGE>
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) Income       Equity
                                             -------    -------   -----------     --------------    ------------
<S>                                         <C>        <C>        <C>            <C>              <C>
BALANCE - January 1, 1999                    $ 3,325    $ 5,880    $  (560)             $  --            $ 8,645

Private placement of stock (Note 8)              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

Private placement of stock (59,043 shares)       295        155       --                   --                450
Comprehensive loss:
  Net loss                                      --         --         (840)                --               (840)
  Change in unrealized gain on
    securities available for sale               --         --         --                     32               32
                                                                                                         -------

              Total comprehensive loss                                                                      (808)
                                             -------    -------    -------              -------          -------

BALANCE - December 31, 2000                    4,075      6,565     (3,232)                  22            7,430

Private placement of stock (34,228 shares)       171         31       --                   --                202

Rights offering (Note 8)                       1,551       (155)      --                   --              1,396

Cost of rights offering                         --         (191)      --                   --               (191)

Comprehensive loss:
  Net loss                                      --         --       (1,876)                --             (1,876)
  Change in unrealized gain on
    securities available for sale               --         --         --                     36               36
                                                                                                         -------

              Total comprehensive loss                                                                    (1,840)
                                             -------    -------    -------              -------          -------

BALANCE - December 31, 2001                  $ 5,797    $ 6,250    $(5,108)             $    58          $ 6,997
                                             =======    =======    =======              =======          =======
</TABLE>


See Notes to Consolidated Financial    F-3
    Statements.
<PAGE>

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

<TABLE>
<CAPTION>
                                                         Year Ended December 31
                                                     ------------------------------
                                                       2001      2000       1999
                                                     -------    -------    -------
<S>                                                  <C>        <C>        <C>

INTEREST INCOME
   Interest and fees on loans                        $ 5,574    $ 5,717    $ 1,992
   Interest on securities                                314        288         75
   Interest on federal funds sold                        287        597        477
                                                     -------    -------    -------

           Total interest income                       6,175      6,602      2,544

INTEREST EXPENSE - Interest on deposits                3,272      3,617      1,219
                                                     -------    -------    -------

NET INTEREST INCOME                                    2,903      2,985      1,325

PROVISION FOR POSSIBLE LOAN LOSSES (Note 4)              995        141        715
                                                     -------    -------    -------

NET INTEREST INCOME - After provision for possible
     loan losses                                        1,908      2,844       610

NONINTEREST INCOME
    Service charges on deposits                          132         97         18
    Loss on sale of securities                            --         --        (12)
    Gain on sale of loans                                 71         --         --
    Other service charges and fees                        54         62         23
    Other                                                 24         11         21
                                                     -------    -------    -------

           Total noninterest income                      281        170         50

NONINTEREST EXPENSES
    Salaries and employee benefits                     1,913      2,200      1,313
    Occupancy expense                                  1,024        647        556
    Advertising and promotion                            143         88         99
    Professional fees                                    421        394        165
    Data processing fees                                 112         48         96
    Other                                                452        477        263
                                                     -------    -------    -------

           Total noninterest expenses                  4,065      3,854      2,492
                                                     -------    -------    -------

LOSS - Before federal income tax                      (1,876)      (840)    (1,832)

PROVISION FOR FEDERAL INCOME TAX (Note 7)                 --         --         --
                                                     -------    -------    -------

NET LOSS                                             $(1,876)   $  (840)   $(1,832)
                                                     =======    =======    =======

NET LOSS PER COMMON SHARE - Basic and fully
    diluted (Note 1)                                 $ (2.17)   $ (1.09)   $ (2.66)
                                                     =======    =======    =======
</TABLE>





See Notes to Consolidated Financial    F-4
    Statements.
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                            CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                  (000S OMITTED)




<TABLE>
<CAPTION>
                                                                                 Year Ended December 31
                                                                           ---------------------------------
                                                                             2001        2000        1999
                                                                           --------    --------    --------
<S>                                                                        <C>         <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                 $ (1,876)   $   (840)   $ (1,832)
  Adjustments to reconcile net loss to net cash from operating
    activities:
      Depreciation and amortization                                             285         266         220
      Loss on sale of securities                                               --          --            12
      Provision for loan losses                                                 995         141         715
      Net amortization and accretion of securities                              (88)        (14)         (3)
      Increase in loans held for sale                                        (2,946)       --          --
      (Increase) decrease in accrued interest receivable
        and other assets                                                          9        (157)       (262)
      Increase in accrued interest payable and other liabilities                 54         368          22
                                                                           --------    --------    --------

          Net cash used in operating activities                              (3,567)       (236)     (1,128)

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from maturities of securities available for sale                   5,000       1,500        --
  Proceeds from sales of securities available for sale                         --          --         1,980
  Purchase of securities available for sale                                  (4,905)     (3,482)     (4,973)
  Purchase of Federal Home Loan Bank stock                                       (5)       --          (103)
  Net increase in loans                                                      (1,126)    (15,983)    (46,627)
  Premises and equipment expenditures                                           (17)       (127)     (1,049)
                                                                           --------    --------    --------

          Net cash used in investing activities                              (1,053)    (18,092)    (50,772)

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in noninterest-bearing deposit accounts            (5,578)      4,080       5,237
  Net increase in interest-bearing deposit accounts                              11      19,388      46,400
  Net proceeds from issuance of stock                                         1,407         450         985
                                                                           --------    --------    --------

          Net cash provided by (used in) financing
            activities                                                       (4,160)     23,918      52,622
                                                                           --------    --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         (8,780)      5,590         722

CASH AND CASH EQUIVALENTS - Beginning of year                                14,218       8,628       7,906
                                                                           --------    --------    --------

CASH AND CASH EQUIVALENTS - End of year                                    $  5,438    $ 14,218    $  8,628
                                                                           ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash
  paid for interest                                                        $  2,940    $  3,346    $    921
</TABLE>



See Notes to Consolidated Financial    F-5
    Statements.


<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               BASIS OF PRESENTATION AND 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.

               USE OF ESTIMATES - The accounting and reporting policies of the
               Corporation and its subsidiaries conform to generally accepted
               accounting principles. Management is required to make estimates
               and assumptions that affect the amounts reported in the financial
               statements and accompanying notes. Actual results could differ
               from those estimates and assumptions.

               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
               ("Lakeside") in Sterling Heights, Michigan and North Oakland
               Community Bank ("North Oakland") in Rochester Hills, Michigan.
               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,
               savings accounts, and time deposits. The Banks conduct lending
               activities in the residential and commercial mortgage markets, in
               the general commercial market, and the consumer installment
               marketplace.

               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 fair
               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
               accretion of discounts to maturity and amortization of premiums
               to the earlier of maturity or call date. 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.

               LOANS HELD FOR SALE - Loans originated and intended for sale in
               the secondary market are carried at the lower of cost or
               estimated fair value in the aggregate. Net unrealized losses, if
               any, are recognized in a valuation allowance by charges to
               income.



                                      F-6
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

               LOANS - Loans are reported at their outstanding unpaid principal
               balances adjusted for charge-offs, the allowance for loan losses,
               and any deferred fees or costs on originated loans. Interest
               income is accrued on the unpaid principal balance. Loan
               origination fees, net of certain direct origination costs, are
               deferred and recognized as an adjustment of the related loan
               yield using the interest method.

               The accrual of interest on loans is discontinued at the time the
               loan is 90 days' delinquent unless the credit is well-secured and
               in process of collection. In all cases, loans are placed on
               nonaccrual or charged-off at an earlier date if collection of
               principal or interest is considered doubtful.

               All interest accrued but not collected for loans that are placed
               on nonaccrual or charged off is reversed against interest income.
               The interest on these loans is accounted for on the cash basis or
               cost-recovery method, until qualifying for return to accrual.
               Loans are returned to accrual status when all the principal and
               interest amounts contractually due are brought current and future
               payments are reasonably assured.

               ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is
               established as losses are estimated to have occurred through a
               provision for loan losses charged to earnings. Loan losses are
               charged against the allowance when management believes the
               uncollectibility of a loan balance is confirmed. Subsequent
               recoveries, if any, are credited to the allowance.

               The allowance for loan losses is evaluated on a regular basis by
               management and is based on management's periodic review of the
               collectibility of the loans in light of historical experience,
               the nature and volume of the loan portfolio, adverse situations
               that may affect the borrower's ability to repay, estimated value
               of any underlying collateral, and prevailing economic conditions.
               This evaluation is inherently subjective as it requires estimates
               that are susceptible to significant revision as more information
               becomes available.

               A loan is considered impaired when, based on current information
               and events, it is probable that the Banks will be unable to
               collect the scheduled payments of principal or interest when due
               according to the contractual terms of the loan agreement.


                                      F-7
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

               Factors considered by management in determining impairment
               include payment status, collateral value, and the probability of
               collecting scheduled principal and interest payments when due.
               Loans that experience insignificant payment delays and payment
               shortfalls generally are not classified as impaired. Management
               determines the significance of payment delays and payment
               shortfalls on a case-by-case basis, taking into consideration all
               of the circumstances surrounding the loan and the borrower,
               including length of the delay, the reasons for the delay, the
               borrower's prior payment record, and the amount of the shortfall
               in relation to the principal and interest owed. Impairment is
               measured on a loan-by-loan basis for commercial and construction
               loans by either the present value of expected future cash flows
               discounted at the loan's effective interest rate, the loan's
               obtainable market price, or the fair value of the collateral if
               the loan is collateral dependent.

               Large groups of homogeneous loans are collectively evaluated for
               impairment. Accordingly, the Corporation does not separately
               identify individual consumer and residential loans for impairment
               disclosures.

               CREDIT-RELATED FINANCIAL INSTRUMENTS - In the ordinary course of
               business, the Corporation has entered into commitments to extend
               credit, including commitments under commercial letters of credit
               and standby letters of credit. Such financial instruments are
               recorded when they are funded.

               FORECLOSED ASSETS - Foreclosed assets include property acquired
               through, or in lieu of, loan foreclosure. Foreclosed assets are
               recorded in other assets at the lower of the amount of the loan
               balance plus unpaid accrued interest or the estimated fair value
               less selling costs at the time of foreclosure. Any write-down of
               the loan balance to estimated fair value when the property is
               acquired is charged to the allowance for loan losses. Subsequent
               market write-downs, operating expenses, and gains or losses on
               disposition of the foreclosed asset are charged or credited to
               other operating expense.

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




                                      F-8
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



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 differences between the tax bases of assets
               and liabilities and their carrying amounts for financial
               reporting purposes.

               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.

               EARNINGS PER COMMON 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. However, those potential shares have not been included in
               2001, 2000, or 1999 because the effect would be antidilutive.

               Earnings per common share have been computed based on the
               following:

<TABLE>
<CAPTION>
                                                         2001        2000         1999
                                                         ----        ----         ----
<S>                                                    <C>          <C>          <C>
               Weighted average shares - Basic         $864,496     $768,618     $687,937
</TABLE>

               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, 2001, 2000, and 1999 is the
               net unrealized gains and losses on available-for-sale securities.




                                      F-9
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

               ADOPTION OF FAS NO. 133 - On January 1, 2001, the Corporation
               adopted Statement on Financial Accounting Standards No. 133 (FAS
               133), Accounting for Derivative Instruments and Hedging
               Activities. FAS No. 133 required that all derivative instruments
               be recorded on the balance sheet at their fair value. Changes in
               the fair value of derivatives are recorded each period in current
               earnings or other comprehensive income, depending on whether a
               derivative is designated as part of a hedge transaction and, if
               it is, the type of hedge transaction.

               The Corporation has not, to date, invested in hedge transactions
               or derivative instruments as defined in the standards. As a
               result, the implementation of SFAS No. 133 had no effect on its
               consolidated financial position or results of operations.

               RECLASSIFICATIONS - Certain prior year amounts have been
               reclassified to conform to the current year presentation.

NOTE 2 - MICHIGAN COMMUNITY BANCORP LIMITED (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 its subsidiaries at
               cost plus its share of the undistributed earnings of the
               subsidiaries since 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
                                                      ---------------
                                                       2001     2000
                                                      ------   ------
<S>                                                   <C>      <C>

                                          ASSETS

              Cash and due from banks                 $  122   $  193
              Investment in subsidiaries               7,104    7,162

              Premises and equipment                      55       86

              Other assets                                65       64
                                                      ------   ------

                              Total assets            $7,346   $7,505
                                                      ======   ======
</TABLE>




                                      F-10
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999


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



                           BALANCE SHEET (Continued)
                     (000S OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                          December 31
                                                       ------------------
                                                         2001       2000
                                                       -------    -------
<S>                                                    <C>        <C>
            LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES - Interest payable and other liabilities   $   349    $    75

STOCKHOLDERS' EQUITY
   Preferred stock - No par value                           --         --
   Common stock - $5 par value                           5,797      4,075
   Capital surplus                                       6,250      6,565
   Accumulated deficit                                  (5,108)    (3,232)
   Accumulated other comprehensive loss                     58         22
                                                       -------    -------

        Total stockholders' equity                       6,997      7,430
                                                       -------    -------

        Total liabilities and stockholders' equity     $ 7,346    $ 7,505
                                                       =======    =======
</TABLE>





                                      F-11

<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



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

                             STATEMENT OF OPERATIONS
                                 (000S OMITTED)

<TABLE>
<CAPTION>
                                                        Year Ended December 31
                                                     -----------------------------
                                                       2001      2000        1999
                                                     -------    -------    -------
<S>                                                  <C>        <C>        <C>
INTEREST INCOME                                      $     2    $    12    $     9

INTEREST EXPENSE                                          --         --         --

NET INTEREST INCOME                                        2         12          9

NONINTEREST INCOME
   Management fees                                       811        636        660
   Data processing fees                                   --         --         96
   Other                                                  --         --          4
                                                     -------    -------    -------

        Total noninterest income                         811        636        760

NONINTEREST EXPENSES
   Salaries and employee benefits                        898        782        434
   Occupancy                                             506        175        185
   Professional fees                                     225        192         77
   Supplies                                               11         13         15
   Outside processing charges                             21         13          5
   Telephone and communications expenses                  10         10         12
   Insurance                                              11          8          6
   Advertising and promotion                              52         51         37
   Other                                                  11         18         46
                                                     -------    -------    -------

        Total noninterest expenses                     1,745      1,262        817
                                                     -------    -------    -------

LOSS - Before equity in losses of subsidiary
    banks and federal taxes                             (932)      (614)       (48)

PROVISION FOR FEDERAL INCOME TAXES                        --         --         --
                                                     -------    -------    -------

LOSS - Before equity in losses of subsidiary banks      (932)      (614)       (48)

EQUITY IN LOSSES OF SUBSIDIARY BANKS                    (944)      (226)    (1,784)
                                                     -------    -------    -------

NET LOSS                                             $(1,876)   $  (840)   $(1,832)
                                                     =======    =======    =======
</TABLE>




                                      F-12
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



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

                            STATEMENT OF CASH FLOWS
                                 (000S OMITTED)

<TABLE>
<CAPTION>
                                                         Year Ended December 31
                                                     -----------------------------
                                                       2001      2000       1999
                                                     -------    -------    -------
<S>                                                  <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                         $(1,876)   $  (840)   $(1,832)
    Adjustments to reconcile net loss to net
      cash from operating activities:
        Undistributed earnings of subsidiary banks       944        226      1,784
        Depreciation                                      35         33          1
        (Increase) decrease in other assets               (1)       (58)       284
        Increase (decrease) in other liabilities         274         48       (291)
                                                     -------    -------    -------

          Net cash used in operating activities         (624)      (591)       (54)

CASH FLOWS FROM INVESTING ACTIVITIES
    Premises and equipment expenditures                   (4)       (14)       (44)
    Investment in subsidiary banks                      (850)      --       (8,445)
                                                     -------    -------    -------

          Net cash used in investing activities         (854)       (14)    (8,489)

CASH FLOWS FROM FINANCING ACTIVITIES - Net
    proceeds from issuance of common stock             1,407        450        985
                                                     -------    -------    -------

NET DECREASE IN CASH AND CASH EQUIVALENTS                (71)      (155)    (7,558)

CASH AND CASH EQUIVALENTS - Beginning of year            193        348      7,906
                                                     -------    -------    -------

CASH AND CASH EQUIVALENTS - End of year              $   122    $   193    $   348
                                                     =======    =======    =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION - Noncash investing activities -
    Net fixed assets - Transferred to subsidiary     $    --    $    --    $   706
                                                     =======    =======    =======
</TABLE>




                                      F-13
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999

NOTE 3 - SECURITIES

               The amortized cost and estimated market value of securities
               available for sale are as follows (000s omitted):


<TABLE>
<CAPTION>
                                                                    Gross         Gross       Estimated
                                                   Amortized     Unrealized    Unrealized       Market
             2001                                     Cost          Gains         Losses        Value
----------------------------                       ---------     ----------    ----------     ----------
<S>                                                <C>           <C>           <C>            <C>

U.S. Treasury securities and
  obligations of U.S. government
  corporations and agencies                        $  4,973      $  60         $      (2)     $    5,031
                                                   ========      =====         =========      ==========

             2000
----------------------------
U.S. Treasury securities and
  obligations of U.S. government
  corporations and agencies                        $  4,980      $  22         $      -       $    5,002
                                                   ========      =====         =========      ==========
</TABLE>


               At December 31, 2001 and 2000, U.S. government agency securities
               carried at $1,533,000 and $3,509,000, respectively, were pledged
               to secure borrowings and for other purposes required or permitted
               by law.

               The amortized cost and fair value of securities available for
               sale by contractual maturity at December 31, 2001 follows (000s
               omitted):

<TABLE>
<CAPTION>
                                                                      Amortized         Estimated
                                                                        Cost          Market Value
                                                                      ---------       ------------
<S>                                                                   <C>            <C>
               Due in one year or less                                $    1,001     $      1,030
               Due after one year through five years                       3,566            3,594
               Due after five years through ten years                        406              407
               Due after ten years                                             -                -
                                                                      ----------      -----------

                         Total                                        $    4,973     $      5,031
                                                                      ==========     ============
</TABLE>



               Other than securities of the U.S. government agency, there were
               no securities of any one issuer aggregating 10 percent of
               consolidated stockholders' equity at December 31, 2001.


                                      F-14
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 4 - LOANS

               A summary of the balances of loans at December 31 is as follows
               (000s omitted):

<TABLE>
<CAPTION>
                                                           2001         2000
                                                         --------    --------
<S>                                                      <C>         <C>
              Mortgage loans on real estate:

                  Residential 1-4 family                 $  5,200    $  4,998
                  Commercial                               31,486      28,342
                  Construction                              4,575       4,369
                  Equity lines of credit                    3,100       2,452
                                                         --------    --------

                          Total                            44,361      40,161

              Commercial loans                             15,261      17,907
              Consumer installment loans                    3,661       4,521
                                                         --------    --------


                          Subtotal                         63,283      62,589


              Less allowances for possible loan losses     (1,398)       (835)
                                                         --------    --------

                          Net loans                      $ 61,885    $ 61,754
                                                         ========    ========
</TABLE>


               In the ordinary course of business, the Banks have granted loans
               to principal officers and directors and their affiliates
               amounting to $2,038,000 and $3,469,000 at December 31, 2001 and
               2000, respectively. During the year ended December 31, 2001,
               total principal additions were $1,606,000 and total principal
               payments were $3,036,000.

               An analysis of the allowance for loan losses for the years ended
               December 31 is as follows (000s omitted):

<TABLE>
<CAPTION>
                                                                          2001            2000            1999
                                                                      -----------       --------        --------
<S>                                                                   <C>               <C>             <C>
              Balance - Beginning of year                             $      835        $  715          $    --

              Provision for possible loan losses                             995            141             715
              Loans charged off                                             (432)          (25)              --
              Recoveries of loans previously charged off                      --             4               --
                                                                      -----------       ------          -------

              Balance - End of year                                   $     1,398       $  835          $   715
                                                                      ===========       ======          =======

</Table>



                                      F-15
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999

NOTE 4 - LOANS (CONTINUED)

               The following is a summary of information pertaining to impaired
               loans (000s omitted):

<TABLE>
<CAPTION>
                                                                      2001          2000
                                                                    ---------      --------
<S>                                                    <C>          <C>            <C>
               Impaired loans without a
                 valuation allowance                                $      --      $     --
               Impaired loans with a valuation
                 allowance                                              1,699            --
                                                                    ---------      --------

               Total impaired loans                                 $   1,699      $     --
                                                                    =========      ========


               Valuation allowance related to
                 impaired loans                                     $     670      $     --
                                                                    =========      ========


               Average investment in
                 impaired loans                        $  1,768     $      --      $     --
                                                       ========     =========      ========


               Interest income recognized
                 on impaired loans                     $    132     $      --      $     --
                                                       ========     =========      ========


               Interest income recognized on
                 a cash basis on impaired loans        $     --     $      --      $     --
                                                       ========     =========      ========
</TABLE>

NOTE 5 - PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                 2001              2000
                                                              ---------         ---------
<S>                                                           <C>               <C>
              Leasehold improvements                          $     887         $     887
              Furniture and equipment                             1,084             1,066

                        Total premises and equipment              1,971             1,953

              Less accumulated depreciation                         782               496
                                                              ---------         ---------

              Premises and equipment - Net                    $   1,189         $   1,457
                                                              =========         =========
</TABLE>





                                      F-16
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 5 - PREMISES AND EQUIPMENT (CONTINUED)

               The Corporation has entered into an assignment of a lease for a
               building to be utilized for North Oakland'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 a lease for a building that is utilized for
               Lakeside's branch operations and the Corporation's headquarters.
               Effective August 4, 2000, the Corporation leased additional space
               adjacent to the existing facility. Accordingly, the amended lease
               requires an $11,080 monthly payment. The lease expires August 1,
               2008.

               The Corporation has a lease for a building in St. Clair County,
               Michigan that was to be utilized for possible future expansion.
               During 2001, the Corporation decided to exit from the St. Clair
               County project. Management concluded that expansion into St.
               Clair County was not economically feasible at that time. The
               Corporation has charged off expenditures related to the abandoned
               project totaling approximately $290,000 related to development
               costs. The Corporation remains liable for the lease of the St.
               Clair County building at December 31, 2001. Management has
               included in its charged-off expenditures an accrual related to
               remaining lease obligations it expects to pay as it vigorously
               pursues options regarding lease termination or sublease of the
               building. There are eight years remaining on the lease term. The
               lease requires a monthly payment of $3,750 for the next three
               years and $4,125 per month for the last five-year period.

               The annual future minimum lease payments required under these
               noncancelable operating leases as of December 31, 2001 are as
               follows:

<TABLE>
<S>                                                       <C>
                              2002                        $    185,160
                              2003                             185,160
                              2004                             185,535
                              2005                             182,460
                              2006                             182,460
                              Thereafter                       365,975
                                                          ------------

                                Total                     $  1,286,750
                                                          ============
</TABLE>


                Total rent expense for 2001, 2000, and 1999 was approximately
                $238,000, $159,000, and $146,000, respectively.


                                      F-17
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



NOTE 6 - DEPOSITS

               The aggregate amount of time deposits in denominations of
               $100,000 or more at December 31, 2001 and 2000 was $17,232,000
               and $18,690,000, respectively.

               The maturities of time deposits outstanding at December 31, 2001
               are as follows (000s omitted):

<TABLE>
<S>                                                     <C>
                        2002                            $   27,754
                        2003                                13,725
                        2004                                   448
                        2005                                   916
                        2006                                    50
                     Thereafter                                 --
                                                        ----------

                                  Total                 $   42,893
                                                        ==========
</TABLE>


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 result from 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 years ended December 31 are as follows (000s omitted):


<TABLE>
<CAPTION>
                                                                            2001           2000            1999
                                                                        ---------       --------     -----------
<S>                                                                     <C>             <C>          <C>
               Preopening and organizational expenses                   $      17       $     18     $       19
               Net operating loss                                            (447)          (269)          (398)
               Provision for possible loan losses                            (175)           (38)          (233)
               Depreciation                                                   (17)             7            (19)
               Accretion of securities                                         (2)             3              1
               Other                                                           (2)             6             (1)
               Unrealized gain (loss) on available-for-sale
                 securities                                                    12             10             (3)
               Increase in valuation allowance                                614            263            634
                                                                        ---------       --------     -----------

                   Net deferred tax expense                             $       -       $      -     $        -
                                                                        =========       ========     ===========
</TABLE>





                                      F-18
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



NOTE 7 - INCOME TAXES (CONTINUED)

<TABLE>
<CAPTION>
                                                  2001       2000       1999
                                                 -------    -------    -------
     <S>                                         <C>        <C>        <C>

     Deferred tax assets:
       Preopening and organizational expenses    $    26    $    43    $    61
       Net operating loss carryforward             1,224        777        508
       Allowance for possible loan losses            446        271        233
       Depreciation                                   23          6         13
       Other                                           6          3          9
       Unrealized loss on available-for-sale
         securities                                    --         --         3
                                                 -------    -------    -------

           Total deferred tax asset                1,725      1,100        827

     Valuation allowance                          (1,703)    (1,089)      (826)
     Deferred tax liabilities:
       Depreciation                                   --         --         --
       Accretion of securities                        (2)        (4)        (1)
       Unrealized gain on available-for-sale
         securities                                  (20)        (7)        --
                                                 -------    -------    -------

           Net deferred tax asset                $    --    $    --    $    --
                                                 =======    =======    =======
</TABLE>


NOTE 8 - COMMON STOCK

               PRIVATE PLACEMENT - On October 1, 1999, the Corporation sold
               91,000 common stock units at a price of $11 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 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, 2001
               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 per share for a period of 20
               consecutive trading days.





                                      F-19
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999


NOTE 8 - COMMON STOCK (CONTINUED)

               The units described above and the private placements in 2000 and
               2001 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.

               RIGHTS OFFERING - Effective August 23, 2001, the Corporation
               granted rights to its stockholders to purchase up to 335,787
               units consisting of two shares of its common stock and one class
               A common stock purchase warrant at a price of $9.00 per unit.
               Each warrant entitles the holder thereof to purchase 1.2 shares
               of common stock at $5.50 per share, subject to adjustment in
               certain circumstances, for a period of 60 months, at which time
               the warrants expire. In addition, at the same time it was
               granting rights to its existing stockholders, the Corporation
               also offered units up to 100,000 on a best efforts basis to the
               general public. Both offerings expired on December 31, 2001. As
               of December 31, 2001, the Corporation had sold 155,059 units,
               which represented 310,118 shares of common stock.

NOTE 9 - STOCK-BASED COMPENSATION

               The Corporation has two stock-based compensation plans. Under the
               1998 Employee Stock Compensation Plan (the "Employee Plan"), the
               Corporation can grant options to key employees for up to 29,000
               shares of common stock. Under the 1998 Nonemployee Director Plan
               (the "Nonemployee Plan"), the Corporation can grant options for
               up to 73,000 shares of common stock. Under both plans, there is a
               minimum vesting period of between one to three years before the
               options can 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. These options vest as follows: 70 percent on the effective
               date of the stock offering, 15 percent on the first anniversary
               of the stock offering, 5 percent on the second anniversary, and
               10 percent on the third anniversary.

               On April 4, 2000, the options granted in 1998 were cancelled.

               On November 6, 2000, the Corporation issued options under the
               Employee and Nonemployee Plans of 16,067 and 59,255,
               respectively. In addition, the vesting terms were slightly
               modified to 75 percent at the date of grant, 15 percent on the
               first anniversary of the date of grant, and 5 percent on both the
               second and third anniversaries of the date of grant. An
               additional 1,200 options were issued on December 31, 2000 under
               the Employee Plan.




                                      F-20
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 9 - STOCK-BASED COMPENSATION (CONTINUED)

               The Corporation has adopted the disclosure-only provisions of
               Statement of Financial Accounting Standards (SFAS) No. 123,
               Accounting for Stock-Based Compensation, but applies APB No. 25
               and related interpretations in accounting for its plan. The fair
               value of each option grant is estimated on the date of grant
               using the Black-Scholes option pricing model. The following
               presents the weighted average fair value of options granted and
               the assumptions used to estimate those fair values:

<TABLE>
<CAPTION>
                                                                  2001       2000         1999
                                                                  ----       ----         ----
<S>                                                             <C>         <C>          <C>

               Weighted average fair value of options
                      granted                                     $  --     $4.55         $ --
               Assumptions:
                       Dividend yield                                --      None           --
                       Expected average life (years)                 --         5           --
                       Volatility                                    --     78.86%          --
                       Risk-free interest rate                       --      6.00%          --
</TABLE>



               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>
                                         2001                       2000                    1999
                                ------------------------     --------------------   -------------------
                                   As                           As                     As
                                Reported       Pro Forma     Reported   Pro Forma   Reported  Pro Forma
                                --------       ---------     --------   ---------   --------  ---------
<S>                             <C>            <C>           <C>        <C>         <C>       <C>
Net loss                        $(1,876)       $(1,928)      $  (840)   $  (958)    $(1,832)   $(1,857)
Net loss per common share         (2.17)         (2.23)        (1.09)     (1.25)      (2.66)     (2.70)
</TABLE>


                                      F-21
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999



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 1, 1999 through December 31, 2001:

<TABLE>
<CAPTION>
                                                  2001                          2000                              1999
                                       ------------------------       ------------------------         --------------------------
                                                      Weighted                        Weighted                          Weighted
                                                       Average                         Average                          Average
                                       Number of      Exercise        Number of       Exercise         Number of       Exercise
                                         Shares         Price          Shares          Price             Shares          Price
                                        -------         -------        -------         -------         -------         -------
<S>                                   <C>           <C>               <C>            <C>              <C>             <C>

Options outstanding - Beginning
        of period                       76,522          $  6.73         41,331          $15.00          41,331          $15.00
Options granted                             --               --         76,522            6.73              --              --
Options exercised                           --               --             --              --              --              --
Options expired                             --               --             --              --              --              --
Options forfeited                       (1,800)            6.75             --              --              --              --
Options forfeited                         (600)            5.63             --              --              --              --
Options cancelled                           --                         (41,331)         (15.00)             --              --
                                        -------                        -------                         -------
Options outstanding - end of period     74,122          $  6.74         76,522         $  6.73          41,331          $15.00
                                        -------         -------        -------         -------         -------         -------
</TABLE>


                The following table shows summary information about fixed stock
                options outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                Stock Options Outstanding                       Stock Options Exerciseable
                        --------------------------------------------   --------------------------------------------
                                                       Weighted        Weighted
                         Range of                       Average        Average                          Weighted
                         Exercise       Number of      Remaining       Exercise       Number of          Average
                          Prices         Shares    Contractual Life     Price          Shares        Exercise Price
                          ------         ------    ----------------     -----          ------        --------------
<S>                     <C>            <C>        <C>                  <C>            <C>           <C>
Employee Plan           $5.63-6.75      14,867          8.85            $6.70           13,380          $6.70
Nonemployee Plan              6.75      59,255          8.85             6.75           53,330           6.75
</TABLE>


NOTE 10 - 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.





                                      F-22
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 11 - OFF-BALANCE-SHEET ACTIVITIES

                 CREDIT-RELATED FINANCIAL INSTRUMENTS - The Corporation is a
                 party to credit-related financial instruments with
                 off-balance-sheet risk in the normal course of business to meet
                 the financing needs of its customers. These financial
                 instruments include commitments to extend credit, standby
                 letters of credit, and commercial letters of credit. Such
                 commitments involve, to varying degrees, elements of credit and
                 interest rate risk in excess of the amount recognized in the
                 consolidated balance sheet.

                 The Corporation's exposure to credit loss is represented by the
                 contractual amount of these commitments. The Corporation
                 follows the same credit policies in making commitments as it
                 does for on-balance-sheet instruments.

                 At December 31, the following financial instruments were
                 outstanding whose contract amounts represent credit risk (000s
                 omitted):


<TABLE>
<CAPTION>
                                                                        Contract Amount
                                                                        ---------------
                                                                    2001             2000
                                                                    ----             ----
<S>                                                            <C>               <C>
                 Commitments to grant loans                    $    2,775         $   6,164
                 Unfunded commitments under lines of credit         9,461            10,895
                 Commercial and standby letters of credit              40               127
</TABLE>


                 Commitments to grant loans are agreements to lend to a customer
                 as long as there is no violation of any condition established
                 in the contract. Commitments generally have fixed expiration
                 dates or other termination clauses and may require payment of a
                 fee. The commitments for equity lines of credit may expire
                 without being drawn upon. Therefore, the total commitment
                 amounts do not necessarily represent future cash requirements.
                 The amount of collateral obtained, if it is deemed necessary by
                 the Corporation, is based on management's credit evaluation of
                 the customer.

                 Unfunded commitments under commercial lines of credit,
                 revolving credit lines, and overdraft protection agreements are
                 commitments for possible future extensions of credit to
                 existing customers. These lines of credit are collateralized
                 and contain maturity dates.


                                      F-23
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 11 - OFF-BALANCE-SHEET ACTIVITIES (CONTINUED)

                 Commercial and standby letters of credit are conditional
                 commitments issued by the Corporation to guarantee the
                 performance of a customer to a third party. Those letters of
                 credit are primarily used to support public and private
                 borrowing arrangements. Essentially all letters of credit
                 issued have expiration dates within one year. The Corporation
                 generally holds collateral supporting those commitments if
                 deemed necessary.

                 COLLATERAL REQUIREMENTS - To reduce credit risk related to the
                 use of credit-related financial instruments, the Corporation
                 might deem it necessary to obtain collateral. The amount and
                 nature of the collateral obtained is based on the Corporation's
                 credit evaluation of the customer. Collateral held varies but
                 may include cash, securities, accounts receivable, inventory,
                 property, plant, and equipment, and real estate.

NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS

                 The fair value of a financial instrument is the current amount
                 that would be exchanged between willing parties, other than in
                 a forced liquidation. Fair value is best determined based on
                 quoted market prices. However, in many instances, there are no
                 quoted market prices for the Corporation's various financial
                 instruments. In cases where quoted market prices are not
                 available, fair values are based on estimates using present
                 value or other valuation techniques. Those techniques are
                 significantly affected by the assumptions used, including the
                 discount rate and estimates of future cash flows. Accordingly,
                 the fair value estimates may not be realized in an immediate
                 settlement of the instrument. SFAS 107 excludes certain
                 financial instruments and all nonfinancial instruments from its
                 disclosure requirements. Accordingly, the aggregate fair value
                 amounts presented may not necessarily represent the underlying
                 fair value of the Corporation.

                 The following methods and assumptions were used by the
                 Corporation in estimating fair value disclosures for financial
                 instruments:

                 CASH AND CASH EQUIVALENTS - The carrying amounts of cash and
                 short-term instruments approximate fair values.

                 SECURITIES - Fair values for securities, excluding Federal Home
                 Loan Bank stock, are based on quoted market prices. The
                 carrying value of Federal Home Loan Bank stock approximates
                 fair value based on the redemption provisions of the Federal
                 Home Loan Bank.


                                      F-24
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

                 LOANS HELD FOR SALE - Fair values of mortgage loans held for
                 sale are based on commitments on hand from investors or
                 prevailing market prices.

                 LOANS - For variable-rate loans that reprice frequently and
                 with no significant change in credit risk, fair values are
                 based on carrying values. Fair values for certain mortgage
                 loans (e.g., one- to four-family residential) and other
                 consumer loans are based on quoted market prices of similar
                 loans sold in conjunction with securitization transactions,
                 adjusted for differences in loan characteristics. Fair values
                 for other loans (e.g., commercial real estate and investment
                 property mortgage loans, commercial and industrial loans) are
                 estimated using discounted cash flow analyses, using interest
                 rates currently being offered for loans with similar terms to
                 borrowers of similar credit quality. Fair values for impaired
                 loans are estimated using discounted cash flow analyses or
                 underlying collateral values, where applicable.

                 DEPOSIT LIABILITIES - The fair values disclosed for demand
                 deposits (e.g., interest and noninterest checking, passbook
                 savings, and certain types of money market accounts) are, by
                 definition, equal to the amount payable on demand at the
                 reporting date (i.e., their carrying amounts). Fair values for
                 fixed-rate certificates of deposit are estimated using a
                 discounted cash flow calculation that applies interest rates
                 currently being offered on certificates to a schedule of
                 aggregated expected monthly maturities on time deposits.

                 ACCRUED INTEREST - The carrying amounts of accrued interest
                 approximate fair value.

                 The estimated fair values and related carrying or notional
                 amounts of the Corporation's financial instruments are as
                 follows (000s omitted):


<TABLE>
<CAPTION>

                                                        2001                            2000
                                              -------------------------       -------------------------
                                              Carrying      Estimated         Carrying        Estimated
                                                Amount      Fair Value          Amount       Fair Value
                                                ------      ---- -----          ------       ----------

<S>                                            <C>            <C>               <C>              <C>
    Assets:
        Cash and cash equivalents              $ 5,438        $  5,438          $14,218          $14,218
        Securities                               5,139           5,139            5,105            5,105
        Loans                                   61,885          62,106           61,754           61,207
        Loans held for sale                      2,946           2,946               --               --
        Accrued interest receivable                357             357              447              447

    Liabilities - Deposits:
        Interest-bearing                        65,799          66,368           65,788           66,005
        Noninterest-bearing                      3,739           3,739            9,317            9,317
        Accrued interest payable                   332             332              556              556
</TABLE>




                                      F-25

<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999


NOTE 13 - MINIMUM REGULATORY CAPITAL REQUIREMENTS

                 The Corporation (on a consolidated basis) and the Banks are
                 subject to various regulatory capital requirements administered
                 by the federal banking agencies. Failure to meet minimum
                 capital requirements can initiate certain mandatory and
                 possibly additional discretionary actions by regulators that,
                 if undertaken, could have a direct material effect on the
                 Corporation's and Banks' financial statements. Under capital
                 adequacy guidelines and the regulatory framework for prompt
                 corrective action, the Corporation and the Banks must meet
                 specific capital guidelines that involve quantitative measures
                 of their assets, liabilities, and certain off-balance-sheet
                 items as calculated under regulatory accounting practices. The
                 capital amounts and classification are also subject to
                 qualitative judgments by the regulators about components, risk
                 weightings, and other factors. Prompt corrective action
                 provisions are not applicable to bank holding companies.

                 Quantitative measures established by regulation to ensure
                 capital adequacy require the Corporation and the Banks to
                 maintain minimum amounts and ratios (set forth in the following
                 table) of total and Tier 1 capital to risk-weighted assets and
                 of Tier 1 capital to average assets. Management believes, as of
                 December 31, 2001 and 2000, that the Corporation and the Banks
                 met all capital adequacy requirements to which they are
                 subject.









                                       F-26
<PAGE>
MICHIGAN COMMUNITY BANCORP LIMITED
--------------------------------------------------------------------------------
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               DECEMBER 31, 2001, 2000, AND 1999




NOTE 13 - MINIMUM REGULATORY CAPITAL REQUIREMENTS (CONTINUED)

                 As of December 31, 2001, the most recent notification from the
                 Federal Deposit Insurance Corporation categorized the Banks as
                 well-capitalized under the regulatory framework for prompt
                 corrective action. To be categorized as well-capitalized, an
                 institution must maintain minimum total risk-based, Tier 1
                 risked-based and Tier 1 leverage ratios as set forth in the
                 following tables. There are no conditions or events since the
                 notification that management believes have changed the Banks'
                 category. The Corporation's and the Banks' actual capital
                 amounts and ratios as of December 31, 2001 and 2000 are also
                 presented in the table.

<TABLE>
<CAPTION>

                                                                         To be Adequately
                                                     Actual                Capitalized        To be Well-capitalized
                                                -----------------       -----------------     -----------------------
                                                Amount     Ratio        Amount      Ratio        Amount      Ratio
                                                ------     -----        ------      -----        ------      -----
<S>                                            <C>        <C>          <C>         <C>          <C>         <C>
AS OF DECEMBER 31, 2001
 Total risk-based capital
    (to risk-weighted assets):
        Consolidated                           $6,940     10.5%        $5.296        8.0%        $6,620       10.0%
        Lakeside                               $4,417     11.9%        $2,964        8.0%        $3,705       10.0%
        North Oakland                          $3,463     11.9%        $2,322        8.0%        $2,903       10.0%
 Tier I capital (to risk-weighted assets):
        Consolidated                           $6,107      9.2%        $2,648        4.0%        $3,972        6.0%
        Lakeside                               $3,953     10.7%        $1,482        4.0%        $2,223        6.0%
        North Oakland                          $3,094     10.7%        $1,161        4.0%        $1,742        6.0%
 Tier I capital (to average assets):
        Consolidated                           $6,107      7.4%        $3,282        4.0%        $4,102        5.0%
        Lakeside                               $3,953      8.6%        $1,833        4.0%        $2,292        5.0%
        North Oakland                          $3,094      8.6%        $1,443        4.0%        $1,804        5.0%

AS OF DECEMBER 31, 2000
 Total risk-based capital
    (to risk-weighted assets):
        Consolidated                           $8,243     12.2%        $5,422        8.0%        $6,778       10.0%
        Lakeside                               $4,106     11.4%        $2,873        8.0%        $3,592       10.0%
        North Oakland                          $3,869     12.2%        $2,541        8.0%        $3,177       10.0%
 Tier I capital
        Consolidated                           $7,408     10.9%        $2,711        4.0%        $4,067        6.0%
        Lakeside                               $3,663     10.2%        $1,437        4.0%        $2,155        6.0%
        North Oakland                          $3,477     10.9%        $1,271        4.0%        $1,906        6.0%
 Tier I capital (to average assets):
        Consolidated                           $7,408      9.7%        $3,045        4.0%        $3,807        5.0%
        Lakeside                               $3,633      8.9%        $1,654        4.0%        $2,068        5.0%
        North Oakland                          $3,477     10.0%        $1,387        4.0%        $1,734        5.0%
</TABLE>



                                      F-27
<PAGE>

                                   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 29, 2002.

                               MICHIGAN COMMUNITY BANCORP LIMITED

                                /s/ Frank Blowers
                                -------------------------------
                               Frank Blowers
                               President and Chief Executive Officer

                               /s/ Janet C. Smith
                                -------------------------------
                               Janet C. Smith
                               Chief Financial Officer

    In accordance with the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Corporation in the capacities
indicated on March 29, 2002.




                 SIGNATURE                                CAPACITY

         /s/ Frank Blowers               President and Chief Executive Officer
         -----------------               and Director
         Frank Blowers                   (Principal Executive and Operating
                                         Officer)

         /s/ Janet C. Smith              Chief Financial Officer and Treasurer
         ------------------              (Principal Accounting Officer)
         Janet C. Smith

         /s/ J. William Sumner           Chairman of the Board of Directors
         ---------------------
         J. William Sumner

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

         /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







<PAGE>
                                 EXHIBIT INDEX



             EXHIBIT              EXHIBIT DESCRIPTION
             NUMBER

              3.1*       Restated Articles of Incorporation of the Corporation.

              3.2*       Bylaws of the Corporation.

              4.1*       See Exhibits 3.1 and 3.2 for provisions of the Restated
                         Articles of Incorporation and Restated Bylaws of the
                         Corporation defining rights of the holders of Common
                         Stock of the Corporation.


              10.1*      Sublease between the Corporation and Rite Aid of
                         Michigan, Inc. for the property located at 43850
                         Schoenherr, Sterling Heights, Michigan



              10.2*      Assignment and Acceptance of Lessee's Interest with
                         Lessor's Consent between the Corporation, First of
                         America, national Association and North Hill Center,
                         for property located at 1467 North Rochester Road,
                         Rochester Hills, Michigan.




              10.3*      Data Processing Agreement between Lakeside Community
                         Bank and Rurbanc Data Services, Inc.


              10.4*      Data Processing Agreement between North Oakland
                         Community Bank and Rurbanc Data Services, Inc.


              10.5*      1998 Non-Employee Director Stock Option Plan

              10.6*      1998 Employee Incentive Stock Option Plan

              10.7**     Lease Agreement between the Corporation and Nimrod
                         Corp. for property located at 800 Pointe Tremble Road,
                         St. Clair County, Michigan

              10.8**     Amendment to Lease* between the Corporation and Rite
                         Aid of Michigan for property located at 43850
                         Schoenherr, Sterling Heights, Michigan.

              22*        Subsidiaries of the Registrant

* Incorporated by Reference from the Registrant's Registration Statement on Form
SB-2, Commission File Number 333-17317.

** Incorporated by Reference from the Registrant's Form 10KSB for the year ended
December 31, 2000, Commission File Number 0-25079