Dearborn Bancorp, Inc.



                              and its subsidiary




                          Community Bank of Dearborn








                                     1999
                                ANNUAL REPORT





                            Dearborn Bancorp, Inc.

                              and its subsidiary


                          Community Bank of Dearborn


CONTENTS

      Corporate Information .........................................    3

      Stock Information .............................................    4

      Summary of Selected Financial Data ............................    5

      Chairman's and President's Letter to Stockholders .............    6

      Consolidated Balance Sheets ...................................    8

      Consolidated Statements of Income .............................    9

      Consolidated Statements of Changes in Stockholders' Equity ....   10

      Consolidated Statements of Cash Flows .........................   12

      Notes to Consolidated Financial Statements ....................   13

      Report of Independent Auditors ................................   33

      Management's Discussion and Analysis ..........................   34

      Dearborn Bancorp, Inc. Directors and Officers .................   49

      Community Bank of Dearborn Officers ...........................   50








                                      2





DESCRIPTION OF BUSINESS

Dearborn Bancorp, Inc.

Dearborn Bancorp, Inc. (the "Parent Company" and, together with its
subsidiary, the "Corporation") is a registered bank holding company which was
incorporated on September 30, 1992. The primary purpose of the holding
company is to own and operate the subsidiary bank, Community Bank of Dearborn
(the "Bank").

Community Bank of Dearborn

The Bank was incorporated on June 28, 1993 and began operations as a state
chartered commercial bank on February 28, 1994 from its main office located
on Michigan Avenue in Dearborn. On December 20, 1995, a second office located
on West Warren Avenue in Dearborn Heights was opened. On August 11, 1997, a
third office located on Five Mile Road at Sheldon Road in Plymouth Township
was opened. The Bank offers a wide range of financial products and services.
These include checking accounts, savings accounts, money market accounts,
certificates of deposit, business checking, direct deposit, loan services
(commercial, consumer, real estate mortgages), travelers' checks, cashiers'
checks, wire transfers, safe deposit boxes, collection services, and night
depository service. The Bank does not have a trust department.


FORM 10-K AVAILABLE

For a free copy of the Corporation's Form 10-K filed with the U.S. Securities
and Exchange Commission, please direct your request to Mr. Jeffrey Karafa,
Dearborn Bancorp, Inc., 22290 Michigan Avenue, Dearborn, Michigan 48124


ANNUAL MEETING

The Annual Meeting of Stockholders will be held on May 16, 2000, at Park
Place, 23400 Park Avenue, Dearborn, Michigan, at 4:00 p.m.


INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Crowe Chizek & Company LLP
300 Riverfront Plaza Building
55 Campau Avenue, N.W.
Grand Rapids, Michigan  49503


                                      3




DEARBORN BANCORP, INC. COMMON STOCK

Dearborn Bancorp, Inc. common stock is listed on the Nasdaq Stock Market and
is traded under the symbol "DEAR".

STOCK TRANSFER AGENT AND REGISTRAR

Shareholders requiring a change of name, address or ownership of stock, as
well as information about shareholder records or lost or stolen certificates
should contact:

Fifth Third Bank
Corporate Trust Division
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Toll Free 1-800-837-2755


PRINCIPAL MARKET MAKERS

First of Michigan Corporation
300 River Place
Detroit, MI  48207
(313) 259-2600

Herzog, Heine, Geduld, Inc.
525 Washington Boulevard
Jersey City, NJ  07310
(800) 221-3600

Raymond James & Associates,  Inc.
880 Carillon Parkway
St. Petersburg, FL  33716
(727) 573-3800

INVESTOR RELATIONS

Additional information about the corporation may be obtained by writing or
calling: Jeffrey L. Karafa, Vice President, 22290 Michigan Avenue, Dearborn,
Michigan 48124; (313) 274-1000 ext. 312


                              [GRAPHIC OMITTED]


                   QUARTERLY COMMON STOCK PRICE INFORMATION
                        COMMON STOCK PRICE INFORMATION

                                  High        Low       Close
                                 -----------------------------
1999
----
First quarter                  $  12.25   $   8.88   $   9.00
Second quarter                    10.13       8.38       9.25
Third quarter                      9.88       7.00       8.25
Fourth quarter                     8.25       4.25       6.00

1998
----
Initial  public offering (1)   $  14.00   $   --     $   --
Second quarter                    18.14      14.00      14.46
Third quarter                     14.71      10.54      11.77
Fourth quarter                    13.73       9.80      10.50

(1) Dearborn Bancorp, Inc. began trading on the Nasdaq Stock Market on
    April 8, 1998.


                                      4




                      SUMMARY OF SELECTED FINANCIAL DATA

The following selected consolidated financial and other data as of and for
each of the five years in the period ended December 31, 1999 should be read
in conjunction with the Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The Consolidated Balance Sheets as of December 31,
1999 and 1998, and the Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997 are included elsewhere in this Annual
Report.

<TABLE>
<CAPTION>
(In thousands, except share and
   per share data)                                         1999          1998           1997            1996          1995
                                                           ----          ----           ----            ----          ----
<S>                                                   <C>            <C>            <C>             <C>            <C>
OPERATIONS
Interest income                                       $     9,677    $     8,290    $     5,404     $     3,314    $     2,023
Interest expense                                            4,735          4,466          2,998           1,706          1,004
                                                      -----------    -----------    -----------     -----------    -----------
Net interest income                                         4,942          3,824          2,406           1,608          1,019
Provision for possible credit losses                          772            120            164             164            114
                                                      -----------    -----------    -----------     -----------    -----------
Net interest income after provision for
     possible credit losses                                 4,170          3,704          2,242           1,444            905
Total non-interest income                                     558            533            312             284            210
Total non-interest expense                                  3,804          2,941          2,089           1,701          1,403
                                                      -----------    -----------    -----------     -----------    -----------
Income (loss) before federal income tax
     expense (benefit)                                        924          1,296            465              27           (288)
Income tax expense (benefit)                                  394            346           (145)           --             --
                                                      -----------    -----------    -----------     -----------    -----------
Net income (loss)                                     $       530    $       950    $       610     $        27    $      (288)
                                                      ===========    ===========    ===========     ===========    ===========

FINANCIAL CONDITION
Total assets                                          $   152,698    $   126,755    $    86,653     $    56,599    $    35,130
Investment securities, available for sale                  55,022         50,211         29,780          10,493         10,035
Federal Home Loan Bank stock                                  381           --             --              --             --
Loans                                                      85,390         66,023         52,139          36,263         19,945
Deposits                                                  118,875         97,610         75,397          47,463         28,922
Other borrowings                                            5,493            517          2,037             554            569
Stockholders' equity                                       27,260         27,731          8,752           8,190          5,458

PER SHARE INFORMATION (1)
Net income per common share - basic and diluted       $      0.21    $      0.45    $      0.57     $      0.04    $     (0.38)
Book value per common share                           $     11.16    $     11.21    $      8.21     $      7.68    $      7.22
Average shares outstanding  - basic                     2,472,352      2,099,239      1,065,767         756,982        756,134
Average shares outstanding - diluted                    2,472,352      2,112,866      1,076,922         756,982        756,134
Shares outstanding at end of period                     2,442,740      2,473,295      1,065,767       1,065,767        756,134

OTHER DATA
Return on average assets                                     0.38%          0.75%          0.86%           0.06%         (1.01)%
Return on average equity                                     1.92%          2.99%          7.23%           0.50%         (5.20)%
Net interest margin                                          3.69%          3.16%          3.60%           3.98%          3.92%
Net interest spread                                          2.44%          1.78%          2.54%           2.92%          2.65%
Allowance for possible credit losses to total loans          0.91%          0.95%          1.01%           1.01%          1.02%
Nonperforming assets to total assets                         0.19%          0.32%          0.02%           0.02%          0.21%
Stockholders' equity to total assets                        17.85%         21.88%         10.10%          14.47%         15.54%
Total interest expense to gross interest income             48.93%         53.87%         55.48%          51.48%         49.63%
Number of offices                                               3              3              3               2              2

<FN>
(1) All per share amounts presented have been adjusted to reflect the
    issuance of stock dividends.
</TABLE>


                                      5





To Our Shareholders:

           During 1999, Community Bank of Dearborn observed the fifth
anniversary of its opening and the robust growth that has characterized every
year we have been in business continued. Over the course of the year, total
assets increase 20.47 percent to $152,698,000, total deposits went to 21.79
percent to $118,875,000 and total loans grew 29.33 percent to stand at
$85,390,000 at year-end.

           Net income for the year was $530,000 or $0.21 per common share.
For 1998, we reported earnings of $950,000 or $0.45 per share. Had it not
been for the charge-off of a large loan to a commercial customer that
suddenly and unexpectedly declared bankruptcy, we would have recorded another
increase in earnings in 1999.

           To ensure that we maintain a high level of customer service, we
continued to add to our staff, including the employment of two senior
officers who brought extensive banking experience to our management group.
Warren R. Musson was named Vice President and Senior Lender while H. Kristene
Rautio became Vice President and Branch Administrator. Mr. Musson completed
the highly regarded credit training program at the former NBD Bank and then
earned ten promotions in twelve years as a commercial lending officer. For
the past eight years, he has been a senior credit officer at two other banks
in southeastern Michigan. Ms. Rautio spent 21 years in increasingly
responsible positions at the former First of America organization. During the
past 12 years, her primary duties have involved branch administration,
business development and retail sales management.

           Both of our branch offices on Warren Avenue in Dearborn Heights
and on Five Mile Road in Plymouth Township are doing well and making a solid
contribution to our "bottom line." Consequently, we are now making plans to
open a fourth banking office in Canton Township on Canton Center Road between
Ford and Saltz Roads. We have applied for permits to build a 6,000 square
foot building on the site. Initially, we will use half of the space to house
the new branch and lease the other half to an unaffiliated tenant. This will
be a full-service branch with drive-in facilities, safe deposit boxes and an
automatic teller machine. If there are no unanticipated delays in the
permitting process or construction, we expect that the new office will open
for business during the fourth quarter of 2000.

           Traditional "brick and mortar" branch networks will never be quite
as important in building a bank's business as they once were. Still, a few
strategically located banking offices will always play a major role in our
marketing strategy in western Wayne and southwestern Oakland Counties.
Electronic and internet services and automated teller machines will
increasingly satisfy many of our customers' day-to-day financial needs but
person-to-person contact in a banking office is likely to remain the most
widely used means of opening new accounts, originating loans and the like as
far as we can foresee into the future.

           Moreover, older, more affluent consumers often prefer doing
business in a banking office. In our case, the mature market is a very
important part of our customer base. We now have more than 1,800 members of
our Community Club for those ages 50 and older. In fact, Community Club
members provide almost 45 percent of our total deposits. We cultivate our
relationships with these customers very carefully with popular events such as
the "Oktoberfest" Seniors Fair that attracted over 400 people last fall.

           In the words of Crain's Detroit Business, bank stock prices were
"clobbered" during 1999. Some of the nation's best banking companies saw
their price-earnings ratios fall below 10 and their premiums over book value
drop to the lowest levels in many years. Community banking organizations such
as ours were similarly affected by this trend. During much of the year, the
entire market seemed to be driven more by speculation and enthusiasm for
unproven technologies than by traditional economic fundamentals. Given this
environment, over which we had absolutely no control, we took two actions
which should have a positive impact on our stock price in the long-term.

           First, we moved our stock listing from the Nasdaq SmallCap Market
to the Nasdaq National Stock Market. In time, this should allow us to attract
more market makers and expand investor interest in our stock. Then, in
November, our board of directors authorized a modest stock repurchase
program. Management was authorized to repurchase up to 125,000 shares on the
open market. Through the end of the year, approximately 30,000 shares had
actually been acquired. The repurchased shares will be held for future
corporate uses.



                                      6




           Late in the year, Congress passed the Gramm-Leach-Billey Act. This
legislation was the most dramatic restructuring of the financial services
industry since the Great Depression. One important provision of the Act will
significantly expand the authority of the Federal Home Loan Banks to provide
advances to community banks. Through the Federal Home Loan Banks,
organizations like ours will now have access to the national and
international money markets to fund some of their lending. During 1999, we
joined the Federal Home Loan Bank of Indianapolis and look forward to a long
and mutually beneficial relationship with this institution.

           The directors and senior officers join us in encouraging you to
attend the Annual Meeting, which will be held at Park Place in Dearborn on
May 16, 2000 at 4:00 pm. We look forward to your comments, questions and
suggestions and an opportunity to discuss our plans to keep Dearborn Bancorp,
Inc. on the path to further progress and ever-greater success.


                                  Sincerely,


         John E. Demmer                             Michael J. Ross
   Chairman of the Board and CEO                   President and CEO
      Dearborn Bancorp, Inc.                   Community Bank of Dearborn


                                      7



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

                         CONSOLIDATED BALANCE SHEETS

    (Dollars, in thousands)                                   December 31,
                                                        ---------------------
                                                            1999        1998
                                                            ----        ----
ASSETS
Cash and cash equivalents
        Cash and due from banks                          $   2,446  $   2,259
        Federal funds sold                                   4,963      3,995
                                                         ---------  ---------
                  Total cash and cash equivalents            7,409      6,254

Mortgage loans held for sale                                   783      1,211
Investment securities, available for sale                   55,022     50,211
Federal Home Loan Bank stock                                   381       --
Loans
        Loans                                               85,390     66,023
        Allowance for possible credit losses                  (781)      (627)
                                                         ---------  ---------
                  Net loans                                 84,609     65,396

Premises and equipment, net                                  2,388      2,378
Accrued interest receivable                                  1,370        933
Other assets                                                   736        372
                                                         ---------  ---------

        Total assets                                     $ 152,698  $ 126,755
                                                         =========  =========

LIABILITIES
Deposits
        Non-interest bearing deposits                    $  14,859  $  11,142
        Interest bearing deposits                          104,016     86,468
                                                         ---------  ---------
                  Total deposits                           118,875     97,610

Other liabilities
        Federal funds purchased                              3,000       --
        Federal Home Loan Bank advances                      2,000       --
        Mortgage payable                                       493        517
        Accrued interest payable                               469        338
        Other liabilities                                      601        559
                                                         ---------  ---------
                  Total liabilities                        125,438     99,024
                                                         ---------  ---------

CONTINGENCIES                                                 --         --

STOCKHOLDERS' EQUITY
        Common stock - 5,000,000 shares
                  authorized, 2,442,740 and 2,473,295
                  shares outstanding at December 31,
                  1999 and 1998, respectively               28,822     29,015
        Accumulated deficit                                   (740)    (1,270)
        Accumulated other comprehensive loss                  (822)       (14)
                                                         ---------  ---------
                  Total stockholders' equity                27,260     27,731
                                                         ---------  ---------

                  Total liabilities and stockholders'
                     equity                              $ 152,698  $ 126,755
                                                         =========  =========

    The accompanying notes are an integral part of these consolidated
financial statements.


                                      8



                    DEARBORN BANCORP, INC. AND SUBSIDIARY


<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF INCOME

  (In thousands, except share
      and per share data)                                 Years Ended December 31,
                                                 ----------------------------------------
                                                      1999           1998          1997
                                                      ----           ----          ----
<S>                                              <C>            <C>           <C>
Interest income
          Interest on loans                      $     6,302    $     5,259   $     3,981
          Interest on investment securities,
            available for sale                         3,162          2,504         1,235
          Interest on federal funds and
            deposits with banks                          213            527           188
                                                 -----------    -----------   -----------
                Total interest income                  9,677          8,290         5,404

Interest expense
          Interest on deposits                         4,687          4,425         2,955
          Interest on other borrowings                    48             41            43
                                                 -----------    -----------   -----------
                Total interest expense                 4,735          4,466         2,998

                Net interest income                    4,942          3,824         2,406
Provision for possible credit losses                     772            120           164
                                                 -----------    -----------   -----------

Net interest income after provision for
  possible credit losses                               4,170          3,704         2,242
                                                 -----------    -----------   -----------

Non-interest income
          Service charges on deposit accounts            197            141           124
          Fees for other services to customers            26             23            26
          Gain on the sale of loans                      340            286           144
          Gain (loss) on the sale of
            investment securities                        (12)            71            13
          Other income                                     7             12             5
                                                 -----------    -----------   -----------
                Total non-interest income                558            533           312

Non-interest expenses
          Salaries and employee benefits               2,226          1,700         1,218
          Occupancy and equipment expense                446            411           267
          Advertising and marketing                      101             85           105
          Stationery and supplies                        164            113            80
          Professional services                          333            166            99
          Data processing                                158            123            90
          FDIC insurance premiums                         12             10             7
          Other operating expenses                       364            333           223
                                                 -----------    -----------   -----------
                Total non-interest expenses            3,804          2,941         2,089
                                                 -----------    -----------   -----------

Income before federal income tax
  provision (benefit)                                    924          1,296           465
Income tax provision (benefit)                           394            346          (145)
                                                 -----------    -----------   -----------

Net income                                       $       530    $       950   $       610
                                                 ===========    ===========   ===========

Per share data:
Net income - basic and diluted                   $      0.21    $      0.45   $      0.57

Weighted average number of shares
  outstanding - basic                              2,472,352      2,099,239     1,065,767
Weighted average number of shares
  outstanding - diluted                            2,472,352      2,112,866     1,076,922

<FN>
  The accompanying notes are an integral part of these consolidated financial
statements.

</TABLE>


                                      9



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 Years Ended December 31, 1999, 1998 and 1997


                                                                Common
                                                                Stock                    Accumulated
                                                              Subscribed                    Other           Total
                                                    Common       but      Accumulated   Comprehensive   Stockholder's
                                                    Stock      Unissued     Deficit     Income (Loss)      Equity
(In thousands, except shares)                      --------   ----------  -----------   ------------    -------------
<S>                                                <C>        <C>         <C>            <C>              <C>
Balance, January 1, 1997                           $  6,521   $  2,752    $ (1,065)      $  (18)          $  8,190

    309,634 shares of subscribed common
            stock issued (net of additional
            offering costs of $1)                     2,751     (2,752)       --             --                 (1)

    10% stock dividend declared December 16,
            payable January 30, 1998                  1,234       --        (1,234)          --               --

    Net income                                         --         --           610           --                610

    Other comprehensive income:
         Changes in net unrealized loss on
            securities available for sale              --         --          --            (58)               (58)
         Reclassification adjustment for (gains)
            losses included in net income              --         --          --            (13)               (13)
                                                                                         ------           --------
         Net change in net unrealized loss on
            securities available for sale              --         --          --            (71)               (71)
         Tax effects                                   --         --          --             24                 24
                                                                                         ------           --------
        Other comprehensive loss                       --         --          --            (47)               (47)
                                                                                                          --------

      Comprehensive income                             --         --          --             --                563
                                                   --------   --------    --------       ------           --------

Balance, December 31, 1997                           10,506       --        (1,689)         (65)             8,752

    Initial public offering of 1,407,527
          shares of common stock (net of
          offering costs of $1,342)                  17,978       --          --             --             17,978

    2% stock dividend declared December 15,
              payable January 15, 1999                  531       --          (531)          --               --

    Net income                                         --         --           950           --                950

    Other comprehensive income
        Changes in net unrealized loss on
           securities available for sale               --         --          --            148                148
        Reclassification adjustment for (gains)
           losses included in net income               --         --          --            (71)               (71)
                                                                                         ------           --------
        Net change in net unrealized loss on
           securities available for sale               --         --          --             77                 77
        Tax effects                                    --         --          --            (26)               (26)
                                                                                         ------           --------
       Other comprehensive income                      --         --          --             51                 51
                                                                                                          --------
      Comprehensive income                             --         --          --             --              1,001
                                                   --------   --------    --------       ------           --------
Balance, December 31, 1998                         $ 29,015   $   --      $ (1,270)      $  (14)          $ 27,731
                                                   ========   ========    ========       ======           ========
</TABLE>


                                      10




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (con't)

                 Years Ended December 31, 1999, 1998 and 1997


                                                                Common
                                                                Stock                    Accumulated
                                                              Subscribed                    Other           Total
                                                    Common       but      Accumulated   Comprehensive   Stockholder's
                                                    Stock      Unissued     Deficit     Income (Loss)      Equity
(In thousands, except shares)                      --------   ----------  -----------   ------------    -------------
<S>                                                <C>        <C>         <C>            <C>              <C>
Balance, January 1, 1999                            $ 29,015    $   --     $ (1,270)     $    (14)        $ 27,731

     Repurchase of  30,555 shares of common stock       (193)       --         --            --               (193)

     Net income                                         --          --          530          --                530

     Other comprehensive income:
         Changes in net unrealized loss on
            securities available for sale               --          --         --          (1,236)          (1,236)
         Reclassification adjustment for (gains)
            losses included in net income               --          --         --              12               12
                                                                                         --------         --------
         Net change in net unrealized loss on
            securities available for sale               --          --         --          (1,224)          (1,224)
         Tax effects                                    --          --         --             416              416
                                                                                         --------         --------
    Other comprehensive loss                            --          --         --            (808)            (808)
                                                                                                          --------

  Comprehensive loss                                    --          --         --            --               (278)
                                                    --------    --------   --------      --------         --------

Balance, December 31, 1999                          $ 28,822    $   --     $   (740)     $   (822)        $ 27,260
                                                    ========    ========   ========      ========         ========

<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>



                                      11


                    DEARBORN BANCORP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)                                                           Years Ended December 31,
                                                                    ---------------------------------
                                                                    1999         1998            1997
                                                                    ----         ----            ----
 <S>                                                               <C>          <C>          <C>
Cash flows from operating activities
          Interest and fees received                              $   9,240    $   8,256    $   5,142
          Interest paid                                              (4,604)      (4,438)      (2,815)
          Proceeds from sale of mortgages held for sale              21,707       21,279       11,209
          Taxes paid                                                   (435)        --           --
          Origination of mortgages held for sale                    (20,939)     (21,857)     (11,109)
          Cash paid to suppliers and employees                       (3,050)      (2,782)      (2,032)
                                                                  ---------    ---------    ---------
          Net cash provided by operating activities                   1,919          458          395

Cash flows from investing activities
          Proceeds from the sale of securities
            available for sale                                        3,670       36,572        2,613
          Proceeds from maturities of securities
            available for sale                                       33,828       52,808       19,500
          Purchases of securities available for sale                (43,669)    (109,690)     (41,438)
          Purchase of Federal Home Loan Bank stock                     (381)        --           --
          Increase in loans, net of payments received               (19,985)     (13,899)     (15,884)
          Purchases of property and equipment                          (275)        (326)        (369)
                                                                  ---------    ---------    ---------
          Net cash used in investing activities                     (26,812)     (34,535)     (35,578)

Cash flows from financing activities
          Net increase in non-interest bearing deposits               3,717        2,555        1,004
          Net increase in interest bearing deposits                  17,548       19,658       26,930
          Increase (decrease) in federal funds purchased              3,000       (1,500)       1,500
          Proceeds from Federal Home Loan Bank advances               2,000         --           --
          Principal payments on mortgage payable                        (24)         (20)         (17)
          Initial public offering of common stock                      --         17,978         --
          Purchase of treasury stock                                   (193)        --           --
                                                                  ---------    ---------    ---------
          Net cash provided by financing activities                  26,048       38,671       29,417

Increase (decrease) in cash and cash equivalents                      1,155        4,594       (5,766)
Cash and cash equivalents at the beginning of the period              6,254        1,660        7,426
                                                                  ---------    ---------    ---------

Cash and cash equivalents at the end of the period                $   7,409    $   6,254    $   1,660
                                                                  =========    =========    =========

Reconciliation of net income to net cash provided by
          operating activities
Net income                                                        $     530    $     950    $     610
          Adjustments to reconcile net income to net cash
           provided by operating activities
               Provision for possible credit losses                     772          120          164
               Depreciation and amortization expense                    265          244          158
               Accretion of discount on investment securities            (5)         (22)          (6)
               Amortization of premium on investment securities         130           23           10
               (Gain) loss on the sale of investment securities          12          (71)         (13)
               (Increase) decrease in mortgages held for sale           428         (864)         (44)
               (Increase) in interest receivable                       (437)        (210)        (417)
               Increase in interest payable                             131           28          183
               (Increase) decrease in other assets                       51         (142)        (142)
               Increase (decrease) in other liabilities                  42          402         (108)
                                                                  ---------    ---------    ---------
Net cash provided by operating activities                         $   1,919    $     458    $     395
                                                                  =========    =========    =========

<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>


                                      12



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           A summary of the significant accounting policies consistently
           applied in the preparation of the accompanying consolidated
           financial statements follows.

           Basis of Presentation and Operations

           Dearborn Bancorp, Inc. (the Corporation) was incorporated in
           Michigan on September 30, 1992. The Corporation's subsidiary,
           Community Bank of Dearborn (the Bank), began operations on
           February 28, 1994. The Bank operates three community banking
           offices in Dearborn, Dearborn Heights and Plymouth Township,
           Michigan, offering a full range of banking services to individuals
           and businesses.

           Its primary deposit products are checking, savings, and term
           certificate accounts, and its primary lending products are
           commercial, residential mortgage, and installment loans.
           Substantially all loans are secured by specific items of
           collateral including business assets, consumer assets and real
           estate. Commercial loans are expected to be repaid from cash flow
           from operations of businesses. Real estate loans are secured by
           both residential and commercial real estate. Other financial
           instruments which potentially represent concentrations of credit
           risk include deposit accounts in other financial institutions.

           While the Corporation's chief decision makers monitor the revenue
           streams of the various products and services, operations are
           managed and financial performance is evaluated on a
           Corporation-wide basis. Accordingly, all of the Corporation's
           banking operations are considered by management to be aggregated
           in one reportable operating segment.

           Principles of Consolidation

           The consolidated financial statements include the accounts of
           Dearborn Bancorp, Inc. and its wholly-owned subsidiary, Community
           Bank of Dearborn. All significant intercompany transactions are
           eliminated in consolidation.

           Use of Estimates

           In the preparation of financial statements, management is required
           to make estimates and assumptions that affect reported amounts of
           assets and liabilities and the disclosure of contingent assets and
           liabilities at the date of the financial statements and revenues
           and expenses during the reporting period. Actual results could
           differ from those estimates. Estimates that are more susceptible
           to change in the near term include the allowance for possible
           credit losses and fair value of certain financial instruments.

           Cash Equivalents

           For purposes of the consolidated statements of cash flows, the
           Corporation considers cash on hand, cash due from banks, and
           federal funds sold to be cash equivalents. Net cash flows are
           reported for loan and deposit transactions.

           Mortgages Held for Sale

           Mortgages held for sale are carried at the lower of cost or
           market. Market value is determined on the basis of existing
           forward delivery contracts.

                                      13




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)

           Investment Securities

           When securities are purchased and the Corporation intends to hold
           the securities for an indefinite period of time but not
           necessarily to maturity, they are classified as available for sale
           and carried at market value. Any decision to sell a security
           available for sale would be based on various factors, including
           significant movements in interest rates, changes in the maturity
           mix of the Corporation's assets and liabilities, liquidity
           demands, regulatory capital considerations, and other similar
           factors. Cost is adjusted for amortization of premiums and
           accretion of discounts to maturity. Unrealized gains and losses
           for available for sale securities are excluded from income and
           recorded as an amount, net of tax, in other comprehensive income
           and as a separate component of stockholders' equity until
           realized. All of the Corporation's securities are classified as
           available for sale. Gains and losses on sales are based on the
           amortized cost of the security and securities are written down to
           fair market value when a decline in fair value in not temporary.

           Loans

           Loans that management has the intent and ability to hold for the
           foreseeable future or until maturity or payoff are reported at the
           principal balance outstanding, net of unearned interest, deferred
           loan fees and costs, and an allowance for loan losses.

           Interest Income on Loans

           Interest on loans is accrued and credited to income based upon the
           principal amount outstanding. The accrual of interest on loans is
           discontinued when, in the opinion of management, there is an
           indication that the borrower may be unable to meet payments as
           they become due. Upon such discontinuance, all unpaid interest
           accrued is reversed. Payments received on such loans are reported
           as principal reductions. Interest accruals are generally resumed
           when all delinquent principal and interest has been brought
           current or the loan becomes both well secured and in the process
           of collection.

           Allowance for Possible Credit Losses

           The allowance for possible credit losses is a valuation allowance
           for probable incurred credit losses, increased by the provision
           for loan losses and decreased by charge-offs less recoveries.
           Management estimates the allowance balance required using past
           loan loss experience, the nature and volume of the portfolio,
           information about specific borrower situations and estimated
           collateral values, economic conditions, and other factors.
           Allocations of the allowance may be made for specific loans, but
           the entire allowance is available for any loan that, in
           management's judgment, should be charged-off.

           Loan Impairment

           A loan is impaired when full payment under the loan terms is not
           expected. Impairment is evaluated in total for smaller-balance
           loans of similar nature such as residential mortgage, consumer,
           and credit card loans, and on an individual loan basis for other
           loans. If a loan is impaired, a portion of the allowance is
           allocated so that the loan is reported, net, at the present value
           of estimated future cash flows using the loan's existing rate or
           at the fair value of collateral if repayment is expected solely
           from the collateral.



                                      14




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)

           Foreclosed Assets

           Assets acquired through or instead of loan foreclosure are
           initially recorded at fair value when acquired, establishing a new
           cost basis. If fair value declines, a valuation allowance is
           recorded through expense. Costs after acquisition are expensed.

           Premises and Equipment

           Premises and equipment are stated at cost less accumulated
           depreciation. Depreciation is computed using the straight-line
           method over the estimated useful lives of the assets as follows:

                Building and improvements - 5 to 30 years
                Furniture and equipment - 5 to 10 years

           Long-term Assets

           Premises and equipment and other long-term assets are reviewed for
           impairment when events indicate their carrying amount may not be
           recoverable from future undiscounted cash flows. If impaired, the
           assets are recorded at discounted amounts.

           Income Taxes

           The Corporation files a consolidated federal income tax return.
           The Corporation uses the asset and liability method of accounting
           for income taxes. Deferred tax assets and liabilities are recorded
           based on the difference between the tax bases of assets and
           liabilities and their carrying amounts for financial reporting
           purposes. Tax planning strategies are utilized in the computation
           of deferred federal income taxes. In addition, the current or
           deferred tax consequences of a transaction is measured by applying
           the provisions of enacted tax laws to determine the amount of
           taxes receivable or payable, currently or in future years.

           Stock Compensation

           Employee compensation expense under stock option plans is reported
           if options are granted below market price at grant date. Pro forma
           disclosures of net income and earnings per share are shown using
           the fair value method to measure expense for options granted,
           using an option pricing model to estimate fair value.

           Stock Dividends

           The Corporation accounts for stock dividends by capitalizing
           retained earnings in an amount equal to the fair value of the
           additional shares issued. All share and per share amounts are
           retroactively adjusted for stock dividends.




                                      15





                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)


           Income Per Share

           Basic income per share is net income divided by the weighted
           average number of common shares outstanding during the period.
           Diluted income per share includes the dilutive effect of
           additional potential common shares issuable under stock options.
           Income per share is restated for all stock splits and dividends
           through the date of issue of the financial statements.

           Restrictions on Cash

           The Corporation was required to have $513,000 and $277,000 of cash
           on hand or on deposit with the Federal Reserve Bank to meet
           regulatory reserve and clearing requirements at year end 1999 and
           1998. These balances do not earn interest.

           Dividend Restriction

           Banking regulations require maintaining certain capital levels and
           may limit the dividends paid by the Bank to the Corporation or by
           the Corporation to shareholders.

           Fair Value of Financial Instruments

           Fair values of financial instruments are estimated using relevant
           market information and other assumptions, as more fully disclosed
           in a separate note. Fair value estimates involve uncertainties and
           matters of significant judgment regarding interest rates, credit
           risk, prepayments, and other factors, especially in the absence of
           broad markets for particular items. Changes in assumptions or in
           market conditions could significantly affect the estimates.

           Reclassifications

           Some items in the prior year financial statements were
           reclassified to conform to the current presentation.







                                      16





                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE B - INVESTMENT SECURITIES - AVAILABLE FOR SALE

           The amortized cost and estimated market value of investment
           securities - available for sale are as follows (in thousands):

                                              December 31, 1999
                                 ---------------------------------------------
                                               Gross       Gross     Estimated
                                 Amortized  Unrealized  Unrealized     Market
                                   Cost        Gains      Losses       Value
                                 ---------  ----------  ----------   ---------

US Treasury securities            $  2,320    $  --      $    (76)   $  2,244
US Government agency securities     53,822       --        (1,167)     52,655
Municipal Securities                   125       --            (2)        123
                                  --------    -------    --------    --------

          Totals                  $ 56,267    $  --      $ (1,245)   $ 55,022
                                  ========    =======    ========    ========

                                              December 31, 1998
                                 ---------------------------------------------
                                               Gross       Gross     Estimated
                                 Amortized  Unrealized  Unrealized     Market
                                   Cost        Gains      Losses       Value
                                 ---------  ----------  ----------   ---------


US Treasury securities            $  2,013    $  --      $     (1)   $  2,012
US Government agency securities     31,682       --           (20)     31,662
Corporate Debt Securities           16,537       --          --        16,537
                                  --------    -------    --------    --------
          Totals
                                  $ 50,232    $  --      $    (21)   $ 50,211
                                  ========    =======    ========    ========


           The amortized cost and estimated market value of investment
           securities - available for sale at December 31, 1999 by
           contractual maturity are shown below (in thousands):

                                                    Estimated
                                        Amortized     Market
                                          Cost        Value
                                        ---------   ---------
Due in three months or less              $  --       $  --
Due in three months through one year        --          --
Due in one year through five years        56,267      55,022
                                         -------     -------
          Totals                         $56,267     $55,022
                                         =======     =======



                                      17



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE B - INVESTMENT SECURITIES - AVAILABLE FOR SALE  (Continued)

           The Bank's securities at December 31, 1999 have an unrealized loss
           of $1,245,000 compared to an unrealized loss of $21,000 at
           December 31, 1998. The decrease in the market value of the
           investment portfolio was primarily due to an increasing interest
           rate environment. The market position of the Bank's investment
           portfolio is reviewed and discussed regularly by management.

           Securities having a market value of $2,243,750 and $2,011,875 at
           December 31, 1999 and 1998, respectively, were pledged to secure
           public deposits. Securities having a market value of $1,976,875
           and $2,000,625 at December 31, 1999 and 1998, respectively, were
           pledged to secure treasury, tax and loan payments with the Federal
           Reserve Bank of Chicago. Securities having a market value of
           $7,801,875 at December 31, 1999 were pledged to the Federal Home
           Loan Bank of Indianapolis to secure advances.


NOTE  C - FEDERAL HOME LOAN BANK STOCK

           The Bank became a member of the Federal Home Loan Bank of
           Indianapolis during 1999. During this process, the Bank purchased
           Federal Home Loan Bank stock in the amount of $381,300 during
           1999.

NOTE D - LOANS

           Major categories of loans included in the portfolio at December 31
           are as follows (in thousands):

                                                                  Percent
                                           1999         1998     Incr(decr)
                                           ----         ----     ----------
Consumer loans                           $ 10,967    $ 12,434    (11.80)%
Commercial, financial, & other             20,563      14,843     38.54%
Commercial real estate construction         3,656       2,619     39.60%
Commercial real estate mortgages           23,103      12,478     85.15%
Residential real estate mortgages          27,101      23,649     14.60%
                                         --------     -------    -------
                                           85,390      66,023     29.33%
Allowance for possible credit losses         (781)       (627)
                                         --------    --------
                                         $ 84,609    $ 65,396
                                         ========    ========





                                      18




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE D - LOANS (Continued)

           Certain directors of the Corporation, including their related
           interests, were loan customers of the Bank during 1999. Total
           loans to these persons at December 31, 1999 amounted to
           $2,247,000. During 1999, $3,026,000 of new loans were made and
           repayments totaled $3,495,000. These loans aggregated to 8.2% of
           consolidated stockholders' equity as of December 31, 1999.

           Transactions in the allowance for possible credit losses for the
           years ended December 31 are as follows (in thousands):

                                     1999       1998      1997
                                     ----       ----      ----

Balance, beginning of year          $ 627      $ 522      $ 366
Charge-offs:
     Consumer loans                   (55)       (15)        (8)
     Commercial Loans                (584)      --         --

Recoveries:
     Consumer loans                    21       --         --
                                    -----      -----      -----

Net charge-offs                      (618)       (15)        (8)

Additions charged to operations       772        120        164
                                    -----      -----      -----

Balance at end of period            $ 781      $ 627      $ 522
                                    =====      =====      =====

           Net charge-offs for 1999 were $618,000 in 1999 compared to $15,000
           in 1998. The increase in charge-offs was primarily due to the
           charge-off of a commercial loan relationship in the amount of
           $584,000. Since the Bank's inception in 1994 through December 31,
           1998, net charge-offs were $35,000.

           The aggregate balances in impaired loans at December 31, are as
           follows (in thousands):


                                                      1999      1998
                                                      ----      ----
 Impaired loans with no allocated
    allowance for loan losses                          $--      $--
 Impaired loans with allocated
    allowance for loan losses                           618      34
                                                       ----     ---
          Total                                        $618     $34
                                                       ====     ===

 Amount of the allowance for loan losses allocated     $171     $ 5

Average of impaired loans during the year              $436     $26

 Interest income recognized during impairment          $--      $ 5
 Cash-basis interest income recognized                 $  1     $--



                                      19



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE E - BANK PREMISES AND EQUIPMENT

           Bank premises and equipment are comprised of the following at
           December 31 (in thousands):

                                   1999      1998
                                   ----      ----
Land and improvements             $  394     $  394
Building and improvements          1,706      1,595
Furniture and equipment            1,212      1,052
                                  ------     ------
                                   3,312      3,041

Less accumulated depreciation        924        663
                                  ------     ------

                                  $2,388     $2,378
                                  ======     ======


           Depreciation expense for 1999, 1998 and 1997 amounted to $265,000,
           $247,000 and $152,000, respectively. The Corporation anticipates
           additional capital expenditures of approximately $1.7 million to
           be incurred in 2000 for the construction of its new branch in
           Canton Township, Michigan.

NOTE F - DEPOSITS

           Time deposits of $100,000 or more were $41,519,000 and $26,754,000
           at December 31, 1999 and 1998, respectively.

           Scheduled maturities of time deposits at December 31, 1999 were as
           follows (in thousands).

        $100,000 and over  Less than $100,000     Total
        -----------------  ------------------     -----

2000          $39,418            $33,237          $72,655
2001            1,464              5,049            6,513
2002              534              1,387            1,921
2003              103              1,230            1,333
2004             --                   81               81
              -------            -------          -------
              $41,519            $40,984          $82,503
              =======            =======          =======

           Related party deposits were approximately $3,346,000 at
           December 31, 1999.




                                      20




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997



NOTE G - MORTGAGE PAYABLE

           The mortgage payable to a bank matures September 1, 2012 and
           requires monthly installments of $4,925 including interest at
           6.82% per annum. Effective September, 2003 the interest rate will
           be computed annually at 2.5% plus the five year treasury rate. The
           note is collateralized by a first real estate mortgage on a
           building and land.

           Aggregate principal payments for the five years following
           December 31, 1999 and thereafter are as follows (in thousands):

                   2000               $26
                   2001                28
                   2002                30
                   2003                31
                   2004                32
                   Thereafter         346
                                     -----
                                     $493
                                     =====


NOTE H - FEDERAL FUNDS PURCHASED

           The Bank has entered into federal funds credit lines with other
           banks in the amount of $4,500,000 to provide additional
           flexibility in the daily management of liquidity. The outstanding
           balance of the federal funds credit line at December 31, 1999 was
           $3,000,000 and was repaid on January 3, 2000.



NOTE I - FEDERAL HOME LOAN BANK ADVANCES

           The Bank joined the Federal Home Loan Bank of Indianapolis with
           the intention of utilizing the facility as an additional source of
           funds and entered into an Advances, Pledge and Security Agreement
           with the Federal Home Loan Bank of Indianapolis. At December 31,
           1999, the Bank held a $2,000,000 variable rate advance with a rate
           of 5.97% at December 31, 1999, maturing on May 22, 2000. The
           advance is subject to a prepayment penalty based on the conditions
           of the credit policy of the Federal Home Loan Bank.




                                      21


                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997



NOTE J - INCOME TAXES

           The federal tax provision consists of the following (in
           thousands):

                           1999     1998      1997
                           ----     ----      ----

           Current         $383      119    $  --
           Deferred          11      227     (145)
                          -----     ----    -----
                           $394     $346    $(145)
                          =====     ====    =====

           The reconciliation of the effective income tax rate to the federal
           statutory tax rate is as follows:

                                                1999    1998   1997
                                                ----    ----   ----
           Federal income tax rate               34%     34%    34%
           Effect of net operating loss
                carryforward and valuation
                allowance                        --      (5)   (63)
           Other                                  9      (2)    (2)
                                                 ===    ===    ===
                Effective tax rate               43%     27%   (31)%
                                                 ===    ===    ===





                                      22




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE J - INCOME TAXES (Continued)


           The details of the net deferred tax asset (liability) are as
           follows at December 31, (in thousands):

                                                      1999        1998
                                                      ----        ----
Deferred tax assets
          Provision for possible credit  losses        $ 196      $ 200
          Net unrealized losses on securities
                    available for sale                   423          6
          Other                                            3       --
                                                       -----      -----

                    Total deferred tax assets            622        206

Deferred tax liabilities
          Accretion of discounts on
                    securities available for sale         (2)      --
          Deferred loan fees                            (102)       (91)
          Premises and equipment                         (66)       (57)
          Mark to market on loans held for sale           (4)      --
          Accrual to cash conversion                    (124)      (140)
                                                       -----      -----

                    Total deferred tax liabilities      (298)      (288)
                                                       -----      -----

Net deferred tax asset (liability) before
          valuation allowance                            324        (82)

Valuation allowance                                     --         --
                                                       -----      -----

Net deferred tax asset (liability)                     $ 324      $ (82)
                                                       =====      =====



           The tax benefit of the net unrealized losses on securities
           available for sale, was charged directly to its related component
           of stockholders' equity.

           At December 31, 1998, the Corporation had exhausted all net
           operating loss carryforwards.




                                      23




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE K - FINANCIAL INSTRUMENTS AND OFF-BALANCE SHEET RISK

           Fair Value of Financial Instruments

           The estimated fair value of the Corporation's financial
           instruments at December 31, are as follows (in thousands):

                                            1999                 1998
                                    --------------------  -------------------
                                               Estimated            Estimated
                                    Carrying     Fair     Carrying    Fair
                                     Amount      Value     Amount     Value
                                    --------  ----------  --------  --------

Assets:
   Cash and cash equivalents        $  7,409  $  7,409    $ 6,254   $ 6,254
   Loans held for sale                   783       796      1,211     1,229
   Securities                         55,022    55,022     50,211    50,211
   Federal Home Loan Bank stock          381       381       --        --
   Loans, net                         84,609    84,058     65,396    65,221
   Accrued interest receivable         1,370     1,370        933       933

Liabilities:
   Deposits                          118,875   119,087     97,610    97,424
   Federal funds purchased             3,000     3,000       --        --
   Federal Home Loan Bank advances     2,000     2,000       --        --
   Mortgage payable                      493       493        517       517
   Accrued interest payable              469       469        338       338


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

           Cash and cash equivalents: The carrying amounts reported in the
           balance sheet for cash and short-term instruments approximate
           those assets' fair values.

           Loans held for sale: The market value of these loans represents
           estimated fair value. The market value is determined in the
           aggregate on the basis of existing forward delivery commitments.



                                      24



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE K - FINANCIAL INSTRUMENTS  AND OFF-BALANCE SHEET RISK (Continued)

           Fair Value of Financial Instruments  (Continued)

           Investment securities: Fair values for investment securities are
           based on quoted market prices, where available. If quoted market
           prices are not available, fair values are based on quoted market
           prices of comparable instruments.

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

           Off-balance-sheet instruments: The Corporation's off-balance-sheet
           instruments approximate their fair values.

           Deposit liabilities: The fair values disclosed for demand deposits
           are, by definition, equal to the amount payable on demand at the
           reporting date. Fair values for fixed rate certificates of deposit
           are estimated using a discounted cash flow calculation that
           applies interest rates currently being offered on similar
           certificates. The carrying amount of accrued interest payable
           approximates its fair value.

           Federal funds purchased: The carrying amounts reported in the
           balance sheet for federal funds purchased approximate those
           liabilities' fair values.

           Federal Home loan Bank advances: The carrying amounts reported in
           the balance sheet for Federal Home Loan Bank advances approximate
           those liabilities' fair values.

           Mortgage payable: The fair value of the Corporation's mortgage
           payable is estimated using discounted cash flow analysis, based on
           the Corporation's current incremental borrowing rate for similar
           types of borrowing arrangements.

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

           Off-Balance-Sheet Risk

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



                                      25




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE K - FINANCIAL INSTRUMENTS AND OFF-BALANCE SHEET RISK (Continued)

           Off-Balance-Sheet Risk (Continued)

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

           The Corporation had outstanding loan commitments aggregating
           $16,122,000 and $9,367,000 and outstanding financial standby
           letters of credit aggregating $641,000 and $498,000 at
           December 31, 1999 and 1998, respectively.

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

NOTE L - EMPLOYEE BENEFIT PLANS

           On January 1, 1996, the Bank established a 401(k) plan for its
           employees. All employees are eligible to participate in the 401(k)
           after completion of age and service requirements. An employee can
           be enrolled as a participant on the first "Enrollment Date" after
           reaching age 18 and completing six months of service.
           Contributions to the plan by the Bank are discretionary. As of
           October 1, 1998, the Corporation began matching 50% of the first
           6% of employee contributions to the plan. Employer contributions
           vest 20% per year for five years. During 1999 and 1998, employer
           contributions were $31,000 and $8,000, respectively.

NOTE M - REGULATORY MATTERS

           The Corporation and Bank 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 financial statements. Under capital adequacy
           guidelines and the regulatory framework for prompt corrective
           action, the Corporation and Bank must meet specific capital
           guidelines that involve quantitative measures of assets,
           liabilities, and certain off-balance-sheet items as calculated
           under regulatory accounting practices. The capital amounts and
           classifications are also subject to qualitative judgments by the
           regulators about components, risk weightings, and other factors.

           Quantitative measures established by regulation to ensure capital
           adequacy require the Corporation and Bank to maintain minimum
           amounts and ratios (set forth in the table below) of total and
           Tier 1 capital (as defined in the regulations) to risk-weighted
           assets (as defined), and of Tier 1 capital (as defined) to average
           assets (as defined).




                                      26




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE M - REGULATORY MATTERS (Continued)

           The following is a presentation of the Corporation's and Bank's
           regulatory capital ratios (in thousands):


<TABLE>
<CAPTION>
                                                                                    Minimum
                                                                             To Be Well Capitalized
                                                       Minimum For Capital  Under Prompt Corrective
                                          Actual        Adequacy Purposes      Action Regulations
                                     ---------------   -------------------  -----------------------
                                     Amount    Ratio   Amount        Ratio    Amount         Ratio
                                     ------    -----   ------        -----    ------         -----
<S>                                 <C>        <C>     <C>           <C>      <C>            <C>
As of December 31, 1999
    Total capital
      (to risk weighted assets)
          Consolidated              $28,864    32.1%   $7,193        8.0%     $8,992       10.0%
          Bank                       12,878    15.1%    6,824        8.0%      8,531       10.0%
    Tier I capital
      (to risk weighted assets)
          Consolidated               28,083    31.2%    3,597        4.0%      5,395        6.0%
          Bank                       12,097    14.2%    3,412        4.0%      5,118        6.0%
    Tier I capital
      (to average assets)
          Consolidated               28,083    19.2%    5,860        4.0%      7,325        5.0%
          Bank                       12,097     9.2%    5,255        4.0%      6,568        5.0%

As of December 31, 1998
    Total capital
      (to risk weighted assets)
          Consolidated               29,642    38.1%    6,223        8.0%      7,779       10.0%
          Bank                       10,622    16.2%    5,245        8.0%      6,557       10.0%
    Tier I capital
      (to risk weighted assets)
          Consolidated               29,015    37.3%    3,112        4.0%      4,668        6.0%
          Bank                        9,995    15.2%    2,623        4.0%      3,934        6.0%
    Tier I capital
      (to average assets)
          Consolidated               29,015    22.4%    5,170        4.0%      6,463        5.0%
          Bank                        9,995     9.0%    4,438        4.0%      5,547        5.0%
</TABLE>


           Based on the respective regulatory capital ratios at December 31,
           1999 and 1998, the Corporation and Bank are considered to be well
           capitalized.


NOTE N - COMMON STOCK OFFERING

           On April 8, 1998, the Corporation completed its initial public
           offering of 1,407,527 shares of common stock at a price of $13.73
           per share and began trading on the Nasdaq SmallCap Market. During
           1999, the Corporation began trading on the Nasdaq National Market.



                                      27




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

 NOTE O - STOCK  REPURCHASE  PLAN

           The Corporation approved a Stock Repurchase Plan, by which the
           Corporation may repurchase up to 125,000 outstanding common shares
           of the Corporation on the open market at a price ranging from
           $5.00 to $13.00. As of December 31, 1999, the Corporation had
           repurchased 30,555 shares of the Corporation at an average price
           per share of $6.29. The shares that were repurchased are being
           reserved for future corporate uses.


NOTE P - STOCK OPTION PLAN

           Options to buy common stock are granted to officers and employees
           under a Stock Option Plan which provides for issue of up to
           255,000 shares. Exercise price is the market price at date of
           grant. The maximum option term is ten years, and options vest
           fully after six months from the date of grant. If an option
           expires or terminates without having been exercised, such option
           becomes available for future grant under the Plan.

           A summary of the option activity is as follows:
                                                                    Weighted
                                                        Weighted  Average Fair
                                 Available              Average     Value of
                                    for      Options    Exercise    Options
                                   Grant   Outstanding   Price      Granted
                                 --------- -----------  --------  ------------

Outstanding at January 1, 1997    255,000       --         --
Granted                           (46,002)    46,002    $   8.91    $   6.29
                                  -------     ------    --------
Outstanding at December 31, 1997  208,998     46,002        8.91
Granted                           (33,150)    33,150       12.75        6.28
                                  -------    -------    --------
Outstanding at January 1, 1998    175,848     79,152       10.52
Granted                           (71,000)    71,000       11.23        4.01
                                  -------    -------    --------
Outstanding at January 1, 1999    104,848    150,152    $  10.85
                                  =======    =======    ========

           For the options outstanding at December 31, 1999, the range of
           exercise prices was $8.91 to $12.75 per share with a
           weighted-average remaining contractual term of 8.4 years. At
           December 31, 1999, 1998 and 1997, 150,152, 79,152, and 46,002
           options were exercisable at weighted average exercise prices of
           $10.85, $10.52, and $8.91 per share, respectively.

           Had compensation cost for stock options been measured using the
           fair value method of FASB Statement No. 123, net income and
           earnings per share would have been the pro forma amounts indicated
           below (in thousands, except per share data). The pro forma effects
           may increase in the future if more options are granted.


                                        1999      1998      1997
                                        ----      ----      ----
Net income
          As reported                  $ 530     $ 950     $ 610
          Pro forma                      245       813       419
Basic and diluted income per share
          As reported                  $0.21     $0.45     $0.57
          Pro forma                     0.10      0.38      0.39


                                      28




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE P - STOCK OPTION PLAN (continued)

           The pro forma effects are computed with option pricing models,
           using the following weighted average assumptions as of grant date.

                                         1999        1998         1997
                                         ----        ----         ----
Risk-free interest rate                   4.94%        5.79%        6.67%
Expected option life                    9 years    10 years     10 years
Dividend yield                            0.00%        0.00%        0.00%
Expected volatility of stock price       33.45%       22.38%       51.23%

           All share and per share amounts have been adjusted for stock
           dividends.


NOTE Q - INCOME PER SHARE

           The following is a reconciliation of the numerator and denominator
           of the basic and diluted income per share calculation for the
           years ended December 31, 1999, 1998 and 1997 (in thousands, except
           share and per share data):


                                            1999         1998        1997
                                            ----         ----        ----
Basic
   Net income                            $      530   $      950   $      610

   Weighted average common shares         2,472,352    2,099,239    1,065,767

   Basic earnings per common share       $     0.21   $     0.45   $     0.57

 Diluted
  Net income                             $      530   $      950   $      610

  Weighted average common shares
      outstanding for basic earnings
      per ommon share                     2,472,352    2,099,239    1,065,767

   Add:  Dilutive effects of assumed
       exercises of stock options              --         13,627       11,155

   Average shares and dilutive
      potential common shares             2,472,352    2,112,866    1,076,922

   Diluted earnings per common share     $     0.21   $     0.45   $     0.57


           Stock options for 150,152 shares of common stock were not
           considered in computing diluted earnings per common share for 1999
           because they were antidilutive. All share and per share amounts
           have been adjusted for stock dividends. Stock options for 60,500
           shares were granted on January 18, 2000.


                                      29




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE R - ISSUED BUT NOT YET ADOPTED ACCOUNTING STANDARDS

Beginning January 1, 2001, a new accounting standard will require all
derivatives to be recorded at fair value. Unless designated as hedges,
changes in these fair values will be recorded in the income statement. Fair
value changes involving hedges will generally be recorded by offsetting gains
and losses on the hedge and on the hedged item, even if the fair value of the
hedged item is not otherwise recorded. This is not expected to have a
material effect, but the effect will depend on derivative holdings when this
Standard applies.












                                      30




                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997

NOTE S - PARENT ONLY CONDENSED FINANCIAL INFORMATION

           The condensed financial information that follows presents the
           financial condition of the parent company, Dearborn Bancorp, Inc.,
           along with the results of its operations and its cash flows.

                           CONDENSED BALANCE SHEETS

(In thousands)                                             December 31,
                                                        ------------------
                                                         1999       1998
                                                        -------    -------
ASSETS
          Cash and cash equivalents                     $ 1,428    $ 2,185
          Investment securities                          11,176     14,460
          Investment in subsidiary                       11,448      9,985
          Advances to subsidiary                          2,000       --
          Other assets                                    1,881      1,803
                                                        -------    -------
          Total assets                                  $27,933    $28,433
                                                        =======    =======
LIABILITIES AND
     STOCKHOLDERS' EQUITY
          Mortgage payable                              $   493    $   517
          Other liabilities                                 180        185
          Stockholders' equity                           27,260     27,731
                                                        -------    -------

          Total liabilities and stockholders' equity    $27,933    $28,433
                                                        =======    =======

                        CONDENSED STATEMENTS OF INCOME

(In thousands)                                  Years Ended December 31,
                                                ------------------------
                                                1999      1998      1997
                                                ----      ----      ----
Interest income                                 $ 852     $ 655     $  58
Operating expenses                               (424)     (259)      (68)
                                                -----     -----     -----
Income (loss) before equity in undistributed
   income (loss) of subsidiary
                                                  428       396       (10)
Equity in undistributed income
  of subsidiary                                   102       554       620
                                                -----     -----     -----
                    Net income                  $ 530     $ 950     $ 610
                                                =====     =====     =====



                                      31



                    DEARBORN BANCORP, INC. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       December 31, 1999, 1998 and 1997


NOTE S - PARENT ONLY CONDENSED FINANCIAL INFORMATION  (Continued)

                      CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

           (In thousands)                                    Years Ended December 31,
                                                           -----------------------------
                                                           1999         1998        1997
                                                           ----         ----        ----
<S>                                                       <C>         <C>          <C>
Cash flows from operating activities
          Net income                                      $   530     $    950     $   610
          Adjustments to reconcile net income
          to net cash provided by
          operating activities
               Equity in undistributed income
                     of subsidiary                           (102)        (554)       (620)
               Other                                            5          114          66
                                                          -------     --------     -------
Net cash flows provided by
          operating activities                                433          510          56

Cash flows from investing activities
          Investment in subsidiary                         (2,000)      (2,004)     (2,600)
          Advances to subsidiary                           (2,000)        --          --
          Purchases of securities - available for sale     (7,748)     (20,608)     (1,000)
          Maturity of securities - available for sale       8,375        4,150       1,000
          Sale of securities - available for sale           2,400        1,998        --
          Property and equipment acquired                    --           --           (14)
                                                          -------     --------     -------
Net cash flows (used in)
          investing activities                               (973)     (16,464)     (2,614)

Cash flows from financing activities
          Proceeds from sale of common stock                 --         17,978        --
          Proceeds due stockholders on
                    Oversubscription of stock                --           --          (145)
          Purchase of treasury stock                         (193)        --          --
          Reduction of mortgage payable                       (24)         (20)        (17)
                                                          -------     --------     -------
Net cash flows provided by (used in)
          financing activities                               (217)      17,958        (162)

Increase (decrease) in cash and
          cash equivalents                                   (757)       2,004      (2,720)
Cash and cash equivalents at
          beginning of year                                 2,185          181       2,901
                                                          -------     --------     -------

Cash and cash equivalents at end of year                  $ 1,428     $  2,185     $   181
                                                          =======     ========     =======



                                      32




                        REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholders
Dearborn Bancorp, Inc. and Subsidiary
Dearborn, Michigan


We have audited the accompanying consolidated balance sheet of Dearborn
Bancorp, Inc. and subsidiary as of December 31, 1999 and the related
consolidated statement of income, changes in stockholders' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
consolidated financial statements of Dearborn Bancorp, Inc. and subsidiary as
of December 31, 1998 and for the years ended December 31, 1998 and 1997, were
audited by other auditors whose report dated February 17, 1999, expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 Dearborn Bancorp, Inc. and subsidiary as of December 31, 1999, and the
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.





                                                Crowe, Chizek and Company LLP

Grand Rapids, Michigan
March 3, 2000






                                      33




       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

General

The Corporation was formed in 1992 and the Bank was formed in 1993. Principal
operations of the Bank commenced on February 28, 1994 when the Bank opened
for business at its main office, located at 22290 Michigan Avenue, Dearborn,
Michigan. On December 20, 1995, the Bank opened its second office, located at
24935 West Warren Avenue, Dearborn Heights, Michigan. On August 11, 1997, the
Bank opened its third office, located at 44623 Five Mile Road, Plymouth
Township, Michigan.

Forward Looking Statements

The following discussion contains forward-looking statements that are based
on management's beliefs, assumptions, current expectations, estimates and
projections about the financial services industry, the economy, and about the
Corporation and Bank. Words such as "anticipates", "believes", "estimates",
"expects", "forecasts", "intends", "is likely", "plans", "projects",
variations of such words and similar expressions are intended to identify
such forward- looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
("Future Factors") that are difficult to predict with regard to timing,
extent, likelihood and degree of occurrence. Therefore, actual results and
outcomes may materially differ from what may be expressed or forecasted in
such forward-looking statements. The Corporation undertakes no obligation to
update, amend or clarify forward-looking statements, whether as a result of
new information, future events (whether anticipated or unanticipated), or
otherwise.

Future Factors include changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking regulation;
changes in tax laws; changes in prices, levies and assessments; the impact of
technological advances; governmental and regulatory policy changes; the
outcomes of contingencies; trends in customer behavior as well as their
ability to repay loans; and changes in the national and local economy. These
are representative of the Future Factors that could cause a difference
between an ultimate actual outcome and a preceding forward-looking statement.

Results of Operations

1999 Compared to 1998. The Corporation reported net income of $530,000 in
1999 compared to $950,000 in 1998. The Corporation's decrease in net income
was primarily due to an increase in the provision for possible credit losses
and an increase in non-interest expense , which was partially offset by the
continued increase in net interest income.

1998 Compared to 1997. The Corporation reported net income of $950,000 in
1998 compared to $610,000 in 1997. The improvement from 1997 to 1998 was
primarily a factor of growth in the volume of investments, loans and deposits
and the corresponding net interest income associated with the increased
volumes.





                                      34




Net Interest Income

1999 Compared to 1998. Net interest income for the period ended December 31,
1999 was $4.9 million compared to $3.8 million for the period ended December
31, 1998, an increase of $1.1 million or 29%. This increase was caused
primarily by an increase in average earning assets of $21.8 million between
the periods while interest bearing liabilities grew by $15.7 million.
Management believes that average net earning assets will continue to grow in
volume consistent with 1999 growth.

The Corporation's interest rate spread increased to 2.44% in 1999 from 2.03%
in 1998. The Corporation's net interest margin also increased in 1999 to
3.69% from 3.41% in 1998. The increases in net interest spread and net
interest margin were primarily the result of increases in the volume of net
earning assets and decreases in the cost of deposits. While management is
continually reviewing spreads and margins, future increases in the net
interest margin are primarily expected from volume growth.

1998 Compared to 1997. Net interest income for the period ended December 31,
1998 was $3.8 million compared to $2.4 million for the period ended
December 31, 1997, an increase of $1.4 million or 58%. This increase was
caused primarily by an increase in average earning assets of $45.1 million
between the periods while interest bearing liabilities grew by $29.1 million.

The Corporation's interest rate spread decreased to 2.03% in 1998 from 2.54%
in 1997. The Corporation's net interest margin also decreased in 1998 to
3.41% from 3.60% in 1997. However, the decreases in net interest spread and
net interest margin were offset by increases in the volume of net earning
assets. The Corporation's decrease in interest rate spread and net interest
margin was a direct result of the repositioning of investment funds and
decreases in loan yields due to declining interest rates.


Average Balances, Interest Rates and Yields. Net interest income is affected
by the difference ("interest rate spread") between rates of interest earned
on interest earning assets and rates of interest paid on interest bearing
liabilities and the relative amounts of interest bearing liabilities and
interest earning assets. When the total of interest earning assets
approximates or exceeds the total of interest bearing liabilities, any
positive interest rate spread will generate net interest income. Financial
institutions have traditionally used interest rate spreads as a measure of
net interest income. Another indication of an institution's net interest
income is its "net yield on interest earning assets" or "net interest
margin," which is net interest income divided by average interest earning
assets.





                                      35




The following table sets forth certain information relating to the
Corporation's consolidated average interest earning assets and interest
bearing liabilities and reflects the average yield on assets and average cost
of liabilities for the periods indicated. Such yields and costs are derived
by dividing income or expense by the average daily balance of assets or
liabilities, respectively, for the periods presented. During the periods
indicated, non-accruing loans, if any, are included in the net loan category.


</TABLE>
<TABLE>
<CAPTION>
                                                     Year Ended December 31, 1999     Year Ended December 31, 1998
                                                   -------------------------------   --------------------------------
                                                   Average                 Average   Average                 Average
(In thousands)                                     Balance     Interest     Rate     Balance     Interest      Rate
                                                   -------     --------    -------   -------     --------    -------
<S>                                               <C>           <C>         <C>     <C>          <C>          <C>
Assets
   Federal funds sold and interest
             bearing deposits with banks          $  3,973      $  213      5.36%   $  9,827     $  527       5.36%
   Investment securities, available for sale        56,573       3,162      5.59%     42,853      2,504       5.84%
   Loans                                            73,327       6,302      8.59%     59,355      5,259       8.86%
                                                  --------      ------      -----    -------     ------       -----
             Sub-total earning assets              133,873       9,677      7.23%    112,035      8,290       7.40%
   Other assets                                      6,525                             5,273
                                                  --------                          --------

             Total assets                         $140,398                          $117,308
                                                  ========                          ========

Liabilities and stockholders' equity
   Interest bearing deposits                       $98,185      $4,687      4.77%   $ 82,702     $4,425       5.35%
   Other interest bearing  liabilities                 753          48      6.37%        505         41       8.12%
                                                  --------      ------      ----    --------     ------       ----
             Sub-total interest bearing
               liabilities                          98,938       4,735      4.79%     83,207      4,466       5.37%
   Non-interest bearing deposits                    13,159                            10,706
   Other liabilities                                   727                               509
   Stockholders' equity                             27,574                            22,886
                                                  --------                          --------
             Total liabilities and
                stockholders' equity              $140,398                          $117,308
                                                  ========                          ========
             Net interest income                                $4,942                           $3,824
                                                                ======                           ======
             Net interest rate spread                                       2.44%                             2.03%
                                                                            ====                              ====
             Net interest margin on
               earning assets                                               3.69%                             3.41%
                                                                            ====                              ====

</TABLE>



                                      36



<TABLE>
<CAPTION>
                                                    Year Ended December 31, 1997
                                                  -------------------------------
                                                  Average                 Average
(In thousands)                                    Balance     Interest     Rate
                                                  -------     --------    -------
<S>                                               <C>           <C>         <C>
Assets
   Federal funds sold and interest
             bearing deposits with banks          $ 3,351       $  188      5.61%
   Investment securities, available for sale       20,031        1,235      6.17%
   Loans                                           43,533        3,981      9.14%
                                                  -------       ------      ----
             Sub-total earning assets              66,915        5,404      8.08%
   Other assets                                     4,361
                                                  -------

             Total assets                         $71,276
                                                  =======

Liabilities and stockholders' equity
   Interest bearing deposits                      $53,559       $2,955      5.52%
   Other interest bearing  liabilities                582           43      7.39%
                                                  -------       ------      ----
             Sub-total interest bearing
               liabilities                         54,141        2,998      5.54%
   Non-interest bearing deposits                    8,374
   Other liabilities                                  322
   Stockholders' equity                             8,439
                                                  -------

             Total liabilities and
                stockholders' equity              $71,276
                                                  =======
             Net interest income                                $2,406
                                                                 ======
             Net interest rate spread                                       2.54%
                                                                            ====
             Net interest margin on
               earning assets                                               3.60%
                                                                            ====

</TABLE>



                                      37




Rate/Volume Analysis. The following table analyzes net interest income in
terms of changes in the volume of interest-earning assets and
interest-bearing liabilities and changes in yields and rates. The table
reflects the extent to which changes in the interest income and interest
expense are attributable to changes in volume (changes in volume multiplied
by prior year rate) and changes in rate (changes in rate multiplied by prior
year volume). Changes attributable to the combined impact of volume and rate
have been allocated proportionately to changes due to volume and changes due
to rate.


<TABLE>
<CAPTION>
                                                                1999/1998                             1998/1997
                                                        Change in Interest due to:            Change in Interest due to:
                                                     -------------------------------      -------------------------------
                                                     Average     Average        Net       Average      Average      Net
(In thousands)                                       Balance       Rate       Change      Balance       Rate      Change
                                                     -------     -------      ------      -------      -------    ------
<S>                                                <C>           <C>          <C>          <C>          <C>        <C>
Assets
          Federal funds sold and interest
               bearing deposits with banks         $  (314)      $  --        $  (314)     $   347      $  (8)     $   339
          Investment securities, available
               for sale                                767          (109)         658        1,334        (65)       1,269
          Loans                                      1,201          (158)       1,043        1,402       (124)       1,278
                                                   -------       -------      -------      -------      -----      -------
Total earning assets                               $ 1,654       $  (267)     $ 1,387      $ 3,083      $(197)     $ 2,886
                                                   =======       =======      =======      =======      =====      =======

Liabilities
          Interest bearing deposits                $   739       $  (477)     $   262        1,559      $ (89)     $ 1,470
          Other borrowings                              16            (9)           7           (6)         4           (2)
                                                   -------       -------      -------      -------      -----      -------
Total interest bearing liabilities                 $   755       $  (486)     $   269      $ 1,553      $ (85)     $ 1,468
                                                   =======       =======      =======      =======      =====      =======

                Net interest income                                           $ 1,118                              $ 1,418
                                                                              =======                              =======

                Net interest rate spread                                         0.41%                               (0.51%)
                                                                              =======                              =======

                Net interest margin on earning
                    assets                                                       0.28%                               (0.19%)
                                                                              =======                              =======
</TABLE>


Provision for Possible Credit Losses

1999 Compared to 1998. The provision for possible credit losses was $772,000
in 1999, compared to $120,000 in 1998. The increase in the provision for
possible credit losses was primarily a result of replenishing the provision
for possible credit losses for a commercial loan charge-off in the amount of
$584,000 and secondarily to provide for loan growth. Management expects that
during the year 2000, the provision for possible credit losses will
approximate one percent of loan growth. The provision for possible credit
losses was based upon management's assessment of relevant factors, including
types and amounts of non-performing loans, historical and anticipated loss
experience on such types of loans, and current and projected economic
conditions. Management currently has no knowledge of any performing loan,
non-performing loan or impaired loan that may result in a significant
charge-off during 2000.

1998 Compared to 1997. The provision for possible credit losses was $120,000
in 1998, compared to $164,000 in 1997. The increase in the provision for
possible credit losses was primarily a result of loan growth during 1998. The
provision for possible credit losses was based upon management's assessment
of relevant factors, including types and amounts of non-performing loans,
historical and anticipated loss experience on such types of loans, and
current and projected economic conditions. Refer to Note D of the Notes to
Consolidated Financial Statements for additional information.



                                      38




Non-interest Income

1999 Compared to 1998. Non-interest income was $558,000 in 1999 compared to
$533,000 in 1998, an increase of $25,000 or 5%. The increase in non-interest
income was primarily due to gain on sale of mortgage loans. Increases in the
gain on sale of mortgage loans were a result of a refinancing boom and the
addition of a mortgage loan originator in April of 1999 bringing the total
number of mortgage loan originators to three. As the refinancing boom ended
in mid 1999 due to an increasing interest rate environment, the mortgage
origination staff was able to maintain origination volume by moving from
mortgage loan refinancing to new purchase mortgage loans. Management expects
in 2000 that mortgage origination will be dominated by new purchase mortgages
and that volumes of mortgages originated will continue to grow with an
addition of one or more qualified mortgage originators to the staff of the
Bank.

Service charges increased from 1998 to 1999 due to an increase in the number
of deposit accounts and an increase in non-sufficient funds fees. During
2000, management anticipates an increase in service charges on deposit
accounts primarily as a result of opening new accounts.

1998 Compared to 1997. Non-interest income was $533,000 in 1998 compared to
$312,000 in 1997, an increase of $221,000 or 71%. The increase in
non-interest income was primarily due to the gain on sale of mortgage loans
due to a decreasing interest rate environment that led to a mortgage
refinancing boom.

Non-interest Expense

1999 Compared to 1998. Non-interest expense was $3.8 million in 1999 compared
to $2.9 million in 1998, an increase of $0.9 million or 31%. The largest
components of the change in non-interest expense were salaries and employee
benefits which amounted to $2.2 million and professional services which
amounted to $333,000 in 1999. In 1998, salaries and employee benefits and
professional services were $1.7 million and $166,000, respectively. The
primary factor for the increase in salaries and employee benefits expense was
the expansion of the retail banking and lending departments during 1999 in
anticipation of future growth. As of December 31, 1999, the number of full
time equivalent employees was 40 as compared to 36 as of December 31, 1998.
Management anticipates that salaries and employee benefits will continue to
grow as the Corporation increases in asset size. In addition, approximately
five full time equivalent employees will be added to the staff during the
third quarter of 2000 in anticipation of the opening of a branch office in
Canton Township, Michigan during the fourth quarter of 2000.

The increase in professional services was primarily due to three one-time
charges. First, the Corporation was accepted for listing on the Nasdaq
National Market and incurred a one-time application and entry fee of $49,000.
Second, the Bank successfully defended itself against a lawsuit without merit
and incurred $50,000 in legal expense. And third, the Corporation spent
$30,000 on outside technical support related to Year 2000 issues.

1998 Compared to 1997. Non-interest expense was $2.9 million in 1998 compared
to $2.1 million in 1997, an increase of $0.8 million or 38%. The largest
components of non-interest expense were salaries and employee benefits which
amounted to $1.7 million and occupancy and equipment expense which amounted
to $411,000 in 1998. In 1997, salaries and employee benefits and occupancy
and equipment expense were $1.2 million and $267,000, respectively. The
primary factor for these increases was the opening of the Bank's office in
Plymouth Township in August 1997 and the expansion of the operations and
lending departments on 1998. As of December 31, 1998, the number of full time
equivalent employees was 36 as compared to 26 as of December 31, 1997.


Income Tax Provision

1999 Compared to 1998. The income tax expense was $394,000 in 1999 compared
to $346,000 in 1998, an increase of $48,000 or 14%. Although pretax income
decreased from 1998 to 1999, the provision for income taxes increased as a
result of changes in deferred tax assets and liabilities. Refer to Note J of
the Notes to Consolidated Financial Statements for additional information.

1998 Compared to 1997. The income tax expense was $346,000, compared to an
income tax benefit was $145,000 in 1997, an increase of $491,000. The
increase was primarily due to the exhaustion of net operating loss
carry-forwards from inception in 1992 through 1997. Refer to Note J of the
Notes to Consolidated Financial Statements for additional information.


                                      39




Comparison of Financial Condition at December 31, 1999 and December 31, 1998

Assets. Total assets at December 31, 1999 were $152.7 million compared to
$126.8 million at December 31, 1998, an increase of $25.9 million or 20%. The
increase was primarily due to increases in loans and investment securities
available for sale funded by increases in deposits and Federal Home Loan Bank
advances.

Investment Securities - Available for Sale. Total investment securities
available for sale, at December 31, 1999 were $55.0 million compared to $50.2
million at December 31, 1998, an increase of $4.8 million or 10%. During
1999, the Corporation purchased $43.7 million in securities and $33.8 million
of securities were called or matured during the year. In addition, the
Corporation sold securities of $3.7 million and recognized losses on such
sales in the amount of $12,000. The Bank's portfolio of investment securities
- available for sale have an amortized cost and estimated market value of
$56.3 million and $55.0 million, respectively. The securities and their
weighted average yield are as follows (in thousands):

                                                          Estimated  Weighted
                                             Amortized      Market    Average
                                 Par Value     Cost         Value      Yield
                                 ---------   ---------    --------   --------
US treasury securities            $ 2,000     $ 2,320     $ 2,244     5.12%
US government agency securities    53,815      53,822      52,655     5.64%
Municipal securities (tax
   equivalent adjusted)               125         125         123     5.30%
                                  -------     -------     -------     ----

          Totals                  $55,940     $56,267     $55,022     5.62%
                                  =======     =======     =======     ====


The entire portfolio matures in one to five years and has an unrealized loss
of $1.2 million. The unrealized loss is reflected by an adjustment to
stockholders' equity and the recognition of a deferred tax asset and is not
expected to impact net interest income as the Corporation intends to hold the
majority of these securities until maturity. All securities within the
Corporation's U.S. treasury or U.S. government sponsored agency portfolios
carry AAA ratings. The Corporation does not hold any securities in the "Held
to Maturity" category nor does the Corporation hold or utilize derivatives.
Refer to Note B of the Notes to Consolidated Financial Statements for
additional information.


Loans. Total loans at December 31, 1999 were $85.4 million compared to $66.0
million at December 31, 1998, an increase of $19.4 million or 29%. The
components of the outstanding balances and percentage increase in loans from
1998 to 1999 are as follows (in thousands):

                                       1999            1998
                                 ----------------  --------------- Increase
                                 Balance  Percent  Balance Percent (Decrease)
                                 ------- --------  ------- ------- ----------
Consumer loans                   $10,967   12.84%  $12,434  18.83%  (11.80%)
Commercial, financial, & other    20,563   24.08%   14,843  22.48%   38.54%
Commercial real estate
    construction                   3,656    4.28%    2,619   3.97%   39.60%
Commercial real estate mortgages  23,103   27.06%   12,478  18.90%   85.15%
Residential real estate
  mortgages                       27,101   31.74%   23,649  35.82%   14.60%
                                 -------  ------   ------- ------   ------
                                 $85,390  100.00%  $66,023 100.00%   29.33%
                                 =======  ======   ======= ======   ======



                                      40




During 1999, the Bank purchased $948,000 in indirect automobile loans from
local dealers compared to $3.8 million in 1998. The decrease was a result of
substantially lower rates offered by the major captive finance companies as
well as a flow of consumers moving toward lease financing. The decrease in
new indirect auto leasing coupled with runoff resulted in the decrease in the
total consumer loan portfolio. Management expects that the consumer loan
portfolio will nominally increase during 2000.

During 1999, all types of commercial loans increased as a result of an
addition of a Senior Lender and a solid business development program.
Management expects the commercial lending segments to increase as a
percentage of the loan portfolio during 2000 via business development
programs and the addition of one or two commercial lenders. These types of
loans carry a relatively large average balance and produce more cross-selling
opportunities and are typically well secured by equipment, receivables or
real estate.

Residential real estate mortgages also increased in 1999. This increase was
primarily due to the addition of a Mortgage Loan Originator in 1999. In 2000,
management anticipates that residential mortgage loans will increase with the
addition of one or more mortgage loan originators.

A maturity and repricing schedule of the loan portfolio is listed below (in
thousands):
<TABLE>
<CAPTION>

                                       Within   Three to  One to     After
                                       Three     Twelve    Five      Five
                                       Months    Months    Years     Years     Total
                                       ------   -------   ------     -----     -----
<S>                                   <C>       <C>       <C>           <C>   <C>
Consumer loans                        $ 3,987   $   394   $ 6,455       131   $10,967
Commercial, financial & other          10,774     1,077     8,112       495    20,458
Commercial real estate construction     3,656      --        --        --       3,656
Commercial real estate mortgages          980       748    15,115     6,260    23,103
Residential real estate mortgages         600     4,430    15,536     6,535    27,101
                                      -------   -------   -------   -------   -------

                                      $19,997   $ 6,649   $45,218   $13,421    85,285
                                      =======   =======   =======   =======
Non-accrual loans                                                                 105
                                                                              -------
          Total loans                                                         $85,390
                                                                              =======

Loans at fixed interest rates         $ 1,023   $ 1,655   $30,254   $12,992   $45,924
Loans at variable interest rates       18,974     4,994    14,964       429    39,361
                                      -------   -------   -------   -------   -------

                                      $19,997   $ 6,649   $45,218   $13,421    85,285
                                      =======   =======   =======   =======
Non-accrual loans                                                                 105
                                                                              -------
          Total loans                                                         $85,390
                                                                              =======
</TABLE>


Variable rate loans comprise 46% of the loan portfolio. The interest rate of
these loans change or reprice at specific intervals according to certain
market indices. The remainder of the loan portfolio has a fixed interest rate
until maturity.





                                      41




The aggregate balances on non-performing loans and the reduction in interest
income associated with these loans at December 31, are as follows (in
thousands):


                                                 1999      1998       1997
                                                 ----      ----       ----
Troubled debt restructuring                     $ --      $ --      $   --
Over 90 days past due                             190         2           25
Non-accrual loans                                 105       410           11
                                                -----     -----     --------

Total non-performing assets                     $ 295     $ 412     $     36
                                                =====     =====     ========

As a percentage of total loans                   0.35%     0.62%        0.02%
                                                =====     =====     ========

Income in accordance with original loan terms   $  22     $  20     $      2
Income recognized                                 (13)     --           --

The Bank automatically places any loan that has been partially charged-off or
any loan to borrowers in bankruptcy proceedings on non-accrual. The Bank on a
discretionary basis places loans on non-accrual when a borrower is in
bankruptcy where adequate security cannot be demonstrated and the borrower
ceases paying interest. All other loans are typically placed on non-accrual
after the borrower is ninety days or more past due unless collection is
expected within 60 days.


Allowance for Possible Credit Losses. The allowance for possible credit
losses at December 31, 1999 was $781,000 compared to $627,000 at December 31,
1998, an increase of $154,000 or 25%. Transactions in the allowance for
possible credit losses for the years ended December 31, are as follows (in
thousands):


                                                 1999      1998       1997
                                                 ----      ----       ----
Balance, beginning of year                      $ 627     $ 522     $    366
Charge-offs:
     Consumer loans                               (55)      (15)          (8)
     Commercial loans                            (584)     --           --

Recoveries:
     Consumer loans                                21      --           --
                                               ------    ------     --------

Net charge-offs                                  (618)      (15)          (8)

Additions charged to operations                   772       120          164
                                               ------    ------     --------

Balance at end of period                        $ 781     $ 627     $    522
                                               ======    ======     ========

Allowance to total loans                         0.91%     0.95%        1.01%
                                               ======    ======     ========

Allowance to non-performing assets             264.75%   152.18%    1,450.00%
                                               ======    ======     ========

Net charge-offs to average loans                 0.84%     0.03%        0.02%
                                               ======    ======     ========


Charge-offs increase from 1998 to 1999 primarily due to a $584,000 charge-off
of one commercial loan relationship which unexpectedly declared bankruptcy
and closed its doors for business.



                                      42



The increase in the allowance for possible credit losses was based upon
management's assessment of relevant factors, including types and amounts of
non-performing loans, historical and anticipated loss experience on such
types of loans, and current and projected economic conditions. Management
expects that the allowance for possible credit losses to total loan ratio
will approximate one percent during 2000.

The allocation of the allowance for possible credit losses as of December 31,
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                 1999                      1998                 1997
                                          ---------------------  ---------------------   ----------------------
                                                    Percent of             Percent of               Percent of
                                                  loans in each          loans in each            loans in each
                                                   category to            category to              category to
                                          Amount   total loans   Amount   total loans    Amount    total loans
                                          ------  -------------  ------  -------------   ------   -------------
<S>                                        <C>       <C>           <C>       <C>          <C>         <C>
  Consumer loans                           $16       12.73%        $20       18.83%       $15         24.37%
  Commercial, financial & other            239       23.86%        266       22.48%         7         20.46%
  Commercial real estate construction        3        4.24%          2        3.39%         1          3.35%
  Commercial real estate mortgages          16       26.81%          9       18.90%         7         18.79%
  Residential real estate mortgages         45       32.36%        101       36.40%        12         33.03%
  Unallocated                              462         N/A         229         N/A        480           N/A
                                          ----      ------        ----      ------       ----        ------
                                          $781      100.00%       $627      100.00%      $522        100.00%
                                          ====      ======        ====      ======       =====       ======
</TABLE>

Premises and Equipment. Bank premises and equipment were $2.4 million at
December 31, 1999 and December 31, 1998. The Corporation intends to open a
new branch office in Canton Township, Michigan in the fourth quarter of 2000.
Expenditures for the project in 1999 were $126,000. The estimated total
expenditures for the project are $1.7 million, including land, building
construction, furniture and equipment.

Accrued Interest Receivable. Accrued interest receivable at December 31, 1999
was $1.4 million compared to $0.9 million at December 31, 1998, an increase
of $0.5 million or 56%. The increase was due to increased loan volume and the
increased volume of investment securities, available for sale, for which
interest is receivable semi-annually.

Other Assets. Other assets at December 31, 1999 were $736,000 compared to
$372,000 at December 31, 1998, an increase of $364,000 or 98%. The increase
was due to an increase in the Bank's recognition of a deferred tax asset
related to the unrealized loss on the investment securities, available for
sale portfolio.





                                      43




Deposits. Total deposits at December 31, 1999 were $118.9 million compared to
$97.6 million at December 31, 1998, an increase of $21.3 million or 22%. The
components of the outstanding balances and percentage increase in deposits
from 1998 to 1999 are as follows (in thousands):

                                    1999                1998
                             -----------------   -----------------  Increase/
                              Balance  Percent   Balance   Percent  Decrease)
                              -------  -------   -------   -------  --------
Non-interest bearing:
    Demand                   $ 14,859    12.50%  $11,142    11.41%   33.36%
                             --------   ------   -------   ------    -----

Interest bearing:
    Checking                 $  5,391     4.53%  $ 3,630     3.72%   48.51%
    Money market               13,013    10.95%   11,215    11.49%   16.03%
    Savings                     3,109     2.62%    2,079     2.13%   49.54%
    Time, under $100,000       40,984    34.48%   42,790    43.84%   (4.22)%
    Time, $100,000 and over    41,519    34.93%   26,754    27.41%   55.19%
                             --------   ------   -------   ------    -----
                             $104,016   100.00%  $86,468   100.00%   20.29%
                             ========   ======   =======   ======    =====


The increase in deposits was primarily due to growth in time deposits. During
1999, the Bank completed one major marketing campaign, an annual birthday
celebration in March, offering a premium rate of interest on time deposits.
This campaign raised in excess of $7.3 million in new deposits in a period of
approximately one week. In addition to the birthday campaign, the Bank
aggressively sought out public funds, in the form of time deposits, $100,000
and over, in the local communities that the Bank serves. Public funds at
December 31, 1999 were $8.2 million compared to $2.7 million at December 31,
1998. Additional growth in all types of deposits was achieved via a strong
business development program which includes normal marketing, telemarketing,
referral and visitation programs. At December 31, 1999, within the large
concentration of time deposits, $100,000 or more, the Bank considers 97% of
these deposits to be core deposits, based upon the length of the relationship
with customers and other deposit or lending relationships maintained at the
Bank.

The Corporation has historically relied heavily on time deposits as a
percentage of total deposits to fund the growth of the Corporation. These
deposits are sensitive to changes in the interest rate environment. During
2000, transaction based deposit products are expected to increase and time
deposits are expected to decrease as a percentage of total deposits.

Final maturities of total time deposits are as follows (in thousands):


                                              $100,000   Less than
                                              And over    $100,000    Total
                                              --------   ---------    -----
Due in three months or less                   $10,191     $ 7,259    $17,450
Due in over three months through six months    12,047      14,198     26,245
Due in over six months through one year        17,180      11,780     28,960
Due in one year through five years              2,101       7,747      9,848
                                              -------     -------    -------
          Totals                              $41,519     $40,984    $82,503
                                              =======     =======    =======





                                      44




The following is a summary of the distribution and weighted average interest
rate of deposits at December 31 (in thousands):


                                            1999                  1998
                                      ------------------  -------------------
                                                Weighted             Weighted
                                                Average              Average
                                      Amount     Rate      Amount     Rate
                                      ------    --------  -------   ---------
Non-interest bearing:
           Demand                    $ 14,859     --      $11,142       --
                                     ========             =======


Interest bearing:
            Checking                  $ 5,391    2.96%    $ 3,630      2.96%
            Money market               13,013    3.39%     11,215      3.39%
            Savings                     3,109    2.50%      2,079      2.50%
            Time, under $100,000       40,984    5.16%     42,790      5.51%
            Time, $100,000 and over    41,519    5.44%     26,754      5.45%
                                     --------             -------
                                     $104,016             $86,468
                                     ========             =======

During the first half of 1999, the Corporation was able to reprice the
majority of its time deposits at lower rates than 1998 due to a decreasing
rate environment that started late in 1998 and ended in the middle of 1999.
During 2000, management believes that time deposits will become more costly
as the interest rate environment increases.


Federal Home Loan Bank Advances. Federal Home Loan Bank advances at December
31, 1999 amounted to $2.0 million as compared to $0.0 at December 31, 1998.
These funds were utilized to fund commercial lending activity and provide
additional liquidity. Management expects to secure additional advances in
2000. In 1999, the Bank joined the Federal Home Loan Bank of Indianapolis.
Membership in the Federal Home Loan Bank provides the Bank with a stable
source of additional funding at a reasonable cost. Federal Home Loan Bank
advances are collateralized with investment securities - available for sale.
The Bank can secure additional advances in the amount of $5.3 million with
the securities that are currently pledged to the Federal Home Loan Bank.

Accrued Interest Payable. Accrued interest payable at December 31, 1999 was
$469,000 compared to $338,000 at December 31, 1998. The increase was due to
the increase in the volume of time deposits during 1999.





                                      45




Capital

Stockholders' equity at December 31, 1999 was $27.3 million compared to $27.7
million as of December 31, 1998, a decrease of $0.4 million or 1%. Capital
decreased during 1999 primarily due to the after-tax effects of unrealized
losses on available for sale investment securities in an increasing interest
rate environment. Management anticipates that interest rates will continue to
modestly increase during 2000 and plans to hold the majority of the available
for sale investment securities until maturity at which time no loss will be
recognized.

At December 31, 1999 the Bank and Corporation exceeded all applicable
regulatory capital requirements as described in Note M - Regulatory Matters.
Based on the Corporation's December 31, 1999 capital to asset ratio of 17.85
percent, management has the capacity to grow the assets of the Corporation to
approximately $340,000,000 before the necessity to raise additional capital,
while maintaining a minimum 8.00% capital to assets ratio.

In November of 1999, the Corporation announced that it would repurchase up to
125,000 shares of its outstanding common stock at a price range of $5.00 to
$13.00 per share, which represents approximately five percent of the
outstanding common stock. Through December 31, 1999, the Corporation was able
to repurchase 30,555 shares within Securities and Exchange Commission
compliance guidelines. Considering that the Corporation's stock closed at
$6.00 per share on December 31, 1999, representing a 54 percent market to
book ratio, management believes that its stock is highly undervalued. Given
such bargain market prices, the Corporation will continue to repurchase
shares during 2000.


Liquidity and Asset and Liability Management

Liquidity refers to readily available funds to meet the needs of borrowers
and depositors. Levels of liquidity are closely monitored in conjunction with
loan funding requirements and deposit outflows. Adequate liquidity protects
institutions from raising funds under duress at excessive expense and
provides a necessary cushion for occasional unpredictable aberrations in
demand. While adequate liquidity is imperative, excessive liquidity in lower
yielding cash investments or other easily marketable assets reduces potential
interest income. Thus, an appropriate balance must be maintained to protect
the institution and at the same time, prudently maximize income
opportunities. Sources of liquidity from both assets and liabilities includes
federal funds sold, securities available for sale, loan repayments, core
deposits and a federal funds purchase credit facility.

The Corporation has sought to manage its exposure to changes in interest
rates by matching more closely the effective maturities or repricing
characteristics of the Corporation's interest earning assets and interest
bearing liabilities. The matching of the assets and liabilities may be
analyzed by examining the extent to which the assets and liabilities are
interest rate sensitive and by monitoring the expected effects of interest
rate changes on net interest income.

An asset or liability is interest rate sensitive within a specific time
period if it will mature or reprice within that time period. If the
Corporation's assets mature or reprice more quickly or to a greater extent
that its liabilities, the Corporation's net portfolio value and net interest
income would tend to increase during periods of rising interest rates but
decrease during periods of falling interest rates. If the Corporation's
assets mature or reprice more slowly or to a lesser extent than its
liabilities, its net portfolio value and net interest income would tend to
decrease during periods of rising interest rates but increase during periods
of falling interest rates.

In 1999, the Bank sold investment securities - available for sale and secured
a Federal Home Loan Bank advance to fund increases in the level of loan
activity. Management expects loan volume to continue to increase in 2000 and
expects to fund that growth with deposit growth and additional Federal Home
Loan Bank advances.





                                      46



Interest Rate Sensitivity Analysis. The matching of assets and liabilities
may be analyzed by examining the extent to which such assets and liabilities
are "interest rate sensitive" and by monitoring an institution's interest
rate sensitivity "gap." An asset or liability is said to be interest rate
sensitive within a specific period if it will mature or reprice within that
period. The interest rate sensitivity "gap" is the difference between the
amount of interest earning assets maturing or repricing within a specific
time period and the amount of interest bearing liabilities maturing or
repricing within that time period. A gap is considered positive when the
amount of interest rate sensitive assets exceeds the amount of interest rate
sensitive liabilities, and is considered negative when the amount of interest
rate sensitive liabilities exceed the amount of interest rate sensitive
assets. During a period of rising interest rates, a negative gap would be
expected to adversely affect net interest income while a positive gap would
be expected to result in an increase in net interest income, while conversely
during a period of declining interest rates, a negative gap would be expected
to result in an increase in net interest income and a positive gap would be
expected to adversely affect net interest income.

Different types of assets and liabilities with the same or similar maturities
may react differently to changes in overall market rates or conditions, and
thus changes in interest rates may affect net interest income positively or
negatively even if an institution were perfectly matched in each maturity
category. Additionally, the gap analysis does not consider the many factors
as banking interest rates move. While the interest rate sensitivity gap is a
useful measurement and contributes toward effective asset and liability
management, it is difficult to predict the effect of changing interest rates
solely on that measure, without accounting for alterations in the maturity or
repricing characteristics of the balance sheet that occur during changes in
market interest rates. During periods of rising interest rates, the
Corporation's assets tend to have prepayments that are slower than those in
an interest rate sensitivity gap and would increase the negative gap
position. Conversely, during a period of falling interest rates, the
Corporation's assets would tend to prepay faster than originally expected
thus decreasing the negative gap position. In addition, some of the
Corporation's assets, such as adjustable rate mortgages, have caps on the
amount by which their interest rates can change in any single period, and
therefore may not reprice as quickly as liabilities in the same maturity
category.

The following table sets forth the amounts of interest earning assets and
interest bearing liabilities outstanding at December 31, 1999 which are
expected to mature or reprice in each of the time periods shown below. For
the purposes of this table, the maturity or repricing periods of other
interest bearing deposits are based upon industry experience in decay rates
as determined by the Company's regulators. These rates are not the
contractual repricing periods, which are shorter than what is shown, as
management has broad discretion in repricing these deposits.

<TABLE>
<CAPTION>
                   RATE SENSITIVITY ANALYSIS / GAP ANALYSIS

                                                          Interest Rate Sensitivity Period
                                                  -------------------------------------------------
(In thousands)                                    1-90     91-365       1-5        Over
                                                  Days      Days        Years     5 Years     Total
                                                  ----     ------       -----     -------     -----
<S>                                            <C>        <C>         <C>        <C>        <C>
Earning assets
          Federal funds sold                   $  4,963   $   --      $   --     $   --     $  4,963
          Mortgage loans held for sale              783       --          --         --          783
          Securities available for sale            --         --        55,022       --       55,022
          Federal Home Loan Bank stock              381       --          --         --          381
          Total loans                            20,102      6,649      45,218     13,421     85,390
                                               --------   --------    --------   --------   --------
Total earning assets                             26,229      6,649     100,240     13,421    146,539

Interest bearing liabilities
          Time deposits                          17,450     55,204       9,849       --       82,503
          Other interest bearing deposits         2,376      7,131      12,006       --       21,513
          Federal funds purchased                 3,000       --          --         --        3,000
          Federal Home Loan Bank advances         2,000       --          --         --        2,000
          Mortgage payable                            6         20         154        313        493
                                               --------   --------    --------   --------   --------
Total interest bearing liabilities               24,832     62,355      22,009        313    109,509

Net asset (liability) funding gap                 1,397    (55,706)     78,231     13,108     37,030
                                               --------    --------   --------   --------    ========

Cumulative net asset (liability) funding gap   $  1,397   $(54,309)   $ 23,922   $ 37,030
                                               ========   ========    ========   ========
</TABLE>

                                      47




Impact of Inflation and Changing Prices

The Consolidated Financial Statements presented herein have been prepared in
accordance with generally accepted accounting principles, which require the
measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation. The primary impact of inflation is
reflected in the increased cost of the Corporation's operations. Unlike most
industrial companies, virtually all the assets and liabilities of the
Corporation are monetary in nature. As a result, interest rates have a more
significant impact on a financial institution's performance than do the
effects of general levels of inflation. Interest rates do not necessarily
move in the same direction, or to the same extent, as the prices of goods and
services.


Year 2000 Issue

During 1999, the Corporation completed its comprehensive Year 2000 (Y2K) plan
in preparing for the Year 2000 date change. The plan involved identifying and
providing a remedy for date recognition problems that might pertain to any
facets of the Corporation's business. These included problems in computer
hardware and software, physical plant and other equipment, working with third
parties to address their Year 2000 issues, assessing major loan and deposit
customers for potential risk and developing contingency plans to address
potential risks in the event of Year 2000 failures. To date, the Corporation
has experienced no disruption in service of any type in the transition to
2000.

During 1999 and 1998, $110,000 and $65,000, respectively, were charged to
expense for depreciation, employee wages and professional services to test,
remediate and upgrade computer workstations, software and networks.

Although considered unlikely, unanticipated problems in the Corporation's
core business process, including problems associated with non-compliant third
parties and disruptions to the economy in general, could still occur despite
efforts to date to remedy affected systems and develop contingency plans. All
business processes will continue to be monitored, including interaction with
the Corporation's customers, vendors and other third parties, throughout 2000
to address any issues and ensure all processes continue to function properly.






                                      48




                            DEARBORN BANCORP, INC.

                            DIRECTORS AND OFFICERS





DIRECTORS

WILBER M. BRUCKER, JR.                 MICHAEL J. ROSS
Retired, Attorney                      President and Chief Executive Officer
                                       Community Bank of Dearborn
MARGARET I. CAMPBELL
Retired, Consultant                    DR. ROBERT C. SCHWYN
                                       Physician
JOHN E. DEMMER
Chairman of the Board and              RONNIE J. STORY
   Chief Executive Officer             President and Chief
Jack Demmer Ford, Inc. and               Executive Officer
Jack Demmer Leasing                    Story Development Corp. and
                                         Story Brothers Grading & Excavating
MICHAEL V. DORIAN, JR.
Vice President                         OFFICERS
Mike Dorian Ford
                                       JOHN E. DEMMER
DAVID HIMICK                           Chairman of the Board and
Financial Consultant                        Chief Executive Officer

DONALD G. KARCHER                      RICHARD NORDSTROM
Chairman of the Board                  Vice Chairman
Karcher Agency, Inc.
                                       MICHAEL J. ROSS
BRADLEY F. KELLER                      President
President
Braden Associates, Inc. and            JEFFREY L. KARAFA
MultiGard Properties, Ltd.             Vice President, Treasurer
                                         and Secretary
JEFFREY G. LONGSTRETH
President                              DONALD G. KARCHER
Prudential Christie Real Estate        Vice President

RICHARD NORDSTROM
Retired, Architect





                                      49




                          COMMUNITY BANK OF DEARBORN

                                   OFFICERS




JOHN E. DEMMER                             GARY AMES JR.
Chairman of the Board                      Controller

MICHAEL J. ROSS                            DANIEL A. BZURA
President                                  Branch Officer, Dearborn Heights
Chief Executive Officer
                                           CYNTHIA M. IMMONEN
TIMOTHY J. CUTTLE                          Loan Operations Officer
Executive Vice President
Loan Administration                        DENIS T. NISSLE
                                           Private Banking Officer, Plymouth
WARREN R. MUSSON
Vice President                             CYNTHIA A. PIZZO
Senior Loan Officer                        Branch Officer, Dearborn

BRIAN A. MAMO                              STEVEN P. SLADE
Vice President                             Consumer Banking Officer
Commercial Loan Officer
                                           DENISE STAFFELD
JEFFREY L. KARAFA                          Senior Mortgage Loan Officer
Vice President
CFO,  Cashier & Secretary                  SUSAN M. VETTRAINO
                                           Retail Operations Officer
H. KRISTENE RAUTIO
Vice President                             CHARLES P. WASCZENSKI
Branch Administration                      Branch Officer, Plymouth

JEFFREY J. WOLBER                          PAMELA G. WILKS
Vice President                             Data Operations Officer
Sales & Product Manager









                                      50




<TABLE>
<CAPTION>
                               BRANCH LOCATIONS




<S>                                             <C>     <C>
Main Office                                     Hours:  9:30 AM - 4:30 PM  Monday through Thursday
22290 Michigan Avenue                                   9:30 AM - 6:00 PM  Friday
PO Box 2247                                             9:30 AM - 1:00 PM  Saturday, Drive-In Only
Dearborn, Michigan  48123-2247
Phone:     (313)  274-1000
Fax:       (313)  274-5050
Cynthia A. Pizzo, Branch Officer



Warren Avenue and Silvery Lane                  Hours:  9:00 AM - 4:30 PM  Monday through Thursday
24935 West Warren Avenue                                9:00 AM - 6:00 PM  Friday
Dearborn Heights, Michigan  48127
Phone:     (313)  724-0100
Fax:       (313)  724-1010
Daniel A. Bzura, Branch Officer



Five Mile and Sheldon Road                      Hours:  9:00 AM - 4:30 PM  Monday through Thursday
44623 Five Mile                                         9:00 AM - 6:00 PM  Friday
Plymouth, Michigan  48170                               9:30 AM - 1:00 PM  Saturday, Walk-Up Window
Phone:     (734)  454-1000
Fax:       (734)  454-0123
Charles P. Wasczenski, Branch Officer

</TABLE>




                                      51




























                            DEARBORN BANCORP, INC.
                            22290 Michigan Avenue
                                 PO Box 2247
                        Dearborn, Michigan 48123-2247

                            Phone: (313) 274-1000