<PAGE>

                                                                     EXHIBIT 13.

                          [DEARBORN BANCORP INC. LOGO]

                               and its subsidiary

                              [COMMUNITY BANK LOGO]
                                   OF DEARBORN
                              ---------------------

                                      2005
                                  ANNUAL REPORT

<PAGE>

                             DEARBORN BANCORP, INC.

                               AND ITS SUBSIDIARY

                           COMMUNITY BANK OF DEARBORN

CONTENTS

<TABLE>
<S>                                                                      <C>
Corporate Information.................................................    3

Chairman's and President's Letter to Stockholders.....................    4

Summary of Selected Financial Data....................................    7

Report of Independent Auditors........................................    9

Consolidated Balance Sheets...........................................   12

Consolidated Statements of Income.....................................   13

Consolidated Statements of Changes in Stockholders' Equity............   14

Consolidated Statements of Cash Flows.................................   16

Notes to Consolidated Financial Statements............................   18

Management's Discussion and Analysis..................................   45

Dearborn Bancorp, Inc. Directors and Officers.........................   65

Community Bank of Dearborn Directors and Executive Officers...........   66

Community Bank of Dearborn Officers...................................   67

Community Bank of Dearborn Subsidiaries...............................   68

Investor Information..................................................   70
</TABLE>

                                        2
<PAGE>

                             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"). Dearborn
Bancorp, Inc. trades on the Nasdaq National Market under the symbol "DEAR".

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. Subsequently, branch offices were opened in
Dearborn Heights, Plymouth Township, Canton Township and Clinton Township. On
February 13, 2003, the Bank opened a branch office in Southgate, Michigan. The
Bank opened a regional lending center and branch office in Auburn Hills,
Michigan on May 15, 2003. The Bank consolidated the three branches of the Bank
of Washtenaw, acquired by the Corporation on October 29, 2004 into the Bank's
operations. This consolidation included a branch office in Saline, Michigan, a
branch office in Ann Arbor, Michigan and a regional lending center in Ann Arbor,
Michigan.

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, ATM services, telephone banking
services, loan services (commercial, consumer, real estate mortgages),
travelers' checks, cashiers' checks, wire transfers, safe deposit boxes,
collection services, night depository service and internet banking services. The
Bank does not have a trust department.

In 2005, the Bank introduced its website, www.cbdear.com, with online banking
capabilities to the public. The Bank's customers are able to execute transfers
to their accounts and view their account information and transactions.
Commercial customers have the option of utilizing the cash management module.
This feature enables commercial customers to designate multiple users, initiate
wire transfers, process ACH transactions, perform stop payments, and process
federal tax payments. During its first year of operation, over 1,000 users have
signed up for online banking. The website also contains product information
regarding the Bank's loan and deposit products and the Corporation's most recent
financial information.

COMMUNITY BANK INSURANCE AGENCY, INC.

On August 19, 1997, the Bank formed Community Bank Insurance Agency, Inc. This
company conducts limited insurance-related activities and holds a minority
interest in Michigan Bankers Title Company of East Michigan, LLC, a title
insurance company.

COMMUNITY BANK MORTGAGE, INC.

On May 1, 2001, the Bank formed Community Bank Mortgage, Inc., a mortgage
company that originates and holds commercial and residential mortgage loans.

COMMUNITY BANK AUDIT SERVICES, INC.

On March 13, 2002, the Bank formed Community Bank Audit Services, Inc., a
company that offers internal auditing and compliance services to financial
institutions.

                                        3
<PAGE>

To Our Stockholders:

      During 2005, we shifted emphasis from seeking rapid growth to improving
profitability. For much of our corporate history, we have, of necessity, placed
the highest priority on expanding both our deposit base and our geographic
footprint in Southeast Michigan. This was the only way that we could make the
transition from a start-up enterprise to an established financial institution.

      With our continued expansion into Oakland, Macomb and Washtenaw Counties,
we have been able to turn much of our focus to improving the profitability of
Community Bank. For the most part, this involved generating quality loans as our
primary goal and then seeking the deposits and other liabilities needed to fund
them. Earlier in our history, we were not as well established that we could be
as certain of obtaining all the funding we needed at competitive cost as we are
today.

      As our financial performance in 2005 demonstrates, this new confidence in
our ability to acquire funds on demand has made a marked difference in the
profitability of our Corporation. Net income for the 12 months ended December
31, 2005, was $7,510,000. This figure was 36.3 percent more than 2004 earnings
of $5,509,000. Because of our successful stock offering in mid-year, 2004, fully
diluted earnings per share of $1.32 for all of 2005 are not directly comparable
with diluted earnings per share of $1.16 in 2004.

      Reflecting the change in our approach to building our business, total
assets went up 8.25 percent during 2005 to stand at $706,497,000 as the year
ended. They had been $652,662,000 one year earlier. Over the course of the year,
total deposits increased 7.7 percent to $582,438,000 from $540,880,000 at the
end of 2004. Total loans, however, grew by 11.8 percent. They were $657,037,000
on December 31, 2005, while they had been $587,562,000 twelve months earlier.

      Earnings for the full year as well as assets, deposits and loans at
year-end all established new records for our Corporation. Stockholders' equity
was also at record levels. It was $84,213,000 at the end of the year, 12.9
percent more than it had been one year earlier when it was $74,604,000. By every
standard, our capital position is far in excess of that required by the federal
banking regulators of organizations such as ours.

      The return on average assets was 1.08 percent, comfortably above the 1.00
percent "standard of excellence" for which we strive. Our return on average
equity of 9.44 percent is still not at our long-term goal of 15 percent but this
is largely a matter of leverage, which we approach cautiously to avoid undue
risk at this stage of our corporate history.

      It should also be noted that during the Second Quarter of 2005, we
recognized a $696,000 decline in the fair market value of 80,000 shares of
Federal Home Loan Mortgage Corporation preferred stock that we purchased in
2001. At the time, we anticipated continuing to hold these securities in our
investment portfolio. Further changes in the mortgage market and continued
uncertainty about the regulation of this government sponsored enterprise led us
to sell the preferred shares later in the year.

      Although we have continued our loan expansion, we have not compromised our
credit quality standards in order to attract new business. During 2005, our net
loan charge-offs were just $157,000 or 0.02 percent of total loans. Moreover, at
the end of the year, our total nonperforming assets were only $1,836,000, less
than 0.3 percent of total loans. This included $663,000 of real estate owned,
which was carried on our books at fair market value and is expected to be sold
during 2006. The allowance for loan losses was $6,808,000 or 1.04 percent of
total loans at December 31, 2005.

                                        4
<PAGE>

      During recent years, we were fairly aggressive residential mortgage
lenders and our mortgage banking activities made a meaningful contribution of
our overall profitability. The end of the refinancing "boom" and gradually
rising long-term interest rates, however, have resulted in a marked decline in
mortgage lending volume. Today, we still consider ourselves "active" mortgage
lenders but we have greatly reduced the fixed overhead devoted to the support of
retail mortgage lending. As a consequence, we have kept these market changes
from having a major impact on our profitability.

      As we have scaled back residential lending, we have placed greater
emphasis on commercial real estate mortgage and construction lending. Because
the yields on these loans tend to make them an advantageous use of funds, this
transition has had a very positive effect on our profitability.

      This increased emphasis on commercial real estate lending has helped us
deal with the disappearing difference between short-term and long-term interest
rates that has taken place over the past 18 months. The Federal Reserve Open
Market Policy Committee had repeatedly raised short-term interest rates during
that time. Long-term rates, however, which are increasingly set in the global
money markets, have not experienced a corresponding increase. This diminishing
"yield curve" has had a significant impact on the profitability of most
community banking organizations. Traditionally, they have "borrowed" funds at
short-term rates from their depositors and profitably employed them in loans and
investments at long-term rates. Today, this is very hard to do and many of these
institutions are reporting declines in earnings.

      On the other hand, our strategy of seeking commercial loans paying higher
interest rates has allowed us to keep a profitable spread between our cost of
funds and the yields on our loans. It is the primary reason why our net interest
income after provision for loan losses was 38.9 percent higher in 2005 than it
was in 2004.

      The economic problems facing the Detroit metropolitan area and the rest of
southeast Michigan are well known. There is no denying a problem exists. In the
midst of an automotive depression, however, there are still many pockets of
prosperity in our market area. Our task is to identify those sectors of the
economy where business is still good and profitable and then solicit deposits
and loans from the people and business organizations to be found there.

      Our financial results suggest that we have been successful in this
endeavor. In the midst of bad news, it is easy to forget that southeast Michigan
is still the tenth largest market for financial services in the United States.
The deposit totals at all financial institutions, excluding credit unions, in
the four counties we have offices are in excess of $77 billion. We currently
hold less than one percent of those deposits. For that reason, we do not let the
problems we see around us cloud our vision of further growth and greater
profitability for our Corporation in the years to come.

                                        5
<PAGE>

      Beyond the size of the markets where we do business, there are two other
factors that suggest our long-term aspirations are quite realistic. The first is
the fact that we have acquired the infrastructure, both in terms of facilities
and, more important, people, that will allow us to grow at a reasonably rapid
rate for some time without commensurate increases in overhead. Our present staff
can handle an appreciably greater volume of business in our current locations
without any deterioration in the high quality customer service that has been a
key ingredient in our success to date.

      Moreover, we have plenty of capital available to support both internal
growth and expansion through acquisitions. A case could be made that we now have
"too much" capital. Experienced bankers, however, know that there is no such
thing as "too much" capital. It is organizations with the strongest capital
positions that are best able to seize attractive opportunities as they arise.
Our senior officers and directors are constantly on the alert for potential
branch sites and possible mergers or acquisitions. We are also in regular
contact with several investment banking firms that know of our keen interest in
having prospective transactions brought to our attention.

      It is within the context of the foregoing background that the directors
and senior officers of our Corporation anticipate compounding our past progress
in 2006 and the years beyond. Obviously, our growth rates by percentage will
decline as we grow, but we expect to be larger and more profitable at this time
next year and we see no impediments to continuing success in the foreseeable
future. We are pleased with what we have accomplished and look forward to
serving our stockholders in the future as we have done in the past.

      It would not be appropriate to close this Annual Report letter without
noting the passing in January, 2006, of our Vice Chairman, Richard Nordstrom.
Dick was one of the incorporators of Dearborn Bancorp, Inc., and had been a
director of both the holding company and Community Bank since we commenced
operations. He was a successful businessman and a distinguished architect who
made numerous contributions to the success of our Corporation over the years.
The directors and senior officers who knew him well will miss him, and everyone
associated with our organization extends our sincere condolences to Dick's
family.

      Our Annual Meeting will be held at Park Place in Dearborn on Tuesday May
16, 2006 at 4:00pm. We hope that you will be able to attend in person. In
addition, we look forward to reporting on our business in greater detail,
hearing your comments and suggestions and responding to your questions.

                                   Sincerely,

          John E. Demmer                                      Michael J. Ross
       Chairman of the Board                                   President and
                                                         Chief Executive Officer

                                        6
<PAGE>

                       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, 2005 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, 2005 and 2004,
and the Consolidated Statements of Income for the years ended December 31, 2005,
2004 and 2003 are included elsewhere in this Annual Report.

<TABLE>
<CAPTION>
(In thousands, except share and per share data)      2005          2004         2003        2002         2001
                                                 -----------   ----------   ----------   ----------   -----------
<S>                                              <C>           <C>          <C>          <C>          <C>
OPERATIONS
Interest income                                  $    43,855   $   29,790   $   23,564   $   18,259   $    14,585
Interest expense                                      16,403        9,409        8,631        7,505         7,405
                                                 -----------   ----------   ----------   ----------   -----------
Net interest income                                   27,452       20,381       14,933       10,754         7,180
Provision for loan losses                              1,081        1,400        1,699        1,052           920
                                                 -----------   ----------   ----------   ----------   -----------
Net interest income after provision for loan
losses                                                26,371       18,981       13,234        9,702         6,260
Total non-interest income                                722        1,332        2,829        1,674         1,460
Total non-interest expense                            15,716       11,967       10,735        7,372         5,379
                                                 -----------   ----------   ----------   ----------   -----------
Income before federal income tax expense              11,377        8,346        5,328        4,004         2,341
Income tax expense                                     3,867        2,837        1,807        1,357           802
                                                 -----------   ----------   ----------   ----------   -----------
Net income                                       $     7,510   $    5,509   $    3,521   $    2,647   $     1,539
                                                 ===========   ==========   ==========   ==========   ===========
FINANCIAL CONDITION
Total assets                                     $   706,497   $  652,662   $  446,075   $  325,100   $   226,865
Mortgage loans held for sale                           1,041        1,692        1,505        9,852         2,915
Investment securities, available for sale             17,153       21,075       16,948       22,216        21,652
Federal Home Loan Bank stock                           1,293        1,122        1,073        1,033         1,000
Loans                                                657,037      587,562      400,958      267,522       180,892
Allowance for loan losses                             (6,808)      (5,884)      (4,314)      (2,875)       (1,922)
Other assets                                          36,781       26,226        8,757        7,902         6,454
Deposits                                             582,438      540,880      379,619      262,086       177,481
Federal Home Loan Bank advances                       25,588       20,614       20,638       20,660        20,000
Subordinated debentures                               10,000       10,000       10,000       10,000            --
Other borrowings                                       1,615        4,115           --           --            --
Other liabilities                                      2,643        2,449        1,217        1,663         1,481
Stockholders' equity                                  84,213       74,604       34,601       30,691        27,903

PER SHARE INFORMATION (1)
Net income per common share - basic              $      1.40   $     1.27   $     0.99   $     0.76   $      0.43
Net income per common share - diluted            $      1.32   $     1.16   $     0.91   $     0.72   $      0.42
Book value per common share                      $     15.53   $    14.12   $     9.68   $     8.76   $      7.64
Average shares outstanding  - basic                5,352,709    4,324,223    3,544,534    3,484,262     3,604,774
Average shares outstanding - diluted               5,702,764    4,732,011    3,851,752    3,662,859     3,680,509
Shares outstanding at end of period                5,423,556    5,285,096    3,576,215    3,502,832     3,652,228

OTHER DATA
Return on average assets                                1.08%        1.05%        0.89%        0.93%         0.76%
Return on average equity                                9.44%       10.56%       10.80%        9.08%         5.46%
Net interest margin                                     4.14%        4.04%        3.97%        3.94%         3.76%
Net interest spread                                     3.62%        3.69%        3.63%        3.37%         2.91%
Allowance for loan losses to total loans                1.04%        1.00%        1.08%        1.07%         1.06%
Nonperforming assets to total assets                    0.26%        0.47%        0.42%        0.84%         0.35%
Stockholders' equity to total assets                   11.92%       11.43%        7.76%        9.44%        12.30%
Total interest expense to gross interest income        37.40%       31.58%       36.63%       41.10%        50.77%
Number of offices                                         12           12            8            6             5
</TABLE>

(1)   All share and per share amounts have been adjusted to reflect the issuance
      of stock dividends.

                                        7
<PAGE>

                             COMMITMENT TO COMMUNITY

      Commitment to community is one of the primary principles upon which
Dearborn Bancorp, Inc. and its primary subsidiary, Community Bank of Dearborn
was founded. Since the Community Bank of Dearborn opened for business in 1994,
management has emphasized the importance of community involvement and community
development as part of the Bank's mission. In fact, the majority of the Bank's
directors, officers and employees live in the communities that are serviced by
the Bank. During 2005, the Bank provided the following local organizations with
financial support or personal involvement:

99 Huskies                            Dearborn Rotary Club
Agape Christian Academy, Canton       Dearborn Senior Center
American Arab Chamber of Commerce     Dearborn Symphony Orchestra
American Red Cross                    Dexter Area Chamber of Commerce
Ann Arbor Chamber of Commerce         Downriver Senior Olympics
Ann Arbor Summer Festival             Festival of Trees
Ann Arbor Symphony Orchestra          Garden City Hospital Foundation
Auburn Hills Chamber of Commerce      Garden Club of Dearborn
Canton Chamber of Commerce            Goodwill Industries of Greater Detroit
Canton Community Foundation           Henry Ford Community College Foundation
Canton Exchange Club                  Holiday on the Avenue, Dearborn
Canton Liberty Festival               Junior League Goodwill
Canton Lion's Club                    Lakeland Broncos
Canton Senior Safety Coalition        Mike Adray Memorial Foundation
Canton Senior Center                  New Morning School
Central Macomb Chamber of Commerce    North Oakland Baseball Federation
Clinton Township Senior Expo          Oakwood Health Care Foundation
Dearborn Baseball                     Orchestra Canton
Dearborn Board of Realtors            Plymouth Chamber of Commerce
Dearborn Chamber of Commerce          Plymouth Community Arts Center
Dearborn Community Arts Council       Royal Oak Police
Dearborn Elderfest                    Saint Joseph Mercy Saline Hospital
Dearborn Exchange Club                Saline Area Chamber of Commerce
Dearborn Goodfellows                  Saline Celtic Festival
Dearborn Heights Chamber of Commerce  Showcase Plymouth
Dearborn Heights Lions Club           Sig Krug Memorial Foundation
Dearborn Heights Park & Recreation    Southern Wayne County Chamber of Commerce
Dearborn Heights Spirit Festival      St. Joseph Hospital
Dearborn Homecoming                   Trenton Rotary Club
Dearborn Kiwanis                      Turning Point
Dearborn Optimist Club                Washtenaw Development Council
Dearborn Outer Drive Kiwanis          Washtenaw Housing Alliance
Dearborn Police Officers Charity      Washtenaw United Way
                                      Wayne County Treasurers Association
                                      Western Wayne Association of Realtors
                                      Westland Foundation
                                      Wyandotte Catholic Consolidated School
                                      Ypsilanti Chamber of Commerce
                                      YWCA of Western Wayne County



































                                        8
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Dearborn
Bancorp, Inc. and subsidiary as of December 31, 2005 and 2004, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2005. 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 audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Dearborn Bancorp, Inc. and subsidiary as of December 31, 2005 and 2004, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2005, in conformity with U. S. generally accepted
accounting principles.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Dearborn
Bancorp, Inc.'s internal control over financial reporting as of December 31,
2005, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated March 8, 2006 expressed an unqualified opinion
thereon.

                                                Crowe Chizek and Company LLC

Grand Rapids, Michigan
March 8, 2006

                                        9
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Dearborn
Bancorp, Inc. maintained effective internal control over financial reporting as
of December 31, 2005, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Dearborn Bancorp, Inc.'s management is responsible
for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the company's internal control over financial
reporting based on our audit

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that Dearborn Bancorp, Inc. maintained
effective internal control over financial reporting as of December 31, 2005, is
fairly stated, in all material respects, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also in our opinion, Dearborn
Bancorp, Inc. maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2005, based on criteria established
in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements of Dearborn Bancorp, Inc. and our report dated March 8, 2006
expressed an unqualified opinion on those consolidated financial statements.

                                               Crowe Chizek and Company LLC

Grand Rapids, Michigan
March 8, 2006

                                       10
<PAGE>

                 REPORT BY DEARBORN BANCORP, INC. AND SUBSIDIARY
                  ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining an effective system
of internal control over financial reporting presented in conformity with
generally accepted accounting principles. There are inherent limitations in the
effectiveness of any system of internal control. Accordingly, even an effective
system of internal control can provide only reasonable assurance with respect to
financial statement preparation.

Management assessed the Company's systems of internal control over financial
reporting presented in conformity with generally accepted accounting principles
as of December 31, 2005. This assessment was based on criteria for effective
internal control over financial reporting described in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, management believes that, as of
December 31, 2005, Dearborn Bancorp, Inc. maintained effective control over
financial reporting presented in conformity with generally accepted accounting
principles based on those criteria.

The Company's independent auditors have issued an audit report on our assessment
of the Company's internal control over financial reporting.

Dearborn Bancorp, Inc. and Subsidiary

/s/ Michael J. Ross
---------------------------------------
Michael J. Ross.
President and Chief Executive Officer

/s/ Jeffery L. Karafa
---------------------------------------
Jeffery L. Karafa
Vice President, Treasurer and Secretary

                                       11
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       December 31,
                                                                 -----------------------
(Dollars, in thousands)                                             2005         2004
                                                                 ----------   ----------
<S>                                                              <C>          <C>
ASSETS
Cash and cash equivalents
          Cash and due from banks                                $    7,118   $    5,946
          Federal funds sold                                          2,268       12,640
          Interest bearing deposits with banks                           69        2,283
                                                                 ----------   ----------
                    Total cash and cash equivalents                   9,455       20,869

Mortgage loans held for sale                                          1,041        1,692
Securities, available for sale                                       17,153       21,075
Federal Home Loan Bank stock                                          1,293        1,122
Loans
          Loans                                                     657,037      587,562
          Allowance for loan losses                                  (6,808)      (5,884)
                                                                 ----------   ----------
                    Net loans                                       650,229      581,678

Bank premises and equipment, net                                     13,792       13,124
Real estate owned                                                       663          138
Goodwill                                                              5,473        7,080
Other intangible assets                                               2,291          902
Accrued interest receivable                                           2,586        1,889
Other assets                                                          2,521        3,093
                                                                 ----------   ----------
          Total assets                                           $  706,497   $  652,662
                                                                 ==========   ==========

LIABILITIES
Deposits
          Non-interest bearing deposits                          $   59,652   $   63,065
          Interest bearing deposits                                 522,786      477,815
                                                                 ----------   ----------
                    Total deposits                                  582,438      540,880

Other liabilities
          Securities sold under agreements to repurchase              1,615        4,115
          Federal Home Loan Bank advances                            25,588       20,614
          Other liabilities                                             960        1,342
          Accrued interest payable                                    1,683        1,107
          Subordinated debentures                                    10,000       10,000
                                                                 ----------   ----------
                    Total liabilities                               622,284      578,058

STOCKHOLDERS' EQUITY
          Common stock - no par value 10,000,000 shares
                   authorized, 5,423,556  and 5,285,096  shares
                   outstanding in 2005 and 2004, respectively        83,944       74,918
          Unearned restricted stock awards                             (260)          --
          Retained earnings                                             573          344
          Accumulated other comprehensive (loss)                        (44)        (658)
                                                                 ----------   ----------
                    Total stockholders' equity                       84,213       74,604
                                                                 ----------   ----------

                    Total liabilities and stockholders' equity   $  706,497   $  652,662
                                                                 ==========   ==========
</TABLE>

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

                                       12
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                            ------------------------------------
(In thousands, except share data)                              2005         2004         2003
                                                            ----------   ----------   ----------
<S>                                                         <C>          <C>          <C>
Interest income
          Interest on loans                                 $   42,904   $   29,040   $   22,764
          Interest on securities, available for sale               598          460          522
          Interest on deposits with banks                          111          129          153
          Interest on federal funds                                242          161          125
                                                            ----------   ----------   ----------
                    Total interest income                       43,855       29,790       23,564

Interest expense
          Interest on deposits                                  14,427        8,013        7,212
          Interest on other liabilities                          1,976        1,396        1,419
                                                            ----------   ----------   ----------
                    Total interest expense                      16,403        9,409        8,631

                    Net interest income                         27,452       20,381       14,933
Provision for loan losses                                        1,081        1,400        1,699
                                                            ----------   ----------   ----------

Net interest income after provision for loan  losses            26,371       18,981       13,234
                                                            ----------   ----------   ----------
Non-interest income
          Service charges on deposit accounts                      639          569          459
          Fees for other services to customers                      79           30           29
          Gain on the sale of loans                                578          674        2,130
          Gain (loss) on the sale of investment securities         (44)          --           89
          Loss on the write-down of securities                    (696)          --           --
          Gain (loss) on the sale of real estate owned              92          (28)          --
          Other income                                              74           87          122
                                                            ----------   ----------   ----------
                    Total non-interest income                      722        1,332        2,829

Non-interest expenses
          Salaries and employee benefits                         9,366        7,722        6,231
          Commissions on the origination of loans                  217          267          912
          Occupancy and equipment expense                        2,528        1,582        1,377
          Intangible expense                                       230           27           --
          Advertising and marketing                                384          336          279
          Stationery and supplies                                  365          310          317
          Professional services                                    929          436          338
          Data processing                                          448          332          280
          Other operating expenses                               1,249          955        1,001
                                                            ----------   ----------   ----------
                    Total non-interest expenses                 15,716       11,967       10,735
                                                            ----------   ----------   ----------

Income before federal income tax provision                      11,377        8,346        5,328
Income tax provision                                             3,867        2,837        1,807
                                                            ----------   ----------   ----------
Net income                                                  $    7,510   $    5,509   $    3,521
                                                            ==========   ==========   ==========
Per share data:
Net income - basic                                          $     1.40   $     1.27   $     0.99
Net income - diluted                                        $     1.32   $     1.16   $     0.91

Weighted average number of shares outstanding - basic        5,352,709    4,324,223    3,544,534
Weighted average number of shares outstanding - diluted      5,702,764    4,732,011    3,851,752
</TABLE>

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

                                       13
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                Unearned                  Accumulated
                                                               Restricted                    Other           Total
                                                     Common      Stock      Retained     Comprehensive   Stockholders'
(In thousands, except shares)                        Stock       Awards     Earnings         Income         Equity
                                                    --------  -----------  ----------   --------------   -------------
<S>                                                 <C>       <C>          <C>          <C>              <C>
Balance, January 1, 2003                            $ 30,611  $        --  $       --   $           80   $      30,691

          Exercise of stock options                      447           --          --               --             447

          Stock dividend #1                            1,312           --      (1,312)              --              --

          Stock dividend #2                            2,081           --      (2,081)              --              --

          Net income                                      --           --       3,521               --           3,521

          Other comprehensive income
              Changes in net unrealized gain on
                 securities available for sale            --           --          --                1               1
              Reclassification adjustment for
                 gains included in net income             --           --          --              (89)            (89)
                                                                                        --------------   -------------
              Net change in net unrealized loss on
                 securities available for sale            --           --          --              (88)            (88)
              Tax effects                                                                           30              30
                                                                                        --------------   -------------
                  Other comprehensive loss                --           --          --              (58)            (58)
                                                                                                         -------------

Total comprehensive income                                                                                       3,463
                                                    --------  -----------  ----------   --------------   -------------

Balance, December 31, 2003                            34,451           --         128               22          34,601

          Issuance of common stock                    34,040           --          --               --          34,040

          Exercise of stock options                      616           --          --               --             616

          Tax effect of issuance of stock options        518           --          --                              518

          Stock dividend #1                            2,504           --      (2,504)              --              --

          Stock dividend #2                            2,789           --      (2,789)              --              --

          Net income                                      --           --       5,509               --           5,509

          Other comprehensive income
              Net change in net unrealized loss on        --           --          --           (1,030)         (1,030)
                 securities available for sale
              Tax effects                                                                          350             350
                                                                                        --------------   -------------
                  Other comprehensive loss                --           --          --             (680)           (680)
                                                                                                         -------------

Total comprehensive income                                                                                       4,829
                                                    --------  -----------  ----------   --------------   -------------

Balance, December 31, 2004                          $ 74,918  $        --  $      344   $         (658)  $      74,604
                                                    ========  ===========  ==========   ==============   =============
</TABLE>

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

                                       14
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                    Unearned                  Accumulated
                                                                   Restricted                     Other         Total
                                                       Common        Stock       Retained    Comprehensive   Stockholders'
                                                        Stock        Awards      Earnings         Income        Equity
                                                      ---------  -------------   --------   --------------   -------------
<S>                                                   <C>        <C>             <C>        <C>              <C>
Balance, January 1, 2005                              $  74,918  $          --   $    344   $         (658)  $      74,604

          Issuance of restricted stock awards               281           (281)        --               --              --

          Stock awards earned                                --             21         --               --              21

          Stock options earned                               10             --         --               --              10

          Exercise of stock options                       1,028             --         --               --           1,028

          Tax effect of issuance of stock options           426             --         --               --             426

          Stock dividend #1                               3,307             --     (3,307)              --              --

          Stock dividend #2                               3,974             --     (3,974)              --              --

          Net income                                         --             --      7,510               --           7,510

          Other comprehensive income
              Reclassification adjustment for losses
                 included in net income                      --             --         --              740             740
              Changes in net unrealized loss on
                 securities available for sale               --             --         --              190             190
                                                                                            --------------   -------------
              Net change in net unrealized loss
                 on securities available for sale            --             --         --              930             930
              Tax effects                                                                             (316)           (316)
                                                                                            --------------   -------------
                  Other comprehensive income                 --             --         --              614             614

Total comprehensive income                                                                                           8,124
                                                      ---------  -------------   --------   --------------   -------------
Balance, December 31, 2005                            $  83,944  $        (260)  $    573   $          (44)  $      84,213
                                                      =========  =============   ========   ==============   =============
</TABLE>

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

                                       15
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                        --------------------------------------
(In thousands)                                                              2005          2004         2003
                                                                        -----------   -----------   ----------
<S>                                                                     <C>           <C>           <C>
Cash flows from operating activities
          Interest and fees received                                    $    42,710   $    29,101   $   22,243
          Interest paid                                                     (15,827)       (8,604)      (8,486)
          Proceeds from sale of mortgages held for sale                      37,556        42,320      139,721
          Origination of mortgages held for sale                            (36,446)      (41,974)    (129,244)
          Taxes paid                                                         (3,400)       (2,435)      (2,560)
          Gain (loss) on sale of real estate owned                               92           (28)          --
          Cash paid to suppliers and employees                              (13,829)      (10,958)      (8,654)
                                                                        -----------   -----------   ----------
          Net cash provided by operating activities                          10,856         7,422       13,020

Cash flows from investing activities
          Proceeds from the sale of securities available for sale             3,260            --        6,199
          Proceeds from calls, maturities and repayments of securities       12,357        40,886       20,636
          Purchases of securities available for sale                        (11,496)      (45,991)     (21,622)
          Purchase of Federal Home Loan Bank stock                             (171)          (49)         (40)
          Increase in loans, net of payments received                       (69,632)     (119,769)    (133,696)
          Purchases of property and equipment                                (1,648)       (7,513)        (757)
          Net cash paid in Bank of Washtenaw acquisition                         --        (5,010)          --
                                                                        -----------   -----------   ----------
          Net cash used in investing activities                             (67,330)     (137,446)    (129,280)

Cash flows from financing activities
          Net increase (decrease) in non-interest bearing deposits           (3,413)       (3,649)       6,625
          Net increase in interest bearing deposits                          44,971        98,637      110,908
          Increase (decrease) in other borrowings                            (2,500)          125           --
          Proceeds from Federal Home Loan Bank advances                       5,000            --           --
          Repayments of Federal Home Loan Bank advances                         (26)          (24)         (22)
          Issuance of common stock                                               --        34,040           --
          Exercise of stock options                                           1,028           616          447
                                                                        -----------   -----------   ----------
          Net cash provided by financing activities                          45,060       129,745      117,958

Increase (decrease) in cash and cash equivalents                            (11,414)         (279)       1,698
Cash and cash equivalents at the beginning of the period                     20,869        21,148       19,450
                                                                        -----------   -----------   ----------
Cash and cash equivalents at the end of the period                      $     9,455   $    20,869   $   21,148
                                                                        ===========   ===========   ==========
</TABLE>

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

                                       16
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                           ---------------------------------
(In thousands)                                                               2005        2004         2003
                                                                           ---------   ----------   --------
<S>                                                                        <C>         <C>          <C>
Reconciliation of net income to net cash provided by operating activities
Net income                                                                 $   7,510   $    5,509   $  3,521
          Adjustments to reconcile net income to net cash
                    Provided by operating activities
                    Provision for loan losses                                  1,081        1,400      1,699
                    Depreciation and amortization expense                        980          556        478
                    Restricted stock award expense                                31           --         --
                    Accretion of discount on investment securities               (47)         (71)       (13)
                    Amortization of premium on investment securities              38           19         69
                    Amortization of intangible assets                            230           27         --
                    (Increase) decrease in mortgages held for sale               651         (187)     8,347
                    Increase in interest receivable                             (697)        (182)      (201)
                    Increase (decrease) in interest payable                      576          209        145
                    (Gain) loss on sale of securities available for sale         740           --        (89)
                    Increase in other assets                                    (281)        (883)      (345)
                    Increase (decrease) in other liabilities                      44        1,025       (591)
                                                                           ---------   ----------   --------

Net cash provided by operating activities                                  $  10,856   $    7,422   $ 13,020
                                                                           =========   ==========   ========

Supplemental noncash disclosures:
                    Transfers from loans to other real estate owned        $   1,850   $      417         --

Noncash investing activities:
        Bank of Washtenaw acquisition:
                    Loans acquired                                                --   $   66,665         --
                    Bank premises and equipment                                   --          613         --
                    Acquisition intangibles recorded                              --        8,009         --
                    Other assets acquired                                         --          502         --
                    Deposits assumed                                              --      (66,273)        --
                    Borrowing assumed                                             --       (3,990)        --
                    Other liabilities assumed                                     --         (516)        --
                                                                           ---------   ----------   --------

                                                                                  --   $    5,010         --
                                                                           =========   ==========   ========
</TABLE>

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

                                       17
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

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 primary subsidiary, Community Bank
      of Dearborn (the "Bank"), began operations on February 28, 1994. The Bank
      operates twelve community banking offices in Dearborn (2), Dearborn
      Heights, Plymouth Township, Canton Township, Clinton Township (2),
      Southgate, Auburn Hills, Saline and Ann Arbor (2) in Michigan, offering a
      full range of banking services to individuals and businesses. The Bank
      also operates Community Bank Mortgage, Inc., a mortgage company that
      originates and services residential and commercial mortgage loans,
      Community Bank Insurance Agency, an insurance agency with limited
      activities and Community Bank Audit Services, Inc., a company that offers
      internal auditing services to financial institutions.

      The Bank's 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 management monitors 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
      and its wholly-owned subsidiaries, Community Bank Mortgage, Inc.,
      Community Bank Insurance Agency, Inc. and Community Bank Audit Services,
      Inc. 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 loan losses, fair value of certain financial instruments,
      and the carrying value of intangible assets.

      Cash Flows

      For purposes of the consolidated statements of cash flows, the Corporation
      considers cash on hand, cash due from banks, federal funds sold, and
      interest bearing deposits with other banks to be cash equivalents. Net
      cash flows are reported for loan, deposit and short-term borrowing
      transactions.

                                       18
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)

      Mortgage Loans Held for Sale

      Mortgage loans held for sale are carried at the lower of cost or market on
      an aggregate basis. These loans are sold service released to other
      entities.

      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 fair
      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 on 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 is not temporary.

      Declines in the fair value of securities below their cost that are other
      than temporary are reflected as realized losses. In estimating
      other-than-temporary losses, management considers: (1) the length of time
      and extent that fair value has been less than cost, (2) the financial
      condition and near term prospects of the issuer, and (3) the Corporation's
      ability and intent to hold the security for a period sufficient to allow
      for any anticipated recovery in fair value.

      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 is reported on the interest method and includes
      amortization of net deferred loan fees and costs over the loan term.
      Interest income on mortgage and commercial loans is generally discontinued
      at the time the loan is 90 days delinquent unless the credit is
      well-secured and in process of collection. Consumer loans are typically
      charged off no later than 180 days past due. In all cases, loans are
      placed on non-accrual or charged-off at an earlier date if collection of
      principal or interest is considered doubtful.

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

                                       19
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Allowance for Loan Losses

      The allowance for loan 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 losses are charged against the allowance when
      management believes the uncollectability of the loan balance is confirmed
      or when required by policy.

      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 and consumer 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. Large groups of smaller balance homogeneous loans,
      such as consumer and residential real estate loans, are collectively
      evaluated for impairment, and accordingly, they are not separately
      identified for impairment disclosures.

      Foreclosed Assets

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

      Premises and Equipment

      Land is carried at cost. 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 - 3 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 fair value.

                                       20
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Goodwill and Other Intangible Assets

      Goodwill results from business acquisitions and represents the excess of
      the purchase price over the fair value of acquired tangible assets and
      liabilities and identifiable intangible assets. Goodwill is assessed at
      least annually for impairment and any such impairment will be recognized
      in the period identified.

      Other intangible assets consist of core deposit and business relationship
      intangible assets arising from a bank acquisition in 2004. They are
      initially measured at fair value and are being amortized on an accelerated
      method over their estimated useful lives.

      Stock Compensation

      The Corporation has two incentive stock plans. Employee compensation
      expense under the 1994 Stock Option Plan is reported using the intrinsic
      value method. No stock-based compensation cost from this plan is reflected
      in net income, as all options granted had an exercise price equal to or
      greater than the market price of the underlying common stock at date of
      grant. The following table illustrates the effect on net income and
      earnings per share if expense was measured using the fair value
      recognition provisions of FASB Statement No. 123, Accounting for
      Stock-based Compensation (in thousands, except per share data).

<TABLE>
<CAPTION>
                                                       2005     2004      2003
                                                     -------  -------   -------
<S>                                                  <C>      <C>       <C>
Net Income
           As reported                               $ 7,510  $ 5,509   $ 3,521
           Less: stock-based compensation expense
           determined under fair value based method       --       (9)     (792)
                                                     -------  -------   -------
           Pro forma                                 $ 7,510  $ 5,500   $ 2,729
Basic income per share
          As reported                                $  1.40  $  1.27   $  0.99
          Pro forma                                  $  1.40  $  1.27   $  0.77
Diluted income per share
          As reported                                $  1.32  $  1.16   $  0.91
          Pro forma                                  $  1.32  $  1.16   $  0.71
</TABLE>

      Employee compensation expense under the 2005 Long-Term Incentive Plan is
      reported using the fair value recognition provisions of FASB Statement No.
      123, Accounting for Stock-based Compensation. Since stock-based
      compensation cost is reflected in net income, there is no pro forma
      effect.

                                       21
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      The pro forma effects are computed with option pricing models, using the
      following weighted average assumptions as of grant date. No options were
      granted during 2004. The impact of options granted during 2005 were
      reflected in net income and do not have any pro forma effects. All per
      share amounts have been adjusted for stock dividends.

<TABLE>
<CAPTION>
                                     2003
                                    -------
<S>                                 <C>
Risk-free interest rate                3.55%
Expected option life                7 years
Dividend yield                         0.00%
Expected volatility of stock price    25.55%
</TABLE>

      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 the expected future tax
      amounts for the temporary differences between the tax bases of assets and
      liabilities and their carrying amounts for financial reporting purposes. A
      valuation allowance, if needed, reduces deferred tax amounts to the amount
      expected to be realized.

      Stock Dividends

      The fair value of shares issued in stock dividends is transferred from
      retained earnings to common stock, to the extent of available retained
      earnings. Any excess of fair value over available retained earnings is
      considered a return of capital. All share and per share amounts are
      retroactively adjusted for stock dividends.

      Reclassifications

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

      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.

      Comprehensive Income

      Comprehensive income consists of net income and other comprehensive
      income. Other comprehensive income includes unrealized gains and losses on
      securities available for sale, net of tax, which are also recognized as
      separate components of equity.

                                       22
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Loss Contingencies

      Loss contingencies, including claims and legal actions arising in the
      ordinary course of business, are recorded as liabilities when the
      likelihood of loss is probable and an amount or range of loss can be
      reasonably estimated. Management does not believe there now are such
      matters that will have a material effect on the financial statements.

      Restrictions on Cash

      The Corporation was required to have $3,980,000 and $5,166,000 of cash on
      hand or on deposit with the Federal Reserve Bank to meet regulatory
      reserve and clearing requirements at year end 2005 and 2004, respectively.
      These balances do not earn interest.

      Dividend Restrictions

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

      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.

      Effect of Newly Issued But Not Yet Effective Accounting Standards:

      FAS 123, Revised, requires companies to record compensation cost for stock
      options provided to employees in return for employment service. The cost
      is measured at the fair value of the options when granted, and this cost
      is expensed over the employment service period, which is normally the
      vesting period of the options. This will apply to awards granted or
      modified in fiscal years beginning in 2006. The effect on results of
      operations will depend on the level of future option grants and the
      calculation of the fair value of the options granted at such future date,
      as well as the vesting periods provided, and so cannot currently be
      predicted. Options granted under the 2005 Long Term Incentive Plan are
      "variable", as defined by FAS 123. Upon adoption of FAS 123, Revised, the
      fair value of these options at their grant date will be expensed over the
      remaining service period. This is expected to result in additional
      compensation expense of approximately $49,000, $49,000 and $24,000 in
      2006, 2007 and 2008, respectively. Any income tax benefit for the exercise
      of stock options in excess of income tax expense for financial reporting
      purposes will be classified as a cash inflow for financing activities and
      a cash outflow for operating activities in the statement of cash flows.

                                       23
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE B - SECURITIES AVAILABLE FOR SALE

      The amortized cost and fair value for securities available for sale and
      the unrealized gains and losses recognized as accumulated other
      comprehensive income were as follows (in thousands):

<TABLE>
<CAPTION>
                                            December 31, 2005
                            -----------------------------------------------
                                           Gross       Gross
                             Amortized   Unrealized  Unrealized     Fair
                               Cost        Gains       Losses       Value
                            -----------  ----------  ----------   ---------
<S>                         <C>          <C>         <C>          <C>
US Treasury securities      $    16,665  $       --  $      (68)  $  16,597
Mortgage backed securities          555           2          (1)        556
                            -----------  ----------  ----------   ---------

          Totals            $    17,220  $        2  $      (69)  $  17,153
                            ===========  ==========  ==========   =========
</TABLE>

<TABLE>
<CAPTION>
                                         December 31, 2004
                            --------------------------------------------
                                          Gross      Gross
                            Amortized  Unrealized  Unrealized     Fair
                               Cost      Gains       Losses      Value
                            ---------  ----------  ----------   --------
<S>                         <C>        <C>         <C>          <C>
US Treasury securities      $  15,696  $       --  $      (62)  $ 15,634
Mortgage backed securities        826          25          --        851
Corporate debt securities       1,550          --          --      1,550
FHLMC preferred stock           4,000          --        (960)     3,040
                            ---------  ----------  ----------   --------
          Totals            $  22,072  $       25  $   (1,022)  $ 21,075
                            =========  ==========  ==========   ========
</TABLE>

      The amortized cost and fair value of securities available for sale at
      December 31, 2005 by contractual maturity are shown below (in thousands).
      Securities not due at a single maturity date, such as mortgage backed
      securities are shown separately.

<TABLE>
<CAPTION>
                                      Amortized     Fair
                                        Cost        Value
                                      ---------  ---------
<S>                                   <C>        <C>
Due in three months or less           $   5,700  $   5,687
Due in three months through one year      6,983      6,936
Due in one year through five years        3,982      3,974
Due in greater than five years               --         --
Mortgage backed securities                  555        556
                                      ---------  ---------
          Totals                      $  17,220  $  17,153
                                      =========  =========
</TABLE>

                                       24
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE B - SECURITIES AVAILABLE FOR SALE  (Continued)

      Sales of available for sale securities for the years ended December 31,
      are as follows (in thousands):

<TABLE>
<CAPTION>
               2005    2004   2003
              ------  -----  ------
<S>           <C>     <C>    <C>
Proceeds      $3,260  $  --  $6,199
Gross gains       --     --      89
Gross losses     740     --      --
</TABLE>

      Securities having a carrying value of $4,524,000 and $5,859,000 at
      December 31, 2005 and 2004, respectively, were pledged to secure Federal
      Home Loan Bank of Indianapolis advances and securities sold under
      agreements to repurchase.

      Securities with unrealized losses at year-end 2005 and 2004, aggregated by
      investment category and length of time that individual securities have
      been in a continuous unrealized loss position, are as follows:

<TABLE>
<CAPTION>
                                               December 31, 2005
                            --------------------------------------------------------------
                             Less than one year    One year or more          Total
                            -------------------   ------------------   -------------------
                             Fair    Unrealized    Fair   Unrealized    Fair    Unrealized
                             Value      Loss       Value     Loss       Value      Loss
                            -------  ----------   ------  ----------   -------  ----------
<S>                         <C>      <C>          <C>     <C>          <C>      <C>
US treasury securities      $ 9,945  $      (21)  $6,652  $      (47)  $16,597  $      (68)
Mortgage backed securities      197          (1)      --          --       197          (1)
                            -------  ----------   ------  ----------   -------  ----------

Total temporarily impaired  $10,142  $      (22)  $6,652  $      (47)  $16,794  $      (69)
                            =======  ==========   ======  ==========   =======  ==========
</TABLE>

<TABLE>
<CAPTION>
                                                 December 31, 2004
                            --------------------------------------------------------------
                             Less than one year    One year or more          Total
                            -------------------   ------------------   -------------------
                             Fair    Unrealized    Fair   Unrealized    Fair    Unrealized
                             Value      Loss       Value     Loss       Value       Loss
                            -------  ----------   ------  ----------   -------  ----------
<S>                         <C>      <C>          <C>     <C>          <C>      <C>
US treasury securities      $15,640  $      (62)  $   --  $       --   $15,640  $      (62)
FHLMC preferred stock         3,040        (960)      --          --     3,040        (960)
                            -------  ----------   ------  ----------   -------  ----------
Total                       $18,680  $   (1,022)  $   --  $       --   $18,680  $   (1,022)
                            =======  ==========   ======  ==========   =======  ==========
</TABLE>

                                       25
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE B - SECURITIES AVAILABLE FOR SALE (Continued)

      Unrealized losses on securities, available for sale at December 31, 2005
      have not been recognized because these securities are of high credit
      quality, management has the intent and ability to hold these securities
      for the foreseeable future, and the decline in fair value is believed to
      be largely due to changes in interest rates. The fair value is expected to
      recover as the bonds approach their maturity date. Unrealized losses on
      securities, available for sale at December 31, 2004 included a single
      issue of FHLMC preferred stock with an unrealized loss of $960,000.
      Management expected the market value of this security to recover after its
      coupon rate repriced on April 1, 2005. When it became apparent that this
      security would not sufficiently recover, the Corporation recorded an
      "Other Than Temporary Loss" of $696,000 on this security. The Corporation
      recorded an additional loss of $44,000 as a result of the sale of the
      security on July 22, 2005.

NOTE C - LOANS, NET

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

<TABLE>
<CAPTION>
                                     December 31,   December 31,      Percent
                                        2005           2004          Incr(decr)
                                     ------------   ------------   ------------
<S>                                  <C>            <C>            <C>
Consumer loans                       $     35,041   $     42,149         (16.86%)
Commercial, financial, & other            130,750        129,103           1.28%
Commercial real estate construction       107,292         70,182          52.88%
Commercial real estate mortgages          336,657        296,934          13.38%
Residential real estate mortgages          47,297         49,194          (3.86%)
                                     ------------   ------------   ------------
                                          657,037        587,562          11.82%
                                                                   ============
Allowance for loan losses                  (6,808)        (5,884)
                                     ------------   ------------
                                     $    650,229   $    581,678
                                     ============   ============
</TABLE>

      Certain directors and executive officers of the Corporation, including
      their related interests, were loan customers of the Bank during 2005 and
      2004. These loan transactions for the years ended December 31, are as
      follows (in thousands):

<TABLE>
<CAPTION>
                                2005     2004
                               -------   -------
<S>                            <C>       <C>
Balance, beginning of year     $ 4,150   $ 3,691

New loans during period            970     1,080

Repayments made during period   (2,363)     (621)
                               -------   -------

Balance, end of period         $ 2,757   $ 4,150
                               =======   =======
</TABLE>

                                       26
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE C - LOANS, NET (Continued)

      Activity in the allowance for loan losses for the years ended December 31
      are as follows (in thousands):

<TABLE>
<CAPTION>
                                           2005    2004    2003
                                          ------  ------  ------
<S>                                       <C>     <C>     <C>
Balance, beginning of year                $5,884  $4,314  $2,875

Allowance on loans acquired                   --     184      --

Charge-offs:
     Consumer loans                          112      31      38
     Commercial, financial & other           169      --     141
     Commercial real estate construction      --      --      50
     Commercial real estate mortgages         86      --     124
     Residential real estate mortgages        --     100      --

Recoveries:
     Consumer loans                           37      12      13
     Commercial, financial & other           131      44      30
     Commercial real estate construction      --      --      50
     Commercial real estate mortgages         10      61      --
     Residential real estate mortgages        32      --      --
                                          ------  ------  ------

Net charge-offs                              157      14     260

Additions charged to operations            1,081   1,400   1,699
                                          ------  ------  ------

Balance at end of period                  $6,808  $5,884  $4,314
                                          ======  ======  ======
</TABLE>

                                       27
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE C - LOANS, NET (Continued)

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

<TABLE>
<CAPTION>
                                                            2005   2004
                                                            ----  ------
<S>                                                         <C>   <C>
Impaired loans with no allocated allowance for loan losses  $341  $   --
Impaired loans with allocated allowance for loan losses      200   1,965
                                                            ----  ------
    Total                                                   $541  $1,965
                                                            ====  ======

    Amount of the allowance for loan loss allocated         $ 69    $295

    Average of impaired loans during the year               $940  $1,412

    Interest income recognized during impairment            $ --  $   10
    Cash-basis interest income recognized                   $ --  $   10
</TABLE>

Non-performing assets were as follows (in thousands):

<TABLE>
<CAPTION>
                                  2005     2004    2003
                                 -------  ------  ------
<S>                              <C>      <C>     <C>
Troubled debt restructuring      $    --  $   --  $   --
Over 90 days past due                189     143      19
Non-accrual loans                    984   2,956   2,056
                                 -------  ------  ------
    Total non-performing loans     1,173   3,099   2,075

Real estate owned                    661     136      --
Other repossessed assets               2       2      --
                                 -------  ------  ------
    Other non-performing assets      663     138      --

Total non-performing assets      $ 1,836  $3,237  $2,075
                                 =======  ======  ======
</TABLE>

      Non-performing loans and impaired loans are defined differently.
      Non-performing loans includes both smaller balance homogeneous loans that
      are collectively evaluated for impairment and individually classified
      impaired loans.

                                       28
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE D - PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                 2005     2004
                               -------  -------
<S>                            <C>      <C>
Land and improvements          $ 3,232  $ 1,641
Building and improvements       10,214   11,220
Furniture and equipment          5,366    4,362
                               -------  -------
                                18,812   17,223

Less accumulated depreciation    5,020    4,099
                               -------  -------

         Totals                $13,792  $13,124
                               =======  =======
</TABLE>

      Depreciation expense for 2005, 2004 and 2003 amounted to $980,000,
      $556,000, and $478,000, respectively. During 2005, the Corporation made
      capital expenditures of $1,664,000. The expenditures were primarily due to
      expansion and renovation of two branch offices, a new phone system and
      other improvements in technology.

      Rent expense for facilities of $617,000, $678,000 and $445,000 was
      incurred during 2005, 2004 and 2003, respectively. Rental commitments
      under noncancellable operating leases are as follows, before considering
      renewal options that generally are present (in thousands):

<TABLE>
<S>              <C>
2006             $  620
2007                489
2008                446
2009                444
2010                374
Thereafter          297
                 ------
         Totals  $2,670
                 ======
</TABLE>

                                       29
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE E - GOODWILL AND OTHER INTANGIBLE ASSETS

      As a result of the acquisition of the Bank of Washtenaw in October of
      2004, the Corporation acquired goodwill and other intangible assets. At
      year-end 2004, the Corporation had identified a core deposit intangible of
      $929,000 and amortized $27,000 of expense. During 2005, the valuation of
      the borrower relationship intangible was completed and that amount was
      separated from goodwill and a $12,000 final adjustment was made to the
      initial goodwill estimate. Goodwill amounted to $5,473,000 and there was
      no impairment of that goodwill during 2005.

      Other intangible assets were as follows (in thousands):

<TABLE>
<CAPTION>
                                                 2005
                                        ----------------------
                                         Gross
                                        Carrying   Accumulated
                                         Amount   Amortization
                                        --------  ------------
<S>                                     <C>       <C>
Amortized intangible assets

      Core deposit intangible           $    929  $        181
      Borrower relationship intangible     1,620            77
                                        --------  ------------
            Total                       $  2,549  $        258
                                        ========  ============
</TABLE>

      The core deposit intangible is amortized over 10 years and the borrower
      relationship intangible is amortized over 17 years. Estimated amortization
      expense for each of the next five years is as follows (in thousands):

<TABLE>
<CAPTION>
      Amortization
      ------------
<S>   <C>
2006  $        251
2007           257
2008           249
2009           249
2010           216
</TABLE>

                                       30
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE F - DEPOSITS

      Time deposits of $100,000 or more were $262,318,000 and $199,237,000 at
      December 31, 2005 and 2004, respectively. Time deposits of $100,000 or
      more from governmental units, which are included in total time deposits of
      $100,000 or more were $85,237,000 and $71,058,000 at December 31, 2005 and
      2004, respectively.

      Scheduled maturities of time deposits at December 31, 2005 are listed in
      the following table (in thousands):

<TABLE>
<CAPTION>
                  $100,000 and over  Less than $100,000     Total
                  -----------------  ------------------  -----------
<S>               <C>                <C>                 <C>
2006              $         199,322  $          110,304  $   309,626
2007                         37,983              31,393       69,376
2008                         13,839               4,020       17,859
2009                          3,359               2,756        6,115
2010                          7,815               2,565       10,380
                  -----------------  ------------------  -----------
          Totals  $         262,318  $          151,038  $   413,356
                  =================  ==================  ===========
</TABLE>

      Related party deposits from directors and executive officers of the
      Corporation were approximately $8,768,000 and $6,546,000 at December 31,
      2005 and 2004, respectively.

NOTE G - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

      Securities sold under agreements to repurchase are secured by US
      government agency securities with a carrying amount of $4.0 million and
      $5.0 million at December 31, 2005 and 2004, respectively.

      Securities sold under agreements to repurchase are financing arrangements
      that mature within two years. At maturity, the securities underlying the
      agreements are returned to the Corporation. Information concerning
      securities sold under agreements to repurchase is summarized as follows
      (in thousands):

<TABLE>
<CAPTION>
                                             2005     2004
                                            ------   ------
<S>                                         <C>      <C>
Balance at year-end                         $1,615   $4,115
Average daily balance during the year       $2,995   $  739
Average interest rate during the year         1.25%    1.25%
Maximum month-end balance during year       $4,565   $4,115
Weighted average interest rate at year-end    1.25%    1.25%
</TABLE>

                                       31
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE H - FEDERAL HOME LOAN BANK ADVANCES

      The Bank has entered into an Advances, Pledge and Security Agreement with
      the Federal Home Loan Bank of Indianapolis. Advances were $25,588,000 and
      $20,614,000 at December 31, 2005 and 2004, respectively. These advances
      carry a fixed rate of interest and are secured by a blanket collateral
      agreement with the Federal Home Loan Bank of Indianapolis covering
      eligible mortgage loans in the amount of $40,480,000 and securities
      available for sale in the amount of $544,000. Federal Home Loan Bank
      advances are comprised of the following at December 31, 2005 (in
      thousands):

<TABLE>
<CAPTION>
Date    Amount   Rate   Maturity Date
-----  --------  ----   -------------
<S>    <C>       <C>    <C>
2001   $ 10,000  4.28%       2006
2001      5,000  4.54%       2007
2001      5,000  4.68%       2008
2002        588  4.01%       2007
2005      5,000  4.43%       2008
       --------  ----

Total  $ 25,588  4.43%
       ========
</TABLE>

      The Bank makes monthly interest payments with principal generally due at
      maturity. Required principal payments at year-end 2005 are $10.0 million
      in 2006, $5.6 million in 2007 and $10.0 million in 2008. Prepayment
      penalties apply if advances are repaid prior to maturity. The Bank's
      capacity to borrow from the Federal Home Loan Bank is capped at $60
      million by a resolution of the Board of Directors of the Bank. The Bank
      had the ability to borrow up to $26.6 million based on collateral pledged
      by the Bank at December 31, 2005.

NOTE I - SUBORDINATED DEBENTURES

      In 2002, the Corporation issued $10,000,000 of floating rate obligated
      mandatory redeemable securities through Dearborn Bancorp Trust I, a
      special purpose entity as part of a pooled offering on December 19, 2002.
      The interest rate is the three month LIBOR plus 3.35% and was 7.50% at
      December 31, 2005. The securities have a term of thirty years with
      interest payments due on a quarterly basis. The Corporation may redeem the
      securities after December 19, 2007, with regulatory approval, at face
      value.

                                       32
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE J - INCOME TAXES

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

<TABLE>
<CAPTION>
           2005    2004     2003
          ------  ------   ------
<S>       <C>     <C>      <C>
Current   $4,330  $3,301   $2,216
Deferred    (463)   (464)    (409)
          ------  ------   ------
          $3,867  $2,837   $1,807
          ======  ======   ======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                2005     2004
                                                               ------   ------
<S>                                                            <C>      <C>
Deferred tax assets
          Allowance for loan losses                            $2,226   $1,829
          Deferred loan fees and costs                            246      247
          Unrealized losses on securities, available for sale      23      339
          Capital loss                                            252       --
          Other                                                    28      116
                                                               ------   ------

                    Total deferred tax assets                   2,775    2,531

Deferred tax liabilities
         Premises and equipment                                  (271)    (305)
         Goodwill and other intangibles                          (138)     (36)
         Other                                                   (125)     (96)
                                                               ------   ------

                    Total deferred tax liabilities               (534)    (437)
                                                               ------   ------

Net deferred tax asset                                         $2,241   $2,094
                                                               ======   ======
</TABLE>

      The effective federal tax rate is substantially the same as the statutory
      rate of 34%. The goodwill and other intangible assets acquired during 2004
      are being amortized over 15 years for tax purposes and are tax deductible,
      but the goodwill is not being amortized for book purposes. During 2005, a
      deferred tax asset of $252,000 was generated on the capital loss that
      resulted from the sale of FHLMC preferred stock. The capital loss can be
      carried forward through 2010 to offset capital gain income. An allowance
      against the net tax deferred asset is not considered necessary at December
      31, 2005.

                                       33
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

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):

<TABLE>
<CAPTION>
                                                        2005                2004
                                               --------------------  --------------------
                                                          Estimated             Estimated
                                               Carrying     Fair     Carrying     Fair
                                                Amount      Value     Amount      Value
                                               ---------  ---------  ---------  ---------
<S>                                            <C>        <C>        <C>        <C>
Assets:
          Cash and cash equivalents            $   9,455  $   9,455  $  20,869  $  20,869
          Mortgage loans held for sale             1,041      1,055      1,692      1,724
          Securities, available for sale          17,153     17,153     21,075     21,075
          Federal Home Loan Bank Stock             1,293      1,293      1,122      1,122
          Loans, net                             650,229    647,621    581,678    583,242
          Accrued interest receivable              2,586      2,586      1,889      1,889

Liabilities:
          Deposits                             $ 582,438  $ 582,629  $ 540,880  $ 542,401
          Securities sold under agreements to
          repurchase                               1,615      1,615      4,115      4,115
          Federal Home Loan Bank advances         25,588     26,002     20,614     20,991
          Subordinated debentures                 10,000     10,000     10,000     10,000
          Accrued interest payable                 1,683      1,683      1,107      1,107
</TABLE>

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

      Carrying amount is the estimated fair value for cash and cash equivalents,
      Federal Home Loan Bank stock, accrued interest receivable and payable,
      demand deposits, short-term debt, and variable rate loans or deposits that
      reprice frequently or fully. Security fair values are based on market
      prices or dealer quotes, and if no such information is available, on the
      rate and term of the security and information about the issuer. For fixed
      rate loans or deposits and for variable rate loans or deposits with
      infrequent repricing or repricing limits, fair value is based on
      discounted cash flows using current market rates applied to the estimated
      life and credit risk. Fair values for impaired loans are estimated using
      discounted cash flow analysis or underlying collateral values. Fair value
      of loans held for sale is based on market quotes. Fair value of debt is
      based on current rates for similar financing. The fair value of
      off-balance-sheet items is based on the current fees or cost that would be
      charged to enter into or terminate such arrangements, and was not
      considered material to this presentation.

                                       34
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

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

      Off-Balance-Sheet Risk

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

      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 $186,729,000
      and $115,504,000 at December 31, 2005 and 2004, respectively. Loan
      commitments for variable rate loans were $167,474,000 and $113,324,000 at
      December 31, 2005 and 2004, respectively. Loan commitments for fixed rate
      loans were $19,255,000 and $2,180,000 at December 31, 2005 and 2004,
      respectively. The fixed rate loan commitments at December 31, 2005 have
      interest rates ranging from 4.47% to 13.25% and maturities ranging from
      one year to ten years. A distribution of outstanding loan commitments by
      contractual maturity is shown below (in thousands):

      At December 31, 2005

<TABLE>
<CAPTION>
                                                  Commitments Period
                              -----------------------------------------------------------
                              Less than  One to three  Four to five   Over five
                               one year      years         years        years     Totals
                              ---------  ------------  ------------  ----------  --------
<S>                           <C>        <C>           <C>           <C>         <C>
Home equity lines of credit   $      46  $        225  $        404  $   19,193  $ 19,868
Residential loan commitments      4,227            --            --          --     4,227
Standby letters of credit         2,159         5,839           992          --     8,990
Commercial lines of credit       59,572         1,167           413         909    62,061
Other commercial commitments     57,862        21,697         3,411       8,613    91,583
                              ---------  ------------  ------------  ----------  --------

Totals                        $ 123,866  $     28,928  $      5,220  $   28,715  $186,729
                              =========  ============  ============  ==========  ========
</TABLE>

      At December 31, 2004

<TABLE>
<CAPTION>
                                                    Commitments Period
                              -----------------------------------------------------------
                              Less than  One to three  Four to five   Over five
                              one year       years        years          years    Totals
                              ---------  ------------  ------------  ----------  --------
<S>                           <C>        <C>           <C>           <C>         <C>
Home equity lines of credit   $     100  $        196  $        332  $   21,235  $ 21,863
Residential loan commitments      2,271            --            --          --     2,271
Standby letters of credit         2,574         3,000            --          --     5,574
Commercial lines of credit       35,662         1,407         3,384         268    40,721
Other commercial commitments     29,037        11,885           299  $    3,854    45,075
                              ---------  ------------  ------------  ----------  --------

Totals                        $  69,644  $     16,488  $      4,015  $   25,357  $115,504
                              =========  ============  ============  ==========  ========
</TABLE>

                                       35
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

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

      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 credit worthiness 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

      The Bank maintains 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 21 and completing six months of
      service.

      Contributions to the plan by the Bank are discretionary and are expensed
      as made. The Bank matches 50% of the first 6% of employee contributions to
      the plan. Employer contributions vest 20% per year for five years. During
      2005, 2004 and 2003, employer contributions were $148,000, $121,000 and
      $124,000, 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, additionally for the Bank, 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. At December 31, 2005 and 2004, the most
      recent regulatory notifications categorized the Bank as well capitalized
      under the regulatory framework for prompt corrective action. There are no
      conditions or events since that notification that management believes have
      changed the institution's category. 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 following table) 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).

                                       36
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

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
                                                         Minimum        To Be Well Capitalized
                                                        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, 2005
     Total capital
        (to risk weighted assets)
               Consolidated        $93,281  13.29%  $56,147      8.00%  $ 70,184          10.00%
               Bank                 75,918  10.89%   55,756      8.00%    69,695          10.00%
    Tier 1 capital
        (to risk weighted assets)
               Consolidated         86,472  12.32%   28,073      4.00%    42,110           6.00%
               Bank                 69,109   9.92%   27,878      4.00%    41,817           6.00%
    Tier 1 capital
        (to average assets)
               Consolidated         86,472  12.32%   28,074      4.00%    35,092           5.00%
               Bank                 69,109  10.09%   27,400      4.00%    34,250           5.00%

As of December 31, 2004
     Total capital
        (to risk weighted assets)
               Consolidated        $81,868  13.27%  $49,360      8.00%  $ 61,700          10.00%
               Bank                 63,986  10.47%   48,913      8.00%    61,141          10.00%
    Tier 1 capital
        (to risk weighted assets)
               Consolidated         75,984  12.32%   24,680      4.00%    37,020           6.00%
               Bank                 58,102   9.50%   24,457      4.00%    36,685           6.00%
    Tier 1 capital
        (to average assets)
               Consolidated         75,984  12.12%   25,079      4.00%    31,348           5.00%
               Bank                 58,102   9.78%   23,765      4.00%    29,706           5.00%
</TABLE>

      Federal and state banking laws and regulations place certain restrictions
      on the amount of dividends and loans a bank can pay to its parent company.
      Under the most restrictive of these regulations, the Bank could pay
      approximately $18,300,000 in dividends to the parent company without prior
      regulatory approval. No cash dividends have ever been paid by the Bank.

                                       37
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE N - INCENTIVE STOCK PLANS

      Incentive stock awards have been granted to officers and employees under
      two Incentive Stock Plans. The first plan is the 1994 Stock Option Plan.
      Options to buy common stock have been granted to officers and employees
      under the 1994 Stock Option Plan, which provides for issue of up to
      738,729 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 in the 1994 Plan follows:

<TABLE>
<CAPTION>
                                                                         Weighted
                                                              Weighted  Average Fair
                                   Available                  Average    Value of
                                      for         Options     Exercise    Options
                                     Grant      Outstanding    Price      Granted
                                  -----------   -----------   --------  ------------
<S>                               <C>           <C>           <C>       <C>
Outstanding at January 1, 2003        138,809       618,671   $   6.07
Forfeited                               5,360        (5,360)     13.73
Granted                              (144,169)      144,169      13.82  $       5.17
Exercised                                  --       (73,374)      6.09
                                  -----------   -----------   --------
Outstanding at December 31, 2003           --       684,106       7.64
Exercised                                  --       (88,233)      7.83
                                  -----------   -----------   --------
Outstanding at December 31, 2004           --       595,873       8.74
Exercised                                  --      (126,816)      8.44
                                  -----------   -----------   --------
Outstanding at December 31, 2005           --       469,057   $   8.82
                                  ===========   ===========   ========
</TABLE>

      Options outstanding under the 1994 Plan at December 31, 2005 were as
      follows:

<TABLE>
<CAPTION>
                                   Outstanding                Exercisable
                          ------------------------------  ----------------------
                                     Weighted
                                     Average    Weighted             Weighted
                                    Remaining   Average              Average
                                   Contractual  Exercise             Exercise
Range of Exercise Prices   Number      Life      Price     Number     Price
------------------------  -------  -----------  --------  -------  -------------
<S>                       <C>      <C>          <C>       <C>      <C>
$4.61 - $9.41             353,336    4.8 years  $   7.01  353,336  $        7.01
$10.31 - $16.15           115,721    7.1 years  $  14.35  115,721  $       14.35
                          -------                         -------
Totals                    469,057    5.3 years  $   8.82  469,057  $        8.82
                          =======                         =======
</TABLE>

      At December 31, 2005, 2004 and 2003, 469,057, 595,873 and 684,106 options
      were exercisable at weighted average exercise prices of $8.82, $8.74 and
      $7.64 per share, respectively. On December 31, 2005, there were no shares
      available for grant under the 1994 Plan.

                                       38
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE N - INCENTIVE STOCK PLANS

      During 2005, the Corporation initiated the 2005 Long-Term Incentive Plan.
      Under this plan, up to 315,000 shares will be granted to officers and
      employees of the Bank. This plan provides that stock awards may take the
      form of any combination of options, restricted shares, restricted share
      units or performance awards.

      The administration of the plan, including the granting of awards and the
      nature of those awards is determined by the Corporation's Compensation
      Committee. In October of 2005, the Corporation's Board of Directors
      approved grants of stock options and restricted stock. The awards have a
      term of ten years and typically vest fully three years from the grant
      date. In order for vesting to occur, the Corporation must meet certain
      performance criteria. The expected compensation cost of the 2005 plan is
      being calculated assuming the Corporation's attainment of "target"
      performance goals over the vesting period of the options. The actual cost
      of these awards could range from zero to 150% of the currently recorded
      compensation cost, depending on the Corporation's performance.

      Stock Options Granted - The incentive stock options were granted with
      exercise prices equal to market prices on the day of grant. The weighted
      average fair value of the options granted at grant date was $8.36. The
      following assumptions were used to determine weighted average fair value
      of the options granted at grant date:

<TABLE>
<CAPTION>
                                      2005
                                    ---------
<S>                                 <C>
Risk-free interest rate                  4.39%
Expected option life                6.5 years
Dividend yield                           0.00%
Expected volatility of stock price      25.09%
</TABLE>

A summary of the plan's option activity during 2005 is as follows:

<TABLE>
<CAPTION>
                                              Weighted
                                              Average
                                    Number    Exercise
                                  of Shares    Price
                                  ---------  ---------
<S>                               <C>        <C>
Outstanding at January 1, 2005           --
Shares Granted - Stock Options       15,839  $   22.96
                                  ---------  ---------
Outstanding at December 31, 2005     15,839  $   22.96
                                  =========

Options exercisable                      --
                                  =========
</TABLE>

      During the twelve months ended December 31, 2005, the Corporation
      recognized stock option compensation expense of $10,000. The stock options
      vest on June 30, 2008. Compensation cost of $49,000, $49,000 and $24,000
      is expected to be recognized during 2006, 2007 and 2008, respectively.

      Restricted Stock Grants - Restricted stock totaling 11,649 shares were
      granted to officers on October 12, 2005. The restricted stock vests on
      June 30, 2008. Compensation cost of $21,000 was recognized during the
      twelve months ended December 31, 2005. Compensation cost of $104,000,
      $104,000 and $51,000 will be recognized during 2006, 2007 and 2008,
      respectively.

                                       39
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE O - 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, 2005, 2004 and 2003 (in thousands, except share and per share
      data):

<TABLE>
<CAPTION>
                                                    2005       2004      2003
                                                 ---------  ---------  ---------
<S>                                              <C>        <C>        <C>
Basic
       Net income                                $   7,510  $   5,509  $   3,521

       Weighted average common shares            5,352,709  4,324,223  3,544,534

       Basic earnings per common share           $    1.40  $    1.27  $    0.99

Diluted
       Net income                                $   7,510  $   5,509  $   3,521

       Weighted average common shares            5,352,709  4,324,223  3,544,534
             outstanding for basic earnings per
             common share

       Add:  Dilutive effects of assumed           350,055    407,788    307,218
             exercise of stock options

        Average shares and dilutive potential
             common shares                       5,702,764  4,732,011  3,851,752

        Dilutive earnings per common share       $    1.32  $    1.16  $    0.91
</TABLE>

      There were no antidilutive shares in 2004 or 2005. Stock options of 4,862
      shares of common stock were not considered in computing diluted earnings
      per common share for 2003 because they were antidilutive. All share and
      per share amounts have been adjusted for stock dividends.

                                       40
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE P - 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

<TABLE>
<CAPTION>
                                                         December 31,
                                                      -----------------
(In thousands)                                          2005      2004
                                                      -------   -------
<S>                                                   <C>       <C>
ASSETS
          Cash and cash equivalents                   $ 2,516   $ 5,390
          Securities, available for sale               12,629    10,980
          Investment in subsidiary                     76,850    66,080
          Other assets                                  2,074     2,134
                                                      -------   -------

          Total assets                                $94,069   $84,584
                                                      =======   =======
LIABILITIES AND
     STOCKHOLDERS' EQUITY

          Other liabilities                           $  (144)  $   (20)
          Subordinated debentures                      10,000    10,000
                                                      -------   -------

          Total liabilities                             9,856     9,980

          Stockholders' equity                         84,213    74,604
                                                      -------   -------

          Total liabilities and stockholders' equity  $94,069   $84,584
                                                      =======   =======
</TABLE>

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                     Years Ended December 31,
                                     ------------------------
(In thousands)                        2005     2004     2003
                                     ------   ------   ------
<S>                                  <C>      <C>      <C>
Interest income                      $  447   $  260   $  121
Operating expenses                    1,092      919      604
                                     ------   ------   ------

Loss before equity in undistributed
          income of subsidiary         (645)    (659)    (483)
Equity in undistributed income
          of subsidiary               8,155    6,168    4,004
                                     ------   ------   ------
                    Net income       $7,510   $5,509   $3,521
                                     ======   ======   ======
</TABLE>

                                       41
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

      NOTE P - PARENT ONLY CONDENSED FINANCIAL INFORMATION (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                                             -------------------------------
(In thousands)                                                  2005       2004       2003
                                                             ---------   --------   --------
<S>                                                          <C>         <C>        <C>
Cash flows from operating activities
          Net income                                         $   7,510   $  5,509   $  3,521
          Adjustments to reconcile net income
          to net cash provided by operating activities
               Equity in undistributed income of subsidiary     (8,155)    (6,168)    (4,004)
               Other, net                                          374        227        213
                                                             ---------   --------   --------
Net cash flows from operating activities                          (271)      (432)      (270)

Cash flows from investing activities
          Investment in subsidiary                              (2,000)   (22,101)    (7,500)
          Purchases of securities, available for sale          (11,496)   (29,595)    (1,235)
          Maturity of securities, available for sale             9,885     23,150      4,115
          Property and equipment acquired                          (20)        --         --
                                                             ---------   --------   --------

Net cash flows from investing activities                        (3,631)   (28,546)    (4,620)

Cash flows from financing activities
          Proceeds from exercise of stock options                1,028        616        446
          Issuance of common stock                                  --     34,040         --
          Increase (decrease) in note payable                       --     (1,000)     1,000
                                                             ---------   --------   --------

Net cash flows from financing activities                         1,028     33,656      1,446
                                                             ---------   --------   --------

Increase (decrease) in cash and cash equivalents                (2,874)     4,678     (3,444)

Cash and cash equivalents at the beginning of year               5,390        712      4,156
                                                             ---------   --------   --------

Cash and cash equivalents at end of year                     $   2,516   $  5,390   $    712
                                                             =========   ========   ========
</TABLE>

                                       42
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE R - ACQUISITION

On October 29, 2004, the Corporation acquired the Bank of Washtenaw
("Washtenaw"), a wholly owned subsidiary of Pavillion Bancorp, Inc. for
$15,100,000 in cash. The assets and liabilities of the Bank of Washtenaw at
acquisition and net income derived from those assets and liabilities since the
acquisition have been consolidated into the Bank. Washtenaw, which was founded
in January 2001, has its main office in Saline, Michigan with a branch office
and a regional lending center in Ann Arbor, Michigan. As of October 29, 2004,
Washtenaw had total assets of $85,500,000, gross loans of $67,100,000 and total
deposits of $66,100,000.

The acquisition has been accounted for using the purchase method of accounting,
and accordingly, the purchase price has been allocated to the tangible and
identified intangible assets purchased and the liabilities assumed based upon
the estimated fair values at the date of acquisition. Identified intangible
assets and purchase accounting fair value adjustments are being amortized under
various methods over the expected lives of the corresponding assets and
liabilities. Goodwill will not be amortized, but will be reviewed for impairment
on an annual basis. Goodwill and other intangible assets are tax deductible over
15 years. Identified intangible assets subject to amortization are $2,549,000.
Goodwill aggregates to $5,473,000.

The following table presents actual information for the Corporation for the year
ended December 31, 2005 and pro forma information for the Corporation including
the acquisition of Bank of Washtenaw for the years ended December 31, 2004 and
2003, as if the acquisition had occurred at the beginning of 2003.

<TABLE>
<CAPTION>
                                                                Twelve Months Ended
(In thousands, except per share data)                    12/31/05   12/31/04  12/31/03
                                                         ---------  --------  --------
<S>                                                      <C>        <C>       <C>
Interest income                                          $  43,855  $ 33,553  $ 27,884
Interest expense                                            16,403    10,691    10,255
                                                         ---------  --------  --------

    Net interest income                                     27,452    22,862    17,629
Provision for loan loss                                      1,081     1,419     1,912
                                                         ---------  --------  --------

    Net interest income after provision for loan losses     26,371    21,443    15,717
Non-interest income                                            722     1,575     3,230
Non-interest expense                                        15,716    13,741    13,248
                                                         ---------  --------  --------

    Income before income tax provision                      11,377     9,277     5,699
Income tax provision                                         3,867     3,261     2,061
                                                         ---------  --------  --------

Net income                                               $   7,510  $  6,017  $  3,638
                                                         =========  ========  ========
Basic earnings per share                                 $    1.40  $   1.39  $   1.03
Diluted earnings per share                               $    1.32  $   1.27  $   0.94
</TABLE>

                                       43
<PAGE>

                      DEARBORN BANCORP, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        DECEMBER 31, 2005, 2004 AND 2003

NOTE S - QUARTERLY FINANCIAL DATA (UNAUDITED)

      (In thousands, except per share data)

<TABLE>
<CAPTION>
                         Interest  Net Interest   Net     Earnings per share
                          Income      Income     Income  Basic   Fully diluted
                         --------  ------------  ------  ------  -------------
<S>                      <C>       <C>           <C>     <C>     <C>
2005
     First quarter       $  9,892  $      6,580  $1,765  $ 0.33  $        0.31
     Second quarter (1)    10,638         6,665   1,412    0.26           0.25
     Third quarter         11,334         7,053   2,079    0.39           0.36
     Fourth quarter        11,991         7,154   2,254    0.42           0.39

2004
     First quarter       $  6,498  $      4,484  $1,174  $ 0.33  $        0.30
     Second quarter         6,849         4,815   1,390    0.38           0.35
     Third quarter (2)      7,426         5,003   1,402    0.29           0.27
     Fourth quarter         9,017         6,079   1,543    0.29           0.27
</TABLE>

(1)   During the second quarter of 2005, the Corporation recognized an "Other
      Than Temporary Loss" of $696,000. This write-down of securities, available
      for sale resulted in a decrease of $459,000, which decreased basic
      earnings per share and diluted earnings per share by $.09 and $.08,
      respectively.

(2)   Decline in income per share results from issuance of common stock during
      the third quarter of 2004.

                                       44
<PAGE>


         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.
Subsequently, the Bank has opened offices in several communities in Southeastern
Michigan. The Corporation acquired the Bank of Washtenaw in 2004. The three
branches, previously operated by the Bank of Washtenaw were subsequently
consolidated into the operations of the Bank. The date opened, branch location
and branch type of each branch is listed below:

<TABLE>
<CAPTION>
 Date Opened                 Location                           Type of office
 -----------                 --------                           --------------
<S>            <C>                                     <C>
February 1994  22290 Michigan Avenue                   Full service retail branch with ATM
               Dearborn, Michigan 48124

December 1995  24935 West Warren Avenue                Full service retail branch
               Dearborn Heights, Michigan 48127

August 1997    44623 Five Mile Road                    Full service retail branch with ATM
               Plymouth, Michigan 48170

May 2001       1325 North Canton Center Road           Full service retail branch with ATM
               Canton, Michigan 48187

December 2001  45000 River Ridge Drive, Suite 110      Regional lending center
               Clinton Township, Michigan 48038

November 2002  19100 Hall Road                         Full service retail branch with ATM
               Clinton Township, Michigan 48038

February 2003  12820 Fort Street                       Full service retail branch with ATM
               Southgate, Michigan 48195

May 2003       3201 University Drive, Suite 180        Full service retail branch
               Auburn Hills, Michigan 48326           Regional lending center

October 2004   450 East Michigan Avenue                Full service retail branch with ATM
               Saline, MI 48176

October 2004   250 West Eisenhower Parkway, Suite 100  Full service retail branch  with ATM
               Ann Arbor, MI 48103                     Regional lending center

October 2004   2180 West Stadium Blvd.                 Full service retail branch with ATM
               Ann Arbor, MI 48103

December 2004  1360 Porter Street                      Loan production office
               Dearborn, MI 48124                      Regional lending center
</TABLE>

The Bank has also formed three subsidiaries that offer additional or specialized
services to the Bank's customers. The Bank's subsidiaries, their formation date
and the type of services offered are listed below:

<TABLE>
<CAPTION>
 Date Formed                   Name                             Services Offered
 -----------                 --------                           ----------------
<S>            <C>                                     <C>
August 1997    Community Bank Insurance Agency, Inc.   Limited insurance related activities

May 2001       Community Bank Mortgage, Inc.           Origination of commercial and
                                                       residential mortgage loans

March 2002     Community Bank Audit Services, Inc.     Internal auditing and compliance
                                                       services for financial institutions
</TABLE>

                                       45
<PAGE>

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The "Management's Discussion and Analysis of Financial Condition and Results of
Operations", as well as disclosures found elsewhere in the annual report, are
based upon the consolidated financial statements of Dearborn Bancorp, Inc.,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires Dearborn Bancorp, Inc. to make estimates and judgements that
affect the reported amounts of assets, liabilities, revenues and expenses.
Material estimates that are particularly susceptible to significant change in
the near term relate to the determination of the allowance for loan loss. Actual
results could differ from those estimates.

The allowance for loan loss is maintained at a level believed adequate by
management to absorb probable losses inherent in the loan portfolio.
Management's evaluation of the adequacy of the allowance for loan loss is an
estimate based on reviews of individual loans, assessments of the impact of
current and anticipated economic conditions on the portfolio, and historical
loss experience. See Note C of the Notes to Consolidated Financial Statements
and the discussion of "Allowance for Loan Loss" in the Management's Discussion
and Analysis.

Management believes the accounting estimates related to the allowance for loan
loss is a "critical accounting estimate" because:

      1)    The estimates are highly susceptible to change from period to period
            and require management to make judgements concerning the quality of
            the loan portfolio and anticipated economic conditions.

      2)    The impact of recognizing an impairment or loan loss could have a
            material effect on the financial statements of Dearborn Bancorp,
            Inc.

      3)    The Bank's rapid growth and entry into new markets make estimating
            the required analysis more complicated and result in past experience
            not being as reliable an indicator of future experience as it might
            be otherwise.

Management has discussed the development and selection of these critical
accounting estimates with the audit committee of the board of directors and the
audit committee has reviewed the Corporation's disclosures related to them in
this Management's Discussion and Analysis.

                                       46
<PAGE>

RESULTS OF OPERATIONS

2005 Compared to 2004. The Corporation reported net income of $7,510,000 in 2005
compared to $5,509,000 in 2004, an increase of $2,001,000 or 36%. The
Corporation's increase in net income was primarily due to an increase in net
interest income, partially offset by a decrease in other income and increases in
non-interest expense. The decrease in other income was primarily due to the
write-down and subsequent sale of a single security. The increase in
non-operating expense was primarily due to increases in salaries and employee
benefits and occupancy and equipment expense.

2004 Compared to 2003. The Corporation reported net income of $5,509,000 in 2004
compared to $3,521,000 in 2003, an increase of $1,988,000 or 56%. The
Corporation's increase in net income was primarily due to an increase in net
interest income, partially offset by a decrease in the gain on sale of loans and
increases in salaries and employee benefits.

NET INTEREST INCOME

2005 Compared to 2004. Net interest income for the period ended December 31,
2005 was $27,452,000 compared to $20,381,000 for the period ended December 31,
2004, an increase of $7,071,000 or 35%. The increase in net interest income was
primarily due to increases in the volume of interest earning assets and interest
bearing liabilities. The Corporation's net interest rate spread decreased to
3.63% in 2005 from 3.69% in 2004, a decrease of 6 basis points. The decrease in
the net interest rate spread was due to liability costs increasing faster than
asset yields. Additionally, the Bank has improved its asset mix by deploying a
larger proportionate share of its funds into loans. The increase in the cost of
deposits was primarily due to the repricing of the Bank's time deposits. The
Corporation's net interest margin increased to 4.14% in 2005 from 4.04% in 2004.

Average interest earning assets grew by $158.8 million between the periods while
interest bearing liabilities grew by $124.2 million. While management is
continually reviewing spreads and margins, future increases in the net interest
margin are primarily expected from volume growth in the higher yielding loan
portfolio and the diversification of the Bank's deposit structure. The primary
sources of funding for the expected growth in the loan portfolio will be excess
cash and cash equivalents, deposit growth and the deployment of funds from the
sale of securities available for sale. During 2006, the Corporation is expecting
the net interest rate spread and net interest rate margin to decrease slightly
as a result of increasing deposit costs.

2004 Compared to 2003. Net interest income for the period ended December 31,
2004 was $20,381,000 compared to $14,933,000 for the period ended December 31,
2003, an increase of $5,448,000 or 36%. The increase in net interest income was
primarily due to increases in the volume of interest earning assets and interest
bearing liabilities. The Corporation's net interest rate spread increased to
3.69% in 2004 from 3.63% in 2003, an increase of 6 basis points. The increase in
the net interest rate spread was primarily due to the volume of interest earning
assets and interest bearing liabilities. Additionally, the Bank has improved its
asset mix by deploying a larger proportionate share of its funds into loans. The
decrease in the cost of deposits was primarily due to the repricing of the
Bank's time deposits into other deposit products at a lower interest rate. The
Corporation's net interest margin increased to 4.04% in 2004 from 3.97% in 2003.

                                       47
<PAGE>

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.

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>
<CAPTION>
                                                   Year Ended December 31, 2005  Year Ended December 31, 2004
                                                   ----------------------------  ----------------------------
                                                    Average             Average   Average              Average
(In thousands)                                      Balance   Interest    Rate    Balance    Interest   Rate
--------------                                     --------   --------  -------  ---------  ---------  -------
<S>                                                <C>        <C>       <C>      <C>        <C>        <C>
Assets
   Interest bearing deposits with banks            $   3,675  $    111   3.02%   $   9,305  $    129    1.39%
   Federal funds sold                                  7,783       242   3.11%      10,602       161    1.52%
   Securities, available for sale                     19,673       598   3.04%      23,122       460    1.99%
   Loans                                             631,491    42,904   6.79%     460,840    29,040    6.30%
                                                   ---------  --------   ----    ---------  --------    ----
       Sub-total earning assets                      662,622    43,855   6.62%     503,869    29,790    5.91%
   Other assets                                       30,220                        19,715
                                                   ---------                     ---------

       Total assets                                $ 692,842                     $ 523,584
                                                   =========                     =========

Liabilities and stockholders' equity
   Interest bearing deposits                       $ 506,228  $ 14,427   2.85%   $ 393,004  $  8,013    2.04%
   Other borrowings                                   41,564     1,976   4.75%      30,634     1,396    4.56%
                                                   ---------  --------   ----    ---------  --------    ----
       Sub-total interest bearing liabilities        547,792    16,403   2.99%     423,638     9,409    2.22%
                                                              --------   ----               --------    ----
   Non-interest bearing deposits                      63,164                        45,456
   Other liabilities                                   2,305                         2,339
   Stockholders' equity                               79,581                        52,151
                                                   ---------                     ---------

       Total liabilities and stockholders' equity  $ 692,842                     $ 523,584
                                                   =========                     =========

       Net interest income                                    $ 27,452                      $ 20,381
                                                              ========                      ========

       Net interest rate spread                                          3.63%                          3.69%
                                                                         ====                           ====

       Net interest margin on earning assets                             4.14%                          4.04%
                                                                         ====                           ====
</TABLE>


                                       48
<PAGE>

(continued)

<TABLE>
<CAPTION>
                                                   Year Ended December 31, 2003
                                                   ----------------------------
                                                    Average             Average
(In thousands)                                      Balance   Interest    Rate
--------------                                     ---------  --------  -------
<S>                                                <C>        <C>       <C>
Assets
   Interest bearing deposits with banks            $  13,667  $    153   1.12%
   Federal funds sold                                 11,764       125   1.06%
   Securities, available for sale                     21,033       522   2.48%
   Loans                                             329,720    22,764   6.90%
                                                   ---------  --------   ----
       Sub-total earning assets                      376,184    23,564   6.26%
   Other assets                                       20,988
                                                   ---------

       Total assets                                $ 397,172
                                                   =========
Liabilities and stockholders' equity
   Interest bearing deposits                       $ 297,103  $  7,212   2.43%
   Other borrowings                                   30,697     1,419   4.62%
                                                   ---------  --------   ----
       Sub-total interest bearing liabilities        327,800     8,631   2.63%
                                                              --------   ----
   Non-interest bearing deposits                      35,311
   Other liabilities                                   1,456
   Stockholders' equity                               32,605
                                                   ---------

       Total liabilities and stockholders' equity  $ 397,172
                                                   =========

       Net interest income                                    $ 14,933
                                                              ========

       Net interest rate spread                                          3.63%
                                                                         ====

       Net interest margin on earning assets                             3.97%
                                                                         ====
</TABLE>

                                       49
<PAGE>

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>
                                                        2005/2004                      2004/2003
                                                 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
  Interest bearing deposits with banks         $    (94)  $    76  $    (18)  $   (60)   $    36   $   (24)
  Federal funds sold                                 (3)       84        81       (18)        54        36
  Securities, available for sale                     14       124       138        42       (104)      (62)
  Loans                                          12,728     1,136    13,864     8,263     (1,987)    6,276
                                               --------   -------  --------   -------    -------   -------
Total earning assets                           $ 12,645   $ 1,420  $ 14,065   $ 8,227    $(2,001)  $ 6,226
                                               ========   =======  ========   =======    =======   =======

Liabilities

  Interest bearing deposits                    $  4,820   $ 1,594  $  6,414   $ 1,955    $(1,154)  $   801
  Other borrowings                                  550        30       580        (3)       (20)      (23)
                                               --------   -------  --------   -------    -------   -------
Total interest bearing liabilities             $  5,370   $ 1,624  $  6,994   $ 1,952    $(1,174)  $   778
                                               ========   =======  ========   =======    =======   =======

        Net interest income                                        $  7,071                        $ 5,448
                                                                   ========                        =======

        Net interest rate spread                                      (0.06%)                         0.06%
                                                                   ========                        =======

        Net interest margin on earning assets                          0.10%                          0.07%
                                                                   ========                        =======
</TABLE>

PROVISION FOR LOAN LOSSES

2005 Compared to 2004. The provision for loan losses was $1,081,000 in 2005,
compared to $1,400,000 in 2004, a decrease of $319,000 or 23%. The decrease was
primarily due to slightly lower loan growth and slightly improved asset quality
during 2005. While net charge-offs increased to $157,000 in 2005 from $14,000 in
2004, non-performing loans declined from $3,099,000 at December 31, 2004 to
$1,173,000 at December 31, 2005. The provision for loan losses is 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, the relevant change in the size and mix of the loan portfolio and
current and projected economic conditions.

2004 Compared to 2003. The provision for loan losses was $1,400,000 in 2004,
compared to $1,699,000 in 2003, a decrease of $299,000 or 18%. The decrease was
primarily due to slightly lower loan volume and lower net charge-offs during
2004.

                                       50
<PAGE>

NON-INTEREST INCOME

2005 Compared to 2004. Non-interest income was $722,000 in 2005, compared to
$1,332,000 in 2004, a decrease of $610,000 or 46%. The decrease was primarily
due to a write-down and subsequent loss on the sale of a single issue of FHLMC
preferred stock. A $696,000 write-down, and a $44,000 loss on the sale of the
FHLMC preferred stock were recognized during 2005. Non-interest income excluding
the write-down and subsequent sale of the FHLMC preferred stock was $1,462,000,
which would be an increase of $130,000 or 10% from 2004. Management expects that
non-interest income will continue to increase during 2006.

2004 Compared to 2003. Non-interest income was $1,332,000 in 2004, compared to
$2,829,000 in 2003, a decrease of $1,497,000 or 53%. The decrease was primarily
due to a decrease in the gain on the sale of loans. The decrease in the gain on
the sale of loans was due to the decline in the level of refinancing activity
during 2004. Loans sold were $41.6 and $137.6 million in 2004 and 2003,
respectively.

NON-INTEREST EXPENSE

2005 Compared to 2004. Non-interest expense was $15,716,000 in 2005 compared to
$11,967,000 in 2004, an increase of $3,749,000 or 31%. The largest component of
the change in non-interest expense was salaries and employee benefits which
amounted to $9,366,000 in 2005. In 2004, salaries and employee benefits were
$7,722,000. The primary factors for the increase in salaries and employee
benefits expense was the first full year of operations of the three branch
offices that the Bank acquired as a result of the Bank of Washtenaw acquisition
in October of 2004. As of December 31, 2005, the number of full time equivalent
employees was 151 as compared to 139 as of December 31, 2004. Anticipated growth
during 2006 will require additional staff throughout most areas of the Bank.

 The second largest component of the change in non-interest expense was
occupancy and equipment expense, which amounted to $2,528,000 in 2005. In 2004,
occupancy and equipment expense amounted to $1,582,000. Primary factors in the
increase were the first full year of operations at the Bank's Operations Center
and at the three branch offices that were acquired as a result of the Bank of
Washtenaw acquisition. Additionally, various technology investments were made
throughout the Bank.

2004 Compared to 2003. Non-interest expense was $11,967,000 in 2004 compared to
$10,735,000 in 2003, an increase of $1,232,000 or 11%. The largest component of
the change in non-interest expense was salaries and employee benefits which
amounted to $7,722,000 in 2004. In 2003, salaries and employee benefits were
$6,231,000. The primary factors for the increase in salaries and employee
benefits expense was the first full year of operations of the full service
branch office in Southgate, Michigan and a regional lending center in Auburn
Hills, Michigan and the impact of the acquisition of the Bank of Washtenaw in
October of 2004. As of December 31, 2004, the number of full time equivalent
employees was 139 as compared to 119 as of December 31, 2003.

The second largest component of the change in non-interest expense was
commissions on the sale of loans, which amounted to $912,000 in 2003. In 2002,
commissions on the sale of loans amounted to $424,000. The primary factor was
the increase in the amount of loans, held for sale that were originated during
2003. The Bank originated $129,244,000 and $82,487,000 in loans, held for sale
during 2003 and 2002, respectively.

 The third largest component of the change in non-interest expense was occupancy
and equipment expense, which amounted to $1,377,000 in 2003. In 2002, occupancy
and equipment expense amounted to $997,000. The primary factor in the increase
was the opening of a full service branch office in Southgate, Michigan and a
regional lending center in Auburn Hills, Michigan.

                                       51
<PAGE>

INCOME TAX PROVISION

2005 Compared to 2004. The income tax expense was $3,867,000 in 2005 compared to
$2,837,000 in 2004, an increase of $1,030,000 or 36%. The increase was primarily
due to the increase in income before federal income tax as the effective tax
rate remained stable. Refer to Note I of the Notes to Consolidated Financial
Statements for additional information.

2004 Compared to 2003. The income tax expense was $2,837,000 in 2004 compared to
$1,807,000 in 2003, an increase of $1,030,000 or 57%. The increase was primarily
due to the increase in income before federal income tax. Refer to Note I of the
Notes to Consolidated Financial Statements for additional information.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2005 AND DECEMBER 31, 2004

Assets. Total assets at December 31, 2005 were $706,497,000 compared to
$652,662,000 at December 31, 2004, an increase of $53,835,000 or 8%. The
increase was primarily due to increases in loans.

Securities Available for Sale. Total securities available for sale, at December
31, 2005 were $17,153,000 compared to $21,075,000 at December 31, 2004, a
decrease of $3,922,000 or 19%. During 2005, the Corporation sold $4 million in
securities and $12 million in securities were called or matured. Funds from the
sale or call of securities were deployed into commercial loans at a higher
yield. The Bank's portfolio of securities available for sale has an amortized
cost and a fair value of $17.2 million. The securities and their weighted
average yield at December 31, 2005 are as follows (in thousands):

<TABLE>
<CAPTION>
                                         December 31, 2005
                                         -----------------
                                         Gross       Gross
                            Amortized  Unrealized  Unrealized    Fair
                               Cost      Gains       Losses      Value
                            ---------  ----------  ----------  ---------
<S>                         <C>        <C>         <C>         <C>
US Treasury securities      $  16,665   $   --        ($68)    $  16,597
Mortgage backed securities        555        2          (1)          556
                            ---------   ------        ----     ---------

      Totals                $  17,220   $    2        ($69)    $  17,153
                            =========   ======        ====     =========
</TABLE>

A maturity and repricing schedule of the securities portfolio at December 31,
2005 is listed below (in thousands):

<TABLE>
<CAPTION>
                             Less than one year  One to five years    Over five years
                             ------------------  -----------------    ---------------
                                       Weighted            Weighted           Weighted
                                        Average             Average            Average
                              Amount    Yield     Amount     Yield    Amount    Yield     Total
                            ---------  --------  --------  --------  -------  --------  ---------
<S>                         <C>        <C>       <C>       <C>       <C>      <C>       <C>
US Treasury securities      $  12,623    3.37%   $  3,974    4.71%   $   --      --     $  16,597
Mortgage backed securities          7    4.90%         --      --       549    5.97%          556
                            ---------    ----    --------    ----    ------    ----     ---------

      Totals                $  12,630            $  3,974            $  549             $  17,153
                            =========            ========            ======             =========
</TABLE>

The entire portfolio has a net unrealized loss of $67,000. The unrealized loss
is reflected by an adjustment to stockholders' equity. The Corporation does not
hold any securities in the "Held to Maturity" category nor does the Corporation
hold or utilize derivatives.

                                       52
<PAGE>

The Bank recorded a loss on the sale of securities, available for sale on a
single security that totaled $740,000 during 2005. This security was an issue of
80,000 shares of FHLMC preferred stock with a par value of $50 per share. The
Bank purchased this equity security in March of 2001. The security carried an
initial interest rate of 4.50% until March 31, 2002. Thereafter, the interest
rate reprices annually on April 1 of each year to a rate equal to the 12 month
LIBOR minus 20 basis points. Additionally, the dividend on this security is 70%
tax deductible. This feature increases the effective yield significantly. As
interest rates declined in 2002 and 2003, the yield on this security also
declined.

During 2004, the market value of this security was negatively impacted by two
primary factors. The first factor was the declining interest rate environment.
Short term interest rates declined during 2002 and 2003 and began to increase
during 2004. The yield on this security does not react immediately to shifts in
interest rates because of the annual adjustment feature. The coupon on this
security did not benefit from the rise in short term interest rates during 2004
due to the timing of the coupon reset date. As the next coupon reset date
approached, the market value of this security had reacted positively. A
repricing and market value table for selected dates is listed below:

<TABLE>
<CAPTION>
                                 Market Value
                        Rate      (per share)
                        ----     ------------
<S>                     <C>      <C>
3/23/2001               4.50%       $ 50.00
4/1/2002                2.82%       $ 50.00
4/1/2003                1.14%       $ 50.00
4/1/2004                1.14%       $ 46.25
6/30/2004               1.14%       $ 46.05
9/30/2004               1.14%       $ 39.00
12/31/2004              1.14%       $ 38.00
2/28/2005               1.14%       $ 43.00
</TABLE>

The second factor in the market value of this security has been the discovery of
certain accounting irregularities at FHLMC and FNMA that have raised questions
about the credit quality of these organizations. The timing of the decline in
the market value of the security also coincided with the public announcements of
these accounting irregularities that occurred.

According to SFAS 115 - Accounting for Certain Investments in Debt and Equity
Securities, the characterization of a security with an other than temporary
impairment is subjective but generally exists when an investor is unlikely to be
able to collect all amounts due according to the contractual terms of the
security. Other factors that suggest other than temporary impairment of a
security would be the downgrading of the security by a rating agency or the
deterioration of the financial condition of the issuer.

Management expected the market value of this security to continue to improve
during 2005. When the value of this security did not increase as expected after
the interest rate reset during the second quarter of 2005, the Corporation
recognized an "Other Than Temporary Loss" of $696,000 on June 30, 2005. The
Corporation recorded an additional loss of $44,000 as a result of the sale of
the security on July 22, 2005

                                       53
<PAGE>

Loans. Total loans at December 31, 2005 were $657,037,000 compared to
$587,262,000 at December 31, 2004, an increase of $69,775,000 or 12%. The
components of the outstanding balances for the years ended December 31, are as
follows (in thousands):

<TABLE>
<CAPTION>
                                        2005       2004       2003      2002       2001
                                     ---------  ---------  ---------  ---------  ---------
<S>                                  <C>        <C>        <C>        <C>        <C>
Consumer loans                       $  35,041  $  42,149  $  25,200  $  22,170  $  18,773
Commercial, financial, & other         130,750    129,103     68,922     46,187     28,920
Commercial real estate construction    107,292     72,286     50,087     30,083     10,463
Commercial real estate mortgages       336,657    296,634    208,305    139,243     90,200
Residential real estate mortgages       47,297     47,090     48,444     29,839     32,536
                                     ---------  ---------  ---------  ---------  ---------

                                     $ 657,037  $ 587,262  $ 400,958  $ 267,522  $ 180,892
                                     =========  =========  =========  =========  =========
</TABLE>

During 2005, loans increased in most categories with stronger growth in
commercial real estate construction and commercial real estate mortgages. The
decline in consumer loans was primarily due to the increase in short term
interest rates. This category is comprised primarily of home equity lines of
credit. The increase during 2004 includes the acquisition of $67.1 million in
loans from the acquisition of the Bank of Washtenaw.

The Bank expects the percentage of total commercial loans and residential real
estate mortgages to increase as a percentage of the loan portfolio in 2006 via
business development programs. Additionally, the Bank expects the largest loan
growth to occur in the commercial real estate mortgage category. These types of
loans carry a relatively large average balance, produce more cross-selling
opportunities and are typically well secured by real estate. The Bank believes
that the higher level of risk that is also inherent with these types of loans is
offset by the Bank with high standards for credit quality and a well-seasoned
group of commercial lenders.

                                       54
<PAGE>

A maturity and repricing schedule of the loan portfolio, which distributes fixed
rate loans by maturity date and adjustable rate loans by repricing date at
December 31, 2005 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                       $ 32,170  $    593  $  1,869  $    338  $ 34,970
Commercial, financial & other          91,622     5,051    29,214     4,427   130,314
Commercial real estate construction    93,387        --    11,127     2,778   107,292
Commercial real estate mortgages       62,985    19,239   241,583    12,745   336,552
Residential real estate mortgages       3,115     9,188    25,917     8,705    46,925
                                     --------  --------  --------  --------  --------

                                     $283,279  $ 34,071  $309,710  $ 28,993   656,053
                                     ========  ========  ========  ========

Non-accrual loans                                                                 984
                                                                             --------

      Total loans                                                            $657,037
                                                                             ========

Loans at fixed interest rates        $  5,661  $ 22,750  $282,861  $ 28,160  $339,432
Loans at variable interest rates      277,618    11,321    26,849       833   316,621
                                     --------  --------  --------  --------  --------

                                     $283,279  $ 34,071  $309,710  $ 28,993   656,053
                                     ========  ========  ========  ========
Non-accrual loans                                                                 984
                                                                             --------

      Total loans                                                            $657,037
                                                                             ========
</TABLE>

Variable rate loans comprise 48% of the loan portfolio. The interest rates 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.

The Bank automatically places any loan that has been partially charged-off and
most consumer loan 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. Refer to Note C of the Notes to the Consolidated Financial
Statements for additional information.

                                       55
<PAGE>

Allowance for Loan Losses. The allowance for loan losses at December 31, 2005
was $6,808,000 compared to $5,884,000 at December 31, 2004, an increase of
$924,000 or 16%. The increase was primarily to provide for the growth in the
loan portfolio during 2005. Transactions in the allowance for loan losses for
the years ended December 31, are as follows (in thousands):

<TABLE>
<CAPTION>
                                           2005       2004     2003      2002      2001
                                          -------   -------   -------   -------   ------
<S>                                       <C>       <C>       <C>       <C>       <C>
Balance, beginning of year                $5,884    $4,314    $2,875    $1,922    $1,252

Allowance on loans acquired                   --       184        --        --        --

Charge-offs:
     Consumer loans                          112        31        38        32        43
     Commercial, financial & other           169        --       141       141       251
     Commercial real estate construction      --        --        50        --        --
     Commercial real estate mortgages         86        --       124        --        --
     Residential real estate mortgages        --       100        --        --        --

Recoveries:
     Consumer loans                           37        12        13         9        32
     Commercial, financial & other           131        44        30        65        12
     Commercial real estate construction      --        --        50        --        --
     Commercial real estate mortgages         10        61        --        --        --
     Residential real estate mortgages        32        --        --
                                          ------    ------    ------    ------    ------

Net charge-offs                              157        14       260        99       250

Additions charged to operations            1,081     1,400     1,699     1,052       920
                                          ------    ------    ------    ------    ------

Balance at end of year                    $6,808    $5,884    $4,314    $2,875    $1,922
                                          ======    ======    ======    ======    ======

Allowance to total loans                    1.04%     1.00%     1.08%     1.07%     1.06%

Net Charge-offs to average loans            0.02%     0.00%     0.08%     0.04%     0.17%
</TABLE>

The increase in the allowance for loan losses was based upon management's
assessment of relevant factors, including types and amounts of non-performing
loans, historical and anticipated loss experience for the Bank and for other
banks in the peer group on such types of loans, the relevant change in the size
and mix of the Bank's loan portfolio and current and projected economic
conditions.

                                       56
<PAGE>

The allocation of the allowance for loan losses as of December 31, 2005 is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                         Total
                                                         -----
                                       2005     2004     2003     2002     2001
                                       ----     ----     ----     ----     ----
<S>                                   <C>      <C>      <C>      <C>      <C>
Consumer loans                        $  513   $  551   $  337   $  282   $  296
Commercial, financial, & other         2,024    1,653      972      660      578
Commercial real estate construction    1,272      976      639      312        6
Commercial real estate mortgages       2,689    2,302    1,899    1,344      828
Residential real estate mortgages        310      402      467      277      214
                                      ------   ------   ------   ------   ------
                                      $6,808   $5,884   $4,314   $2,875   $1,922
                                      ======   ======   ======   ======   ======
</TABLE>

<TABLE>
<CAPTION>
                                       Percent of allowance for loan losses in each category
                                                to total allowance for loan losses
                                       -----------------------------------------------------
                                         2005        2004      2003       2002       2001
                                         ----        ----      ----       ----       ----
<S>                                     <C>        <C>        <C>        <C>        <C>
Consumer loans                            7.54%      9.37%      7.81%      9.81%     15.40%
Commercial, financial, & other           29.74%     28.09%     22.53%     22.96%     30.07%
Commercial real estate construction      18.68%     16.59%     14.81%     10.85%      0.31%
Commercial real estate mortgages         39.49%     39.12%     44.02%     46.75%     43.08%
Residential real estate mortgages         4.55%      6.83%     10.83%      9.63%     11.13%
                                        ------     ------     ------     ------     ------
                                        100.00%    100.00%    100.00%    100.00%    100.00%
                                        ======     ======     ======     ======     ======
</TABLE>

<TABLE>
<CAPTION>
                                         Percent of loans in each category to total loans
                                         ------------------------------------------------
                                          2005      2004       2003       2002        2001
                                        -------    -------    -------    -------    -------
<S>                                     <C>        <C>        <C>        <C>        <C>
Consumer loans                            5.33%      7.17%      6.27%      8.29%     10.38%
Commercial, financial, & other           19.90%     21.97%     17.22%     17.26%     15.99%
Commercial real estate construction      16.33%     12.30%     12.55%     11.25%      5.78%
Commercial real estate mortgages         51.24%     50.54%     51.92%     52.05%     49.86%
Residential real estate mortgages         7.20%      8.02%     12.04%     11.15%     17.99%
                                        ------     ------     ------     ------     ------
                                        100.00%    100.00%    100.00%    100.00%    100.00%
                                        ======     ======     ======     ======     ======
</TABLE>

                                       57
<PAGE>

Bank Premises and Equipment. Bank premises and equipment at December 31, 2005
were $13,792,000 compared to $13,124,000 at December 31, 2004, an increase of
$668,000 or 5%. The increase was mainly due to upgrades in technology instituted
throughout the Bank and the purchase of land adjacent to the Dearborn Heights
office. The land was purchased during 2005 and developed into a parking lot in
order to provide convenient parking for the Bank's customers.

Real Estate Owned. Real estate owned at December 31, 2005 was $663,000, compared
to $138,000 at December 31, 2004, an increase of $525,000 or 380%. Real estate
owned at December 31, 2005 is comprised of three residential properties with an
appraised value of $782,000. The Bank expects to realize a gain as a result of
the sale of these properties during 2006.

Goodwill and other intangible assets. Goodwill and other intangible assets were
$7,764,000 at December 31, 2005, compared to $7,982,000 at December 31, 2004, a
decrease of $218,000 of 3%. The Bank has intangible assets for the estimated
value of core deposit accounts and borrower relationships acquired in the
acquisition of the Bank of Washtenaw. The intangible values represent the
present value of the net revenue streams attributable to these intangibles. The
core deposit intangible was valued at $929,000 and is being amortized over a
period of ten years. The borrower relationship intangible was valued to
$1,620,000 and is being amortized over a period of 17 years. At December 31,
2005, the core deposit intangible and borrower relationship intangible amounted
to $748,000 and $1,543,000, respectively.

The balance of the acquisition price in excess of the fair market value of the
assets and liabilities acquired, including intangible assets, was recorded as
goodwill and totaled $5.5 million. Goodwill is defined as an intangible asset
with an indefinite useful life, and as such, is not amortized, but is required
to be tested annually for impairment of the value. If impaired, an impairment
loss must be recorded for the value equal to the excess of the asset's carrying
value over its fair value. There was no impairment at December 31, 2005

Accrued Interest Receivable. Accrued interest receivable at December 31, 2005
was $2,586,000 compared to $1,889,000 at December 31, 2004, an increase of
$697,000 or 37%. The increase was primarily due to increase in the size and
yield of the loan portfolio.

Other Assets. Other assets at December 31, 2005 were $2,521,000 compared to
$3,093,000 at December 31, 2004, a decrease of $572,000 or 18%. The decrease was
largely due to a decrease in the Corporation's deferred tax asset.

                                       58
<PAGE>

Deposits. Total deposits at December 31, 2005 were $582,438,000 compared to
$540,880,000 at December 31, 2004, an increase of $41,558,000 or 8%. The
components of the outstanding balances and percentage increase in deposits from
2004 to 2005 are as follows (in thousands):

<TABLE>
<CAPTION>
                              December 31, 2005   December 31, 2004       Percent
                              -----------------   -----------------       -------
                              Balance    Percent  Balance   Percent  Increase/(Decrease)
                              -------    -------  -------   -------  -------------------
<S>                           <C>        <C>      <C>       <C>      <C>
Non-interest bearing:
    Demand                    $ 59,652    10.24%  $ 63,065   11.66%         (5.41%)
                              --------            --------
Interest bearing:
    Checking                  $ 13,413     2.30%  $ 15,400    2.85%        (12.90%)
    Money market                26,514     4.55%    54,957   10.16%        (51.76%)
    Savings                     69,503    11.93%    83,773   15.49%        (17.03%)
    Time, under $100,000       151,038    25.94%   124,448   23.01%         21.37%
    Time, $100,000 and over    262,318    45.04%   199,237   36.84%         31.66%
                              --------   ------   --------  ------         ------
                               522,786    89.76%   477,815   88.34%          9.41%
                              --------   ------   --------  ------         ------

    Total deposits            $582,438   100.00%  $540,880  100.00%          7.68%
                              ========   ======   ========  ======         ======
</TABLE>

The increase in deposits was primarily due to growth in time deposits. During
2005, the Bank completed an annual birthday celebration in March 2005, four time
deposit promotions and one promotion that introduced the Bank's High Performance
Savings product. Management developed these campaigns in order to increase
liquidity and diversify the Bank's deposit mix.

In addition to these deposit campaigns, the Bank has enacted a strategy to
utilize public funds to a higher degree, in the form of time deposits, $100,000
and over, in the State of Michigan. The Bank also began to utilize brokered
deposits as a source of funds. In order to coordinate and manage these efforts,
the Bank has also designated a public funds officer. Public funds at December
31, 2005 were $86.2 million compared to $92.9 million at December 31, 2004.
There were 28 and 35 entities with public funds on deposit at December 31, 2005
and December 31, 2004, respectively. The average term of time deposits invested
with the Bank by public units was 95 and 183 days at December 31, 2005 and 2004,
respectively. Brokered deposits were $45.1 million with an average rate of 3.79%
at December 31, 2005, compared to $19.2 million with an average rate of 2.85% at
December 31, 2004.

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

<TABLE>
<CAPTION>
                                              $100,000   Less than
                                              and over   $100,000     Total
                                              --------   --------     -----
<S>                                           <C>        <C>         <C>
Due in three months or less                   $ 87,502   $ 27,803    $115,305
Due in over three months through six months     45,996     20,733      66,729
Due in over six months through one year         65,824     61,768     127,592
Due in over one year through five years         62,996     40,734     103,730
                                              --------   --------    --------

                                              $262,318   $151,038    $413,356
                                              ========   ========    ========
</TABLE>

                                       59
<PAGE>
The following is a summary of the distribution and weighted average interest
rate of deposits at December 31, 2005 (in thousands):

<TABLE>
<CAPTION>
                                                       2005                           2004
                                               --------------------           -------------------
                                                           Weighted                       Weighted
                                                            Average                        Average
                                                Amount       Rate              Amount       Rate
                                               --------    --------           --------    --------
<S>                                            <C>         <C>                <C>         <C>
Non-interest bearing:
            Demand                             $ 59,652         --            $ 63,065         --
                                               --------                       --------

Interest bearing:
            Checking                           $ 13,413       1.01%           $ 15,400       1.44%
            Money market                         26,514       2.43%             54,957       1.94%
            Savings                              69,503       1.90%             83,773       1.00%
            Time, under $100,000                151,038       3.70%            124,448       2.73%
            Time, $100,000 and over             262,318       3.90%            199,237       2.64%
                                               --------                       --------
                                                522,786                        477,815
                                               --------                       --------

                                               $582,438                       $540,880
                                               ========                       ========
</TABLE>

The Bank continues a strategy of shifting maturing time deposits into other
savings products. In addition, the Bank continued to enact a strategy to utilize
municipal and brokered deposits to a greater degree. Management believes that
the weighted average rate of deposits will continue to increase during 2006.

Federal Home Loan Bank Advances. Federal Home Loan Bank advances at December 31,
2005 amounted to $25,588,000 compared to $20,614,000 at December 31, 2004, an
increase of $4,974,000. This increase is primarily due to the Bank borrowing a
three year Federal Home Loan Bank advance in the amount of $5,000,000 with a
rate of 4.43% that matures in 2008.

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 a blanket collateral agreement with the Federal Home Loan
Bank and investment securities, available for sale. Please refer to Note G of
the Notes to the Consolidated Financial Statements for additional information.

Other Borrowings. Other borrowings were $1,615,000 at December 31, 2005 compared
to $4,115,000 at December 31, 2004, a decrease of $2,500,000 or 61%. These
borrowings were comprised of several repurchase agreements that were acquired in
the 2004 acquisition of the Bank of Washtenaw. These repurchase agreements are
secured by securities held by the Bank.

Other Liabilities. Other liabilities were $960,000 at December 31, 2005 compared
to $1,342,000 at December 31, 2004, a decrease of $382,000 or 28%. The decrease
was primarily due to a decrease in accrued expenses.

Accrued Interest Payable. Accrued interest payable at December 31, 2005 was
$1,683,000 compared to $1,107,000 at December 31, 2004, an increase of $576,000
or 52%. The increase was due to the increase in deposits during 2005.

Subordinated Debentures. On December 19, 2002, the Corporation issued
$10,000,000 of floating rate obligated mandatory redeemable securities through a
special purpose entity as part of a pooled offering. The securities have a term
of thirty years. The Corporation may redeem the securities after five years at
face value. They are considered to be Tier 1 capital for regulatory capital
purposes. The funds from the issue of these securities were invested into
securities available for sale until they can be invested into the Bank to allow
for additional growth.

                                       60
<PAGE>

CAPITAL

Stockholders' equity at December 31, 2005 was $84,213,000 compared to
$74,604,000 as of December 31, 2004, an increase of $9,609,000 or 13%. Capital
increased during 2005 primarily due to net income during 2005.

At December 31, 2005 and 2004, the Bank and Corporation exceeded all applicable
regulatory capital requirements as described in Note M of the Notes to the
Consolidated Financial Statements.

MARKET RISK ANALYSIS

The Corporation's primary market risk exposure is interest rate risk and, to a
lesser degree, liquidity risk. All of our transactions are denominated in U. S.
dollars with no specific foreign exchange exposure. The Corporation has no
agricultural-related loan assets and therefore has no significant exposure to
changes in commodity prices. Any impact that change foreign exchange rates or
commodity prices would have on interest rates are assumed to be insignificant.
Interest rate risk is the exposure of our financial condition to adverse
movements in interest rates. We derive our income primarily from the excess of
interest collected on our interest-earning assets over the interest paid on our
interest-bearing liabilities. The rates of interest earned on the assets and
owed on our liabilities of the Corporation generally are established
contractually for a period of time. Since market interest rates change over
time, we are exposed to lower profitability if we cannot adapt to interest rate
changes. Accepting interest rate risk can be an important source of
profitability and shareholder value; however, excessive levels of interest rate
risk could pose a significant threat to our earnings and capital base.
Accordingly, effective risk management that maintains interest rate risk at
prudent levels is essential to our safety and soundness.

Interest Rate Sensitivity Analysis. Evaluating the exposure to changes in
interest rates includes assessing both the adequacy of the process used to
control interest rate risk and the quantitative level of exposure. The
Corporation's interest rate risk management process seeks to ensure that
appropriate policies, procedures, management information systems and internal
controls are in place to maintain interest rate risk at prudent levels with
consistency and continuity. In evaluating the quantitative level of interest
rate risk, we assess the existing and potential future effects of changes in
interest rates on our financial position, including capital adequacy, earnings,
liquidity and asset quality.

The Corporation primarily uses two interest rate risk measurement techniques.
The first, which is commonly referred to as GAP analysis, measures the
difference between the dollars amounts of interest-sensitive assets and
liabilities that will be repriced or mature during a given time period. 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 than 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.

                                       61
<PAGE>

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 expected and would tend to
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, 2005 which are expected
to mature or reprice in each of the time periods shown below.

<TABLE>
<CAPTION>
                                                               Interest Rate Sensitivity Period
                                               ------------------------------------------------------------------
                                                 1-90           91-365          1-5          Over
(In thousands)                                   Days            Days          Years       5 Years        Total
                                               -------        ---------       -------      --------      --------
<S>                                            <C>            <C>             <C>          <C>           <C>
Earning assets
      Federal funds sold                       $ 2,268        $      --       $    --      $     --      $  2,268
      Interest bearing deposits with Banks          69               --            --            --            69
      Mortgage loans held for sale               1,041               --            --            --         1,041
      Securities available for sale              5,695            6,936         3,974           548        17,153
      Federal Home Loan Bank stock               1,293               --            --            --         1,293
      Total loans, net of non-accrual          283,279           34,071       309,710        28,993       656,053
                                               -------        ---------       -------      --------      --------
Total earning assets                           293,645           41,007       313,684        29,541       677,877

Interest bearing liabilities
      Total interest bearing deposits          224,735          194,321       103,730            --       522,786
      Federal Home Loan Bank advances               --           10,000        15,588            --        25,588
      Other Borrowings                           1,615               --            --            --         1,615
      Trust preferred securities                10,000               --            --            --        10,000
                                               -------        ---------       -------      --------      --------
Total interest bearing liabilities             236,350          204,321       119,318            --       559,989
                                               -------        ---------       -------      --------      --------

Net asset (liability) funding gap               57,295         (163,314)      194,366        29,541      $117,888
                                               -------        ---------       -------      --------      ========

Cumulative net asset (liability) funding gap   $57,295        ($106,019)      $88,347      $117,888
                                               =======        =========       =======      ========
</TABLE>

The second interest rate measurement used is commonly referred to as net income
simulation analysis. We believe that this methodology provides a more accurate
measurement of interest rate risk than GAP analysis. The simulation model
assesses the directions and magnitude of variations in net interest income
resulting from potential changes in market interest rates. Key assumptions in
the model include prepayment speeds on various loan and investment assets; cash
flows and maturities of interest-sensitive assets and liabilities; and changes
in market conditions impacting loan and deposit volume and pricing. These
assumption are inherently uncertain, subject to fluctuation and revision in a
dynamic environment; therefore, the model cannot precisely estimate net interest
income or exactly predict the impact of higher or lower interest rates on net
interest income. Actual results will differ from simulated results due to
timing, magnitude, and frequency of interest rate changes, changes in market
conditions and our strategies, among other factors.

                                       62
<PAGE>

We conducted an interest rate simulation as of December 31, 2005, that assumed a
gradual change in market rates occurred over the following twelve months. The
following table reflects the suggested impact on net interest income over the
next twelve months (dollars, in thousands):

<TABLE>
<CAPTION>
                                              Change in Net Interest Income
                                              -----------------------------
Interest Rate Change                            Amount             Percent
                                              ---------           ---------
<S>                                           <C>                 <C>
+ 300 Basis Points                              $1,224             13.14%
+ 200 Basis Points                                 882              9.47%
+ 100 Basis Points                                 423              4.54%
+ 100 Basis Points                                (448)            (4.81%)
+ 200 Basis Points                              (1,022)           (10.97%)
+ 300 Basis Points                              (1,988)           (21.34%)
</TABLE>

Liquidity. 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
include federal funds sold, securities available for sale, loan repayments, core
deposits, Federal Home Loan Bank advances and a federal funds purchase credit
facility.

The following tables provide information about the Bank's contractual
obligations and commitments at December 31, 2005 (in thousands):

Contractual Obligations

<TABLE>
<CAPTION>
                                                                 Payments Due By Period
                                          -----------------------------------------------------------------------
                                          Less Than                         4-5           Over 5
                                            1 Year         1-3 Years       Years          Years           Total
                                          ---------        ---------      -------        -------         --------
<S>                                       <C>              <C>            <C>            <C>             <C>
Securities sold under agreements to
repurchase                                 $  1,615              --            --             --         $  1,615
Certificates of deposit                     309,626          87,235        16,495             --          413,356
Long-term borrowings                         10,027          15,561            --             --           25,588
Lease commitments                               620             935           818            297            2,670
Subordinated debentures                          --              --            --         10,000           10,000
                                           --------        --------       -------        -------         --------

Totals                                     $321,888        $103,731       $17,313        $10,297         $453,229
                                           ========        ========       =======        =======         ========
</TABLE>

Unused Loan Commitments and Letters of Credit

<TABLE>
<CAPTION>
                                                        Amount Of Commitment Expiration Per Period
                                          -----------------------------------------------------------------------
                                          Less Than                         3-5          Over 5
                                            1 Year         1-3 Years       Years          Years           Total
                                          ---------        ---------      -------        -------         --------
<S>                                       <C>              <C>            <C>            <C>             <C>
Unused loan commitments                    $121,707         $23,089        $4,228        $28,715         $177,739
Standby letters of credit                     2,159           5,839           992             --            8,990
                                           --------        --------       -------        -------         --------
Totals                                     $123,866         $28,928        $5,220        $28,715         $186,729
                                           ========        ========       =======        =======         ========
</TABLE>

                                       63
<PAGE>

IMPACT OF INFLATION AND CHANGING PRICES

The Consolidated Financial Statements presented herein have been prepared in
accordance with accounting principles generally accepted in the United States of
America, 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.

TECHNOLOGY

The Corporation, operating as an independent, local community bank, strives to
make available to its employees and customers a high level of technology as a
way to be competitive with other larger financial institutions.

In July 2001, the Bank began operation of a voice response, automatic telephone
banking service available 24 hours a day. The Bank began operating a new deposit
and check imaging system in August 2001, which has helped to streamline its
check operations and improve statement delivery. The Bank purchased a
windows-based teller system in November 2002, which will improve the efficiency
of the Bank's retail operations. This system was operational in February 2003.
During 2003, the Bank also contracted with a firm to perform a comprehensive
technology review of the Bank's technology systems and the Bank's utilization of
those systems. Management has utilized that review to develop and implement a
plan to utilize the Bank's technology systems more efficiently. During 2005, the
Bank completed its development of a website and began to offer Internet Banking.

                                       64
<PAGE>

                             DEARBORN BANCORP, INC.

                             DIRECTORS AND OFFICERS

DIRECTORS                                JEFFREY G. LONGSTRETH
                                         Real Estate Broker
MARGARET I. CAMPBELL                     Century 21 - Curran & Christie
Retired, Manufacturing
                                         MIICHAEL J. ROSS
JOHN E. DEMMER                           President and Chief Executive Officer
Chairman of the Board and                Community Bank of Dearborn
     Chief Executive Officer
Jack Demmer Ford, Inc.;                  DR. ROBERT C. SCHWYN
Jack Demmer Lincoln-Mercury, Inc. and    Physician
Jack Demmer Leasing
                                         RONNIE J. STORY
WILLIAM J. DEMMER                        President and Chief Executive Officer
President                                Story Development Corp. and Story
Jack Demmer Ford, Inc and                Brothers Grading & Excavating
Jack Demmer Lincoln-Mercury, Inc.
                                         OFFICERS
MICHAEL V. DORIAN, JR.
Vice President                           JOHN E. DEMMER
Mike Dorian Ford                         Chairman of the Board

DAVID HIMICK                             MICHAEL J. ROSS
Retired, Industrial Supply               President and Chief Executive Officer

DONALD G. KARCHER                        JEFFREY L. KARAFA
Chairman of the Board                    Vice President, Treasurer and Secretary
Karcher Agency, Inc.

BRADLEY F. KELLER
President
Braden Associates, Inc. and
MultiGard Properties, Ltd.

                                       65
<PAGE>

                           COMMUNITY BANK OF DEARBORN

                        DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS                                  JEFFREY G. LONGSTRETH
                                           Real Estate Broker
MARGARET I. CAMPBELL                       Century 21 - Curran & Christie
Retired, Manufacturing
                                           MICHAEL J. ROSS
JOHN E. DEMMER                             President and Chief Executive Officer
Chairman of the Board                      Community Bank of Dearborn
Jack Demmer Ford, Inc.;
Jack Demmer Lincoln-Mercury, Inc. and      DR. ROBERT C. SCHWYN
Jack Demmer Leasing                        Physician

WILLIAM J. DEMMER                          RONNIE J. STORY
President                                  President and C.E.O.
Jack Demmer Ford, Inc. and                 Story Development Corp. and Story
Jack Demmer Lincoln Mercury                Brothers Grading & Excavating

MICHAEL V. DORIAN, JR.                     EXECUTIVE OFFICERS
Vice President
Mike Dorian Ford                           MICHAEL J. ROSS
                                           President
DAVID HIMICK                               Chief Executive Officer
Retired, Industrial Supply
                                           JEFFREY L. KARAFA
DONALD G. KARCHER                          Senior Vice President
Chairman of the Board                      CFO & Secretary
Karcher Agency, Inc.
                                           WARREN R. MUSSON
BRADLEY F. KELLER                          Senior Vice President
President                                  Head of Lending
Braden Associates, Inc. and
MultiGard Properties, Ltd.                 STEPHEN C. TARCZY
                                           Northeast Regional President

                                           JEFFREY J. WOLBER
                                           Senior Vice President
                                           Branch Operations

































                                       66
<PAGE>

                           COMMUNITY BANK OF DEARBORN
                                    OFFICERS

<TABLE>
<S>                                <C>                          <C>
TERRENCE R. O'NEIL                 DON A. PLAISTED                 MICHAEL A. VANOVER
First Vice President               Vice President                  Assistant Vice President
Credit Administration              Commercial Lending              Regional Business Development

GARY W. AMES, JR.                  JAMES T. POWERS                 SUSAN M. VETTRAINO
Vice President                     Vice President                  Assistant Vice President
Controller                         Customer/Product Support        Loss Prevention

KEVIN A. BANK                      H. KRISTENE RAUTIO              PAMELA G. WILKS
Vice President                     Vice President                  Assistant Vice President
Senior Commercial Lender           Business Development            Customer/Product Support

MARK H. BOBINSKI                   DENNIS C. ROCHELEAU             MARIAN ZELEJI
Vice President                     Vice President                  Assistant Vice President
Commercial Lending                 Cashier                         Mortgage Lending

DANIEL P. BROPHY                   GARY P. RUSCH                   STEPHENI C. AGUILA
Vice President                     Vice President                  Data Operations Officer
Senior Commercial Lender           Commercial Lending
                                                                   DEBBY M. ASTERIOU
KATHERINE T. BROWN                 WILLIAM M. SCHMIDT              Treasury Officer
Vice President                     Vice President
Commercial Lending                 Senior Commercial Lender        MARK D. BOWERS
                                                                   Mortgage Loan Officer
DANIEL A. BZURA                    GREGORY M. SCHNEIDER
Vice President                     Vice President                  KAREN HENDERSHOT
Branch Administration              Commercial Lending              Branch Officer

RITA L. CAVATAIO                   STEVEN P. SLADE                 RICHARD T. JONES
Vice President                     Vice President                  Business Development Officer
Commercial Lending                 Consumer Lending/Collections
                                                                   SANDRA L. LETHBRIDGE
GEORGE J. DEMOU                    PATRICIA M. CARMONA             Branch Officer
Vice President                     Assistant Vice President
Senior Commercial Lender           Accounting                      NADINE S. McMILLAN
                                                                   Credit Administration Officer
ANTHONY W. DEVINE                  KAREN M. COVER
Vice President                     Assistant Vice President        TIMOTHY D. SIERPIEN
Commercial Lending                 Regional Branch Administration  Branch Officer

JIHAD A. HACHEM                    PATRICIA L. DANCIK              CHARLES P. WASCZENSKI
Vice President                     Assistant Vice President        Audit Officer
Senior Commercial Lender           Regional Business Development
                                                                   CAROLYN A. WILKINS
F. GLEN ISLAMI                     DAVID W. LESLIE                 Corporate Services Officer
Vice President                     Assistant Vice President
Compliance                         Commercial Lending

WYNN C. MILLER                     DENIS T. NISSLE
Vice President                     Assistant Vice President
Internal Audit                     Private Banking

REGAN J. MORIN                     MIHAI PARASCA
Vice President                     Assistant Vice President
Senior Commercial Lender           Computer Systems & Network

MARK M. PACITTO                    ELIZABETH A. PIZZO
Vice President                     Assistant Vice President
Commercial Lending                 Human Resources
</TABLE>



                                        67








<PAGE>

                           COMMUNITY BANK OF DEARBORN

                                  SUBSIDIARIES

                      COMMUNITY BANK INSURANCE AGENCY, INC.
                           Michael J. Ross, President

                          COMMUNITY BANK MORTGAGE, INC.
                           Daniel P. Brophy, President

                       COMMUNITY BANK AUDIT SERVICES, INC.
                            Wynn C. Miller, President

                                NORTHEAST REGION
                          AUXILIARY BOARD OF DIRECTORS

                                DAVID B. BERGMAN
                                     Partner
                           Sigma Investment Counselors

                             DR. MICHAEL J. BUSUITO
                                    Physician

                                GERALD J. CARNAGO
                  Attorney at Law & Certified Public Accountant
                           Carnago & Associates, P.C.

                                MICHAEL P. GUERRA
                                      Owner
                           Millcreek Building Company

                                VITO A. PAMPALONA
                                    President
                     Vito Anthony Homes and Building Company

                                JAMES A. PATRONA
                                      Owner
                        Universal Press & Machinery, Inc.

                                       68
<PAGE>

                           COMMUNITY BANK OF DEARBORN
                                    LOCATIONS

<TABLE>
<S>                                                        <C>
Ann Arbor - Eisenhower and Washtenaw Regional              Dearborn Heights
Lending Center                                             24935 West Warren Avenue
250 West Eisenhower Parkway, Suite 100                     Dearborn Heights, MI  48127
Ann Arbor, MI 48103                                        Phone:   (313)724-0100
Phone:   (734)302-1481                                     Fax:     (313)724-1010
Fax:     (734)761-6332                                     Mark A. O'Keefe, Branch Manager
Michael A. Vanover, AVP & Regional Bus Devel.
                                                           Dearborn Administration and
Ann Arbor - Stadium                                        Regional Lending Center
2180 West Stadium Boulevard                                1360 Porter Street, Suite 200
Ann Arbor, MI 48103                                        Dearborn, MI 48124
Phone:   (734)302-9165                                     Phone:   (313)565-5700
Fax:     (734)302-1485                                     Fax:     (313)561-2291
Karen R. Hendershot, Branch Officer                        Warren R. Musson, Senior VP & Head of Lending

Auburn Hills and Oakland Regional Lending Center           Plymouth Township
3201 University Drive, Suite 180                           44623 Five Mile
Auburn Hills, MI 48326                                     Plymouth, MI 48170
Phone:   (248)364-9700                                     Phone:   (734)454-1000
Fax:     (248)364-9701                                     Fax:     (734)454-0123
Tim Sierpien, Branch Officer                               Mara  Sears, Branch Manager

Canton Township                                            Southgate
1325 N. Canton Center Road                                 12820 Fort Street
Canton, MI  48187                                          Southgate, MI 48195
Phone:   (734)981-0022                                     Phone:   (734)284-3300
Fax:     (734)981-0033                                     Fax:     (734)284-3311
Sandra L. Lethbridge, Branch Officer                       Kim Kelemen, Branch Manager

Clinton Township                                           Saline
19100 Hall Road                                            450 East Michigan Avenue
Clinton Township, MI 48038                                 Saline, MI  48176
Phone:   (586)416-4400                                     Phone:   (734)429-3828
Fax:     (586)416-6200                                     Fax:     (734)429-9294
Karen M. Cover, AVP & Regional Branch Admin.               Shelly L. Rankin, Branch Manager

Clinton Township Regional Lending Center                   Bank Operations Center
45000 River Ridge Drive, Suite 110                         4000 Allen Road
Clinton Township, MI 48038                                 Allen Park, MI 48101
Phone:   (586)416-0200                                     Phone:   (313)381-3200
Fax:     (586)416-0220                                     Fax:     (313)381-6100
Stephen C. Tarczy, Northeast Regional President

Dearborn Office
22290 Michigan Avenue
Dearborn, MI 48124
Phone:   (313)274-1000
Fax:     (313)274-5050
Gary D. Zanley, Branch Manager
</TABLE>

                                       69
<PAGE>

DEARBORN BANCORP, INC. COMMON STOCK

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

INVESTOR RELATIONS AND FORM 10-K AVAILABLE

Additional information about the Corporation including a free copy of the
Corporation's Form 10-K filed with the Securities and Exchange Commission may be
obtained by writing or calling: Carolyn Wilkins, Corporate Services Officer,
4000 Allen Road, Allen Park, Michigan 48101; (313) 381-3200 or by E-mail at
Carolyn.Wilkins@cbdear.com.

ANNUAL MEETING

The Annual Meeting of Stockholders will be held on Tuesday, May 16, 2006, at
Park Place, 23400 Park Avenue, Dearborn, Michigan, at 4:00 p.m.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Crowe Chizek & Company LLC
55 Campau Avenue, N.W., Suite 300
Grand Rapids, Michigan  49503
(616) 774-0774

STOCK TRANSFER AGENT AND REGISTRAR

Stockholders requiring a change of name, address or ownership of stock, as well
as information about shareholder records or lost or stolen certificates,
dividend checks, dividend direct deposit, and dividend reinvestment should
contact:

Computershare Investor Services, LLC
2 North Lasalle Street
Chicago, Illinois 60602
(888) 294-8217
www.computershare.com

WEBSITE INFORMATION

Online Information for the most current news releases and Dearborn Bancorp, Inc.
financial reports and product information, visit our Website at www.cbdear.com

                                       70
<PAGE>

                    QUARTERLY COMMON STOCK PRICE INFORMATION

<TABLE>
<CAPTION>
                                     High        Low        Close
                                    ------      ------      ------
<S>                                 <C>         <C>         <C>
2005
First quarter                       $30.90      $25.30      $26.50
Second quarter                       28.48       25.31       25.90
Third quarter                        26.64       25.18       25.70
Fourth quarter                       26.23       23.15       24.75

2004
First quarter                       $24.65      $19.30      $22.00
Second quarter                       30.75       21.78       29.00
Third quarter                        29.47       25.25       26.10
Fourth quarter                       30.03       26.00       29.16
</TABLE>

All per share amounts presented have been adjusted to reflect the issuance of
stock dividends.

                             PRINCIPAL MARKET MAKERS

Citadel Derivatives Group, LLC               Oppenheimer & Co, Inc.
131 South Dearborn Street, 32nd Floor        125 Broad Street
Chicago, IL 60603                            New York, NY 10004
(312) 395-3121                               (212) 668-8104

Citigroup Global Markets, Inc.               Raymond James & Associates, Inc.
388 Greenwich St.                            880 Carillon Parkway
New York, NY 10013                           St. Petersburg, FL 33716
(212) 816-6000                               (727) 567-1000

FIG Partners, LLC                            Susquehanna Capital Group
1545 Peachtree Street, Suite 650             401 City Line Avenue, Suite 220
Atlanta, GA 30309                            Bala Cynwyd, PA 19004
(404) 601-7206                               (610) 617-2600

Hill Thompson Magid, & Co.                   Tradition Asiel Securities, Inc.
15 Exchange Place, Suite 800                 75 Park Place, 4th Floor
Jersey City, NJ 07302                        New York, NY 10007
(201) 434-6900                               (212) 791-4500

Howe Barnes Investments, Inc.                UBS Capital Markets, L.P.
222 S. Riverside Plaza, 7th Floor            111 Pavonia Avenue
Chicago, Illinois 60606                      Jersey City, NJ 07310
(312) 655-3000                               (212) 804-3605

Knight Equity Markets, L.P.                  UBS Securities, LLC
545 Washington Boulevard                     677 Washington Blvd.
Jersey City, NJ 07310                        Stamford, CT 06901
(201) 557-6844                               (203) 719-3000


                                       71
<PAGE>

                           [DEAR NASDAQ LISTED LOGO]

                             DEARBORN BANCORP, INC.
                               1360 Porter Street

                            Dearborn, Michigan 48124

                              Phone: (313) 565-5700

                                 www.cbdear.com