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                          Sun Community Bancorp Limited










                                Marketing Section

                                       of

                       1999 Annual Report to Shareholders


2777 East Camelback Road
Suite 101
Phoenix, AZ  85016
(602) 955-6100
<PAGE>
Sun Community Bancorp

To Our Shareholders

Rarely  does a  company  experience  the  growth  and  transformation  that  Sun
Community Bancorp enjoyed during 1999. Even more remarkable is such change for a
company that began just two years ago. As a bank development  company,  however,
this change responds directly to our core mission - growth of the community bank
concept.  Sun Community's  banks are driven with the ability to customize credit
solutions and offer competitive deposit products,  within an environment that is
sensitive to the local  culture and  committed to  personalized  service.  Quite
simply, the Sun Community difference is Smaller Banks, Bigger Service.

Sun stands alone as a model of success in an industry that is otherwise  wrought
with  dissatisfaction  and uncertainty.  On one hand, big banks continue to reel
with mergers and  consolidation.  On the other hand,  small,  independent  banks
struggle  with  the  difficulties  and  expense  of  ever-changing   technology,
regulation and administration.  In contrast, our shared administrative  services
and back  office  support  allow for  economies  of scale  that give our  banks'
customers  the best of both  worlds.  Our small  banks are big on  service  and,
consequently, big on customer loyalty.

Growing with the Power of Sun

As 1999 began, Sun Community's family included six banks in Arizona, up from two
at the beginning of the prior year.  Each bank achieved  significant  milestones
during the year.  Bank of  Tucson,  now three  years  old,  achieved a return on
assets of 1.48% and a return of equity of 16.63%.  Valley First  Community Bank,
which celebrated its second anniversary in June, achieved overall  profitability
for  1999.  In  addition,   Valley  First  received  an  outstanding   Community
Reinvestment Act rating;  an  acknowledgment of the bank's commitment to serving
the credit needs of its community. Camelback Community Bank's president, Barbara
Ralston, was elected to the American Bankers Association Board of Directors, the
first  woman  Arizonan  to be elected  to the  national  board in 12 years.  She
accomplished  this while  leading  her new bank to  profitability  in the fourth
quarter of 1999.

Neil  Barna,  president  of Mesa  Bank,  announced  the  bank's  first  month of
profitability  during  the tenth full  month of  operation  - a record for a Sun
Community bank.  Southern  Arizona  Community Bank in Tucson grew assets by over
105% and loans by an  impressive  600%.  Sunrise  Bank of Arizona  received  its
preferred  lender (PLP) status from the Small Business  Administration  (SBA) in
November,  making it the only bank in  Arizona to receive  this  designation  in
1999.  The PLP program  allows  Sunrise to underwrite and approve SBA loans with
minimal review from the SBA office, speeding the funding of loans for customers.

By year-end 1999, our bank  development  strategy had led to three new operating
banks and five banks in  organization.  East Valley  Community  Bank, the latest
Arizona bank,  opened in Chandler in June,  with President  Becky Jackson at the
helm.  Becky, a career banker with tremendous  marketing  acumen and a wealth of
contacts and experience,  has formed a successful  strategy to capture the small
and medium sized  business  customers in the Valley's  fastest  growing area. At
year-end, Sun had moved forward on plans to open a community bank in the western
part of the Phoenix metropolitan area, by mid-year 2000.
<PAGE>
The success of Sunrise Bank of Arizona, a real-estate  focused bank specializing
in SBA small business lending for owner-occupied commercial facilities,  led Sun
to establish Sunrise Capital Corporation,  a bank development company which will
open  additional  Sunrise banks in key markets  throughout  the Southwest with a
similar focus. Its second bank, Sunrise Bank of Albuquerque (in organization) is
targeted to open in the first quarter of 2000 and a third bank, to be located in
San Diego, will open by mid-year 2000.

Our plans of spreading the Sun Community  vision  throughout  the western United
States moved forward in 1999. In Las Vegas,  Nevada  Community  Bancorp Limited,
led by Tom  Mangione,  opened two new banks and organized a third for opening in
early 2000.  Desert Community Bank opened in August with Jim Howard as president
and Red Rock Community Bank began  operations in November under Steve  Mallory's
leadership.  Both banks  received  outstanding  receptions  in their  respective
markets.

Sun completed  formation of two California  bank  development  companies,  First
California  Northern  Bancorp  and  First  California  Southern  Bancorp,   with
impressive  leadership teams. Board members include nationally prominent banking
leaders Joe Stiglich,  former vice chair of Wells Fargo,  Kathleen  Lucier,  who
headed Wells Fargo's Southwest  operations,  and Kathy Munro, formerly President
of Bank of America Southwest Region. With their guidance,  we expect to identify
exceptional opportunities for new community banks in California.

Operational Expansion

The efficiencies of our individual banks are enhanced by the  infrastructure Sun
Community provides. In 1999, we identified the need for growth and leadership in
the operations  and  information  arenas.  We recruited Dave Dutton as executive
vice president and chief information  officer for Sun Community  operations,  as
well as those of our parent  company,  Capitol  Bancorp.  In his first months on
board,  Dave  restructured  the processing  center and directed the planning and
oversight for construction of a  state-of-the-art  operations  center to support
our anticipated growth in new banks and future technology advancements.

With Y2K  uncertainty  wreaking  havoc on our  industry,  Sun Community was well
prepared with a strong team, proactive strategy and open  communications.  While
bank presidents with large banks and many small community banks found themselves
distracted by the Y2K problem,  Sun  Community's  approach  allowed our banks to
focus on the customer,  knowing that the issue was in good hands. As a result of
our planning, the critical Y2K dates passed without incident.

Electronic  commerce  initiatives  received a great deal of  attention  in 1999.
Customers  were surveyed to determine  their specific  needs,  in order that our
energies  could be  focused  properly.  Integrated  telephone,  Internet  and PC
banking  options will be available in 2000,  with cash  management  products and
web-based services that are responsive to customer demands.

In our efforts to better serve our banks and increase  efficiency  of regulatory
and administrative functions, Sun Community added an experienced  compliance/CRA
officer, a full-time auditor,  additional loan review personnel and legal staff.
The personnel demands of individual banks led to the hiring of a human resources
director  to assist  in  identification  and  recruitment  of staff,  as well as
development and evaluation of performance criteria.
<PAGE>
Performance

As predicted in our 1998 annual report letter, 1999 proved to be a dramatic year
for  corporate  growth.  The size of Sun more than  doubled from $136 million to
$300 million.  Our investment in the  operational  and support  functions of Sun
improved our position and effectiveness in our core business. With the added new
bank units, we anticipate moving to profitability during the current year.

A most  noteworthy  event for Sun in 1999 was the initial public offering of its
common stock on the NASDAQ  exchange.  On July 2, 1999,  Sun  completed its IPO,
raising over $25 million to support our aggressive  growth strategy.  Relatively
all  financial  stocks,  particularly  those  of  regional  and  community  bank
companies,  have been hit hard in recent months. As more of our banks mature, we
believe  Sun's  shares will begin to reflect  more  appropriate  valuation.  Our
strategy is to continue  aggressive  growth  during the course of this  calendar
year.

As we enter our third year of operation,  we believe Sun Community is positioned
to continue  to capture an  increasingly  desirable  market  segment  within the
financial  services  arena.  Through our  affiliation  and  commitment,  we have
created a new class of banking that we are confident will prove profitable,  not
only for our customers, but also for you, our shareholders.

Sincerely,
Joseph D. Reid
Chairman and CEO

John S. Lewis
President

Board of Directors
Michael J. Devine
Attorney at Law

Richard N. Flynn
President
Flynn & Associates

Michael F. Hannley
President and CEO
Bank of Tucson

Michael J. Harris
Broker
Tucson Realty & Trust Company

Gary W. Hickel
President
Valley First Community Bank

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

John S. Lewis
President
Sun Community Bancorp Limited
<PAGE>
Humberto S. Lopez
President
HSL Properties, Inc.

Kathryn L. Munro
Partner
Tahoma Venture Fund

Joseph D. Reid
Chairman, President and CEO
Capitol Bancorp Ltd. and
Chairman and CEO
Sun Community Bancorp Limited

Ronald K. Sable
CEO
Concord Solutions, L.L.C.

Officers
Joseph D. Reid
Chairman of the Board
and CEO

Michael L. Kasten
Vice Chairman

Richard N. Flynn
Secretary

John S. Lewis
President

David J. Dutton
Executive Vice President and
Chief Information Officer

Michael F. Hannley
Executive Vice President

Lee W. Hendrickson
Executive Vice President and
Chief Financial Officer

Gary W. Hickel
Executive Vice President

Gerry J. Smith
Executive Vice President

Cristin Reid English
General Counsel

Patricia L. Stone
Senior Vice President
<PAGE>
Leonard C. Zazula
Senior Vice President

Katherine P. Bowden
Vice President and
Regional Controller

Paige E. Mulhollan
Vice President and
Corporate Controller

Greg E. Patten
Vice President

Darryl Tenenbaum
Vice President
<PAGE>
Bank of Tucson
4400 E. Broadway * Tucson, AZ 85711 * (520) 321-4500

Bank of  Tucson's  motto is "Small  Bank,  Big  Difference."  As a result of our
affiliation  with the Sun  family of banks,  we can be as small as we want to be
and as  large as we need to be.  Our  customers  receive  major  advantages  not
available in big bank  environments  because of our unique corporate  structure.

During the past year, Bank of Tucson continued to add to its already significant
loan  portfolio  in  the  form  of  commercial  real  estate,   residential  and
construction  loans. By  participating  loans with our  affiliates,  we recently
provided construction financing of a $6.5 million Holiday Inn Express and a $4.5
million  office  project,  while giving equal  attention to the  renovation of a
small medical complex and many other loans requiring creative financing.

Bank of Tucson  has  exceeded  what most  three-year  old  banks  would  hope to
achieve.  Yet, we aren't even close to our potential.  We have dubbed the coming
year  "Success  2000 - Reaching  New  Heights."  Keep an eye on Bank of Tucson -
we're focused on being the best!

Michael F. Hannley
President and CEO

Board of Directors
Bruce I. Ash
Vice President
Paul Ash Management, L.L.C.

Slivy Edmonds Cotton
Chairman and CEO
Perpetua, Inc.

Michael J. Devine
Attorney at Law

Brian K. English
Attorney at Law
The English Law Firm

William A. Estes, Jr.
President
TEM Corp.

Richard N. Flynn
President
Flynn & Associates

Michael F. Hannley
President and CEO
Bank of Tucson

Michael J. Harris
Broker
Tucson Realty and Trust Company

Richard F. Imwalle
President
University of Arizona Foundation

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.
<PAGE>
Burton J. Kinerk
Attorney at Law
Kinerk, Beal, Schmidt & Dyer, P.C.

Humberto S. Lopez
President
HSL Properties, Inc.

Lyn M. Papanikolas
Business Consultant

Officers
Richard F. Imwalle
Chairman of the Board

Michael J. Devine
Vice Chairman

Richard N. Flynn
Secretary

Michael F. Hannley
President and CEO

C. David Foust
Executive Vice President and CCO

Barbara A. Sadler
Vice President

Charlene F. Schumaker
Vice President

Sandi L. Smithe
Vice President
<PAGE>
Camelback Community Bank
2777 E. Camelback Rd. * Phoenix, AZ 85016 * (602) 224-5800

Since  1999  marked  our  first  full  year in  operation,  it was  particularly
gratifying  to end the year  profitably.  With the support of the Sun  Community
family, Camelback Community Bank proved once again that the strategy of autonomy
and affiliation brings powerful results.

We are  particularly  proud of our  community  involvement,  most notably of our
Investing Heart in our Community awards,  which recognize young people for their
volunteer activities. The participation by nonprofit organizations who nominated
teens,  community  leaders who chose the winners and the teens  themselves,  was
amazing.  Our staff's community service throughout the year was equally amazing,
and included  involvement  in  organizations  to assist with issues ranging from
domestic  violence,  children  and cancer  prevention.  As the 1998 Athena Award
recipient,  I spoke to dozens of community groups,  providing many opportunities
to position our bank as a community leader.

Through  my  recent  election  to the  American  Bankers  Association  Board  of
Directors,  I am committed to ensuring that community banking grows and prospers
in the years to come. Our  affiliation  with Sun Community  Bancorp ensures that
Camelback Community Bank will be at the forefront of that opportunity.

Barbara J. Ralston
President

Board of Directors
Shirley A. Agnos
President
Arizona Town Hall

Michael J. Devine
Attorney at Law

Cristin Reid English
General Counsel
Sun Community Bancorp Limited

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

Gregory M. Kruzel
Attorney at Law
Braun-Becker-Kruzel

John S. Lewis
President
Sun Community Bancorp Limited
<PAGE>
Tammy A. Linn
Special Projects
Governor Jane Dee Hull

Susan C. Mulligan
Certified Public Accountant
Miller Wagner Business Services, Inc.

Earl A. Petznik
President and CEO
Northside Hay Company

William J. Post
CEO
Arizona Public Service Co.

Barbara J. Ralston
President
Camelback Community Bank

Dan A. Robledo
President and CEO
Lawyer's Title of Arizona, Inc.

Mary Jane Rynd
CPA and Partner
Rynd, Carneal and Ewing

Jacqueline J. Steiner
Community Volunteer

Officers
Dan A. Robledo
Chairman of the Board

Joseph D. Reid
Chief Executive Officer

Barbara J. Ralston
President

Rob Boosman
Executive Vice President
and CCO

Betty L. Cornish
Vice President

Tim Himstreet
Vice President

Sondra K. Koskela
Vice President

Patrick B. Westman
Vice President
<PAGE>
Desert Community Bank
3740 S. Pecos-McLeod * Las Vegas, NV 89121 * (702) 938-0500

Desert  Community  Bank is the first  bank  opened by Nevada  Community  Bancorp
Limited,  an  affiliate of Capitol  Bancorp and Sun  Community  Bancorp.  If our
experience is any indication,  the Sun Community model is a welcome  addition to
the Las Vegas  business  community.  Our  efforts  in the first  four  months of
operation  attracted  about $18  million in assets.  After  year-end  1999,  our
business  development  efforts  culminated in attracting  the two largest single
accounts in Sun Community history - both in the same day.

Our choice of  geographic  location did not follow the trend in Las Vegas toward
the high-growth  suburban areas; rather we opted to locate in the city, avoiding
the  competition  rampant  among banks in the suburbs and  choosing to serve the
businesses who felt abandoned by this recent phenomena. These business customers
are thankful, supportive and fiercely loyal to Desert Community Bank.

Community leadership demonstrates our gratitude to Las Vegas. In particular,  we
are spearheading the Coalition of Community Banks in negotiations  with the city
to  establish  much  needed  low-income  housing.  Our  participation  in  other
important  organizations  from downtown  redevelopment to scouting is a critical
component of our community bank vision.

James W. Howard
President

Board of Directors
Robert J. Andrews
COO
New-Com, Inc.

Michael J. Devine
Attorney at Law

Rose M. K. Dominguez
President
Discovery Travel

Tom Grimmett
Owner
Grimmett & Company

Garry L. Hayes
President
Law Office of Garry L. Hayes

James W. Howard
President
Desert Community Bank

Charles L. Lasky
President
Lasky, Fifarek & Hogan, P.C.

Thomas C. Mangione
President and COO
Nevada Community Bancorp Limited
<PAGE>
Greg McKinley
Vice President
Cragin & Pike, Inc.

Leland Pace
Managing Partner
Stewart, Archibald & Barney, L.L.P.

Greg J. Paulk
President
M.M.C., Inc.

Joseph D. Reid
Chairman and CEO
Sun Community Bancorp Limited

Joseph D. Soderberg, M.D.
Physician
Summit Anesthesiology

Stephen D. Stiver
President
Stiver Car Care

Officers
Joseph D. Reid
Chairman of the Board

Charles L. Lasky
Secretary

Thomas C. Mangione
Chief Executive Officer

James W. Howard
President

Kent L. Harding
Executive Vice President
and CCO

Rodney Chaney
Senior Vice President

Susan Pucciarelli
Senior Vice President

Cheryl Fricker
Vice President

Eileen Hagler
Vice President
<PAGE>
East Valley Community Bank
1940 N. Alma School Road * Chandler, Arizona 85224 * (480) 726-6500

As the newest Sun Community bank in Arizona, East Valley Community Bank is proud
to be  part  of the  family.  Since  opening  our  doors  at  mid-year,  we have
concentrated on a grassroots approach to spread our message.  Our involvement in
the local  Chambers of Commerce,  Boys and Girls Clubs,  Chandler/Gilbert  YMCA,
National  Association of Women Business Owners and Chandler Leadership have been
excellent tools for business  development,  while satisfying our desire to bring
real community spirit to our bank.

Grassroots efforts were also important to our one-to-one  relationship  building
efforts. Our slogan, Always Rising to Meet Your Needs, was captured in our early
morning  deliveries of fresh  cinnamon rolls to local  businesses.  The cinnamon
rolls,  delivered  by none  other  than my  mother,  have  been  well  received,
attracting priceless publicity and goodwill.

Located in the family-centered East Valley of metropolitan Phoenix, our approach
to banking mirrors our community.  At East Valley  Community Bank,  banking is a
family affair.

Rebecca M. Jackson
President

Board of Directors
Mary E. Contreras
Owner and Agent
State Farm Insurance Agency

Michael J. Devine
Attorney at Law

David L. Heuermann
President
Axis Mortgage & Investments, L.L.C.

L. Christine Hutchings
Realtor
Re/Max 100 Realtors

Rebecca M. Jackson
President
East Valley Community Bank

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

Martha S. Martin
Chief Executive Officer
Spectrum Astro, Inc.

Thomas A. Padilla
Fiscal Planning Analyst
Arizona State University
<PAGE>
Darra L. Rayndon
Principal and President
Rayndon & Longfellow, P.C.

Joseph D. Reid
Chairman and CEO
Sun Community  Bancorp Limited

James C. Stratton
Chief Executive Officer
Boys and Girls Clubs of Scottsdale

Joseph A. Tameron
Partner
Skinner. Tameron, & Company, L.L.P.

Officers
Joseph D. Reid
Chairman of the Board
and CEO

Rebecca M. Jackson
President

J. Dennis Kennedy
Executive Vice President
and CCO

Christina I. McCallum
Senior Vice President

James Patrick Blaine
Vice President

Charles M. Ertl
Vice President
<PAGE>
Mesa Bank
63 East Main Street * Suite 100 * Mesa, AZ 85201 * (480) 649-5100

The Sun Community  model calls for  newly-chartered  banks to hit black ink long
before the national  average of nearly three years. The desire for excellence is
alive and well at Mesa Bank  where we  achieved  profitability  during our tenth
full month of operation.  Customer  confidence is soaring and the Mesa Bank team
is gearing up for an even more amazing 2000.

Success as a community bank means  understanding  local business  needs. In this
booming  economy,  our  customers  need loans to build or expand their  business
locations,  finance equipment and to obtain  construction loans for their homes.
Mesa  Bank  responded  with an  aggressive  lending  program  designed  to offer
affordable rates and attractive options, larger loans through participation with
our family of banks and a unique  residential  construction  loan  program  that
provided assistance to over 150 proud homeowners.

Mesa Bank's track record is a testament  to the  entrepreneurial  model that Sun
Community banks embrace. Our commitment to community,  understanding of business
needs and creative service  approach  provides us with the tools to continue our
success.

Neil R. Barna
President

Board of Directors
Neil R. Barna
President
Mesa Bank

Michael J. Devine
Attorney at Law

Debra L. Duvall, Ed. D.
Assistant Superintendent
Mesa Public Schools

Brian K. English
Attorney at Law
The English Law Firm

Robert R. Evans, Sr.
Partner
Evans Management Company

Stewart A. Hogue
Owner
Commercial Lithographers
<PAGE>
Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

Philip S. Kellis
Managing Partner
Dobson Ranch Inn and Resort

John S. Lewis
President
Sun Community Bancorp Limited

Ruth L. Nesbitt
Community Volunteer

James A. Schmidt
CPA and Executive Director
Nelson Lambson & Co., P.L.C.

Daniel P. Skinner
Owner and Manager
LeBaron and Carroll LSI, Inc.

Terry D. Turk
President
Sun American Mortgage Co.

Officers
Robert R. Evans, Sr.
Chairman of the Board

Joseph D. Reid
Chief Executive Officer

Neil R. Barna
President

David D. Fortune
Executive Vice President
and CCO

Daniel R. Laux
Vice President
<PAGE>
Red Rock Community Bank
10000 W. Charleston, Suite 100 * Las Vegas, NV 89135 * (702) 948-7500

With just a month of operation  during 1999, Red Rock Community Bank has already
experienced  a tremendous  outpouring  of support from our community and the Sun
Community  family.  Las  Vegas  is one of the  fastest  growing  markets  in the
country, but still enjoys a small town feel within its business core. All of our

banking  professionals  and board members are veterans in the community,  with a
loyal  following.  Upon opening our doors,  we were inundated with customers who
couldn't  wait  to  find  a bank  where  personal  service  and  stability  were
available. We are proud to offer both at Red Rock Community Bank.

Our  geographic  location  is an asset to our bank,  with  nearly 300  potential
customers in our office complex and several high-end housing developments in the
surrounding  area. We have aligned with several  developers and  homebuilders in
the area to facilitate introductions to homebuyers.

As 2000  begins,  Red Rock  Community  Bank enjoys the energy of the dynamic Sun
Community family and the tremendous opportunities ahead.

Steven E. Mallory
President

Board of Directors
Judith A. Banks
Vice President
Talbot of Nevada

Eric L. Colvin
Secretary and Treasurer
Marnell Corrao Associates, Inc.

Michael J. Devine
Attorney at Law

Molly K. Hamrick
Vice President and CFO
Coldwell Banker Premier Realty

Phillip G. Hardy, Jr.
Vice President
and Project Manager
Hardy Painting and Drywall

James Harris
Vice President
Harris Insurance Services

Kathryn D. Justyn
Chief Executive Officer
Universal Health Services
Summerlin Hospital Medical Center
<PAGE>
Keith W. Langlands
CPA and Partner
O'Bannon Wallace Langlands
& Neuman, L.L.P.

Charles L. Lasky
President
Lasky, Fifarek & Hogan, P.C.

Steven E. Mallory
President
Red Rock Community Bank

Thomas C. Mangione
President and COO
Nevada Community Bancorp Limited

Joseph D. Reid
Chairman and CEO
Sun Community Bancorp
Limited

Frederick P. Waid
Principal
SBG Group, L.L.C.

Officers
Joseph D. Reid
Chairman of the Board

Charles L. Lasky
Secretary

Thomas C. Mangione
Chief Executive Officer

Steven E. Mallory
President

James Wojewodka
Executive Vice President
and CCO

Mary E. Davis
Senior Vice President

Susan E. Daleiden
Vice President

Theresa L. Hartke
Vice President
<PAGE>
Southern Arizona Community Bank
6400 N. Oracle Rd * Tucson, AZ 85704 * (520) 219-5000

Growth at Southern  Arizona  Community  Bank is a testament to the wisdom of the
Sun Community model. The bank's excellent performance this past twelve months is
evidenced by a 108%  increase in assets,  a 166% increase in deposits and a very
impressive  600%  increase in loans  outstanding.  Our  commitment  to small and
medium sized business and professional clients proved fruitful.

Our board and staff, with a combined 400 years of banking  experience,  provided
solid reasons to bank at Southern  Arizona  Community  Bank. We reached out into
the northwest  Tucson  community,  supporting civic  organizations  and adopting
community causes,  with the desired results. In just over one year of operation,
our bank has grown to be a sought-after  resource for local businesses.

We look  forward to  continuing  our pattern of growth in the coming  year.  The
foundation we have built has set a solid course for the new millennium.

John P. Lewis
President

Board of Directors
William R. Assenmacher
President
T. A. Caid Industries, Inc.

Jody A. Comstock
Physician and Owner
Skin Spectrum

Thomas F. Cordell
Marketing Media Specialist
University of Arizona, ECAT

Michael J. Devine
Attorney at Law

Robert A. Elliott
President and Owner
Robert A. Elliott, Inc.

Brian K. English
Attorney at Law
The English Law Firm

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

Yoram Levy
Project Manager
Diamond Ventures, Inc.

John P. Lewis
President
Southern Arizona Community Bank

John S. Lewis
President
Sun Community Bancorp Limited

Jim Livengood
Director of Athletics
University of Arizona
<PAGE>
James A. Mather
Certified Public Accountant
and Attorney at Law

Louise M. Thomas
President
Events Made Special

Paul A. Zucarelli
President
Gordon, Zucarelli and Handley Insurance

Officers
Paul A. Zucarelli
Chairman of the Board

Joseph D. Reid
Chief Executive Officer

John P. Lewis
President

Michael J. Trueba
Executive Vice President
and CCO

Teresa R. Gomez
Vice President

James C. Latta
Vice President
<PAGE>
Sunrise Bank of Arizona
4350 East Camelback Road * Suite 100A * Phoenix, AZ 85018 * (602) 956-6250

1999 was a year of  tremendous  opportunity  for  Sunrise  Bank of  Arizona.  We
continued  to  differentiate  our  bank  from  the  competition,  as well as our
affiliates,  with our  targeted  growth  strategy  and  emphasis  on real estate
lending.  The  pipeline  for SBA loans grew  steadily  and  Sunrise was the only
Arizona bank to receive its preferred lender or "PLP" designation from the Small
Business Administration in 1999, speeding the approval and underwriting process.
Loan growth of $23 million was well balanced  with deposit  growth of nearly $26
million.

Our  success  and the unique  nature of the  Sunrise  concept led to creation of
Sunrise  Capital  Corporation,  a bank  development  company whose purpose is to
establish similar real estate focused banks in targeted  geographic  markets. In
anticipation  of our  second  bank,  we  opened  a  loan  production  office  in
Albuquerque,  New Mexico,  funding nearly $3 million in loans in late 1999. With
at least two more banks on the drawing board,  we can leverage our  underwriting
staff and PLP designation for greater efficiency and better margins.

2000 will bring increased focus on deposit relationships.  Garth Jax, former NFL
linebacker,  joined our team as Vice President and Relationship Manager, after a
distinguished  career in community relations for the Arizona Cardinals.  We look
forward  to great  things  from  Garth  and our new  banks  as we enter  the new
millennium.

William D. Hinz, II
President

Board of Directors
Sandra A. Abalos
President
Abalos and Associates, P.C.

Michael J. Devine
Attorney at Law

Brian K. English
Attorney at Law
The English Law Firm

Howard J. Hickey, III
Executive Vice President
Sunrise Bank of Arizona

William D. Hinz, II
President
Sunrise Bank of Arizona

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

John T. Katsenes
Manager
Katsenes Enterprises

Kevin B. Kinerk
Executive Vice President
Sunrise Bank of Arizona
<PAGE>
G. D. "Rab" Paquette
President
Commercial Blueprint Company

Joseph D. Reid
Chairman and CEO
Sun Community Bancorp Limited

Mark Steig, D.D.S.
Orthodontist
Mark Steig, D.D.S., P.C.

James R. Wentworth
Principal
Wentworth, Webb and Postal, L.L.C.

Officers
Joseph D. Reid
Chairman of the Board and CEO

William D. Hinz, II
President

Howard J. Hickey, III
Executive Vice President

Kevin B. Kinerk
Executive Vice President

Marian B. Creel
Vice President

J. Garth Jax
Vice President

Douglas N. Reynolds
Vice President and CCO

Leonard C. Zazula
Vice President
<PAGE>
Valley First Community Bank
7501 East McCormick Parkway * North Court, Suite 105N
Scottsdale,  AZ 85258-3495 * (480) 596-0883

Valley  First  Community  Bank  marked  its  second  anniversary  in 1999.  This
represents our first full calendar year of profitability.  Through hard work and
sound strategy, we have positioned the Bank for continued success.

In addition to the dedication of our Board of Directors,  the Bank has benefited
significantly  from its  Business  Advisory  Council  made up of local  business
owners  and  professionals,  who  serve as our  ambassadors  within  the city of
Scottsdale.  Like our Board,  the  Advisory  Council  has  provided  significant
guidance toward our success.

Our emphasis on  profitability  has not compromised  our parallel  commitment to
this community.  Banks are routinely graded on their community citizenship under
the authority of the Community  Reinvestment  Act which is  administered  by our
primary  regulators.  I am pleased to report to you that Valley First  Community
Bank received a CRA rating of Outstanding.  Among the many community  activities

in which we are  involved,  we are  especially  pleased  with the efforts of our
employees.  For the second year, our employees teamed with customers to make the
holidays brighter for children from domestic violence situations.

As we enter the third  calendar year of  operations  as a start-up  bank, we are
encouraged by the many  opportunities  for success which exist in our community.
Unlike large  institutions,  our focus is business  retention  more than growth.
This is a part of our operating philosophy "Smaller Bank - Bigger Service."

Gary W. Hickel
President

Board of Directors
W. Craig Berger
President
W. Craig Berger Financial Services, Ltd.

Marilyn D. Cummings
Realtor
Russ Lyon Realty Company

Michael J. Devine
Attorney at Law

W. Randy Fitzpatrick
Certified Public Accountant
Fitzpatrick , Hopkins, Kelly and Leonhard, P.L.C.
<PAGE>
Patrick J. Harris
Skill Golf, Inc.

Gary W. Hickel
President
Valley First Community Bank

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

John S. Lewis
President
Sun Community Bancorp Limited

Donald J. Mahoney
Managing Director
Trammel Crow Company

Gordon D. Murphy
Chairman
Esperanca, Inc.

Harry Rosenzweig, Jr.
Co-Owner
Harry's Fine Jewelry

Patricia B. Ternes
Certified Financial Planner
Dain Rauscher Incorporated

Officers
Gordon D. Murphy
Chairman of the Board

Joseph D. Reid
Chief Executive Officer

Patrick J. Harris
Secretary

Gary W. Hickel
President

Edward T. Williams
Executive Vice President
and CCO

Jeffrey S. Birkelo
Vice President

Lance K. Wise
Vice President
<PAGE>
Nevada Community Bancorp Limited
3740 S. Pecos-McLeod o Suite A
Las Vegas, NV 89121-4253
(702) 938-0521

Board of Directors
Glenn C. Christenson
EVP, CFO and CAO
Station Casinos, Inc.

Michael J. Devine
Attorney at Law

Cristin Reid English
General Counsel
Nevada Community Bancorp Limited

Joel I. Ferguson
Chairman
Ferguson Development, L.L.C.

Michael F. Hannley
President and CEO
Bank of Tucson

Mark A. James
Senior Partner/State Senator
James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson

Lewis D. Johns
President
Mid-Michigan Investment Company

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

Larry W. Kifer
Chairman and CEO
Algiers Hotel

John S. Lewis
President
Sun Community Bancorp Limited

Humberto S. Lopez
President
HSL Properties, Inc.
<PAGE>
Thomas C. Mangione
President and COO
Nevada Community Bancorp Limited

Joseph D. Reid
Chairman and CEO
Nevada Community Bancorp Limited

Edward D. Smith
President
Smith-Christensen Enterprises

Officers
Joseph D. Reid
Chairman and CEO

Michael J. Devine
Vice Chairman

Michael F. Hannley
Secretary

Thomas C. Mangione
President and
Chief Operating Officer
Lee W. Hendrickson
Executive Vice President and
Chief Financial Officer

Cristin Reid English
General Counsel
<PAGE>
Sunrise Capital Corporation
225 Gold SW
Albuquerque, NM o 87102
(505) 244-8000

Board of Directors
Michael J. Devine
Attorney at Law

Cristin Reid English
General Counsel
Sunrise Capital Corporation

Gary W. Hickel
President
Valley First Community Bank

William D. Hinz, II
President
Sunrise Bank of Arizona

Michael L. Kasten
Managing Partner
Kasten Investments, L.L.C.

John S. Lewis
President
Sun Community Bancorp Limited

Joseph D. Reid
Chairman and CEO
Sunrise Capital Corporation

Douglas N. Reynolds
Vice President and CCO
Sunrise Bank of Arizona

Officers
Joseph D. Reid
Chairman, President and CEO
<PAGE>
Lee W. Hendrickson
Executive Vice President and
Chief Financial Officer

William D. Hinz, II
Executive Vice President
and COO

Cristin Reid English
General Counsel

Other Corporate Information

Corporate Office
2777 E. Camelback Rd.
Suite 375
Phoenix, AZ 85016
(602) 955-6100
www.suncommunity.com

Independent Auditors
BDO Seidman, LLP
Grand Rapids, Michigan

Shareholder Information

Annual Meeting

Sun's Annual  Meeting of  Shareholders  will be held on Friday,  May 26, 2000 at
9:00 a.m. at Sun's corporate offices located at 2777 E. Camelback Road, Phoenix,
Arizona.

Common Stock Trading Information

Sun's  common  stock  trades on the  National  Market  Tier of The Nasdaq  Stock
MarketSM under the trading symbol SCBL.

The following brokerage firms make a market in Sun's common stock:

First Union Securities
Richmond, Virginia

M.H. Meyerson & Company
Jersey City, New Jersey

Sandler O'Neill & Partners
New York, New York
<PAGE>
Sherwood Securities Corporation
New York, New York

Spear, Leeds & Kellogg
New York, New York

Stifel, Nicolaus & Company, Inc.
St. Louis, Missouri

Stock Transfer Agent
American Securities Transfer & Trust, Inc.
12039 West Alameda Parkway
Lakewood, CO 80228
(303) 986-5400

                                 [MAP GRAPHIC]
<PAGE>
TABLE OF CONTENTS

Selected Consolidated Financial Data...........................................2
Information Regarding Sun's Common Stock.......................................3
Availability of Form 10-K and Certain Other Reports............................3
Responsibility For Financial Statements........................................4
Cautionary Statement Regarding Forward-Looking Statements......................4
Management's Discussion and Analysis of Financial Condition and Results
  of Operations:
    The Business of Sun and its Banks..........................................5
    Sun's Structure............................................................6
    Recent Developments........................................................8
    Banking Technology at Sun..................................................8
    1999 Financial Overview....................................................8
    Changes in Consolidated Financial Position.................................8
    Consolidated Results of Operations........................................10
    Liquidity, Capital Resources and Capital Adequacy.........................12
    Trends Affecting Operations...............................................13
    Century Date Change.......................................................16
    New Accounting Standards..................................................17
Report of Independent Auditors................................................18
Consolidated Financial Statements:
    Consolidated Balance Sheets...............................................19
    Consolidated Statements of Operations.....................................20
    Consolidated Statements of Changes in Stockholders' Equity................21
    Consolidated Statements of Cash Flows.....................................22
    Notes to Consolidated Financial Statements................................23

                                        1
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA
                       (in $1,000s, except per share data)


<TABLE>
<CAPTION>
                                                            As of and for the Year Ended December 31
                                                        -------------------------------------------------
                                                         1999(1)        1998(2)     1997(3)      1996(4)
                                                        ---------      ---------   ---------    ---------
<S>                                                     <C>            <C>         <C>          <C>
For the year:
  Interest income                                       $  17,920      $   7,344   $   2,871    $     354
  Interest expense                                          5,368          2,280         914          123
  Net interest income                                      12,552          5,064       1,957          231
  Provision for loan losses                                 1,753            379         268           49
  Noninterest income                                          759            334         125           10
  Noninterest expense                                      14,503          5,330       2,037          440
  Income (loss) before cumulative effect of change in
    accounting principle                                   (1,207)(5)         57         (72)        (164)
  Net income (loss)                                        (1,593)            57         (72)        (164)
  Net income (loss) per share:
      Basic                                                  (.34)           .02        (.05)        (.14)
      Diluted                                                (.34)           .02        (.05)        (.14)

At end of year:
  Total assets                                          $ 300,390      $ 135,578   $  55,007    $  17,276
  Total earning assets                                    291,783        130,640      52,901       16,639
  Portfolio loans                                         206,232         68,080      31,236        4,850
  Deposits                                                225,007         98,782      42,899       12,021
  Debt obligations                                             --             --          --           --
  Minority interests in consolidated subsidiaries          21,384          9,411       2,010           --
  Stockholders' equity                                     50,003         26,627       9,690        5,189


                                                       Quarterly Results of Operations
                                               ----------------------------------------------
                                                First        Second       Third      Fourth     Total for
                                               Quarter       Quarter     Quarter     Quarter     the Year
                                               --------      --------    --------    --------    --------
Year ended December 31, 1999:(1)
  Interest income                              $  2,976      $  3,804    $  4,988    $  6,152    $ 17,920
  Interest expense                                  886         1,193       1,425       1,864       5,368
  Net interest income                             2,090         2,611       3,563       4,288      12,552
  Provision for loan losses                         209           326         527         691       1,753
  Income (loss) before income taxes and
    cumulative effect of change in
    accounting principle                           (240)         (315)       (677)       (504)     (1,736)
  Income (loss) before cumulative effect
    of change in accounting principle              (176)(5)      (225)       (464)       (342)     (1,207)
  Net income (loss)                                (562)         (225)       (464)       (342)     (1,593)
  Net income (loss) per share:
      Basic                                        (.15)         (.06)       (.08)       (.06)       (.34)
      Diluted                                      (.15)         (.06)       (.08)       (.06)       (.34)

Year ended December 31, 1998:(2)
  Interest income                              $  1,335      $  1,638    $  2,004    $  2,367    $  7,344
  Interest expense                                  395           502         639         744       2,280
  Net interest income                               940         1,136       1,365       1,623       5,064
  Provision for loan losses                          41            70         129         139         379
  Income (loss) before income taxes                 133           245          41        (333)         86
  Net income (loss)                                 117           151          15        (226)         57
  Net income (loss) per share:
      Basic                                         .04           .05         .01        (.08)        .02
      Diluted                                       .04           .05         .01        (.08)        .02
</TABLE>

(1)  Includes  East  Valley  Community  Bank  effective  June 1999  (located  in
     Chandler, Arizona and majority-owned by Sun); Desert Community Bank (August
     1999) and Red Rock  Community  Bank  (November  1999),  both located in Las
     Vegas,  Nevada  and  majority-owned  by Nevada  Community  Bancorp  Limited
     (formed in 1999 and majority-owned by Sun).
(2)  Includes  Camelback  Community Bank (effective May 1998),  Southern Arizona
     Community Bank (effective August 1998), Mesa Bank (effective  October 1998)
     and Sunrise Bank of Arizona  (effective  December 1998),  majority-owned by
     Sun.
(3)  Includes  Valley  First  Community  Bank,  effective  June  1997,  which is
     majority-owned by Sun.
(4)  1996 period  represents Bank of Tucson amounts from date of inception (June
     1996).  Bank of Tucson became  wholly-owned  by Sun in 1997 through a share
     exchange transaction.  Prior to the share exchange transaction,  Sun had no
     assets or operations.
(5)  Implementation of a new accounting standard which required the write-off of
     previously  capitalized  start-up  costs  resulted in a one-time  charge of
     $386,000 (net of income tax effect) or $.08 per share effective  January 1,
     1999.

                                        2
<PAGE>
INFORMATION REGARDING SUN'S COMMON STOCK

Sun's  common  stock is traded on the  National  Market Tier of The Nasdaq Stock
MarketSM under the symbol "SCBL".  Market quotations regarding the range of high
and low sales prices of Sun's common stock,  which reflect  inter-dealer  prices
without retail mark-up,  mark-down or  commissions,  were as follows for periods
after Sun's July 1999 initial public offering of common stock:

                                                    1999
                                           ----------------------
                                             Low           High
                                           -------        -------
     Quarter Ended:
       September 30                        $10.375        $20.000
       December 31                           8.000         12.500

Sun has paid no cash dividends to date.  Capitol  Bancorp Ltd. owns 51% of Sun's
common stock.

As of February 22,  2000,  there were 1,088  beneficial  holders of Sun's common
stock,  based on  information  supplied to Sun from its stock transfer agent and
other sources. At that date,  5,503,870 shares of common stock were outstanding.
Sun's stock transfer agent is American  Securities Transfer & Trust, Inc., 12039
West Alameda Parkway, Lakewood, Colorado 80228 (telephone 303-986-5400).

AVAILABILITY OF FORM 10-K AND CERTAIN OTHER REPORTS

A copy of Sun's 1999 report on Form 10-K,  without  exhibits,  is  available  to
holders of its common stock  without  charge,  upon written  request.  Form 10-K
includes  certain  statistical  and  other  information  regarding  Sun  and its
business.  Requests  to obtain  Form 10-K should be  addressed  to Cristin  Reid
English,  General Counsel,  Sun Community  Bancorp Limited,  2777 East Camelback
Road, Suite 101, Phoenix, Arizona 85016.

Form 10-K, and certain other periodic reports, are filed with the Securities and
Exchange  Commission (SEC). The SEC maintains an internet web site that contains
reports,  proxy  and  information  statements  and other  information  regarding
companies  which file  electronically  (which  includes Sun). The SEC's web site
address is  http:\\www.sec.gov.  Sun's filings with the SEC can also be accessed
through Sun's web site, http:\\www.suncommunity.com.

                                        3
<PAGE>
RESPONSIBILITY FOR FINANCIAL STATEMENTS

Sun's  management  is  responsible  for  the  preparation  of  the  consolidated
financial statements and all other information  appearing in this annual report.
The  financial  statements  have been  prepared  in  accordance  with  generally
accepted accounting principles.

Sun's  management is also  responsible  for  establishing  and  maintaining  the
internal  control   structure  of  Sun,  its  banks  and  its  bank  development
subsidiaries.  The general  objectives of the internal control  structure are to
provide management with reasonable assurance that assets are safeguarded against
loss from unauthorized use or disposition, and that transactions are executed in
accordance with generally  accepted  accounting  principles.  In fulfilling this
objective, management has various control procedures in place which include, but
are not  limited to,  review and  approval  of  transactions,  a code of ethical
conduct  for  employees,   internal  auditing  and  an  annual  audit  of  Sun's
consolidated  financial  statements  performed by a qualified  independent audit
firm.  Management  believes the internal control structure of Sun to be adequate
and that there are no material weaknesses in internal control.

FORWARD-LOOKING STATEMENTS

Certain  of the  statements  contained  in this  annual  report,  including  the
consolidated  financial  statements,  management's  discussion  and  analysis of
financial  condition and results of operations and other portions of this annual
report that are not historical facts, including, without limitation,  statements
of performance and other  forward-looking  statements  within the meaning of the
Private  Securities  Litigation  Reform  Act of 1995,  are  subject to known and
unknown risks, uncertainties and other factors which may cause the actual future
results,  performance or achievements of Sun and/or its  subsidiaries  and other
operating  units  to  differ   materially   from  those   contemplated  in  such
forward-looking statements. The words "intend", "expect", "project", "estimate",
"predict",  "anticipate",  "should",  "will", "believe", and similar expressions
also are  intended to identify  forward-looking  statements.  Important  factors
which  may cause  actual  results  to differ  from  those  contemplated  in such
forward-looking  statements include,  but are not limited to: (i) the results of
Sun's  efforts to  implement  its  business  strategy,  (ii) changes in interest
rates, (iii) legislation or regulatory  requirements  adversely  impacting Sun's
banking  business and/or  expansion  strategy,  (iv) adverse changes in business
conditions or inflation,  (v) general economic conditions,  either nationally or
regionally,  which are less  favorable  than  expected and that result in, among
other things,  a  deterioration  in credit quality and/or loan  performance  and
collectability,  (vi) competitive pressures among financial institutions,  (vii)
changes in securities markets,  (viii) actions of competitors of Sun's banks and
Sun's  ability to respond to such actions,  (ix) the cost of capital,  which may
depend in part on Sun's asset  quality,  prospects  and outlook,  (x) changes in
governmental  regulation,  tax  rates  and  similar  matters,  (xi)  changes  in
management,  and (xii) other risks  detailed  in Sun's  other  filings  with the
Securities  and  Exchange  Commission.  Should  one or more of  these  risks  or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual outcomes may vary materially from those indicated. All subsequent written
or oral forward-looking  statements attributable to Sun or persons acting on its
behalf are  expressly  qualified  in their  entirety by the  foregoing  factors.
Investors and other interested parties are cautioned not to place undue reliance
on  such  statements,  which  speak  as of the  date  of  such  statements.  Sun
undertakes   no   obligation   to  release   publicly  any  revisions  to  these
forward-looking  statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of unanticipated events.

                                        4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Most of this section  discusses  items of importance  regarding  Sun's financial
statements  which appear  elsewhere  in this  report.  In order to obtain a full
understanding  of this  discussion,  it is  important  to  read  it  with  those
financial  statements.  However,  before discussing the financial statements and
related highlights,  an introductory  section includes some important background
information about the business of Sun and its banks,  Sun's structure and recent
developments.

THE BUSINESS OF SUN AND ITS BANKS

Sun  defines  itself as a BANK  DEVELOPMENT  COMPANY.  In the  highly  regulated
business of banking,  it is viewed by  governmental  agencies as a bank  holding
company.  Sun views bank  DEVELOPMENT  as a much more dynamic  activity than the
regulatory label for bank holding companies.

Bank  development  at Sun is the business of mentoring,  monitoring and managing
its  investments in community  banks.  Bank  development is also the activity of
adding  new banks  through  startup,  or DE NOVO,  formation  or  through  other
affiliation efforts, such as acquiring existing banks.

The banks have similar characteristics:

     *    Each bank has an  on-site  president  and  management  team,  as local
          decision makers.
     *    Each bank has a local board of  directors  which has actual  authority
          over the bank.
     *    Each bank generally operates from only one office location.
     *    Each bank can fully meet customers'  needs  anywhere,  anytime through
          bankers  on  call,  courier  services,  telephone  banking  and  other
          delivery methods.
     *    Each bank has access to an efficient back-room processing facility and
          leading edge technology through shared resources.

Sun's banks seek the profitable customer relationships which are often displaced
through  mergers,  mass  marketing,  megabanks  and an  impersonal  approach  to
handling  customers.  The banks are focused on  commercial  banking  activities,
emphasizing  business  customers,  although they also offer a complete  array of
financial products and services.

Each bank has a separate  charter.  A bank  charter is  similar to  articles  of
incorporation  and enables each bank to exist as a distinct legal entity.  Sun's
banks are  state-chartered  which means they are  organized  under a  particular
state's  banking  laws.  All of the banks  are FDIC  insured.  Banks are  highly
regulated by state and federal agencies.  Because each bank has its own charter,
each bank is  examined  by both state and  federal  agencies  as a separate  and
distinct legal entity for safety, soundness and compliance with banking laws and
regulations.

Sun became a bank holding  company in 1997 when it acquired  Bank of Tucson in a
share exchange transaction. Bank of Tucson had been formed in 1996 by a group of
individuals  which  included  some of the same  organizers  of Sun. Sun became a
one-bank  holding  company  through the Bank of Tucson share  exchange and, as a
result, Bank of Tucson's shareholders became shareholders of Sun. Bank of Tucson
is Sun's only wholly-owned bank subsidiary. A second start-up bank, Valley First
Community  Bank,  was added in 1997.  Four start-up banks were added in 1998 and
three in 1999.

                                        5
<PAGE>
At December 31, 1999,  Sun consisted of 9 community  banks,  with locations in 3
states.

Sun's bank development  philosophy is one of "SHARED VISION" which encompasses a
commitment to community  banking  emphasizing  local  leadership and investment,
with the shared resources of efficient management. Sun provides shared resources
to its banks which includes common data  processing  systems,  centralized  item
processing,  loan review, internal audit, credit administration,  accounting and
risk management.

SUN'S STRUCTURE

Sun  is a  majority-owned  subsidiary  of  Capitol  Bancorp  Ltd.  Capitol  is a
multi-bank  development  company  headquartered  in  Lansing,  Michigan.  It has
consolidated   total  assets  of  about  $1.3  billion,   which  includes  Sun's
consolidated  assets.  Sun's  financial  statements  are  included in  Capitol's
because of Capitol's majority ownership of Sun.

The organizational  structure of Sun is complex.  It is a mixture of banks which
Sun owns directly and others which are owned indirectly  through subsidiary bank
development  companies.   Additionally,  Sun's  direct  and  indirect  ownership
percentages of these entities differ.

Headquartered  in Phoenix,  Arizona,  Sun became a public company in 1999 and is
carrying out all of its current bank development  activities in the southwestern
region of the United States. At year end 1999, its consolidated assets were $300
million  ($136 million at year end 1998).  It is comprised of a  combination  of
directly-owned banks and bank development subsidiaries:

<TABLE>
<S>                        <C>                                     <C>
                              Sun Community Bancorp Limited
                              51% owned by Capitol Bancorp

Arizona bank development     Nevada bank development through       Sunrise Capital Corporation, multi-
  through 6 majority-      Nevada Community Bancorp Limited and    state bank development emphasizing
 owned community banks     its 2 majority-owned community banks    specialized lending (SBA) through 1
                                                                      majority-owned community bank
</TABLE>

The current group of banks comprising bank development in Arizona follows:

                            Arizona Bank Development
                             (direct subsidiaries of
                         Sun Community Bancorp Limited)

             Bank of Tucson                           Mesa Bank
            (Tucson -- 1996)                        (Mesa -- 1998)
          100% ownership by Sun                   53% ownership by Sun

              Valley First                            Camelback
             Community Bank                         Community Bank
          (Scottsdale -- 1997)                     (Phoenix -- 1998)
          52% ownership by Sun                    55% ownership by Sun

            Southern Arizona                          East Valley
             Community Bank                          Community Bank
            (Tucson -- 1998)                       (Chandler -- 1999)
          51% ownership by Sun                    88% ownership by Sun

                                        6
<PAGE>
All of these  banks are very young.  The most mature bank of the group,  Bank of
Tucson,  completed its 36th month of operation in June 1999.  The youngest bank,
East Valley Community Bank, opened in June 1999. These banks ranged in size from
almost $11 million in assets to $82 million at year end 1999.  Four of the banks
are located in or near greater Phoenix, while two are located in Tucson.

Bank  development  activities in Nevada are carried out through Nevada Community
Bancorp Limited, which is 51% owned by Sun, and was formed in 1999:

                        Nevada Community Bancorp Limited
                                51% owned by Sun

          Desert Community Bank                   Red Rock Community Bank
           (Las Vegas -- 1999)                      (Las Vegas -- 1999)
          51% ownership by NCBL                    51% ownership by NCBL

Both of the Nevada banks opened in the second half of 1999 and a third Las Vegas
area bank is expected to open in the first half of 2000.  For their brief period
of operation in 1999,  the two banks'  combined  total assets was $33 million at
year end 1999.

Sunrise Capital Corporation is a newly formed subsidiary  company,  57% owned by
Sun.  It is  focused  on  developing  banks in  several  states  with a slightly
different  emphasis on commercial lending than the other bank affiliates of Sun.
As of year end 1999 it has one bank subsidiary,  Sunrise Bank of Arizona,  which
is majority-owned and located in Phoenix.  As its initials would imply,  Sunrise
Bank of Arizona is focused on offering loan products structured through the SBA,
or US Small  Business  Administration,  in addition to the full array of typical
bank products.  Sunrise Capital  Corporation  commenced  operations in late 1999
when it  completed  a  share  exchange  transaction  involving  Sunrise  Bank of
Arizona, previously a 51%-owned subsidiary of Sun.

In 1999, a loan production  office of Sunrise Bank of Arizona was established in
Albuquerque,  New Mexico.  It will evolve into Sunrise Bank of  Albuquerque  (in
organization), which is expected to open in the first half of 2000.

All of these banks and subsidiary bank  development  companies are combined,  or
consolidated, for financial reporting purposes because Sun has ownership control
of  them  either  directly  or  indirectly.  Current  accounting  rules  require
consolidated  reporting when one entity has majority  voting control of another.
The  reporting  entity  is  the  parent  organization  and  entities  which  are
majority-owned by the parent are subsidiaries. In the circumstances of Sun, this
parent and  subsidiary  relationship  applies  also to second tier  subsidiaries
which have consolidated subsidiaries of their own.

The  accounting  rules in this area are also complex and  complicate  gaining an
understanding of consolidated  financial statements.  For example,  consolidated
balance sheets  include all of the combined  entities'  assets and  liabilities,
without an  adjustment  for the  percentage  of ownership by the parent.  On the
other hand,  consolidated  net income  includes  all of the  combined  entities'
operating results, but only to the extent of the parent's ownership percentage.

                                        7
<PAGE>
RECENT DEVELOPMENTS

Because of the number of banks and bank development  companies added in 1999 and
1998, comparing financial results for those and prior periods is difficult.

In 1999, a total of 5 entities were added to the consolidated group. This number
consists of 3 new banks and 2 new bank  development  companies.  In 1998,  there
were four new banks added to the group.

At year end  1999,  applications  for two banks  (one in  Nevada  and one in New
Mexico)  were  pending,   awaiting   regulatory   approval  and  capitalization.
Management  expects that at least two  applications  for  permission to form new
banks  will be filed in early  2000  (one  each in the  states  of  Arizona  and
California).  Additionally,  two bank  development  companies (which will become
majority-owned  subsidiaries of Sun) are expected to commence  operations in two
regions within the state of California in 2000.

BANKING TECHNOLOGY AT SUN

The use of high  technology  banking  systems is key to the delivery of accurate
and timely customer  service.  Sun currently  operates one data processing site,
located in Phoenix, Arizona which processes all activity for its banks.

With the century date change, or Y2K, now successfully completed, implementation
of Internet-based banking capabilities is in process.

1999 FINANCIAL OVERVIEW

Sun completed 1999 with total assets exceeding $300 million, an increase of more
than 120% over the year end 1998 level.

Consolidated  operating  losses for 1999 were about $1.2  million  compared to a
slight amount of net income,  $57,000,  in 1998.  The net loss for 1999 was $1.6
million.  The 1999 net loss resulted  primarily from the early period  operating
losses of start-up and young bank  subsidiaries  and an accounting  change which
required the write-off of previously capitalized start-up costs.

CHANGES IN CONSOLIDATED FINANCIAL POSITION

Total assets have grown  significantly  from $55 million at the end of 1997,  to
$136 million at year end 1998 and reaching $300 million at the end of 1999. This
rapid  asset  growth  is the  result of adding  new  banks  and the  growth  and
evolution of Sun's young banks. Each bank reported strong asset growth in 1999.

                                        8
<PAGE>
                                  TOTAL ASSETS
                                  ($ millions)

                   1996         1997        1998         1999
                   ----         ----        ----         ----
                    17           55          136          300

At year end 1999,  total assets of the three banks  formed in 1999  approximated
$44 million. The four banks formed in 1998 reported total assets of $111 million
at the end of 1999, an increase of $77 million during the year.  Total assets of
the bank which  became two years old in 1999 grew 25% to $46  million.  The most
mature bank,  formed in 1996,  reported  total assets of $82 million at year end
1999, an increase of about 29% for the year.

The total assets of each bank, the consolidated totals and ownership percentages
are summarized below as of year end 1999 (in $1,000s):

                                            Percentage
                                           Ownership By         Total Assets
                                         ----------------   --------------------
                                         Sun     2nd Tier     1999        1998
                                         ----    --------   --------    --------
     Bank of Tucson                      100%               $ 82,113    $ 63,860
     Camelback Community Bank             55%                 30,254      10,017
     East Valley Community Bank           88%                 10,757
     Mesa Bank                            53%                 24,738       6,192
     Southern Arizona Community Bank      51%                 25,778      12,395
     Valley First Community Bank          52%                 45,678      36,588
     Nevada Community Bancorp Limited:    51%
       Desert Community Bank                        51%       17,839
       Red Rock Community Bank                      51%       15,596
     Sunrise Capital Corporation:         57%
       Sunrise Bank of Arizona                     100%       30,615       5,411
     Other, net                                               17,022       1,115
                                                            --------    --------
              Consolidated totals                           $300,390    $135,578
                                                            ========    ========

Most of the consolidated  assets consist of loans. Net portfolio loans surpassed
the $200 million mark near the end of 1999,  or about 68% of total  consolidated
assets at the end of the year.

The banks  emphasize  commercial  loans,  consistent with their focus on serving
small to mid-sized business customers. Commercial loans comprise $192 million or
93% of total portfolio loans at year end 1999, an increase over the 89% ratio in
1998. Loan growth in 1999 was significant--$138 million or a growth rate of 203%
for the year.

Asset quality has remained  strong in this record  period of economic  stability
and  expansion.  Nonperforming  loans,  which consist of loans more than 90 days
past due and loans on nonaccrual status,  approximated $34,000 at year end 1999,
none in 1998.

                                        9
<PAGE>
The banks  maintain an allowance for loan losses to absorb  estimated  losses in
the loan  portfolio  at the  balance  sheet  date.  At December  31,  1999,  the
allowance for loan losses approximated $2.4 million or 1.15% of portfolio loans,
compared to $696,000 or 1.02% in 1998. The following table summarizes  portfolio
loans, the allowance for loan losses and its ratio, and nonperforming  loans (in
$1,000s):

<TABLE>
<CAPTION>
                                                                                              Allowance as a
                                                           Allowance for     Nonperforming      % of Total
                                  Total Portfolio Loans     Loan Losses         Loans         Portfolio Loans
                                  ---------------------   ---------------    -------------    ---------------
                                    1999         1998     1999      1998     1999     1998    1999     1998
                                    ----         ----     ----      ----     ----     ----    ----     ----
<S>                               <C>          <C>       <C>       <C>       <C>     <C>      <C>      <C>
Bank of Tucson                    $ 59,088     $37,899   $  725    $ 392                      1.23%    1.03%
Camelback Community Bank            22,731       3,246      228       33                      1.00%    1.02%
East Valley Community Bank           4,335                   44                               1.01%
Mesa Bank                           18,884       1,386      189       14                      1.00%    1.01%
Southern Arizona Community Bank     20,610       2,925      207       30                      1.00%    1.03%
Valley First Community Bank         36,334      20,879      418      209     $ 34             1.15%    1.00%
Nevada Community Bancorp Limited:
  Desert Community Bank             11,438                  154                               1.35%
  Red Rock Community Bank            7,861                  156                               1.98%
Sunrise Capital Corporation:
  Sunrise Bank of Arizona           24,952       1,745      250       18                      1.00%    1.03%
Other, net                              (1)
                                  --------     -------   ------    -----     ----    -----    ----     ----
      Consolidated totals         $206,232     $68,080   $2,371    $ 696     $ 34    $ -0-    1.15%    1.02%
                                  ========     =======   ======    =====     ====    =====    ====     ====
</TABLE>

The  allowance for loan losses is  maintained  at a level  believed  adequate by
management. It is analyzed quarterly by each bank. The adequacy of the allowance
is  based  on  evaluation  of  the  portfolio  (including  volume,   amount  and
composition,  potential  impairment of  individual  loans and  concentration  of
credit),  past loss experience,  current economic  conditions,  loan commitments
outstanding, regulatory requirements and other factors.

New banks,  as a  condition  of charter  approval,  are  required to maintain an
allowance  ratio of not less than 1% for their first three years of  operations.
Because  they are new  banks  with new or  unseasoned  loans  and no prior  loss
history,  1% is often used as a starting  point for the amount of the allowance,
particularly in the earliest years of operation.  This reduces the  consolidated
ratio,  even  though  larger and more mature  banks  maintain  higher  allowance
ratios.  For  example,  Bank of Tucson,  the most  mature  bank,  increased  its
allowance ratio to 1.23% at year end 1999.

CONSOLIDATED RESULTS OF OPERATIONS

Revenue growth has been  significant.  In 1999,  total  revenues  exceeded $18.7
million,  a 143%  increase  over the 1998  revenue  level of $7.7  million.  The
primary revenue source is interest income from loans. Net interest income is the
difference  between total interest  income and interest  expense on deposits and
borrowings.  The  following  graph  summarizes  growth in total  revenue  (which
includes noninterest income like some fees and service charges):

                                       10
<PAGE>
                                 TOTAL REVENUES
                                 ($ thousands)

                   1996         1997        1998         1999
                   ----         ----        ----         ----
                    364        2,997       7,679        18,679

Of the 1999  revenues,  $7.4  million,  or about 40%,  came from the most mature
bank,  formed in 1996.  The bank formed in 1997  reported  1999 revenues of $3.4
million or about 18% of the  consolidated  total. The four banks started in 1998
generated  total  revenues  of $6.3  million  or  about  one  third  of the 1999
consolidated total.

Growth in the  categories of interest  income and interest  expense,  as well as
noninterest income and noninterest expense, is the result of the addition of new
banks during the periods  presented and the ongoing growth of Sun's young banks.
The largest  component of noninterest  expense is salaries,  wages and benefits,
which has  increased  significantly  due to the larger  number of banks and bank
development subsidiaries and added corporate personnel.

The  following  table  summarizes  net  income  for each of the  banks  and on a
consolidated basis and the related rates of return on average assets and equity,
where applicable (in $1,000s):

<TABLE>
<CAPTION>
                                        Net Income (Loss)      Return on Average Equity    Return on Average Assets
                                   -------------------------   -------------------------   -------------------------
                                    1999      1998      1997    1999      1998     1997     1999      1998     1997
                                    ----      ----      ----    ----      ----     ----     ----      ----     ----
<S>                                <C>       <C>       <C>     <C>       <C>      <C>      <C>       <C>      <C>
Bank of Tucson                     $ 1,086   $ 776    $ 150    16.63%    12.73%    2.88%    1.48%     1.25%    0.47%
Camelback Community Bank              (520)   (370)
East Valley Community Bank            (673)
Mesa Bank                             (207)   (118)
Southern Arizona Community Bank       (546)   (252)
Valley First Community Bank             36     (81)    (245)    0.87%                       0.10%
Nevada Community Bancorp Limited:
  Desert Community Bank               (358)
  Red Rock Community Bank             (269)
Sunrise Capital Corporation:
  Sunrise Bank of Arizona             (634)    (26)
Other, net                             492     128       23
                                   -------   -----    -----    -----     -----    -----    -----      ----    -----
      Consolidated totals          $(1,593)  $  57    $ (72)   (3.19)%    0.34%   (0.97)%  (0.86)%    0.06%   (0.20)%
                                   =======   =====    =====    =====     =====    =====    =====      ====    =====
</TABLE>

Provisions for loan losses also increased  significantly,  commensurate with the
growth in the number of banks and loans.

During 1999, a new  accounting  standard  required the  write-off of  previously
capitalized  start-up  costs,  which is  discussed  in a later  section  of this
narrative.  It is  reflected as a  cumulative  effect of a change in  accounting
principle in the consolidated statement of operations,  and amounted to $.08 per
share.

Income (loss) per share, before the cumulative-effect adjustment, was $(.26) per
basic and  diluted  share in 1999,  compared to net income of $.02 per basic and
diluted share in 1998.

                                       11
<PAGE>
LIQUIDITY, CAPITAL RESOURCES AND CAPITAL ADEQUACY

Liquidity  for  financial  institutions  consists of cash and cash  equivalents,
marketable  investment  securities and loans held for resale.  These  categories
totaled  $86  million  at year end  1999,  or about  28% of total  assets.  This
compares to $63 million or 46% of total assets at year end 1998.

Liquidity varies significantly daily, based on customer activity.  The change in
the  liquidity  ratio is the result of more assets  being  deployed  into loans,
consistent with the strategy of maximizing  interest  income.  Rates of interest
income on liquid  assets are  typically  less than rates the banks  achieve from
commercial loans.

The  primary  source  of funds for the banks is  deposits.  The banks  emphasize
interest-bearing time deposits as part of their funding strategy. The banks also
seek noninterest-bearing deposits, or checking accounts, which reduce the banks'
cost of funds.  Noninterest-bearing deposits were about 22% of total deposits at
year end 1999 and increased $22 million during the year.

                                 TOTAL DEPOSITS
                                  ($ millions)

                                       1996     1997     1998      1999
                                       ----     ----     ----      ----
     Interest-bearing                   8.2     33.5     71.0     175.0
     Noninterest-bearing                3.8      9.5     28.0      50.0

In  recent  periods,  banks in  general  have  experienced  some  difficulty  in
obtaining  additional  deposits  to fuel  growth.  Sun's  banks have had similar
experiences  in their  individual  markets.  As deposit  pricing has become more
competitively aggressive,  deposit growth is achievable,  but at a higher price,
shrinking net interest margins.

In July 1999,  Sun became a public company  through an initial  public  offering
(IPO) of its common stock with net proceeds of $25  million.  Capitol  purchased
51% of the offering, maintaining its majority ownership of Sun.

A  significant  source of capital  has been  investments  provided  by  minority
shareholders in the subsidiaries which are consolidated for financial  reporting
purposes.  Total minority  interests in  consolidated  subsidiaries  amounted to
$21.4 million at year end 1999, an increase of $12 million from the $9.4 million
level at year end 1998. These minority interests  approximated $2 million at the
end of 1997.  The increases in these periods are the result of Sun's strategy of
starting new banks and bank development  companies with less than 100% ownership
by Sun.

Total  stockholders'  equity  approximated  $50  million  at year end  1999,  an
increase of $23.4 million for the year. The book value per share of common stock
was  $9.09 at year end  1999,  compared  with  $6.92 at year end  1998.  No cash
dividends  have been paid.  Future  payment of dividends,  if any, is subject to
approval by Sun's board of directors and capital adequacy.

                                       12
<PAGE>
Sun's capital structure consists of these primary elements:

     *    Minority interests in consolidated subsidiaries, and
     *    Stockholders' equity.

                              TOTAL CAPITALIZATION
                                  ($ millions)

                                       1996     1997     1998      1999
                                       ----     ----     ----      ----
     Stockholders' Equity               5.2      9.7     26.6        50
     Minority Interests                   0        2      9.4      21.4

Total  capitalization  at year end 1999  amounted  to $71.4  million or 23.8% of
total assets. This compares to $36 million at year end 1998.

Sun and each of its banks and bank  development  subsidiaries  are  subject to a
complex  series of regulatory  rules and  requirements  which  require  specific
levels of capital adequacy at the bank level and on a consolidated  basis. Under
those  rules  and  regulations,  banks  are  categorized  as  WELL  CAPITALIZED,
ADEQUATELY   CAPITALIZED  or  INADEQUATELY   CAPITALIZED   using  several  ratio
measurements,  including a  risk-weighting  approach to assets and  commitments.
Banks  falling  into the  INADEQUATELY  CAPITALIZED  category are subject to the
prompt  corrective  action  provisions of the FDIC  Improvement  Act,  which can
result in significant  regulatory agency  intervention and other adverse action.
Although it is  permissible  to  maintain  capital  adequacy  at the  ADEQUATELY
CAPITALIZED level, Sun operates with the objective of its banks meeting the WELL
CAPITALIZED standard. The well capitalized banks benefit from lower FDIC deposit
insurance costs and less restrictive limitations on some banking activities.

New banks,  as a condition  of  regulatory  charter  approval,  are  required to
maintain higher ratios of capital adequacy. Generally, they are required to keep
a ratio of capital  to total  assets of not less than 8% for their  first  three
years of operation.

In the opinion of management, all of the affiliated banks met the criteria to be
classified as WELL CAPITALIZED at year end 1999.

TRENDS AFFECTING OPERATIONS

The most significant trends which can impact the financial condition and results
of operations of financial  institutions are changes in market rates of interest
and changes in general economic conditions.

Changes in interest  rates,  either up or down,  have an impact on net  interest
income (plus or minus),  depending on the  direction and timing of such changes.
At any  point  in time,  there  is an  unfavorable  imbalance  between  interest
rate-sensitive assets and interest rate-sensitive  liabilities.  This means that
when  interest  rates  change,  the timing and  magnitude  of the effect of such

                                       13
<PAGE>
interest  rate changes can alter the  relationship  between asset yields and the
cost of funds. This timing difference between interest rate-sensitive assets and
interest  rate-sensitive  liabilities  is  characterized  as a  "gap"  which  is
quantified by the  distribution  of  rate-sensitive  amounts within various time
periods in which they reprice or mature.  The  following  table  summarizes  the
consolidated  financial  position in relation to "gap" at December  31, 1999 (in
$1,000s):

<TABLE>
<CAPTION>
                                                              Interest Rate Sensitivity
                                                     ---------------------------------------------
                                                      0 to 3      4 to 12      1 to 5      Over
                                                      Months      Months       Years      5 years      Total
                                                     ---------   ---------   ---------   ---------   ---------
<S>                                                  <C>         <C>         <C>         <C>         <C>
Assets
  Federal funds sold                                 $  28,699                                       $  28,699
  Interest-bearing deposits with banks                   8,994   $   2,544                              11,538
  Loans held for resale                                  1,296                                           1,296
  Investment securities                                 25,642       1,800   $   7,998                  35,440
  Portfolio loans:
    Commercial                                          96,634      17,717      73,031   $   4,444     191,826
    Real estate mortgage                                 6,968          99         335          56       7,458
    Installment                                          2,095       1,546       2,379         930       6,950
  Non-earning assets and other                                                              17,183      17,183
                                                     ---------   ---------   ---------   ---------   ---------
        Total assets                                 $ 170,328   $  23,706   $  83,743   $  22,613   $ 300,390
                                                     =========   =========   =========   =========   =========
Liabilities and stockholders' equity
  Interest-bearing deposits:
    Time deposits over $100,000                      $  18,572   $  28,702   $   4,789   $           $  52,063
    Time deposits under $100,000                         4,909      14,953       5,376                  25,238
    All other interest-bearing deposits                 98,055                                          98,055
                                                     ---------   ---------   ---------   ---------   ---------
  Total interest-bearing deposits                      121,536      43,655      10,165                 175,356
  Noninterest-bearing liabilities                                                           53,647      53,647
  Minority interests in consolidated subsidiaries                                                       21,384
  Stockholders' equity                                                                                  50,003
                                                     ---------   ---------   ---------   ---------   ---------
        Total liabilities and stockholders' equity   $ 121,536   $  43,655   $  10,165   $  53,647   $ 300,390
                                                     =========   =========   =========   =========   =========
Interest rate sensitive period gap                   $  48,792   $ (19,949)  $  73,578   $ (31,034)

Interest rate sensitive cumulative gap               $  48,792   $  28,843   $ 102,421   $  71,387

Period rate sensitive assets/period rate sensitive
liabilities                                               1.40        0.54        8.24        0.42

Cumulative rate sensitive assets/cumulative rate
sensitive liabilities                                     1.40        1.17        1.58        1.31

Cumulative gap to total assets                           16.24%       9.60%      34.10%      23.76%
</TABLE>

The "gap"  changes  daily  based  upon  changes  in the  underlying  assets  and
liabilities at the banks.  Analyzing  exposure to interest rate risk is prone to
imprecision because the "gap" is constantly changing,  the "gap" differs at each
of the banks, and it is difficult to predict the timing, amount and direction of
future changes in market interest rates and the corresponding effect on customer
behavior.

The banks  endeavor to manage and  monitor  interest  rate risk in concert  with
market  conditions  and  risk  parameters.  Management  strives  to  maintain  a
reasonably balanced position of interest  rate-sensitive assets and liabilities.
The  banks  have  not  engaged  in  speculative  positions  through  the  use of
derivatives in  anticipation  of interest rate  movements.  In these most recent
periods of relatively lower interest rates,  the banks have emphasized  variable
rate  loans  and  time  deposits  to  the  extent   possible  in  a  competitive
environment;  however,  competitive influences often result in making fixed rate
loans,  although the banks seek to limit the duration of such loans.  Similarly,

                                       14
<PAGE>
low interest rates generally make competition  more intense for deposits,  since
loan  demand  will  typically  increase  during  periods  of  lower  rates  and,
accordingly,  result in higher interest costs on deposits,  adversely  impacting
interest margins. Future interest rates and the impact on earnings are difficult
to  predict.  In addition to  interest  rate risk  relating to  interest-bearing
assets and  liabilities,  changes  in  interest  rates  also can  impact  future
transaction  volume of loans and deposits at the banks. For activities which are
influenced  by levels of interest  rates for  transaction  volume (for  example,
origination  of  residential  mortgage  loans),  pricing  margins and demand can
become impacted significantly by changes in interest rates.

As a means of monitoring and managing exposure to interest rate risk, management
uses a  computerized  simulation  model which is intended to estimate  pro forma
effects of changes in interest rates.  Using the simulation model, the following
table illustrates,  on a consolidated basis, changes which would occur in annual
levels of interest income, interest expense and net interest income assuming one
hundred and two hundred basis point ("bp")  parallel  increases and decreases in
interest rates (in $1,000s):

                      Pro Forma
                      Assuming     Pro Forma Effect of    Pro Forma Effect of
                      No Change  Interest Rate Increases Interest Rate Decreases
                     in Interest ----------------------- -----------------------
                        Rates       +100 bp   +200 bp       -100 bp   -200 bp
                       -------      -------   -------       -------   -------
Interest income        $25,441      $27,170   $28,897       $23,710   $21,978
Interest expense         8,863       10,077    11,292         7,647     6,433
                       -------      -------   -------       -------   -------
 Net interest income   $16,578      $17,093   $17,605       $16,063   $15,545
                       =======      =======   =======       =======   =======

The pro forma  analysis  above is intended to  quantify  theoretical  changes in
interest income based on stated assumptions. The pro forma analysis excludes the
effect of numerous other  variables  such as borrowers'  ability to repay loans,
the ability of banks to obtain  deposits in a radically  changed  interest  rate
environment and how management  would revise its asset and liability  management
priorities in concert with rate changes.

Simulation  modeling  techniques are inherently flawed and inaccurate due to the
number of  variables  and due to the fact that the actual  effects of changes in
interest rates are subject to some variables  (for example,  customer  behavior)
which simulation models cannot  effectively  predict.  Therefore,  actual future
results  will  differ  from  pro  forma   simulation  model  analyses  and  such
differences may be significant.

General economic  conditions also have a significant  impact on both the results
of operations and the financial  condition of financial  institutions.  Economic
conditions  nationally and in the banks' local markets have remained  relatively
stable and positive.  Local  economic  conditions,  and to some extent  national
economic conditions,  have a significant impact on levels of loan demand as well
as the ability of  borrowers  to repay loans and the  availability  of funds for
customers to make deposits.  Throughout  1999,  1998 and 1997, the U.S.  economy
continued to produce the longest peacetime economic  expansion in history.  With
worldwide economic conditions  currently  unstable,  the duration of the current
economic expansion period in the United States is questionable.

                                       15
<PAGE>
Continuing consolidation of the banking industry on a national basis, and in the
markets of Sun's banks, has presented  opportunities  for growth. As a result of
consolidation  of the  banking  industry,  coupled  with the  closure  of branch
locations by larger  institutions and conversion of customer  relationships into
perceived  `commodities' by the larger banks, many customer  relationships  have
been displaced,  generating opportunities for development by the banks. For many
retail  customers,  banking  services have become a commodity in an  environment
that is dominated by larger mega-bank or  mass-merchandising  institutions.  For
the   professional,   entrepreneur   and   other   customers   seeking   a  more
service-oriented,  customized banking  relationship,  Sun's banks fill that need
through their focus on  single-location  banks with full, local  decision-making
authority.  As the banks focus on service  delivery and keeping  their size at a
manageable  level,  only a modest  market share of deposits and loan activity is
necessary to achieve profitability and investor-oriented earnings performance.

Start-up banks generally  incur  operating  losses during their early periods of
operations.  Recently-formed  start-up  banks  will  detract  from  consolidated
earnings  performance  and  additional  start-up banks formed in 2000 and beyond
will similarly  negatively  impact short-term  profitability.  On a consolidated
basis,  such  operating  losses reduce net income by the pro rata share of Sun's
ownership  percentage in those banks. When those banks become profitable,  their
operating  results will  contribute  to  consolidated  earnings to the extent of
Sun's ownership percentage.

Commercial banks continue to be subject to significant  regulatory  requirements
which  impact  current  and  future  operations.  In  addition  to the extent of
regulatory  interaction  with  financial   institutions,   extensive  rules  and
regulations governing lending activities, deposit gathering and capital adequacy
(to  name a  few),  translate  into  a  significant  cost  burden  of  financial
institution regulation.  Such costs include the significant amount of management
time and expense  which is incurred in  maintaining  compliance  and  developing
systems for compliance  with those rules and  regulations as well as the cost of
examinations, audits and other compliance activities.

Premiums for FDIC insurance have  historically  been significant  costs of doing
business as  financial  institutions,  but in recent  years,  deposit  insurance
premiums  have been  maintained  at a stable and modest  level.  Future  deposit
insurance  premium levels are difficult to predict inasmuch as deposit insurance
premiums will be determined based on general economic  conditions,  the relative
health of the banking and financial institution industry and other unpredictable
factors.  It is  reasonable  to expect  that  deposit  insurance  premiums  will
increase at some point in the future.

The future of financial institution regulation,  and its costs, is uncertain and
difficult to predict.

CENTURY DATE CHANGE

Throughout 1999,  significant attention was drawn to the century date change and
concerns about whether banks were prepared.  Media hype, coupled with regulatory
anxiety,  reached a crescendo  near the end of the year.  What was  predicted by
some media to become a catastrophic disaster of computer failures,  proved to be
a  nonevent.  Throughout  1998 and 1999,  each of the banks  were  subjected  to
repeated examinations of year 2000 readiness by bank regulatory agencies and Sun
incurred consolidated costs of about $250,000 each year.

                                       16
<PAGE>
Sun  and  its  banks  were  well  prepared,  far in  advance  of the  regulatory
initiatives,  and are pleased to celebrate the new year without any  significant
problems.

Bank regulatory  agencies have advised that they remain somewhat concerned about
the banking  industry on this matter for the remainder of 2000 and are likely to
perform  some  limited  follow-up  examinations  during the  period.  Management
estimates  additional  future costs  relating to the century date change will be
minimal.

NEW ACCOUNTING STANDARDS

Certain new accounting standards became applicable to Sun during 1999.

FASB  Statement No. 133,  "Accounting  For  Derivative  Instruments  and Hedging
Activities"  requires all  derivatives to be recognized in financial  statements
and to be measured at fair value.  Gains and losses  resulting  from  changes in
fair value would be included in income, or other comprehensive income, depending
on whether the instrument qualifies for hedge accounting and the type of hedging
instrument involved. This new accounting standard, as amended in June 1999, will
become  effective  in 2001 and,  because  Sun and its banks  have not  typically
entered  into  derivative  contracts  either  to  hedge  existing  risks  or for
speculative  purposes,  is  not  expected  to  have  a  material  effect  on the
consolidated financial statements.

The American Institute of Certified Public Accountants  (AICPA) issued Statement
of Position 98-1, "Costs of Computer Software Developed or Obtained for Internal
Use." It requires capitalization of certain costs of development of software and
had no effect on Sun's financial statements when implemented in 1999.

The AICPA issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities." It requires start-up costs and  organizational  costs to be charged
to expense when incurred.  The initial  application of the statement  required a
cumulative effect adjustment for those companies that had previously capitalized
start-up and organization costs and became effective in 1999.  Implementation of
this new standard has been  reflected  as a cumulative  effect of an  accounting
change as of January 1, 1999,  resulting in a one-time  charge of $.08 per share
in the consolidated statement of operations.  Most of the previously capitalized
costs relate to start-up and organization costs incurred in 1998.

A variety of proposed or otherwise potential  accounting standards are currently
under study by standard-setting  organizations and various regulatory  agencies.
Because of the tentative and  preliminary  nature of these  proposed  standards,
management has not determined whether  implementation of such proposed standards
would be material to Sun's financial statements in future periods.

                                       17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Sun Community Bancorp Limited


We have audited the  accompanying  consolidated  balance sheets of Sun Community
Bancorp  Limited  and  subsidiaries  as of December  31, 1999 and 1998,  and the
related consolidated  statements of operations,  changes in stockholders' equity
and cash flows for each of the three  years in the  period  ended  December  31,
1999. 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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  financial  position of Sun  Community
Bancorp  Limited  and  subsidiaries  at  December  31,  1999 and  1998,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity  with generally
accepted accounting principles.

In accordance with a new accounting standard,  as more fully described in Note B
to the consolidated financial statements,  the Corporation changed its method of
accounting for start-up and organization costs, effective January 1, 1999.


\s\ BDO Seidman, LLP

Grand Rapids, Michigan
January 31, 2000

                                       18
<PAGE>
CONSOLIDATED BALANCE SHEETS

SUN COMMUNITY BANCORP LIMITED

                                                           December 31
                                                    ---------------------------
                                                       1999           1998
                                                    ------------   ------------
ASSETS
Cash and due from banks                             $  8,578,000   $  9,902,458
Interest-bearing deposits with banks                  11,537,608        858,955
Federal funds sold                                    28,699,050     37,600,000
                                                    ------------   ------------
        Cash and cash equivalents                     48,814,658     48,361,413
Loans held for resale                                  1,295,977      1,275,788
Investment securities available for sale,
  carried at market value--Note C                     35,439,821     12,922,539
Portfolio loans, less allowance for loan
  losses of $2,371,000 in 1999 and $696,000
  in 1998--Note D                                    203,861,113     67,383,909
Premises and equipment, net--Note E                    5,308,423      2,753,721
Accrued interest income                                1,352,719        448,331
Other assets                                           4,317,706      2,432,336
                                                    ------------   ------------

        TOTAL ASSETS                                $300,390,417   $135,578,037
                                                    ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
    Noninterest-bearing                             $ 49,650,744   $ 28,033,128
    Interest-bearing--Note H                         175,356,132     70,748,676
                                                    ------------   ------------
        Total deposits                               225,006,876     98,781,804
Accrued interest on deposits and other liabilities     3,996,658        757,879
                                                    ------------   ------------
        Total liabilities                            229,003,534     99,539,683

MINORITY INTERESTS IN CONSOLIDATED
  SUBSIDIARIES--Note A                                21,384,108      9,411,272

STOCKHOLDERS' EQUITY--Notes A, I and M:
Common stock, no par value,
  10,000,000 shares authorized;
  issued and outstanding:
    1999--5,503,870 shares
    1998--3,847,060 shares                            51,867,516     26,795,416
Retained-earnings deficit                             (1,772,622)      (179,673)
Market value adjustment (net of tax effect) for
  investment securities available for sale
  (accumulated other comprehensive income)               (92,119)        11,339
                                                    ------------   ------------
        Total stockholders' equity                    50,002,775     26,627,082
                                                    ------------   ------------
        TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY                      $300,390,417   $135,578,037
                                                    ============   ============

See notes to consolidated financial statements.

                                       19
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS

SUN COMMUNITY BANCORP LIMITED

<TABLE>
<CAPTION>
                                                                       Year Ended December 31
                                                               -----------------------------------------
                                                                  1999           1998           1997
                                                               -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>
Interest income:
  Portfolio loans (including fees)                             $14,281,034    $ 5,296,379    $ 1,845,741
  Loans held for resale                                            115,587         30,062
  Taxable investment securities                                  1,446,522        762,717        735,930
  Federal funds sold                                             1,594,367      1,230,361        289,742
  Interest-bearing deposits with banks and other                   482,195         24,880
                                                               -----------    -----------    -----------
       Total interest income                                    17,919,705      7,344,399      2,871,413

Interest expense:
  Demand deposits                                                3,066,878      1,427,457        625,931
  Savings deposits                                                  14,204          9,460          6,433
  Time deposits                                                  2,280,592        843,630        281,880
  Other                                                              6,104            252            338
                                                               -----------    -----------    -----------
       Total interest expense                                    5,367,778      2,280,799        914,582
                                                               -----------    -----------    -----------
       Net interest income                                      12,551,927      5,063,600      1,956,831
Provision for loan losses--Note D                                1,753,183        379,000        268,000
                                                               -----------    -----------    -----------
       Net interest income after provision for
         loan losses                                            10,798,744      4,684,600      1,688,831

Noninterest income:
  Service charges on deposit accounts                              404,661        223,812         87,326
  Other                                                            354,255        110,452         38,156
                                                               -----------    -----------    -----------
       Total noninterest income                                    758,916        334,264        125,482

Noninterest expense:
  Salaries and employee benefits                                 7,674,825      2,673,277      1,020,608
  Occupancy                                                      1,286,803        545,639        179,055
  Equipment rent, depreciation and maintenance                   1,251,662        557,509        173,419
  Deposit insurance premiums                                        14,767          5,555            749
  Other                                                          4,274,877      1,547,931        662,892
                                                               -----------    -----------    -----------
       Total noninterest expense                                14,502,934      5,329,911      2,036,723
                                                               -----------    -----------    -----------
  Income (loss) before minority interest, federal
    income taxes and cumulative effect of change in
    accounting principle                                        (2,945,274)      (311,047)      (222,410)
Federal income taxes (benefit)--Note F                            (529,000)        29,000        (33,000)
                                                               -----------    -----------    -----------
  Income before minority interest and cumulative
    effect of accounting change                                 (2,416,274)      (340,047)      (189,410)
Minority interest in net losses of consolidated subsidiaries     1,209,553        396,725        117,536
                                                               -----------    -----------    -----------
  Income before cumulative effect of change in
    accounting principle                                        (1,206,721)        56,678        (71,874)

Cumulative effect of change in accounting principle--Note B       (386,228)
                                                               -----------    -----------    -----------
  NET INCOME (LOSS)                                            $(1,592,949)   $    56,678    $   (71,874)
                                                               ===========    ===========    ===========
  NET INCOME (LOSS) PER SHARE--Note O
</TABLE>

See notes to consolidated financial statements.

                                       20
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

SUN COMMUNITY BANCORP LIMITED

<TABLE>
<CAPTION>
                                                                              Accumulated
                                                               Retained-        Other
                                                Common         Earnings      Comprehensive
                                                Stock           Deficit         Income          Total
                                             ------------    ------------    ------------    ------------
<S>                                          <C>             <C>             <C>             <C>
Balances at January 1, 1997                  $  5,363,512    $   (164,477)   $     (9,997)   $  5,189,038

Issuance of 750,000 shares of common
  stock for cash consideration of
  $6.00 per share                              4,500,000                                       4,500,000

Components of comprehensive income:
  Net loss for 1997                                               (71,874)                        (71,874)
  Market value adjustment (net of tax
    effect) for investment securities
    available for sale                                                             72,722          72,722
                                                                                             ------------
  Total comprehensive income for 1997                                                                 848
                                             ------------    ------------    ------------    ------------
BALANCES AT DECEMBER 31, 1997                   9,863,512        (236,351)         62,725       9,689,886

Issuance of 1,947,736 shares of common
  stock for cash consideration--Note I         16,931,904                                      16,931,904

Components of comprehensive income:
  Net income for 1998                                              56,678                          56,678
  Market value adjustment (net of tax
    effect) for investment securities
    available for sale                                                            (51,386)        (51,386)
                                                                                             ------------
  Total comprehensive income for 1998                                                               5,292
                                             ------------    ------------    ------------    ------------
BALANCES AT DECEMBER 31, 1998                  26,795,416        (179,673)         11,339      26,627,082

Issuance of 6,810 shares of common stock
  for cash consideration of $10.00 per
  share--Note I                                    68,100                                          68,100

Issuance of 1,650,000 shares of common
  stock for cash consideration of $16.00
  per share--Note I                            25,004,000                                      25,004,000

Components of comprehensive income:
  Net loss for 1999                                            (1,592,949)                     (1,592,949)
  Market value adjustment for investment
    securities available for sale (net of
    tax effect)                                                                  (103,458)       (103,458)
                                                                                             ------------
  Total comprehensive loss for 1999                                                            (1,696,407)
                                             ------------    ------------    ------------    ------------
BALANCES AT DECEMBER 31, 1999                $ 51,867,516    $ (1,772,622)   $    (92,119)   $ 50,002,775
                                             ============    ============    ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       21
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

SUN COMMUNITY BANCORP LIMITED

<TABLE>
<CAPTION>
                                                                              Year Ended December 31
                                                                   -----------------------------------------------
                                                                       1999             1998             1997
                                                                   -------------    -------------    -------------
<S>                                                                <C>              <C>              <C>
OPERATING ACTIVITIES
  Net income (loss) for the period                                 $  (1,592,949)   $      56,678    $     (71,874)
  Adjustments to reconcile net income to net cash provided
    (used) by operating activities:
      Cumulative effect of change in accounting principle                386,228
      Minority interest in net losses of consolidated
        subsidiaries                                                  (1,209,553)        (396,725)        (117,536)
      Provision for loan losses                                        1,753,183          379,000          268,000
      Net accretion of investment security premiums                      (46,149)         (54,394)        (223,841)
      Depreciation of premises and equipment                             942,413          421,360          141,394
      Loss on sale of furniture and equipment                                               3,915
      Deferred income taxes                                             (560,000)        (420,000)         (44,000)
  Originations and purchases of loans held for resale                (32,770,882)     (15,761,895)
  Proceeds from sales of loans held for resale                        32,750,693       14,486,107
  Increase in accrued interest income and other assets                (2,549,309)      (1,531,898)        (811,255)
  Increase in accrued interest on deposits and other liabilities       3,238,779          679,503          251,661
                                                                   -------------    -------------    -------------
      NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                   342,454       (2,138,349)        (607,451)

INVESTING ACTIVITIES
  Proceeds from sale of investment securities available
    for sale                                                                              505,000
  Proceeds from maturities of investment securities available
    for sale                                                          23,338,039       22,500,000       20,500,000
  Purchases of investment securities available for sale              (46,057,490)     (24,417,336)     (20,827,326)
  Net increase in portfolio loans                                   (138,152,204)     (36,843,486)     (26,386,402)
  Proceeds from sale of furniture and equipment                                            10,000
  Purchases of premises and equipment                                 (3,497,115)      (1,998,806)        (969,597)
                                                                   -------------    -------------    -------------
      NET CASH USED BY INVESTING ACTIVITIES                         (164,368,770)     (40,244,628)     (27,683,325)

FINANCING ACTIVITIES
  Net increase in demand deposits, NOW accounts and
    savings accounts                                                  72,687,409       40,850,295       24,671,742
  Net increase in certificates of deposit                             53,537,663       15,032,938        6,205,569
  Net proceeds from issuance of common stock                          25,072,100       16,931,904        4,500,000
  Resources provided by minority interests                            13,182,389        7,798,160        2,127,373
                                                                   -------------    -------------    -------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                      164,479,561       80,613,297       37,504,684
                                                                   -------------    -------------    -------------
      INCREASE IN CASH AND CASH EQUIVALENTS                              453,245       38,230,320        9,213,908
Cash and cash equivalents at beginning of year                        48,361,413       10,131,093          917,185
                                                                   -------------    -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                           $  48,814,658    $  48,361,413    $  10,131,093
                                                                   =============    =============    =============
</TABLE>

See notes to consolidated financial statements.

                                       22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE A--NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF
        CONSOLIDATION

Sun Community Bancorp Limited (the  "Corporation") is a bank development company
headquartered  in the state of  Arizona.  The  Company  is 51% owned by  Capitol
Bancorp  Limited,  a  multibank  holding  company,   headquartered  in  Lansing,
Michigan.  The Corporation was formed in October 1996 and was inactive until May
1997. In May 1997, the Corporation  entered into a share exchange agreement with
Bank of Tucson and its shareholders whereby Bank of Tucson became a wholly-owned
subsidiary of the  Corporation.  Because such share  exchange has been accounted
for as a pooling of interests, the consolidated financial statements reflect the
merger  transaction  as if it had  occurred  at  the  beginning  of the  periods
presented  (i.e.,  date of commencement  of operations for Bank of Tucson,  June
1996).

The Corporation's consolidated banking subsidiaries (the "Banks") consist of the
following:

                                                        Percentage   Year Formed
         Affiliate                 Location               Owned      or Acquired
         ---------                 --------               -----      -----------
Bank of Tucson                     Tucson, Arizona         100%          1996
Camelback Community Bank           Phoenix, Arizona         55%          1998
East Valley Community Bank         Chandler, Arizona        88%          1999
Mesa Bank                          Mesa, Arizona            53%          1998
Southern Arizona Community Bank    Tucson, Arizona          51%          1998
Valley First Community Bank        Scottsdale, Arizona      52%          1997
Nevada Community Bancorp Limited:                           51%          1999
  Desert Community Bank            Las Vegas, Nevada                     1999
  Red Rock Community Bank          Las Vegas, Nevada                     1999
Sunrise Capital Corporation:                                57%          1999
  Sunrise Bank of Arizona          Phoenix, Arizona                      1998

Sun is the  majority  owner of Nevada  Community  Bancorp  Limited  and  Sunrise
Capital Corporation which each have majority-owned bank subsidiaries. Sun became
a public company in 1999 through an initial public offering of common stock with
net  proceeds  approximating  $25  million,  including  $13 million  invested by
Capitol Bancorp Limited.

The Banks provide a full range of banking  services to  individuals,  businesses
and other customers located in their respective  communities.  Each of the Banks
generally  operate from a single location and focus their  activities on meeting
the various credit and other banking needs of  entrepreneurs,  professionals and
other high  net-worth  individuals.  A variety of deposit  products are offered,
including checking,  savings,  money market,  individual retirement accounts and
certificates of deposit.  The principal market for the Banks' financial services
are the  communities  in  which  they  are  located  and the  areas  immediately
surrounding those  communities.  Mortgage banking activities are offered through
Sun Community Mortgage Company, a wholly-owned  subsidiary of Bank of Tucson. In
addition, Valley First Community Bank obtained trust powers in 1998.

                                       23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE A--NATURE OF OPERATIONS, BASIS OF PRESENTATION AND PRINCIPLES OF
        CONSOLIDATION--CONTINUED

The   Corporation   and  the   Banks   are   engaged   in  a   single   business
activity--banking.  Each  bank is  viewed by  management  as being a  separately
identifiable business or segment from the perspective of monitoring  performance
and allocation of financial resources.  Although the Banks operate independently
and are managed and monitored separately,  each bank is substantially similar in
terms of business focus, type of customers,  products and services. Further, the
Banks  and the  Corporation  are  subject  to  substantially  similar  laws  and
regulations  unique to the  banking  industry.  Accordingly,  the  Corporation's
consolidated   financial   statements   reflect  the   presentation  of  segment
information on an aggregated basis.

The consolidated  financial  statements  include the accounts of the Corporation
and its majority-owned subsidiaries,  after elimination of intercompany accounts
and  transactions,  and after giving  effect to applicable  minority  interests.
Banks formed or otherwise  acquired  during 1997,  1998 and 1999 are included in
the consolidated financial statements for periods after joining the consolidated
group.  Certain 1998 and 1997 amounts have been  reclassified  to conform to the
1999 presentation.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

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

CASH AND CASH  EQUIVALENTS:  Cash and  cash  equivalents  include  cash on hand,
amounts  due from  banks  and  federal  funds  sold.  Generally,  federal  funds
transactions are entered into for a one-day period.

LOANS HELD FOR RESALE:  Loans held for resale represent  residential real estate
mortgage  loans held for sale into the secondary  market.  Loans held for resale
are stated at the aggregate lower of cost or market.

INVESTMENT SECURITIES:  Investment securities available for sale (generally most
debt  securities  investments  of the Banks),  are carried at market  value with
unrealized  gains and losses reported as a separate  component of  stockholders'
equity,  net of tax effect.  Investments  are classified at the date of purchase
based on management's analysis of liquidity and other factors. The adjusted cost
of  specific  securities  sold is used to  compute  realized  gains  or  losses.
Premiums and  discounts  are  recognized  in interest  income using the interest
method over the period to maturity.

                                       24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE B--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

LOANS, CREDIT RISK AND ALLOWANCE FOR LOAN LOSSES: Portfolio loans are carried at
their principal  balance based on  management's  intent and ability to hold such
loans for the foreseeable future until maturity or repayment.

Credit risk arises from making loans and loan commitments in the ordinary course
of  business.  Portfolio  loans are made  primarily  to  borrowers in the Banks'
geographic areas. Consistent with the Banks' emphasis on business lending, there
are  concentrations  of credit  in loans  secured  by  commercial  real  estate,
equipment and other business  assets.  The maximum  potential credit risk to the
Corporation,  without  regard to underlying  collateral and  guarantees,  is the
total  of  loans  and  loan  commitments  outstanding.  Management  reduces  the
Corporation's exposure to losses from credit risk by requiring collateral and/or
guarantees  for loans granted and by  monitoring  concentrations  of credit,  in
addition to recording  provisions  for loan losses and  maintaining an allowance
for loan losses.

The  allowance for loan losses is  maintained  at a level  believed  adequate by
management  to absorb  estimated  losses in the  portfolio at the balance  sheet
date.  Management's  determination  of the adequacy of the allowance is based on
evaluation of the portfolio  (including potential impairment of individual loans
and   concentrations  of  credit),   past  loss  experience,   current  economic
conditions,   volume,  amount  and  composition  of  the  loan  portfolio,  loan
commitments  outstanding  and other  factors.  The  allowance  is  increased  by
provisions charged to operations and reduced by net charge-offs.

INTEREST AND FEES ON LOANS:  Interest  income on loans is recognized  based upon
the  principal  balance of loans  outstanding.  Fees from  origination  of loans
approximate related costs incurred.

The accrual of interest is  generally  discontinued  when a loan becomes 90 days
past due as to  interest.  When  interest  accruals are  discontinued,  interest
previously  accrued (but unpaid) is reversed.  Management  may elect to continue
the accrual of interest when the estimated net realizable value of collateral is
sufficient to cover the principal  balance and accrued  interest and the loan is
in process of collection.

PREMISES AND EQUIPMENT:  Premises and equipment are stated on the basis of cost.
Depreciation  is computed  principally  by the  straight-line  method based upon
estimated  useful lives of the respective  assets.  Leasehold  improvements  are
generally depreciated over the respective lease term.

OTHER REAL  ESTATE:  Other real estate  (included as a component of other assets
and which, at December 31, 1999,  approximated  $307,000)  comprises  properties
acquired  through a  foreclosure  proceeding  or acceptance of a deed in lieu of
foreclosure.  These properties held for sale are carried at the lower of cost or
estimated  fair value at the date  acquired  and are  periodically  reviewed for
subsequent impairment.

                                       25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE B--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

STOCK-BASED  COMPENSATION:  No stock-based compensation expense is recorded upon
granting of stock options because such stock options are accounted for under the
provisions of Accounting Principles Board (APB) Opinion 25 and are granted at an
exercise  price equal to the market  price of common  stock at grant  date.  Pro
forma disclosure of alternative  accounting recognition is made elsewhere herein
(see Note I).

TRUST ASSETS AND RELATED INCOME: Customer property, other than funds on deposit,
held in a  fiduciary  or agency  capacity  by the Banks is not  included  in the
consolidated  balance  sheet  because  it is not an  asset  of the  Banks or the
Corporation. Trust fee income is recorded on the accrual method.

FEDERAL INCOME TAXES: The Corporation and subsidiaries  owned 80% or more by the
Corporation file a consolidated federal income tax return. Deferred income taxes
are recognized  for the tax  consequences  of temporary  differences by applying
enacted  tax  rates  applicable  to  future  years to  differences  between  the
financial  statement  carrying  amount and the tax bases of existing  assets and
liabilities.  The  effect on  deferred  income  taxes of a change in tax laws or
rates is recognized in income in the period that includes the enactment date.

COMPREHENSIVE  INCOME:  Comprehensive income is the sum of net income (loss) and
certain other items which are charged or credited to stockholders'  equity.  For
the periods presented,  the Corporation's  only element of comprehensive  income
other than net income  (loss) was the net change in the market value  adjustment
for  investment  securities  available for sale.  Accordingly,  the elements and
total of  comprehensive  income  are shown  within the  statement  of changes in
stockholders' equity presented herein.

COSTS OF START-UP  ACTIVITIES:  In 1998,  the American  Institute of CPAs issued
Statement of Position 98-5,  "Reporting on the Costs of Start-Up Activities." It
requires start-up costs and  organizational  costs to be charged to expense when
incurred.  The initial application of the statement required a cumulative effect
adjustment  for those  companies that had  previously  capitalized  start-up and
organization  costs and became  effective in 1999. In the  circumstances  of the
Corporation and the Banks,  this new accounting  standard  applies to previously
capitalized  preopening and other start-up costs of its bank subsidiaries which,
net of  amortization,  approximated  $1,149,000  at  December  31, 1998 and were
classified  as a component of other assets in the  consolidated  balance  sheet.
Implementation  of this  standard  is  reflected  as a  cumulative  effect of an
accounting  change at January 1, 1999 (net of impact of minority  interests  and
income tax effect). Most of the previously  capitalized costs relate to start-up
and organization costs incurred in 1998.

                                       26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE C--INVESTMENT SECURITIES

Investment  securities available for sale consisted of the following at December
31:

                                    1999                        1998
                          -------------------------   -------------------------
                                         Estimated                   Estimated
                           Amortized       Market      Amortized       Market
                             Cost          Value         Cost          Value
                          -----------   -----------   -----------   -----------
United States Treasury
 securities               $        --   $        --   $ 1,499,981   $ 1,504,843
United States government
 agency securities         35,579,253    35,439,821    11,405,378    11,417,696
                          -----------   -----------   -----------   -----------
                          $35,579,253   $35,439,821   $12,905,359   $12,922,539
                          ===========   ===========   ===========   ===========

At December 31, 1999,  securities with a market value  approximating  $4,086,000
were  pledged to secure  public and trust  deposits  and for other  purposes  as
required by law.

Gross  unrealized gains and losses on investment  securities  available for sale
were as follows at December 31:

                                              1999                  1998
                                       -------------------   -------------------
                                        Gains      Losses     Gains      Losses
                                       --------   --------   --------   --------
United States Treasury securities      $     --   $     --   $  4,862   $     --
United States government agency
 securities                              13,009    152,441     17,437      5,119
                                       --------   --------   --------   --------
                                       $ 13,009   $152,441   $ 22,299   $  5,119
                                       ========   ========   ========   ========

Gross  realized  gains and  losses  from  sales  and  maturities  of  investment
securities were insignificant for each of the periods presented.

Scheduled maturities of investment securities as of December 31, 1999 follows:

                                                                      Estimated
                                                    Amortized           Market
                                                      Cost              Value
                                                   -----------       -----------
Due in one year or less                            $27,580,996       $27,570,480
After one year, through five years                   7,998,257         7,869,341
                                                   -----------       -----------
                                                   $35,579,253       $35,439,821
                                                   ===========       ===========

                                       27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE D--LOANS

Portfolio loans consisted of the following at December 31:

                                                  1999                1998
                                              -------------       -------------
     Commercial                               $ 191,824,802       $  60,366,282
     Real estate mortgage                         7,458,649           4,371,401
     Installment                                  6,948,662           3,342,226
                                              -------------       -------------
          Total portfolio loans                 206,232,113          68,079,909
     Less allowance for loan losses              (2,371,000)           (696,000)
                                              -------------       -------------
          Net portfolio loans                 $ 203,861,113       $  67,383,909
                                              =============       =============

Transactions in the allowance for loan losses are summarized below:

                                           1999           1998          1997
                                        -----------    -----------   -----------
     Balance at beginning of period     $   696,000    $   317,000   $    49,000
     Provision charged to operations      1,753,183        379,000       268,000
     Loans charged off (deduction)          (78,183)            --            --
     Recoveries                                  --             --            --
                                        -----------    -----------   -----------
     Balance at December 31             $ 2,371,000    $   696,000   $   317,000
                                        ===========    ===========   ===========

At December 31, 1999 and 1998,  impaired loans (i.e., loans for which there is a
reasonable probability that borrowers would be unable to repay all principal and
interest  due  under  the  contractual  terms  of the loan  documents)  were not
material.

NOTE E--PREMISES AND EQUIPMENT

Major classes of premises and  equipment  consisted of the following at December
31:

                                                    1999               1998
                                                 -----------        -----------
     Leasehold improvements                      $ 1,880,355        $   819,620
     Equipment and furniture                       4,948,343          2,511,963
                                                 -----------        -----------
                                                   6,828,698          3,331,583
     Less accumulated depreciation                (1,520,275)          (577,862)
                                                 -----------        -----------
                                                 $ 5,308,423        $ 2,753,721
                                                 ===========        ===========

The Banks rent office space under  operating  leases.  Rent expense  under these
lease  agreements  approximated  $982,000,  $362,000  and $158,000 for the years
ended  December 31, 1999,  1998 and 1997,  respectively.  Future  minimum rental
payments  under  operating  leases that have initial or remaining  noncancelable
lease  terms in  excess  of one year as of  December  31,  1999  aggregate  $7.8
million,  due  approximately  $900,000 annually in each of the years 2000, 2001,
2002, 2003 and 2004 and $3.3 million thereafter.

                                       28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE F--INCOME TAXES

Federal income taxes (benefit) consist of the following components:

                                      1999             1998             1997
                                    ---------        ---------        ---------
     Current                        $(439,000)       $ 449,000        $  11,000
     Deferred credit                 (560,000)        (420,000)         (44,000)
                                    ---------        ---------        ---------
                                    $(999,000)       $  29,000        $ (33,000)
                                    =========        =========        =========

Federal income tax benefit in 1999 shown above includes $470,000 relating to the
cumulative  effect of the change in accounting  principle.  Income taxes paid in
1999 and 1998 approximated $310,000 and $387,000, respectively.

Differences  between  federal income tax expense  recorded and amounts  computed
using the statutory tax rate are reconciled below:

                                           1999           1998           1997
                                       -----------    -----------    -----------
  Federal income tax computed at
   statutory rate of 34%              $(1,001,000)   $  (106,000)   $   (76,000)
  Tax effect of:
    Minority interests in net losses
     of consolidated subsidiaries         411,000        134,000         40,000
    Cumulative effect of change in
     accounting principle                (470,000)
    Nondeductible expenses                (44,000)
    Other                                 105,000          1,000          3,000
                                      -----------    -----------    -----------
                                      $  (999,000)   $    29,000    $   (33,000)
                                      ===========    ===========    ===========

Net deferred income tax assets consisted of the following at December 31:

                                                           1999          1998
                                                        ----------    ----------
  Allowance for loan losses                             $  780,000    $ 227,000
  Portion of subsidiaries operating losses
   applicable to minority interests                       (586,000)    (134,000)
  Net operating loss carryforwards of subsidiaries         828,000      417,000
  Cash to accrual temporary differences                    (45,000)     (45,000)
  Market value adjustments for investment
    securities available for sale                           47,000        6,000
  Other, net                                                25,000      (23,000)
                                                        ----------    ---------
       Net deferred tax assets                          $1,049,000    $ 448,000
                                                        ==========    =========

Certain  consolidated  subsidiaries have net operating loss carryforwards  which
may  reduce  income  taxes  payable  in  future  periods.   Such   carryforwards
approximate  $4.1  million  at  December  31,  1999,  have been  recognized  for
financial reporting purposes and expire at varying dates through 2019.

                                       29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE G--RELATED PARTIES TRANSACTIONS

In the  ordinary  course of  business,  the Banks  make  loans to  officers  and
directors of the Banks including their immediate families and companies in which
they are principal  owners.  At December 31, 1999,  total loans to these persons
approximated $5.7 million ($4.7 million at December 31, 1998). During 1999, $3.1
million of new loans were made to these  persons  and  repayments  totaled  $2.1
million. Such loans are made at the Banks' normal credit terms.

Such  officers  and  directors  of the  Corporation  and the  Banks  (and  their
associates,  family and/or  affiliates) are also  depositors of the Banks.  Such
deposits are similarly made at the Banks' normal terms as to interest rate, term
and deposit insurance.

The Banks purchased certain data processing and management services from Capitol
Bancorp Ltd. Amounts paid for such services aggregated $105,000 in 1997 (none in
1999 and 1998).

NOTE H--DEPOSITS

The  aggregate  amount of time  deposits of $100,000  or more  approximated  $52
million and $15.5 million as of December 31, 1999 and 1998, respectively.

At December 31, 1999,  the scheduled  maturities of time deposits of $100,000 or
more were as follows:

                       2000                    $47,274,000
                       2001                      4,322,000
                       2002                        200,000
                       2003                        267,000
                                               -----------
                                               $52,063,000
                       Total                   ===========

Interest paid approximates amounts charged to operations on an accrual basis for
the periods presented.

NOTE I--COMMON STOCK AND STOCK OPTIONS

In September 1998 a 3-for-1 stock split  occurred.  All share and per share data
have been  restated  to reflect  the stock  split as if it had  occurred  at the
beginning of the periods presented.

In January 1998, the Corporation  completed a private offering of 954,546 shares
of common stock at a price of $7.33 per share. In December 1998, the Corporation
sold 993,190 shares of common stock at $10.00 per share in a private offering of
1,000,000  shares;  6,810 shares of common stock were subsequently sold in early
1999,  completing  the offering.  In July 1999, the  Corporation  sold 1,650,000
shares of common  stock in a public  offering at $16.00 per share.  The proceeds
from the offering,  net of underwriting  commissions and expenses,  approximated
$25 million.

                                       30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE I--COMMON STOCK AND STOCK OPTIONS--CONTINUED

Stock  options  have been  granted to certain  officers  which  provide  for the
purchase  of shares of common  stock.  Stock  options are granted at an exercise
price  equal to the fair  value of common  stock on the grant  date,  expire ten
years after grant, and are currently exercisable.

Stock option activity is summarized as follows:

                                                                        Weighted
                                         Number of                      Average
                                          Options       Exercise        Exercise
                                        Outstanding    Price Range       Price
                                          -------   ------------------   ------
Outstanding at January 1, 1997            195,000        $ 4.67          $ 4.67
Granted in 1997                            87,000          6.00            6.00
Exercised in 1997                              --           --               --
Expired/other in 1997                          --           --               --
                                          -------   ------------------   ------
     Outstanding at December 31, 1997     282,000     4.67  to    6.00     5.08

Granted in 1998                           278,973         10.00           10.00
Exercised in 1998                              --           --               --
Expired/other in 1998                          --           --               --
                                          -------   ------------------   ------
     Outstanding at December 31, 1998     560,973     4.67  to   10.00     7.53

Granted in 1999                           247,500         16.00           16.00
Exercised in 1999                              --           --               --
Expired/other in 1999                          --           --               --
                                          -------   ------------------   ------
     Outstanding at December 31, 1999     808,473   $ 4.67  to  $16.00   $10.12

As of December  31,  1999,  stock  options  outstanding  had a weighted  average
remaining contractual life of 8.1 years.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation",  establishes a fair value method of accounting  for stock options
whereby  compensation  expense is recognized based on the computed fair value of
the options on the grant date.  However,  as permitted by Statement No. 123, the
Corporation  has elected to continue to account for its stock  options under the
earlier  accounting  standard and,  therefore,  has not recognized  compensation
expense.  By electing this  alternative,  certain pro forma  disclosures  of the
expense recognition provisions are required, which are as follows:

                                               1999          1998       1997
                                               ----          ----       ----
     Fair value assumptions:
       Risk-free interest rate                  6.25%        5.0%        7.5%
       Dividend yield                            0%           0%          0%
       Stock price volatility                    .56          0           0
       Expected option life                   10 years     10 years    10 years
     Pro forma net loss                     $(4,487,000)  $(668,000)  $(285,000)
     Pro forma net loss per diluted share      $(.96)       $(.22)      $(.18)

                                       31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE J--EMPLOYEE BENEFIT PLANS

Employees of the Corporation and its subsidiaries  participate in a 401(k) plan,
subject to certain eligibility requirements.  Employer contributions to the plan
and  charged to  expense  in 1999 and 1998  approximated  $87,500  and  $28,000,
respectively.  There  were no  employer  contributions  to this plan  charged to
expense in 1997.

NOTE K--ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying  values and  estimated  fair values of  financial  instruments  were as
follows at December 31 (in $1,000s):

<TABLE>
<CAPTION>
                                                      1999                      1998
                                             ----------------------    ----------------------
                                                          Estimated                 Estimated
                                             Carrying       Fair       Carrying       Fair
                                               Value        Value        Value        Value
                                             ---------    ---------    ---------    ---------
<S>                                          <C>          <C>          <C>          <C>
Financial Assets:
  Cash and cash equivalents                  $  48,815    $  48,815    $  48,361    $  48,361
  Loans held for resale                          1,296        1,296        1,276        1,276
  Investment securities available for sale      35,440       35,440       12,923       12,953
  Portfolio loans:
    Fixed rate                                  58,127       58,649       17,443       17,686
    Variable rate                              148,105      146,883       50,637       50,640
                                             ---------    ---------    ---------    ---------
      Total portfolio loans                    206,232      205,532       68,080       68,326
    Less allowance for loan losses              (2,371)      (2,371)        (696)        (696)
                                             ---------    ---------    ---------    ---------
    Net portfolio loans                        203,861      203,161       67,384       67,630

Financial Liabilities:
  Deposits:
    Noninterest-bearing deposits                49,651       49,651       28,033       28,033
    Interest-bearing deposits:
      Demand accounts                           98,055       97,947       46,986       47,569
      Time certificates of deposit less
       than $100,000                            25,238       25,226        8,244        8,273
      Time certificates of deposit
       $100,000 or more                         52,063       52,151       15,519       14,663
                                             ---------    ---------    ---------    ---------
        Total interest-bearing deposits        175,356      175,324       70,749       70,505
                                             ---------    ---------    ---------    ---------
        Total deposits                         225,007      224,975       98,782       98,538
</TABLE>

Estimated  fair  values of  financial  assets and  liabilities  are based upon a
comparison of current interest rates of financial  instruments and the timing of
related  scheduled cash flows to the estimated  present value of such cash flows
using current  estimated market rates of interest unless quoted market values or
other fair value information is more readily  available.  Such estimates of fair
value are not intended to represent market value or portfolio liquidation value,
and only  represent  an  estimate  of fair  values  based on  current  financial
reporting requirements.

                                       32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE L--COMMITMENTS AND CONTINGENCIES

In the  ordinary  course  of  business,  various  loan  commitments  are made to
accommodate the financial needs of the Banks'  customers.  Such loan commitments
include stand-by letters of credit, lines of credit, and various commitments for
other commercial,  consumer and mortgage loans. Stand-by letters of credit, when
issued,  commit the Banks to make  payments on behalf of customers  when certain
specified  future  events  occur and are used  infrequently  ($1.5  million  and
$511,000  outstanding at December 31, 1999 and 1998,  respectively).  Other loan
commitments  outstanding  consist of unused  lines of credit and  approved,  but
unfunded, specific loan commitments ($64.6 million and $12.6 million at December
31, 1999 and 1998,  respectively).  These loan commitments  (stand-by letters of
credit and unfunded  loans)  generally  expire  within one year and are reviewed
periodically  for continuance or renewal.  All loan commitments have credit risk
essentially the same as that involved in routinely making loans to customers and
are made  subject to the Banks'  normal  credit  policies.  In making these loan
commitments,   collateral  and/or  personal  guarantees  of  the  borrowers  are
generally  obtained  based  on  management's   credit   assessment.   Such  loan
commitments are also included in management's  evaluation of the adequacy of the
allowance for loan losses.

The Corporation's  banking subsidiaries are required to maintain average reserve
balances in the form of cash on hand and balances  due from the Federal  Reserve
Bank and certain correspondent banks. The amount of reserve balances required as
of December 31, 1999 was $408,000.

NOTE M--DIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL REQUIREMENTS

Current  banking  regulations  restrict  the  ability  to  transfer  funds  from
subsidiaries to their parent in the form of cash  dividends,  loans or advances.
Subject to various regulatory capital  requirements,  bank subsidiaries' current
and retained  earnings (if any) are available for  distribution  as dividends to
the  Corporation  (and other bank  shareholders,  as  applicable)  without prior
approval from  regulatory  authorities.  Substantially  all of the remaining net
assets of the subsidiaries are restricted as to payments to the Corporation.

The Corporation and the Banks are subject to certain other capital requirements.
Federal  financial  institution  regulatory  agencies have  established  certain
risk-based  capital  guidelines  for banks  and bank  holding  companies.  Those
guidelines  require all banks and bank  holding  companies  to maintain  certain
minimum  ratios and related  amounts  based on `Tier 1' and `Tier 2' capital and
`risk-weighted assets' as defined and periodically  prescribed by the respective
regulatory  agencies.  Failure to meet these capital  requirements can result in
severe  regulatory  enforcement  action  or  other  adverse  consequences  for a
depository  institution,  and, accordingly,  could have a material impact on the
Corporation's consolidated financial statements.

Under the  regulatory  capital  adequacy  guidelines  and related  framework for
prompt corrective action, the specific capital requirements involve quantitative
measures of assets,  liabilities and certain  off-balance-sheet items calculated
under regulatory accounting  practices.  The capital amounts and classifications
are  also  subject  to  qualitative   judgments  by  regulatory  agencies  about
components, risk weighting, and other factors.

                                       33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE M--DIVIDEND LIMITATIONS OF SUBSIDIARIES AND OTHER CAPITAL
        REQUIREMENTS--CONTINUED

As of December 31, 1999, the most recent notification received by the Banks from
regulatory   agencies   have   advised   that  the  Banks  are   classified   as
`well-capitalized' as that term is defined by the applicable agencies. There are
no conditions or events since those notifications that management believes would
change the regulatory classification of the Banks.

Management believes, as of December 31, 1999, that the Corporation and the Banks
meet all capital adequacy requirements to which they are subject.

The various amounts of regulatory capital (in $1,000s) and related ratios of the
individually  significant  subsidiaries  (assets  of $35  million  or more as of
December 31, 1999 and 1998) and consolidated  regulatory  capital position as of
December 31, 1999 and 1998 are summarized below:

<TABLE>
<CAPTION>
                                                                            Valley First
                                                                Bank of      Community
                                                                Tucson         Bank       Consolidated
                                                                -------       -------        -------
<S>                                                           <C>           <C>            <C>
DECEMBER 31, 1999
Total Capital to Total Assets:
   Minimum Required Amount(1)                                 >= $ 3,285    >= $ 1,827     >= $12,016
   Actual Amount                                                 $ 6,937       $ 4,126        $50,003
     Ratio                                                          8.45%         9.03%         16.65%

Tier 1 Capital to Risk-Weighted Assets:
   Minimum Required Amount(2)                                 >= $ 2,516    >= $ 1,595     >= $11,089
   Actual Amount                                                 $ 6,856       $ 3,958        $71,263
     Ratio                                                         10.90%         9.93%         25.71%

Combined Tier 1 and Tier 2 Capital to Risk-Weighted Assets:
   Minimum Required Amount(3)                                 >= $ 5,032    >= $ 3,190     >= $22,178
   Amount Required to Meet `Well-Capitalized' Category(4)     >= $ 6,290    >= $ 3,988     >= $27,723
   Actual Amount                                                 $ 7,581       $ 4,376        $73,634
     Ratio                                                         12.05%        10.97%         26.56%

DECEMBER 31, 1998
Total Capital to Total Assets:
   Minimum Required Amount(1)                                 >= $ 5,109    >= $ 2,927     >= $ 5,423
   Actual Amount                                                 $ 6,053       $ 3,994        $26,627
     Ratio                                                          9.48%         10.92%        19.64%

Tier 1 Capital to Risk-Weighted Assets:
   Minimum Required Amount(2)                                 >= $ 1,669    >= $   940    >= $  3,397
   Actual Amount                                                 $ 5,945       $ 3,705        $36,038
     Ratio                                                         14.25%        15.76%         42.43%

Combined Tier 1 and Tier 2 Capital to Risk-Weighted Assets:
   Minimum Required Amount(3)                                 >= $ 3,338    >= $ 1,880     >= $ 6,795
   Amount Required to Meet `Well-Capitalized' Category(4)     >= $ 4,173    >= $ 2,351     >= $ 8,494
   Actual Amount                                                 $ 6,337       $ 3,914        $36,734
     Ratio                                                         15.19%        16.65%         43.25%
</TABLE>

(1)  As a condition of charter approval, DE NOVO banks generally are required to
     maintain a capital-to-assets  ratio of not less than 8% for the first three
     years of operations;  such leverage  ratio is otherwise  required to be not
     less than 4%.
(2)  The minimum required ratio of Tier 1 capital to risk-weighted assets is 4%.
(3)  The minimum  required  ratio of Tier 1 and Tier 2 capital to  risk-weighted
     assets is 8%.
(4)  In order to be classified as a `well-capitalized' institution, the ratio of
     Tier 1 and Tier 2 capital to risk-weighted assets must be 10% or more.

                                       34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE N--PARENT COMPANY ONLY INFORMATION

CONDENSED BALANCE SHEETS

                                                             December 31
                                                       -------------------------
                                                          1999          1998
                                                       -----------   -----------
Assets
  Cash on deposit with subsidiary banks                $   696,842   $     6,618
  Money market and other interest-bearing funds on
   deposit with subsidiary banks                         7,676,114     8,914,586
                                                       -----------   -----------
      Cash and cash equivalents                          8,372,956     8,921,204
  Investment securities available for sale              15,510,212
  Investment in subsidiaries                            27,005,790    17,194,453
  Equipment and furniture, net                           1,034,154       383,019
  Other assets                                             907,119       319,988
                                                       -----------   -----------

      TOTAL ASSETS                                     $52,830,231   $26,818,664
                                                       ===========   ===========
Liabilities and Stockholders' Equity
  Accounts payable, accrued expenses
    and other liabilities                              $ 2,827,456   $   191,582
  Stockholders' equity                                  50,002,775    26,627,082
                                                       -----------   -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $52,830,231   $26,818,664
                                                       ===========   ===========

CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                          Year Ended December 31
                                                  -----------------------------------------
                                                     1999           1998           1997
                                                  -----------    -----------    -----------
<S>                                               <C>            <C>            <C>
Income
  Intercompany fees                               $ 1,705,609    $   711,651    $    96,000
  Dividends from subsidiary                           200,000
  Interest                                            785,439        226,186         36,270
                                                  -----------    -----------    -----------
                                                    2,691,048        937,837        132,270
Expenses
  Salaries and employee benefits                    1,657,914        581,431        109,628
  Occupancy                                           195,338         70,906          3,585
  Equipment rent, depreciation and maintenance        428,523        199,431         22,843
  Other                                             1,066,481        305,381         79,778
                                                  -----------    -----------    -----------
                                                    3,348,256      1,157,149        215,834
                                                  -----------    -----------    -----------
                                                     (657,208)      (219,312)       (83,564)
Equity in net earnings (losses) of consolidated
subsidiaries                                         (919,741)       348,990           (310)
Federal income taxes                                   16,000         73,000         12,000
                                                  -----------    -----------    -----------
      NET INCOME (LOSS)                           $(1,592,949)   $    56,678    $   (71,874)
                                                  ===========    ===========    ===========
</TABLE>

                                       35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITY BANCORP LIMITED

NOTE N--PARENT COMPANY ONLY INFORMATION--CONTINUED

CONDENSED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                           1999            1998            1997
                                                                       ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>
OPERATING ACTIVITIES
Net Income (loss)                                                      $ (1,592,949)   $     56,678    $    (71,874)
Adjustments to reconcile net loss to net cash provided (used) by
  operating activities:
     Equity in net losses (earnings) of subsidiaries                        919,741        (348,990)            310
     Depreciation and amortization                                          260,772         105,408
     Net amortization of investment security premiums                       (39,228)
Increase in other assets                                                   (518,664)        (82,774)       (237,214)
Increase in accounts payable, accrued expenses and other liabilities      2,635,874         115,837          75,745
                                                                       ------------    ------------    ------------
     NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                     1,665,546        (153,841)       (233,033)
INVESTING ACTIVITIES
Proceeds from maturities of investment securities available for sale      8,918,039
Purchases of investment securities available for sale                   (24,457,490)
Net cash investment in subsidiaries                                     (10,834,536)     (9,337,077)     (2,298,322)
Purchases of equipment and furniture                                       (911,907)       (150,068)       (338,359)
                                                                       ------------    ------------    ------------
     NET CASH USED BY INVESTING ACTIVITIES                              (27,285,894)     (9,487,145)     (2,636,681)
FINANCING ACTIVITIES--Net proceeds from issuance
  of common stock                                                        25,072,100      16,931,904       4,500,000
                                                                       ------------    ------------    ------------
     INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      (548,248)      7,290,918       1,630,286
Cash and cash equivalents at beginning of year                            8,921,204       1,630,286             -0-
                                                                       ------------    ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                               $  8,372,956    $  8,921,204    $  1,630,286
                                                                       ============    ============    ============
</TABLE>

NOTE O--NET INCOME (LOSS) PER SHARE

The computations of basic and diluted earnings (loss) per share were as follows:

<TABLE>
<CAPTION>
                                                                   1999            1998          1997
                                                                -----------     ----------    ----------
<S>                                                             <C>             <C>           <C>
Numerator:
   Income (loss) before cumulative effect of
    accounting change                                           $(1,206,721)    $   56,678    $  (71,874)
                                                                ===========     ==========    ==========
   Net income (loss)                                            $(1,592,949)    $   56,678    $  (71,874)
                                                                ===========     ==========    ==========
Denominator:
   Weighted average number of shares outstanding (denominator
    for basic earnings per share)                                 4,674,386      2,853,070     1,592,574
   Effect of dilutive stock options                                      --(1)     138,735            --(1)
                                                                -----------     ----------    ----------
Denominator for diluted earnings per share--weighted average
  number of shares and potential dilution                         4,674,386      2,991,805     1,592,574
                                                                ===========     ==========    ==========
Basic earnings (loss) per share:
   Income before cumulative effect of accounting change         $     (0.26)    $     0.02    $    (0.05)
                                                                ===========     ==========    ==========
   Net income                                                   $     (0.34)    $     0.02    $    (0.05)
                                                                ===========     ==========    ==========
Diluted earnings (loss) per share:
   Income before cumulative effect of accounting change         $     (0.26)    $     0.02    $    (0.05)
                                                                ===========     ==========    ==========
   Net income                                                   $     (0.34)    $     0.02    $    (0.05)
                                                                ===========     ==========    ==========
</TABLE>

(1) Antidilutive for period presented.

Additional disclosures regarding stock options are set forth in Note J.

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