SEC Info - Dearborn Bancorp Inc/MI - ‘424B1’ on 4/14/98

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Dearborn Bancorp Inc/MI – ‘424B1’ on 4/14/98

As of: Tuesday, 4/14/98 · Accession #: 889697-98-177 · File #: 333-47227

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/14/98  Dearborn Bancorp Inc/MI           424B1                  1:187K                                   Reardon Parshall Co/FA

Prospectus — Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                            62    318K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Available Information Business Capitalization Cash and cash equivalents Certain Charter Provisions Common Stock Community Club Deposits Description of Common Stock Dividend Policy Experts Federal funds purchased Forward-Looking Statements Income tax benefit Incorporation of Certain Documents by Reference Indemnification of Directors and Officers Legal Matters Loans Loans held for sale Management Management's Discussion and Analysis of Financial Condition and Results of Operations Mortgage Payable Net interest income No Assurance of Cash Dividends Notes to Consolidated Financial Statements Offering, The Prospectus Summary Provision for possible credit losses Related Party Transactions Report of Independent Certified Public Accountants Risk Factors Security Ownership Selected Consolidated Financial Data Shares Eligible for Future Sale Stockholders' equity Supervision and Regulation The Offering Underwriting Use of Proceeds Year 2000 Problem
1	1st Page - Filing Submission
"	Common Stock
2	Forward-Looking Statements
3	Prospectus Summary
5	The Offering
7	Risk Factors
8	No Assurance of Cash Dividends
9	Indemnification of Directors and Officers
"	Use of Proceeds
10	Dividend Policy
11	Capitalization
12	Selected Consolidated Financial Data
13	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Net interest income
15	Provision for possible credit losses
16	Income tax benefit
"	Loans
17	Deposits
"	Federal funds purchased
20	Year 2000 Problem
21	Business
22	Community Club
27	Management
31	Related Party Transactions
32	Security Ownership
33	Supervision and Regulation
34	Description of Common Stock
"	Certain Charter Provisions
36	Shares Eligible for Future Sale
37	Underwriting
38	Available Information
"	Incorporation of Certain Documents by Reference
39	Legal Matters
"	Experts
41	Report of Independent Certified Public Accountants
42	Stockholders' equity
46	Notes to Consolidated Financial Statements
54	Cash and cash equivalents
"	Loans held for sale
"	Mortgage Payable

424B1 1st Page of 62 TOC ↑Top Previous Next ↓Bottom Just 1st
PROSPECTUS

1,200,000 Shares

DEARBORN BANCORP, INC.

Common Stock

Dearborn Bancorp, Inc., a Michigan corporation (the "Company"), is
offering for sale 1,200,000 shares of its Common Stock (the "Common Stock").
The Company is a bank holding company which owns all of the common stock of
Community Bank of Dearborn, a Michigan banking corporation, located in
Dearborn, Michigan (the "Bank"). There has been no public trading market for
the Common Stock. Roney & Co., L.L.C. (the "Underwriter") has advised the
Company that it anticipates making a market in the Common Stock following
completion of the offering, although there can be no assurance that an active
trading market will develop. See "Underwriting" for a discussion of the
factors considered in determining the public offering price. The Common Stock
will be reported on the Nasdaq Small-Cap Market under the symbol "DEAR."

THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A SIGNIFICANT AMOUNT OF
RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMPANY'S
COMMON STOCK.

These securities are not savings accounts or savings deposits and they are not
insured by the Federal Deposit Insurance Corporation or any other
government agency.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL
OFFENSE.

==============================================================================

[Download Table]

Price to Underwriting Proceeds to
Public (1) Discounts (1)(2) Company(1)(3)
---------- ---------------- -------------

Per Share $14.00 $ .91 $13.09
Total(1) $16,800,000 $1,092,000 $15,708,000

==============================================================================
<FN>

(1) The Company has granted the Underwriter a 30-day option to purchase up to
180,000 additional shares of its Common Stock solely to cover
over-allotments, if any. If the Underwriter exercises such option in
full, the Price to Public, Underwriting Discounts, and Proceeds to
Company will be approximately $19,320,000, $1,255,800 and $18,064,200,
respectively. See "Underwriting." The Underwriter has agreed to limit the
Underwriting Discounts to 4.0% of the Price to Public for up to 202,571
shares sold by the Underwriter to officers, directors and certain
employees of the Company and the Bank. See "Underwriting."

(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(3) Before deducting estimated offering expenses payable by the Company of
$179,000. Certain officers, directors and employees have provided
nonbinding of interest to purchase a total of approximately 202,571
shares, and if such shares are so purchased, Underwriting Discounts
will be reduced by, and proceeds to the Company will be increased by,
$70,900.00.

The shares of Common Stock are offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter, and
subject to the right of the Underwriter to withdraw, cancel or modify such
offer and to reject orders in whole or in part. It is expected that delivery
of the shares of Common Stock will be made through the facilities of The
Depository Trust Company in New York, New York on or about April 15, 1998
against payment therefor in immediately available funds.

Roney & Co.

The date of this Prospectus is April 8, 1998.

424B1 2nd Page of 62 TOC 1st Previous Next ↓Bottom Just 2nd
[ GRAPHIC: SERVICE AREA ]

FORWARD-LOOKING STATEMENTS

This Prospectus contains statements which constitute forward-looking
statements. These statements appear in several places in this Prospectus and
include statements regarding intent, belief, outlook, estimate or
expectations of the Company, primarily with respect to future events and the
future financial performance of the Company. Prospective purchasers of the
Common Stock are cautioned that any such forward-looking statements are not
guarantees of future events or performance and involve risks and
uncertainties, and that actual results may differ materially from those in
the forward-looking statements.

IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE
"UNDERWRITING."

424B1 3rd Page of 62 TOC 1st Previous Next ↓Bottom Just 3rd
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context clearly suggests otherwise, references in this Prospectus
to the Company include the Bank. Except as otherwise indicated, all
information in this Prospectus assumes no exercise of the Underwriter's
over-allotment option. All information in this Prospectus with respect to the
Common Stock has been adjusted to reflect the 10% stock dividend paid on
January 30, 1998 to shareholders of record on December 16, 1997.

The Company

Dearborn Bancorp, Inc. (the "Company"), a Michigan corporation, is a
bank holding company owning all of the common stock of Community Bank of
Dearborn (the "Bank"), a Michigan banking corporation which commenced
business on February 28, 1994. The Bank is the only commercial bank
headquartered in Dearborn, Michigan and conducts business primarily in
western Wayne County, Michigan.

The Bank has a strong commitment to community banking and offers a wide
range of financial products and services, primarily for individuals as well
as small- to medium-sized businesses. The Bank's lending strategy focuses on
residential real estate lending and, to a lesser extent, commercial lending
and indirect consumer lending through a select list of local automotive
dealers. The Bank also offers a broad array of deposit products, including
checking, savings and money market accounts, business checking, direct
deposits and certificates of deposit.

The Bank primarily serves western Wayne County and currently has
offices in Dearborn, Dearborn Heights and Plymouth Township, Michigan.
Western Wayne County has a diverse economy based primarily on manufacturing,
retail and service. The Bank has delineated its primary market area to
include the communities of Dearborn, Dearborn Heights, Northville, Plymouth
and Plymouth Township, Michigan. The Bank has identified the Metropolitan
Detroit Area as its secondary marketing area to promote and foster additional
banking and credit opportunities as they arise.

At December 31, 1997, the Company had total assets of $86.7 million,
total loans of $52.1 million, total deposits of $75.4 million, a ratio of
non-performing assets to total loans of 0.02%, and a ratio of allowance for
possible credit losses to total loans of 1.01%. For the year ended
December 31, 1997, the Company reported net income of $610,000 or $0.58 per
share, basic and diluted, compared to net income of $27,000 or $0.04 per
share, basic and diluted, for the same period in 1996. At December 31, 1997,
the Bank exceeded all applicable regulatory capital requirements.

Management and Board of Directors

The Company has assembled a management team and a board of directors
that have many years of combined banking experience in the Bank's market area
and a shared vision and commitment to the future growth and success of the
Bank.

Michael J. Ross, President and Chief Executive Officer of the Bank, has
over 26 years of banking experience. Prior to joining the Bank at its
formation in 1993, Mr. Ross worked as an independent consultant in the
banking industry during 1992, was President of Republic Bank -- South East
during 1991, and President of Republic Bank -- Flint from 1987 to 1990. From
1972 to 1986, Mr. Ross was with Manufacturers National Bank of Detroit (now
part of Comerica Bank) where he held various positions principally in
commercial lending.

Jeffrey L. Karafa, Vice President and Cashier of the Bank, joined the
Bank in 1994 and has over 15 years of banking experience, 11 of which were
with Michigan National Bank, primarily in financial management positions.
Timothy J. Cuttle, Executive Vice President in charge of the Bank's lending
operations, has over 28 years of banking experience, 21 of which were with
Huntington Bank of Michigan and its predecessor. Jeffrey J. Wolber, Vice
President in charge of the Bank's branch operations, has over 23 years of
banking experience, 8 of which were with NBD Bank and 10 of which were with
Michigan National Bank.

424B1 4th Page of 62 TOC 1st Previous Next ↓Bottom Just 4th
Four of the directors of the Company served as executive officers
and/or directors of Alliance Financial Corporation, the bank holding company
which owned Dearborn Bank and Trust Company, until its merger with Comerica
Incorporated ("Comerica") in December 1989. Two other directors served as
directors of Heritage Bankcorp, Inc., the thrift holding company which owned
Heritage Federal Savings Bank, prior to its merger with Standard Federal Bank
in 1994.

Business Strategy

Grow Through Branch Expansion. Since commencing operations, the Bank's growth
has been accomplished through internal growth. The internal growth of the
Bank has been aided by the opening of two additional offices. The Dearborn
Heights office opened on December 20, 1995 and as of December 31, 1997 had
$15.7 million in total deposits, while the Plymouth Township office opened on
August 11, 1997 and as of December 31, 1997 had $5.4 million in total
deposits. In 1998, the Bank intends to open an additional office in western
Wayne County.

Emphasize Community Banking. The Bank strives to maintain a strong commitment
to community banking. The Bank's goal is to attract small- to medium-sized
businesses and individuals as customers who wish to conduct business with a
local commercial bank that demonstrates an active interest in their business
and personal affairs. Management believes that the Bank is better able than
its larger competitors to deliver more timely responses to customer requests,
provide customized financial products and services and offer customers the
personal attention of senior banking officers.

Expand Lending in the Company's Primary Market. The Company's initial lending
philosophy concentrated on single family residential lending but has grown to
include a more diverse group of loan products. The Company's loan portfolio
currently consists of residential loans, indirect consumer loans with a
select list of local automobile dealers, commercial real estate loans, small
business commercial loans and other consumer loans. Management intends to
maintain its emphasis on these loan products.

Grow Through Selected Acquisitions. Although the Company will continue to
pursue internal growth at the Bank, management believes that additional
growth opportunities may be found in acquisitions of community banks or
branches in southeastern Michigan to enhance the Company's markets. As part
of its normal business operations, management maintains contact with
financial institutions to discuss various acquisition possibilities. However,
the Company has made no bank or branch acquisitions to date, and it presently
has no agreements, commitments, understandings or arrangements to acquire any
other banks or branches, and there is no assurance that the Company will be
successful in its acquisition strategy.

424B1 5th Page of 62 TOC 1st Previous Next ↓Bottom Just 5th
The Offering

Securities Offered by
the Company .......... 1,200,000 shares of Common Stock. In addition, the
Company has granted the Underwriter an option to
purchase up to an additional 180,000 shares to cover
over-allotments.

Common Stock Outstanding
Before the Offering .. 1,044,924 shares

Common Stock Outstanding
After the Offering ... 2,244,924 shares (2,424,924 shares if the
over-allotment option is exercised in full).

Use of Proceeds by the
Company .............. Approximately $2 million of the net proceeds received
by the Company from the shares it is selling in the
offering will be contributed to the Bank to be used
for general corporate purposes and to provide
additional capital to the Bank. The remaining net
proceeds will be held by the Company for general
corporate purposes. See "Use of Proceeds."

Nasdaq Small-Cap Market
Symbol ............... DEAR

424B1 6th Page of 62 TOC 1st Previous Next ↓Bottom Just 6th
SUMMARY OF SELECTED FINANCIAL DATA

The following selected consolidated financial and other data as of and
for each of the four years in the period ended December 31, 1997 are derived
from the Company's audited consolidated financial statements. The information
set forth below should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Consolidated Balance
Sheets as of December 31, 1997 and 1996, and the Consolidated Statements of
Operations for the years ended December 31, 1997, 1996 and 1995, are included
elsewhere in this Prospectus.

[Enlarge/Download Table]

At or for the years ended December 31,
--------------------------------------
(In thousands, except share data) 1997 1996 1995 1994(1)
--------------------------------- ---- ---- ---- -------

SHARE INFORMATION
Net income (loss) per common share -- basic and
diluted ........................................... $0.58 $0.04 $(0.39) $(0.90)
Book value per common share ......................... $8.38 $7.84 $7.36 $7.59
Average shares outstanding .......................... 1,055,861 742,178 741,346 741,346
Shares outstanding at end of period ................. 1,044,924 1,044,924 741,346 741,346

OTHER DATA
Return on average assets ............................ 0.86% 0.06% (1.01%) (5.12%)
Return on average equity ............................ 7.23% 0.50% (5.20%) (11.62%)
Net interest margin ................................. 3.60% 3.98% 3.92% 3.55%
Net interest spread ................................. 2.54% 2.92% 2.65% 1.46%
Allowance for possible credit losses to total loans . 1.01% 1.01% 1.02% 1.00%
Nonperforming assets to total loans ................. 0.02% 0.02% 0.21% 0.00%
Stockholders' equity to total assets ................ 10.10% 14.47% 15.54% 26.95%
Total interest expense to interest income ........... 55.48% 51.48% 49.63% 39.47%
Number of offices ................................... 3 2 2 1
<FN>
----------------
(1) Bank operations began on February 28, 1994.

424B1 7th Page of 62 TOC 1st Previous Next ↓Bottom Just 7th
RISK FACTORS

The Common Stock offered hereby involves significant risk. The
following constitute some of the potential risks of an investment in the
Common Stock and should be carefully considered by prospective investors
prior to purchasing shares of Common Stock. The order of the following is not
necessarily indicative of the relative importance of any described risk nor
is the following intended to be inclusive of all risks of investment in the
Common Stock.

Lending Risks

The risk of nonpayment of loans is inherent in commercial banking, and
such nonpayment, if it occurs, would likely have a material adverse effect on
the Company's earnings and overall financial condition, as well as the value
of the Common Stock. Management attempts to minimize the Bank's credit
exposure by carefully monitoring the concentration of its loans within
specific industries and through prudent loan application and approval
procedures, but there can be no assurance that such monitoring and procedures
will reduce such lending risks. Credit losses can cause insolvency and
failure of a financial institution, and in such event, its shareholders could
lose their entire investment.

Impact of Interest Rates and Economic Conditions

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

Competition

The Company and the Bank face strong competition for deposits, loans
and other financial services from numerous banks, savings banks, thrifts,
credit unions and other financial institutions as well as other entities
which provide financial services, including consumer finance companies,
securities brokerage firms, mortgage brokers, insurance companies, mutual
funds, and other lending sources and investment alternatives. Some of the
financial institutions and financial services organizations with which the
Bank competes are not subject to the same degree of regulation as the Bank.
Many of the financial institutions and financial services organizations
aggressively compete for business in the Bank's market area. Most of these
competitors have been in business for many years, have established customer
bases, are larger, have substantially higher lending limits than the Bank,
and are able to offer certain services that the Bank does not currently
provide, including more extensive branch networks, trust services, and
international banking services. In addition, most of these entities have
greater capital resources than the Bank, which, among other things, may allow
them to price their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. Additionally, recently
effective legislation regarding interstate branching and banking may increase
competition in the future from out-of-state banks.

424B1 8th Page of 62 TOC 1st Previous Next ↓Bottom Just 8th
Need for Technological Change

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

Discretion in Use of Proceeds

The purpose of the offering is to further strengthen the Company's
capital position in order to support the general expansion of the Company's
business, including, if opportunities arise, possible acquisitions of other
branches or expansion into other lines of business closely related to
banking. Management, however, will retain discretion in employing the
proceeds of the offering. At present there are no specific agreements,
arrangements, or understandings for any acquisition, and there is no
assurance that the Company's acquisition strategy will be successful. See
"Use of Proceeds."

Government Regulation and Monetary Policy

The Company and the Bank are subject to extensive state and federal
government supervision and regulation. Existing state and federal banking
laws subject the Bank to substantial limitations with respect to loans,
purchase of securities, payment of dividends and many other aspects of its
banking business. There can be no assurance that future legislation or
government policy will not adversely affect the banking industry or the
operations of the Bank. Federal economic and monetary policy may affect the
Bank's ability to attract deposits, make loans and achieve satisfactory
interest spreads. See "Supervision and Regulation."

No Assurance of Cash Dividends

Although the Company recently declared a stock dividend, the Company
has not paid cash dividends on its Common Stock, and it is anticipated that
no cash dividends will be paid on the Common Stock for the foreseeable
future. The Company is largely dependent upon dividends paid by the Bank for
funds to pay dividends on the Common Stock, if and when such dividends are
declared. No assurance can be given that future earnings of the Bank, and
resulting dividends to the Company, will be sufficient to permit the legal
payment of dividends to Company shareholders at any time in the future. Even
if the Company may legally declare dividends, the amount and timing of such
dividends will be at the discretion of the Company's Board of Directors. The
Board may in its sole discretion decide not to declare dividends. These
shares should not be purchased by persons who need or desire dividend income
from this investment. For a more detailed discussion of other regulatory
limitations on the payment of cash dividends by the Company, see "Dividend
Policy."

Anti-Takeover Provisions

The Articles of Incorporation of the Company and Chapter 7B of the
Michigan Business Corporation Act ("MBCA") provide for certain supermajority
vote and other requirements on certain business combinations with interested
shareholders and limit voting rights of certain acquirers of control shares.
In addition, federal law requires the approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve") prior to acquisition of
"control" of a bank holding company. These

424B1 9th Page of 62 TOC 1st Previous Next ↓Bottom Just 9th
provisions may have the effect of delaying or preventing a change in control
of the Company without action by the shareholders. As a result, these
provisions could adversely affect the price of the Common Stock by, among
other things, preventing a shareholder of the Company's Common Stock from
realizing a premium which might be paid as a result of a change in control of
the Company. See "Description of Common Stock -- Certain Charter Provisions."

Indemnification of Directors and Officers

The Company's Articles of Incorporation provide for the indemnification
of its officers and directors and insulate its officers and directors from
liability for certain breaches of the duty of care. It is possible that the
indemnification obligations imposed under these provisions could result in a
charge against the Company's earnings and thereby affect the availability of
funds for payment of dividends to the Company's shareholders. See
"Description of Common Stock -- Indemnification of Directors and Officers."

Determination of Offering Price; Limited Trading Market Expected

The public offering price of $14.00 per share was determined by the
Company in consultation with the Underwriter. This price is not based upon
earnings or past operations and should not be construed as indicative of the
present or anticipated future value of the Common Stock. Prior to the
offering, there has been no public trading market for the Common Stock and
shares have been traded on an individual basis. The price at which these
shares are being offered to the public may be greater than the market price
for the Common Stock following the offering. The Underwriter has advised the
Company that, upon completion of the offering, it intends to use reasonable
efforts to initiate quotations of the Common Stock in the Nasdaq Small-Cap
Market and to act as a market maker in the Common Stock, subject to
applicable laws and regulatory requirements, although it is not obligated to
do so. Making a market in securities involves maintaining bid and ask
quotations and being able, as principal, to effect transactions in reasonable
quantities at those quoted prices, subject to various securities laws and
other regulatory requirements. The development of a public trading market
depends, however, upon the existence of willing buyers and sellers, the
presence of which is not within the control of the Company or any market
maker. Even with a market maker, factors such as the limited number of shares
outstanding and the absence of a reasonable expectation of dividends within
the near future mean that there can be no assurance of an active and liquid
market for the Common Stock developing in the foreseeable future. Even if a
market develops, there can be no assurance that a market will continue, or
that shareholders will be able to sell their shares at or above the price at
which these shares are being offered to the public. Purchasers of Common
Stock should carefully consider the limited liquidity of their investment in
the shares being offered hereby.

Dilution

In the period following the offering, the offering may have a dilutive
effect on income per share and return on equity, because the proceeds
of the offering may be invested in short-term investments at comparatively
low interest rates. The Company's long-term strategy is to use the additional
equity raised through the offering as a base to support asset growth which
would enhance income per share and return on equity. However, there is no
assurance that the Company will be able to achieve such growth.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,200,000 shares
of Common Stock offered hereby are estimated to be $15,708,000 ($18,064,200
if the Underwriter's over-allotment option is exercised in full), after
deduction of the underwriting discounts, but before deducting estimated
offering expenses of $179,000. The Underwriter has agreed to limit the
underwriting discounts to 4.0% of the public offering price for up to 202,571
shares sold by the Underwriter to officers, directors and certain employees
of the Company and the Bank. If the 202,571 shares are purchased by such
persons, the underwriting discounts will be reduced by, and proceeds to the
Company will be increased by $70,900.00.

424B1 10th Page of 62 TOC 1st Previous Next ↓Bottom Just 10th
The sources and uses of the proceeds from the offering are set below:

[Download Table]

Amount Percentage
------ ----------

Sources:
Sale of 1,2000,000 shares of Common Stock........ $16,800,000 100.00%
----------- ------
Total sources:................................. $16,800,000
Uses:
Capital contribution to the Bank (1).............. $ 2,000,000 11.9%
Underwriter's commission.......................... $ 1,092,000 6.5%
Offering expenses................................. $ 179,000 1.1%
General corporate purposes (2).................... $13,529,000 80.5%
----------- -----
Total uses...................................... $16,800,000 100%
<FN>
----------
(1) It is anticipated that the net proceeds received by the Bank will be used
to fund investments in loans and securities and for payment of operating
expenses.
(2) It is anticipated that proceeds for general corporate purposes will be
used in the near future for branch expansion (including the opening of an
additional office in western Wayne County, Michigan), growth through
selected bank or other financial service institution acquisitions, and
possibly an additional capital contribution to the Bank. The Company,
however, currently has no commitments, agreements, understandings or
arrangements to acquire any other banks or branches.

DIVIDEND POLICY

The Company and Bank income, if any, will be retained to finance the
growth of the Company and the Bank. The Company does not anticipate that cash
dividends will be paid in the foreseeable future. The declaration of
dividends is at the discretion of the Board of Directors, and there is no
assurance that cash dividends will be declared at any time. If and when
dividends are declared, the Company will be largely dependent upon dividends
paid by the Bank for funds to pay dividends on the Common Stock.

On December 16, 1997, the Company declared a 10% stock dividend payable
on January 30, 1998 to shareholders of record on December 16, 1997.

Under Michigan law, the Bank is restricted as to the maximum amount of
cash dividends it may pay on its Common Stock. A Michigan state bank may not
declare cash dividends except out of net profits then on hand after deducting
its losses and bad debts, and then only if the bank will have a surplus
amounting to at least 20% of its capital after the payment of the dividend.
If the surplus of a Michigan state bank is at any time less than the amount
of its capital, before the declaration of a cash dividend or dividend in
kind, it must transfer to surplus not less than 10% of its net profits for
the preceding half-year (in the case of quarterly or semi-annual dividends)
or the preceding two consecutive half-year periods (in the case of annual
dividends). The ability of the Company and the Bank to pay cash dividends is
also affected by various regulatory requirements and policies, such as the
requirement to maintain adequate capital above regulatory guidelines. See
"Supervision and Regulation." Such requirements and policies may limit the
Company's ability to obtain dividends from the Bank for its cash needs,
including funds for acquisitions, payment of dividends by the Company, and
the payment of operating expenses.

424B1 11th Page of 62 TOC 1st Previous Next ↓Bottom Just 11th
CAPITALIZATION

The following table sets forth the historical capitalization of the
Company and as it is projected to be immediately after the sale of the
1,200,000 shares of Common Stock offered hereby and the application of the
estimated net proceeds. See "Use of Proceeds."

[Download Table]

At December 31, 1997
--------------------
(In thousands, except share data) Historical As Adjusted
---------- -----------

Long-term debt ...................................... $ 537 $ 537
Stockholders' equity:
Common Stock, 3,000,000 shares authorized,
1,044,924 shares issued and outstanding; 2,244,924
shares issued and outstanding as adjusted (1).... 10,506 26,106 (2)
Accumulated deficit ............................... (1,689) (1,689)
------- -------
Net unrealized loss on securities available for
sale ............................................ (65) (65)
------- -------
Total stockholders' equity .......................... 8,752 24,352
------- -------
Total capitalization ................................ $ 9,289 $24,889
======= =======
<FN>
----------------
(1) Excludes 87,400 shares reserved for issuance of options outstanding under
the Company's Stock Option Plan.

(2) Offering expenses to be paid by the Company are expected to be $179,000.

424B1 12th Page of 62 TOC 1st Previous Next ↓Bottom Just 12th
SELECTED CONSOLIDATED FINANCIAL DATA

[Enlarge/Download Table]

At or for the years ended December 31,
--------------------------------------
(In thousands, except share data) 1997 1996 1995 1994(1)
--------------------------------- ---- ---- ---- -------

OPERATIONS
Interest income ..................................... $5,404 $3,314 $2,023 $674
Interest expense .................................... 2,998 1,706 1,004 266
----- ----- ----- -----
Net interest income ................................. 2,406 1,608 1,019 408
Provision for possible credit losses ................ 164 164 114 100
----- ----- ----- -----
Net interest income after provision for possible
credit losses ..................................... 2,242 1,444 905 308
Total non-interest income ........................... 312 284 210 93
Total non-interest expense .......................... 2,089 1,701 1,403 1,065
----- ----- ----- -----
Net income (loss) before federal income tax benefit . 465 27 (288) (664)
Income tax benefit .................................. 145 -- -- --
----- ----- ----- -----
Net income (loss) ................................... $610 $27 $(288) $(664)
===== ===== ===== =====
FINANCIAL CONDITION
Total assets ........................................ $86,653 $56,599 $35,130 $20,879
Loans ............................................... 52,139 36,263 19,945 9,907
Deposits ............................................ 75,397 47,463 28,922 14,389
Other borrowings .................................... 2,037 554 569 584
Stockholders' equity ................................ 8,752 8,190 5,458 5,626
SHARE INFORMATION
Net income (loss) per common share -- basic and
diluted ........................................... $0.58 $0.04 $(0.39) $(0.90)
Book value per common share ......................... $8.38 $7.84 $7.36 $7.59
Average shares outstanding .......................... 1,055,861 742,178 741,346 741,346
Shares outstanding at end of period ................. 1,044,924 1,044,924 741,346 741,346
OTHER DATA
Return on average assets ............................ 0.86% 0.06% (1.01%) (5.12%)
Return on average equity ............................ 7.23% 0.50% (5.20%) (11.62%)
Net interest margin ................................. 3.60% 3.98% 3.92% 3.55%
Net interest spread ................................. 2.54% 2.92% 2.65% 1.46%
Allowance for possible credit losses to total loans . 1.01% 1.01% 1.02% 1.00%
Nonperforming assets to total loans ................. 0.02% 0.02% 0.21% 0.00%
Stockholders' equity to total assets ................ 10.10% 14.47% 15.54% 26.95%
Total interest expense to interest income ........... 55.48% 51.48% 49.63% 39.47%
Number of offices ................................... 3 2 2 1
<FN>
----------------
(1) Bank operations began on February 28, 1994.

424B1 13th Page of 62 TOC 1st Previous Next ↓Bottom Just 13th
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

General

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

Results of Operations

The Company reported net income of $610,000 in 1997 compared to net
income of $27,000 in 1996 and a net loss of $288,000 in 1995. The improvement
each year was primarily a function of growth in the volume of investments,
loans and deposits and the corresponding net interest income associated with
the increased volumes.

Net Interest Income

1997 Compared to 1996. Net interest income for the period ended
December 31, 1997 was $2.4 million compared to $1.6 million for the period
ended December 31, 1996, an increase of $0.8 million or 50%. This increase
was caused primarily by an increase in average earning assets of $26.5
million between the periods while interest-bearing liabilities grew by $21.9
million. At the same time the Company's interest rate spread decreased to
2.54% in 1997 from 2.92% in 1996. The Company's net interest margin also
decreased in 1997 to 3.60% from 3.98% in 1996. However, the decreases in net
interest spread and net interest margin were offset by increases in the
volume of net earning assets. The Company's decrease in interest rate spread
and net interest margin was a direct result of aggressive time deposit
gathering at premium rates and the direct reinvestment of those funds into
investment securities with similar interest rates until the funds could be
redeployed into quality loans with higher yields.

1996 Compared to 1995. Net interest income for the period ended
December 31, 1996 was $1.6 million compared to $1.0 million for the period
ended December 31, 1995, an increase of $0.6 million or 60%. This increase
was caused primarily by an increase in average earning assets of $14.6
million between the periods, while interest-bearing liabilities grew by $13.0
million. At the same time, the Company's interest rate spread increased to
2.92% in 1996 from 2.65% in 1995. The Company's net interest margin also
increased in 1996 to 3.98% from 3.95% in 1995.

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

424B1 14th Page of 62 TOC 1st Previous Next ↓Bottom Just 14th
The following table sets forth certain information relating to the
Company's consolidated average interest-earning assets and interest-bearing
liabilities and reflects the average yield on assets and average cost of
liabilities for the periods indicated. Such yields and costs are derived by
dividing income or expense by the average daily balance of assets or
liabilities, respectively, for the periods presented. During the periods
indicated, non-accruing loans, if any, are included in the net loan category.

[Enlarge/Download Table]

Year Ended December 31, 1997 Year Ended December 31, 1996 Year Ended December 31, 1995
---------------------------- ---------------------------- ----------------------------
Average Average Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ---- ------- -------- ----

Assets
Federal funds sold and
interest bearing
deposits with banks .. $ 3,351 $ 188 5.61% $ 2,137 $ 115 5.38% $ 3,184 $ 188 5.90%
Investment securities --
available for sale ... 20,031 1,235 6.17% 12,400 733 5.91% 8,240 466 5.66%
Loans .................. 43,533 3,981 9.14% 25,835 2,466 9.55% 14,345 1,369 9.54%
------ ----- ---- ------ ----- ---- ------ ----- ----
Sub-total earning
assets............... 66,915 5,404 8.08% 40,372 3,314 8.21% 25,769 2,023 7.85%
Other assets ........... 4,361 3,618 2,711
------ ------ ------
Total assets ......... $71,276 $43,990 $28,480
====== ====== ======
Liabilities and
stockholders'
equity
Interest bearing
deposits ........... $53,559 $2,955 5.52% $31,713 $1,662 5.24% $18,748 $ 959 5.12%
Other borrowings ..... 582 43 7.39% 564 44 7.80% 576 45 7.75%
------ ----- ---- ------ ----- ---- ------ ----- ----
Sub-total interest
bearing
liabilities ...... 54,141 2,998 5.54% 32,277 1,706 5.29% 19,324 1,004 5.20%
Non-interest bearing
deposits ........... 8,374 6,142 3,359
Other liabilities .... 322 210 256
Stockholders' equity . 8,439 5,361 5,541
------ ------ ------
Total liabilities
and stockholders'
equity ........... $71,276 $43,990 $28,480
======= ====== ======
Net interest income $2,406 $1,608 $1,019
====== ===== =====
Net interest rate
spread ........... 2.54% 2.92% 2.65%
==== ==== =====
Net interest margin
on earning assets 3.60% 3.98% 3.95%
==== ==== ====

424B1 15th Page of 62 TOC 1st Previous Next ↓Bottom Just 15th
Rate/Volume Analysis. The following table analyzes net interest income
in terms of changes in the volume of interest-earning assets and
interest-bearing liabilities and changes in yields and rates. The table
reflects the extent to which changes in the interest income and interest
expense are attributable to changes in volume (changes in volume multiplied
by prior year rate) and changes in rate (changes in rate multiplied by prior
year volume). Changes attributable to the combined impact of volume and rate
have been allocated proportionately to changes due to volume and changes due
to rate.

[Enlarge/Download Table]

1997/1996 1996/1995
Change in Interest Due to: Change in Interest Due to:
-------------------------- --------------------------
Average Average Net Average Average Net
(In thousands) Balance Rate Change Balance Rate Change
-------------- ------- ---- ------ ------- ---- ------

Assets
Federal funds sold and interest bearing deposits
with banks ...................................... $ 68 $ 5 $ 73 $ (56) $(17) $ (73)
Investment securities -- available for sale ....... 470 32 502 246 21 267
Loans ............................................. 1,619 (104) 1,515 1,097 -- 1,097
----- ---- ----- ----- --- -----
Total earning assets ................................ $2,157 ($ 67) $2,090 $1,287 $ 4 $1,291
===== ===== ===== ===== === =====
Liabilities
Interest bearing deposits ......................... $1,206 $ 87 $1,293 $ 679 $ 24 $ 703
Other borrowings .................................. 1 (2) (1) (1) -- (1)
----- ---- ----- ----- --- -----
Total interest bearing liabilities .................. $1,207 $ 85 $1,292 $ 678 $ 24 $ 702
===== ==== ===== ===== === =====
Net interest income ............................. $ 798 $ 589
===== =====
Net interest rate spread ........................ (0.38%) 0.27%
===== =====
Net interest margin on earning assets ........... (0.39%) 0.03%
===== =====

Provision for Possible Credit Losses

1997 Compared to 1996. The provision for possible credit losses was
$164,000 in both 1997 and 1996. The provision for possible credit losses was
based upon management's assessment of relevant factors, including types and
amounts of non-performing loans, historical and anticipated loss experience
on such types of loans, and current and projected economic conditions. Refer
to Note C of the Notes to Consolidated Financial Statements for additional
information.

1996 Compared to 1995. The provision for possible credit losses was
$164,000 in 1996 compared to $114,000 in 1995, an increase of $50,000 or 44%.
The increase in the provision for possible credit losses was based upon
management's assessment of relevant factors, including types and amounts of
non-performing loans, historical and anticipated loss experience on such
types of loans, and current and projected economic conditions. Refer to Note
C of the Notes to Consolidated Financial Statements for additional
information.

Non-interest Income

1997 Compared to 1996. Non-interest income was $312,000 in 1997
compared to $284,000 in 1996, an increase of $28,000 or 10%. This increase
was primarily due to service charges on deposit accounts as a result of an
increase in the volume of these accounts.

1996 Compared to 1995. Non-interest income was $284,000 in 1996
compared to $210,000 in 1995, an increase of $74,000 or 35%. This increase
was primarily due to service charges on deposit accounts as a result of an
increase in the volume of these accounts.

Non-interest Expense

1997 Compared to 1996. Non-interest expense was $2.1 million in 1997
compared to $1.7 million in 1996, an increase of $0.4 million or 24%. The
largest components of non-interest expense were salaries and employee
benefits which amounted to $1.2 million and occupancy and equipment expense
which

424B1 16th Page of 62 TOC 1st Previous Next ↓Bottom Just 16th
amounted to $267,000 in 1997. In 1996, salaries and employee benefits and
occupancy and equipment expense were $1.1 million and $198,000, respectively.
The primary factor for these increases was the opening of the Bank's office
in Plymouth Township, Michigan in August 1997. As of December 31, 1997, the
number of full time equivalent employees was 26 as compared to 23 as of
December 31, 1996.

1996 Compared to 1995. Non-interest expense was $1.7 million in 1996
compared to $1.4 million in 1995, an increase of $0.3 million or 21%. The
largest components of non-interest expense were salaries and employee
benefits which amounted to $1.1 million and occupancy and equipment expense
which amounted to $198,000 in 1996. In 1995, salaries and employee benefits
and occupancy and equipment expense were $0.9 million and $147,000,
respectively. The primary factor for these increases was the opening of the
Bank's office in Dearborn Heights, Michigan in late December 1995. As of
December 31, 1996, the number of full time equivalent employees was 23 as
compared to 24 as of December 31, 1995.

Income Tax Benefit

1997 Compared to 1996. The income tax benefit was $145,000 in 1997
compared to $0 in 1996, an increase of $145,000. During 1997, the Bank
recognized a $145,000 tax benefit from the change in the valuation allowance
against a deferred tax asset related to net operating loss carryforwards.
Refer to Note H of the Notes to Consolidated Financial Statements for
additional information.

Comparison of Financial Condition at December 31, 1997 and December 31, 1996

Assets. Total assets at December 31, 1997 were $86.7 million compared
to $56.6 million at December 31, 1996, an increase of $30.1 million or 53%.
The increase was primarily due to increases in investment securities --
available for sale and loans.

Investment Securities -- Available for Sale. Total investment
securities -- available for sale, at December 31, 1997 were $29.8 million
compared to $10.5 million at December 31, 1996, an increase of $19.3 million
or 184%. During 1997, the Company purchased $41.4 million in securities, and
$19.5 million of securities were called or matured during the year. In
addition, the Company sold securities of $2.6 million and recognized gain on
such sales in the amount of $13,000. The increase in deposits has enabled the
Company to invest in investment securities -- available for sale until such
time as quality loan opportunities become available. All securities within
the Company's portfolio are U.S. treasury issues or U.S. government-sponsored
agency issues carrying AAA ratings. The Company does not hold any securities
in the "Held to Maturity" category, nor does the Company hold or utilize
derivatives. Refer to Note B of the Notes to Consolidated Financial
Statements for additional information.

Loans. Total loans at December 31, 1997 were $52.1 million compared to
$36.3 million at December 31, 1996, an increase of $15.8 million or 44%. The
components of the outstanding balances and percentage increase in loans from
1996 to 1997 are as follows:

[Enlarge/Download Table]

December 31, 1997 December 31, 1996 Percent
------------------ -------------------- Increase/
(In thousands) Balance Percentage Balance Percentage (Decrease)
-------------- ------- ---------- ------- ---------- ----------

Consumer loans ...................................... $12,705 25% $ 8,877 24% 43%
Commercial, financial, & other ...................... 10,668 20 7,199 20 48
Commercial real estate construction ................. 1,746 3 1,971 5 (11)
Commercial real estate mortgages .................... 9,796 19 6,384 18 53
Residential real estate mortgages ................... 17,224 33 11,832 33 46
------- --- ------- --- ---
$52,139 100% $36,263 100% 44%
======= === ======= === ==

Refer to Note C of the Notes to Consolidated Financial Statements for
additional information.

Allowance for Possible Credit Losses. The allowance for possible credit
losses at December 31, 1997 was $522,000 compared to $366,000 at December 31,
1996, an increase of $156,000 or 43%. The increase in the allowance for
possible credit losses was based upon management's assessment of relevant
factors, including types and amounts of non-performing loans, historical and
anticipated loss experience on such types of loans, and current and projected
economic conditions. Refer to Note C of the Notes to Consolidated Financial
Statements for additional information.

424B1 17th Page of 62 TOC 1st Previous Next ↓Bottom Just 17th
Bank Premises and Equipment. Bank premises and equipment at December
31, 1997 was $2.3 million compared to $2.1 million at December 31, 1996, an
increase of $0.2 million or 10%. This increase reflects the Bank's investment
in technology as well as capital expenditures necessary to open the Bank's
Plymouth Township office.

Accrued Interest Receivable. Accrued interest receivable at December
31, 1997 was $723,000 compared to $306,000 at December 31, 1996, an increase
of $417,000 or 136%. The increase was due to the increased volume of
investments securities -- available for sale, for which interest is
receivable semi-annually.

Other Assets. Other assets at December 31, 1997 were $230,000 compared
to $94,000 at December 31, 1996, an increase of $136,000 or 145%. The
increase was due to the Bank's recognition of an income tax asset of $145,000
in 1997. Refer to Note H of the Notes to Consolidated Financial Statements
for additional information.

Deposits. Total deposits at December 31, 1997 were $75.4 million
compared to $47.5 million at December 31, 1996, an increase of $27.9 million
or 59%. The components of the outstanding balances and percentage increase in
deposits from 1996 to 1997 are as follows:

[Enlarge/Download Table]

December 31, 1997 December 31, 1996
----------------- ----------------- Percent
(In thousands) Balance Percentage Balance Percentage Increase
-------------- ------- ---------- ------- ---------- --------

Non-interest bearing:
Demand ............................................ $ 8,587 11% $ 7,583 15% 13%
Interest bearing:
Checking .......................................... 1,274 2 977 2 30
Money market ...................................... 6,787 9 5,977 13 14
Savings ........................................... 1,529 2 1,240 3 23
Time, under $100,000 .............................. 36,114 48 19,048 40 90
Time, $100,000 and over
Non-volatile priced ............................. 12,055 16 5,265 11 129
Volatile priced ................................. 9,051 12 7,373 16 23
------- --- ------- --- ---
$75,397 100% $47,463 100% 59%
======= === ======= === ===

The increase in deposits was primarily due to growth in time deposits.
During 1997, the Bank completed two major marketing campaigns, an annual
birthday celebration in March and a grand opening celebration in August,
offering a premium rate of interest on time deposits. These campaigns raised
in excess of $7 million in new deposits per campaign in a period of
approximately two weeks each. Additional growth in all types of deposits was
achieved via routine marketing, telemarketing, referral and visitation
programs. The increase in deposits enabled the Company to invest the funds in
investment securities -- available for sale until such time as quality loan
opportunities became available.

Federal Funds Purchased. Federal funds purchased at December 31, 1997
were $1.5 million compared to $0 at December 31, 1996. The increase in
federal funds purchased was a result of the Bank's need for liquidity to fund
an unanticipated $1.5 million outgoing wire transfer for a large customer
late in the day on December 31, 1997.

Accrued Interest Payable. Accrued interest payable at December 31, 1997
was $310,000 compared to $127,000 at December 31, 1996. The increase was due
to the increase in the volume of time deposits during 1997.

Capital

Stockholders' equity at December 31, 1997 was $8.8 million compared to
$8.2 million as of December 31, 1996, an increase of $0.6 million or 7%. In
addition, at December 31, 1997, the Bank exceeded all applicable regulatory
capital requirements. Refer to Note K of the Notes to Consolidated Financial
Statements for further information.

424B1 18th Page of 62 TOC 1st Previous Next ↓Bottom Just 18th
Liquidity and Asset and Liability Management

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

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

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

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

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

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The following table set forth the amounts of interest-earning assets
and interest-bearing liabilities outstanding at December 31, 1997 which are
expected to mature or reprice in each of the time periods shown.

[Enlarge/Download Table]

Interest Rate Sensitivity Period
-----------------------------------------------
1-90 91-365 1-5 Over
(In thousands) Days Days Years 5 Years Total
---- ---- ----- ------- -----

Earning assets
Federal funds sold ................................ $ 254 $ -- $ -- $ -- $ 254
Mortgage loans held for sale ...................... 347 -- -- -- 347
Securities available for sale ..................... 999 1,000 27,781 -- 29,780
Total loans, net of non-accrual ................... 11,600 7,963 32,072 493 52,128
------ ----- ------ --- ------
Total earning assets ................................ 13,200 8,963 59,853 493 82,509
====== ======= ====== ====== ======
Interest bearing liabilities
Total interest bearing deposits ................... 11,060 33,303 22,447 -- 66,810
Federal funds purchased ........................... 1,500 -- -- -- 1,500
Mortgage payable .................................. -- -- -- 537 537
------ ------- ------ ------ ------
Total interest bearing liabilities .................. 12,560 33,303 22,447 537 68,847
Net asset (liability) funding gap ................... 640 (24,340) 37,406 (44) $13,662
------ ------- ------ ------ ======
Cumulative net asset (liability) funding gap ........ $ 640 $(23,700) $13,706 $13,662
======= ====== ======= ======

Effects of New Accounting Standards

In June 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement No. 130, "Reporting of Comprehensive Income" ("SFAS 130"),
which establishes standards for reporting and display of comprehensive income
and its components (revenues, expense, gains, and losses) in a full set of
financial statements. This statement also requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. This statement is
effective for fiscal years beginning after December 15, 1997. Earlier
application is permitted. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. The Company
does not anticipate that the adoption of SFAS 130 will have a material effect
on its financial statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"), which establishes
standards for the manner in which public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to stockholders. This statement
also establishes standards for related disclosures about products and
services, geographic areas, and major customers. This statement requires the
reporting of financial and descriptive information about an enterprise's
reportable operating segments. This statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial year
of adoption, comparative information for earlier years is to be restated. The
Company does not anticipate that the adoption of SFAS 131 will have a
material effect on its financial statements.

Impact of Inflation and Changing Prices

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

424B1 20th Page of 62 TOC 1st Previous Next ↓Bottom Just 20th
Year 2000 Problem

The Company is aware of the current concerns throughout the business
community of reliance upon computer software programs that do not properly
recognize the year 2000 in date formats, often referred to as the "Year 2000
Problem." The Year 2000 Problem is the result of software being written using
two digits rather than four digits to define the application year (i.e., "98"
rather than "1998"). A failure by a business to properly identify and correct
a Year 2000 Problem in its operations could result in system failures or
miscalculations. In turn, this could result in disruptions of operations,
including among other things a temporary inability to process transactions,
send invoices or otherwise engage in routine business transactions on a
day-to-day basis.

Operations of the Company depend upon the successful operation on a
daily basis of its computer software programs. The Company relies upon
software purchased from third-party vendors rather than internally generated
software, and based upon its ongoing discussions with these vendors, the
Company believes that most of its software already reflects changes necessary
to avoid the Year 2000 Problem. The Company expects to update during 1998 any
remaining software that could be affected by the Year 2000 Problem to
eliminate remaining concerns. This update is not expected to have a material
adverse effect on the Company.

424B1 21st Page of 62 TOC 1st Previous Next ↓Bottom Just 21st
BUSINESS

Background

The liberalization of Michigan's branch banking laws, together with the
expansion of interstate banking, has led to substantial consolidation of the
banking industry in Michigan, including within the county in which the Bank
is located. In the past, several of the financial institutions within the
primary market area of the Bank have either been acquired by or merged with
larger financial institutions or out-of-state financial institutions. In some
cases, when these consolidations occurred, local boards of directors were
dissolved and local management was relocated or terminated. These actions
have, in some cases, resulted in policy and credit decisions being centralized
away from local management.

In the opinion of the Company's management, this situation has created
a favorable opportunity for a local commercial bank with local management and
directors. Management of the Company believes that such a bank attracts those
customers who wish to conduct business with a locally managed institution
that demonstrates an active interest in their business and personal financial
affairs. The Company believes that a locally managed institution, in many
cases, will be able to deliver more timely responses to customer requests,
provide customized financial products and services and offer customers the
personal attention of the Bank's senior banking officers. The Bank seeks to
take advantage of this opportunity by emphasizing in its marketing plan the
Bank's local management and the Bank's ties and commitment to its market
area.

The Company was incorporated as a Michigan business corporation on
September 30, 1992. The Company was formed to acquire all of the Bank's
issued and outstanding stock and to engage in the business of a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "Act").
In connection with the formation of the Company, during 1993 the Company sold
741,346 shares of its Common Stock at a price of $9.09 per share. As of
December 31, 1996, the Company sold an additional 303,578 shares of its
Common Stock at a price of $9.09 per share to its shareholders pursuant to a
rights offering.

The executive offices of the Company and the Bank are located at 22290
Michigan Avenue, Dearborn, Michigan 48123-2247, telephone number (313)
274-1000.

Business of the Company

The primary purpose of the Company is the ownership of the Bank. In the
future, the Company may form or acquire other subsidiaries as permitted under
the Act and the regulations of the Federal Reserve. There are no plans,
agreements, understandings or negotiations, either written or oral, at the
present time for any acquisitions by the Company.

Business of the Bank

The Bank is a commercial bank organized under Michigan law which
commenced business on February 28, 1994. The Bank, through its main office
and two branch offices, emphasizes and offers highly personalized service to
its customers.

The customer service officers are well-trained, experienced bank
officers who fill the needs of the customers and handle the requests of their
customers in a professional manner. The management of the Company and the
Bank believe that it is important to the success of the Bank's strategy to
create long-term relationships between customers and Bank employees. The
Bank's senior management holds regular staff information meetings so that all
employees are given information regarding the Bank's plans and objectives,
and employees are offered the opportunity to make suggestions to improve the
Bank's performance. The management of the Bank believes that this approach
creates a commitment by all employees to the Bank's success.

The Bank offers a wide range of financial products and services. These
include checking accounts, savings accounts, money market accounts,
certificates of deposit, business checking, direct deposit, loan

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services (commercial, consumer, real estate mortgages), travelers' checks,
cashiers' checks, wire transfers, safety deposit boxes, collection services
and night depository services. The Bank does not have a trust department.

Business Strategy

Grow Through Branch Expansion. Since commencing operations, the Bank's
growth has been accomplished through internal growth. The internal growth of
the Bank has been aided by the opening of two additional offices. The
Dearborn Heights office opened on December 20, 1995 and as of December 31,
1997 had $15.7 million in total deposits, while the Plymouth Township office
opened on August 11, 1997 and as of December 31, 1997 had $5.4 million in
total deposits. In 1998, the Bank intends to open an additional office in
western Wayne County.

Emphasize Community Banking. The Bank strives to maintain a strong
commitment to community banking. The Bank's goal is to attract small to
medium-sized businesses and individuals as customers who wish to conduct
business with a local commercial bank that demonstrates an active interest in
their business and personal affairs. Management believes that the Bank is
better able than its larger competitors to deliver more timely responses to
customer requests, provide customized financial products and services and
offer customers the personal attention of senior banking officers.

Expand Lending in the Company's Primary Market. The Company's initial
lending philosophy concentrated on single family residential lending but has
grown to include a more diverse group of loan products. The Company's loan
portfolio currently consists of residential loans, indirect consumer loans
with a select list of local automobile dealers, commercial real estate loans,
small business commercial loans and other consumer loans. Management intends
to maintain its emphasis on these loan products.

Grow Through Selected Acquisitions. Although the Company will continue
to pursue internal growth at the Bank, management believes that greater
growth opportunities may be found in acquisitions of community banks or
branches in southeastern Michigan to enhance the Company's markets. As part
of its normal business operations management maintains contact with financial
institutions to discuss various acquisition possibilities. However, the
Company has made no bank or branch acquisitions to date, and it presently has
no agreements, commitments, understandings or arrangements to acquire any
other banks or branches, and there is no assurance that the Company will be
successful in its acquisition strategy.

Marketing Plan

The Bank's marketing plan focuses on the concepts of corporate
citizenship and personal interaction within the communities the Bank serves
through promotion of, and active participation in, a number of civic
organizations and ongoing community activities. Management believes that
these efforts establish the identity and philosophy of the Bank within the
communities it serves and allow Bank officers and employees to personally
interact with local business leaders and members of the public. The marketing
plan also emphasizes direct sales calls by Bank officers and specific
telemarketing programs involving the Bank's branch managers and customer
service representatives.

The Bank has two primary target markets: consumer financial services,
with an emphasis on individual deposit accounts, single family residential
lending and indirect automobile lending; and business financial services,
with an emphasis on small- to medium-sized businesses.

Community Club. At inception, the Bank established a "Community Club"
which has become an important marketing tool to increase the Bank's total
deposits. The Community Club is targeted at individuals over the age of 50.
As of December 31, 1996, the Community Club had over 400 members who accounted
for total deposits of $17.0 million, or 36% of the Bank's total deposits,
while as of December 31, 1997, the Community Club had over 1,000 members who
accounted for total deposits of $36.4 million, or 48% of the Bank's total
deposits.

Among other things, membership in the Community Club entitles the
customer to increased personal attention and service by Bank staff and a 1/4%
premium on new certificate of deposit accounts with a minimum $1,000 balance
and one year maturity. The Bank also hosts local community events,

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educational seminars and travel programs which have been well received by the
Community Club members. Management believes that the success of the Community
Club and the Bank's continued efforts to expand the benefits of the program
will foster an increase in the number of Community Club members and deposit
accounts.

Business Financial Services. The Bank's business marketing efforts are
directed by senior management, including Messrs. Ross, Cuttle and Wolber, with
Mr. Wolber assigned as sales manager, whose duties include administering and
coordinating the business development efforts of the Bank.

Each Bank officer, in addition to each branch manager, is responsible
for creating new business opportunities for the Bank. The targeted list of
new business customers represents a mix of industrial, manufacturing,
professional and retail clients with an emphasis on businesses with annual
sales of $10 million or less.

The Bank has developed an aggressive telemarketing program for new
business. Businesses are identified through listings provided by the various
Chambers of Commerce, local phone directories and other sources targeted to
the communities the Bank serves. Initial sales calls are introductory in
nature with follow-up calls made to determine whether a meeting can be
arranged with the targeted company to discuss the Bank's products and
services. The Bank believes this strategy has been and will continue to be
successful in generating new business for the Bank.

In addition to its telemarketing program, the Bank's officers maintain
contact with local attorneys, accountants and other representatives in the
local community that may be in a position to refer business to the Bank. The
Bank also encourages and supports its officers and employees to join and
participate in various community organizations and events.

Consumer Financial Services. The Bank originates residential real
estate loans primarily through its retail branch facilities. Branch managers
and mortgage loan originators develop new residential mortgage applications
from several sources including real estate brokers, insurance agents,
accountants, attorneys, existing residential mortgage customers and other
customers of the Bank. An extensive telemarketing effort generates potential
customers as a result of these contacts. Additionally, the Bank has developed
targeted real estate newsletters that are mailed to an existing data base
composed of those referral sources. The Bank also maintains an active role in
several local real estate boards offering product training to members.

The Bank, as a result of its secondary market operations, is able to
offer a variety of loan products that serve the needs of first time home
buyers by providing five percent down payment loans and loans with no points.
Customers desiring to construct new homes are able to obtain financing as a
result of the Bank's construction loan program that is offered in addition to
the permanent loan. Non-conforming loans, which are larger residential loans,
are also provided through the Bank's secondary marketing efforts. The Bank
also provides loans that it holds in its own portfolio on those transactions
that evidence excellent credit quality and income but are unable to be sold
in the secondary market for other reasons.

The Bank originates indirect consumer loans primarily from its main
office in Dearborn, Michigan. A consumer loan officer purchases loans from a
select list of automobile dealers located in the Metropolitan Detroit
Area through an extensive direct calling program. The Bank intends to target
additional automobile dealers in its market area in an effort to broaden and
diversify its indirect consumer loan portfolio.

Management believes that cross-selling of the Bank's products and
services to its existing customers is vital to expanding account
relationships, generating additional sales opportunities and increasing fee
income.

Loan Policy

As a routine part of the Bank's business, the Bank makes loans to
individuals and businesses located within the Bank's market area. The loan
policy of the Bank states that the function of the lending operation is
twofold: to provide a means for the investment of funds at a profitable rate
of return with an acceptable degree of risk, and to meet the credit needs of
the responsible businesses and individuals

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who are customers of the Bank. However, the Board of Directors of the Bank
recognizes that in the normal business of lending, some losses on loans will
be inevitable and should be considered a part of the normal cost of doing
business. Under the loan policy, only the President, Executive Vice President
and Chief Lending Officer currently have lending authority.

The Bank's loan policy anticipates that priorities in extending loans
will change from time to time as interest rates, market conditions and
competitive factors change. The policy sets forth guidelines on a
nondiscriminatory basis for lending in accordance with applicable laws and
regulations. The policy describes various criteria in granting loans,
including the ability to pay; the character of the customer; evidence of
financial responsibility; purpose of the loan; knowledge of collateral and
its value; terms of repayment; source of repayment; payment history; and
economic conditions.

The loan policy specifies lending limits for certain officers up to a
maximum of $50,000 for unsecured loans and $100,000 for secured loans, with
loans from $100,000 to $250,000 requiring approval by a loan committee.
Larger loans up to the legal maximum authorized by law requires the approval
of the Board of Directors of the Bank.

The loan policy also limits the amount of funds that may be loaned
against specified types of collateral including: listed securities -- 70%
loan to value; U.S. Government securities -- 90% loan to value; and insured
bank deposits -- 100% loan to value. As to loans secured principally by real
estate, the policy requires appraisal of the property offered as collateral
by licensed independent appraisers. The loan policy also provides general
guidelines as to collateral, provides for environmental reviews, contains
specific limitations with respect to loans to employees, executive officers
and directors, provides for problem loan identification, establishes a policy
for the maintenance of a loan loss reserve, provides for loan reviews and
sets forth policies for mortgage lending and other matters relating to the
Bank's lending business.

Lending Practices

Commercial Loans. The Bank's commercial lending group originates
commercial loans primarily in the western Wayne County area of southeastern
Michigan. Commercial loans are originated by the officer group with the
assistance of the President and the Executive Vice President, who have over
55 years of combined commercial lending experience. Loans are originated for
general business purposes, including working capital, accounts receivable
financing, machinery and equipment acquisition, and commercial real estate
financing including new construction and land development.

Working capital loans are often structured as a line of credit and are
reviewed periodically in connection with the borrower's year end financial
reporting. These loans generally are secured by all of the assets of the
borrower, a personal guaranty of the owners and have an interest rate plus a
margin tied to the national prime rate. Loans for machinery and equipment
purposes typically have a maturity of five to seven years and are fully
amortizing. Commercial real estate loans are usually written with a five year
maturity and are amortized over a fifteen year period. Commercial real estate
loans may have an interest rate that is fixed to maturity or float with a
margin over the prime rate or a U.S. Treasury index.

The Bank evaluates all aspects of a commercial loan transaction in
order to minimize credit and interest rate risk. Underwriting includes an
assessment of management, products, markets, cash flow, capital, income and
collateral. The analysis includes a review of historical and projected
financial results. Appraisals are obtained by licensed independent appraisers
who are well known to the Bank on transactions involving real estate and, in
some cases, equipment.

Commercial real estate lending involves more risk than residential
lending, because loan balances are greater and repayment is dependent upon
the borrower's operation. The Bank attempts to minimize risk associated with
these transactions by limiting its exposure to existing well-known customers
and new customers with an established profitable history. Risk is further
reduced by limiting the concentration of credit to any one borrower as well
as the type of commercial real estate financed.

424B1 25th Page of 62 TOC 1st Previous Next ↓Bottom Just 25th
Single-Family Residential Real Estate Loans. The Bank originates
residential real estate loans in its market area according to secondary
market underwriting standards. These loans provide borrowers with a fixed
interest rate with terms up to thirty years. Loans are sold on a servicing
released basis in the secondary market with all interest rate risk and
credit risk passed to the purchaser. The Bank from time to time may elect
to underwrite certain residential real estate loans to be held in its own
loan portfolio. These loans are generally underwritten with the same
standards that apply to the secondary market. The majority of these loans
have an interest rate that is indexed to the one-year treasury rate and
adjust annually.

Consumer Loans. The Bank originates consumer loans for a wide variety
of personal financial requirements. Consumer loans include home equity lines
of credit, new and used automobiles, boat loans and overdraft protection for
checking account customers. The Bank also purchases retail installment loans
from a select list of automobile dealerships located in the Bank's primary
market.

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

Allowance for Loan Losses. An allowance for loan losses is maintained
at a level that management of the Bank considers adequate to provide for
potential losses in the loan portfolio. Allowances for loan losses are based
upon the Bank's experience and estimates of the net realizable value of
collateral in each loan portfolio. The Board of Directors and senior
management review the allowance quarterly. The Bank's evaluation takes into
consideration experience, the level of classified assets, non-performing
loans, the current level of the allowance as it relates to the total loan
portfolio, projected chargeoffs, current economic conditions, recent
regulatory examinations and other factors.

Employees

As of March 2, 1998, the Bank had 31 employees, including 8 officers
and 23 customer service, operations and other support persons. Management
believes that the Bank's relations with its employees are excellent.

Competition

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international banking services. In addition, most of these entities have
greater capital resources than the Bank, which, among other things, may allow
them to price their services at levels more favorable to the customer and to
provide larger credit facilities than could the Bank. Additionally, recently
effective legislation regarding interstate branching and banking may increase
competition in the future from out-of-state banks.

Properties

The main office of the Company and the Bank is located in a single
story building containing 8,400 square feet at 22290 Michigan Avenue,
Dearborn, Michigan which is owned by the Company and leased to the Bank.

On December 20, 1995, the Bank opened a branch office located in a
single story commercial/retail office building at 24935 W. Warren Avenue,
Dearborn Heights, Michigan which is also owned by the Company. Approximately
79% of the 3,240 square foot building is leased to the Bank and the remaining
space is leased to a non-affiliated tenant.

On August 11, 1997, the Bank opened a branch office located at 44623
Five Mile, Plymouth Township, Michigan in a leased 1,595 square foot building
in a retail shopping center anchored by a regional grocery store.

424B1 27th Page of 62 TOC 1st Previous Next ↓Bottom Just 27th
MANAGEMENT

The following table sets forth certain information about directors and
executive officers of the Company and the Bank:

[Enlarge/Download Table]

Year in which
term of office
Position with as Director Position with
Name the Company will expire the Bank
---- ------------------- ------------- -------------

John E. Demmer ...................................... Chairman of the Board 1998 Chairman of the Board
and Chief Executive
Officer
Richard Nordstrom ................................... Vice Chairman and 1998 Director
Director
Michael J. Ross ..................................... President and Director 2000 President, Chief Executive
Officer and Director
Jeffrey L. Karafa ................................... Vice President and -- Vice President and Cashier
Treasurer
Donald G. Karcher ................................... Vice President and 1998 Director
Director
Wilber M. Brucker, Jr. .............................. Secretary and 1999 Director
Director
Margaret I. Campbell ................................ Director 1998 Director
Timothy J. Cuttle ................................... -- -- Executive Vice President
Michael V. Dorian, Jr. .............................. Director 1998 Director
David Himick ........................................ Director 2000 Director
Bradley F. Keller ................................... Director 1999 Director
Steven M. Kirkpatrick ............................... Director 1999 Director
William E. Kreger ................................... Director 2000 Director
Jeffrey G. Longstreth ............................... Director 2000 Director
Robert C. Schwyn .................................... Director 1998 Director
Ronnie J. Story ..................................... Director 1999 Director
Jeffrey J. Wolber ................................... -- -- Vice President

The members of the Board of Directors are divided into three classes,
each class to be as nearly equal in number as possible, with each class to
serve a three-year term. The entire Board of Directors of the Bank is elected
annually by its shareholder, the Company. Officers of the Company and the
Bank are elected annually by their respective Boards of Directors and perform
such duties as are prescribed in the bylaws or by the Board of Directors.

The principal occupation and other information for each director and
executive officer of the Company and the Bank is set forth below:

John E. Demmer, age 74, has served as Chairman of the Board and Chief
Executive Officer of the Company and Chairman of the Board of the Bank since
1992. Mr. Demmer has been a Ford Motor Company dealer since 1957. He became a
director of Dearborn Bank and Trust Company in 1981 and was made Chairman of
the Board in 1985. In 1983, he became a director of Alliance Financial
Corporation, the bank holding company that owned Dearborn Bank and Trust
Company. He remained in both capacities until the merger with Comerica
Incorporated ("Comerica") in December, 1989. Mr. Demmer is Chairman of the
Board and Chief Executive Officer of Jack Demmer Ford, Inc. and Jack Demmer
Leasing, located in Wayne, Michigan.

Richard Nordstrom, age 71, has served as Vice Chairman and a director
of the Company since 1998. From 1992 to 1997, Mr. Nordstrom served as
President and a director of the Company. Mr. Nordstrom was Chairman of
Nordstrom Samson Associates, a Dearborn architectural and engineering firm
which he co-founded in 1960 until 1996 when he retired. He also served on the
Board of Directors of Dearborn Bank and Trust Company and Alliance Financial
Corporation from 1987 until its merger with Comerica.

424B1 28th Page of 62 TOC 1st Previous Next ↓Bottom Just 28th
Michael J. Ross, age 47, has served as a director of the Company since
1994, President of the Company since January 1998 and as a director,
President and Chief Executive Officer of the Bank since 1993. Mr. Ross has
been in banking since 1972 when he joined Manufacturers National Bank in
Detroit (now part of Comerica Bank) where he gained experience in lending,
operations and administrative planning. He was promoted to Vice President in
1984. In 1987, Mr. Ross became President, Republic Bank -- Flint; and in
1991, President of Republic Bank -- South East. In 1992 he resigned to open
Mike Ross and Associates, Inc., a bank consulting firm that served smaller
and mid-size independent banks in Michigan. Mr. Ross is a member of the
Goodwill Industries Foundation, University of Michigan- Dearborn Advisory
Council, Henry Ford Community College Foundation, Dearborn Goodfellows and
Dearborn Chamber of Commerce.

Jeffrey L. Karafa, age 33, has served as Vice President and Cashier of
the Bank since 1996 and as a Vice President and Treasurer of the Company
since January 1998. From 1994 to 1996, he was Assistant Vice President of the
Bank, Mr. Karafa joined Michigan National Bank in 1983 and served as a Second
Vice President from 1992 to 1994.

Donald G. Karcher, age 68, has served as a Vice President and director of
the Company since 1992. Mr. Karcher is Chairman of Karcher Agency, Inc., a
family insurance business, which was established in Dearborn in 1934. He was a
director of Dearborn Bank and Trust Company from 1986 to 1989. Mr. Karcher has
served as President of the Dearborn Chamber of Commerce and the Dearborn Rotary
Club.

Wilber M. Brucker, Jr., age 72, has served as a director of the Company
since 1992. Mr. Brucker is licensed to practice law in the State of Michigan.
In 1986, he was elected President and Chief Executive Officer of Alliance
Financial Corporation. He served on the Board of Alliance Financial
Corporation from its inception in 1983 until its merger with Comerica in
December, 1989. Following the Comerica merger, Mr. Brucker joined the law
firm of Riley and Roumell, as of counsel, where he served until 1995.

Margaret I. Campbell, age 58, has served as a director of the Company
since 1992. Mrs. Campbell was a member of the Board of Alliance Financial
Corporation and Dearborn Bank and Trust Company until the merger with
Comerica. Mrs. Campbell is President of Kean Manufacturing Corporation, a
family owned automotive supply business. She is a past president of the
Dearborn Chamber of Commerce and a member of the Board of Oakwood Hospital
and the Citizens Advisory Board of the University of Michigan-Dearborn.

Timothy J. Cuttle, age 52, has served as Executive Vice President of
the Bank since 1996. Mr. Cuttle has been in banking since 1970 when he joined
the commercial lending division of Michigan National Bank. In 1975, Mr.
Cuttle joined First Macomb Bank, which was merged into Huntington Bankshares
in 1989, where he served as Senior Vice President of the bank and President
and Chief Operating Officer of First Macomb Leasing Corporation and First
Macomb Mortgage Company, Inc.

Michael V. Dorian, Jr., age 38, who has served as a director of the
Company since 1994, is a Vice President of Mike Dorian Ford, an automobile
dealer.

David Himick, age 72, who has served as a director of the Company since
1995, is a financial consultant. He served as a director of Heritage
Bankcorp, Inc. ("Heritage") from 1982 to 1993 prior to its merger with
Standard Federal Bank in 1994. In 1994, he served as a director of Standard
Federal Bank. Mr. Himick is also a director of Bio-Plexus,Inc. which
manufactures and sells retractable hypodermic needles.

Bradley F. Keller, age 56, has served as a director of the Company since
1992. Mr. Keller is President of Braden Associates, Inc., a business consulting
company, and prior thereto served as President of MultiGard Security Systems.
Mr. Keller has served as President of the Detroit College of Business
Foundation, the Burglar and Fire Alarm Association of Michigan, the Dearborn
Rotary Foundation and the Dearborn Rotary Club.

Steven M. Kirkpatrick, age 50, has served as a director of the Company
since 1994. He is President and Chief Executive Officer of The Bancorp Group,
Inc., a leasing company, and President and Chief Executive Officer of Capital
Mortgage Funding, L.L.C, a residential mortgage origination company.

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William E. Kreger, age 82, has served as a director of the Company
since 1994. He is a retired real estate investor. Mr. Kreger served as a
director of Heritage from 1965 to 1993 prior to its merger with Standard
Federal Bank in 1994. He was Chairman of the Board of Heritage from 1983 to
1989.

Jeffrey G. Longstreth, age 55, has served as a director of the Company
since 1992. He is President of Prudential Christie Real Estate, Inc., a real
estate company in Dearborn, Michigan. Mr. Longstreth was a director of the
Dearborn Board of Realtors for seven years, a past President of such Board
and previously selected as Realtor of the Year. He also served as a director
on the Metro Multi-List for four years.

Robert C. Schwyn, age 59, has served as a director of the Company since
1994. He is a physician.

Ronnie J. Story, age 51, has served as a director of the Company since
1994. He is President and Chief Executive Officer of Story Development
Corporation, a real estate building company.

Jeffery J. Wolber, age 42, has served as a Vice President of the Bank
since 1994. From 1990 to 1993, he served as a banking officer and branch
manager of NBD Bank. From 1985 to 1990, Mr. Wolber served as Senior Vice
President and operations officer of Guaranty Federal Savings Bank, which
merged into NBD Bank in 1990. He was also Branch Administrator for Michigan
National Bank from 1975 to 1984.

Except as otherwise indicated above, each director and executive
officer has had the same occupation during the past five years.

Executive Compensation

The Chairman of the Board and Chief Executive Officer of the Company,
John E. Demmer, received no compensation in 1997. The following table sets
forth information with respect to the Chief Executive Officer of the Bank.
There were no executive officers of the Company or the Bank whose total
compensation exceeded $100,000 during 1997 other than the Chief Executive
Officer of the Bank.

Summary Compensation Table

[Download Table]

Annual Compensation
-----------------------------------
Options
Name and Principal Position Year Salary Bonus Granted
--------------------------- ---- ------ ----- -------

Michael J. Ross 1997 $122,916 $25,000 22,000
President and Chief Executive Officer, 1996 106,734 17,000 --
Community Bank of Dearborn 1995 101,529 12,000 --

On January 21, 1997 Mr. Ross was granted an option for 22,000 shares
(49% of the total options granted during 1997) under the Stock Option Plan at
an option price of $9.09 per share. The option expires on January 21, 2007.

Directors Fees

The Company does not pay annual directors fees. However, the Bank pays
directors fees in the amount of $100 for each board meeting attended and $50
for each committee meeting attended. Mr. Ross does not receive directors
fees.

Stock Option Plan

In 1994 the Board of Directors of the Company adopted, and the
shareholders approved a Stock Option Plan (the "Plan"). The Board of
Directors believes that its ability to grant options is of assistance in
attracting and retaining highly qualified associates to the benefit of the
Company and its shareholders. Under the terms of the Plan, options to
purchase an aggregate of 165,000 shares of Common Stock of the Company may be
granted. At the Annual Meeting of Shareholders of the Company to be held on
May 19, 1998, shareholders are being requested to approve an amendment to the
Plan to make an additional 85,000 shares of Common Stock available for
issuance under the Plan.

424B1 30th Page of 62 TOC 1st Previous Next ↓Bottom Just 30th
Summary of Plan

The following is a summary of the principal provision of the Plan:

Administration. The Plan is administered by the Stock Option Plan
Committee of the Board of Directors of the Company comprised of directors who
are not eligible to participate in the Plan. The Committee makes
determinations with respect to which officers and other key employees of the
Company or a subsidiary who shall participate in the Plan and the extent of
their participation.

Options grated under the Plan may be either incentive stock options or
non-qualified stock options. The Committee may not grant an employee
incentive stock options which in the aggregate are first exercisable during
any one calendar year with respect to Common Stock the aggregate fair market
value of which (determined as of the time of grant) exceeds $100,000.

Option Agreement. Each option granted under the Plan is evidenced by an
agreement in such form as the Committee shall from time to time approve,
which agreement must comply with and be subject to certain conditions set
forth in the Plan.

Option Price. The option price shall not be less than the fair market
value of the shares of Common Stock on the date the option is granted. Fair
market value is defined as the price established and determined by the Board
of Directors, provided, however, if the Common Stock is traded in the
over-the-counter market, fair market value shall mean the closing price of
the Common Stock, in such market rounded, if necessary, to the next full one
cent, or if there is no such price published, then on the most recent
preceding date on which such prices are published.

Duration and Exercise of Options. The period during which each option
may be exercised is determined by the Committee, except that the maximum
duration may not exceed ten years from the date of grant. The Committee
determines at the time of grant whether the option will be exercisable in
full or in cumulative installments.

Generally under the Plan, an option may be exercised by an optionee
only while such optionee is in the employ of the Company or a subsidiary. In
the event that the employment of an optionee to whom an option has been
granted under the Plan is terminated (except as set forth below), such option
may be exercised, to the extent that the option was exercisable on the date
of termination of employment, only until the earlier of three (3) months
after such termination or the original expiration date of the option;
provided, however, that if termination of employment results from death or
total and permanent disability, such three (3) month period shall be extended
to twelve (12) months; and provided, further, that any optionee whose
employment shall be terminated either (i) for cause or (ii) voluntarily by
the optionee and without the consent of the Company shall, to the extent not
theretofore exercised, forthwith terminate. In the event of a change in
control (as defined in the Plan) unless the Committee determines otherwise,
all outstanding options become immediately exercisable in full.

Payment of Option Price. The option price shall be paid in cash or at
the discretion of the Committee through (i) the delivery of previously owned
shares of the Company's Common Stock or (ii) by a combination of cash and
Common Stock.

Adjustments. The Committee shall make appropriate adjustments in the
number of shares of Common Stock for which options may be granted or which
may be issued under the Plan and the price per share of each option if there
is any change in the Common Stock as a result of a stock dividend, stock
split, recapitalization or otherwise.

Termination of Plan and Amendments. An option may not be granted
pursuant to the Plan after May 16, 2004. The Board of Directors may from time
to time terminate the Plan or amend the Plan subject to shareholder approval
to the extent necessary to satisfy the requirements of Section 16 under the
Exchange Act, or any successor rule.

Federal Income Tax Consequences. The Company is advised by counsel that
the grant of a non-qualified option or incentive stock option has no tax
consequences for the optionee or the Company. Upon the exercise of a
non-qualified option, the optionee is deemed to realize taxable income to the
extent that the fair market value of the shares of Common Stock exceeds the
option price. The Company

424B1 31st Page of 62 TOC 1st Previous Next ↓Bottom Just 31st
is entitled to a tax deduction for such amounts at the date of exercise. If
any stock received upon the exercise of a non-qualified option is later sold,
any excess of the sale price over the fair market value of the stock at the
date of exercise is taxable to the optionee.

The exercise of an incentive stock option will not result in income to
the optionee if the optionee (a) does not dispose of the shares within two
years after the date of grant or one year after exercise and (b) is an
employee from the date of the grant until three months before the exercise.
If these requirements are met, the basis of the shares upon later disposition
will be the option price. Any gain will be taxed to the optionee as a
long-term capital gain, and the Company will not be entitled to a deduction.
The excess of the market value on the exercise date over the option price is
an item of tax preference, potentially subject to the alternative minimum
tax. If the optionee disposes of the shares prior to the expiration of either
of the holding periods in (a) above, the optionee will generally recognize
compensation income, and the Company will be entitled to a deduction equal to
the fair market value of the shares on the exercise date minus the option
price. Any gain in excess of the compensation income portion will be treated
as a long-term or short-term capital gain.

As of March 2, 1998, options were outstanding under the Plan to
purchase an aggregate of 77,600 shares of Common Stock (45,100 shares at an
exercise price of $9.09 and 32,500 shares at an exercise price of $13.00 per
share), and 87,400 shares are available for grant of options under the Plan.

RELATED PARTY TRANSACTIONS

Certain directors and officers of the Company, their associates and
members of their immediate families were customers of, and had transactions
including loans and commitments to lend with, the Bank in the ordinary course
of business during 1997. All such loans and commitments were made by the Bank
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
and did not involve more than the normal risk of collectibility or present
other unfavorable features. Similar transactions may be expected to take
place in the ordinary course of business in the future.

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SECURITY OWNERSHIP

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 20, 1998 prior to the
offering and as adjusted to reflect the sale of 1,000,000 shares of Common
Stock by the Company in the offering, (i) by directors and executive officers
of the Company, (ii) by each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, and
(iii) by all directors and executive officers of the Company as a group:

[Enlarge/Download Table]

Prior to Offering After Offering
----------------------------- ----------------------------
Number of Shares of Number of
Shares of Common Stock Shares of
Common Stock Percentage Being Common Stock Percentage
Owned of Common Purchased Owned of Common
Name Beneficially(1) Stock in the Offering(2) Beneficially(1) Stock
---- --------------- ---------- ---------------- --------------- ----------

Wilber M. Brucker, Jr. ... 10,209(3) * -- 10,209(3) *
Margaret I. Campbell ..... 13,175 1.26 10,500 23,175 1.03
Timothy J. Cuttle ........ --(4) * 8,000 8,000(4) *
John E. Demmer ........... 72,939(5) 6.98 25,000 97,939(5) 4.36
Michael V. Dorian, Jr. ... 15,499 1.48 5,000 20,499 *
David Himick ............. 65,679(6) 6.29 25,000 90,679(6) 4.04
Jeffrey L. Karafa ........ 9,012(4) * -- 9,012(4) *
Donald G. Karcher ........ 14,026 1.34 5,000 19,026 *
Bradley F. Keller ........ 38,308(7) 3.67 25,000 63,308(7) 2.82
Steven M. Kirkpatrick .... 43,340(8) 4.15 25,000 68,340(8) 3.04
William E. Kreger ........ 41,846(9) 4.00 25,000 66,846(9) 2.98
Jeffrey G. Longstreth .... 7,946 * 2,000 9,946 *
Richard Nordstrom ........ 32,143(10) 3.08 11,640 43,783(10) 1.95
Michael J. Ross .......... 24,640(4) 2.34 145 24,785(4) 1.10
Robert C. Schwyn ......... 12,399(11) 1.19 4,285 16,684(11) *
Ronnie J. Story .......... 53,608 5.13 25,000 78,608 3.50
Jeffrey J. Wolber ........ 9,127(4) * 300 9,427(4) *
All directors and
executive officers as a
group (12)
(17 persons) ........... 463,896 42.77 196,370 660,266 28.90
<FN>
----------------
* Less than one percent

(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as
to which a person has or shares voting power and/or investment power.

(2) Based on non-binding commitments received from these individuals.

(3) Includes 775 shares owned by Mr. Brucker's wife.

(4) The number of shares shown in the table includes shares issuable upon
the exercise of stock options by the following executive officers:
Jeffrey L. Karafa -- 8,800 shares; Michael J. Ross -- 22,000 shares; and
Jeffrey J. Wolber -- 8,800 shares. The table excludes the
following stock options granted by the Company on January 20, 1998:
Timothy J. Cuttle -- 7,500 shares; Jeffrey L. Karafa -- 4,000 shares;
Michael J. Ross -- 10,000 shares; and Jeffrey J. Wolber -- 4,000 shares.

(5) Includes 24,024 shares held by Mr. Demmer's wife as Trustee of a Trust.

(6) Includes 62,580 shares held in an individual retirement account for the
benefit of Mr. Himick.

(7) Includes 2,200 shares owned by Mr. Keller's wife.

(8) These shares are owned of record by The Bancorp Group, Inc., of which
company Mr. Kirkpatrick serves as President and Chief Executive Officer.

(9) Includes 3,099 shares owned by Mr. Kreger's wife.

(10) Includes 8,250 shares held for Mr. Nordstrom's benefit in a profit
sharing trust.

(11) These shares are held for the benefit of Mr. Schwyn in a defined benefit
plan trust.

(12) Includes 39,600 shares issuable upon the exercise of stock options.

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SUPERVISION AND REGULATION

The Company is a registered bank holding company and is subject to the
supervision of the Federal Reserve. The Company is required to file with the
Federal Reserve annual reports and such other information as the Federal
Reserve may require under the Act. The Company and the Bank are each subject
to examination by the Federal Reserve.

The Act requires every bank holding company to obtain prior approval of
the Federal Reserve before it may merge with or consolidate into another bank
holding company, acquire substantially all assets of any bank, or acquire
ownership or control of any voting shares of any bank, if after such
acquisition, it would own or control, directly or indirectly, more than 5% of
the voting shares of such bank holding company or bank.

The Act also prohibits a bank holding company, with certain exceptions,
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company that is not a bank, and from engaging in any
business other than that of banking, managing and controlling banks or
furnishing services to banks and their subsidiaries. Holding companies may
engage in, and may own shares of companies engaged in, certain businesses
found by the Federal Reserve to be closely related to banking or the
management or control of banks. Under current regulations of the Federal
Reserve, a holding company and its non-bank subsidiaries are permitted to
engage in investment management, sales and consumer finance, equipment
leasing, data processing, discount securities brokerage, mortgage banking and
brokerage, and other activities. These activities are subject to certain
limitations imposed by the regulations.

Federal law prohibits acquisition of "control" of a bank or bank
holding company without prior notice to certain federal bank regulators.
"Control" may include the acquisition of as little as 5% of outstanding
capital stock.

Transactions between the Company and the Bank will be subject to
various restrictions imposed by state and federal law. Such transactions
include loans and other extensions of credit, purchases of securities, and
payment of fees and other distributions. Federal law places restrictions on
the amount and nature of loans to executive officers, directors and
controlling persons of banks insured by the Federal Deposit Insurance
Corporation and holding companies controlling such banks.

The Company is subject to other regulations under the Act, including
those described in "Risk Factors", and the Company and the Bank are subject
to numerous other federal and state statutes and regulations which govern the
conduct of enterprises in the financial services industry.

The Bank which is a state chartered bank is subject to regulation and
examination by the Michigan Financial Institutions Bureau. The Bank also is
subject to certain provisions of the Federal Deposit Insurance Act and
regulations issued under that Act. The regulations affect many activities of
the Bank, including the permissible types and amounts of loans, investments,
capital adequacy, branching, interest rates payable on deposits, required
reserves, and the safety and soundness of the Bank's practices. The
regulations are intended primarily for the protection of the Bank's
depositors and customers, and not the shareholders of the Bank or the
Company. The Bank is a non-member bank of the Federal Reserve System and is
regulated and examined by the Federal Deposit Insurance Corporation.

The Federal Reserve's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: (i) a
leverage capital requirement expressed as a percentage of total assets, (ii)
a risk-based requirement expressed as a percentage of total risk-weighted
assets, and (iii) a Tier 1 leverage requirement expressed as a percentage of
total assets. The leverage capital requirement consists of a minimum ratio of
total capital to total assets of 6%, with an expressed expectation that
banking organizations generally should operate above such minimum level. The
risk-based requirement consists of a minimum ratio of total capital to total
risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital
(which consists principally of shareholders' equity). The Tier 1 leverage
requirement consists of a minimum ratio of Tier 1 capital to total assets of
3% for the most highly rated companies, with minimum requirements of 4% to 5%
for all others.

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The Federal Reserve Board's regulations provide that the foregoing
capital requirements will generally be applied on a bank-only (rather than a
consolidated) basis in the case of a bank holding company with less than $150
million in total consolidated assets. Refer to Note K of the Notes to
Consolidated Financial Statements for further information.

There has been significant legislative and regulatory change relating
to the financial services industry in recent years. Non-bank financial
institutions, such as securities brokerage firms, insurance companies and
money market funds, have been permitted to engage in activities that directly
compete with traditional bank business. The services that banks are permitted
to provide and the types of accounts banks may offer to depositors have been
expanded, and restrictions on the rates of interest that may be paid by
financial institutions on deposits have been reduced. These trends probably
will continue.

The Bank is also subject to limitations on the dividends it may pay to
the Company described in "Risk Factors -- No Assurance of Cash Dividends".

DESCRIPTION OF COMMON STOCK

The Company's authorized capital stock consists of 3,000,000 shares of
Common Stock. At the Annual Meeting of Shareholders of the Company to be held
on May 19, 1998, shareholders are being requested to approve an amendment to
the Articles of Incorporation of the Company to increase the number of
authorized shares of Common Stock to 5,000,000 shares. As of the date of this
Prospectus, there are 1,044,924 shares of Common Stock issued and outstanding.

Michigan law allows the Company's Board of Directors to issue
additional shares of stock up to the total amount of Common Stock authorized
without obtaining the prior approval of the shareholders.

Dividend Rights

The holders of the Common Stock are entitled to cash dividends when, as
and if declared by the Company's Board of Directors out of funds legally
available therefor. Under Michigan law, cash dividends may be legally
declared or paid only if after the distribution the corporation can pay its
debts as they come due in the usual course of business and the corporation's
total assets equal or exceed the sum of its liabilities.

Funds for the payment of cash dividends by the Company are expected to
be obtained primarily from dividends of the Bank. There can be no assurance
that the Company will have funds available for cash dividends, or that if
funds are available, that dividends will be declared by the Company's Board
of Directors. The Company does not expect to declare cash dividends at any
time in the foreseeable future.

Voting Rights

All voting rights are vested in the holders of shares of Common Stock.
Each share of Common Stock entitles the holder thereof to one vote on all
matters, including the election of directors. Shareholders of the Company do
not have cumulative voting rights.

Preemptive Rights

Holders of Common Stock do not have preemptive rights.

Liquidation Rights

Holders of Common Stock are entitled to share on a pro rata basis in
the net assets of the Company which remain after satisfaction of all
liabilities.

Transfer Agent

The Fifth Third Bank serves as the transfer agent of the Company's Common
Stock.

Certain Charter Provisions

The following provisions of the Company's Articles of Incorporation may
delay, defer, prevent, or make it more difficult for a person to acquire the
Company or to change control of the Company's Board of Directors, thereby
reducing the Company's vulnerability to an unsolicited takeover attempt.

424B1 35th Page of 62 TOC 1st Previous Next ↓Bottom Just 35th
Classification of the Board and Filling Board Vacancies. The Articles
of Incorporation divide the Board into three classes with staggered terms;
each director is elected for a three (3) year term. Approximately one-third
of the Board positions are filled by a shareholder vote each year. Any
vacancies in the Board, or newly created director positions, may be filled
only by a 66-2/3% vote of the directors in office, and a majority of the
Continuing Directors as hereinafter defined.

Board Evaluation of Certain Offers and Proposed Business Combinations.
The Board of Directors is required by the Articles of Incorporation to
consider a number of factors before it approves any offer to acquire shares
of Common Stock of the Company, any offer to merge or consolidate the Company
with any other entity or to sell all or substantially all assets of the
Company. These factors include the adequacy and fairness of the consideration
to be received, the potential social and economic impact of the transaction
on the Company, its employees, customers and vendors and the communities in
which the Company and its subsidiaries operate.

Certain Business Combinations, as defined in the Company's Articles of
Incorporation, may require a super majority approval by the shareholders.
These Business Combinations include transactions such as a merger or
consolidation of the Company or a subsidiary, a sale, lease, exchange,
mortgage, transfer or other disposition of assets of the Company in excess of
10% of its net worth, the issuance or transfer of equity securities of the
Company or a subsidiary having an aggregate fair market value in excess of 5%
of the market value of the outstanding shares of the Company, the adoption of
any plan of liquidation or dissolution of the Company, or any
reclassification of securities or recapitalization which increases the
proportionate share of any class of outstanding securities.

Super majority approval of the shareholders is required for any of
these Business Combinations in which an "Interested Shareholder" is involved.
An Interested Shareholder includes a person who owns, and in some cases a
person who owned, directly or indirectly, 10% or more of the voting power of
the outstanding shares of Common Stock. If a Business Combination is subject
to these provisions, it would require the approval of shareholders owning at
least 66-2/3% of the voting power of the outstanding shares of Common Stock.
In addition, shareholders holding not less than two-thirds of the outstanding
shares not owned directly or indirectly by the Interested Shareholder must
approve the Business Combination.

A super majority vote is not required if the Business Combination is
approved by a majority of Directors who are unaffiliated with the Interested
Shareholder and were members of the Board before the Interested Shareholder
owned 10% of the Company's shares. Such a Director is defined in the Articles
as a "Continuing Director."

A super majority vote also will not be required when the aggregate
amount of cash and the fair market value of consideration other than cash to
be received per share by the shareholders exceeds a stated amount. This
amount is the higher of the fair market value per share or the highest price
per share paid by the Interested Shareholder. There are certain additional
requirements contained in the Articles of Incorporation that must be met to
avoid the super majority vote requirement.

It is the duty of a majority of the Continuing Directors to determine
the facts necessary for evaluating compliance with the Articles of
Incorporation. These facts include whether a person is an "Interested
Shareholder", the number of shares owned by each shareholder, the proposed
purchase price of shares, and the corporation's net worth. The good faith
determination of the Continuing Directors on such matters shall be conclusive
and binding for all purposes.

The Articles of Incorporation expressly provide that nothing contained
in the provisions dealing with Business Combinations shall be construed to
relieve any member of the Board of Directors or any Interested Shareholder
from any fiduciary duty imposed by law upon them. In addition, the Articles
expressly provide that the Company shall not be governed by the provisions of
the MBCA dealing with regulation of Business Combinations. The Articles of
Incorporation may be amended to expressly adopt such provisions only by a
majority vote of the Continuing Directors of the Company.

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Shareholder Equity Provisions of the Michigan Business Corporation Act.
In addition to the foregoing provisions contained in the Articles of
Incorporation, the MBCA conditions the acquisition of voting control of
certain Michigan business corporations on the approval by the majority of the
pre-existing disinterested shareholders. In general, these provisions deny
voting rights to those persons who make purchase offers or investors who
increase their holdings above any of the "Control Share" levels (described
below), unless they are granted voting rights by a majority vote of all
disinterested shareholders (shareholders excluding the bidders or owners of
Control Shares and the corporation's officers and employee-directors).
Control Shares are shares that, when added to shares already owned by that
person, give the person voting power in the election of directors over any
one of three thresholds: one-fifth, one-third and a majority. If the
shareholders do not elect to grant voting rights to Control Shares, under
certain circumstances, the Control Shares may become subject to redemption by
the corporation. The Board of Directors may amend the Bylaws of the Company
before a Control Share acquisition occurs to provide that these provisions do
not apply to the Company.

Indemnification of Directors and Officers

The Company's Articles of Incorporation provide that the Company shall
indemnify its directors, officers, and such other persons as the Board of
Directors may authorize, to the fullest extent permitted by law.

Federal Deposit Insurance Corporation regulations impose limitations on
indemnification payments which could restrict, in certain circumstances,
payments by the Company or the Bank to their respective directors or officers
otherwise permitted under the MBCA or the Michigan Banking Code,
respectively.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions discussed above or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.

Limitation of Director Liability

The MBCA permits corporations to limit the personal liability of their
directors in certain circumstances, and the Company's Articles of
Incorporation contain such a provision. A director of the Company shall not
be personally liable to the Company or its shareholders for money damages for
any action taken or any failure to take any action as a director, except
liability for any of the following: (i) the amount of a financial benefit
received by a director to which he or she is not entitled, (ii) the
intentional infliction of harm by the director on the Company or the
shareholders of the Company, (iii) a violation of Section 551 of the MBCA
(certain unlawful actions), or (iv) an intentional criminal act committed by
the director.

SHARES ELIGIBLE FOR FUTURE SALE

The shares of the Company's Common Stock sold in the offering have been
registered with the Commission under the Securities Act and may generally be
resold without registration under the Securities Act unless they were
acquired by directors, executive officers, or other affiliates of the Company
(collectively, "Affiliates"). Affiliates of the Company may generally only
sell shares of the Common Stock pursuant to Rule 144 under the Securities
Act.

In general, under Rule 144 as currently in effect, an affiliate (as
defined in Rule 144) of the Company may sell shares of Common Stock within
any three-month period in an amount limited to the greater of 1% of the
outstanding shares of the Company's Common Stock or the average weekly
trading volume in the Company's Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
manner-of-sale provisions, holding periods for restricted shares, notice
requirements, and the availability of current public information about the
Company.

The Company, and the directors and officers of the Company, have
agreed, or will agree, that (a) they will not issue, offer for sale, sell,
transfer, grant options to purchase or otherwise dispose of any

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shares of Common Stock without the prior written consent of the Underwriter
for a period of 150 days from the date of this Prospectus (the "Lock-Up"),
except that (i) the Company may issue shares upon the exercise of options
under the Company's Stock Option Plan and (ii) the directors and officers may
give Common Stock owned by them to others who have agreed in writing to be
bound by the same agreement. Approximately 660,266 shares of Common Stock are
subject to the Lock-Up. The balance of the outstanding shares of Common Stock
are subject to immediate resale under Rule 144, although certain of such
shares may be subject to manner of sale and volume restrictions.

Prior to the offering, there has been no public trading market for the
Common Stock, and no predictions can be made as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the
prevailing market price of the Common Stock after completion of the offering.
Nevertheless, sales of substantial amounts of Common Stock in the public
market could have an adverse effect on prevailing market prices.

UNDERWRITING

The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement, that it will purchase from the Company, on a firm
commitment basis, 1,200,000 shares of Common Stock. The Underwriting
Agreement provides that the obligations of the Underwriter thereunder are
subject to certain conditions and provides for the Company's payment of
certain expenses incurred in connection with the review of the underwriting
arrangements for the offering by the National Association of Securities
Dealers, Inc. (the "NASD"). The Underwriter is obligated to purchased all
1,200,000 of the shares of Common Stock offered hereby, excluding shares
covered by the over-allotment option granted to the Underwriter, if any are
purchased.

If the Underwriting Agreement is terminated, except in certain limited
cases, the Underwriting Agreement provides that the Company will reimburse
the Underwriter for all accountable out-of-pocket expenses and the
Underwriter's legal fees incurred by it in connection with the proposed
purchase and sale of the Common Stock, up to a maximum of $40,000. The
Company has advanced $10,000 to the Underwriter in connection with such
expense reimbursement. The Underwriting Agreement provides that in the event
the expenses to be reimbursed upon such termination total an amount less than
$40,000, the Underwriter shall pay such difference to the Company.

The Company and the Underwriter have agreed that the Underwriter will
purchase the 1,200,000 shares of Common Stock offered hereunder at a price to
the public of $14.00 per share less underwriting discounts of $.91 per share.
However, the Underwriter has agreed to limit the underwriting discounts to
4.0% of the public offering price ($.56 per share) for up to 202,571 shares
to be sold to officers, directors and certain employees of the Company and
the Bank. The Underwriter proposes to offer the Common Stock to selected
dealers who are members of the NASD at a price of $14.00 per share less a
concession not in excess of $.51 per share. The Underwriter may allow, and
such dealers may re-allow, concessions not in excess of $.10 per share to
certain other brokers and dealers. After the Common Stock is released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Underwriter.

The Company and the directors and officers of the Company have agreed
to be subject to certain lock-up restrictions as described under "Shares
Eligible for Future Sale."

The Underwriter has informed the Company that it does not intend to
make sales to any accounts over which the Underwriter exercises discretionary
authority.

The Company has granted the Underwriter an option, exercisable within
30 days after the date of the offering, to purchase up to an additional
180,000 shares of Common Stock from the Company to cover over-allotments, if
any, at the same price per share as is to be paid by the Underwriter for the
other shares offered hereby. The Underwriter may purchase such shares only to
cover over-allotments, if any, in connection with the offering.

The Underwriting Agreement contains indemnity provisions between the
Underwriter and the Company and the controlling persons thereof against
certain liabilities, including liabilities arising under the Securities Act.
The Company is generally obligated to indemnify the Underwriter and its
respective

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controlling persons in connection with losses or claims arising out of any
untrue statement of a material fact contained in this Prospectus or in
related documents filed with the Commission or with any state securities
administrator, or any omission of certain material facts from such documents.

There has been no public trading market for the Common Stock. The price
at which the shares are being offered to the public was determined by
negotiations between the Company and the Underwriter. This price is not based
upon earnings or past operations and should not be construed as indicative of
the present or anticipated future value of the Common Stock. Several factors
were considered in determining the offering price of the Common Stock, among
them the size of the offering, the desire that the security being offered be
attractive to individuals and the Underwriter's experience in dealing with
public offerings for financial institutions.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by the Company with the
Commission can be inspected and copied at public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at its Regional Offices located at Suite 1400, 500
West Madison Street, Chicago, Illinois 60661, and Suite 1300, Seven World
Trade Center, New York, New York 10048, and copies of such materials can be
obtained from the Public Reference Section of the Commission, at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates or accessed
electronically on the Commission's Web Site at http://www.sec.gov.

This Prospectus constitutes a part of a registration statement filed by
the Company with the Commission under the Securities Act. This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities
offered hereby. Any statements contained herein concerning the provisions of
any document are not necessarily complete, and in such instance reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed by the Company with the Commission, is
incorporated by reference in the Prospectus.

Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any document incorporated by reference in this Prospectus (other than
exhibits unless such exhibits are expressly incorporated by reference in such
documents). Requests should be directed to Jeffrey L. Karafa, Vice President
and Treasurer, Dearborn Bancorp, Inc., 22290 Michigan Avenue, Dearborn,
Michigan 48123-2247, telephone (313) 274-1000.

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LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for
the Company by Dickinson Wright PLLC, Detroit, Michigan. Honigman Miller
Schwartz and Cohn, Detroit, Michigan, is acting as counsel for the
Underwriter in connection with certain legal matters relating to the shares
of Common Stock offered hereby.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1997 and 1996 and for each of the three years in the period ended December
31, 1997 included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, and are included herein in reliance
upon the authority of said firm as experts in accounting and auditing.

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DEARBORN BANCORP, INC. AND SUBSIDIARY

Index to Consolidated Financial Statements

Page
----
Report of Independent Certified Public Accountants ................ F-2

Consolidated Balance Sheets as of December 31, 1997 and 1996 ...... F-3

Consolidated Statements of Operations for the Years ended
December 31, 1997, 1996 and 1995 ................................ F-4

Consolidated Statements of Stockholders' Equity for the Years ended
December 31, 1997, 1996 and 1995 ................................ F-5

Consolidated Statements of Cash Flows for the Years ended
December 31, 1997, 1996 and 1995 ................................ F-6

Notes to Consolidated Financial Statements ........................ F-7

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424B1 41st Page of 62 TOC 1st Previous Next ↓Bottom Just 41st
Report of Independent Certified Public Accountants

Board of Directors
Dearborn Bancorp, Inc.

We have audited the accompanying consolidated balance sheets of Dearborn
Bancorp, Inc. and subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997.
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 consolidated financial position
of Dearborn Bancorp, Inc. and subsidiary as of December 31, 1997 and 1996,
and the results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.

/s/ Grant Thornton LLP

Detroit, Michigan
January 28, 1998

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

[Download Table]

(In thousands, except share data) December 31,
--------------
1997 1996
---- ----

ASSETS
Cash and cash equivalents
Cash and due from banks ........................... $ 1,406 $ 2,126
Federal funds sold ................................ 254 5,300
------- -------
Total cash and cash equivalents ............... 1,660 7,426
Mortgage loans held for sale ........................ 347 303
Investment securities -- available for sale ......... 29,780 10,493
Loans
Loans ............................................. 52,139 36,263
Allowance for possible credit losses ................ (522) (366)
------- -------
Net loans ..................................... 51,617 35,897
Bank premises and equipment, net .................... 2,296 2,080
Accrued interest receivable ......................... 723 306
Other assets ........................................ 230 94
------- -------
Total assets .................................. $86,653 $56,599
======= =======
LIABILITIES
Deposits
Non-interest bearing deposits ..................... $ 8,587 $ 7,583
Interest bearing deposits ......................... 66,810 39,880
------- -------
Total deposits ................................ 75,397 47,463
Other liabilities
Federal funds purchased ........................... 1,500 --
Mortgage payable .................................. 537 554
Accrued interest payable .......................... 310 127
Other liabilities ................................. 157 265
------- -------
Total liabilities ............................. 77,901 48,409

STOCKHOLDERS' EQUITY
Common stock -- 3,000,000 shares authorized,
1,044,924 and 742,178 shares outstanding in 1997
and 1996, respectively .......................... 10,506 6,521
Common stock subscribed but unissued, 303,578
shares in 1996 .................................. -- 2,752
Accumulated deficit ............................... (1,689) (1,065)
Net unrealized gain (loss) on securities available
for sale ........................................ (65) (18)
------- -------
Total stockholders' equity .................... 8,752 8,190
------- -------
Total liabilities and stockholders' equity .... $86,653 $56,599
======= =======

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

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

[Enlarge/Download Table]

(In thousands, except share data) Years Ended December 31,
---------------------------
1997 1996 1995
---- ---- ----

Interest income
Interest on loans ................................. $ 3,981 $ 2,466 $ 1,369
Interest on investment securities -- available for
sale ............................................ 1,235 733 466
Interest on federal funds and deposits with banks . 188 115 188
---------- -------- --------
Total interest income ......................... 5,404 3,314 2,023
Interest expense
Interest on deposits .............................. 2,955 1,662 959
Interest on other liabilities ..................... 43 44 45
---------- -------- --------
Total interest expense ........................ 2,998 1,706 1,004
Net interest income ........................... 2,406 1,608 1,019
Provision for possible credit losses ................ 164 164 114
---------- -------- --------
Net interest income after provision for possible
credit losses ................................... 2,242 1,444 905
---------- -------- --------
Non-interest income
Service charges on deposit accounts ............... 124 92 38
Fees for other services to customers .............. 26 19 16
Gain on the sale of loans ......................... 144 130 126
Gain on the sale of investment securities ......... 13 37 19
Other income ...................................... 5 6 11
---------- -------- --------
Total non-interest income ..................... 312 284 210
Non-interest expense
Salaries and employee benefits .................... 1,218 1,060 877
Occupancy and equipment expense ................... 267 198 147
Advertising and marketing ......................... 105 93 63
Stationery and supplies ........................... 80 56 62
Professional services ............................. 99 63 79
Data processing ................................... 90 71 47
FDIC insurance premiums ........................... 7 2 16
Other operating expenses .......................... 223 158 112
---------- -------- --------
Total non-interest expense .................... 2,089 1,701 1,403
Income (loss) before federal income tax benefit ..... 465 27 (288)
Income tax benefit .................................. (145) -- --
---------- -------- --------
Net income (loss) ................................... $ 610 $ 27 $ (288)
========== ======== ========
Per share data:
Net income (loss) -- basic and diluted .............. $ 0.58 $ 0.04 $ (0.39)
Weighted average number of shares outstanding --
basic ............................................. 1,044,924 742,178 741,346
Weighted average number of shares outstanding --
diluted ........................................... 1,055,861 742,178 741,346

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

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years Ended December 31, 1997, 1996 and 1995

[Enlarge/Download Table]

Net
Unrealized
Common Gain (Loss)
Stock on
Subscribed Securities Total
Common but Accumulated Available Stockholders'
(In thousands, except share data) Stock Unissued Deficit For Sale Equity
------ --------- ----------- ----------- -------------

Balance, January 1, 1995 ............................ $ 6,521 $ -- $ (804) $(91) $5,626
Net loss .......................................... -- -- (288) -- (288)
Net change in unrealized gain (loss) on securities -- -- -- 120 120
------- ------- ------- ---- ------
Balance, December 31, 1995 .......................... 6,521 -- (1,092) 29 5,458
303,578 shares of common stock subscribed (net of
offering costs of $8), but unissued ............. -- 2,752 -- -- 2,752
Net income ........................................ -- -- 27 -- 27
Net change in unrealized gain (loss) on securities -- -- -- (47) (47)
------- ------- ------- ---- ------
Balance, December 31, 1996 .......................... 6,521 2,752 (1,065) (18) 8,190
303,578 shares of subscribed common stock issued
(net of additional offering costs of $1) ........ 2,751 (2,752) -- -- (1)
10% stock dividend declared December 16, payable
January 30, 1998 ................................ 1,234 -- (1,234) -- --
Net income .......................................... -- -- 610 -- 610
Net change in unrealized gain (loss) on securities -- -- -- (47) (47)
------- ------- ------- ---- ------
Balance, December 31, 1997 .......................... $10,506 $ -- $(1,689) $(65) $8,752
======= ======= ======= ==== ======

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

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

(In thousands) Years Ended December 31,
--------------------------
1997 1996 1995
---- ---- ----

Cash flows from operating activities
Interest and fees received ........................ $ 5,142 $ 3,415 $ 1,959
Interest paid ..................................... (2,815) (1,671) (1,040)
Proceeds from sale of mortgages held for sale ..... 11,209 7,648 8,251
Origination of mortgages held for sale ............ (11,109) (7,413) (8,493)
Cash paid to suppliers and employees .............. (2,032) (1,330) (1,435)
-------- -------- --------
Net cash provided by (used in) operating activities 395 649 (758)

Cash flows from investing activities
Proceeds from the sale of securities available for
sale ............................................ 2,613 8,735 3,249
Proceeds from maturities of securities available
for sale ........................................ 19,500 9,250 4,050
Purchases of securities available for sale ........ (41,438) (18,514) (10,091)
Increase in loans, net of payments received ....... (15,884) (16,320) (10,048)
Purchases of property and equipment ............... (369) (194) (483)
-------- -------- --------
Net cash used in investing activities ............. (35,578) (17,043) (13,323)

Cash flows from financing activities
Net increase in non-interest bearing deposits ..... 1,004 3,510 1,706
Net increase in interest bearing deposits ......... 26,930 15,031 12,827
Increase in federal funds purchased ............... 1,500 -- --
Principal payments on mortgage payable ............ (17) (15) (15)
Common stock subscriptions received ............... -- 2,752 --
Net cash provided by financing activities ......... 29,417 21,278 14,518
Increase (decrease) in cash and cash equivalents .... (5,766) 4,884 437
Cash and cash equivalents at the beginning of the
period ............................................ 7,426 2,542 2,105
-------- -------- --------
Cash and cash equivalents at the end of the period .. $ 1,660 $ 7,426 $ 2,542
======== ======== ========
Reconciliation of net income (loss) to net cash
provided by (used in) operating activities
Net income (loss) ................................... $ 610 $ 27 $ (288)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Provision for possible credit losses ............ 164 164 114
Depreciation and amortization expense ........... 158 133 104
Accretion of discount on investment securities .. (6) (11) (54)
Amortization of premium on investment securities 10 72 38
(Gain) on the sale of investment securities ..... (13) (37) (19)
(Increase) decrease in mortgages held for sale .. (44) 105 (368)
(Increase) in interest receivable ............... (417) (16) (129)
Increase in interest payable .................... 183 35 36
(Increase) decrease in other assets ............. (142) 1 (57)
Increase (decrease) in other liabilities ........ (108) 176 (135)
-------- -------- --------
Net cash provided by (used in) operating activities . $ 395 $ 649 $ (758)
======== ======== ========

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

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DEARBORN BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1997, 1996 and 1995

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Operations

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

Principles of Consolidation

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

Cash Equivalents

For purposes of the consolidated statements of cash flows, the
Corporation considers cash on hand, cash due from banks, and federal funds
sold to be cash equivalents.

Mortgages Held for Sale

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

Investment Securities

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

Interest Income on Loans

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

Allowance for Possible Credit Losses

The allowance is maintained at a level considered by management to be
adequate to provide for reasonably foreseeable loan losses based on an
evaluation of the loan portfolio, loan loss experience and the economic
environment.

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Loan Impairment

A loan is identified as impaired when it is probable in the opinion of
management that interest and principal may not be collected according to the
contractual terms of the loan agreement.

Bank Premises and Equipment

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

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

Income Taxes

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

Stock Options

The Financial Accounting Standards Board (the "FASB") issued Statement
No. 123, "Accounting for Stock Based Compensation" ("SFAS No. 123") effective
for transactions entered into during 1996 and thereafter. The statement
establishes a fair market value method of accounting for employee stock
options and similar equity instruments such as warrants, and encourages all
companies to adopt that method of accounting for all their employee stock
option plans. However, the statement allows companies to continue measuring
compensation cost for such plans using accounting guidance in place prior to
SFAS No. 123. Companies that elect to remain with the former method of
accounting must make pro forma disclosures of net income and income per share
as if the fair value method provided for in SFAS No. 123 had been adopted.
The Corporation has not adopted the fair value provisions of SFAS No. 123 but
has disclosed the pro forma effects in accordance with the pronouncement.

Stock Dividends

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

The Corporation declared a 10% stock dividend payable January 30, 1998,
to shareholders of record as of December 16, 1997. Accordingly, per share
amounts for 1997, 1996 and 1995 have been adjusted to reflect the dividend.

Income Per Share

The FASB has issued Statement No. 128, "Earnings Per Share" ("SFAS No.
128") which is effective for financial statements issued after December 15,
1997. The new standard eliminates primary and fully diluted income per share
and requires presentation of basic and diluted income per share together with
disclosure of how the per share amounts were computed. Basic income per share
excludes dilution and

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is computed by dividing income available to common shareholders by the
weighted average common shares outstanding for the period. Diluted income per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised and converted into common
stock or resulted in the issuance of common stock that then shared in the
income of the entity. The Corporation adopted SFAS No. 128 at December 31,
1997. All per share data has been restated to reflect application of this new
pronouncement.

Use of Estimates

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

NOTE B -- INVESTMENT SECURITIES -- AVAILABLE FOR SALE

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

[Enlarge/Download Table]

December 31, 1997
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ------

US Treasury securities ................ $ 2,001 $ 2 $ -- $ 2,003
US Government agency securities ....... 27,844 -- (67) 27,777
------- --- ----- -------
Totals .......................... $29,845 $ 2 $(67) $29,780
======= === ===== =======

[Enlarge/Download Table]

December 31, 1996
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ------

US Treasury securities ................ $ 2,009 $-- $(10) $ 1,999
US Government agency securities ....... 8,502 4 (12) 8,494
------- --- ----- -------
Totals .......................... $10,511 $ 4 $(22) $10,493
======= === ==== =======

The amortized cost and estimated market value of investment securities
-- available for sale at December 31, 1997 by contractual maturity, are shown
below (in thousands):

[Download Table]

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

Due in three months or less ......................... $ 1,000 $ 999
Due in three months through one year ................ 999 1,000
Due in one year through five years .................. 27,846 27,781
------- -------
Totals ........................................ $29,845 $29,780
======= =======

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Securities having a carrying value of $2,001,000 and a market value of
$2,003,000 were pledged to secure public deposits. Securities having a
carrying value of $1,000,000 and a market value of $999,000 were pledged to
secure treasury, tax and loan payments with the Federal Reserve Bank of
Chicago.

NOTE C -- LOANS

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

[Download Table]

1997 1996
---- ----

Consumer loans ...................................... $12,705 $ 8,877
Commercial, financial, & other ...................... 10,668 7,199
Commercial real estate construction ................. 1,746 1,971
Commercial real estate mortgages .................... 9,796 6,384
Residential real estate mortgages ................... 17,224 11,832
------- -------
52,139 36,263
Allowance for possible credit losses ................ (522) (366)
------- -------
$51,617 $35,897
======= =======

Final loan maturities and rate sensitivity of the loan portfolio at
December 31, 1997 are as follows (in thousands):

[Enlarge/Download Table]

Within Three to One to After
Three Twelve Five Five
Months Months Years Years Total
------ ------ ----- ----- -----

Consumer loans ............................. $ 1,779 $ 605 $10,166 $144 $12,694
Commercial, financial & other .............. 6,006 678 3,984 -- 10,668
Commercial real estate construction ........ 1,486 53 207 -- 1,746
Commercial real estate mortgages ........... 486 693 8,337 280 9,796
Residential real estate mortgages .......... 1,843 5,934 9,378 69 17,224
------- ------ ------- ---- ------
$11,600 $7,963 $32,072 $493 52,128
======= ====== ======= ====
Non-accrual loans .......................... 11
-------
Total loans .......................... $52,139
=======
Loans at fixed interest rates .............. $ 778 $1,446 $23,000 $493 $25,717
Loans at variable interest rates ........... 10,822 6,517 9,072 -- 26,411
------- ------ ------- ---- -------
$11,600 $7,963 $32,072 $493 52,128
======= ====== ======= ====
Non-accrual loans .......................... 11
-------
Total loans .......................... $52,139
=======

Certain directors of the Corporation, including their related
interests, were loan customers of the Bank during 1997. Such loans were made
in the ordinary course of business at the Bank's normal credit terms and
interest rates, and do not represent more than a normal risk of collection.
Total loans to these persons at December 31, 1997 amounted to $1,989,000.
During 1997, $1,664,000 of new loans were made and repayments totaled
$1,525,000. These loans aggregated to 23% of consolidated stockholders'
equity as of December 31, 1997.

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

[Download Table]

1997 1996 1995
---- ---- ----

Balance, beginning of year ..................... $366 $204 $100
Charge-offs:
Consumer loans ............................... (8) (4) (10)
Recoveries:
Consumer loans ............................... -- 2 --
----- ----- -----
Net charge-offs ................................ (8) (2) (10)
Additions charged to operations ................ 164 164 114
Balance at end of period ....................... $ 522 $ 366 $ 204
===== ===== =====
Allowance to total loans ....................... 1.01% 1.01% 1.02%
===== ===== =====
Net charge-offs to average loans ............... 0.02% 0.01% 0.07%
===== ===== =====

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

[Enlarge/Download Table]

1997 1996 1995
----------------- ----------------- -----------------
Percent Percent Percent
of loans of loans of loans
in each in each in each
category category category
to total to total to total
Amount loans Amount loans Amount loans
------ -------- ------ -------- ------ --------

Consumer loans ............................ $ 15 24.37% $ 8 24.48% $ 10 23.16%
Commercial, financial & other ............. 7 20.46% 5 19.85% 4 26.95%
Commercial real estate construction ....... 1 3.35% 1 5.44% 1 4.82%
Commercial real estate mortgages .......... 7 18.79% 4 17.60% 2 13.42%
Residential real estate mortgages ......... 12 33.03% 8 32.63% 4 31.65%
Unallocated ............................... 480 N/A 340 N/A 183 N/A
---- ------ ---- ------ ---- ------
$522 100.00% $366 100.00% $204 100.00%
==== ====== ==== ====== ==== ======

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

[Download Table]

1997 1996 1995
---- ---- ----

Non-accrual loans ................................... $ 11 $ 8 $ 43
===== ===== =====
As a percentage of total loans ...................... 0.02% 0.02% 0.21%
===== ===== =====
Income in accordance with original loan terms ....... $ 2 $ 1 $ 2
Income recognized ................................... -- -- --
----- ----- -----
Reduction in interest income ........................ $ 2 $ 1 $ 2
===== ===== =====

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NOTE D -- BANK PREMISES AND EQUIPMENT

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

[Download Table]

1997 1996
---- ----

Land and improvements ............................... $ 394 $ 394
Building and improvements ........................... 1,579 1,469
Furniture and equipment ............................. 742 484
------ ------
2,715 2,347
Less accumulated depreciation ....................... 419 267
------ ------
$2,296 $2,080
====== ======

Depreciation expense for 1997, 1996 and 1995 amounted to $152,000,
$127,000, and $98,000, respectively.

NOTE E -- DEPOSITS

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

[Download Table]

1997 1996
----------------- -----------------
Weighted Weighted
Average Average
Amount Rate Amount Rate
------ -------- ------ --------

Non-interest bearing:
Demand ........................... $ 8,587 -- $ 7,583 --
======= ==== ======= ====
Interest bearing:
Checking ......................... $ 1,274 2.92% $ 977 2.02%
Money market ..................... 6,787 3.98% 5,977 4.22%
Savings .......................... 1,529 2.50% 1,240 2.50%
Time, under $100,000 ............. 36,114 6.01% 19,048 5.83%
Time, $100,000 and over
Non-volatile priced ............ 12,055 6.00% 5,265 5.74%
Volatile priced ................ 9,051 5.84% 7,373 5.69%
------- -------
$66,810 $39,880
======= =======

Final maturities of time deposits of $100,000 and greater at
December 31, 1997 are as follows (in thousands):

[Download Table]

Non-volatile Volatile
priced priced Total
------------ -------- -----

Due in three months or less .............. $ 1,545 $4,115 $ 5,660
Due in three months through one year ..... 7,739 4,818 12,557
Due in one year through five years ....... 2,771 118 2,889
------- ------ -------
Totals ............................. $12,055 $9,051 $21,106
======= ====== =======

Time deposits of $100,000 and greater that are non-volatile priced are
time deposits that are priced using retail rates and would be considered by
the Bank as core deposits except for the fact that they are issued in
denominations of $100,000 or more. Volatile priced time deposits of $100,000
and greater are time deposits that are priced using wholesale rates and are
typically referred to as jumbo time deposits.

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NOTE F -- MORTGAGE PAYABLE

The mortgage payable with a bank matures September 1, 2013 and requires
monthly installments of $4,925 including interest at 7.75% per annum.
Effective September, 1998 the interest rate will be computed annually at 2.5%
plus the five year treasury rate. The note is collateralized by a first real
estate mortgage on a building and land.

Aggregate maturities for the five years following December 31, 1997 and
thereafter are as follows (in thousands):

[Download Table]

1998 ............................... $ 18
1999 ............................... 20
2000 ............................... 21
2001 ............................... 23
2002 ............................... 25
Thereafter ......................... 430
----
$537
====

NOTE G -- FEDERAL FUNDS PURCHASED

The Bank has entered into a federal funds credit line with another bank
in the amount of $1,500,000 to provide additional flexibility in the daily
management of liquidity. The outstanding balance of the federal funds credit
line at December 31, 1997 was $1,500,000 and was repaid on January 5, 1998.

NOTE H -- INCOME TAXES

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

[Download Table]

1997 1996 1995
---- ---- ----

Current ....................... $ -- $ -- $ --
Deferred ...................... (145) -- --
----- ---- ----
$(145) -- --
===== ==== ====

The deferred tax benefit in 1997 consisted of a reduction of the
beginning of the year valuation allowance of $293,000 offset by a deferred
tax expense of $148,000. Deferred tax benefits for 1996 and 1995 were
eliminated by increases in the valuation allowance of $7,000 and $48,000,
respectively.

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

[Download Table]

1997 1996 1995
---- ---- ----

Federal income tax rate ............................. 34% 34% (34)%
Effect of net operating loss carryforward and
valuation allowance ............................... (63) (26) 31
Effect of graduated tax rates ....................... -- (18) 1
Other ............................................... (2) 10 2
--- --- ---
Effective tax rate .................................. (31)% --% --%
=== === ===

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

[Download Table]

1997 1996

Deferred tax assets
Provision for possible credit losses .............. $ 163 $ 110
Unrealized losses on securities available for sale 23 8
Net operating loss carryforwards .................. 282 400
Other ............................................. 4 1
----- -----
Total deferred tax assets ................... 472 519
Deferred tax liabilities
Accretion of discounts on securities available for
sale ............................................ (4) (1)
Deferred loan fees ................................ (72) (59)
Premises and equipment ............................ (72) (56)
Accrual to cash conversion ........................ (115) (46)
Unrealized gain on securities available for sale .. (1) (1)
----- -----
Total deferred tax liabilities ...................... (264) (163)
----- -----
Net deferred tax asset before valuation allowance ... 208 356
Valuation allowance ................................. (63) (356)
----- -----
Net deferred tax asset .............................. $ 145 $ --
===== =====

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

At December 31, 1997 the Corporation had net operating loss
carryforwards of approximately $829,000 expiring in 2009 through 2011. These
losses are available to reduce otherwise taxable income in future periods.

F14

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NOTE I -- FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

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

[Download Table]

1997 1996
-------------------- --------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- --------- -------- ---------

Assets:
Cash and cash equivalents ..... $ 1,660 $ 1,660 $ 7,426 $ 7,426
Loans held for sale ........... 347 349 303 307
Securities .................... 29,780 29,780 10,493 10,493
Loans ......................... 51,617 51,020 35,897 35,332
Liabilities:
Deposits ...................... 75,397 75,507 47,463 47,444
Federal funds purchased ....... 1,500 1,500 -- --
Mortgage Payable .............. 537 537 554 554

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

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

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

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

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

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

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

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

Limitations: Fair value estimates are made at a specific point in time,
based on relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount that could
result from offering for sale, at one time, the Corporation's entire holdings
of a

F-15

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particular financial instrument. Because no market exists for a significant
portion of the Corporation's financial instruments, fair value estimates are
based on management's judgments regarding future expected loss experience,
current economic conditions, risk characteristics and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

Off-Balance-Sheet Risk

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

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

The Corporation has outstanding loan commitments aggregating $5,150,000
and outstanding financial standby letters of credit aggregating $147,000 at
December 31, 1997.

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

The Corporation originates primarily residential and commercial real
estate loans, commercial loans, and installment loans. The Corporation
estimates that 67% of the loan portfolio is based in Wayne County, 18% in
Oakland County, and the remainder distributed throughout Michigan.

At December 31, 1997, the Corporation has consumer loans secured by
real estate aggregating approximately $2,790,000 and construction loans
relating to commercial, residential, and land development properties of
$1,746,000.

NOTE J -- EMPLOYEE BENEFIT PLANS

On January 1, 1996, the Bank established a 401(k) plan for its
employees. All employees are eligible to participate in the 401(k) after
completion of age and service requirements. An employee can be enrolled as a
participant on the first "Enrollment Date" after reaching age 18 and
completing six months of service. Contributions to the plan by the Bank are
discretionary. As of December 31, 1997 the Corporation has elected not to
match any portion of employee contributions to the plan.

F-16

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NOTE K -- REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a
direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices.
The Bank's capital amounts and classifications are also subject to
qualitative judgments by the regulators about components, risk weightings,
and other factors.

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

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

[Enlarge/Download Table]

Minimum For Capital Minimum
Actual Adequacy Purposes: To Be Well Capitalized:
------------- ------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----

As of December 31, 1997
Total capital
(to risk weighted assets) .......... $7,963 16.1% $3,964 8.0% $4,955 10.0%
Tier I capital
(to risk weighted assets) .......... 7,441 15.0% 1,982 4.0% 2,972 6.0%
Tier I capital
(to average assets) ................ 7,441 9.1% 3,282 4.0% 4,102 5.0%
As of December 31, 1996
Total capital
(to risk weighted assets) .......... 4,586 14.4% 2,548 8.0% 3,185 10.0%
Tier I capital
(to risk weighted assets) .......... 4,220 13.2% 1,279 4.0% 1,918 6.0%
Tier I capital
(to average assets) ................ 4,220 8.5% 1,986 4.0% 2,482 5.0%

Based on the respective regulatory capital ratios at December 31, 1997
and 1996, the Bank is well capitalized.

NOTE L -- COMMON STOCK SUBSCRIBED

On November 15, 1996, the Corporation issued an offering memorandum,
which included an over-subscription privilege, to those stockholders who were
residents of the State of Michigan. The offering memorandum gave those
stockholders the right to subscribe to 303,578 shares of common stock at a
price of $9.09 per share. All rights expired on December 31, 1996.

At the close of business on December 31, 1996, the Corporation had
received requests to purchase approximately 319,600 shares of common stock.
In accordance with the Corporation's offering memorandum $2,760,000 was
recorded as common stock subscribed, representing 303,578 shares of common
stock and $145,490 was recorded as an oversubscription rights payable in
other liabilities. On January 21, 1997, the common stock subscribed was
formally issued.

F17

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NOTE M -- STOCK OPTION PLAN

On June 21, 1994, the Corporation adopted a stock option plan to enable
key employees of the Corporation and its subsidiaries to participate in the
Corporation's future growth and profitability by the granting of long-term
performance-based incentive compensation. As of December 31, 1996, 55,000
shares of common stock were authorized with no options granted.

During 1997, the stock option plan was amended to allow up to 165,000
shares to be granted. Also in 1997, the Corporation issued 45,100 options at
an exercise price of $9.09. No options were exercised, expired or terminated
during 1997.

Granted options expire no later than ten years after the date of grant,
may not be exercised for six months after the date of grant and are granted
at a price of not less than the fair market value of the Corporation's share
price on the date of grant. If an option expires or terminates without having
been exercised, such option will be available for future grant under the
plan.

The Corporation accounts for the stock option plan under Accounting
Principles Board Option No. 25, "Accounting for Stock Issued to Employees."
No compensation costs have been recognized for the plan. Had compensation
costs for the plan been determined based on the fair value of the options at
the grant date consistent with the method of SFAS No. 123, the Corporation's
net income per share for the year ended December 31, 1997 would have been as
follows (in thousands, except per share data):

[Download Table]

Net income
As reported ....................................... $ 610
Pro forma ......................................... 419
Basic and diluted income per share
As reported ....................................... 0.58
Pro forma ......................................... 0.40

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options-pricing model with the following
weighted-average assumptions used for grants in 1997: dividend yield of
0.00%; expected volatility of 51.23%; risk-free interest rate of 6.67%; and
expected lives of ten years. All information presented with respect to stock
options has been adjusted for the effects of the stock dividend.

NOTE N -- INCOME PER SHARE

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

[Download Table]

Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------

Basic income per share
Net income available ............... $610 1,044,924 $0.58
Effect of dilutive options
Options ............................ -- 10,937 --
---- --------- -----
Diluted income per share
Net income to stockholders plus
assumed conversions.............. $610 1,055,861 $0.58
==== ========= =====

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NOTE O -- ISSUED BUT NOT YET ADOPTED ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No. 130, "Reporting of Comprehensive
Income" ("SFAS 130"), which establishes standards for reporting and display
of comprehensive income and its components (revenues, expense, gains, and
losses) in a full set of financial statements. This statement also requires
that all items that are required to be recognized under accounting standards
as components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements.
This statement is effective for fiscal years beginning after December 15,
1997. Earlier application is permitted. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
The Corporation does not anticipate that the adoption of SFAS 130 will have a
material effect on its financial statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"), which establishes
standards for the manner in which business enterprises report information
about operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments in
interim financial reports issued to stockholders. This statement also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. This statement requires the reporting
of financial and descriptive information about an enterprise's reportable
operating segments. This statement is effective for financial statements for
periods beginning after December 15, 1997. In the initial year of adoption,
comparative information for earlier years is to be restated. The Corporation
does not anticipate that the adoption of SFAS 131 will have a material effect
on its financial statements.

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NOTE P -- PARENT ONLY CONDENSED FINANCIAL INFORMATION

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

CONDENSED BALANCE SHEETS

[Download Table]

(In thousands) December 31,
-------------
1997 1996
---- ----

ASSETS
Cash and cash equivalents ......................... $ 181 $2,901
Investment in subsidiary .......................... 7,376 4,203
Other assets ...................................... 1,741 1,792
------ ------
$9,298 $8,896
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage payable .................................. $ 537 $ 554
Other liabilities ................................. 9 152
Stockholders' equity .............................. 8,752 8,190
------ ------
$9,298 $8,896
====== ======

CONDENSED STATEMENTS OF OPERATIONS

[Download Table]

(In thousands) Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----

Dividends from subsidiary bank .................. $ -- $ -- $ --
Operating income ................................ 58 35 87
Operating expenses .............................. (68) (60) (77)
---- ---- -----
Net income (loss) before equity in
undistributed income (loss) of subsidiary ..... (10) (25) 10
Equity in undistributed income (loss) of
subsidiary .................................... 620 52 (298)
---- ---- -----
Net income (loss) ........................... $610 $ 27 $(288)
==== ==== =====

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CONDENSED STATEMENTS OF CASH FLOWS

[Download Table]

(In thousands) Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----

Cash flows from operating activities
Net income (loss) ............................. $ 610 $ 27 $ (288)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Equity in undistributed (income) loss of
subsidiary .............................. (620) (52) 298
Other ..................................... 66 61 37
------- ------ ------
Net cash flows provided by operating activities ... 56 36 47
Cash flows from investing activities
Investment in subsidiary ...................... (2,600) (850) (500)
Investment in securities ...................... (1,000) -- (698)
Maturity of securities ........................ 1,000 -- 1,600
Sale of securities ............................ -- 703 --
Property and equipment acquired ............... (14) (101) (361)
------- ------ ------
Net cash flows provided by (used in) investing
activities ...................................... (2,614) (248) 41
Cash flows from financing activities
Proceeds from sale of common stock ............ -- 2,752 --
Proceeds due stockholders on oversubscription
of stock .................................... (145) 145 --
Reduction of mortgage payable ................. (17) (15) (15)
Dividends paid ................................ -- -- --
------- ------ ------
Net cash flows provided by (used in) financing
activities ...................................... (162) 2,882 (15)
Increase (decrease) in cash and cash equivalents .. (2,720) 2,670 73
Cash and cash equivalents at beginning of year .... 2,901 231 158
------- ------ ------
Cash and cash equivalents at end of year .......... $ 181 $2,901 $ 231
======= ====== ======

F-21

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========================

No dealer, salesperson or
other person has been authorized
to give any information or make
any representations other than
those contained in this Prospectus
in connection with the offer made
by this Prospectus, and if given
or made, such information or
representations must not be relied
upon as having been authorized by
the Company or any Underwriter.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create any
implication that the information
herein is correct as of any time
subsequent to the date hereof.
This Prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy
any securities offered hereby by
anyone in any jurisdiction in
which such offer or solicitation
is not authorized or in which the
person making such offer or
solicitation is not qualified to
do so or to anyone to whom it is
unlawful to make such offer or
solicitation.

TABLE OF CONTENTS

[Download Table]

Page

Forward-Looking Statements ....... 2
Prospectus Summary ............... 3
Risk Factors ..................... 7
Use of Proceeds .................. 9
Dividend Policy .................. 10
Capitalization ................... 11
Selected Consolidated Financial
Data ............................. 12
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ...... 13
Business ......................... 21
Management ....................... 27
Related Party Transactions ....... 31
Security Ownership ............... 32
Supervision and Regulation ....... 33
Description of Common Stock ...... 34
Shares Eligible for Future Sale .. 36
Underwriting ..................... 37
Available Information ............ 38
Incorporation of Certain Documents
by Reference ................... 38
Legal Matters .................... 39
Experts .......................... 39
Index to Financial Statements .... F-1

Until May 3, 1998 (25
days after the effective date of
the offering), all dealers
effecting transactions in the
Common Stock, whether or not
participating in this
distribution, may be required to
deliver a Prospectus. This
delivery requirement is in
addition to the obligation of
dealers to deliver a Prospectus
when acting as underwriter and
with respect to their unsold
allotments or subscriptions.

========================

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========================

1,200,000 Shares

DEARBORN BANCORP, INC.

Common Stock

Prospectus

Roney & Co.

April 8, 1998

========================

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B1’ Filing	Date	First	Last	Other Filings

	9/1/13	52
	1/21/07	29
	5/16/04	30
	5/19/98	29	34	DEF 14A, PRE 14A
	5/3/98	61
	4/15/98	1
Filed on:	4/14/98
	4/8/98	1	62
	3/2/98	25	31
	2/20/98	32
	1/30/98	3	47
	1/28/98	41
	1/20/98	32
	1/5/98	52
	12/31/97	3	57	10-K
	12/16/97	3	47
	12/15/97	19	58
	8/11/97	4	26
	1/21/97	29	56
	12/31/96	6	57	10-K
	11/15/96	56
	1/1/96	55
	12/31/95	6	46
	12/20/95	4	26
	1/1/95	44
	6/21/94	57
	2/28/94	3	46
	9/30/92	21	46
				List all Filings

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Filing Submission 0000889697-98-000177 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Dearborn Bancorp Inc/MI – ‘424B1’ on 4/14/98

As of: Tuesday, 4/14/98 · Accession #: 889697-98-177 · File #: 333-47227

Previous ‘424B1’: ‘424B1’ on 4/9/98 · Latest ‘424B1’: This Filing

Prospectus — Rule 424(b)(1)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(1)
Filing Table of Contents