SUN COMMUNITY BANCORP LTD, 424B4, 1999-07-02

SUN COMMUNITY BANCORP LTD
424B4, 1999-07-02
STATE COMMERCIAL BANKS

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<PAGE> 1

Filed Pursuant to Rule 424(b)(4)
Registration No. 333-76719
PROSPECTUS

- --------------------------------------------------------------------------------
1,650,000 SHARES

[SUN COMMUNITY LOGO]

COMMON STOCK

Sun is offering 1,650,000 shares of common stock. This is Sun's initial
public offering. Capitol Bancorp Ltd. will be purchasing 850,000 shares, about
51% of the 1,650,000 shares being sold in this offering, in order to maintain
its majority ownership in Sun after the offering.

Nasdaq National Market(SM)
Trading Symbol: SCBL

INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----------
<S> <C> <C>
Public offering price....................................... $16.00 $26,400,000
Underwriting discount(1).................................... $ 1.12 $ 896,000
Proceeds to Sun............................................. $14.88 $25,504,000
</TABLE>

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

(1) The per share underwriting discount will not apply to those shares being
sold to Capitol.

This is a firm commitment underwriting. Sun has granted the underwriters a
30-day option to purchase up to 247,500 additional shares of its common stock on
the same terms and conditions as above to cover over-allotments, if any.

THE SHARES OF COMMON STOCK THAT ARE BEING OFFERED ARE NOT SAVINGS ACCOUNTS
OR DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE BANK
INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OF THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Sun expects that the shares of common stock will be ready for delivery in
Chicago, Illinois on or about July 8, 1999.

EVEREN SECURITIES, INC.

The date of this prospectus is July 2, 1999
<PAGE> 2

SUN COMMUNITY BANCORP LIMITED
BANK AND OFFICE LOCATIONS
[Map Graphic indicating the Bank and Office locations of Sun Community Bancorp
Limited]
<PAGE> 3

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
Because this is a summary, it may not contain all of the information that is
important to you. To understand the offering fully, you should read the entire
prospectus, including the financial statements and related notes, before making
a decision to invest in Sun's common stock.

Unless stated otherwise, all share, per share and financial information in
this prospectus:

- gives effect to Sun's September 1998 3-for-1 stock split of its common
stock, and

- assumes no exercise of the underwriters' option to purchase additional
shares of common stock from Sun.

HIGHLIGHTS

This is Sun's initial public offering of common stock. Sun is offering
1,650,000 shares, about 51% of which will be purchased by Capitol Bancorp Ltd.
Capitol currently owns 51% of Sun's common stock. Capitol will be purchasing
shares at the same price as the public.

ABOUT SUN COMMUNITY BANCORP LIMITED

Sun is a bank holding company. Although viewed by regulators as a bank
holding company, Sun describes itself as a bank development company. Bank
development includes managing Sun's bank subsidiaries and the formation of new
banks and bank holding companies.

Sun currently has six fully operational bank subsidiaries, all of which are
in Arizona:

- Bank of Tucson, formed in 1996,

- Valley First Community Bank (Scottsdale), formed in 1997,

- Camelback Community Bank (Phoenix), formed in 1998,

- Southern Arizona Community Bank (Tucson), formed in 1998,

- Mesa Bank (Mesa), formed in 1998, and

- Sunrise Bank of Arizona (Phoenix), formed in 1998.

Sun plans to continue the formation of additional new banks in Arizona and
other southwestern locations. A seventh bank just opened on June 30, 1999. See
"Recent Developments -- Pending Bank Applications."

SUN'S HISTORY

Bank of Tucson was formed in 1996. To enable further bank development in
the Southwest, Sun was formed later as a bank holding company by the same group
of organizers. Bank of Tucson became a wholly-owned subsidiary of Sun through an
exchange of common stock in 1997.

Sun has added newly-formed banks to its consolidated group. 1998 was a year
of significant bank development activity with the addition of four banks.
Currently, Sun has six fully operational banks, all but one less than three
years old and four less than one year old. Sun filed applications in early 1999
for regulatory approval for the formation of two new banks, one in Arizona,
which obtained its regulatory approvals and opened on June 30, 1999, and one in
Nevada, anticipated to open later in 1999. Sun also formed an additional
subsidiary to facilitate bank development in Nevada in early 1999, and expects
to file a second Nevada bank application during 1999.
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<PAGE> 4

Sun's approach to bank development is patterned after Capitol's successful
bank development strategy. Capitol has total assets of approximately $1 billion
and includes 17 banks currently. Capitol's assets and number of banks include
Sun and Sun's banks because of Capitol's 51% ownership of Sun.

SUN'S BANK DEVELOPMENT STRATEGY

Sun's strategy is to establish an attractive community banking franchise
through bank development. The foundation of Sun's strategy is that small banks
in large markets can thrive through their focus on serving the customer.

As part of its bank development efforts, Sun mentors its banks through the
most crucial and early formative periods. This is done by recruiting management
and directors from the local community and providing experience and guidance in
the formation process.

When forming a new bank, Sun purchases a majority interest, but does not
seek 100% ownership. Each new bank commences a community stock offering prior to
opening. Ideally, up to 49% of the bank's stock will be sold in the local
community and involve more than 100 local investors. Sun views this joint
ownership to be a shared vision. It is a vision that the community has a need
for a new bank, one that is focused on the customer. It is shared because of the
joint investment of community investors and Sun. Sun views the concept of shared
vision to also encompass other relationships, particularly applicable to bank
customers and employees.

SUN'S COMMUNITY BANKING PHILOSOPHY

Sun's business is community banking. Sun's banks are each small, single
location facilities. Each bank has a president. The bank president's office is
adjacent to the bank lobby and his or her door is always open to customers. Each
bank makes its own credit decisions. Each bank has its own board of directors,
drawn from leaders within the local business community. Each bank has local
investors. Each bank is focused on the customer, offering the following:

- the bank president serves customers,

- the bank's decision-makers are on site,

- the bank makes house calls (courier service or other on site delivery),
and

- the bank's location is convenient.

Sun's banks seek the profitable customer relationship that has been
displaced through mergers, mass marketing and an impersonal approach to treating
customers. Each of Sun's banks is focused on commercial banking activities. They
emphasize commercial loans, but offer a complete array of credit facilities to
customers. The banks also offer a wide range of deposit products with emphasis
on business checking and time accounts.

Sun provides the back-room and administrative support and mentoring to aid
in the development and growth of its banks.

SUN'S MANAGEMENT

Sun's management team has significant banking experience with an average of
more than 10 years' industry experience.
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Sun's Chairman and Chief Executive Officer, Joseph D. Reid, has more than
15 years of experience in starting new banks and managing bank development. Thus
far, he has started 17 community banks and three bank development companies.

Sun recently hired John S. Lewis as its president to oversee the growth of
Sun's banks and Sun's back-room and administrative support services to the
banks. He has over 22 years of bank management experience in the Southwestern
United States.

SUN'S ADDRESS AND TELEPHONE NUMBER

Sun's principal executive offices are located at 2777 East Camelback Road,
Suite 101, Phoenix, Arizona 85016. Sun's telephone number is (602) 955-6100.

SUN'S RELATIONSHIP WITH CAPITOL BANCORP LTD.

Capitol Bancorp Ltd. owns a majority of Sun's common stock. Capitol is a
publicly traded multi-bank holding company headquartered in Lansing, Michigan.
Sun's Chairman and Chief Executive Officer, Joseph D. Reid, is also Chairman,
President and Chief Executive Officer of Capitol. Capitol is a Nasdaq-listed
company traded under the symbol CBCL.

In addition to Mr. Reid, two other executive officers of Sun are also
executive officers of Capitol. Lee W. Hendrickson is Senior Vice President and
Chief Financial Officer of Sun and Capitol. Cristin Reid English, Mr. Reid's
daughter, is Vice President and General Counsel of Sun and Capitol.

Messrs. Reid and Hendrickson and Ms. English are compensated separately by
Sun and Capitol by separate salaries from each company. These individuals
allocate their time to Sun and Capitol depending upon current projects and other
responsibilities. This allocation of time and effort varies from time to time
depending on need. Mr. Hendrickson and Ms. English also allocate their time and
effort under the direction of Mr. Reid. There are no contractual provisions
directing how time will be allocated between Sun and Capitol.

Capitol will purchase enough shares in this offering to maintain its 51%
ownership and majority control of Sun. As a result, investors in this offering
will become minority shareholders in Sun.

RECENT DEVELOPMENTS

Sun filed applications in early 1999 for regulatory approval for the
formation of two new banks, one in Arizona, which has been recently approved,
and one in Nevada. Sun also formed an additional subsidiary to facilitate bank
development in Nevada. While no other applications have been filed as of the
date of this offering, Sun plans to continue its expansion through the
development of newly formed banks in Las Vegas, Nevada; Albuquerque, New Mexico;
and California.
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<PAGE> 6

THE OFFERING

Securities Offered for Sale..... Shares of common stock of Sun Community
Bancorp Limited. For a description of these
shares, see "Description of Capital Stock."

Number of Shares being
Offered......................... 1,650,000. 850,000 of the shares offered
(about 51%) will be purchased by Capitol
Bancorp Ltd. In addition, the underwriters
have a 30-day option to purchase up to
247,500 additional shares to cover
over-allotments. For a description of this
option, see "Underwriting."

Price to the Public............. $16.00 per share.

Number of Shares to be
Outstanding After the
Offering...................... 5,503,870 shares will be outstanding
immediately after the offering. This number
assumes that the underwriters do not
exercise their over-allotment option and
does not include 808,473 shares that will be
subject to issuance under Sun's stock option
program after this offering. For a
description of this plan, see
"Management -- Stock Option Program."

Dividend Policy................. Sun does not intend to pay any cash
dividends in the foreseeable future.

Use of Proceeds................. Investment in bank and bank holding company
subsidiaries. For further details, see "Use
of Proceeds."

Risk Factors.................... You should read the "Risk Factors" section
before deciding to invest in this offering.

Nasdaq National Market(SM)
Symbol.......................... SCBL
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SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Selected consolidated financial data as of and for the periods ended
December 31, 1998 are derived from, and should be read in conjunction with,
Sun's Consolidated Financial Statements appearing elsewhere in this prospectus.
Selected consolidated financial data as of and for the three months ended March
31, 1999 and 1998 should also be read in conjunction with the Condensed
Consolidated Interim Financial Statements of Sun and the accompanying Notes,
appearing elsewhere in this prospectus, and the information provided under
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." AS DESCRIBED ELSEWHERE IN THIS PROSPECTUS,
BECAUSE OF THE NUMBER OF BANKS ADDED IN 1997 AND 1998, SUN'S HISTORICAL
OPERATING RESULTS ARE OF LIMITED RELEVANCE IN EVALUATING SUN'S HISTORICAL
FINANCIAL PERFORMANCE AND PREDICTING SUN'S FUTURE OPERATING RESULTS.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 PERIODS ENDED DECEMBER 31
------------------ ----------------------------
1999 1998 1998(1) 1997(2) 1996(3)
-------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF
OPERATIONS DATA:
Net interest income......... $ 2,090 $ 940 $ 5,064 $ 1,957 $ 231
Provision for loan losses... 209 41 379 268 49
Noninterest income.......... 118 59 334 125 10
Noninterest expense......... 2,463 796 5,330 2,036 440
Income (loss) before income
taxes, minority interest
and accounting change.... (464) 162 (311) (222) (248)
Income (loss) before
minority interest and
accounting change........ (400) 87 (340) (189) (164)
Minority interest in net
losses of consolidated
subsidiaries............. 224 30 397 117 --
Income (loss) before
accounting change........ (176) 117 57 (72) (164)
Cumulative effect of
accounting change(4)..... (386) -- -- -- --
Net income (loss)........... (562) 117 57 (72) (164)
Net income (loss) per share:
Before cumulative effect of
accounting change:
Basic.................... (0.05) 0.04 0.02 (0.05) (0.14)
Diluted.................. (0.05) 0.04 0.02 (0.05) (0.14)
After cumulative effect of
accounting change:
Basic.................... (0.15) 0.04 0.02 (0.05) (0.14)
Diluted.................. (0.15) 0.04 0.02 (0.05) (0.14)
Cash dividends paid per
share.................... -- -- -- -- --
</TABLE>

6
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<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 PERIODS ENDED DECEMBER 31
------------------ ----------------------------
1999 1998 1998(1) 1997(2) 1996(3)
-------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets................ $159,121 $74,465 $135,578 $55,007 $17,276
Portfolio loans............. 86,167 35,655 68,080 31,236 4,850
Nonperforming loans......... -- -- -- -- --
Deposits.................... 122,613 55,322 98,782 42,899 12,021
Debt obligations............ -- -- -- -- --
Minority interest in
consolidated
subsidiaries............. 9,280 1,980 9,411 2,010 --
Stockholders' equity........ 26,128 16,803 26,627 9,690 5,189
-------- ------- -------- ------- -------
Total capitalization........ 35,408 18,783 36,038 11,700 5,189
Book value per common
share(5)................. $ 6.78 $ 5.90 $ 6.92 $ 5.10 $ 4.51
Number of banks............. 6 2 6 2 1
FINANCIAL RATIOS:
Net interest margin......... 4.88% 4.71% 4.51% 4.51% 1.33%
Allowance for loan losses as
a percentage of portfolio
loans.................... 1.05 1.00 1.02 1.01 1.01
Total capitalization as a
percentage of total
assets(6)................ 22.25 25.22 26.58 21.27 30.04
Return on average assets.... (1.56) 0.68 0.06 (0.20) (1.45)
Return on average equity.... (8.60) 2.84 0.34 (0.97) (3.12)
</TABLE>

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

Notes:

(1) Includes Camelback Community Bank (effective May 1998), Southern Arizona
Community Bank (effective August 1998), Mesa Bank (effective October 1998)
and Sunrise Bank of Arizona (effective December 1998).

(2) Includes Valley First Community Bank (effective June 1997). Sun acquired
Bank of Tucson in a share exchange transaction effective May 1997.

(3) Period ended December 31, 1996 consisted only of Bank of Tucson which
commenced operations effective June 1996.

(4) Cumulative effect of accounting change (net of income tax benefit) relates
to implementation of new accounting standard requiring write-off of
unamortized capitalized start-up costs effective January 1, 1999.

(5) Excludes outstanding stock options.

(6) Includes stockholders' equity and minority interest in consolidated
subsidiaries.
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RISK FACTORS

Investing in the common stock from this offering will provide you with an
equity ownership interest in Sun. As a Sun shareholder, your investment may be
impacted by risks inherent in our business. You should carefully consider the
following factors as well as other information contained in this prospectus
before deciding to invest in shares of Sun's common stock.

SUN HAS A LIMITED OPERATING HISTORY AND MAY NEVER BECOME PROFITABLE.

Sun's oldest bank, Bank of Tucson, was formed in June 1996. Sun began its
operations as a bank holding company in May 1997. Most of its banks are less
than one year old and are not yet profitable. Sun has incurred losses since its
formation. Because of the early stages of development of Sun and its banks, it
is likely that Sun will incur additional operating losses in future periods and
may never produce earnings. Net operating losses and the resulting
retained-earnings deficit reduce the underlying book value per share of Sun's
common stock.

NEWLY FORMED BANKS ARE LIKELY TO INCUR SIGNIFICANT LOSSES.

Only two of Sun's banks are currently profitable. Newly formed banks are
expected to incur operating losses in their early periods of operation because
of an inability to generate sufficient net interest income to cover operating
costs. Those operating losses can be significant and can occur for longer
periods than planned depending upon the ability to control operating expenses
and generate net interest income. Due to a recent accounting rule change that
requires immediate write-off of start-up costs, future newly formed banks are
expected to report larger early period operating losses.

SUN MAY BE UNABLE TO EFFECTIVELY MANAGE ITS GROWTH.

Sun has rapidly and significantly expanded its operations and anticipates
that further expansion will be required to realize its growth strategy. Sun's
rapid growth has placed significant demands on its management and other
resources which, given its expected future growth rate, are likely to continue.
To manage future growth, Sun will need to attract, hire and retain highly
skilled and motivated officers and employees and improve existing systems and/or
implement new systems for:

- transaction processing;

- operational and financial management; and

- training, integrating and managing Sun's growing employee base.

FAVORABLE ENVIRONMENT FOR FORMATION OF NEW BANKS COULD CHANGE ADVERSELY.

Sun's growth strategy includes the formation of additional new banks. Thus
far, Sun has experienced favorable business conditions for the formation of its
small, community and customer-focused banks. Those favorable conditions could
change suddenly or over an extended period of time. A change in the availability
of financial capital, human capital or general economic conditions could
eliminate or severely limit expansion opportunities. To the extent Sun is unable
to effectively deploy its capital in new or existing banks, this could adversely
affect future earnings and the value of Sun's common stock.

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<PAGE> 10

SUN'S BANKS ARE SMALL, HAVE LIMITATIONS ON THE SIZE OF LOANS THEY CAN MAKE AND
HAVE MINIMAL MARKET SHARE.

Sun endeavors to capitalize its newly formed banks with the lowest dollar
amount permitted by regulatory agencies. As a result, the legal lending limits
of Sun's banks severely constrain the size of loans that those banks can make.
In addition, many of the banks' competitors have significantly larger
capitalization and, hence, an ability to make significantly larger loans.

Sun's banks are intended to be small in size. They each operate from single
locations. They are very small relative to the dynamic markets in which they
operate. Each of those markets has a variety of big and small competitors that
have resources far beyond those of Sun's banks. While it is the intention of
Sun's banks to operate as niche players within their geographic markets, their
continued existence is dependent upon being able to gain profitable market share
in those large markets that are dominated by substantially larger regulated and
unregulated financial institutions.

NEW INVESTORS IN SUN WILL BE MINORITY SHAREHOLDERS.

Sun is a 51% owned subsidiary of Capitol Bancorp Ltd. Capitol is the
controlling shareholder of Sun. Capitol will continue to be the majority
shareholder of Sun after this offering is completed. Because of that majority
ownership, new investors in this offering will be minority shareholders and will
not be able to gather sufficient votes to cause a shareholder vote in opposition
to Capitol. Accordingly, Capitol may have substantial influence over the
business and policies of Sun, including the election of directors, approving or
disapproving mergers or consolidations, and other matters.

Because it is a bank holding company that is regulated by the Federal
Reserve Board, Capitol could be caused to take actions with respect to Sun that
would not be in the best interests of Sun's minority shareholders. Further,
Capitol will, for the foreseeable future, have the ability to take actions with
respect to its majority interest in Sun which may not be consistent with the
objectives or desires of Sun's minority shareholders.

THERE ARE POTENTIAL CONFLICTS OF INTEREST RELATING TO CAPITOL BANCORP LTD.

Because of Sun's relationship with Capitol and directors and officers which
serve both companies, Sun is likely to face potential conflicts of interest
relating to Capitol. Capitol is a publicly traded bank holding company.

Certain of Sun's executive officers are directors, officers or employees of
Capitol and either own, or hold options to purchase, equity securities of
Capitol. In particular, Joseph D. Reid, Chairman and Chief Executive Officer of
Sun, is also Chairman, President and Chief Executive Officer of Capitol and in
such capacity has majority voting control over Capitol's investment in Sun. Upon
the consummation of this offering, Capitol will directly own approximately 51%
of Sun's outstanding common stock. Conflicts of interest may arise from time to
time between Sun and Capitol particularly with respect to the pursuit of
overlapping corporate opportunities. Since the formation of Sun, Capitol has
pursued bank development opportunities in the Southwestern United States only
through Sun. However, there can be no assurance that this approach will continue
or that conflicts will not arise in the future. There is no formal process or
procedure agreed to by Capitol or Sun for resolution of future conflicts of
interest, if any.

Sun intends to review related-party transactions with Capitol on a
case-by-case basis. Because Sun has directors and officers in common with
Capitol, there may be inherent

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conflicts of interest when such directors and officers make decisions related to
transactions between Sun and Capitol. Sun could lose valuable management input
from such interested directors and officers.

SUN'S POSSIBLE FAILURE TO MAINTAIN ITS LISTING ON THE NASDAQ NATIONAL MARKET(SM)
MAY CAUSE ITS SHAREHOLDERS TO EXPERIENCE LIQUIDITY PROBLEMS AND MAKE IT MORE
DIFFICULT TO SELL THEIR SHARES.

Sun has been approved to list its common stock on the Nasdaq National
Market(SM), and Sun believes that it will be able to maintain its listing
requirements when it completes this offering. If Sun is unable to satisfy the
requirements for continued listing on the Nasdaq National Market(SM) trading, if
any, would be conducted in the over-the-counter market. As a result, selling
Sun's shares may be more difficult, transactions could be delayed, and security
analysts' and news media coverage of Sun may be reduced. These factors could
result in lower prices and larger spreads in the bid and ask prices for Sun's
shares.

SUN IS DEPENDENT UPON THE CONTRIBUTIONS OF ITS KEY MANAGEMENT PERSONNEL.

Sun's future success depends, in large part, upon the continuing
contributions of its key management personnel, including bank presidents. Some
of Sun's executive officers have been with Sun for less than a year. The loss of
services of one or more key employees at Sun or its bank subsidiaries could have
a material adverse effect on Sun. Sun can provide no assurance that it will be
able to retain any of its key officers and employees or attract and retain
qualified personnel in the future.

Joseph D. Reid, Sun's Chairman and Chief Executive Officer, has an
employment agreement which expires on January 1, 2001. The agreement will
automatically extend for another year unless Mr. Reid or Sun gives written
notice 45 days prior to the expiration date of the agreement. Certain members of
Sun's senior management also have employment agreements with Sun. See
"Management -- Employment Agreements."

Mr. Reid and two other executive officers of Sun are also executive
officers of Capitol, the controlling and majority shareholder of Sun. Their
continued employment with Sun is, in part, dependent upon their continued
employment with Capitol. Since the services of these executive officers are not
exclusively devoted to Sun, there is a risk that these management resources may
not be immediately available when needed.

Sun does not have "key person" life insurance policies on any of its key
personnel.

IF SUN CANNOT RECRUIT ADDITIONAL PERSONNEL, SUN'S BUSINESS MAY SUFFER.

Sun's strategy is also dependent upon its continuing ability to attract and
retain other highly qualified personnel. Competition for such employees among
financial institutions is intense. Availability of personnel with appropriate
community banking experience varies. If Sun does not succeed in attracting new
employees or retaining and motivating current and future employees, Sun's
business could suffer significantly.

Since beginning operations, Sun has expanded to approximately 110
employees. Sun also has employed many new key personnel, including a President
and a number of key managerial and operations personnel. Sun expects to continue
to add additional key personnel in the near future.

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<PAGE> 12

SUN AND ITS BANKS OPERATE IN AN ENVIRONMENT HIGHLY REGULATED BY STATE AND
FEDERAL GOVERNMENT; CHANGES IN FEDERAL AND STATE BANKING LAWS AND REGULATIONS
COULD HARM SUN'S BUSINESS.

As a bank holding company, Sun is regulated primarily by the Federal
Reserve Board. Sun's current bank subsidiaries are regulated primarily by the
state banking regulators and the FDIC.

Federal and the various state laws and regulations govern numerous matters
of the banks, including;

- adequate capital and financial condition,

- permissable types, amounts and extensions of credit and investments,

- permissable nonbanking activities, and

- restrictions on dividend payments.

Federal and state regulatory agencies have extensive discretion and power
to prevent or remedy unsafe or unsound practices or violations of law by banks
and bank holding companies. Sun and its banks also undergo periodic examinations
by one or more regulatory agencies. Following such examinations Sun may be
required, among other things, to change its asset valuations or the amounts of
required loan loss allowances or to restrict its operations. Such actions would
result from the regulators' judgments based on information available to them at
the time of their examination. The banks' operations are required to follow a
wide variety of state and federal consumer protection and similar statutes and
regulations. Such federal and state regulatory restrictions limit the manner in
which Sun and its banks may conduct business and obtain financing. Those laws
and regulations can and do change significantly from time to time, and any such
change could adversely affect Sun. See "Supervision and Regulation."

REGULATORY INTERVENTION COULD SEVERELY LIMIT FUTURE EXPANSION PLANS.

The banking industry is highly regulated. Sun and each of its banks are
regulated by various governmental agencies. In order to carry out some of its
expansion plans, Sun is required to obtain permission from the Federal Reserve
Board. Applications for the formation of new banks are submitted to the state
and federal bank regulatory agencies for their approval. Many states have laws
relating to interstate banking and interstate branching by an out-of-state bank
holding company, or company controlled by an out-of-state bank holding company,
which may restrict entry or acquisition of newly formed banks by an out-of-state
bank holding company.

While Sun's recent experience with the regulatory application process has
been favorable, the future climate for regulatory approval is impossible to
predict. Regulatory agencies could prohibit or otherwise significantly restrict
the expansion plans of Sun, its current bank subsidiaries and future start-up
banks.

THE BANKS' ALLOWANCES FOR LOAN LOSSES MAY PROVE INADEQUATE TO ABSORB ACTUAL
FUTURE LOAN LOSSES.

Sun believes that its consolidated allowance for loan losses is maintained
at a level adequate to absorb any inherent losses in the loan portfolios of its
banks. Management's estimates are used to determine the allowance that is
considered adequate to absorb losses in the loan portfolios of Sun's banks.
Management's estimates are based on historical loan loss experience, specific
problem loans, value of underlying collateral and other relevant

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factors. These estimates are subjective and their accuracy depends on the
outcome of future events. Actual future losses may differ from current
estimates. Depending on changes in economic, operating and other conditions,
including changes in interest rates, that are generally beyond Sun's control,
actual loan losses could increase significantly. As a result, such losses could
exceed current allowance estimates. No assurance can be provided that the
allowance will be sufficient to cover actual future loan losses should such
losses be realized.

Because Sun's banks do not have seasoned loan portfolios, it is likely that
the ratio of the allowance for loan losses will need to be increased in future
periods as those loan portfolios become more mature. If it becomes necessary to
increase the ratio of the allowance for loan losses to total loans, such
increases would be accomplished through higher provisions for loan losses, which
will adversely impact net income or will increase operating losses.

In addition, bank regulatory agencies, as an integral part of their
supervisory functions, periodically review the adequacy of the allowance for
loan losses. Such regulatory agencies may require Sun or its banks to increase
its provision for loan losses or to recognize further loan charge-offs based
upon judgments different from those of management. Any increase in the allowance
required by regulatory agencies could have a negative impact on Sun's operating
results.

CHANGES IN INTEREST RATES MAY ADVERSELY AFFECT SUN'S BUSINESS.

Changes in Net Interest Income. Sun's profitability is significantly
dependent on net interest income. Net interest income is the difference between
interest income on interest-earning assets, such as loans, and interest expense
on interest-bearing liabilities, such as deposits. Therefore, any change in
general market interest rates, whether as a result of changes in monetary
policies of the Federal Reserve Board or otherwise, can have a significant
effect on our net interest income. Sun's assets and liabilities may react
differently to changes in overall market rates or conditions because there may
be mismatches between the repricing or maturity characteristic of assets and
liabilities. As a result, changes in interest rates can affect net interest
income in either a positive or negative way.

Changes In The Yield Curve. Changes in the difference between short and
long-term interest rates, commonly known as the yield curve, may also harm Sun's
business. For example, short-term deposits may be used to fund longer-term
loans. When differences between short-term and long-term interest rates shrink
or disappear, the spread between rates paid on deposits and received on loans
could narrow significantly, decreasing net interest income.

NO PRIOR MARKET FOR COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK PRICE.

Prior to this offering, there has been no established market for Sun's
common stock. There can be no assurance that an active public market for Sun's
common stock will develop at any time in the future. If an active market
develops, there can be no assurance that it will continue. If a public market
develops, the market price of Sun's common stock may fluctuate in response to
numerous factors, including variations in the annual or quarterly financial
results of Sun or its competitors, changes by financial research analysts in
their estimates of the earnings of Sun or its competitors or the failure of Sun
or its competitors to meet such estimates, conditions in the economy in general
or the banking industry in particular, or unfavorable publicity affecting Sun,
its banks, or the industry. In

12
<PAGE> 14

addition, equity markets have, on occasion, experienced significant price and
volume fluctuations that have affected the market price for many companies'
securities and have been unrelated to the operating performance of those
companies. Any fluctuation may adversely affect the prevailing market price of
Sun's common stock.

In addition, any significant sales of Sun's common stock owned by Capitol
could result in a significant reduction in the market price of Sun's common
stock.

SUN HAS NO PRESENT INTENTION TO PAY DIVIDENDS AND DOES NOT PLAN TO PAY DIVIDENDS
IN THE FORESEEABLE FUTURE.

Sun has not paid cash dividends on its common stock and does not plan to
pay dividends in the foreseeable future. Sun's ability to declare a dividend on
its common stock will depend upon many factors including future earnings,
operating and financial condition, capital requirements, general business
conditions and receipt of regulatory approvals, if then required. Sun is a legal
entity separate and distinct from its bank subsidiaries. Substantially all of
Sun's revenue and cash flows, including funds available for the payment of
operating expenses, is dependent upon payment of management fees and data
processing fees to Sun by its banks. Any funds available for payments of
dividends by Sun in the future, if any, will be mostly dependent upon the
payment of dividends to Sun from its banks. Dividends payable by the banks are
severely restricted by existing regulatory requirements. Further, most of Sun's
banks have a retained-earnings deficit and would be prohibited from the payment
of any cash dividends until the deficit has been eliminated and a sufficient
amount of retained-earnings would exist for the payment of a dividend.

YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION IN YOUR SHARES.

Investors in this offering will experience an immediate and substantial
dilution in the book value of the common stock. If you purchase shares of Sun's
common stock in this offering, the pro forma net book value of your shares at
March 31, 1999 would have been $9.29. This is $6.71 less than your purchase
price. See "Dilution."

MANAGEMENT WILL HAVE SUBSTANTIAL DISCRETION OVER THE USE OF THE PROCEEDS OF THIS
OFFERING.

Sun has not designated specific uses for the net proceeds of this offering.
Sun intends to use the net proceeds for investment in present and future bank
and banking holding company subsidiaries. You must rely upon the judgment of
Sun's management who will have significant flexibility with respect to applying
the net proceeds. See "Use of Proceeds."

SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT SUN'S
STOCK PRICE OR ABILITY TO RAISE CAPITAL.

If one or more of Sun's shareholders sell significant amounts of Sun's
common stock in the public market, the market price of Sun's common stock could
drop. These sales could make it difficult for Sun to raise funds through future
offerings of common stock or depress Sun's stock price at a time when Sun needs
to raise capital. Even the perception that significant amounts of shares could
be sold in the public market could affect Sun's stock price.

When this offering is complete, Sun will have outstanding 5,503,870 shares
of common stock, of which 1,536,788 will be freely transferable without
restriction or further registration as long as they are not owned by affiliates.
The remaining 3,967,082 shares, or

13
<PAGE> 15

approximately 72% of the shares outstanding after the offering, will not be
freely transferable; however, these shares may be available for future sale with
limited or no restrictions.

SUN RELIES ON COMPUTER HARDWARE, SOFTWARE, AND INTERNET-BASED TECHNOLOGY THAT
COULD HAVE YEAR 2000 PROBLEMS AND ADVERSELY AFFECT THE DELIVERY OF BANK SERVICES
TO OUR CUSTOMERS.

Sun relies extensively on computer hardware, software and related
technology, together with data, in the operation of its business. This
technology and data are used in creating and delivering bank products and
services, and in Sun's internal operations, for example, its billing and
accounting. In connection with Capitol, who uses systems similar to those Sun
uses, Sun has initiated an enterprise-wide program to evaluate the technology
and data used in the creation and delivery of bank products and services and in
Sun's internal operations. If Sun fails to complete this implementation of its
Year 2000 plan prior to the commencement of the Year 2000, or bank customers and
suppliers fail to successfully remediate their own Year 2000 issues, it could
materially adversely affect Sun and its banks. The program includes resolving
any Year 2000 issues that are related to Sun and its banks' systems, customers
and suppliers. However, there can be no assurances that third parties will
successfully remedy their own Year 2000 issues over which Sun has no control.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations for Periods Ended December 31, 1998, 1997 and 1996 -- Year 2000."

14
<PAGE> 16

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This prospectus includes forward-looking statements. Sun has based these
forward-looking statements on its current expectations and projections about
future events. These forward-looking statements may be impacted by risks,
uncertainties and assumptions. Examples of some of the risks, uncertainties or
assumptions that may impact the forward-looking statements are:

- the results of management's efforts to implement Sun's business strategy
including planned expansion into new markets such as Nevada and
California;

- adverse changes in the banks' loan portfolios and the resulting credit
risk-related losses and expenses;

- adverse changes in the economy of the banks' market areas that could
increase credit-related losses and expenses;

- adverse changes in real estate market conditions that could also
negatively affect credit risk;

- the possibility of increased competition for financial services in Sun's
markets;

- fluctuations in interest rates and market prices, which could negatively
affect net interest margins, asset valuations and expense expectations;

- changes in regulatory requirements of federal and state agencies
applicable to bank holding companies and Sun's present and future banking
subsidiaries;

- year 2000 (Y2K) computer, embedded chip and related data processing
issues; and

- other factors discussed in "Risk Factors."

Sun undertakes no obligation to publicly update or otherwise revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur.

15
<PAGE> 17

USE OF PROCEEDS

The net proceeds to Sun from the offering (after deducting estimated
expenses of the offering, which are expected to be $510,000) are estimated to be
approximately $25 million. It is currently expected that the net proceeds from
the offering will be used by Sun for investment in bank and bank holding company
subsidiaries to fund the development and growth of new or existing banks,
including expansion into new geographic markets, as part of Sun's growth
strategy. Pending application of the net proceeds described above, Sun currently
intends to place such funds as deposits at affiliated or unaffiliated banks or
invest in high-grade investment securities.

In Sun's recent experience, newly-formed banks in Arizona have been
required by bank regulators to have initial capitalization of not less than $4.2
million. Since state-chartered banks are formed under differing state rules, new
banks in states other than Arizona may require more or less than that amount and
those requirements could change, including requirements in Arizona. If Sun
purchases at least 51% of the new bank's common stock it will invest at least
$2,397,000 in each new bank if the required capital for the new bank is $4.7
million. In addition to its investment in a new bank, Sun may also fund some of
the bank's preopening and start-up costs before it opens, which could
approximate between $150,000 and $300,000. Sun anticipates that its currently
planned banks will have average initial capital of $4.7 million and that Sun
will purchase at least 51% of each bank's common stock. See "Recent
Developments."

Other than the pending bank applications and the second bank currently
planned to be developed in Nevada, Sun has not yet developed the specific plans
or identified the specific locations of additional new bank formations.
Accordingly, the cost, timing and amount of funds required by Sun for
development and growth opportunities cannot be precisely determined at this
time. Although there are no specific plans for the use of a majority of the net
proceeds, Sun is effecting this offering at this time because of favorable
market conditions that currently exist for the public offering of stock within
Sun's industry. If unforeseen events should occur or business conditions change,
some or all of the net proceeds may be applied in a different manner. See "Risk
Factors -- Management will have substantial discretion over the use of proceeds
of this offering."

16
<PAGE> 18

CAPITALIZATION

The table presented below shows Sun's actual total capitalization as of
March 31, 1999, and as adjusted to reflect the issuance and sale of 1,650,000
shares of common stock which Sun is offering in this prospectus and the
application of the estimated net proceeds as described in "Use of Proceeds."

<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt obligations........................................ $ -- $ --
Minority interest in consolidated subsidiaries.......... 9,280 9,280
Stockholders' equity:
Common Stock, no par value, 50,000,000 shares
authorized(1); issued and outstanding:
Actual -- 3,853,870 shares
As adjusted -- 5,503,870 shares.................... 26,866 51,861
Retained-earnings deficit............................. (742) (742)
Market value adjustment (net of tax effect) for
investment securities available for sale
(accumulated other comprehensive income)........... 4 4
-------- --------
Total stockholders' equity.................... 26,128 51,123
-------- --------
Total capitalization.......................... $ 35,408 $ 60,402
======== ========
Shares of common stock subject to issuance pursuant to
outstanding stock options............................. 560,973 808,473(2)
======== ========
Capital ratios:
Ratio of total capitalization to total assets......... 22.25% 32.81%
Tier 1 risk-weighted ratio............................ 25.68 40.70
Total risk-weighted ratio............................. 27.61 42.24
</TABLE>

- -------------------------
(1) Sun's Articles of Incorporation were amended in May 1999 to increase the
number of authorized shares of common stock from 10,000,000 to 50,000,000.
See "Description of Capital Stock."

(2) Assumes 247,500 additional stock options will be granted pursuant to Sun's
stock option program upon completion of the offering. See
"Management -- Stock Option Program."

17
<PAGE> 19

DIVIDEND POLICY

Sun has not declared or paid a cash dividend on its common stock and does
not plan to declare or pay a cash dividend on the common stock in the
foreseeable future. Dividends may be paid only out of legally available funds as
permitted by statute, at the discretion of Sun's board of directors. See "Risk
Factors -- Sun Has No Present Intention To Pay Dividends and Does Not Plan To
Pay Dividends in the Forseeable Future" and "Supervision and
Regulation -- Financial Institution Regulation Generally -- Dividend
Limitations."

Sun is a legal entity separate and distinct from its bank subsidiaries.
Substantially all of Sun's revenues and cash flow, including funds available for
other operating expenses, will be paid from fees charged by Sun to its banks for
management and data processing services. Funds available for payments of
dividends by Sun would principally consist of dividends paid to Sun by its
banks. Due to the development status of Sun's banks, their ability to pay
dividends to Sun is severely limited. There are also statutory and regulatory
limitations on the amount of dividends that may be paid to Sun by its banks. See
"Risk Factors -- Sun Has No Present Intention to Pay Dividends and Does Not Plan
To Pay Dividends in the Forseeable Future" and "Supervision and
Regulation -- Financial Institution Regulation Generally -- Dividend
Limitations" for a discussion of regulatory restrictions on the payment of
dividends by the banks to Sun.

18
<PAGE> 20

DILUTION

The following table summarizes the pro forma book value per share resulting
from this offering, representing an immediate increase of $2.51 per share to
current shareholders and an immediate dilution in book value of $6.71 per share
to persons purchasing shares in this offering:

<TABLE>
<S> <C> <C>
Per share price in this offering............................ $16.00
Net book value per share at March 31, 1999.................. $6.78
Increase attributable to investors in this offering......... 2.51
-----
Pro forma net book value per share after offering........... 9.29
------
Per share book value dilution to investors in this
offering(1)............................................... $ 6.71
======
</TABLE>

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

(1) Does not give effect to and assumes no prior exercise of any of currently
outstanding options to purchase up to an aggregate of 560,973 shares of
common stock, all of which are currently exercisable. If all options were
exercised, the pro forma net book value per share after the offering would
be $9.13 and the per share book value dilution to investors in this offering
would be $6.87.

The following table compares, on a pro forma basis at March 31, 1999, the
total number of shares of common stock purchased from Sun, the total cash
consideration paid and the average price per share paid by existing shareholders
prior to the offering and by investors in this offering.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE
PERCENT PERCENT PRICE
NUMBER OF TOTAL AMOUNT OF TOTAL PER SHARE
--------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1)... 3,853,870 70% $26,866,516 50% $ 6.97
Investors in this
offering................. 1,650,000 30% 26,400,000 50% 16.00
--------- ---- ----------- ----
Total............ 5,503,870 100% $53,266,516 100%
========= ==== =========== ====
</TABLE>

- -------------------------
(1) Does not give effect to and assumes no prior exercise of any currently
outstanding options to purchase up to an aggregate of 560,973 shares of
common stock, all of which are currently exercisable.

19
<PAGE> 21

RECENT DEVELOPMENTS

PENDING BANK APPLICATIONS

In February 1999, Sun filed applications for formation of East Valley
Community Bank to be located in Chandler, Arizona. These bank applications were
subsequently approved by the Arizona Banking Department and the Federal Deposit
Insurance Corporation. Sun's purchase of at least 51% of the common stock of
East Valley Community Bank was approved by the Federal Reserve Bank of Chicago,
under delegated authority of the Federal Reserve Board. This bank opened on June
30, 1999.

Nevada Community Bancorp Limited, formed in early 1999 to become a bank
holding company to be engaged in bank development activities in the state of
Nevada, was capitalized in April 1999 through a $10.0 million private placement.
Of this amount, $5.1 million was invested by Sun. Sun owns a majority interest
in Nevada Community Bancorp Limited. In April 1999, an application was filed for
Desert Community Bank to be formed and located in the community of Las Vegas,
Nevada. That application is pending approval by the state of Nevada and the
FDIC. Approval by the Federal Reserve Board or, under delegated authority, the
Federal Reserve Bank of Chicago will be necessary for Nevada Community Bancorp
Limited's purchase of a majority interest in Desert Community Bank.

RECENT HIRINGS

In February 1999, Sun hired John S. Lewis to become President and a
director of Sun. Mr. Lewis has substantial banking experience in the
Southwestern portion of the United States with 22 years of prior banking
experience. Mr. Lewis will oversee bank performance and Sun's support services
provided to its banks.

In early 1999, Sun hired Thomas C. Mangione to become Chief Operating
Officer of Nevada Community Bancorp Limited. Mr. Mangione has over 23 years of
experience in the banking industry, serving in varying capacities at First
Interstate Bank (subsequently merged with Wells Fargo). He also served on the
board of directors of Wells Fargo Bank from 1995 to 1996. Mr. Mangione will
provide oversight to Nevada Community Bancorp Limited's banks.

FUTURE EXPANSION

Sun plans to continue its expansion through the development of newly formed
banks. Sun has under consideration additional markets including Albuquerque, New
Mexico, California, and additional sites in Las Vegas, Nevada for this
expansion. Sun expects to file a second Nevada bank application during 1999. Sun
will continue to explore new markets in the Southwest and currently anticipates
that at least two additional bank formations will be pursued in 1999. However,
as of the date of this offering, no other applications have been filed.

20
<PAGE> 22

BUSINESS

OVERVIEW

Sun Community Bancorp Limited is a recently-formed company engaged in the
business of bank development. Its approach to banking is focused on the
development and operation of a number of small banks during an era of industry
consolidation and branching. Sun believes it follows a unique approach which
includes local investment in its community banks. Each of Sun's banks operates
independently. Each bank is community-focused in its business activities in
terms of local investment, local leadership and local decision-making in all
aspects of making loans and providing deposit services. Sun's primary roles are
bank development and providing services, including data processing, accounting
and similar administrative activities, which are most efficiently performed on a
combined basis for the banks.

Sun was organized as an Arizona corporation on November 4, 1996. It became
a bank holding company in May 1997 when it completed a share exchange with the
shareholders of Bank of Tucson, an Arizona commercial bank. Bank of Tucson had
been formed by the same group of organizers in June of 1996. As a result of that
share exchange, Bank of Tucson became Sun's first bank subsidiary, and is 100%
owned by Sun.

Although viewed by regulators as a bank holding company, Sun describes
itself as a bank development company. The concept of bank development differs
from 'bank holding' because it is more active, proactive and dynamic.

Sun views bank development as:

- managing Sun's investments in its banks,

- mentoring new banks through their most crucial and early formative
periods,

- identifying opportunities for development of new banks,

- recruiting management from the local community for new banks,

- recruiting directors from the local community for new banks,

- facilitating the regulatory process for new banks, and

- raising capital for new banks.

Sun's approach to bank development is patterned after Capitol Bancorp's
successful bank development strategy. Capitol has total assets of approximately
$1 billion and includes 17 banks currently. Capitol's assets and number of banks
include Sun and Sun's banks because of Capitol's 51% ownership of Sun.

SUN'S BANKING PHILOSOPHY

The focus of Sun's banking philosophy is the bank customer. In this era of
bank consolidation, branch closings and treating bank customers as a commodity,
management believes opportunities for customer-focused banking are significant.

Sun's banks are small and operate in big markets. They operate from a
single location and do not have any branches. Each bank has a president. The
president's office is adjacent to the bank lobby and his or her door is open to
customers. The bank president serves customers. Each bank makes its own credit
decisions. Each bank prices and markets its own loan and deposit products. Each
bank has its own board of directors, drawn mainly from leaders within the local
business community, which has full authority over the bank,

21
<PAGE> 23

in contrast to "advisory" boards which lack authority. Each bank begins with
local investors. Each bank endeavors to be a solid citizen in its community.

Each bank is focused on the customer. Sun provides the back-room and
administrative support and mentoring to aid in the development and growth of the
banks.

In the past few years, a number of independent banks have been formed by
others, resulting from the waves of consolidation in the banking industry.
However, Sun's banking philosophy differs from some other banks in a number of
significant ways.

Sun emphasizes minimal capitalization of its banks, generally $5 million or
less, in order to achieve the benefits of leverage earlier and, in Sun's
opinion, at a significantly lower cost than independently formed banks. Sun's
external costs of raising capital for its banks on a community offering basis
have typically approximated less than $175,000 per bank. Some other banks are,
in Sun's opinion, excessively capitalized at $10 million or more, often through
an initial public offering of their common stock. When capitalized at that
level, the costs of raising capital can be $750,000 or more, and can often take
an extended period of time to achieve appropriate leverage (i.e., adding
sufficient loans and deposits to create a reasonable return on equity). Sun's
banks emphasize their smallness. Larger banks tend to emphasize their need for a
targeted market share because they need to, in part, due to their larger
capitalization. On the other hand, Sun's banks do not focus on market share as a
key indicator of success; being a small bank in a big market can provide a
superior rate of return on deployed capital and assets.

Sun's banks have access to an efficient back-room and a management team
which has significant experience in starting community banks. In contrast, some
other banks must independently identify and implement back-room systems and
typically lack experience in starting new banks. Sun's banks start small and
stay small from a management and staffing perspective. Typically, Sun's banks
begin with a total staff of less than 10 people and then add staff when growth
and customer service needs dictate. Larger banks tend to have infrastructure or
larger staff and hierarchy.

Recent industry statistics report that newly formed banks on average take
between one and two years to reach break-even operating results. Sun's banks
seek to achieve profitability within their first year of operation and to earn
back their operating losses in advance of their 36th month of operation. For
example, Bank of Tucson achieved profitability in its 11th month and cumulative
profitability in its 19th month of operation. Valley First Community Bank has
been operating for almost two years. It became profitable in its 13th month and
has not yet reached cumulative profitability. Camelback Community Bank, Southern
Arizona Community Bank, Mesa Bank, and Sunrise Bank of Arizona have not yet
reached profitability. They range in age from five to 12 months.

SUN'S CONCEPT OF SHARED VISION

Under Sun's approach, each of Sun's banks conducts a community stock
offering prior to opening. Typically, up to 49% of the bank's stock will be sold
in the local community, generally involving more than 100 local investors. When
forming a new bank, Sun purchases a majority interest and does not seek 100%
ownership.

Sun views this joint ownership to be a shared vision. It is a vision that
the community has a need for a new bank, one which is focused on the customer.
It is shared because of the joint investment of community investors and Sun.
Sun's management believes its shared vision concept also applies to other
relationships, including bank customers and employees.

22
<PAGE> 24

Sun's strategy of involving community investors in the newly formed banks
has several advantages:

- requires less capital investment in new banks by Sun at the outset,

- ties the local community to the bank better than solely through
marketing,

- reduces the amount of early period startup losses in Sun's net income,
and

- leverages Sun's capital.

Under current accounting rules, entities which are more than 50% owned by
another are consolidated or combined for financial reporting purposes. This
means that all of the banks' assets are included in Sun's consolidated balance
sheet, regardless of whether Sun owns 51% or 100%. Sun's net income, however,
will only include its subsidiaries net income or net loss to the extent of its
ownership percentage. This means that when a newly formed bank incurs early
start-up losses, Sun will only reflect that loss based on its ownership
percentage. Conversely, when banks generate income, Sun will only reflect that
income based on its ownership percentage. Based on Sun's experience, it
typically requires a full year of operation before a bank becomes profitable.

SUN'S CURRENT OPERATIONS

After its initial formation and first bank addition, Sun added several
newly-formed banks to its consolidated group. In 1997, Sun added one new bank,
bringing the total number of banks to two at year end 1997. 1998 was a year of
significant bank development activity, with the addition of four banks. At year
end 1998, the consolidated group included a total of six banks, all less than
three years old at that date and four less than one year old.

All of Sun's current banks are located in Arizona. The following table
lists each of the fully operational banks, their community and related summary
information:

<TABLE>
<CAPTION>
SUN'S
OWNERSHIP
BANK LOCATION PERCENTAGE DATE OPENED
- ---- ---------- ---------- -------------
<S> <C> <C> <C>
Bank of Tucson........................ Tucson 100% June 1996
Valley First Community Bank........... Scottsdale 52% June 1997
Camelback Community Bank.............. Phoenix 55% May 1998
Southern Arizona Community Bank....... Tucson 51% August 1998
Mesa Bank............................. Mesa 53% October 1998
Sunrise Bank of Arizona............... Phoenix 51% December 1998
</TABLE>

Each of the banks operates from a single location, without branches. The
banks are organized as state commercial banks and their deposits are insured by
the FDIC.

Sun's plans for 1999 include the ongoing growth and development of its
existing banks and the formation of additional new banks. See "Recent
Developments."

BANK DEVELOPMENT ACTIVITY OCCURS ON VARIOUS LEVELS. In Arizona, Sun's
banks are direct subsidiaries, although Sun's ownership varies between 51% and
100%, as shown in the table above. In states other than Arizona, Sun intends to
form new banks through subsidiary bank holding companies which are
majority-owned by Sun.

23
<PAGE> 25

For example, in early 1999, Nevada Community Bancorp Limited was formed. In
April 1999, the Nevada company completed a private placement of $10 million of
common stock, of which Sun purchased $5.1 million. As a result, Sun owns 51% and
has majority voting control of the Nevada company. The Nevada company is
expected to purchase a majority interest in a bank being formed in Las Vegas
later this year. The Nevada company may also purchase a majority interest in one
or two additional banks in Nevada in 1999. It is expected that Sun will provide
back-room and related administrative support services to the Nevada company and
its future subsidiary banks.

Sun provides back-room and administrative support services on a combined
basis for each of the banks. These services include:

- data processing,

- processing of checks and deposits,

- accounting,

- internal and external financial reporting,

- asset/liability management,

- internal audit,

- credit administration and loan review,

- regulatory compliance assistance,

- budgeting,

- strategic planning,

- legal support services,

- human resources and employee benefits administration, and

- other administrative support services.

These back-room and administrative support services do not involve a direct
interface with the bank customer. Sun is able to provide these services
economically and efficiently and at a lower cost to each bank than if they had
to contract for services separately through other providers. Sun also provides
these services on a transparent basis, maintaining the customer-contact
interface at the bank level.

Sun also actively monitors and mentors its banks through the following
activities:

- Reviewing monthly financial statements of each bank, including
comparisons to budget and other goals or performance targets,

- Actively participating in the development of detailed budgets for each
bank,

- Periodic internal auditing of transactions, balances, lending activity
and deposit gathering,

- Loan review procedures to monitor loan quality, origination procedures
and identification of problem loans,

- Asset/liability management assistance to monitor and enhance
profitability, balance sheet management and net interest margins, and

- Implementing a comprehensive risk management program which includes a
risk matrix and assesses trends in business and financial risks at each
bank.

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<PAGE> 26

Sun currently anticipates using a similar bank development strategy in
other states, such as California and New Mexico. While other states are
currently under consideration by Sun's management, there are no specific plans
at this time.

MARKETS

Sun's banks currently are all located in the state of Arizona. Two are
located in greater Tucson and the rest are located in or around Phoenix. The
metropolitan area of both Phoenix and Tucson are large and Sun's banks in those
communities do not compete with each other either due to having sufficient
geographic distance from each other or differing business emphasis.

Phoenix is located within Maricopa County, one of the nation's fastest
growing economies. Pima County, which includes greater Tucson has reported
significant growth in recent years, but at a pace less than Maricopa County.
According to recent statistics, Maricopa County is one of the fastest growing
counties in the United States.

Each of the banks offers a comprehensive range of banking products and
services, tailored to meet the needs of the bank customers. The banks' primary
customer emphasis is on entrepreneurs, professionals and other high net worth
individuals seeking personalized banking services. The banks emphasize
commercial loans, consistent with the banks' focus on business customers. The
banks also offer residential and other consumer loans. One bank, Sunrise Bank of
Arizona, emphasizes SBA lending (loans made through the Small Business
Administration, an agency of the US government).

Each bank defines its own particular market. No map lines are drawn to
prohibit any of Sun's banks from pursuing customers in particular areas. Each
bank develops its own marketing effort, tailored to the strengths of bank
management, the bank's location and bank's board of directors.

The banks offer trust services through Valley First Community Bank, which
is Sun's only bank currently having trust powers. Bank of Tucson has a
wholly-owned subsidiary, Sun Community Mortgage Company, which offers certain
types of residential mortgage loans, principally in greater Tucson.

Each of the banks offers a wide range of deposit products, with emphasis on
business checking accounts and time deposits.

COMPETITION

The markets of Sun's banks are dynamic and highly competitive. Sun's banks
are small banks in large markets. The market share of Sun's banks, individually
and collectively, is not significant. Sun's banks are not expected to achieve
significant market share, rather, they are expected to remain small.

Banking services, in general, are viewed as a commodity. This perception
seems to result from a retail orientation of larger, megabanks and other mass
marketers of financial services. Sun's banks do not have a retail focus, they
have a relationship focus. Sun's banks seek the profitable customer relationship
which has been displaced through mergers, mass marketing and an impersonal
approach to handling the customer. Sun believes that there is a large enough
group of profitable customers seeking a banking relationship within Sun's target
markets to enable small customer-focused banks to thrive in the shadows of
larger institutions. There is, however, little statistical evidence to support
this view.

25
<PAGE> 27

Competition for loans and deposits is intense in Sun's markets. Larger
banks and nonbank financial institutions are aggressive in their efforts to
obtain banking business on the basis of price, delivery and service. While Sun's
banks frequently encounter competitive situations in both loans and deposits
which are price driven, Sun's banks emphasize their personalized service and
ability to meet the customers' needs, rather than emphasizing price. Competitive
opportunities based solely on price are not desirable to Sun's banks; the
emphasis is on customer relationships.

Sun's banks' competitive advantages are:

- local decision making,

- quick response time,

- service, and

- follow-through.

The competitors of Sun's banks vary from large to very large banks. In
addition, there is a significant number of nonbank competitors, including
commercial finance companies, credit unions, credit card issuers, loan 'stores'
and numerous other companies and agencies which provide credit or investment
accounts or both. All of the competitors are significantly larger than Sun's
banks, individually and collectively, and have resources much larger than Sun or
its banks.

The small size of Sun's banks limits the size of the loans each bank can
make. All commercial banks have legal lending limits which are based primarily
upon a bank's capital. Larger banks have significantly larger legal lending
limits than small banks, such as Sun's. While this can adversely impact the
banks' ability to compete on loan transactions, the banks can make larger loans
than their individual lending limit through having other banks, which can be
affiliated or unaffiliated banks, participate in making the loan. Sun's banks
emphasize commercial loans of $350,000 to $600,000 individually and larger loans
through loan participations with other banks.

Each of Sun's banks operates from a single location. Competitors generally
operate from multiple locations including branches and the Internet. The single
locations of Sun's banks are not perceived to be a limiting factor but are
perceived to be a competitive advantage because:

- the customer seeks a banking relationship,

- the bank's decision-makers are on site,

- the bank makes house calls (courier service or other on-site delivery),
and

- the bank's location is convenient.

EMPLOYEES

At March 31, 1999, Sun and its banks employed a total of 110 full time
employees. None of the work force is unionized. Management believes that its
relationships with employees is good.

PROPERTIES

As of March 31, 1999, none of Sun's or its banks' facilities are owned by
Sun. Sun's and its banks' office facilities are leased under operating leases
with third parties except for an operating lease for a proposed bank location.
See "Recent Developments." These lease

26
<PAGE> 28

agreements typically have a lease term of 10 years plus renewal options. Sun
believes that its facilities are adequate for its operations, as now conducted.
Additional information about Sun's rent expense and lease commitments is
included in the accompanying financial statements for the periods ended December
31, 1998.

RELATIONSHIP WITH CAPITOL BANCORP LTD.

Sun is 51% owned by Capitol Bancorp Ltd., a Michigan based, publicly traded
bank holding company. Capitol will purchase about 51% of the shares sold in this
offering and will maintain its 51% ownership of Sun. Capitol is currently
required by the Federal Reserve Board to maintain not less than 51% voting
control of Sun. Sun has entered into an anti-dilution agreement with Capitol
which requires Sun to afford to Capitol the opportunity to maintain Capitol's
ownership percentage of Sun at 51%. Pursuant to Capitol's By-Laws, Joseph D.
Reid, as President of Capitol, has authority to vote Sun's shares held by
Capitol.

Sun and Capitol, and their bank subsidiaries, share a number of common
directors and executive officers. Sun's Chairman and Chief Executive Officer,
Joseph D. Reid, is also Chairman, President and Chief Executive Officer of
Capitol. Mr. Reid is also a significant shareholder of Sun and Capitol. Lee W.
Hendrickson is Senior Vice President and Chief Financial Officer of Sun and
Capitol. Cristin Reid English is Vice President and General Counsel of Sun and
Capitol, and director of two subsidiary banks of Capitol.

Sun and its banks operate separately from Capitol. Although Sun's and
Capitol's data processing systems are substantially similar, they are physically
separate in different states and are not interdependent.

Some of Sun's employee benefit plans are either patterned after Capitol's
or are a part of a multiemployer plan with Capitol. Sun and Capitol jointly
purchase some insurance, including property, casualty, directors' and officers'
insurance.

Michael L. Kasten, Sun's Vice Chairman, is also a director of Capitol.
Michael J. Devine, a director of Sun, is also a director of Oakland Commerce
Bank, a subsidiary of Capitol. Messrs. Kasten and Devine both serve as directors
of each of Sun's current bank subsidiaries.

There are no agreements or understandings which prohibit Capitol from
engaging in business activities in competition with Sun or its banks. Similarly,
there are no agreements or understandings which prohibit Sun from engaging in
business activities in competition with Capitol or its bank subsidiaries. See
"Risk Factors -- There are potential conflicts of interest relating to Capitol
Bancorp Ltd."

LEGAL PROCEEDINGS

Neither Sun nor any of its banks are a party to any legal proceeding or are
aware of any threatened litigation where Sun or its banks may be exposed to any
material loss.

27
<PAGE> 29

SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Selected consolidated financial data as of and for the periods ended
December 31, 1998 are derived from, and should be read in conjunction with,
Sun's Consolidated Financial Statements appearing elsewhere in this prospectus.
Selected consolidated financial data as of and for the three months ended March
31, 1999 and 1998 should also be read in conjunction with the Condensed
Consolidated Interim Financial Statements of Sun and the Notes thereto,
appearing elsewhere in this prospectus, and the information set forth under
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." AS DESCRIBED ELSEWHERE IN THIS PROSPECTUS,
BECAUSE OF THE NUMBER OF BANKS ADDED IN 1997 AND 1998, SUN'S HISTORICAL
OPERATING RESULTS ARE OF LIMITED RELEVANCE IN EVALUATING SUN'S HISTORICAL
FINANCIAL PERFORMANCE AND PREDICTING SUN'S FUTURE OPERATING RESULTS.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 PERIODS ENDED DECEMBER 31
------------------ -----------------------------
1999 1998 1998(1) 1997(2) 1996(3)
-------- ------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF OPERATIONS
DATA:
Interest income:
Portfolio loans (including
fees)....................... $ 2,258 $ 913 $ 5,296 $ 1,845 $ 114
Loans held for resale.......... 28 -- 30 -- --
Taxable investment
securities.................. 200 185 763 736 186
Federal funds sold............. 461 237 1,230 290 45
Interest-bearing deposits with
banks and other............. 29 -- 25 -- 9
-------- ------- -------- ------- --------
Total interest
income.............. 2,976 1,335 7,344 2,871 354
Interest expense:
Demand deposits................ 546 270 1,427 626 74
Savings deposits............... 3 2 9 6
Time deposits.................. 337 123 844 282 41
Other.......................... -- -- -- -- 8
-------- ------- -------- ------- --------
Total interest
expense............. 886 395 2,280 914 123
-------- ------- -------- ------- --------
Net interest income.... 2,090 940 5,064 1,957 231
Provision for loan losses........ 209 41 379 268 49
-------- ------- -------- ------- --------
Net interest income
after provision for
loan losses......... 1,881 899 4,685 1,689 182
Noninterest income:
Service charges on deposit
accounts.................... 70 38 224 87 8
Other.......................... 48 21 110 38 2
-------- ------- -------- ------- --------
Total noninterest
income.............. 118 59 334 125 10
</TABLE>

28
<PAGE> 30

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 PERIODS ENDED DECEMBER 31
------------------ -----------------------------
1999 1998 1998(1) 1997(2) 1996(3)
-------- ------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Noninterest expense:
Salaries and employee
benefits.................... $ 1,410 $ 409 $ 2,673 $ 1,021 $ 246
Occupancy...................... 241 76 546 179 24
Equipment rent, depreciation
and maintenance............. 247 89 557 173 34
Deposit insurance premiums..... 2 1 6 1 1
Other.......................... 563 221 1,548 662 135
-------- ------- -------- ------- --------
Total noninterest
expense............. 2,463 796 5,330 2,036 440
-------- ------- -------- ------- --------
Income (loss) before
federal income
taxes, minority
interest and
cumulative effect of
change in accounting
principle........... (464) 162 (311) (222) (248)
Federal income taxes (benefit)... (64) 75 29 (33) (84)
-------- ------- -------- ------- --------
Income (loss) before minority
interest and cumulative effect
of change in accounting
principle...................... (400) 87 (340) (189) (164)
Minority interest in net losses
of consolidated subsidiaries... 224 30 397 117 --
-------- ------- -------- ------- --------
INCOME (LOSS) BEFORE CHANGE IN
ACCOUNTING PRINCIPLE........... (176) 117 57 (72) (164)
Cumulative effect of change in
accounting principle, net of
income tax effect(4)........... (386) -- -- -- --
-------- ------- -------- ------- --------
NET INCOME (LOSS)................ $ (562) $ 117 $ 57 $ (72) $ (164)
======== ======= ======== ======= ========
NET INCOME (LOSS) PER SHARE:
Before cumulative effect of
change in accounting
principle
Basic..................... $ (0.05) $ 0.04 $ 0.02 $ (0.05) $ (0.14)
======== ======= ======== ======= ========
Diluted................... $ (0.05) $ 0.04 $ 0.02 $ (0.05) $ (0.14)
======== ======= ======== ======= ========
After cumulative effect of
change in accounting
principle
Basic..................... $ (0.15) $ 0.04 $ 0.02 $ (0.05) $ (0.14)
======== ======= ======== ======= ========
Diluted................... $ (0.15) $ 0.04 $ 0.02 $ (0.05) $ (0.14)
======== ======= ======== ======= ========
Cash dividends paid per
share..................... -- -- -- -- --
</TABLE>

29
<PAGE> 31

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

Notes:

(2) Includes Valley First Community Bank (effective June 1997). Sun acquired
Bank of Tucson in a share exchange transaction effective May 1997.

(3) Period ended December 31, 1996 consisted only of Bank of Tucson which
commenced operations effective June 1996.

(5) Excludes outstanding stock options.

(6) Includes stockholders' equity and minority interest in consolidated
subsidiaries.

30
<PAGE> 32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PERIODS ENDED MARCH 31, 1999 AND 1998

This narrative discusses Sun's financial condition and results of
operations and should be read with the Condensed Consolidated Interim Financial
Statements. This discussion also includes historical financial information as
well as some statements which are "forward-looking." Forward-looking statements
are subject to a variety of future events and uncertainties. Readers are
cautioned not to place significant reliance on such forward-looking statements.
Past trends and results may not be reliable indicators of future results or
trends. A number of important factors, which are outside of Sun's or
management's control, could affect actual future results and cause actual future
results to differ materially from those in the forward-looking statements.

OVERVIEW

See page 34 for information regarding the presentation of Sun's
consolidated financial statements and treatment of minority interests under
generally accepted accounting principles.

The interim periods for the three months ended March 31, 1999 and 1998
differ significantly. The 1998 period included two banks, Bank of Tucson and
Valley First Community Bank. The 1999 period includes those two banks plus four
more banks which were formed after March 31, 1998 (Camelback Community Bank,
Southern Arizona Community Bank, Mesa Bank, and Sunrise Bank of Arizona).

At March 31, 1999, consolidated total assets were $159.1 million, a
significant increase from the beginning of the year level of $135.6 million and
more than double the approximate $74.5 million at March 31, 1998.

The 1999 interim period included a net loss from operations, before the
cumulative effect of a change in accounting principle (as discussed below) of
approximately $176,000, due to four of Sun's banks being less than one year old
and incurring their expected early-period losses. In the three months ended
March 31, 1998, net income approximated $117,000.

CHANGES IN CONSOLIDATED FINANCIAL CONDITION

Total assets were $159.1 million at March 31, 1999. Consolidated total
assets increased $23.5 million during the three months ended March 31, 1999.
Such asset growth was 17% for that period or an annualized growth rate of 69%,
based on consolidated assets of $135.6 million at the beginning of the year.

The change in total assets was the result of growth at each of Sun's six
banks.

The allowance for loan losses, as a percentage of total loans, was 1.02% at
March 31, 1999, and 1.00% at March 31, 1998. Sun's banks, as a condition of
charter approval, are required to maintain an allowance for loan losses of not
less than 1.00% for their first few years of operation. The allowance for loan
losses is maintained at a level believed to be adequate by management to absorb
potential losses in the portfolio incurred at the balance sheet date.

Portfolio loans increased $18.1 million during the three months ended March
31, 1999, an increase of 26.6% from the beginning of the year. The annualized
rate of growth in portfolio loans exceeded 100%. Most of the loan growth
occurred in commercial loans,

31
<PAGE> 33

which comprised 90% of total loans at March 31, 1999, relatively unchanged from
the percentage at the beginning of the year. The growth and concentration in
commercial loans is consistent with the banks' emphasis on fulfilling the credit
needs of entrepreneurs, professionals, commercial real estate developers and
other small, local businesses within their communities.

Cash and cash equivalents increased $2.6 million in the first quarter of
1999. Total cash and cash equivalents were $50.9 million at March 31, 1999, or
32.0% of total assets.

Total deposits were $122.6 million at March 31, 1999, compared to $98.8
million at the beginning of the year. The ratio of non-interest bearing deposits
to total deposits decreased from 28.4% at the beginning of the year to 23.9% at
March 31, 1999. The change in this ratio is the result of increases in time
deposits at the banks.

CONSOLIDATED INTERIM RESULTS OF OPERATIONS

Total interest income was $3.0 million for the three months ended March 31,
1999, compared to $1.3 million for the corresponding 1998 period, an increase of
123%. Similar increases occurred in Sun's other categories of operating results,
including interest expense, provisions for loan losses, net interest income and
non-interest expenses.

Consolidated operations resulted in a net loss of approximately $176,000
for the three month 1999 period, before the cumulative effect of a change in
accounting principle.

In 1998, the American Institute of CPAs issued a Statement of Position
which changes the accounting for costs of start-up activities. It requires
start-up and organizational costs to be charged to expense when incurred. In the
circumstances of Sun and its banks, this new accounting standard applies to
previously capitalized pre-opening and other start-up costs of its banks which,
net of amortization, were $1,149,000 at December 31, 1998, and classified as a
component of other assets at that date. Implementation of this standard is
reflected as a cumulative effect adjustment (net of income tax effect) of
$386,000 charged to operations effective January 1, 1999.

LIQUIDITY, CAPITAL RESOURCES AND CAPITAL ADEQUACY

Sun continued to maintain significant consolidated liquidity in the form of
cash and cash equivalents at December 31, 1998. In addition to cash and cash
equivalents, Sun's banks have further liquidity in investment securities
available for sale, which approximated $14.4 million at March 31, 1999, an
increase of approximately $1.5 million from the December 31, 1998 level of $12.9
million.

Stockholders' equity approximated $26.1 million at March 31, 1999, or 16.4%
of consolidated total assets.

Sun's consolidated financial statements for the period ended December 31,
1998, and the accompanying narrative regarding financial condition and results
of operations, include a discussion of capital adequacy and various matters
relating to current regulatory capital requirements. That information is not
repeated here and readers should refer to those disclosures and commentary. In
the opinion of management, all of Sun's affiliated banks meet the regulatory
criteria to be classified as "well capitalized" at March 31, 1999.

TRENDS AFFECTING OPERATIONS

See the accompanying "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the periods ended December 31, 1998,
1997 and 1996 for a

32
<PAGE> 34

discussion beginning on page 39 of trends affecting Sun's operations and the
operations of its banks, including the anticipated impact of new bank formations
on earnings performance discussed on page 42. That information is not repeated
here, and readers should refer to that narrative.

No significant changes in interest rates occurred during the three months
ended March 31, 1999, as compared with December 31, 1998. Competition for
deposits has continued to be intense during early 1999 as is the case with
competition for new loans.

YEAR 2000

The accompanying "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the periods ended December 31, 1998,
1997 and 1996 includes a thorough discussion of Year 2000 issues and its
potential impact on Sun and its banks. Readers should refer to that discussion.

During the three months ended March 31, 1999, management continued its
efforts to address the Year 2000 issue, in terms of testing, remediation of
systems and development of contingency plans.

The efforts of Sun and its banks on this issue are significant and
on-going. Even with the extensive testing methodologies implemented by Sun, its
banks and other financial institutions, until the century date change actually
occurs and it is determined that such systems properly process data after that
date, there can be no assurance that such systems will function properly,
despite adequate and appropriate planning, testing and remediation efforts.

Sun and its banks, in their on-going effort to competently address evolving
Year 2000 issues, will continue to devote both human and financial resources to
this issue.

NEW ACCOUNTING STANDARDS

As previously mentioned, a new accounting standard was implemented
effective January 1, 1999, which required the write off of previously
capitalized start up and organizational costs.

The accompanying "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the periods ended December 31, 1998,
1997 and 1996 includes a discussion of new accounting standards adopted in 1998
and certain other new accounting standards which will become effective in 1999.
Readers should refer to that discussion for additional information.

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

33
<PAGE> 35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PERIODS ENDED DECEMBER 31, 1998, 1997 AND 1996

This narrative discusses Sun's financial condition and results of
operations and should be read with the Consolidated Financial Statements. This
discussion also includes historical financial information as well as some
statements which are "forward-looking." Forward-looking statements are subject
to a variety of future events and uncertainties. Readers are cautioned not to
place significant reliance on such forward-looking statements. Past trends and
results may not be reliable indicators of future results or trends. A number of
important factors, which are outside of Sun's or management's control, could
affect actual future results and cause actual future results to differ
materially from those in the forward-looking statements.

OVERVIEW

1998 was another significant year in Sun's evolution. Sun completed 1998
with six operating banks, after beginning the year with two. Total consolidated
assets were $135.6 million at December 31, 1998, compared to $55.0 million at
year-end 1997.

1998 also marked Sun's first period of profitability with net income of
$57,000, compared with a loss of $72,000 in 1997.

The 1996 period referred to herein relates to Bank of Tucson which was
formed in June 1996. Hence, the 1996 period was less than a full year. Bank of
Tucson became a wholly-owned subsidiary of Sun in May 1997 in a share exchange
transaction.

Under current accounting rules, entities which are more than 50% owned by
another are consolidated for financial reporting purposes. This means that all
of the banks' assets are included in Sun's consolidated balance sheet,
regardless of whether Sun owns 51% or 100%. Sun's net income, however, will only
include its subsidiaries' net income or net loss to the extent of its ownership
percentage. This means that when a newly-formed bank incurs early start-up
losses, Sun will only count that loss to the extent of its ownership percentage.
Conversely, if a bank generates income, Sun will only count that income based on
its ownership percentage. Based on Sun's experience, it typically requires a
full year of operation before a new bank becomes profitable.

CHANGES IN CONSOLIDATED GROUP

Each of the periods of 1996, 1997 and 1998 have been significant periods of
evolution for Sun. Through the development of new banks, Sun has actively
pursued bank development in addition to managing its investments in its
previously existing bank subsidiaries.

Sun is a uniquely structured affiliation of community banks. Each bank has
only one location, and is focused on meeting the banking needs of entrepreneurs,
professionals and other individuals seeking individually-tailored service within
its own market. Each bank has full decision-making authority in structuring and
approving loans and the delivery of other banking services. Each bank is managed
by an on-site president and management team under the direction of its local
board of directors, which is comprised of business leaders from that bank's
community.

Sun's community banking philosophy involves the formation and operation of
small, customer-focused, community banks. These banks have been organized on a
"partnership"

34
<PAGE> 36

basis through which local investors purchase up to 49% of the bank's common
stock. Ideally, more than 100 local business leaders and other community
individuals become shareholders in those community banks. This approach also
serves to aid in the formation of the initial customer base for those new banks,
since those community shareholders typically open accounts at their new
community bank.

At year-end 1998, Sun's affiliated banks include the following:

<TABLE>
<CAPTION>
YEAR ARIZONA
FORMED COMMUNITY
------ ----------
<S> <C> <C>
Bank of Tucson............................................ 1996 Tucson
Valley First Community Bank............................... 1997 Scottsdale
Camelback Community Bank.................................. 1998 Phoenix
Southern Arizona Community Bank........................... 1998 Tucson
Mesa Bank................................................. 1998 Mesa
Sunrise Bank of Arizona................................... 1998 Phoenix
</TABLE>

CHANGES IN CONSOLIDATED FINANCIAL POSITION

Total assets were $135.6 million at December 31, 1998. Assets increased in
1998 approximately $80.6 million compared to consolidated total assets of $55.0
million at December 31, 1997.

A significant portion of the asset growth in 1998 ($34.0 million) was the
result of banks which were newly formed during the year. Bank of Tucson, Sun's
first banking subsidiary, increased its assets about 53% or $22.3 million in
1998. Valley First Community Bank, Sun's second bank subsidiary (formed in
mid-1997), increased its assets nearly three-fold in 1998, or $23.8 million.

At year-end 1998, total portfolio loans were $68.1 million or about 50% of
total assets. Portfolio loans increased more than 100% in 1998, from $31.2
million.

Commercial loans comprised nearly 90% of total portfolio loans at year-end
1998 and 84% of total portfolio loans at December 31, 1997. The growth and
concentration in commercial loans is consistent with the banks' emphasis on
fulfilling the credit needs of entrepreneurs, professionals, commercial real
estate developers and other small, local businesses within their communities.

Cash and cash equivalents also increased significantly in 1998 from $10.1
million at the beginning of the year to $48.4 million at December 31, 1998. Cash
and cash equivalents approximated 36% of total assets at year-end 1998, which is
a higher percentage than year-end 1997 (18%). This increase, as a percentage, is
a predictable result from recently formed banks which generally achieve deposit
growth at a rate faster than the rate at which funds can be deployed into loans.

Most of the asset growth in 1998 was funded by increases in deposits, which
grew more than 100% from $42.9 million to $98.8 million at December 31, 1998.
Most of the $55.9 million deposit growth was deployed into loans ($36.8 million)
and interest-bearing cash equivalents (federal funds sold).

35
<PAGE> 37

A comparative summary of the individual banks' total portfolio loans,
allowance for loan losses, nonperforming loans and loan loss allowance ratios
follows:

<TABLE>
<CAPTION>
ALLOWANCE AS A
ALLOWANCE PERCENTAGE OF
TOTAL FOR NONPERFORMING TOTAL
PORTFOLIO LOANS LOAN LOSSES LOANS PORTFOLIO LOANS
----------------- ----------- -------------- ---------------
1998 1997 1998 1997 1998 1997 1998 1997
------- ------- ---- ---- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bank of Tucson............ $37,899 $23,406 $392 $235 $ -- $ -- 1.03% 1.00%
Valley First Community
Bank.................... 20,879 7,830 209 82 -- -- 1.00 1.05
Camelback Community Bank.. 3,246 n/a 33 n/a -- n/a 1.02 n/a
Southern Arizona Community
Bank.................... 2,925 n/a 30 n/a -- n/a 1.03 n/a
Mesa Bank................. 1,386 n/a 14 n/a -- n/a 1.01 n/a
Sunrise Bank of Arizona... 1,745 n/a 18 n/a -- n/a 1.03 n/a
------- ------- ---- ---- ---- ---- ---- ----
Consolidated.............. $68,080 $31,236 $696 $317 $ -- $ -- 1.02% 1.01%
======= ======= ==== ==== ==== ==== ==== ====
</TABLE>

- -------------------------
n/a -- not applicable

The allowance for loan losses is maintained at a level believed adequate by
management to absorb potential losses in the portfolio incurred at the balance
sheet date. A number of elements are considered in management's determination of
the adequacy of the allowance which includes evaluation of recent loss
experience (minimal thus far), current economic conditions, volume, amount and
composition of the portfolio, loan commitments outstanding and other factors.

The allowance for loan losses, as a percentage of portfolio loans, has
approximated 1% for the periods presented. New banks, as a condition of charter
approval, are generally required to maintain an allowance for loan losses of not
less than 1% for their first few years of operation. More mature banks typically
maintain substantially higher loan loss allowances, on a percentage basis. The
lower allowance ratio for newly-formed banks is appropriate in the context of
their young and, hence, unseasoned loan portfolios. While the lower allowance
ratio is appropriate in early periods for new banks, ultimately it is expected
that they will increase their allowance ratios as they mature and their loan
portfolios become more seasoned.

The consolidated balance sheets as of December 31, 1998 and 1997 include
the total assets of each of Sun's bank subsidiaries, regardless of whether those
banks are wholly-owned (in the case of Bank of Tucson) or are less than 100%,
but majority, owned (as in the case of Sun's five other bank subsidiaries); this
consolidation treatment is required under generally accepted accounting
principles. The consolidation requirements for the balance sheet is different
than the results of operations because consolidated net income includes only
Sun's pro rata share of its percentage ownership in the bank subsidiaries.

CONSOLIDATED RESULTS OF OPERATIONS

As is the case with changes in Sun's consolidated financial position, Sun's
consolidated results of operations have changed significantly during the periods
presented, primarily due to the combined effects of the development of its bank
subsidiaries and the periods and dates in which those bank subsidiaries have
been added.

36
<PAGE> 38

Revenue growth and net interest income generally lag behind the rate of
asset growth. This is because asset growth is funded primarily through increases
in interest-bearing deposits which are not immediately deployed into the
highest-yielding asset category -- loans. Additionally, new banks, because of
their start-up nature, first generate deposits, often at a pace faster than the
rate of deployment into loans.

New banks, by their nature, are expected to incur operating losses during
their early periods of operations. Accordingly, banks formed in 1997 and 1998
did not contribute positively to consolidated 1998 earnings.

It is, however, notable that Bank of Tucson (formed in 1996) reported
strong 1998 earnings of $776,000 or a rate of return of 1.25% on average assets
even though the bank was eighteen months old at the beginning of the year.
Further, Valley First Community Bank, formed in June 1997, reported its first
quarterly period of profitability in the fourth calendar quarter of 1998, and
reported a modest net operating loss of $81,000 in 1998. A comparative summary
of assets and results of operations follows (in thousands):

<TABLE>
<CAPTION>
TOTAL ASSETS
AT DECEMBER 31 NET INCOME (LOSS)
------------------- -----------------------
1998 1997 1998 1997 1996
-------- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Bank of Tucson................. $ 63,860 $41,605 $ 776 $ 150 $(164)
Camelback Community Bank....... 10,017 n/a (370) n/a n/a
Mesa Bank...................... 6,192 n/a (118) n/a n/a
Southern Arizona Community
Bank......................... 12,395 n/a (252) n/a n/a
Sunrise Bank of Arizona........ 5,411 n/a (26) n/a n/a
Valley First Community Bank.... 36,588 12,826 (81) (245) n/a
Other, net..................... 1,115 576 128 23 --
-------- ------- ----- ----- -----
Consolidated................... $135,578 $55,007 $ 57 $ (72) $(164)
======== ======= ===== ===== =====
n/a -- not applicable
</TABLE>

Total interest income was $354,000 in 1996, $2.9 million in 1997 and $7.3
million in 1998. Interest expense for the periods similarly increased from
$123,000 to $915,000 to $2.3 million, respectively. Net interest income,
accordingly, increased from $231,000 in 1996 to nearly $2.0 million in 1997 and
$5.1 million in 1998. These changes are the result of the number of banks
included within the consolidated group as well as the ongoing development of
banks formed before 1998.

Total noninterest income has similarly increased during the periods
presented from about $10,000 in 1996 to $125,000 in 1997 and $334,000 in 1998.

Total noninterest expenses have correspondingly increased from $440,453 in
1996 to $2.0 million in 1997 and $5.3 million in 1998. Increases in each of the
categories during those periods (primarily salaries and employee benefits,
occupancy and various other noninterest expenses) correspond to the increased
number of bank subsidiaries during the periods presented as well as necessary
increases in staffing in concert with asset growth.

Overall, Sun achieved modest profitability of $57,000 in 1998 after
incurring losses of $72,000 in 1997 and $164,000 in 1996. The 1996 and 1997
operating losses were due to expected start-up period losses of newly formed
banks.

37
<PAGE> 39

LIQUIDITY, CAPITAL RESOURCES AND CAPITAL ADEQUACY

At December 31, 1998, Sun maintained significant liquidity in the form of
cash and cash equivalents, as previously discussed. In addition to cash and cash
equivalents, significant liquidity exists in the form of investment securities
available for sale ($12.9 million at December 31, 1998 and $11.5 million at
December 31, 1997). Together, total liquidity (cash, cash equivalents, loans
held for resale and investment securities available for sale) approximated $62.5
million or 46% of total assets at December 31, 1998 and $21.7 million or 39.4%
of total assets at December 31, 1997.

Management has designated all of Sun's current investment securities as
being "available for sale" due to the longer-term strategy of the banks'
striving to maintain higher loan-to-deposit ratios to maximize earnings.
Investment securities available for sale are carried at market value with the
market value adjustment being reflected as an element of stockholders' equity
(net of related tax effect) on the consolidated balance sheet (also described as
accumulated other comprehensive income).

The primary funding source for asset growth is deposits. Each of the banks
offers a full array of deposit products. The banks emphasize time deposits by
offering attractive rates in comparison to competitors, when needed, to fund
loan demand. Time deposits approximated $23.8 million or 24% of total deposits
at December 31, 1998 ($8.7 million or 20% at December 31, 1997).

Time deposits are generally expected to be renewed by customers. To the
extent maturing deposits are not renewed by customers, those deposits usually
can be replaced by new deposits obtained through competitive pricing. Most time
deposits obtained by the banks are considered to be core deposits and the banks
generally do not seek brokered or other deposits which are not relationship
based.

The banks' also emphasize noninterest-bearing demand deposits (checking
accounts) which amounted to $28.0 million at December 31, 1998 or 28% of total
deposits ($9.6 million or 22% of total deposits at December 31, 1997). The level
of checking account deposits is important in reducing the banks' overall cost of
funds.

Deposits at each of the banks are insured up to the maximum amount covered
by FDIC insurance. As noted previously, Sun owns between 51% and 100% of its
consolidated affiliated banks. For banks which are not wholly-owned by Sun,
appropriate accounting recognition is given to applicable minority interests in
those subsidiaries on Sun's consolidated balance sheet. Minority interests in
consolidated subsidiaries approximated $9.4 million at December 31, 1998 and
$2.0 million in 1997. Sun's strategy of majority ownership (less than 100%) for
its bank development expansion has generated significant resources provided by
minority interests in those entities.

Stockholders' equity approximated $26.6 million or nearly 20% of total
assets at December 31, 1998. Stockholders' equity increased significantly in
1998 due to two private placement stock offerings, one in January 1998 and one
in December 1998.

In September 1998, Sun effected a three-for-one stock split. All share and
per share information appearing in the consolidated financial statements has
been retroactively restated to reflect the stock split as if it had occurred at
the beginning of the periods presented.

During the periods presented, Sun has not paid cash dividends. Payment of
cash dividends in future periods is limited by a number of significant
variables, including retained earnings available for dividends (if any) and
regulatory capital requirements, in

38
<PAGE> 40

addition to liquidity, cash adequacy and other factors. Accordingly, there can
be no assurance with respect to payment of cash dividends in the future.

Sun and each of its affiliated banks are required to comply with very
complex banking rules and regulations relating to capital adequacy. Key ratios
of leverage, Tier 1 capital and Tier 2 capital (as those terms are currently
defined in the regulatory guidance) and corresponding ratios in relation to
total assets and risk-weighted assets are set forth in Note M to the
Consolidated Financial Statements.

Under the current regulatory framework, banks are categorized as "well
capitalized," "adequately capitalized" or "inadequately capitalized." Banks
which fall into the "inadequately capitalized" category are subject to the
"prompt corrective action" provisions of the FDIC Improvement Act, which can
result in significant regulatory agency intervention and other adverse action.
Although it is permissible to maintain capital adequacy at the "adequately
capitalized" level, Sun's management currently intends to maintain the capital
of each affiliated bank within the "well capitalized" category. Classification
as a "well capitalized" institution enables those banks to enjoy the lowest-
cost deposit insurance assessment and less restrictive regulatory intervention
in relation to certain banking business activities.

New banks, as a condition of charter approval, are required to maintain
certain higher capital ratios. Generally, newly formed banks are required to
maintain a Tier 1 capital to assets ratio of not less than 8% for the first
three years of operation in addition to maintaining the previously-discussed
allowance for loan losses of not less than 1% of portfolio loans. Such capital
ratio requirements, in the opinion of management, do not constrict the
operations of new banks during the periods that the ratios are required and,
consistent with management's effort to maintain capital adequacy at each
affiliated bank, Sun will infuse such amounts of capital as are necessary to
maintain compliance with those capital requirements. Each of Sun's bank
subsidiaries are subject to the 8% capital to assets ratio.

In the opinion of management, all of Sun's affiliated banks meet the
criteria to be classified as "well capitalized" at December 31, 1998.

TRENDS AFFECTING OPERATIONS

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

Changes in interest rates, either up or down, can have an impact on net
interest income (plus or minus), depending on the direction and timing of such
changes. At any point in time, there is a difference between interest
rate-sensitive assets and interest rate-sensitive liabilities. That difference,
from a timing perspective, arises because it is practically impossible to
maintain a perfectly matched relationship between rate-sensitive assets and
liabilities. This means that when interest rates change, the timing of the
effect of such interest rate changes can differ between their effect on assets
and liabilities. The difference between interest rate-sensitive assets and
interest rate-sensitive liabilities is characterized as a "gap" which is
quantified by the distribution of rate-sensitive amounts within various time
periods in which they reprice or mature. The following table

39
<PAGE> 41

summarizes Sun's consolidated financial position in relation to "gap" at
December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY
--------------------------------------
0 TO 3 4 TO 12 1 TO 5 OVER
MONTHS MONTHS YEARS 5 YEARS TOTAL
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold.............. $37,600 $ -- $ -- $ -- $ 37,600
Interest-bearing deposits
with banks................... -- 850 -- 9 859
Loans held for resale........... 1,276 -- -- -- 1,276
Investment securities........... 6,480 5,426 1,000 17 12,923
Portfolio loans:
Commercial................... 47,036 2,418 8,490 2,422 60,366
Real estate mortgage......... 4,371 -- -- -- 4,371
Installment.................. 1,541 423 1,086 292 3,342
Non-earning assets and other.... -- -- -- 14,548 14,548
------- ------- ------- -------- --------
Total Assets............ $98,304 $ 9,117 $10,576 $ 17,288 $135,285
======= ======= ======= ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits:
Time deposits over
$100,000................... $ 2,273 $ 4,213 $ 1,758 $ -- $ 8,244
Time deposits under
$100,000................... 3,176 7,356 4,987 -- 15,519
All other interest-bearing
deposits................... 46,986 -- -- -- 46,986
------- ------- ------- -------- --------
Total interest-bearing
deposits..................... 52,435 11,569 6,745 -- 70,749
Non-interest bearing
liabilities.................. -- -- -- 28,791 28,791
Minority interest in
consolidated subsidiaries.... -- -- -- -- 9,118
Stockholders' equity............ -- -- -- -- 26,627
------- ------- ------- -------- --------
Total Liabilities and
Stockholders'
Equity............... $52,435 $11,569 $ 6,745 $ 28,791 $135,285
======= ======= ======= ======== ========
Interest rate sensitive period
gap............................. $45,869 $(2,452) $ 3,831 $(11,503)
Interest rate sensitive
cumulative gap.................. $45,869 $43,417 $47,248 $ 35,745
Period rate sensitive
assets/period rate sensitive
liabilities..................... 1.87 0.79 1.57 0.60
Cumulative rate sensitive assets/
cumulative rate sensitive
liabilities..................... 1.87 1.68 1.67 1.36
Cumulative gap to total assets.... 33.91% 32.09% 34.92% 26.42%
</TABLE>

The "gap" changes daily based upon changes in the underlying assets and
liabilities at each of Sun's banks. Analyzing exposure to interest rate risk is
prone to imprecision

40
<PAGE> 42

because the "gap" is constantly changing, the "gap" differs at each of the
banks, and it is difficult to predict the timing, amount and direction of future
changes in market interest rates and the corresponding effect on customer
behavior.

Sun's banks endeavor to manage and monitor interest rate risk in concert
with market conditions. Management strives to maintain a balanced position of
interest rate-sensitive assets and liabilities. Sun and its banks have not
engaged in speculative positions through the use of derivatives in anticipation
of interest rate movements. In these most recent periods of lower interest
rates, the banks emphasize variable rate loans and time deposits to the extent
possible in a competitive environment; however, competitive influences often
result in making fixed rate loans, although the banks seek to limit the duration
of such loans. Similarly, low interest rates generally make competition more
intense for deposits, since loan demand will typically increase during periods
of lower rates and, accordingly, result in higher interest costs on deposits,
adversely impacting interest margins. Future interest rates and the impact on
earnings are difficult to predict. In addition to interest rate risk relating to
Sun's interest-bearing assets and liabilities, changes in interest rates also
can impact future transaction volume of loans and deposits at the banks. For
activities which are influenced by levels of interest rates for transaction
volume (for example, origination of residential mortgage loans), pricing margins
and demand can become impacted significantly by changes in interest rates.

As a means of monitoring and managing exposure to interest rate risk,
management uses a computerized simulation model which, at a static point in
time, is intended to estimate pro forma effects of changes in interest rates.
Using the consolidated "gap" table information above and Sun's simulation model,
the following table illustrates, on a consolidated basis, changes which would
occur in annual levels of interest income, interest expense and net interest
income (in thousands) assuming 100 and 200 basis point ("bp") increases and
decreases in interest rates:

<TABLE>
<CAPTION>
PRO FORMA
ASSUMING PRO FORMA EFFECT OF PRO FORMA EFFECT OF
NO CHANGE INTEREST RATE INCREASES INTEREST RATE DECREASES
IN INTEREST ------------------------ -----------------------
RATES +100 BP +200 BP -100 BP -200 BP
----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Interest income.......... $18,082 $19,539 $20,996 $16,626 $15,169
Interest expense......... 5,659 6,700 7,740 4,619 3,578
------- ------- ------- ------- -------
Net interest income.... $12,423 $12,839 $13,256 $12,007 $11,591
======= ======= ======= ======= =======
</TABLE>

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

No specific actions have been considered necessary by management in
reaction to the "gap" table and results of the simulation model. Because the
banks are young and are early in their development of deposit base, loan
portfolios and investments, the "gap" table and simulation model data are of
less significance than in the circumstances of more mature institutions.
Interest rate risk is managed separately by each bank and is monitored on a
consolidated basis by Sun's management. Overall, interest rate risk is managed
emphasizing relatively short-term deposits and variable rate loans.

41
<PAGE> 43

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

General economic conditions also have a significant impact on financial
institution results of operations and financial condition. Economic conditions
nationally and in the banks' local environments have remained relatively stable
and positive. Local economic conditions, and to some extent national economic
conditions, have a significant impact on levels of loan demand as well as the
ability of borrowers to repay loans and the availability of funds for customers
to make deposits. Throughout 1998, 1997 and 1996, the U.S. economy has continued
to produce the longest peacetime economic expansion in history. While worldwide
economic conditions are unstable, the duration of the current economic expansion
period in the United States is questionable. Additionally, issues regarding the
century date change and its impact on financial institutions, their customers
and the economy in general are uncertain.

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

In management's view the ongoing banking consolidation environment presents
further opportunities for expansion of start-up banking activities in numerous
markets. While it is difficult to predict specific locations and markets for
future bank development, plans are currently underway for additional banks in
Arizona, Nevada and elsewhere in the southwestern United States.

As previously discussed, new banks generally incur operating losses during
their early periods of operations. Management expects Sun's recently-formed
banks to detract from consolidated earnings performance and additional new banks
to be formed in 1999 and beyond will similarly adversely impact short-term
profitability. On a consolidated basis, those operating losses reduce net income
by the pro rata share of Sun's ownership percentage in the banks. When those
banks become profitable, their operating results will contribute to consolidated
earnings to the extent of Sun's ownership percentage.

Commercial banks continue to be influenced by significant regulatory
requirements which impact current and future operations. In addition to the
extent of regulatory interaction with financial institutions, extensive rules
and regulations governing lending activities, deposit gathering and capital
adequacy (to name a few), the costs of financial institution regulation are
significant. Those costs include, but are not limited to, the significant amount
of management time and expense which is incurred in maintaining

42
<PAGE> 44

compliance and developing systems for compliance with those rules and
regulations as well as the cost of examinations, audits and other compliance
activities.

Premiums for FDIC insurance have historically been significant costs of
doing business as financial institutions. In recent years, however, deposit
insurance premiums have been maintained at a stable and modest level by Sun
maintaining its banks in the so-called "well capitalized" category of capital
adequacy and the overall health of the banking industry, in general. Future
deposit insurance premium levels are difficult to predict because deposit
insurance premiums will be determined based on general economic conditions, the
relative health of the banking and financial institution industry and other
unpredictable factors. It is reasonable to expect that deposit insurance
premiums will increase at some point in the future.

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

The ongoing expansion of Internet and "e-commerce" activity continues to
evolve. Thus far, Sun's banks have not experienced significant competition from
competitors' delivery of banking services via the Internet or other e-commerce
channels. The impact of the Internet and e-commerce on Sun's banks is difficult
to predict; Sun's information systems staff is continuing to explore
implementation of Internet banking opportunities for Sun's banks. Management
expects that Internet banking and e-commerce, in general, will result in
deposits being obtained as more of a "commodity" in the future, while nongeneric
loan products will continue to be handled face-to-face with the customer.

YEAR 2000

The year 2000 issue confronting Sun and its suppliers, customers, and
competitors, centers on the inability of computer systems and embedded
technology to properly recognize dates near the end of and beyond the year 1999.

Sun has been actively implementing a comprehensive plan throughout 1998 and
1999, as required by bank regulatory guidelines, to address potential impacts of
the year 2000 problem on Sun's information technology (IT) and non-IT systems.
Sun's year 2000 plans are subject to modification and are revised periodically
as additional information is developed.

READINESS. Sun has completed the inventory, assessment and planning phases for
its mission-critical IT and non-IT systems, which are those systems that pose
risks to Sun's ability to process data for its loans, deposits and general
ledger, impacting revenues and operating results. Of the 17 mission-critical
systems, all are year 2000 compliant.

Sun recognizes that its ability to be year 2000 compliant is somewhat
dependent upon the year 2000 efforts of its vendors. Sun and its banks sent
questionnaires to its significant vendors in 1998. Follow-up letters requesting
additional information of the vendors' year 2000 readiness were sent when
necessary. All mission-critical vendors have responded to the questionnaires or
have otherwise represented that they are year 2000 compliant. Sun also routinely
monitors its non-mission critical vendors to determine their level of year 2000
readiness.

Sun and its banks have been required by bank regulatory agencies to update
their customers on the banks' year 2000 compliance efforts. Letters and
informational brochures have been and will continue to be sent to customers
notifying them of the banks' efforts in

43
<PAGE> 45

addressing year 2000 issues. Compliance efforts are also communicated to
customers on their account statements and through brochures available in bank
lobbies.

Sun and its banks are also following regulatory requirements that require
an assessment of loan customers' year 2000 readiness. Letters and questionnaires
have been utilized to assess material loan customers' readiness based on the
size of their loan type. The number of existing customers that have not
responded to the letters and questionnaires is minimal. Follow-up letters or
phone calls are being made when necessary to obtain additional information from
these customers. Of those who have responded, all material customers represented
that they are year 2000 compliant or are working toward compliance. The number
of customers working towards year 2000 compliance is minimal and, in Sun's
opinion, their inability to become compliant will not have a material adverse
effect on Sun's business or operating results. Sun and its banks also monitor
material customers applying for new loans that exceed a certain dollar amount by
requiring a written representation that the customer is year 2000 compliant.

WORST CASE SCENARIO AND CONTINGENCY PLANS. Sun and its banks have determined
the most reasonably likely worst case scenario is the possibility of the lack of
power or communication services for a period of time in excess of one day. If
this scenario were to occur, Sun's and its banks' operations could be
interrupted. Sun and its banks have developed plans and procedures to address
this scenario, ranging from producing complete printed reports from the core
banking systems prior to January 1, 2000, to ensure that a hard copy of the data
is available in the event of a failure, to preparations for failures of voice
and data communications through the use of manual posting and courier services,
use of generators, alternative customer service locations and/or reduced lobby
hours.

Contingency planning, including the type discussed above, is an integral
part of Sun's year 2000 readiness plan. Sun's contingency plans address
alternative courses of action in the event that mission-critical systems do not
function properly with the date change. Development of the contingency plans was
recently completed. The year 2000 contingency plans will be tested when
practical to validate the effectiveness of contingent procedures and refined as
additional information becomes available.

COSTS. The total costs associated with Sun's and its banks' year 2000
compliance are estimated at approximately $500,000, of which approximately
$300,000 has been incurred through March 31, 1999. These costs principally
relate to the added personnel costs, the employment of external consultants, and
the purchase of software upgrades.

These estimated costs are part of Sun's information technology budget.
Sun's information technology staff and senior management have devoted
significant time and resources to year 2000 activities. While this has resulted
in allocating resources that would have otherwise been devoted to other
information technology projects, no projects have been delayed or postponed that
would have a material adverse impact on Sun or its banks' operations.

REGULATORY OVERSIGHT. Bank regulators have issued numerous statements and
guidance on year 2000 compliance issues and the responsibilities of senior
management and directors of banks and bank holding companies. In addition, the
bank regulators have issued safety and soundness guidelines to be followed by
insured depository institutions, such as Sun and its banks, to ensure resolution
of any year 2000 problems. Periodic year 2000 reviews are performed by various
bank regulatory agencies. Most of the recent examinations have been performed by
the FDIC and it is expected that the FDIC will continue its frequent

44
<PAGE> 46

examinations throughout 1999. The banking regulatory agencies have asserted that
year 2000 testing and certification is a key safety and soundness issue in
conjunction with regulatory examinations. Consequently, Sun's or its banks'
failure to address appropriately the year 2000 issue could result in supervisory
action, including the reduction of the banks' supervisory ratings, the denial of
applications for expansion, or the imposition of civil money penalties.

The Federal Financial Institutions Examination Council maintains an
Internet site that lists financial institutions which have been subject to
enforcement actions relating to year 2000 readiness. To Sun's knowledge, none of
Sun's banks are subject to enforcement actions for year 2000 readiness.

NEW ACCOUNTING STANDARDS

Certain new accounting standards became applicable to Sun during 1998.

Financial Accounting Standards Board (FASB) Statement No. 130, "Reporting
Comprehensive Income" requires presentation of all components of "comprehensive
income" and "total comprehensive income." This new standard became effective for
Sun as of January 1, 1998. Implementation of this new accounting standard had no
impact on Sun's financial position or results of operations for the year ended
December 31, 1998. Components of comprehensive income and total comprehensive
income are included in the consolidated statements of stockholders' equity.

FASB Statement No. 131, "Disclosures About Segments of an Enterprise and
Related Information" revises reporting of information about operating segments
in annual and interim financial statements. This Statement sets revised
standards for disclosures about products and services, geographic areas and
major customers. It is intended to promote a more practical approach to segment
reporting by requiring presentation of information on the basis which is used
internally by management for evaluating segment performance and allocation of
resources to segments of the enterprise. The Statement permits aggregation or
combination of segments which have similar characteristics. Although Sun's banks
operate independently and are managed and monitored separately, each bank is
substantially similar in terms of business focus, types of customers, products
and services. Further, each of the banks and Sun are subject to substantially
similar laws and regulations unique to the banking industry. The consolidated
financial statements reflect the presentation of segment information on an
aggregated basis.

FASB Statement No. 133, "Accounting For Derivative Instruments and Hedging
Activities" requires all derivatives to be recognized in financial statements
and to be measured at fair value. Gains and losses resulting from changes in
fair value would be included in income, or comprehensive income, depending on
whether the instrument qualifies for hedge accounting and the type of hedging
instrument involved. This new accounting standard will become effective for Sun
in the year 2000 and, because Sun has not typically entered into derivative
contracts either to hedge existing risks or for speculative purposes, is not
expected to have a material effect on its financial statements.

The American Institute of Certified Public Accountants (AICPA) issued
Statement of Position 98-1, "Costs of Computer Software Developed or Obtained
for Internal Use." It requires capitalization of certain costs of development of
software and is not expected to have a material effect on Sun's financial
statements when implemented in 1999.

The AICPA issued Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities." It requires start-up costs and organizational costs to be
charged to expense

45
<PAGE> 47

when incurred. The initial application of the statement will require a
cumulative effect adjustment at January 1, 1999, for those companies that had
previously capitalized start-up and organization costs. See Note P to the
consolidated financial statements.

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

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<PAGE> 48

SUPPLEMENTAL SELECTED FINANCIAL DATA

The following tables (tables A through G), present certain supplemental
selected financial data for Sun on a consolidated basis. The accompanying tables
should be read with the financial statements and management's discussion and
analysis of financial condition and results of operations elsewhere in the
prospectus.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY (TABLE A)

Net interest income, the primary component of earnings, represents the
difference between interest income on interest-earning assets and interest
expense on interest-bearing liabilities. Net interest income depends upon the
volume of interest-earning assets and interest-bearing liabilities and the rates
earned or paid on them. This table sets forth the daily average balances for the
major asset and liability categories and the actual related interest income and
expense (in thousands) and average yield/cost for the years ended December 31,
1998 and 1997. Corresponding information for the period ended December 31, 1996
is not meaningful.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
(1) (1)
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE COST BALANCE EXPENSE COST
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment securities:
U.S. Treasury and government
agencies................. $12,902 $ 763 5.91% $12,482 $ 736 5.90%
Interest-bearing deposits with
banks....................... 535 25 4.67% -- -- --
Federal funds sold............ 23,269 1,230 5.29% 5,200 289 5.56%
Loans held for resale......... 445 30 6.74% -- -- --
Portfolio loans (2)........... 45,225 5,296 11.71% 15,407 1,846 11.98%
------- ------ ------ ------- ------ ------
Total Interest-Earning
Assets/Interest
Income................. 82,376 7,344 8.92% 33,089 2,871 8.68%
Allowance for loan losses
(deduct).................... (415) (146)
Cash and due from banks....... 4,094 1,507
Premises and equipment, net... 1,706 587
Other assets.................. 1,910 989
------- -------
Total Assets........ $89,671 $36,026
======= =======
</TABLE>

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<PAGE> 49

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
(1) (1)
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE COST BALANCE EXPENSE COST
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Savings deposits............ $ 285 $ 9 3.16% $ 166 $ 6 3.61%
Time deposits under
$100,000................. 5,480 287 5.24% 2,926 150 5.13%
Time deposits of $100,000 or
more..................... 10,073 557 5.53% 2,273 132 5.81%
Other interest-bearing
deposits................. 35,784 1,427 3.99% 16,539 626 3.78%
Other....................... 33 -- -- 12 -- --
------- ------ ------ ------- ------ ------
Total Interest-Bearing
Liabilities/Interest
Expense................ 51,655 2,280 4.41% 21,916 914 4.17%
Noninterest-bearing demand
deposits.................... 16,242 6,030
Accrued interest on deposits
and other liabilities....... 200 100
Minority interest in
consolidated subsidiaries... 5,120 604
Stockholders' equity.......... 16,454 7,376
------- -------
Total Liabilities
and Stockholders'
Equity........... $89,671 $36,026
======= =======
Net Interest Income........... $5,064 $1,957
====== ======
Interest Rate Spread (3)...... 4.51% 4.51%
====== ======
Net Yield on Interest-Earning
Assets(4)................... 6.15% 5.91%
====== ======
Ratio of Average
Interest-Earning Assets to
Interest-Bearing
Liabilities................. 1.59 X 1.51 X
======= =======
</TABLE>

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

(1) Average yield/cost is determined by dividing the actual interest
income/expense by the daily average balance of the asset or liability
category.

(2) Average balance of loans includes non-accrual loans (none for periods
presented).

(3) Interest rate spread represents the average yield on interest-earning assets
less the average cost of interest-bearing liabilities.

(4) Net yield is based on net interest income as a percentage of average total
interest-earning assets.

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<PAGE> 50

CHANGES IN NET INTEREST INCOME (TABLE B)

The following table summarizes the extent to which changes in interest
rates and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Corporation's net interest income (in thousands)
during the periods indicated. The change in interest attributable to volume is
calculated by multiplying the annual change in volume by the prior year's rate.
The change in interest attributable to rate is calculated by multiplying the
annual change in rate by the current year's average balance. Any variance
attributable jointly to volume and rate changes has been allocated to each
category based on the percentage of each to the total change in both categories.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
COMPARED TO
YEAR ENDED DECEMBER 31, 1997
-----------------------------
NET
VOLUME RATE TOTAL
------- ------- -------
<S> <C> <C> <C>
Increase (Decrease) In Interest Income:
Investment securities:
U.S. Treasury and government agencies......... $ 24 $ 3 $ 27
Interest-bearing deposits with banks............. -- 25 25
Federal funds sold............................... 1,006 (65) 941
Loans held for resale............................ 30 -- 30
Portfolio loans.................................. 3,569 (119) 3,450
------ ------ ------
Total.................................... 4,628 (155) 4,473
Increase (Decrease) In Interest Expense
On Deposits:
Savings....................................... 4 (1) 3
Time deposits under $100,000.................. 131 6 137
Time deposits of $100,000 or more............. 454 (29) 425
Other interest-bearing deposits............... 725 76 801
Other............................................ 1 (1) --
------ ------ ------
Total.................................... 1,315 51 1,366
------ ------ ------
Increase (Decrease) in Net Interest Income......... $3,313 $(206) $3,107
====== ====== ======
</TABLE>

49
<PAGE> 51

INVESTMENT PORTFOLIO (TABLE C)

The following table sets forth the amortized cost and market value of
investment securities as of December 31, 1998, 1997 and 1996 (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------------------- ------------------- -------------------
AMORTIZED MARKET AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE COST VALUE
--------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury and government
agencies................... $12,905 $12,923 $11,439 $11,534 $10,887 $10,872
------- ------- ------- ------- ------- -------
Total
investments..... $12,905 $12,923 $11,439 $11,534 $10,887 $10,872
======= ======= ======= ======= ======= =======
</TABLE>

The following table sets forth the amortized cost, relative maturities and
weighted average yields of investment securities at December 31, 1998 (in
thousands):

<TABLE>
<CAPTION>
U.S. TREASURY AND
GOVERNMENT AGENCIES
---------------------------------
WEIGHTED TOTAL
AMORTIZED AVERAGE CARRYING
COST YIELD AMOUNT
--------- -------- --------
<S> <C> <C> <C>
Maturity:
Due in one year or less.............. $10,906 5.67% $10,927
Due after one year but within five
years............................. 1,999 5.42% 1,996
------- -------
Total........................ $12,905 $12,923
======= =======
</TABLE>

Following is a summary of the weighted average maturities of investment
securities at December 31, 1998:

<TABLE>
<S> <C> <C>
U.S. Treasury securities.................. 3 months 25 days
U.S. government agencies.................. 7 months 3 days
</TABLE>

50
<PAGE> 52

LOAN PORTFOLIO SUMMARY (TABLE D)

Portfolio Loans outstanding as of the end of each period are shown in the
following table according to type of loan (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Commercial............................... $60,366 $26,062 $ 3,768
Real estate mortgage..................... 4,372 2,607 534
Installment.............................. 3,342 2,567 548
------- ------- -------
Total portfolio loans.......... $68,080 $31,236 $ 4,850
======= ======= =======
</TABLE>

The following table presents (in thousands) the remaining maturity of
portfolio loans outstanding at December 31, 1998 according to scheduled
repayments of principal.

Aggregate maturities of portfolio loan balances which are due:

<TABLE>
<CAPTION>
FIXED VARIABLE
RATE RATE TOTAL
------- -------- -------
<S> <C> <C> <C>
In one year or less...................... $ 3,680 $32,070 $35,750
After one year but within five years..... 9,511 14,339 23,850
After five years......................... 2,522 5,958 8,480
Non-accrual loans........................ -- -- --
------- ------- -------
Total.......................... $15,713 $52,367 $68,080
======= ======= =======
</TABLE>

The following summarizes, in general, Sun's various loan classifications:

COMMERCIAL

Includes a range of business credit products, current asset lines of credit
and equipment term loans. These products bear higher inherent economic risk than
other types of lending activities.

REAL ESTATE

Includes single family residential loans held for permanent portfolio, and
home equity lines of credit. Risks are nominal, borne out by loss experience,
housing economic data and loan-to-value percentages.

INSTALLMENT

Includes a broad range of consumer credit products, secured by automobiles,
boats, etc., with typical consumer credit risks.

All loans are subject to underwriting procedures commensurate with the loan
size, nature of collateral, industry trends, risks and experience factors.
Appropriate collateral is required for most loans, as is documented evidence of
debt repayment sources.

As of December 31, 1998, there were no nonperforming loans (loans past due
90 days or on nonaccrual status).

51
<PAGE> 53

SUMMARY OF LOAN LOSS EXPERIENCE (TABLE E)

The table below summarizes portfolio loan balances, daily average loan
balances, changes in the allowance for loan losses arising from loans
charged-off and recoveries on loans previously charged-off, by loan category,
and additions to the allowance for loan losses through provisions charged to
expense, as of the end of each period (in thousands).

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 PERIOD ENDED
------------------ DECEMBER 31,
1998 1997 1996
------- ------- ------------
<S> <C> <C> <C>
Allowance for loan losses at beginning of period........ $ 317 $ 49 $ --
Loans charged-off:
Commercial............................................ -- -- --
Real estate........................................... -- -- --
Installment........................................... -- -- --
------- ------- ------
Total charge-offs............................. -- -- --
Recoveries:
Commercial............................................ -- -- --
Real estate........................................... -- -- --
Installment........................................... -- -- --
------- ------- ------
Total recoveries.............................. -- -- --
------- ------- ------
Net charge-offs............................... -- -- --
Additions to allowance charged to expense............... 379 268 49
------- ------- ------
Allowance for loan losses at December 31........... $ 696 $ 317 $ 49
======= ======= ======
Total portfolio loans outstanding at December 31........ $68,080 $31,236 $4,850
======= ======= ======
Ratio of allowance for loan losses to portfolio loans
outstanding........................................... 1.02% 1.01% 1.01%
======= ======= ======
Average total portfolio loans for the year.............. $45,225 $15,407 $2,425
======= ======= ======
Ratio of net charge-offs to average portfolio loans
outstanding........................................... 0.00% 0.00% 0.00%
======= ======= ======
</TABLE>

The allowance for loan losses has been established as a general allowance
for losses on the loan portfolio at the balance sheet date. For internal
purposes, management allocates the allowance to all loan classifications. The
amounts allocated in the following table (in thousands), which includes all
loans for which, based on Sun's loan rating system, management has concerns,
should not be interpreted as an indication of future charge-offs and the amounts
allocated are not intended to reflect the amount that may be available for
future losses since the allowance is a general allowance.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 PERIOD ENDED
------------------ DECEMBER 31,
1998 1997 1996
------- ------- ------------
<S> <C> <C> <C>
Commercial.............................................. $ 318 $ 145 $ 15
Real estate mortgage.................................... 11 17 2
Installment............................................. 33 13 2
Unallocated............................................. 334 142 30
------- ------- ------
Total allowance for loan losses......................... $ 696 $ 317 $ 49
======= ======= ======
Total portfolio loans outstanding............. $68,080 $31,236 $4,850
======= ======= ======
Ratio of allowance for loan losses to portfolio loans
outstanding........................................... 1.02% 1.01% 1.01%
======= ======= ======
</TABLE>

52
<PAGE> 54

AVERAGE DEPOSITS (TABLE F)

The following table presents the average balances of deposits (in
thousands) and the average rates of interest paid for the years ended December
31, 1998 and 1997.

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------
1998 1997
------------------ ------------------
AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE
------- ------- ------- -------
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits... $16,242 $ 6,030
Savings deposits...................... 285 3.16% 166 3.61%
Time deposits under $100,000.......... 5,480 5.24% 2,926 5.13%
Time deposits of $100,000 or more..... 10,073 5.53% 2,273 5.81%
Other interest-bearing deposits....... 35,784 3.99% 16,539 3.78%
------- -------
Total deposits.............. $67,864 $27,934
======= =======
</TABLE>

The following table sets forth the amount of time certificates of deposit
issued in amounts of $100,000 or more, by time remaining until maturity, which
were outstanding at December 31, 1998 (in thousands):

<TABLE>
<S> <C>
Three months or less................................ $ 3,145
Three months to twelve months....................... 7,387
Over 12 months...................................... 4,987
-------
$15,519
=======
</TABLE>

CERTAIN FINANCIAL RATIOS (TABLE G)

The following table shows the ratio of net income to average stockholders'
equity, average total assets and certain other ratios for the periods ended
December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
YEAR ENDED PERIOD
DECEMBER 31 ENDING
-------------- DECEMBER 31
1998 1997 1996
----- ----- ------------
<S> <C> <C> <C>
Net income as a percentage of:
Average stockholders' equity................... 0.34% (0.97%) (3.12%)
Average total assets........................... 0.06 (0.20) (1.45)
Average stockholders' equity as a percentage of
average total assets........................... 18.35% 20.47% 46.61%
Dividend payout ratio (cash dividends per share
as a percentage of net income per share):
Basic.......................................... -- -- --
Diluted........................................ -- -- --
</TABLE>

53
<PAGE> 55

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table lists the directors and executive officers of Sun.

<TABLE>
<CAPTION>
DIRECTOR AND/OR
EXECUTIVE OFFICER
NAME AGE POSITION SINCE
- ---- --- -------- -----------------
<S> <C> <C> <C>
Joseph D. Reid 56 Chairman, Chief Executive Officer and
Director 1996
Michael L. Kasten 54 Vice Chairman and Director 1997
John S. Lewis 45 President and Director 1999
Michael F. Hannley 50 Executive Vice President and Director 1997
Gary W. Hickel 50 Executive Vice President and Director 1997
Richard N. Flynn 55 Secretary and Director 1997
Michael J. Devine 57 Director 1997
Michael J. Harris 61 Director 1999
Humberto S. Lopez 53 Director 1997
Kathryn L. Munro 51 Director 1999
Ronald K. Sable 58 Director 1997
Gerry J. Smith 41 Executive Vice President 1998
Lee W. Hendrickson 43 Senior Vice President and Chief
Financial Officer 1997
Patricia L. Stone 50 Senior Vice President 1998
Leonard C. Zazula 44 Senior Vice President 1997
Cristin Reid English 30 Vice President and General Counsel 1997
Paige E. Mulhollan 41 Vice President and Corporate
Controller 1999
Katherine P. Wait 34 Vice President 1997
</TABLE>

JOSEPH D. REID, CHAIRMAN, CHIEF EXECUTIVE OFFICER, DIRECTOR, is the founder
of Sun, and each of its banks. Mr. Reid holds the office of Chairman of the
Board of Directors and Chief Executive Officer of Sun, and Chairman of the Board
and Chief Executive Officer of each of its banks. He also serves as Chairman,
President and Chief Executive Officer of Capitol Bancorp Ltd., a Michigan-based
bank development company with assets of over $1 billion, and which owns 51% of
the common stock of Sun. Mr. Reid has been in the bank development business
since 1982 and has an extensive background in the formation, organization and
operation of community based banks. After forming six banks in the Midwest, Mr.
Reid saw an opportunity to develop banks in the southwestern region of the
United States, specifically in Arizona. In 1996, he organized Bank of Tucson,
and formed Sun and one new bank in 1997. In 1998, Sun's second year of
operation, Mr. Reid led the development of four additional banks in the State of
Arizona. To date, Mr. Reid has organized 17 operating banks in the states of
Michigan and Arizona. Mr. Reid is developing three additional bank holding
companies to be located in Nevada, California, and Indiana.

Mr. Reid is a member of the board of directors of the Phoenix Chamber of
Commerce, and a member of the board of trustees of the Arizona's Children
Foundation.

54
<PAGE> 56

Before concentrating in the financial services field, he was engaged in the
private practice of law in the State of Michigan. Mr. Reid is the father of
Cristin Reid English.

MICHAEL L. KASTEN, VICE CHAIRMAN, DIRECTOR, currently serves as managing
partner of Kasten Investments, LLC, a position he has held since 1997. He has
also served as the president of Kasten Management, Inc., a real estate
development and management company since 1982. Mr. Kasten is founder of numerous
companies which include Kasten Insulation Services, where he has served as vice
president and director since 1992. Mr. Kasten is a member of the board of
directors of Capitol Bancorp Ltd., the chairman of the board of directors of
Portage Commerce Bank, a wholly-owned subsidiary of Capitol Bancorp Ltd., and a
director of each of Bank of Tucson, Camelback Community Bank, Mesa Bank,
Southern Arizona Community Bank, Sunrise Bank of Arizona, and Valley First
Community Bank.

JOHN S. LEWIS, PRESIDENT, DIRECTOR, joined Sun as its President in February
1999. As President, Mr. Lewis will assist the presidents of Sun's existing
Arizona banks, as well as future banks, with operational issues. He served as
president of MicroAge Integration Group from January 1997 to 1999, where he was
responsible for its $1.4 billion global systems integration business, which
included MicroAge Infosystems Services and MicroAge Solutions. From 1974 to
1996, Mr. Lewis was employed with First Interstate Bank. He held several
different positions during that time, including chairman and chief executive
officer of the Southwest Region, executive and senior vice president of human
resources, executive and senior vice president of retail banking and executive
vice president of the Southwest Region Administration. In this latter position,
Mr. Lewis was responsible for overseeing operations for all First Interstate
divisions in Arizona, Nevada, Utah, Colorado, Wyoming and New Mexico. His
responsibilities included: legal compliance, human resources, corporate
properties, marketing/communications, training and support services. After First
Interstate was acquired by Wells Fargo Bank in 1996, Mr. Lewis served as
executive vice president and division manager for Wells Fargo's Southwest Region
branch banking network.

MICHAEL F. HANNLEY, EXECUTIVE VICE PRESIDENT, DIRECTOR, currently serves as
the President of the Bank of Tucson, a bank formed in June 1996 and a
wholly-owned subsidiary of Sun. He has been involved in the banking industry for
over twenty-five years. He previously served as senior vice president and
director of professional banking and administration for National Bank of Arizona
from May 1986 to January 1996. He was an original incorporator of Sun. Ronald K.
Sable is Mr. Hannley's brother-in-law.

GARY W. HICKEL, EXECUTIVE VICE PRESIDENT, DIRECTOR, is the president of
Valley First Community Bank, a bank that opened in June 1997 and a
majority-owned subsidiary of Sun. Mr. Hickel has been involved in the greater
Phoenix area banking industry for over twenty years. His prior positions include
senior vice president and southwest division head for First Interstate Bank's
residential real estate group from 1991 to 1994, and consultant to various
financial service companies involved in commercial real estate mortgage lending
on a nationwide basis including Securnet Financial Corporation/Pathway Financial
from 1994 to 1996, and Consumer Guaranty Corporation for a brief period in 1996.

RICHARD N. FLYNN, DIRECTOR, SECRETARY, is the president of Flynn &
Associates, a commercial tax consulting firm in Tucson, a position he has held
since 1989. He also served as managing partner of Winema Land Company LLC from
1997 to 1999. Prior to that, he served as a managing partner of Winema Partners,
a real estate development company from 1985 to 1996. He serves as secretary and
a director of Bank of Tucson.

55
<PAGE> 57

MICHAEL J. DEVINE, DIRECTOR, has been engaged in the private practice of
law since 1967 in Bloomfield Hills, Michigan. He was an incorporating director
of several successful efforts to form banks in Michigan and Arizona. He
currently serves as chairman of the board of Oakland Commerce Bank, a
wholly-owned subsidiary of Capitol, and as a director of each of Bank of Tucson,
Camelback Community Bank, Mesa Bank, Southern Arizona Community Bank, Sunrise
Bank of Arizona, and Valley First Community Bank, which are majority-owned
subsidiaries of Sun.

MICHAEL J. HARRIS, DIRECTOR, was elected as a Sun director at the 1999
annual meeting of shareholders. Mr. Harris has been a real estate broker at
Tucson Realty and Trust Co. since February 1990. He also serves as a director of
Bank of Tucson.

HUMBERTO S. LOPEZ, DIRECTOR, serves as the president and a director of HSL
Properties, which participates in real estate syndications, acquisitions, and
sales. He has held this position since 1975. He also serves as a director of
Bank of Tucson. Mr. Lopez is also a director of Pinnacle West Capital Corp.

KATHRYN L. MUNRO, DIRECTOR, was employed with Bank of America from 1980 to
1998. Most recently she served as chief executive officer of the southwest
banking group for Bank of America's Southwest region. Prior to that she served
as president of Bank of America Arizona, and was a member of the bank's Board of
Directors from 1994 until 1998. Ms. Munro joined Sun as a director in April
1999. Ms. Munro also serves as a director of Flow International Corporation and
Central Newspapers, Inc.

RONALD K. SABLE, DIRECTOR, has served as senior vice president of The
Aerospace Corporation since October 1997, where he is responsible for new
business development and is a member of the Executive Council. From July 1994 to
October 1997 he served as vice president of Space Technology Applications and
from April 1993 to July 1994 he served as vice president, Washington Region.
Michael F. Hannley is Mr. Sable's brother-in-law.

GERRY J. SMITH, EXECUTIVE VICE PRESIDENT, joined Sun in October of 1998. He
served most recently as president and chief executive officer of Signature Bank
in Bad Axe, Michigan, an eight-branch community bank, from May 1997 to August
1998 and as Executive Vice President and Chief Operating Officer from December
1995 to May 1997. Prior to this position, he served as the community bank
president for the Monroe region of First of America Bank Corporation in Monroe,
Michigan from 1994 to 1995. Mr. Smith is a CPA with over 17 years of banking
experience and provides Sun oversight in the areas of risk management and
accounting.

LEE W. HENDRICKSON, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, has
served as senior vice president and chief financial officer for Capitol Bancorp
Ltd. since 1991, and as Senior Vice President and Chief Financial Officer of Sun
since its inception.

PATRICIA L. STONE, SENIOR VICE PRESIDENT OF CREDIT ADMINISTRATION, joined
Sun in 1998 with over 20 years experience in the banking industry. Ms. Stone
served as Senior Vice President from 1992 to 1997 for Wells Fargo Bank, formerly
First Interstate Bank. Ms. Stone was employed in various capacities at First
Interstate since 1986.

LEONARD C. ZAZULA, SENIOR VICE PRESIDENT, BANK OPERATIONS. In August 1997,
Mr. Zazula became senior vice president of systems operations for Sun after
joining Valley First Community Bank. Since 1989, Mr. Zazula has been involved in
numerous successful efforts to form banks both in Michigan and Arizona,
including affiliates of Capitol. Mr. Zazula was employed with Valley Commerce
Bank from January 1995 to January 1997 as vice president, chief financial
officer, and senior operations officer.

56
<PAGE> 58

CRISTIN REID ENGLISH, VICE PRESIDENT AND GENERAL COUNSEL, has served as
vice president of corporate development and general counsel of Capitol Bancorp
Ltd. and Sun since September 1997. Prior to this position she served as vice
president of Access BIDCO, Incorporated (a hybrid commercial finance company),
from 1995 to 1998. From 1993 to 1995 she was engaged in the private practice of
law in Lansing, Michigan. She currently serves as a director of Ann Arbor
Commerce Bank and Portage Commerce Bank, affiliate banks of Capitol Bancorp Ltd.
Ms. English is the daughter of Joseph D. Reid.

PAIGE E. MULHOLLAN, VICE PRESIDENT AND CORPORATE CONTROLLER, joined Sun as
its vice president and corporate controller in January 1999. From March 1997 to
January 1999, he was corporate controller of Employee Solutions, Inc., an
employee leasing firm located in Phoenix, Arizona. From 1994 to March 1997, he
was an assistant vice president with the Controller Group and Consolidated
Reporting with First Interstate Bancorp and Wells Fargo and Company, which
acquired First Interstate Bancorp in 1996.

KATHERINE P. WAIT, VICE PRESIDENT, joined the Bank of Tucson in her current
position prior to its opening in 1996. She previously served as assistant vice
president and financial reporting manager for the National Bank of Arizona from
October 1992 to May 1996.

57
<PAGE> 59

BOARDS OF DIRECTORS OF SUN'S SUBSIDIARIES

BANK OF TUCSON

<TABLE>
<S> <C> <C>
Bruce I. Ash, Richard N. Flynn, Burton J. Kinerk,
Vice President President Attorney At Law
Paul Ash Investment Co. Flynn & Associates Kinerk, Beal, Schmidt
& Dyer, PC

Sylvia Edmonds Cotton, Michael F. Hannley, Humberto S. Lopez,
Chairman & CEO President President
Perpetua, Inc HSL Properties, Inc.

Michael J. Devine Michael J. Harris, Lyn M. Papanikolas,
Attorney At Law Associate Broker Director of Public
Tucson Realty and Trust Relations
Company Arizona Children's Home

Brian K. English Richard F. Imwalle, Joseph D. Reid,
Attorney At Law President Chairman and CEO
University of Arizona
Foundation

William A. Estes, Jr., Michael L. Kasten,
President Managing Partner
TEM Corp. Kasten Investments, LLC
</TABLE>

CAMELBACK COMMUNITY BANK

<TABLE>
<S> <C> <C>
Shirley A. Agnos, Tammy A. Linn Joseph D. Reid,
President Consultant Chairman and CEO
Arizona Town Hall

Michael J. Devine Susan C. Mulligan, Dan A. Robledo,
Attorney At Law Certified Public Accountant Senior Vice President and
Miller Wagner Business County Operations Manager
Services Inc. Lawyer's Title of Arizona,
Inc.

Brian K. English Earl A. Petznick, Mary Jane Rynd,
Attorney At Law President and CEO Partner
Nothside Hay Co. Rynd, Carneal & Ewing, PLC

Michael L. Kasten, William J. Post, Senator Jacqueline J.
Managing Partner President and CEO Steiner
Kasten Investments, LLC Arizona Public Service Co. Community Volunteer

John S. Lewis, Barbara J. Ralston,
President President
Sun Community Bancorp
Limited
</TABLE>

58
<PAGE> 60

MESA BANK

<TABLE>
<S> <C> <C>
Neil R. Barna, Gary W. Hickel, Joseph D. Reid,
President President Chairman and CEO
Valley First Community Bank

Michael J. Devine Stewart A. Hogue, James A. Schmidt,
Attorney At Law Owner Certified Public Accountant
Commercial Lithographers Nelson Lambson & Co., PLC

Debra L. Duvall, Ed.D., Michael L. Kasten, Daniel P. Skinner,
Assistant Superintendent Managing Partner Owner & Manager
Mesa Public Schools Kasten Investments, LLC Lebaron & Carroll LSI, Inc.

Brian K. English Philip S. Kellis, Terry D. Turk,
Attorney At Law Managing Partner President
Dobson Ranch Inn Sun American Mortgage Co.

Robert R. Evans, Sr. Ruth L. Nesbitt
Partner Community Volunteer
Evans Management Co.
</TABLE>

SOUTHERN ARIZONA COMMUNITY BANK

<TABLE>
<S> <C> <C>
William R. Assenmacher, Michael F. Hannley, James A. Mather
President President Certified Public
T.A. Caid Industries, Inc. Bank of Tucson Accountant/
Attorney At Law

Thomas F. Cordell, Michael L. Kasten, Joseph D. Reid,
Director/Multi-Media Managing Partner Chairman and CEO
Specialist Kasten Investments, LLC
University of Arizona, ECAT

Michael J. Devine John P. Lewis, Louise M. Thomas,
Attorney At Law President President
Events Made Special

Robert A. Elliot, Jim Livengood, Paul A. Zucarelli,
President & Owner Director of Athletics Owner & Principal
Robert A. Elliot, Inc. University of Arizona Gordon, Zucarelli & Handley
Insurance

Brian K. English
Attorney At Law
</TABLE>

59
<PAGE> 61

SUNRISE BANK OF ARIZONA

<TABLE>
<S> <C> <C>
Sandra A. Abalos, William D. Hinz, Gerald D. Paquette,
President President President
Abalos & Associates, PC Commercial Blueprint
Company

Michael J. Devine Michael L. Kasten, Joseph D. Reid,
Attorney At Law Managing Partner Chairman and CEO
Kasten Investments, LLC

Brian K. English John T. Katsenes, Mark A. Steig
Attorney At Law Manager Orthodontist
Katsenes Enterprises

Howard J. Hickey, III, Kevin B. Kinerk, James R. Wentworth,
Executive Vice President Executive Vice President Principal
Sunrise Bank of Arizona Sunrise Bank of Arizona Wentworth, Webb &
Postal LLC.
</TABLE>

VALLEY FIRST COMMUNITY BANK

<TABLE>
<S> <C> <C>
W. Craig Berger, Warner A. Gabel, III, Gordon D. Murphy,
President President & Chairman
W. Craig Berger Financial Designated Broker Esperanca Foundation
Services, Ltd. Gabel Investments, Inc.

Marilyn D. Cummings, Patrick J. Harris, Mary D. Ogilvy
Realtor Vice President of President
Russ Lyon Realty Company Marketing Phoenix Museum of History
Skill Golf, Inc.

Michael J. Devine Gary W. Hickel, Joseph D. Reid,
Attorney At Law President Chairman and CEO

Brian K. English Michael L. Kasten, Harry Rosenzweig,
Attorney At Law Managing Partner Co-Owner
Kasten Investments, LLC Harry's Fine Jewelry

William R. Fitzpatrick,
Certified Public
Accountant
Fitzpatrick, Hopkins,
Kelly & Leonhard, PLC
</TABLE>

60
<PAGE> 62

DIRECTOR COMPENSATION

Each non-employee director of Sun receives a fee of $750 for attendance at
each board meeting. In addition, non-employee directors receive a fee of $200
for attendance at meetings of any committees of the board on which they serve.
Messrs. Kasten, Devine and Sable each receive a travel allowance of $300 for
each meeting attended. Directors who are also officers of Sun are not
compensated for their services as directors. Sun's directors also participate in
Sun's stock option program. See "Management -- Stock Option Program."

BOARD COMMITTEES

The Board of Directors has an Executive Committee, a Compensation Committee
and an Audit Committee.

EXECUTIVE COMMITTEE. The Executive Committee has the authority to act in
place of the full Board of Directors, whenever the Board is not in session. The
Executive Committee reports through its chairman, any action taken between the
regular meetings of the Board of Directors. The Board of Directors retains the
right to rescind any executory committee action.

COMPENSATION COMMITTEE. The Compensation Committee is responsible for
reviewing and recommending the compensation of Sun's officers and recommending
non-cash compensation programs, including grants of options pursuant to, and
establishment of stock option plans, retirement plans, 401(k) plans and employee
stock purchase plans.

AUDIT COMMITTEE. The Audit Committee reports to the Board of Directors in
discharging its responsibilities relating to the accounting, reporting and
financial control practices of Sun. The Audit Committee has general
responsibility for the oversight of financial controls, as well as Sun's
accounting and audit activities. The Audit Committee also annually reviews the
qualifications of the independent auditors. The Audit Committee is composed
entirely of outside directors who are not now, and have never been, officers of
Sun.

COMMITTEE MEMBERSHIP

<TABLE>
<CAPTION>
NAME EXECUTIVE COMMITTEE COMPENSATION COMMITTEE AUDIT COMMITTEE
- ---- ------------------- ---------------------- ---------------
<S> <C> <C> <C>
Joseph D. Reid........... X
Richard N. Flynn......... X
Michael L. Kasten........ X X
Humberto S. Lopez........ X X
Kathryn L. Munro......... X
Michael J. Devine........ X
Ronald Sable............. X
</TABLE>

61
<PAGE> 63

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The table below shows compensation paid by Sun to its Chief Executive
Officer and other executive officers whose compensation exceeds $100,000. Some
of Sun's executive officers are employed by both Sun and Capitol and receive
compensation from each company. The options listed below include options granted
by Sun and also its bank subsidiaries. This table does not reflect compensation
paid to those individuals by Capitol. John S. Lewis, Sun's recently-appointed
President, did not begin serving in that capacity until after December 31, 1998.

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
AWARDS ------------
------------------ SECURITIES
NAME AND SALARY BONUS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) OPTIONS/SARs COMPENSATION(1)
- ------------------ ---- -------- ------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Joseph D. Reid(2)
Chairman and Chief
Executive Officer of
Sun, Chairman and Chief
Executive Officer of
each of Sun's current
bank subsidiaries....... 1998 101,392 -- 127,694(3) --
1997 36,923 -- 45,000(4) --
1996 9,615 -- 140,000(5) --
Michael F. Hannley
Executive Vice President
of Sun; President of
Bank of Tucson.......... 1998 148,089 12,000 5,000(6) 3,287
1997 132,990 -- 12,000(6) --
1996 115,053 -- 60,000(7) --
Gary W. Hickel(8)
Executive Vice President
of Sun; President of
Valley First Community
Bank.................... 1998 134,522 6,137 7,000(9) 3,814
1997 126,727 -- 14,000(10) --
</TABLE>

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

(1) Represents matching contributions made by Sun under its 401(k) plan.

(2) Excludes compensation paid to Mr. Reid for services rendered in all
capacities to Capitol.

(3) Represents 72,694 Sun options; 5,000 Camelback Community Bank options;
20,000 Mesa Bank options; 5,000 Southern Arizona Community Bank options;
20,000 Sunrise Bank of Arizona options; and 5,000 Valley First Community
Bank options.

(4) Represents no Sun options; 20,000 Camelback Community Bank options; 20,000
Southern Arizona Community Bank options; and 5,000 Valley First Community
Bank options.

(5) Represents 20,000 Valley First Community Bank options and 120,000 Bank of
Tucson options, which were converted into Sun options in 1997 when Bank of
Tucson became a wholly-owned subsidiary of Sun.

(6) Represents Sun options.

(7) Represents 60,000 Bank of Tucson options, which were converted into Sun
options in 1997 when Bank of Tucson became a wholly-owned subsidiary of
Sun.

(8) Mr. Hickel's employment with Sun commenced in fiscal 1997.

(9) Represents 5,000 Sun options and 2,000 Valley First Community Bank options.

(10) Represents 12,000 Sun options and 2,000 Valley First Community Bank
options.

62
<PAGE> 64

OPTIONS GRANTS IN LAST FISCAL YEAR

The following table shows grants of stock options by Sun and its subsidiary
banks to the named Sun executive officers during the fiscal year ended December
31, 1998. Sun does not maintain an option or other stock-based plan that
provides for the grant of stock appreciation rights.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM
NAME AND GRANTOR OF OPTIONS EMPLOYEES IN (PER EXPIRATION ---------------------
OPTION GRANTED FISCAL YEAR SHARE) DATE 5% 10%
- ------------------- ---------- ------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph D. Reid
Sun................. 22,694(1) 27.5% $10.00 11/01/08 $108,250 $259,392
50,000(1) 10.00 01/01/09 238,500 571,500
Camelback Community
Bank............. 5,000 45 14.00 10/01/07 38,600 95,050
Mesa Bank........... 20,000 60 14.00 12/31/05 114,000 265,600
Southern Arizona
Community Bank... 5,000 45 14.00 10/01/07 38,600 95,050
Sunrise Bank of
Arizona.......... 20,000 40 14.00 10/01/08 176,000 446,200
Valley First
Community Bank... 5,000 60.6 14.00 10/01/05 28,500 66,400
Michael F. Hannley
Sun................. 5,000(1) 1.89 10.00 11/01/08 23,850 57,150
Gary W. Hickel
Sun................. 5,000(1) 1.89 10.00 11/01/08 23,850 57,150
Valley First
Community Bank... 2,000 22.9 14.00 09/30/05 11,400 26,560
</TABLE>

- -------------------------
(1) Sun has the right to repurchase options for a period of 5 years after the
date of issuance at a price of $.10 per option. The right of repurchase
expires at the rate of 20% of the issued options per year during the first 5
years from the date of issuance.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table shows the value of the named Sun executive officers'
unexercised options at December 31, 1998. None of the named executive officers
exercised any stock options in 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph D. Reid............. -- -- 312,694(2) -- $1,795,764 --
Michael F. Hannley......... -- -- 77,000(3) -- 829,800 --
Gary W. Hickel............. -- -- 21,000(4) -- 150,000 --
</TABLE>

- -------------------------
(1) Assumes a market price for Sun's common stock equal to $16.00. None of the
bank options are in-the-money.

(2) Represents 192,694 Sun options; 25,000 Camelback Community Bank options;
20,000 Mesa Bank options; 25,000 Southern Arizona Community Bank options;
20,000 Sunrise Bank of Arizona options; and 30,000 Valley First Community
Bank options.

(3) 77,000 Sun options.

(4) 17,000 Sun options, 4,000 Valley First Community Bank options.
63
<PAGE> 65

EMPLOYMENT AGREEMENTS

JOSEPH D. REID. Sun employs Joseph D. Reid under an agreement which
terminates on January 1, 2001. The agreement automatically renews for successive
one-year periods unless either Sun or Mr. Reid gives written notice to the
contrary. In addition to information found elsewhere in this prospectus, the
agreement provides:

- a base salary equal to $25,000 per bank subsidiary;

- discretionary bonuses;

- stock options equal to 5% of the total outstanding shares of Sun's common
stock, Sun has the right to repurchase the options for a 5 year period;

- right to receive additional stock options equal to 5% of any additional
issuances of Sun's common stock, having an exercise price equal to the
fair market value at the time of the grant; and

- participation in Sun's benefit plans, an automobile allowance and a
lodging allowance of $600 a month per bank, and certain other fringe
benefits.

If Mr. Reid's employment is terminated without cause, Mr. Reid will receive his
base salary for the duration of the then current term plus one additional year's
salary. In the event Sun is sold to Capitol, then all of Mr. Reid's vested
options shall be converted into options of Capitol equal to the ratio that Sun's
common stock is converted into Capitol's common stock. In the event Sun is sold
to a third party, Mr. Reid will receive a lump sum payment equal to two times
his annual base salary.

Additionally, each of Sun's subsidiaries employs Mr. Reid, as Chief
Executive Officer, he has separate agreements with each bank subsidiary except
Valley First Community Bank and Bank of Tucson. The agreements are for a term of
three years and automatically renew for additional one year terms unless notice
is otherwise given by either party. Mr. Reid receives no cash compensation under
the agreements, but he does receive stock options to purchase 30,000 shares of
common stock in each bank. The options are exercisable at $14.00 per share. In
the event a bank is sold to Sun, the options granted to Mr. Reid to purchase
shares in such bank will be converted into options of Sun equal to the ratio
that the bank's common stock is converted into Sun's common stock. The converted
options will become immediately vested and exercisable. In the event a bank is
sold to a third party, then all of Mr. Reid's stock options to purchase shares
in such bank will become immediately vested and exercisable.

JOHN S. LEWIS. Sun employs its newly-appointed President, John S. Lewis,
under an agreement which terminates February 1, 2004. The agreement provides:

- an annual base salary equal to $150,000, with annual adjustments at the
discretion of the board of directors;

- discretionary bonuses;

- stock options equal to 3.5% of the total issued shares of Sun's common
stock, having an exercise price of $10.00 per share. Sun has the right to
repurchase the options for a 5 year period;

- right to receive additional stock options equal to 3.5% of any additional
issuances of Sun's common stock, having an exercise price equal to the
fair market value at the time of the grant; and

- participation in Sun's benefit plans, an automobile allowance, and
certain other fringe benefits.

64
<PAGE> 66

If Mr. Lewis' employment is terminated without cause, Mr. Lewis will receive for
a period of one year following termination an amount equal to his annual base
salary on the date of termination. In the event Sun is sold to Capitol, then all
of Mr. Lewis' vested options will convert into options of Capitol equal to the
ratio that Sun's common stock is converted into Capitol's common stock. In the
event Sun is sold to a third party, Sun's right to repurchase any of the stock
options terminates.

GARY W. HICKEL. Valley First Community Bank employs Gary W. Hickel under
an agreement which terminates on October 1, 1999. The agreement automatically
renews for successive one-year periods unless either Valley First or Mr. Hickel
gives written notice to the contrary. In addition to information found elsewhere
in this prospectus, the agreement provides:

- an annual base salary equal to $125,000, with annual adjustments at the
discretion of the board of directors;

- discretionary bonuses;

- stock options to purchase a total of 20,000 shares of Valley First's
common stock at an exercise price of $14.00 per share, all of which shall
vest in accordance with certain performance standards;

- right to receive additional stock options to purchase his pro rata share
of all or any part of new issuances of Valley First's common stock; and

- participation in Valley First's benefit plans, an automobile allowance,
and certain other fringe benefits;

If Mr. Hickel's employment is terminated without cause, Mr. Hickel will receive
for a period of one year following termination an amount equal to his annual
base salary on the date of termination. In the event Mr. Hickel is terminated
without cause or upon a change in control of Valley First, including a sale to
Capitol, all stock options granted under the agreement will immediately vest and
become exercisable. In the event Valley Community is sold to a third party, Mr.
Hickel will receive a lump sum payment equal to two times his annual base
salary.

MICHAEL F. HANNLEY. Bank of Tucson employs Michael F. Hannley under an
agreement which has a rolling three-year term that renews each year unless
either Bank of Tucson or Mr. Hannley gives written notice to the contrary. In
addition to information found elsewhere in this prospectus, the agreement
provides:

- an annual base salary equal to $125,000, with annual adjustments at the
discretion of the board of directors;

- for discretionary bonuses;

- stock options to purchase a total of 60,000 shares of Sun's common stock
at an exercise price of $4.66 per share; and

- participation in Bank of Tucson's benefit plans, use of company
automobile, and certain other fringe benefits.

If Mr. Hannley's employment is terminated without cause, Mr. Hannley will
receive for a period of one year following termination an amount equal to his
annual base salary on the date of termination. In the event Bank of Tucson is
sold to Capitol, then all of Mr. Hannley's stock options will convert into
options of Capitol equal to the ratio that Bank of Tucson's common stock is
converted into Capitol's common stock. All converted options become immediately
vested and exercisable. In the event Bank of Tucson is sold to a third party,
other than Capitol, Mr. Hannley will receive a lump sum payment equal to two
times his annual base salary and all unvested stock options immediately vest and
become exercisable.

65
<PAGE> 67

EXECUTIVE SUPPLEMENTAL INCOME AGREEMENTS

Valley First Community Bank and Bank of Tucson have each entered into
supplemental income agreements with Gary Hickel and Michael Hannley,
respectively. The agreements for Messrs. Hickel and Hannley provide that:

- upon retirement after the age of 62 with at least 15 years of continuous
service to the bank or upon death, Mr. Hickel and Mr. Hannley, or their
designated beneficiary, are both entitled to a total annual payment of
$75,000. Such payment is made for fifteen years.

- upon termination of employment after attaining age 55 and with 10 or more
continuous years of service to the bank, Mr. Hickel and Mr. Hannley are
both entitled to a total annual payment of $25,000. Both also are
entitled to an additional $3,000 for each year they are employed by their
respective banks after the age of 55. Such payment is made for fifteen
years.

- in the event of a change in control (as defined in the agreements), which
is approved by the board of directors, Mr. Hickel and Mr. Hannley are
both entitled to receive a lump sum payment upon termination of
employment equal to $500,000.

- in the event of a change of control, that is not approved by the board of
directors, Mr. Hickel and Mr. Hannley are both entitled to receive a lump
sum payment equal to $500,000.

It is anticipated that Sun's banks, including Valley First and Bank of Tucson,
will enter into additional supplemental income agreements with certain executive
officers and employees. The actual amounts paid upon the occurrence of the
events described above will depend in part on the individual's position within
the bank. The amounts paid under the agreements are funded through an insurance
program.

STOCK OPTION PROGRAM

In November 1998, Sun's Board of Directors adopted a stock option program.
The program establishes an option pool, which at all times will be equal to 15%
of the issued and outstanding shares of Sun. The options granted pursuant to the
program have an exercise price equal to the fair market value at the time of
grant, a ten year exercise period, and to a diminishing right of Sun to
repurchase for a five year period from the date of grant. The right of
repurchase does not apply to those options that have been exercised. The options
are non-dilutive in the event of a stock split or stock dividend. Pursuant to
the program, the option pool will be allocated as follows: corporate officers
5%, Chairman and Chief Executive Officer 5%, President 3.5%, Board of Directors
1%, and unallocated .5%.

66
<PAGE> 68

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Sun's banking subsidiaries have, in the normal course of business, made
loans to certain directors and officers of Sun and its subsidiaries, and to
organizations in which certain directors and officers have an interest. As of
December 31, 1998, the outstanding principal balance of such loans approximated
$4,674,000 representing 17.5% of the stockholders' equity. In the opinion of
management, such loans were made in the ordinary course of business and were
made on substantially the same terms, including interest rates and collateral as
those prevailing at the time for comparable transactions with unrelated parties
and did not involve more than the normal risk of collectibility or present other
unfavorable features. Sun has a written policy that all loans to, and all
transactions with Sun's officers, directors, affiliates and/or shareholders
holding 10% or more of Sun's stock will be made or entered into for bona fide
business purposes, on terms no less favorable than could be made to, or obtained
from, unaffiliated parties, and shall be approved by a majority of the directors
of Sun, including a majority of the independent disinterested directors of Sun.

East Valley Community Bank, in organization, has entered into a lease
agreement with Chandler Properties Group, LLC. The lease is at market rate,
$7,748 per month, and for an initial term of ten years. The principals of
Chandler Properties Group, LLC include Messrs. Kasten, Lopez, Flynn and Devine,
members of the board of directors of Sun and certain of its banks.

See "Business -- Relationship with Capitol Bancorp Ltd." for a discussion
of director and officer relationships between Sun and Capitol and information
relating to certain transactions with Capitol.

67
<PAGE> 69

PRINCIPAL SHAREHOLDERS

These tables present information regarding the beneficial ownership as of
May 31, 1999 of common stock in Sun and each of its bank subsidiaries held by:

- each beneficial owner of more than 5% of the outstanding shares of Sun's
common stock,

- each director of Sun,

- each of the named executive officers of Sun, and

- all of Sun's directors and executive officers as a group.

Unless otherwise indicated, each of the shareholders listed below has sole
voting and investment power with respect to the shares beneficially owned and
the address of each of the listed shareholders is 2777 East Camelback Road,
Phoenix, Arizona 85016.

SUN COMMUNITY BANCORP LIMITED

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING AFTER THE OFFERING(1)
NAME AND ADDRESS OF ------------------------- -------------------------
BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER PERCENTAGE
- ------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Capitol Bancorp Ltd............. 1,965,474 51.00% 2,815,474 51.15%
One Business & Trade Center
200 Washington Square North
Lansing, MI 48933
Joseph D. Reid.................. 2,191,868(2) 54.17% 3,124,368(3) 54.06%
Michael L. Kasten............... 95,554(4) 2.48% 95,554 1.74%
John S. Lewis................... 137,385(5) 3.44% 195,135(6) 3.43%
Michael F. Hannley.............. 92,750(7) 2.36% 92,750(7) 1.66%
Gary W. Hickel.................. 18,000(8) * 18,000(8) *
Richard N. Flynn................ 108,422(4) 2.81% 108,422(4) 1.97%
Michael J. Devine............... 10,522(4) * 10,522(4) *
Michael J. Harris............... 16,800 * 16,800 *
Humberto S. Lopez............... 122,645(4) 3.18% 122,645(4) 2.23%
Kathryn L. Munro(9)............. -- -- -- --
Ronald K. Sable................. 27,601(4) * 27,601(4) *
Gerry Smith..................... 17,100(10) * 17,100(10) *
Lee W. Hendrickson.............. 10,600(11) * 10,600(11) *
Patricia L. Stone............... 21,000(12) * 21,000(12) *
Leonard C. Zazula............... 20,000(13) * 20,000(13) *
Cristin Reid English............ 13,962(14) * 13,962(14) *
Paige E. Mulhollan.............. 1,500(15) * 1,500(15) *
Katherine P. Wait............... 13,750(16) * 13,750(16) *
All Officers and Directors as a
Group (18 Persons)............ 2,919,459(17) 66.35% 3,909,709(18) 63.16%
</TABLE>

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

* Represents less than 1% of the total shares outstanding.

68
<PAGE> 70

(1) Assuming no purchase of common stock in this offering, except for the
purchase by Capitol of 850,000 shares.

(2) Includes 1,965,474 shares owned by Capitol and 192,694 options.

(3) Includes 2,815,474 shares owned by Capitol and 275,194 options.

(4) Includes 6,422 options.

(5) Includes 134,885 options.

(6) Includes 192,635 options.

(7) Includes 77,000 options.

(8) Includes 17,000 options.

(9) Ms. Munro was elected to the board in April 1999.

(10) Includes 17,000 options.

(11) Includes 10,500 options.

(12) Includes 21,000 options.

(13) Includes 18,000 options.

(14) Includes 11,500 options.

(15) Includes 1,500 options.

(16) Includes 13,000 options.

(17) Includes 546,189 options.

(18) Includes 686,439 options.

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<PAGE> 71

SUN'S SUBSIDIARY BANKS

Sun owns 51% or more of the outstanding stock of each of the banks
reflected in the table below. Bank of Tucson is 100% owned by Sun. Capitol does
not have a direct ownership in any of Sun's banks. Except where noted, share
ownership represents less than 1% of the total outstanding stock.

<TABLE>
<CAPTION>
SOUTHERN SUNRISE NEVADA
CAMELBACK ARIZONA BANK VALLEY FIRST COMMUNITY
NAME AND ADDRESS OF COMMUNITY MESA COMMUNITY OF COMMUNITY BANCORP
BENEFICIAL OWNER BANK BANK BANK ARIZONA BANK LIMITED
- ------------------- --------- ------ --------- ------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph D. Reid........... 28,577(1) 26,000(2) 26,000(3) 22,000(4) 33,000(5) 50,000(6)
Michael L. Kasten........ 4,000(7) 4,000(8) 4,000(9) 4,000(10) 3,700(11) 13,000(12)
John S. Lewis............ 1,800 -- -- -- -- 6,500(13)
Michael F. Hannley....... -- 100 100 100 100 3,500(13)
Gary W. Hickel........... -- 100 -- -- 7,500(14) --
Michael J. Devine........ 300 300 400 200 300 8,000(15)
Richard N. Flynn......... -- -- -- -- -- --
Michael J. Harris........ -- -- -- -- -- --
Humberto S. Lopez........ -- -- 7,143(16) -- -- 13,000(12)
Kathryn L. Munro......... -- -- -- -- -- --
Ronald K. Sable.......... 100 200 200 200 -- 5,000
Gerry Smith.............. -- -- -- -- -- 100
Lee W. Hendrickson....... 100 100 100 100 -- 7,600(17)
Patricia L. Stone........ -- -- 400 -- -- --
Leonard C. Zazula........ -- -- -- -- 200 --
Cristin Reid English..... 150 100 100 100 100 8,000(17)
Paige E. Mulhollan....... -- -- -- -- -- --
Katherine P. Wait........ -- -- -- -- -- --
All Officers and
Directors as a Group
(18 Persons)........... 35,027(18) 30,900(19) 38,443(20) 26,700(21) 44,900(22) 114,700(23)
</TABLE>

- -------------------------
(1) Includes 25,000 Camelback Community Bank options; represents approximately
8.8% of the outstanding stock.

(2) Includes 25,000 Mesa options; represents approximately 8.0% of the
outstanding stock.

(3) Includes 25,000 Southern Arizona Community Bank options; represents
approximately 7.5% of the outstanding stock.

(4) Includes 20,000 Sunrise Bank of Arizona options; represents approximately
6.0% of the outstanding stock.

(5) Includes 30,000 Valley First Community Bank options; represents
approximately 9.6% of the outstanding stock.

(6) Includes 40,000 Nevada Community Bancorp Limited options; represents
approximately 4.8% of the outstanding stock.

(7) Represents approximately 1.3% of the outstanding stock.

(8) Represents approximately 1.3% of the outstanding stock.

(9) Represents approximately 1.2% of the outstanding stock.

70
<PAGE> 72

(10) Represents approximately 1.1% of the outstanding stock.

(11) Represents approximately 1.3% of the outstanding stock.

(12) Includes 3,000 Nevada Community Bancorp Limited options; represents
approximately 1.3% of the outstanding stock.

(13) Includes 3,000 Nevada Community Bancorp Limited options.

(14) Includes 4,000 Valley First Community Bank options; represents
approximately 2.4% of the outstanding stock.

(15) Includes 8,000 Nevada Community Bancorp Limited options.

(16) Represents approximately 2.2% of the outstanding stock.

(17) Includes 7,500 Nevada Community Bancorp Limited options.

(18) Includes 25,000 Camelback Community Bank options; represents approximately
10.8% of the outstanding.

(19) Includes 25,000 Mesa Bank options; represents approximately 9.5% of the
outstanding stock.

(20) Includes 25,000 Southern Arizona Community Bank options; represents
approximately 11.1% of the outstanding stock.

(21) Includes 20,000 Sunrise Bank of Arizona options; represents approximately
8.1% of the outstanding stock. Excludes 46,500 Sunrise Bank of Arizona
options held by employees other than those named above.

(22) Includes 34,000 Valley First Community Bank options; represents
approximately 12% of the outstanding stock.

(23) Includes 75,000 Nevada Community Bancorp Limited options; represents 10.7%
of the outstanding stock.

71
<PAGE> 73

SUPERVISION AND REGULATION

Bank holding companies and banks are extensively regulated under federal
and state law. References under this heading to applicable statutes or
regulations are brief summaries of portions of the regulations that do not
purport to be complete and that are qualified in their entirety by reference to
those statutes and regulations. Any change in applicable laws or regulations may
have a material adverse effect on Sun's business. Furthermore, Sun's formation
of additional banks in the Southwest may subject Sun and its bank subsidiaries
to additional supervision and regulation under various state laws.

BANK HOLDING COMPANY REGULATION

FEDERAL RESERVE BOARD. Sun is regulated by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act (the "BHC Act"). As a result, Sun is required to file periodic
reports, and other additional information as the Federal Reserve Board may
require, pursuant to the BHC Act. Sun is examined by the Federal Reserve Board,
which may also examine its banking and non-banking affiliates.

ACQUISITIONS AND ACTIVITIES. Under the BHC Act, Sun must obtain prior
Federal Reserve Board approval for the acquisition of more than 5% of the voting
shares, or substantially all the assets, of any bank or bank holding company.
Sun must also obtain approval for any merger or consolidation with another bank
holding company. With certain exceptions, the BHC Act prohibits Sun from
acquiring the voting shares or assets of any company that is not a bank or bank
holding company. It also prevents Sun from engaging in any activity other than
banking, managing or controlling banks, or performing services for its
authorized affiliates.

Sun may, however, acquire an interest in a company or engage in an activity
if the Federal Reserve Board determines that it is so closely related to banking
or managing or controlling banks that it should be permitted. Even if a specific
activity has previously been approved, the Federal Reserve Board may still order
Sun to terminate the activity, or to terminate its ownership or control of any
subsidiary, if it constitutes a serious risk to the financial safety, soundness
or stability of any of Sun's banking subsidiaries.

ACQUISITIONS OF BANKS. Any person, including associates, affiliates and
groups acting in concert with the person, who purchases or subscribes for:

- 5% or more of Sun's shares may be required to obtain prior approval of
the Federal Reserve Board, or

- 25% or more of Sun's shares may be required to obtain prior approval of
the Arizona Banking Department.

Under the Change in Bank Control Act, a person may be required to obtain
the prior regulatory approval of the Federal Deposit Insurance Corporation
("FDIC") and the Federal Reserve Board before acquiring the power to direct the
management, operations or policies of Sun or its banking affiliates. In
addition, any corporation, partnership, trust or organized group that acquires a
controlling interest in Sun or its banking affiliates may have to obtain the
Federal Reserve Board's approval to become a bank holding company and as a
result will become subject to its regulations.

CAPITAL ADEQUACY REQUIREMENTS. Under Federal Reserve Board policy, Sun is
expected to act as a source of financial strength and commit resources to
support its

72
<PAGE> 74

banking affiliates. It is the Federal Reserve Board's position that Sun must
provide support even when it would otherwise not consider itself able to do so.

The Federal Reserve Board has adopted risk-based capital requirements for
assessing the capital adequacy of bank holding companies. These standards define
regulatory capital and establish minimum capital standards in relation to assets
and off-balance sheet exposures, as adjusted for credit risks. The Federal
Reserve Board's risk-based guidelines apply on a consolidated basis for bank
holding companies with consolidated assets of $150 million or more and on a
"bank-only" basis for bank holding companies with consolidated assets of less
than $150 million. Under the Federal Reserve Board's risk-based guidelines,
capital is classified into two categories:

- Tier 1 or "core" capital, which consists of the following:

- common shareholders' equity,

- perpetual preferred stock,

- minority interests in the common equity accounts of consolidated
affiliates, and

- certain other capital instruments.

Tier 1 capital is reduced by goodwill, certain other intangible assets
and certain investments in other corporations.

- Tier 2 capital, which consists of the following:

- allowance for loan and lease losses,

- perpetual preferred stock,

- "hybrid capital instruments,"

- perpetual debt and mandatory convertible debt securities,

- term subordinated debt,

- intermediate term preferred stock, and

- certain other capital instruments excluded from Tier 1 capital.

Under the Federal Reserve Board's capital guidelines, bank holding
companies are required to maintain a minimum ratio of qualifying capital to
risk-weighted assets of 8.0%, of which at least 4.0% must be in the form of Tier
1 capital.

The Federal Reserve Board also requires a minimum leverage ratio of Tier 1
capital to total assets of 3.0%, except that bank holding companies not rated in
the highest category under the regulatory rating system are required to maintain
a leverage ratio of 1.0% to 2.0% above the minimum. The 3.0% Tier 1 capital to
total assets ratio constitutes the minimum leverage standard for the strongest
bank holding companies under the rating system, and is used in conjunction with
the risk-based ratio in determining the overall capital adequacy of banking
organizations. In addition, the Federal Reserve Board continues to consider the
Tier 1 leverage ratio in evaluating proposals for expansion or new activities.

In its capital adequacy guidelines, the Federal Reserve Board emphasizes
that these standards are supervisory minimums and that banking organizations
generally are expected to operate well above the minimum ratios. These
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions are expected to maintain strong capital positions
substantially above the minimum levels.

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<PAGE> 75

Sun's banking affiliates are subject to these requirements. They are also
subject to requirements of the FDIC, state banking regulatory agencies and other
agencies, whether as a condition of charter approval or other circumstances.

BANK REGULATION

The deposits of Sun's affiliate banks are insured under the provisions of
the Federal Deposit Insurance Act, and as a result are regulated by the FDIC.
The FDIC supervises compliance with federal law and regulations which place
restrictions on loans between FDIC-insured banks and their directors, executive
officers and other controlling persons.

Sun is also affected by the credit policies of other monetary authorities,
including the Federal Reserve Board, which regulate the national supply of bank
credit. These policies influence the overall growth of bank loans, investments,
and deposits and may also affect interest rates charged on loans and paid on
deposits. The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future.

FINANCIAL INSTITUTION REGULATION GENERALLY

TRANSACTIONS WITH AFFILIATES. State and federal regulatory agencies impose
various restrictions on transactions between a bank and its holding company or
other affiliates. These transactions include loans and other extensions of
credit, purchases of securities and other assets, and payments of fees or other
distributions. In general, these restrictions may limit or prohibit the amount
of transactions between Sun and its affiliates. The restrictions also require
that transactions with affiliates be on terms comparable to those with
unaffiliated entities.

LOANS TO DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS. Loans
between Sun and any of its directors, executive officers or principal
shareholders must be made on substantially the same terms as a comparable
transaction with a person who is not in the same position. This restriction does
not apply if the loan is made pursuant to a compensation or benefit plan that is
widely available to all of Sun's employees and does not favor insiders.

Under Federal law, outstanding loans to Sun's executive officers,
directors, principal shareholders and affiliates generally may not exceed 15% of
its unimpaired capital and surplus for loans that are not fully secured and 10%
of unimpaired capital and surplus for loans that are fully secured by readily
marketable collateral. A majority of Sun's disinterested directors must approve
any loans to insiders in excess of the greater of $25,000 or 5% of capital and
unimpaired surplus. Arizona law limits the aggregate value of loans made to any
one director, officer, or employee of Sun to 1% of Sun's capital, unless
otherwise approved by a majority of disinterested directors.

DIVIDEND LIMITATIONS. As a bank holding company, Sun is primarily
dependent upon dividend distributions from its bank affiliates. A major source
of Sun's revenue comes from dividends received or expected to be received from
its bank affiliates. As a result, Sun's ability to pay dividends is likely to be
dependent on the amount of dividends paid by its bank affiliates. Sun's bank
affiliates are prohibited from paying dividends until start up losses are
recovered and a cumulative profit is made. No assurance can be given that Sun's
bank affiliates will, in any circumstances, pay dividends.

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Federal and state statutes and regulations impose restrictions on Sun's
ability to pay dividends:

- Federal Reserve Board policy provides that a bank holding company should
not pay dividends unless:

- the bank holding company's net income over the prior year is
sufficient to fully fund the dividends, and

- the prospective rate of earnings retention appears consistent with the
capital needs, asset quality and overall financial condition of the
bank holding company and its affiliates,

- Arizona law provides that dividends may be declared by Sun as permitted
by the general laws governing Arizona corporations, except that approval
of the regulatory authority is required prior to the declaration of any
dividend by Sun which is payable out of its capital surplus.

In addition Sun's ability to pay dividends may be affected by the various
minimum capital requirements and the capital and non-capital standards
established under the Federal Deposit Insurance Corporation Improvements Act of
1991 ("FDICIA"). Sun's right and the right of its shareholders and creditors to
participate in any distribution of the assets or earnings of Sun's affiliates
exists only after satisfaction of the prior claims of creditors of the
affiliate.

YEAR 2000 COMPLIANCE. The federal banking agencies, through the Federal
Financial Institutions Examination Council, expect the senior management and
board of directors of banks and their holding companies to be actively involved
in overseeing the Year 2000 issue. The agencies expect active involvement in the
readiness and monitoring of business risks posed not only by vendors of computer
systems but business partners, counter parties, and major loan customers. The
Office of the Controller of the Currency ("OCC") issued an advisory letter in
May 1997 providing comprehensive Year 2000 guidance and establishing a schedule
for banks to achieve Year 2000 compliance. Senior management is expected to
report at least quarterly to the board of directors on Year 2000 compliance
progress and to notify the board immediately if critical benchmarks are missed.

The agencies have indicated that Year 2000 readiness progress will be
required as a condition to regulatory approval of expansion proposals.
Enforcement actions may also be brought against banking organizations that have
inadequate Year 2000 readiness programs.

STANDARDS FOR SAFETY AND SOUNDNESS

The FDIC requires the Federal Reserve Board, together with the other
federal bank regulatory agencies, to prescribe standards of safety and soundness
relating generally to operations and management, asset growth, asset quality,
earnings, stock valuation, and compensation. The federal bank regulatory
agencies have adopted a set of guidelines prescribing safety and soundness
standards pursuant to the FDICIA. The guidelines establish general standards
relating to:

- internal controls and information systems,

- internal audit systems,

- loan documentation,

- credit underwriting,

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- interest rate exposure,

- asset growth,

- compensation, and

- fees and benefits.

In general, the guidelines require appropriate systems and practices to
identify and manage the risks and exposures specified in the guidelines. The
guidelines prohibit excessive compensation as an unsafe and unsound practice.
Compensation is deemed excessive when the amount paid is unreasonable or
disproportionate to the services performed by an executive officer, employee,
director or principal shareholder.

The Federal Reserve Board, FDIC and the OCC adopted regulations that
authorize the agencies to order non-complying institutions to submit a
compliance plan. If the institution fails to submit or implement an acceptable
compliance plan, the applicable agency must issue an order directing action to
correct the deficiency. The agency may also issue an order directing other
actions of the types to which an undercapitalized association is subject under
the "prompt corrective action" provisions of the FDICIA. If an institution fails
to comply with an order the agency may seek to enforce it through judicial
proceedings and impose civil money penalties. The agencies may also propose
guidelines for asset quality and earnings standards.

A range of other provisions of the FDICIA include:

- requirements applicable to closure of branches;

- additional disclosures to depositors with respect to terms and interest
rates applicable to deposit accounts;

- uniform regulations for extensions of credit secured by real estate;

- restrictions on activities of, and investments by, state-chartered banks;

- modification of accounting standards to conform to generally accepted
accounting principles including (1) the reporting of off-balance sheet
items and (2) supplemental disclosure of the estimated fair market value
of assets and liabilities in financial statements filed with the banking
regulators;

- increased penalties in making or failing to file assessment reports with
the FDIC;

- greater restrictions on extensions of credit to directors, officers and
principal shareholders; and

- increased reporting requirements on agricultural loans and loans to small
businesses.

The Federal Reserve Board, OCC, FDIC and other federal banking agencies'
risk-based capital standards provide for consideration of interest rate risk
when assessing the capital adequacy of a bank. The agencies must explicitly
include a bank's exposure to declines in the economic value of its capital due
to changes in interest rates as a factor in evaluating its capital adequacy. The
agencies have also adopted a joint agency policy statement providing guidance to
banks for managing interest rate risk. The policy statement emphasizes the
importance of adequate oversight by management and a sound risk management
process. The assessment of interest rate risk management made by the banks'
examiners will be incorporated into the banks' overall risk management rating
and used to determine the effectiveness of management.

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PROMPT CORRECTIVE ACTION. The FDICIA requires the federal banking
regulators, including the Federal Reserve Board, the OCC and the FDIC, to take
prompt corrective action with respect to depository institutions that fall below
certain capital standards. It also prohibits any depository institution from
making any capital distribution that would cause it to be undercapitalized.

Institutions that are not adequately capitalized may be subject to a
variety of supervisory actions including the following:

- restrictions on growth;

- restrictions on investment activities;

- restrictions on capital distributions;

- restrictions on affiliate transactions; and

- required to submit a capital restoration plan guaranteed in part by any
company having control of the institution.

In other respects, the FDICIA provides for enhanced supervisory authority,
including greater authority for the appointment of a conservator or receiver for
under-capitalized institutions. The capital-based prompt corrective action
provisions of the FDICIA and their implementing regulations apply to
FDIC-insured depository institutions. Federal banking agencies, however, have
indicated that they may take appropriate action at the holding company level
based on their assessment of the effectiveness of supervisory actions imposed
upon affiliate insured depository institutions pursuant to the prompt corrective
action provisions of the FDICIA.

INSURANCE OF DEPOSIT ACCOUNTS. The banks' deposits are insured by the FDIC
to the maximum amount permitted by law, which is currently $100,000 per
depositor in most cases. FDIC insurance premiums are assessed on a risk-based
system, meaning that the amount of a depositary institution's premium depends on
its risk classification. The FDIC has authority to raise or lower assessment
rates on insured deposits in order to achieve certain designated reserve ratios
in the insurance funds. The FDIC may also impose special additional assessments.
Each depository institution is assigned to one of three capital groups:
"well-capitalized," "adequately capitalized" or "undercapitalized". Within each
capital group, institutions are assigned to one of three subgroups. The
institution is assigned to a subgroup on the basis of supervisory evaluations by
the institution's primary supervisory authority and other information the FDIC
determines to be relevant to its financial condition and the risk posed to the
deposit insurance fund. An institution's assessment rate depends on the capital
category and supervisory category to which it is assigned.

The FDIC's current assessment rate schedule for the Bank Insurance Fund
("BIF") provides an assessment rate of zero for well-capitalized institutions
with the highest supervisory ratings and the schedule calls for an assessment
rate of 0.27% of insured deposits for institutions in the lowest risk assessment
classification.

COMMUNITY REINVESTMENT ACT. Under the Community Reinvestment Act ("CRA"),
a financial institution has a continuing and affirmative obligation, consistent
with its safe and sound operation, to help meet the credit needs of its entire
community, including low and moderate income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions.
In addition, the CRA does not limit an institution's discretion to develop the
types of products and services that it believes are best suited to its
particular Community. The CRA requires each federal banking agency, in
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connection with its examination of a financial institution, to assess and assign
one of four ratings to the institution's record of meeting the credit needs of
its community.

The record is taken into account by a federal banking agency in its
evaluation of certain applications by the institution, including applications
for the following:

- charters;

- branches and other deposit facilities;

- relocations;

- mergers;

- consolidations;

- acquisitions of assets or assumptions of liabilities; and

- savings and loan holding company acquisitions.

The CRA also requires that all institutions make public disclosure of their
CRA ratings.

In April 1995, the Federal Reserve Board, the OCC and other federal banking
agencies revised the CRA regulations. Among other things, the amended CRA
regulations substituted the prior process-based assessment factors with a new
evaluation system that rates an institution based on its actual performance in
meeting community needs. In particular, the evaluation system would focus on
three tests:

- a lending test, to evaluate the institution's record of making loans in
its assessment areas;

- an investment test, to evaluate the institution's record of investing in
community development projects, affordable housing, and programs
benefiting low or moderate-income individuals and businesses; and

- a service test, to evaluate the institution's availability and
effectiveness of services through its branches, ATMs and other offices.

The amended CRA regulations also clarified how an institution's CRA
performance would be considered in the application process.

ENFORCEMENT ACTIONS. Federal and state statutes and regulations provide
financial institution regulatory agencies with great flexibility to undertake
enforcement action against an institution that fails to comply with regulatory
requirements, particularly capital requirements.

Possible enforcement actions include the following:

- the imposition of a capital restoration plan and capital directive,

- receivership,

- conservatorship, or

- the termination of deposit insurance.

INTERSTATE BANKING AND BRANCHING LEGISLATION. Under the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, adequately capitalized
and adequately managed bank holding companies are allowed to acquire banks
across state lines after complying with various regulations. It also permits
banks to merge with one another across

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state lines resulting in a main bank with branches in separate states. After
establishing branches in a state through an interstate merger transaction, a
bank could then establish and acquire additional branches at any location in the
state where any bank involved in the interstate merger could have established or
acquired branches under applicable federal and state law.

MONETARY POLICY AND ECONOMIC CONDITIONS

The earnings of banks and bank holding companies are affected by general
economic conditions and by the fiscal and monetary policies of federal
regulatory agencies, including the Federal Reserve Board. Through open market
transactions, variations in the discount rate and the establishment of reserve
requirements, the Federal Reserve Board exerts considerable influence over the
cost and availability of funds obtainable for lending or investing.

The above monetary and fiscal policies and resulting changes in interest
rates have affected the operating results of all commercial banks in the past
and are expected to do so in the future. It is impossible to predict the nature
or the extent of any effects which fiscal or monetary policies may have on Sun's
business and earnings.

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DESCRIPTION OF CAPITAL STOCK

The following description of Sun's common stock does not purport to be
complete and is subject in all respects to applicable Arizona law and to the
provisions of Sun's Articles of Incorporation and Bylaws, copies of which have
been filed as exhibits to the Registration Statement of which this prospectus is
a part.

Sun is authorized to issue 50,000,000 shares of common stock, no par value.
As of May 31, 1999, Sun had approximately 312 shareholders of record. Upon
completion of the offering, and assuming no exercise of the underwriters'
over-allotment option, there will be 5,503,870 shares of common stock issued and
outstanding. There are options to purchase 560,973 shares of Sun common stock
outstanding, all of which are currently exercisable. An additional 247,500
shares of common stock will be issuable upon exercise of outstanding options
granted or expected to be granted upon the closing of the offering under the
terms of Sun's stock option program. See "Management-Stock Option Program."
Prior to the offering, there are 3,853,870 shares of common stock issued and
outstanding.

COMMON STOCK

Each holder of common stock is entitled to one vote per share of record on
all matters to be voted upon by the shareholders. Holders also have cumulative
voting rights in the election of directors, as provided under Arizona law. This
means that shareholders may multiply the total number of shares they are
entitled to vote by the total number of directors for whom they are entitled to
vote, and may apply that product to elect a single director or distribute that
product among two or more candidates. For example, at a meeting to elect three
directors, a shareholder holding 100 voting shares could cast 300 votes for a
single candidate, or could cast any combination totaling 300 votes for two or
more candidates. Arizona's cumulative voting rights may allow shareholders
holding a minority of Sun's shares a greater opportunity to elect a director
even though management or larger shareholders control a substantial percentage
of Sun's shares.

Each share of common stock entitles the holder thereof to an equal and
ratable right to receive dividends when, if and as declared from time to time by
the board of directors out of legally available funds. Sun does not anticipate
paying cash dividends in the foreseeable future. See "Dividend Policy."

In the event of the liquidation, dissolution or winding up of Sun, the
holders of common stock will be entitled to share ratably in all assets
remaining after payments to creditors. Holders of common stock have no
preemptive, conversion, or redemption rights and are not subject to further
calls or assessments by Sun. All of the shares of common stock to be issued and
sold in the offering will be, immediately upon consummation of the offering,
validly issued, fully paid and nonassessable.

AUTHORIZED BUT UNISSUED SHARES

Authorized but unissued shares may be used for a variety of corporate
purposes, including future public or private offerings to raise capital or to
facilitate corporate acquisitions. One of the effects of the existence of
authorized but unissued shares may be to enable the board of directors to issue
shares to persons friendly to current management, which issuance could render
more difficult or discourage an attempt to obtain control of Sun by means of a
merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of Sun's management and possibly deprive the shareholders of
opportunities to sell their shares of common stock at prices higher than
prevailing market prices. This could have the effect of discouraging third
parties from making proposals involving an unsolicited acquisition or change in
control of Sun, although such proposals, if made, might be considered desirable
by a majority of Sun's shareholders.

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CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS

Sun's By-laws establish an advance notice procedure with regard to business
to be brought before an annual or special meeting of shareholders of Sun and
with regard to the nomination of candidates for election of directors, other
than by or at the direction of the board of directors. Although Sun's By-laws do
not give the board of directors any power to approve or disapprove shareholder
nominations for the election of directors or proposals for action, they may have
the effect of prohibiting a contest for the election of directors or the
consideration of shareholder proposals if the established procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal without regard to whether consideration of such nominees or
proposals might be harmless or beneficial to Sun and its shareholders.

DIRECTOR'S LIABILITY

Sun's Articles of Incorporation limit personal liability of directors, to
Sun or its shareholders, for monetary damages for breach of their fiduciary duty
as a director except to the extent such limitation of liability is not permitted
under Arizona law. Arizona law provides that the liability of a director may not
be eliminated or limited for:

- transactions in which a director receives a financial benefit to which
the director is not entitled;

- an intentional infliction of harm on the corporation or the shareholders;

- liability for unlawful distributions in violation of Arizona law or the
Articles of Incorporation, or

- an intentional violation of criminal law.

CERTAIN EFFECTS OF ARIZONA LAW

Business Combinations. Under Arizona law, any person who acquires 10% or
more of the voting power of the common stock of a corporation is considered an
"interested shareholder." For a period of three years after an acquisition,
certain business combinations between Sun and the interested shareholder are
prohibited, unless prior to the acquisition of the common stock by the
interested shareholder, a committee of the "disinterested" directors approves
the acquisition of the common stock or the business combination. After the
three-year period, only the following three types of business combinations
between Sun and the interested shareholder are permitted:

- a business combination approved by the board of directors before the
acquisition of common stock by the interested shareholder;

- a business combination approved by holders of a majority of the common
stock not owned by the interested shareholder; and

- a business combination which meets certain conditions relating to price
and form of consideration.

Control Share Acquisitions. Under Arizona law, a party acquiring Sun's
common stock may lose the right to vote some or all of those shares if the
acquisitions results in that party holding greater than 20%, 33%, or 50% of the
outstanding common stock of Sun. An acquiring party can avoid losing the right
to vote these shares if the right to vote is approved by a majority of the
disinterested shareholders. If approval of the right to vote shares is obtained
at one of the specified levels, additional shareholder approvals are required
when a shareholder seeks to acquire the power to vote shares at the next level.

Unless otherwise provided in Sun's Articles of Incorporation or By-laws
approved by the shareholders, Sun may call for redemption of all but not less
than all of the acquiring party's

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common stock at a redemption price equal to the market value of the shares at
the time the call for redemption is given if either:

- the acquiring person fails to deliver certain written information to Sun
by the tenth day after crossing any of the specified levels above; or

- the shareholders vote not to accord voting rights to such shares.

Limitation on Share Repurchases. Under Arizona law, Sun may not purchase
or agree to purchase any shares of its common stock from a beneficial owner of
more than 5% of the voting power of Sun's common stock for more than the
"average market price" of the shares if the shares have been owned by the
beneficial owner for less than three years unless either:

- the purchase or agreement to purchase is approved by shareholders holding
a majority of the disinterested common stock; or

- Sun makes an offer, of at least equal value per share, to all holders of
the common stock of Sun.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sun's Articles of Incorporation provide that Sun shall indemnify to the
fullest extent allowed by Arizona law, any person who incurs liability or
expense by reason of that person acting as an officer or director of Sun.
Arizona law generally provides that indemnification is permissible only when the
director or officer acted in good faith and in a manner reasonably believed to
be in the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that the conduct was
unlawful. Indemnification is not permitted for any action brought by an officer
or director against Sun unless the action was approved by the Board of
Directors. Indemnification of directors is not permitted in connection with a
proceeding by or in the right of the corporation in which the director was held
liable to the corporation or in connection with any other proceeding charging
improper personal benefit to the director, whether or not involving action in
the director's official capacity, in which the director was held liable on the
basis that personal benefit was improperly received by the director. In the
opinion of the SEC, indemnification for liabilities arising under the federal
securities laws is unenforceable.

FDIC regulations impose limitations on indemnification payments which could
restrict, in certain circumstances, payments by Sun or its banks to their
respective directors or officers that would otherwise be permitted or required
under Arizona law or Sun's Articles of Incorporation.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is American
Securities Transfer & Trust, Inc., Denver, Colorado.

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SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to the offering, Sun had 3,853,870 shares of common stock
outstanding, 2,373,270 of which are held by "affiliates" of Sun. Upon completion
of the offering, Sun will have 5,503,870 shares of common stock outstanding,
excluding 808,473 shares of common stock issuable upon the exercise of
outstanding options. Of the shares outstanding upon completion of the offering,
a total of approximately 1,536,788 shares will be freely tradeable without
restriction under the Securities Act as long as they are not owned by
affiliates. The remaining 3,967,082 shares outstanding upon the completion of
the offering may be resold publicly only upon registration under the Securities
Act or in compliance with an exemption from the registration requirements of the
Securities Act, such as Rule 144. Affiliates of Sun generally will be able to
sell shares of common stock only in accordance with the limitations of Rule 144
under the Securities Act.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an "affiliate" who has beneficially
owned "restricted" shares for at least one year, may sell in the open market
within any three-month period a number of shares that does not exceed the
greater of (1) one percent of the then outstanding shares of the Sun's common
stock (approximately 55,038 shares immediately following the offering assuming
no exercise of the underwriters" over-allotment option) or (2) the average
weekly trading volume of the common stock during the four calendar weeks
preceding the date on which notice of the sale is filed with the SEC. Sales
pursuant to Rule 144 are subject to certain requirements relating to manner of
sale, notice and availability of current public information about Sun. An
"affiliate" of Sun may sell securities that are not "restricted" without regard
to the period of beneficial ownership but subject to the volume limitations
described above and other conditions of Rule 144. A person (or persons whose
shares are aggregated) who is not deemed an "affiliate" of Sun (and has not been
at any time during the three months immediately preceding the sale) and who has
beneficially owned his or her shares for at least two years would be entitled to
sell the shares under Rule 144(k) without regard to the volume limitations,
manner of sale provisions, notice requirements, or availability of public
information described above.

Capitol, Sun and the directors and executive officers of Sun (who are
expected to hold an aggregate of approximately 3,223,270 shares after the
offering, excluding the shares that they have a right to acquire pursuant to
options granted to them under Sun's Stock Option Program) have agreed, or will
agree, that they will not issue, offer for sale, sell, transfer, or otherwise
dispose of or register with the SEC any shares of common stock (or any
securities convertible into or exercisable for shares of common stock), for a
period of 180 days from the date of this prospectus without the prior written
consent of EVEREN Securities, Inc., except that (1) Sun may issue shares upon
the exercise of options under Sun's stock option program and (2) the directors
and officers may gift common stock owned by them to others who have agreed in
writing to be bound by the same agreement.

As of January 1, 1999, there were outstanding options to purchase an
aggregate of 560,973 shares of Sun's common stock at exercise prices ranging
from $4.67 to $10.00 under Sun's Stock Option Program. See "Management -- Stock
Option Program." Resulting from this offering, Sun will grant additional options
to purchase 247,500 shares of Sun's common stock at an exercise price of $16.00.

Prior to the offering, there has been no public trading market for Sun's
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.
Sales of substantial amounts of common stock in the public market could have an
adverse affect on prevailing market prices.

Sun has received approval for listing of its common shares on the Nasdaq
National Market(SM) under the symbol "SCBL" subject to completion of this
offering.

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UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below, for whom EVEREN Securities, Inc, is acting as
representative (the "Representative") have severally agreed to purchase from
Sun, and Sun has agreed to sell to them, the respective number of shares of
common stock set forth opposite each underwriter's name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
EVEREN Securities, Inc.................................... 1,355,000
Fahnestock & Co. Inc...................................... 29,500
Howe Barnes Investments, Inc.............................. 29,500
McDonald Investments Inc., a KeyCorp Company.............. 29,500
Parker/Hunter Incorporated................................ 29,500
Ryan, Beck & Co., Inc..................................... 29,500
Sandler O'Neill & Partners L.P............................ 29,500
Stifel, Nicolaus & Company, Incorporated.................. 29,500
Sutro & Co. Incorporated.................................. 29,500
C.E. Unterberg, Towbin.................................... 29,500
Wheat First Securities.................................... 29,500
---------
Total........................................... 1,650,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The nature of the underwriters'
obligation is such that they are committed to purchase and pay for all shares of
common stock if any are purchased.

The underwriters propose to offer the shares of Sun's common stock directly
to the public at the initial public offering price set forth on the cover page
of this prospectus, and to certain securities dealers (who may include the
underwriters) at such price, less a concession not in excess of $0.64 per share
of common stock. The underwriters may allow, and such selected dealers may
reallow, a concession not in excess of $0.10 per share of common stock to
certain brokers and dealers. After this offering, the price to the public,
concession, allowance and reallowance may be changed by the Representative. The
Representative has informed Sun that it does not intend to confirm sales to any
account over which it exercises discretionary authority.

At Sun's request, the underwriters have agreed that 850,000 of the shares
offered hereby will be sold to Capitol at the initial public offering price in
order to enable Capitol to maintain its 51% ownership in Sun in accordance with
the anti-dilution agreement between Sun and Capitol. Accordingly, the number of
shares of common stock available for sale to the general public will be reduced.
There will be no underwriting discount with respect to the shares sold to
Capitol.

Sun has granted the underwriters an option, exercisable during the 30-day
period after the date of this prospectus, to purchase up to 247,500 additional
shares of common stock at the same price per share as Sun will receive for the
1,650,000 shares that the underwriters have agreed to purchase solely to cover
over-allotments, if any. To the extent that the underwriters exercise this
option, each of the underwriters will be committed,

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subject to certain conditions, to purchase such additional shares of common
stock in approximately the same proportions as set forth in the above table. If
purchased, the underwriters will sell the additional shares on the same terms as
the 1,650,000 shares are being sold, including an agreement that 51% of these
shares will also be sold to Capitol at the initial public offering price. If the
underwriters exercise the over-allotment option in full, the total public
offering price will be $30,360,000, total underwriting discounts and commissions
will be $1,030,400 and total proceeds to Sun will be $29,329,600.

The offering of the common stock is made for delivery when, as and if
accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject any order for the purchase of common stock.

Subject to certain exceptions, Sun has agreed not to issue, and each of its
officers and directors (and certain shareholders of Sun) has agreed not to
offer, sell or otherwise dispose of any of Sun's shares of common stock for a
period of 180 days after the date of this prospectus (other than shares sold
pursuant to this prospectus) without the prior written consent of EVEREN
Securities. Capitol has also agreed to the same restrictions with respect to its
shares of Sun common stock, including the shares Capitol will be purchasing in
this offering.

Sun has agreed to indemnify the underwriters against certain liabilities
under the Securities Act, or to contribute to payments the underwriters may be
required to make in respect thereof.

Prior to this offering, there has been no public market for Sun's common
stock. Consequently, Sun negotiated the initial public offering price with the
underwriters. Among the factors considered in such negotiations were:

- Prevailing market conditions;

- An assessment of management;

- Sun's results of operations in recent periods;

- The present stage of Sun's development;

- The market capitalization of stages in development of other companies
which Sun and the Representative believe to be comparable to Sun; and

- Estimates of Sun's business potential.

There can be no assurance that an active trading market will develop for
Sun's common stock or that Sun's common stock will trade in the public market
subsequent to this offering at or above the initial public offering price. The
initial public offering price should not be considered an indication of the
actual value of Sun's common stock. Such price is subject to change as a result
of market conditions and other factors. Sun cannot assure you that its common
stock can be resold at or above the initial public offering price.

In order to facilitate this offering, certain persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of Sun's common stock during and after the offering, such as the
following:

- The underwriters may over-allot or otherwise create a short position in
the common stock for its own account by selling more shares of common
stock than may have been sold to them.

85
<PAGE> 87

- The underwriters may elect to cover any such short position by purchasing
shares of common stock in the open market or by exercising the
over-allotment option;

- The underwriters may stabilize or maintain the price of Sun's common
stock by bidding for or purchasing shares of common stock in the open
market;

- The underwriters may engage in passive market making transactions; and

- The underwriters may impose penalty bids, under which selling concessions
allowed to syndicate members of other broker-dealers participating in
this offering are reclaimed if shares of common stock previously
distributed in the offering are repurchased in connection with
stabilization transactions or otherwise.

The effect of these transactions may be to stabilize or maintain the market
price at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of Sun's common stock
to the extent that it discourages resales thereof. No representation is made as
to the magnitude of effect of any such stabilization or other transactions. Such
transactions may be effected on the Nasdaq National Market or otherwise and, if
commenced, may be discontinued at any time.

86
<PAGE> 88

LEGAL MATTERS

The validity of the common stock offered in this prospectus is being passed
upon for Sun by Snell & Wilmer L.L.P., Phoenix, Arizona. Certain legal matters
will be passed upon for the underwriters by Vedder, Price, Kaufman & Kammholz,
Chicago, Illinois.

EXPERTS

The consolidated balance sheets as of December 31, 1998 and 1997 and the
statements of operations, cash flows and changes in stockholders' equity for the
years ended December 31, 1998 and 1997 of Sun included in this prospectus have
been included in reliance on the report of BDO Siedman, LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing. Consolidated financial information of Sun for the period ended
December 31, 1996 included in this prospectus has been included in reliance on
the report of Cotton, Parker, Johnson & Co. P.C., independent accountants, given
on the authority of that firm as experts in accounting and auditing.

87
<PAGE> 89

WHERE YOU CAN FIND MORE INFORMATION

Sun has filed with the SEC a registration statement on Form S-1 under the
Securities Act and the rules and regulations promulgated thereunder with respect
to the common stock being offered hereby. This prospectus omits certain
information contained in the registration statement or in any amendments to the
registration statement, and you should look at the registration statement and
the exhibits and schedules thereto for further information with respect to Sun
and the common stock being offered hereby. Statements contained in this
prospectus describing the provisions or contents of any contract, agreement or
any other document are not necessarily complete with respect to each such
contract, agreement or document filed as an exhibit to the registration
statement, and reference is made to the exhibit for a more complete description
of the matters involved.

A copy of the registration statement, including the exhibits and schedules
thereto, and any other documents Sun may file may be inspected without charge at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of the registration statement and the exhibits and schedules
thereto can be obtained from the Public Reference Room upon payment of
prescribed fees. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet web site that contains reports, proxy information and statements and
other information regarding issuers that file electronically with the SEC. Sun's
filings with the SEC are available to the public at the site which is
http://www.sec.gov.

Prior to filing the registration statement of which this prospectus is a
part, Sun was not subject to the reporting requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934. Upon effectiveness of the registration
statement, Sun will become subject to the informational and periodic reporting
requirements of the Exchange Act, and in accordance therewith, will file
periodic reports, proxy statements and other information with the SEC. Such
periodic reports, proxy statements and other information will be available for
inspection and copying at the public reference facility referenced above. Sun
intends to register the securities offered by the registration statement under
the Exchange Act simultaneously with the effectiveness of the registration
statement and to furnish Sun's shareholders with annual reports containing
financial statements examined and reported on by Sun's independent public
accountants, and quarterly reports for the first three fiscal quarters of each
fiscal year containing unaudited interim financial information.

88
<PAGE> 90

SUN COMMUNITY BANCORP LIMITED AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Condensed Consolidated Interim Financial Statements
(unaudited)
Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998...................................... F-2
Consolidated Statements of Operations for the Three Months
ended March 31, 1999 and 1998.......................... F-3
Consolidated Statements of Changes in Stockholders' Equity
for the Three Months ended March 31, 1999 and 1998..... F-4
Consolidated Statements of Cash Flows for the Three Months
ended March 31, 1999 and 1998.......................... F-5
Notes to Consolidated Interim Financial Statements........ F-6
Audited Consolidated Financial Statements
Independent Auditors' Reports............................. F-8
Consolidated Balance Sheets as of December 31, 1998 and
1997................................................... F-10
Consolidated Statements of Operations for the Years ended
December 31, 1998 and 1997 and the period ended
December 31, 1996...................................... F-11
Consolidated Statements of Changes in Stockholders' Equity
for the Years ended December 31, 1998 and 1997 and the
period ended December 31, 1996......................... F-12
Consolidated Statements of Cash Flows for the Years ended
December 31, 1998 and 1997 and the period ended
December 31, 1996...................................... F-13
Notes to Consolidated Financial Statements................ F-14
</TABLE>

F-1
<PAGE> 91

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 9,461,357 $ 9,902,458
Interest-bearing deposits with banks........................ 3,768,680 858,955
Federal funds sold.......................................... 37,700,000 37,600,000
------------ ------------
Cash and cash equivalents................................. 50,930,037 48,361,413
Loans held for resale....................................... 2,789,253 1,275,788
Investment securities available for sale, carried at market
value..................................................... 14,428,325 12,922,539
Portfolio loans:
Commercial................................................ 77,596,397 60,366,282
Real estate mortgage...................................... 4,555,965 4,371,401
Installment............................................... 4,014,413 3,342,226
------------ ------------
Total portfolio loans............................. 86,166,775 68,079,909
Less allowance for loan losses............................ (905,000) (696,000)
------------ ------------
Net portfolio loans............................... 85,261,775 67,383,909
Premises and equipment, net................................. 2,935,614 2,753,721
Accrued interest income..................................... 617,933 448,331
Other assets................................................ 2,158,238 2,432,336
------------ ------------
TOTAL ASSETS...................................... $159,121,175 $135,578,037
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing....................................... $ 29,314,830 $ 28,033,128
Interest-bearing.......................................... 93,298,665 70,748,676
------------ ------------
Total deposits.................................... 122,613,495 98,781,804
Accrued interest on deposits and other liabilities.......... 1,099,385 757,879
------------ ------------
Total liabilities................................. 123,712,880 99,539,683
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.............. 9,279,713 9,411,272
STOCKHOLDERS' EQUITY
Common stock, no par value, 10,000,000 shares authorized;
issued and outstanding:
1999 -- 3,853,870 shares
1998 -- 3,847,060 shares.................................. 26,866,516 26,795,416
Retained-earnings deficit................................... (741,654) (179,673)
Market value adjustment (net of tax effect) for investment
securities available for sale (accumulated other
comprehensive income)..................................... 3,720 11,339
------------ ------------
Total stockholders' equity........................ 26,128,582 26,627,082
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $159,121,175 $135,578,037
============ ============
</TABLE>

See notes to consolidated interim financial statements.

F-2
<PAGE> 92

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------
1999 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
Interest income:
Portfolio loans (including fees).......................... $2,258,024 $ 912,947
Loans held for resale..................................... 28,475 --
Taxable investment securities............................. 199,610 185,101
Federal funds sold........................................ 460,626 236,966
Interest-bearing deposits with banks and other............ 28,794 --
---------- ----------
Total interest income.............................. 2,975,529 1,335,014
Interest expense:
Demand deposits........................................... 546,280 269,946
Savings deposits.......................................... 3,164 1,741
Time deposits............................................. 336,139 122,922
Other..................................................... 308 --
---------- ----------
Total interest expense............................. 885,891 394,609
---------- ----------
Net interest income................................ 2,089,638 940,405
Provision for loan losses................................... 209,000 41,000
---------- ----------
Net interest income after provision for loan
losses........................................... 1,880,638 899,405
Noninterest income:
Service charges on deposit accounts....................... 70,542 37,565
Other..................................................... 48,033 20,979
---------- ----------
Total noninterest income........................... 118,575 58,544
Noninterest expense:
Salaries and employee benefits............................ 1,410,161 409,198
Occupancy................................................. 241,094 76,083
Equipment rent, depreciation and maintenance.............. 246,340 88,636
Deposit insurance premiums................................ 2,133 965
Other..................................................... 563,520 220,376
---------- ----------
Total noninterest expense.......................... 2,463,248 795,258
---------- ----------
Income (loss) before federal income taxes, minority
interest and cumulative effect of change in
accounting principle............................. (464,035) 162,691
---------- ----------
Federal income taxes (benefit).............................. (64,000) 75,000
Income (loss) before minority interest and cumulative
effect of change in accounting principle................ (400,035) 87,691
Minority interest in net losses of consolidated
subsidiaries.............................................. 224,282 29,742
---------- ----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE.................................... (175,753) 117,433
Change in accounting principle, net of income tax effect of
$200,000 -- Note B........................................ (386,228) --
---------- ----------
NET INCOME (LOSS)......................................... $ (561,981) $ 117,433
========== ==========
NET INCOME (LOSS) PER SHARE -- Note D:
Before cumulative effect of change in accounting principle
Basic................................................... $ (0.05) $ 0.04
========== ==========
Diluted................................................. $ (0.05) $ 0.04
========== ==========
After cumulative effect of change in accounting principle
Basic................................................... $ (0.15) $ 0.04
========== ==========
Diluted................................................. $ (0.15) $ 0.04
========== ==========
</TABLE>

See notes to consolidated interim financial statements.

F-3
<PAGE> 93

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
ACCUMULATED
RETAINED- OTHER
COMMON EARNINGS COMPREHENSIVE
STOCK DEFICIT INCOME TOTAL
----------- --------- ------------- -----------
<S> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1998................ $ 9,863,512 $(236,351) $62,725 $ 9,689,886
Issuance of 954,546 shares of common
stock for cash consideration of
$7.3333 per share in conjunction with
formation of bank subsidiary.......... 7,000,004 -- -- 7,000,004
Components of comprehensive income:
Net income for three months ended March
31, 1998.............................. -- 117,433 -- 117,433
Market value adjustment (net of tax
effect) for investment securities
available for sale.................... -- -- (3,986) (3,986)
-----------
Total comprehensive income for period
ended March 31, 1998.................. -- -- -- 113,447
----------- --------- ------- -----------
BALANCES AT MARCH 31, 1998................. $16,863,516 $(118,918) $58,739 $16,803,337
=========== ========= ======= ===========
BALANCES AT JANUARY 1, 1999................ $26,795,416 $(179,673) $11,339 $26,627,082
Issuance of 6,810 shares of common stock
for cash consideration of $10.00 per
share.................................... 71,100 -- -- 71,100
Components of comprehensive income (loss):
Net loss for three months ended March 31,
1999.................................. -- (561,981) -- (561,981)
Market value adjustment (net of tax
effect) for investment securities
available for sale.................... -- -- (7,619) (7,619)
-----------
Total comprehensive income (loss) for
period ended March 31, 1999........... -- -- -- (569,600)
----------- --------- ------- -----------
BALANCES AT MARCH 31, 1999................. $26,866,516 $(741,654) $ 3,720 $26,128,582
=========== ========= ======= ===========
</TABLE>

See notes to consolidated interim financial statements.

F-4
<PAGE> 94

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------------
1999 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) for the period................. $ (561,981) $ 117,433
Adjustments to reconcile net income to net cash
used by operating activities:
Minority interest in net losses of
consolidated subsidiaries................... (224,282) (29,742)
Provision for loan losses..................... 209,000 41,000
Depreciation of premises and equipment........ 338,190 70,054
Net accretion of investment security
premiums.................................... (71,522) (5,875)
Cumulative effect of accounting change........ (386,228) --
Originations of loans held for resale............ (11,084,478) --
Proceeds from sales of loans held for resale..... 9,571,013 --
Increase in accrued interest income and other
assets........................................ 359,166 (431,032)
Increase in accrued interest on deposits and
other liabilities............................. 213,870 (77,081)
------------ -----------
NET CASH USED BY OPERATING ACTIVITIES.... (1,637,252) (315,243)
INVESTING ACTIVITIES
Proceeds from maturities of investment securities
available for sale............................ 15,341,000 1,750,000
Purchases of investment securities available for
sale.......................................... (16,786,807) (4,481,461)
Net increase in portfolio loans.................. (18,086,866) (4,418,196)
Purchases of premises and equipment.............. (520,083) (24,854)
------------ -----------
NET CASH USED BY INVESTING ACTIVITIES.... (20,052,756) (7,174,511)
FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts and
savings accounts.............................. 17,042,694 11,323,639
Net increase in certificates of deposit.......... 6,788,997 1,100,271
Net proceeds from issuance of common stock....... 71,100 7,000,004
Resources provided by minority interests......... 355,841 --
------------ -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES............................ 24,258,632 19,423,914
------------ -----------
INCREASE IN CASH AND CASH EQUIVALENTS.... 2,568,624 11,934,160
Cash and cash equivalents at January 1............. 48,361,413 10,131,093
------------ -----------
CASH AND CASH EQUIVALENTS AT MARCH 31.............. $ 50,930,037 $22,065,253
============ ===========
</TABLE>

See notes to consolidated interim financial statements.

F-5
<PAGE> 95

SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1999

NOTE A -- BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of Sun
Community Bancorp Ltd. have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all information and footnotes necessary for a fair presentation of
consolidated financial position, results of operations and cash flows in
conformity with generally accepted accounting principles.

The statements do, however, include all adjustments of a normal recurring
nature (in accordance with Rule 10-01(b)(8) of Regulation S-X) which the
Corporation considers necessary for a fair presentation of the interim periods.

The results of operations for the three-month period ended March 31, 1999
are not necessarily indicative of the results to be expected for the year ending
December 31, 1999.

The consolidated balance sheet as of December 31, 1998 was derived from
audited consolidated financial statements as of that date.

NOTE B -- IMPLEMENTATION OF NEW ACCOUNTING STANDARD

In 1998, the American Institute of CPAs issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities". It requires start-up costs and
organizational costs to be charged to expense when incurred. The initial
application of the statement requires a cumulative effect adjustment for those
companies that had previously capitalized start-up and organization costs and
became effective in 1999. In the circumstances of the Corporation and its banks,
this new accounting standard applies to previously capitalized preopening and
other start-up costs of its bank subsidiaries which, net of amortization,
approximated $1,149,000 at December 31, 1998 and were classified as a component
of other assets in the consolidated balance sheet. Implementation of this
standard is reflected as a cumulative effect adjustment (net of income tax
effect) of approximately $386,000 charged to first quarter 1999 results of
operations.

NOTE C -- NEW SUBSIDIARY

Nevada Community Bancorp Limited ("NCBL") was incorporated by the
Corporation in early 1999. NCBL has been formed for the purpose of becoming a
bank holding company to facilitate formation of de novo banks to be located in
the state of Nevada.

F-6
<PAGE> 96
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED) -- CONTINUED

NOTE D -- NET INCOME (LOSS) PER SHARE

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Numerator -- net income (loss) for the period......... $ (561,981) $ 117,433
========== ==========
Denominator:
Weighted average number of common shares outstanding
(denominator for basic earnings per share).......... 3,853,870 2,853,070
Dilutive effect of stock options...................... --(1) 86,638
---------- ----------
Denominator for diluted net income per
share -- Weighted average number of common shares
and potential dilution.............................. 3,853,870 2,939,708
========== ==========
Basic net income (loss) per share..................... $ (0.15) $ 0.04
========== ==========
Diluted net income (loss) per share................... $ (0.15) $ 0.04
========== ==========
</TABLE>

- -------------------------
(1) Antidilutive for period presented

F-7
<PAGE> 97

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Sun Community Bancorp Limited

We have audited the accompanying consolidated balance sheets of Sun
Community Bancorp Limited and subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sun
Community Bancorp Limited and subsidiaries at December 31, 1998 and 1997, and
the consolidated results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.

BDO SEIDMAN, LLP
Grand Rapids, Michigan
April 19, 1999

F-8
<PAGE> 98

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Sun Community Bancorp Ltd.

We have audited the balance sheet of Bank of Tucson as of December 31,
1996, and the related statements of operations, changes in stockholders' equity
and cash flows for the period then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bank of Tucson at December
31, 1996, and its results of its operations and its cash flows for the period
then ended, in conformity with generally accepted accounting principles.

COTTON, PARKER, JOHNSON & CO., P.C.
Tucson, Arizona
March 18, 1997

F-9
<PAGE> 99

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 9,902,458 $ 2,822,138
Interest-bearing deposits with banks........................ 858,955 8,955
Federal funds sold.......................................... 37,600,000 7,300,000
------------ -----------
Cash and cash equivalents......................... 48,361,413 10,131,093
Loans held for resale....................................... 1,275,788 --
Investment securities available for sale, carried at market
value -- Note C........................................... 12,922,539 11,533,667
Portfolio loans -- Notes D and G:
Commercial................................................ 60,366,282 26,061,673
Real estate mortgage...................................... 4,371,401 2,607,231
Installment............................................... 3,342,226 2,567,569
------------ -----------
Total portfolio loans............................. 68,079,909 31,236,473
Less allowance for loan losses............................ (696,000) (317,000)
------------ -----------
Net portfolio loans............................... 67,383,909 30,919,473
Premises and equipment, net -- Note E....................... 2,753,721 1,190,190
Accrued interest income..................................... 448,331 337,604
Other assets................................................ 2,432,336 895,165
------------ -----------
TOTAL ASSETS...................................... $135,578,037 $55,007,192
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing....................................... $ 28,033,128 $ 9,558,830
Interest-bearing -- Note H................................ 70,748,676 33,339,741
------------ -----------
Total deposits.................................... 98,781,804 42,898,571
Accrued interest on deposits and other liabilities.......... 757,879 408,898
------------ -----------
Total liabilities................................. 99,539,683 43,307,469
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES -- Note A.... 9,411,272 2,009,837
STOCKHOLDERS' EQUITY -- Notes A, I and M:
Common stock, no par value, 10,000,000 shares authorized;
issued and outstanding:
1998 -- 3,847,060 shares
1997 -- 1,899,324 shares............................... 26,795,416 9,863,512
Retained-earnings deficit................................... (179,673) (236,351)
Market value adjustment (net of tax effect) for investment
securities available for sale (accumulated other
comprehensive income)..................................... 11,339 62,725
------------ -----------
Total stockholders' equity........................ 26,627,082 9,689,886
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $135,578,037 $55,007,192
============ ===========
</TABLE>

See notes to consolidated financial statements.

F-10
<PAGE> 100

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 PERIOD ENDED
----------------------- DECEMBER 31
1998 1997 1996
---------- ---------- ------------
<S> <C> <C> <C>
Interest income:
Portfolio loans (including fees).................. $5,296,379 $1,845,741 $ 113,670
Loans held for resale............................. 30,062 -- --
Taxable investment securities..................... 762,717 735,930 186,172
Federal funds sold................................ 1,230,361 289,742 45,532
Interest-bearing deposits with banks and other.... 24,880 -- 8,671
---------- ---------- ---------
Total interest income..................... 7,344,399 2,871,413 354,045
Interest expense:
Demand deposits................................... 1,427,457 625,931 73,621
Savings deposits.................................. 9,460 6,433 284
Time deposits..................................... 843,630 281,880 40,888
Other............................................. 252 338 8,226
---------- ---------- ---------
Total interest expense.................... 2,280,799 914,582 123,019
---------- ---------- ---------
Net interest income....................... 5,063,600 1,956,831 231,026
Provision for loan losses -- Note D................. 379,000 268,000 49,000
---------- ---------- ---------
Net interest income after provision for
loan losses............................. 4,684,600 1,688,831 182,026
Noninterest income:
Service charges on deposit accounts............... 223,812 87,326 7,607
Other............................................. 110,452 38,156 2,343
---------- ---------- ---------
Total noninterest income.................. 334,264 125,482 9,950
Noninterest expense:
Salaries and employee benefits.................... 2,673,277 1,020,608 246,710
Occupancy......................................... 545,639 179,055 23,688
Equipment rent, depreciation and maintenance...... 557,509 173,419 33,663
Deposit insurance premiums........................ 5,555 749 1,000
Other............................................. 1,547,931 662,892 135,392
---------- ---------- ---------
Total noninterest expense................. 5,329,911 2,036,723 440,453
---------- ---------- ---------
Loss before federal income taxes and
minority interest....................... (311,047) (222,410) (248,477)
Federal income taxes (benefit) -- Note F............ 29,000 (33,000) (84,000)
---------- ---------- ---------
Loss before minority interest............. (340,047) (189,410) (164,477)
Minority interest in net losses of consolidated
subsidiaries...................................... 396,725 117,536 --
---------- ---------- ---------
NET INCOME (LOSS)................................. $ 56,678 $ (71,874) $(164,477)
========== ========== =========
NET INCOME (LOSS) PER SHARE -- Note O:
Basic.......................................... $ .02 $ (.05) $ (.14)
========== ========== =========
Diluted........................................ $ .02 $ (.05) $ (.14)
========== ========== =========
</TABLE>

See notes to consolidated financial statements.

F-11
<PAGE> 101

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
RETAINED- OTHER
COMMON EARNINGS COMPREHENSIVE
STOCK DEFICIT INCOME TOTAL
----------- --------- ------------- -----------
<S> <C> <C> <C> <C>
BALANCES AT BEGINNING OF PERIOD............ $ -- $ -- $ -- $ --
Issuance of 1,149,324 shares of common
stock for cash consideration of $4.67 per
share in conjunction with formation of
bank subsidiary.......................... 5,363,512 -- -- 5,363,512
Components of comprehensive income (loss):
Net loss for 1996........................ -- (164,477) -- (164,477)
Market value adjustment (net of tax
effect) for investment securities
available for sale.................... -- -- (9,997) (9,997)
-----------
Total comprehensive loss for 1996........ -- -- -- (174,474)
----------- --------- -------- -----------
BALANCES AT DECEMBER 31, 1996.............. 5,363,512 (164,477) (9,997) 5,189,038
Issuance of 750,000 shares of common stock
for cash consideration of $6.00 per
share.................................... 4,500,000 -- -- 4,500,000
Components of comprehensive income:
Net loss for 1997........................ -- (71,874) -- (71,874)
Market value adjustment (net of tax
effect) for investment securities
available for sale.................... -- -- -- 72,722
-----------
Total comprehensive income for 1997...... -- -- 72,722 848
----------- --------- -------- -----------
BALANCES AT DECEMBER 31, 1997.............. 9,863,512 (236,351) 62,725 9,689,886
Issuance of 1,947,736 shares of common
stock for cash consideration -- Note I... 16,931,904 -- -- 16,931,904
Components of comprehensive income:
Net income for 1998...................... -- 56,678 -- 56,678
Market value adjustment (net of tax
effect) for investment securities
available for sale.................... -- -- (51,386) (51,386)
-----------
Total comprehensive income for 1998...... -- -- -- 5,292
----------- --------- -------- -----------
BALANCES AT DECEMBER 31, 1998.............. $26,795,416 $(179,673) $ 11,339 $26,627,082
=========== ========= ======== ===========
</TABLE>

See notes to consolidated financial statements.

F-12
<PAGE> 102

SUN COMMUNITY BANCORP LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED DECEMBER 31 ENDED
---------------------------- DECEMBER 31
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) for the period........................ $ 56,678 $ (71,874) $ (164,477)
Adjustments to reconcile net income to net cash used by
operating activities:
Minority interest in net losses of consolidated
subsidiaries....................................... (396,725) (117,536) --
Provision for loan losses............................ 379,000 268,000 49,000
Depreciation of premises and equipment............... 421,360 141,394 20,345
Net accretion of investment security premiums........ (54,394) (223,841) (186,172)
Loss on sale of furniture and equipment.............. 3,915 -- --
Deferred income taxes................................ (420,000) (33,000) (84,000)
Originations of loans held for resale................... (15,761,895) -- --
Proceeds from sales of loans held for resale............ 14,486,107 -- --
Increase in accrued interest income and other assets.... (1,531,898) (822,255) (308,514)
Increase in accrued interest on deposits and other
liabilities.......................................... 679,503 251,661 139,925
------------ ------------ ------------
NET CASH USED BY OPERATING ACTIVITIES........... (2,138,349) (607,451) (533,893)
INVESTING ACTIVITIES
Proceeds from sale of investment securities available
for sale............................................. 505,000 -- --
Proceeds from maturities of investment securities
available for sale................................... 22,500,000 20,500,000 22,420,000
Purchases of investment securities available for sale... (24,417,336) (20,827,326) (33,121,291)
Net increase in portfolio loans......................... (36,843,486) (26,386,402) (4,850,072)
Proceeds from sale of furniture and equipment........... 10,000 -- --
Purchases of premises and equipment..................... (1,998,806) (969,597) (382,333)
------------ ------------ ------------
NET CASH USED BY INVESTING ACTIVITIES........... (40,244,628) (27,683,325) (15,933,696)
FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts and
savings accounts..................................... 40,850,295 24,671,742 9,496,794
Net increase in certificates of deposit................. 15,032,938 6,205,569 2,524,468
Net proceeds from issuance of common stock.............. 16,931,904 4,500,000 5,363,512
Resources provided by minority interests................ 7,798,160 2,127,373 --
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES....... 80,613,297 37,504,684 17,384,774
------------ ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS........... 38,230,320 9,213,908 917,185
Cash and cash equivalents at beginning of period.......... 10,131,093 917,185 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................ $ 48,361,413 $ 10,131,093 $ 917,185
============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-13
<PAGE> 103

SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998

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

Sun Community Bancorp Limited (the "Corporation") is a multibank holding
company headquartered in the state of Arizona. The Corporation became a bank
holding company in May 1997 upon consummation of a share exchange agreement with
the shareholders of Bank of Tucson. Financial information set forth herein for
periods prior to May 1997 represent amounts applicable to Bank of Tucson.

The Corporation was formed in October 1996 and was inactive until May 1997.
In May 1997, the Corporation entered into a share exchange agreement with Bank
of Tucson and its shareholders whereby Bank of Tucson became a wholly-owned
subsidiary of the Corporation. Because such share exchange has been accounted
for as a pooling of interests, the consolidated financial statements reflect the
merger transaction as if it had occurred at the beginning of the periods
presented (i.e., date of commencement of operations for Bank of Tucson, June
1996).

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

<TABLE>
<CAPTION>
PERCENTAGE
AFFILIATE LOCATION OWNED YEAR FORMED
- --------- ------------------- ---------- -----------
<S> <C> <C> <C>
Bank of Tucson Tucson, Arizona 100% 1996
Camelback Community Bank Phoenix, Arizona 55% 1998
Mesa Bank Mesa, Arizona 53% 1998
Southern Arizona Community Bank Tucson, Arizona 51% 1998
Sunrise Bank of Arizona Phoenix, Arizona 51% 1998
Valley First Community Bank Scottsdale, Arizona 52% 1997
</TABLE>

The Corporation is 51% owned by Capitol Bancorp Ltd., a multibank holding
company, headquartered in the state of Michigan.

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

Financial Accounting Standards Board ("FASB") Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" became
effective for and has been implemented by the Corporation in 1998. This new
accounting standard revises the

F-14
<PAGE> 104
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

definition of reportable 'segments' and the presentation of related disclosures.
The standard focuses on the identification of reportable segments on the basis
of discreet business units and their financial information to the extent such
units are reviewed by an entity's 'chief decision maker' (which can be an
individual or group of management persons). The Statement permits aggregation or
combination of segments which have similar characteristics.

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

The consolidated financial statements include the accounts of the
Corporation and its majority-owned subsidiaries, after elimination of
intercompany accounts and transactions, and after giving effect to applicable
minority interests. Banks formed during 1996, 1997 and 1998 are included in the
consolidated financial statements for periods after joining the consolidated
group. Certain 1997 and 1996 amounts have been reclassified to conform to the
1998 presentation.

NOTE B -- SIGNIFICANT ACCOUNTING POLICIES

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

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

Loans Held For Resale: Loans held for resale represent residential real
estate mortgage loans held for sale into the secondary market. Loans held for
resale are stated at the aggregate lower of cost or market.

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

Loans, Credit Risk and Allowance for Loan Losses: Portfolio loans are
carried at their principal balance based on management's intent and ability to
hold such loans for the foreseeable future until maturity or repayment.

F-15
<PAGE> 105
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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

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

Interest and Fees on Loans: Interest income on loans is recognized based
upon the principal balance of loans outstanding. Fees from origination of loans
approximate related costs incurred.

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

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

Other Real Estate: Other real estate comprises properties acquired through
a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. These
properties held for sale are carried at the lower of cost or estimated fair
value (net of estimated selling cost) at the date acquired and are periodically
reviewed for subsequent impairment.

Federal Income Taxes: Deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted tax rates applicable
to future years to differences between the financial statement carrying amount
and the tax bases of existing assets and liabilities. The effect on deferred
income taxes of a change in tax laws or rates is recognized in income in the
period that includes the enactment date.

Stock-Based Compensation: No stock-based compensation expense is recorded
upon granting of stock options because such stock options are accounted for
under the provisions of Accounting Principles Board Opinion 25. Pro forma
disclosure of alternative accounting recognition is made elsewhere herein (see
Note I).

Trust Assets and Related Income: Customer property, other than funds on
deposit, held in a fiduciary or agency capacity by the Corporation's banks is
not included in the

F-16
<PAGE> 106
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

consolidated balance sheets because such property is not an asset of the Banks
or the Corporation. Trust fee income is recorded on the accrual method.

Comprehensive Income: "Comprehensive income", as that term is defined in
Statement of Financial Accounting Standards (SFAS) No. 130, is the sum of net
income and certain other items which are charged or credited to stockholders'
equity. For the periods presented, the Corporation's only element of
comprehensive income other than net income was the net change in the market
value adjustment for investment securities available for sale. Accordingly, the
elements and total of comprehensive income are shown within the consolidated
statement of changes in stockholders' equity presented herein. Implementation of
this new accounting standard in 1998 had no impact on the Corporation's
consolidated financial position or results of operations.

NOTE C -- INVESTMENT SECURITIES

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

<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
United States Treasury
securities............ $ 1,499,981 $ 1,504,843 $ 1,748,652 $ 1,756,874
United States government
agency securities..... 11,405,378 11,417,696 9,689,978 9,776,793
----------- ----------- ----------- -----------
$12,905,359 $12,922,539 $11,438,630 $11,533,667
=========== =========== =========== ===========
</TABLE>

At December 31, 1998, securities with a market value approximating
$3,000,000 were pledged to secure public and trust deposits and for other
purposes as required by law.

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

<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
GAINS LOSSES GAINS LOSSES
------- ------ ------- ------
<S> <C> <C> <C> <C>
United States Treasury securities........ $ 4,862 $ -- $ 8,222 $ --
United States government agency
securities............................. 17,437 5,119 87,387 572
------- ------ ------- ----
$22,299 $5,119 $95,609 $572
======= ====== ======= ====
</TABLE>

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

F-17
<PAGE> 107
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Scheduled maturities of investment securities as of December 31, 1998
follows:

<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less............................. $10,905,985 $10,926,602
After one year, through five years.................. 1,999,374 1,995,937
----------- -----------
$12,905,359 $12,922,539
=========== ===========
</TABLE>

NOTE D -- LOANS

Transactions in the allowance for loan losses are summarized below:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Balance at beginning of period................. $317,000 $ 49,000 $ --
Provision charged to operations................ 379,000 268,000 49,000
Loans charged off (deduction).................. -- -- --
Recoveries..................................... -- -- --
-------- -------- -------
Balance at December 31......................... $696,000 $317,000 $49,000
======== ======== =======
</TABLE>

At December 31, 1998, there were no impaired loans (i.e., loans for which
there is a reasonable probability that borrowers would be unable to repay all
principal and interest due under the contractual terms of the loan documents).

NOTE E -- PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Leasehold improvements................................ $ 819,620 $ 201,724
Equipment and furniture............................... 2,511,963 1,147,081
---------- ----------
3,331,583 1,348,805
Less accumulated depreciation......................... (577,862) (158,615)
---------- ----------
$2,753,721 $1,190,190
========== ==========
</TABLE>

The Banks rent office space under operating leases. Rent expense under
these lease agreements approximated $362,000, $158,000 and $22,000 for the
periods ended December 31, 1998, 1997 and 1996, respectively. Future minimum
rental payments under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1998
aggregate $8,287,000 due as follows: $801,000 in 1999, $805,000 in 2000,
$808,000 in 2001, $826,000 in 2002, $849,000 in 2003 and $4,198,000 thereafter.

F-18
<PAGE> 108
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE F -- INCOME TAXES

Income taxes (benefit) consist of the following components:

<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Current.............................. $ 449,000 $ 11,000 $(74,000)
Deferred............................. (420,000) (44,000) (10,000)
--------- -------- --------
$ 29,000 $(33,000) $(84,000)
========= ======== ========
</TABLE>

Income taxes paid in 1998 and 1997 approximated $387,000 and $40,000,
respectively (none in 1996).

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

<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Federal income tax (benefit) computed
at statutory rate of 34%........... $(106,000) $(76,000) $(84,000)
Tax effect of:
Minority interest in losses of
consolidated subsidiaries....... 135,000 40,000 --
Nondeductible expenses............. -- 1,000 --
Other.............................. -- 2,000 --
--------- -------- --------
$ 29,000 $(33,000) $(84,000)
========= ======== ========
</TABLE>

As of December 31, 1998, the Corporation and its subsidiaries have net
operating loss carryforwards of approximately $1,500,000 which expire
principally in 2014.

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

<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Allowance for loan losses....................... $ 227,000 $ 98,000
Portion of subsidiaries operating losses
applicable to minority interests.............. (134,000) --
Net operating loss carryforwards of
subsidiaries.................................. 417,000 --
Cash to accrual temporary differences........... (45,000) --
Market value adjustments for investment
securities available for sale................. 6,000 32,000
Other, net...................................... (23,000) (76,000)
--------- --------
Net deferred tax assets....................... $ 448,000 $ 54,000
========= ========
</TABLE>

Realization of the recorded deferred tax asset is dependent upon generating
taxable income in future periods. Although realization is not assured,
management believes it is more likely than not that all of the deferred tax
asset will be realized.

F-19
<PAGE> 109
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE G -- RELATED PARTIES TRANSACTIONS

In the ordinary course of business, the Banks make loans to officers and
directors of the Banks including their immediate families and companies in which
they are principal owners. At December 31, 1998, total loans to these persons
approximated $4,674,000 ($1,497,000 at December 31, 1997). During 1998,
$4,134,000 of new loans were made to these persons and repayments totaled
$957,000. Such loans are made at the Banks' normal credit terms.

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

The Banks purchased certain data processing and management services from
Capitol Bancorp Ltd. Amounts paid for such services aggregated $105,000 and
$30,000 in 1997 and 1996, respectively (none in 1998).

The Banks have interest-bearing time deposits at other bank affiliates of
Capitol Bancorp Ltd. which approximated $1,150,000 at December 31, 1998.

NOTE H -- DEPOSITS

The aggregate amount of time deposits of $100,000 or more approximated
$15,519,000 and $5,268,000 as of December 31, 1998 and 1997, respectively.

At December 31, 1998, the scheduled maturities of time deposits of $100,000
or more were as follows:

<TABLE>
<S> <C>
1999...................................................... $10,532,000
2000...................................................... 2,747,000
2001...................................................... 2,140,000
2002...................................................... 100,000
-----------
Total..................................................... $15,519,000
===========
</TABLE>

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

NOTE I -- COMMON STOCK AND STOCK OPTIONS

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

In January 1998, the Corporation completed a private offering of 954,546
shares of common stock at a price of $7.33 per share. In December 1998, the
Corporation sold 993,990 shares of common stock at $10.00 per share in a private
offering of 1,000,000 shares; 6,810 shares of common stock were subsequently
sold in early 1999, completing the offering.

Stock options have been granted to certain officers which provide for the
purchase of shares of common stock. Generally, stock options are granted at an
exercise price equal to

F-20
<PAGE> 110
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

the fair value of common stock on the grant date, expire ten years after grant
and are currently exercisable. The Corporation has the right to repurchase
options for a period of 5 years after the date of grant at a price of $.10 per
option. The right of repurchase expires at the rate of 20% of the granted
options per year during the first 5 years from date of grant. The right of
repurchase does not apply to options which have been exercised.

Stock option activity is summarized as follows:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
OPTIONS EXERCISE EXERCISE
OUTSTANDING PRICE RANGE PRICE
----------- --------------- --------
<S> <C> <C> <C>
Outstanding at January 1, 1997......... 195,000 $4.67 $ 4.67
Granted in 1997........................ 87,000 6.00 6.00
Exercised in 1997...................... -- -- --
Expired in 1997........................ -- -- --
------- --------------- ------
Outstanding at December 31, 1997....... 282,000 $4.67 to $6.00 5.08
Granted in 1998........................ 278,973 $10.00 10.00
Exercised in 1998...................... -- -- --
Expired in 1998........................ -- -- --
------- --------------- ------
Outstanding at December 31, 1998....... 560,973 $4.67 to $10.00 $ 7.53
======= =============== ======
</TABLE>

As of December 31, 1998, stock options outstanding had a weighted average
remaining contractual life of 9.3 years.

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

<TABLE>
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
Fair value assumptions:
Risk-free interest rate............................. 5.0% 7.5%
Dividend yield...................................... 0% 0%
Stock price volatility.............................. 0 0
Expected option life................................ 10 years 10 years
Pro forma net loss.................................... $ (668,000) $(285,000)
Pro forma net loss per diluted share.................. $ (.22) $ (.18)
</TABLE>

F-21
<PAGE> 111
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE J -- EMPLOYEE BENEFIT PLANS

Employees of the Corporation and its subsidiaries participate in a 401(k)
plan, subject to certain eligibility requirements. Employer contributions to the
Plan and charged to expense in 1998 approximated $28,000. There were no employer
contributions to this plan in 1997 or 1996.

NOTE K -- ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying values and estimated fair values of financial instruments were as
follows (in thousands) at December 31:

<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and cash equivalents.............. $48,361 $48,361 $10,131 $10,131
Investment securities available for
sale................................ 12,923 12,953 11,534 11,534
Loans:
Fixed rate.......................... 18,719 18,962 9,940 9,892
Variable rate....................... 50,637 50,640 21,296 21,433
------- ------- ------- -------
Total loans.................... 69,356 69,602 31,236 31,325
Less allowance for loan losses......... (696) (696) (317) (317)
------- ------- ------- -------
Net portfolio loans................. 68,660 68,906 30,919 31,008
Financial Liabilities:
Deposits:
Noninterest-bearing deposits........ 28,033 28,033 9,559 9,559
Interest-bearing deposits:
Demand accounts................... 46,986 47,569 24,610 24,516
Time certificates of deposit less
than $100,000.................. 8,244 8,273 3,462 3,460
Time certificates of deposit
$100,000 or more............... 15,519 14,663 5,268 5,398
------- ------- ------- -------
Total interest-bearing
deposits..................... 70,749 70,505 33,340 33,374
------- ------- ------- -------
Total deposits................. 98,782 98,538 42,899 42,933
</TABLE>

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

F-22
<PAGE> 112
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE L -- COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, various loan commitments are made to
accommodate the financial needs of the Banks' customers. Such loan commitments
include stand-by letters of credit, lines of credit, and various commitments for
other commercial, consumer and mortgage loans. Stand-by letters of credit, when
issued, commit the Banks to make payments on behalf of customers when certain
specified future events occur and are used infrequently ($511,000 and $1,120,000
outstanding at December 31, 1998 and 1997, respectively). Other loan commitments
outstanding consist of unused lines of credit and approved, but unfunded,
specific loan commitments ($12,553,000 and $10,877,000 at December 31, 1998 and
1997, respectively). These loan commitments (stand-by letters of credit and
unfunded loans) generally expire within one year and are reviewed periodically
for continuance or renewal. All loan commitments have credit risk essentially
the same as that involved in routinely making loans to customers and are made
subject to the Banks' normal credit policies. In making these loan commitments,
collateral and/or personal guarantees of the borrowers are generally obtained
based on management's credit assessment. Such loan commitments are also included
in management's evaluation of the adequacy of the allowance for loan losses.

The Corporation's banking subsidiaries are required to maintain average
reserve balances in the form of cash on hand and balances due from the Federal
Reserve Bank and certain correspondent banks. The amount of reserve balances
required as of December 31, 1998 was $213,000.

NOTE M -- CAPITAL REQUIREMENTS

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

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

As of December 31, 1998, the most recent notification received by the Banks
from regulatory agencies have advised that the Banks are classified as
"well-capitalized" as that term is defined by the applicable agencies. There are
no conditions or events since those notifications that management believes would
change the regulatory classification of the Banks.

Management believes, as of December 31, 1998, that the Corporation and the
Banks meet all capital adequacy requirements to which they are subject.

F-23
<PAGE> 113
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The various amounts of regulatory capital (in thousands) and related ratios
of the individually significant subsidiaries (assets of $35 million or more as
of December 31, 1998) and consolidated regulatory capital position as of
December 31, 1998 and 1997 are summarized below:

<TABLE>
<CAPTION>
VALLEY FIRST
BANK OF COMMUNITY
TUCSON BANK CONSOLIDATED
----------- ------------ ------------
<S> <C> <C> <C>
December 31, 1998
- ---------------------
Total Capital to Total Assets:
Minimum Required Amount(1)............. or equal to $ 5,109 or equal to $ 2,927 or equal to $ 5,423
Actual Amount.......................... $ 6,053 $ 3,994 $26,627
Ratio............................... 9.48% 10.92% 19.64%
Tier I Capital to Risk-Weighted Assets:
Minimum Required Amount(2)............. or equal to $ 1,669 or equal to $ 940 or equal to $ 3,397
Actual Amount.......................... $ 5,945 $ 3,705 $36,038
Ratio............................... 14.25% 15.76% 42.43%
Combined Tier 1 and Tier 2 Capital to
Risk-Weighted Assets:
Minimum Required Amount(3)............. or equal to $ 3,338 or equal to $ 1,880 or equal to $ 6,795
Amount Required to Meet "Well- Greater than Greater than Greater than
Capitalized" Category(4)............ or equal to $ 4,173 or equal to $ 2,351 or equal to $ 8,494
Actual Amount.......................... $ 6,337 $ 3,914 $36,734
Ratio............................... 15.19% 16.65% 43.25%
December 31, 1997
- ---------------------
Total Capital to Total Assets:
Minimum Required Amount(1)............. or equal to $ 3,328 or equal to $ 1,026 or equal to $ 4,401
Actual Amount.......................... $ 5,412 $ 4,170 $ 9,690
Ratio............................... 13.01% 32.51% 17.62%
Tier 1 Capital to Risk-Weighted Assets:
Minimum Required Amount(2)............. or equal to $ 1,089 or equal to $ 359 or equal to $ 1,473
Actual Amount.......................... $ 5,124 $ 3,775 $ 9,191
Ratio............................... 18.82% 42.02% 24.96%
</TABLE>

F-24
<PAGE> 114
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

<TABLE>
<CAPTION>
VALLEY FIRST
BANK OF COMMUNITY
TUCSON BANK CONSOLIDATED
----------- ------------ ------------
<S> <C> <C> <C>
Combined Tier 1 and Tier 2 Capital to
Risk-Weighted Assets:
greater than greater than greater than
or equal to or equal to or equal to
Minimum Required Amount(3)............. $ 2,178 $ 719 $ 2,946

greater than greater than greater than
or equal to or equal to or equal to
Amount Required to Meet "Well-
Capitalized" Category(4)............ $ 2,722 $ 898 $ 3,682
Actual Amount.......................... $ 5,359 $ 3,857 $ 9,508
Ratio............................... 19.69% 42.94% 25.82%
</TABLE>

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

(1) As a condition of charter approval, de novo banks generally are required to
maintain a capital-to-assets ratio of not less than 8% for the first three
years of operations; such leverage ratio is otherwise required to be not
less than 4%.

(2) The minimum required ratio of Tier 1 capital to risk-weighted assets is 4%.

(3) The minimum required ratio of Tier 1 and Tier 2 capital to risk-weighted
assets is 8%.

(4) In order to be classified as a "well-capitalized" institution, the ratio of
Tier 1 and Tier 2 capital to risk-weighted assets must be 10% or more.

NOTE N -- PARENT COMPANY ONLY INFORMATION

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1998 1997
----------- ----------
<S> <C> <C>
Assets
Cash on deposit with subsidiary banks.............. $ 6,618 $ 108,843
Money market funds on deposit with subsidiary
banks........................................... 8,914,586 1,521,443
Investment in subsidiaries......................... 17,194,453 7,497,047
Equipment and furniture, net....................... 383,019 338,359
Other assets....................................... 319,988 237,214
----------- ----------
TOTAL ASSETS............................... $26,818,664 $9,702,906
=========== ==========
Liabilities and Stockholders' Equity
Accounts payable, accrued expenses and other
liabilities..................................... $ 191,582 $ 75,745
Stockholders' equity............................... 26,627,082 9,627,161
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.................................. $26,818,664 $9,702,906
=========== ==========
</TABLE>

F-25
<PAGE> 115
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1998 1997
---------- --------
<S> <C> <C>
Income
Intercompany fees......................................... $ 711,651 $ 96,000
Interest.................................................. 226,186 36,270
---------- --------
937,837 132,270
Expenses
Salaries and employee benefits............................ 581,431 109,628
Occupancy................................................. 70,906 3,585
Other..................................................... 504,812 102,621
---------- --------
1,157,149 215,834
---------- --------
(219,312) (83,564)
Equity in net earnings (losses) of consolidated
subsidiaries.............................................. 348,990 (310)
Federal income taxes........................................ 73,000 12,000
---------- --------
NET INCOME (LOSS)................................. $ 56,678 $(71,874)
========== ========
</TABLE>

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net income (loss)........................................ $ 56,678 $ (71,874)
Adjustments to reconcile net loss to net cash used by
operating activities:
Equity in net losses (earnings) of subsidiaries........ (348,990) 310
Depreciation and amortization.......................... 105,408 --
Increase in other assets................................. (82,774) (237,214)
Increase in accounts payable, accrued expenses and other
liabilities............................................ 115,837 75,745
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES.......... (153,841) (233,033)
INVESTING ACTIVITIES
Net cash investment in subsidiaries...................... (9,337,077) (2,298,322)
Purchases of equipment and furniture..................... (150,068) (338,359)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES.......... (9,487,145) (2,636,681)
FINANCING ACTIVITIES -- Net proceeds from issuance of
common stock........................................... 16,931,904 4,500,000
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS.................... 7,290,918 1,630,286
Cash and cash equivalents at beginning of year........... 1,630,286 --
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR................. $ 8,921,204 $ 1,630,286
=========== ===========
</TABLE>

F-26
<PAGE> 116
SUN COMMUNITY BANCORP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE O -- NET INCOME (LOSS) PER SHARE

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

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Numerator -- net income (loss) for the
year................................... $ 56,678 $ (71,874) $ (164,477)
========== ========== ==========
Denominator:
Weighted average number of shares
outstanding (denominator for basic
earnings per share)................. 2,853,070 1,592,574 1,149,324
Effect of dilutive stock options....... 138,735 --(1) --(1)
---------- ---------- ----------
Denominator for diluted earnings per
share -- weighted average number of
shares and potential dilution.......... 2,991,805 1,592,574 1,149,324
========== ========== ==========
Basic net income (loss) per share........ $ 0.02 $ (0.05) $ (0.14)
========== ========== ==========
Diluted net income (loss) per share...... $ 0.02 $ (0.05) $ (0.14)
========== ========== ==========
</TABLE>

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

(1) Antidilutive for period presented.

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

NOTE P -- IMPLEMENTATION OF NEW ACCOUNTING STANDARD

In 1998, the American Institute of CPAs issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities". It requires start-up costs and
organizational costs to be charged to expense when incurred. The initial
application of the statement will require a cumulative effect adjustment for
those companies that had previously capitalized start-up and organization costs
and will become effective in 1999. In the circumstances of the Corporation and
its banks, this new accounting standard applies to previously capitalized
preopening and other start-up costs of its bank subsidiaries which, net of
amortization, approximated $1,149,000 at December 31, 1998 and were classified
as a component of other assets in the consolidated balance sheet. Based on
management's preliminary analysis, implementation of this standard is expected
to be reflected as a cumulative effect adjustment (net of income tax effect) of
approximately $386,000 to be charged to first quarter 1999 results of
operations.

F-27
<PAGE> 117

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

You should rely only on the information contained in this prospectus. We have
not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not, and the underwriters are not, making an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
as of the date on the front cover of this prospectus only. Our business,
financial condition, results of operations and prospects may have changed since
that date.
------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................... 2
Risk Factors................................. 8
Cautionary Statement Regarding
Forward-Looking Information................ 15
Use of Proceeds.............................. 16
Capitalization............................... 17
Dividend Policy.............................. 18
Dilution..................................... 19
Recent Developments.......................... 20
Business..................................... 21
Selected Consolidated Financial Data......... 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 31
Supplemental Selected Financial Data......... 47
Management................................... 54
Certain Relationships and Related
Transactions............................... 67
Principal Shareholders....................... 68
Supervision and Regulation................... 72
Description of Capital Stock................. 80
Shares Eligible for Future Sale.............. 83
Underwriting................................. 84
Legal Matters................................ 87
Experts...................................... 87
Where You Can Find More Information.......... 88
Index to Consolidated Financial Statements... F-1
</TABLE>

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

Until July 27, 1999 (25 days after the date of this prospectus), all
dealers that buy, sell or trade these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotment or subscriptions.

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

1,650,000 SHARES

[SUN COMMUNITY BANCORP LIMITED LOGO]

COMMON STOCK
---------------------------

PROSPECTUS

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

EVEREN SECURITIES, INC.

July 2, 1999

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