MICHIGAN COMMUNITY BANCORP LTD, SB-2/A, 1998-10-08

MICHIGAN COMMUNITY BANCORP LTD
SB-2/A, 1998-10-08
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1998

REGISTRATION NO. 333-62487
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------

MICHIGAN COMMUNITY BANCORP LIMITED
(Name of small business issuer in its charter)

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<S> <C> <C>
MICHIGAN 6712 38-3390193
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or
Organization)
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12900 HALL ROAD
STERLING HEIGHTS, MICHIGAN, 48313
(810) 739-6410
(Address and telephone number of principal executive offices and principal place
of business or
intended principal place of business)

DAVID A. MCKINNON
12900 HALL ROAD
STERLING HEIGHTS, MICHIGAN, 48313
(810) 739-6410
(Name, address and telephone number of agent for service)

COPIES TO:

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JUSTIN G. KLIMKO PAUL R. RENTENBACH
BUTZEL LONG DYKEMA GOSSETT PLLC
150 WEST JEFFERSON, SUITE 900 400 RENAISSANCE CENTER
DETROIT, MICHIGAN 48226 DETROIT, MICHIGAN 48243
</TABLE>

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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE> 2

SUBJECT TO COMPLETION, DATED OCTOBER 8, 1998

PROSPECTUS
1,000,000 SHARES

[MI COMM BANCORP LTD LOGO]
COMMON STOCK
------------------------

Michigan Community Bancorp Limited, a Michigan corporation (the "Company"),
is offering for sale 1,000,000 shares of its Common Stock (the "Common Stock").
The Company is organized to become a bank holding company and intends to own all
of the common stock of Lakeside Community Bank, a Michigan banking corporation
(in organization), to be located in Macomb County, Michigan ("LCB"), and North
Oakland Community Bank, a Michigan banking corporation (in organization) to be
located in Oakland County, Michigan ("NOCB") (collectively, the "Banks").
Neither the Company nor the Banks have conducted any operations other than
matters related to their initial organization and the raising of capital. See
"Business." There has been no public trading market for the Common Stock. Fifth
Third/The Ohio Company (the "Managing Underwriter") has advised the Company that
it anticipates making a market in the Common Stock following completion of the
offering, although there can be no assurance that an active trading market will
develop. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. The Company expects that the
quotations for the Common Stock will be reported on the NASD OTC Bulletin Board
under the trading symbol "MCBL". Designated officers, directors and organizers
of the Company and the Banks, and their designated friends and family members
are expected to purchase approximately 150,000 shares of Common Stock at the
public offering price although none have irrevocably committed to purchase such
shares.
------------------------

THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A SIGNIFICANT AMOUNT OF
RISK. INVESTORS SHOULD NOT INVEST ANY FUNDS IN THE OFFERING UNLESS THEY CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" COMMENCING ON PAGE 7
FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMPANY'S COMMON
STOCK.
------------------------

THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
------------------------

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

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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1)(2) COMPANY(2)(3)
<S> <C> <C> <C>
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Per Share................................ $15.00 $ $
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Total(2)................................. $15,000,000 $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to 150,000 additional shares of Common Stock on the same terms
and conditions as set forth above. If the Underwriters exercise such option
in full, the total Price to Public, Underwriting Discounts, and Proceeds to
Company will be approximately $ , $ and $ ,
respectively. The Underwriters have agreed to limit Underwriting Discounts
to 2.5% of the public offering price for up to shares sold by
the Underwriters to the designated officers, directors and organizers of the
Company and the Banks and their designated friends and family members. If
shares are so purchased, total Underwriting Discounts will be
reduced by , and the Proceeds to Company will be increased by
$ . See "Underwriting."
(3) Before deducting offering expenses payable by the Company, estimated to be
$ .
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The shares of Common Stock are offered by the Underwriters subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and subject
to the right of the Underwriters to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made through the facilities of The Depository Trust Company
in New York, New York on or about October , 1998.
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[Fifth Third/The Ohio Co LOGO]

THE DATE OF THIS PROSPECTUS IS , 1998.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 3

MICHIGAN COMMUNITY BANCORP

MAP OF THE LOWER PENINSULA OF THE STATE OF MICHIGAN WITH AN INSERT SHOWING THE
APPROXIMATE LOCATION OF THE BANKS

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY OVER-ALLOT OR ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK INCLUDING STABILIZING BIDS. SEE "UNDERWRITING." IF COMMENCED, SUCH
TRANSACTIONS MAY BE DISCONTINUED AT ANY TIME.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context clearly suggests otherwise, references in this Prospectus to
the Company include the Banks. Except as otherwise indicated, all information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.

THE COMPANY

Michigan Community Bancorp Limited (the "Company") is a Michigan
corporation organized to own all the common stock of and operate Lakeside
Community Bank and North Oakland Community Bank ("LCB", "NOCB", or "Banks",
collectively). The Banks are organizing as Michigan banking corporations with
depository accounts to be insured by the Bank Insurance Fund of the Federal
Deposit Insurance Corporation (the "FDIC"). The Banks intend to provide a
focused core of commercial and consumer banking services, primarily to small to
medium-sized businesses, as well as individuals, by providing superior service
and convenience to customers. The Banks' lending activities will focus primarily
on commercial real estate loans and commercial term loans to businesses secured
by the assets of the borrower and, to a lesser extent, on commercial equipment
financing. The Company anticipates that a significant majority of the Banks'
loan portfolio will eventually be comprised of commercial loans and commercial
real estate loans. The Banks' consumer service strategy is expected to focus on
providing single-family mortgage loans, home equity loans, and other forms of
consumer lending. LCB intends to offer its banking services throughout Macomb
County, Michigan, but primarily in Clinton Township, Macomb Township, Ray
Township, Shelby Township, Washington Township, Mt. Clemens, Sterling Heights
and Utica. NOCB intends to offer its banking services throughout Oakland County,
Michigan, but primarily in Rochester, Rochester Hills, Pontiac, Troy, Auburn
Hills, Oakland Township, Orion Township and Lake Orion Village. Completion of
the offering will be conditioned upon, among other things, the Company and the
Banks having received all necessary regulatory approvals and satisfying certain
conditions contained therein. Receipt of all necessary regulatory approvals is a
non-waivable condition of the offering. Management anticipates commencing
business in the fourth quarter of 1998.

The Banks have received the approvals of the Financial Institutions Bureau
of the State of Michigan ("FIB"), subject to the satisfaction of certain
conditions that are customary in connection with such regulatory approvals.
These conditions will consist of matters including, but not limited to, LCB
receiving at least $4,550,000 of capital, and NOCB receiving at least $4,600,000
of capital. The required $9,150,000 of capital will be contributed to the Banks
from the proceeds of this offering promptly following its completion. The
remaining proceeds from this offering may be used to open a third community bank
or for working capital and other general corporate purposes. The Company and the
Banks expect to receive the approvals of the FDIC and the Board of Governors of
the Federal Reserve System prior to the completion of this offering.

REASONS FOR STARTING THE COMPANY

The liberalization of Michigan's branch banking laws, together with the
expansion of interstate banking, has led to substantial consolidation of the
banking industry in Michigan, including the Banks' market areas. In many cases,
when these consolidations occurred, local boards of directors were dissolved and
local management relocated or in some cases terminated. Management believes that
locally owned and managed banks in Macomb and Oakland County dedicated to the
needs of local businesses and residents will fill a need for service and
convenience that is currently not being satisfied by the existing financial
institutions in Macomb and Oakland County.

In the opinion of the Company's management, a favorable opportunity exists
in the targeted market areas for a true community bank, a new commercial bank
which has local management and local directors. Management believes that such a
bank can be successful in attracting, as customers, small to medium-sized
businesses and individuals who wish to conduct business with a locally owned and
managed institution that demonstrates an active interest in their business and
financial affairs. Each Bank will seek to take advantage of this opportunity by
emphasizing local management, strong ties and active commitment to the
community.

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BUSINESS STRATEGY

The Company intends to emphasize experienced local management with a strong
commitment to the communities located within the primary market areas of the
Banks. The Company's strategy is to locate the Banks in communities that are
growing quickly and where there has been a significant impact from the
consolidation in the banking industry. These communities have a history of
community banking but no longer have as many community banks. Management
believes that the small and medium-sized industrial and commercial businesses
that are the target customers of the Banks are not being adequately served by
existing banks. Management also believes that it has chosen communities where
the officers and directors of the Company and the Banks are active in the
community and where community and business leaders are anxious to welcome a
locally owned and managed financial institution. The Company and the Banks will
be committed to providing outstanding customer service and banking products and
intend to compete aggressively for banking business through a systematic program
of directly calling on both customers and referral sources such as attorneys,
accountants, mortgage brokers, insurance agents and other business people, many
of whom are already known to its officers and directors.

The Company has hired and will continue to hire experienced staff to
provide personalized service. Management believes that this experienced staff
will be able to generate competitively priced loans and deposits. This
experienced staff will have access to current software and database systems
selected to deliver high-quality products and provide responsive service to
clients. The Company has a procurement policy to only purchase technological
equipment that is Year 2000 compliant. The Banks have entered into agreements
with third-party service providers to provide customers with convenient
electronic access to their accounts and other bank products through debit cards,
voice response and home banking. The use of third-party service providers is
intended to allow the Banks to remain at the forefront of technology while
minimizing the costs of delivering such products.

MARKET AREA

The market service area of LCB will be Macomb County, primarily Clinton
Township, Shelby Township, Washington Township, Sterling Heights, Ray Township,
Mt. Clemens and Utica. Macomb County is comprised of 27 cities, villages or
townships, ranks third in population out of Michigan's 83 counties and covers
482 square miles. According to statistical data compiled by the Department of
Planning and Economic Development of Macomb County, as of July 31, 1996, Macomb
County had approximately 15,000 business establishments and as of June 1998, had
an unemployment rate of 3.3%. Based on 1990 U.S. Census Data, Macomb County had
a median household income of $38,931. Macomb County is also a significant
banking market in the State of Michigan. According to available industry data,
as of June 30, 1997, total deposits in Macomb County, including banks, thrifts
and credit unions, were approximately $10.3 billion. Approximately 20 banks,
thrifts and credit unions currently service the target market of LCB.

The service area of NOCB will be Oakland County, primarily Rochester,
Rochester Hills, Troy, Auburn Hills, Pontiac, Oakland Township, Orion Township
and Lake Orion Village. Oakland County is comprised of 61 cities, villages, and
townships, ranks second in population out of Michigan's 83 counties and covers
910 square miles. According to statistical data compiled by the Oakland County
Development and Planning Division, as of July 31, 1996, Oakland County had
approximately 38,440 business establishments, an unemployment rate as of January
1998 of 3.0%, and a median household income in 1997 of $57,360. Oakland County
is also a significant banking market in the State of Michigan. According to
available industry data, as of June 30, 1997, total deposits in Oakland County,
including banks, thrifts, and credit unions were approximately $18.7 billion.
Approximately 30 banks, thrifts and credit unions currently service the target
market of NOCB.

The main office of LCB will be located at 43850 Schoenherr Road, Sterling
Heights, Michigan 48313 and the main office of NOCB will be located at 1467
North Rochester Road, Rochester Hills, Michigan 48307. The Company's offices are
located at 12900 Hall Road, Sterling Heights, Michigan 48313 and its telephone
number is (810) 739-6410.

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MANAGEMENT

THE COMPANY

The Company has assembled a management team and a Board of Directors with
strong and diversified business experiences in the Banks' market areas and a
shared vision and commitment to future growth and success. The officers and
directors currently assembled by the Company provide a wide range of business,
banking, government and investment knowledge and experience. See "Management."

David A. McKinnon, Chairman of the Board of Directors, President and Chief
Executive Officer of the Company, served as legal counsel to First National Bank
in Macomb County and to First State Bank of East Detroit. Mr. McKinnon also
served as a director of First National Bank in Macomb County and as an advisory
director of Old Kent Bank. Further, he was one of the original officers and
directors of Macomb Community Bank, a community bank organized in 1996 in Macomb
County, Michigan. Mr. McKinnon served as its Vice Chairman, and was involved in
managing all areas of Macomb Community Bank.

William L. Carley, Vice President, Treasurer and Chief Financial Officer of
the Company, served for ten years as a member of the senior management team, and
was chief financial officer for the National Bank of Royal Oak, a community bank
located in Oakland County, Michigan, that had assets of approximately $190
million at the time of its acquisition in 1993.

Gail L.M. DiFranco, Vice President - Operations of the Company, was a
member of the start-up team and served as operations officer for Macomb
Community Bank.

The Company's Board of Directors is comprised of individuals with broad
backgrounds in business, real estate, banking and government. Current directors
include Mr. McKinnon, Paul E. Baltzer Jr., a businessman, Gerald A. Tarquinio,
the past president and a director of National Bank of Rochester, a local
community bank located in Oakland County, Michigan, Phillip T. Hernandez, a
local businessman and past director of Macomb Community Bank, Joseph P. Lentine,
a local businessman, John W. Melstrom, a certified public accountant practicing
in Oakland County, Robert R. Peleman, a medical doctor practicing in Macomb
County and a past director of Macomb Community Bank, David F. Shellenbarger, a
local businessman and Russell M. Shelton, a local businessman.

The Company does not maintain "key man" life insurance, nor has the Company
entered into employment agreements, with any members of management.

In addition to the individuals named above, the Company has also named the
following individuals as officers and directors of LCB and NOCB.

LAKESIDE COMMUNITY BANK

Frank D. Blowers, President, Chief Executive Officer and a director of LCB,
has over 30 years of banking experience, most recently as a Senior Vice
President with First of America Bank, N.A., where he was responsible for product
sales in a region with branches holding approximately $750 million in assets.
Additional directors of LCB include Jeff Tamaroff, a local businessman and Gary
Davison, a local certified public accountant.

NORTH OAKLAND COMMUNITY BANK

James T. Polson, President, Chief Executive Officer and a director of NOCB,
has over 26 years of banking experience with First of America Bank, N.A., most
recently as a Senior Vice President. As Senior Vice President, Mr. Polson was
responsible for the operations and customer service of approximately 500
branches located throughout Michigan, Illinois and Indiana. Additional directors
of NOCB include A. Frank Gerstenecker, former City Manager of Troy, Michigan for
26 years, Frederick Maibauer, a local medical doctor and Vernon Pixley, a local
businessman.

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THE OFFERING

Securities offered by the
Company....................... 1,000,000 shares of Common Stock.

Shares of Common Stock to be
outstanding after the
offering(1)................. 1,000,000 (1,150,000 if the over-allotment
option is exercised in full)

Use of proceeds by the
Company....................... Capitalization of the Banks and payment of
organization and pre-opening expenses and other
working capital. See "Use of Proceeds."

Proposed NASD OTC Bulletin
Board Symbol.................. MCBL
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(1) Does not include 41,331 shares of Common Stock issuable upon the exercise of
outstanding stock options granted pursuant to the Company's 1998
Non-Employee Director Stock Option Plan and 1998 Employee Stock Option Plan.

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RISK FACTORS

The Common Stock offered hereby involves a high degree of risk and should
be considered only by persons who can afford the loss of their entire
investment. The following is a discussion of the principal risks of an
investment in the Common Stock and should be carefully considered by all
prospective investors prior to purchasing any of the shares of Common Stock.

LACK OF OPERATING HISTORY

Neither the Company nor the Banks have any operating history. The business
of the Company and the Banks is subject to the risks inherent in the
establishment of a new business enterprise. Because the Company has only
recently been formed, the Banks have not commenced operations and the Banks and
the Company are in the process of obtaining necessary regulatory approvals.
Prospective investors do not have access to all of the information that, in
assessing a proposed investment, would be available to the purchasers of
securities issued by a financial institution with a history of operations.

SIGNIFICANT LOSSES EXPECTED

As a result of the start-up expenditures that must be incurred by a new
bank and the time it will take to develop its deposit base and loan portfolio,
it is expected that the Banks, and thus the Company, will operate at a loss
during the start-up period of the Banks. The Company does not expect the Banks
to be profitable for at least the first two years of operations. Cumulative
losses during the first two years of operations are projected to exceed $1.6
million and could be higher. There can be no assurance that the Banks or the
Company will ever operate profitably. If the Company does not reach
profitability and recover its accumulated operating losses and the
non-recoverable market portion of its investment in fixed assets, investors in
the offering would likely suffer a significant decline in the value of their
shares of Common Stock.

DELAY IN COMMENCING OPERATIONS

Although the Company and the Banks expect to commence business during the
fourth quarter of 1998, there can be no assurance as to when, if at all, these
events will occur. Any delay in commencing operations will increase pre-opening
expenses and postpone realization by the Banks of potential revenues. Absent the
receipt of revenues and commencement of profitable operations, the Company's
accumulated deficit will continue to increase (and book value per share
decrease) as operating expenses such as salaries and other administrative
expenses continue to be incurred. In the event that the Company and the Banks
commence operations, there can be no assurance that the Company or the Banks
will continue to have sufficient capital to sustain and expand operations.

EXPOSURE TO LOCAL ECONOMY

The Company's success and profitability is directly dependent on the
success and profitability of the Banks. The operations of LCB and NOCB will be
materially dependent upon and sensitive to the economy of their market areas in
southeastern Michigan. Adverse economic developments can impact the
collectibility of loans and have a negative effect on the Company's earnings and
financial condition. The economies of Macomb and Oakland County include many
businesses that manufacture products for, or provide goods or services to, the
automobile industry. No assurance can be made that future economic changes will
not have a significant adverse effect on the Company.

GOVERNMENT REGULATION AND MONETARY POLICY

Prior to completion of this offering the Company and the Banks will have
received all regulatory approvals required to organize and establish the Banks,
subject to the satisfaction of certain conditions. Receipt of all necessary
regulatory approvals is a non-waivable condition of the offering. These
conditions include, among other things, that: (i) beginning paid-in capital of
NOCB will not be less than $4.6 million and beginning paid-in-capital of LCB
will not be less than $4.55 million; (ii) each Bank will maintain a ratio of
Tier 1 leverage capital to total assets for the first three years after
commencing business of at least 8.0% and an

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adequate valuation reserve; (iii) each Bank will have its financial statements
audited by a public accountant for at least the first three years; (iv) each
Bank will file its Certificate of Paid in Capital and Surplus with the FIB and
notify the FIB of its opening date so the FIB can conduct a customary
pre-opening investigation; and (v) any changes in executive management of each
Bank will be submitted to the bank regulatory agencies in advance for their
approval. Regulatory capital requirements imposed on the Banks may have the
effect of constraining future growth, absent the infusion of additional capital.

The Company and each of the Banks will be subject to extensive state and
federal government supervision and regulation. Existing state and federal
banking laws will subject the Banks to substantial limitations with respect to
loans, purchase of securities, payment of dividends and many other aspects of
their banking business. Applicable laws, regulations, interpretations and
enforcement policies have been subject to significant and sometimes
retroactively applied, changes in recent years, and may be subject to
significant future changes. Many of these regulations are intended to protect
depositors, the public, and the FDIC, not shareholders. There can be no
assurance that future legislation or government policy will not adversely affect
the banking industry, the operations of the Banks, or shareholders. The burden
imposed by federal and state regulations may place banks in general, and the
Company and the Banks specifically, at a competitive disadvantage compared to
less regulated competitors. Federal economic and monetary policy may affect the
Banks' ability to attract deposits, make loans and achieve satisfactory interest
rate spreads. See "Supervision and Regulation."

LACK OF DIVIDENDS

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

DEPENDENCE UPON SUBSIDIARY OPERATIONS

The Company is organized to become a bank holding company and will be
substantially dependent upon dividends from the Banks, for funds to pay its
expenses, including debt repayment, and to pay cash dividends to shareholders.
The Banks are subject to regulatory limitations upon the payment of dividends
and receipt of dividends from the Banks cannot be assured. Further, no cash
dividends are anticipated from the Banks during the initial years of operation.

COMPETITION

The Company and the Banks will face strong competition for deposits, loans
and other financial services from other community banks, regional banks,
out-of-state national banks, savings banks, thrifts, credit unions and other
financial institutions as well as other entities which provide financial
services, including consumer finance companies, securities brokerage firms,
mortgage brokers, insurance companies, mutual funds, and other lending sources
and investment alternatives. Some of the financial institutions and financial
services organizations with which the Banks will compete are not subject to the
same degree of regulation as the Banks. Many of the financial institutions
aggressively compete for business in the proposed market areas of the Banks.
Most of these competitors have been in business for many years, have established
customer bases, are larger, have substantially higher lending limits than the
Banks will have in the foreseeable future, and will be able to offer certain
services that the Banks do not expect to provide in the foreseeable future,
including multiple branches, trust services, and international banking services.
In addition, most of these entities have greater capital resources than the
Banks, which among other things, may allow them to price their services at
levels more favorable to the customer and to provide larger credit facilities
than will be available from the Banks. See "Business - Market Area" and
"Business - Competition." Additionally, recent legislation

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regarding interstate branching and banking may act to increase competition in
the future from larger out-of-state banks. See "Supervision and Regulation."

DEPENDENCE ON MANAGEMENT

The Company and the Banks are, and for the foreseeable future will be,
dependent primarily upon the services of David A. McKinnon, the Chairman of the
Board, Chief Executive Officer and President of the Company, Frank D. Blowers,
President of LCB James T. Polson, President of NOCB, William L. Carley, Vice
President and Chief Financial Officer of the Company and Gail L.M. DiFranco,
Vice President - Operations of the Company. If the services of these individuals
were to become unavailable to the Company or the Banks for any reason, or if the
Company or the Banks were unable to hire highly qualified and experienced
personnel either to replace Mr. McKinnon, Mr. Blowers, Mr. Polson, Mr. Carley or
Ms. DiFranco or to adequately staff the anticipated growth of the Company or
Banks, the operating results of the Company and the Banks would be adversely
affected. The Company and the Banks do not have employment agreements with, or
key man life insurance for, these or any other officers. See
"Business - Employees" and "Management."

DISCRETION IN USE OF PROCEEDS

The offering is intended to raise funds to provide for the initial
capitalization of the Banks, repay all currently existing indebtedness, purchase
leasehold improvements, equipment and other assets for the Banks' operations,
provide working capital for general corporate purposes and pay initial operating
expenses. Management will have discretion over the use of proceeds that remain
after the initial capitalization of the Banks. Depending on economic and market
conditions, management is currently considering the possibility of opening a
third bank within the first year of operation. Some of the proceeds of the
offering may be used to finance such a third bank. In addition, while there are
no current plans, the Company may, if the opportunity arises, use some of the
proceeds to finance acquisitions of branches of other institutions or expansion
into other lines of business closely related to banking. See "Use of Proceeds."

LENDING RISKS AND LENDING LIMITS

The risk of nonpayment of loans is inherent in commercial banking, and such
nonpayment, if it occurs, would likely have a material adverse effect on the
Company's earnings and overall financial condition as well as the value of the
Common Stock. Because the Banks do not have an operating history, none of the
Banks' customers will have an established credit history with the Banks.
Management will attempt to minimize credit exposure by carefully monitoring the
concentration of loans within specific industries and through prudent loan
application and approval procedures, but there can be no assurance that such
monitoring and procedures will reduce such lending risks. Credit losses can
cause insolvency and failure of a financial institution, and in such event, its
shareholders could lose their entire investment. The general per customer
lending limit of each Bank is expected to initially be approximately $500,000,
subject to a higher lending limit of $1.5 million in specific cases with
approval by two-thirds of the respective Banks' Board of Directors. Accordingly,
the size of the loans which the Banks can offer to potential customers is less
than the size of loans which most of the Banks' competitors with larger lending
limits are able to offer. This limit initially may affect the ability of the
Banks to seek relationships with the area's larger businesses. The Banks expects
to accommodate loan volumes in excess of its lending limit through the sale of
participations in such loans to other banks. However, there can be no assurance
that the Banks will be successful in attracting or maintaining customers seeking
larger loans or that the Banks will be able to engage in participations of such
loans on terms favorable to the Banks.

IMPACT OF INTEREST RATES AND ECONOMIC CONDITIONS

The results of operations for financial institutions, including the Banks,
may be materially and adversely affected by changes in prevailing economic
conditions, including declines in real estate market values, rapid changes in
interest rates and the monetary and fiscal policies of the federal government.
The Banks' profitability will be partly a function of the spread between the
interest rates earned on investments and loans and the interest rates paid on
deposits and other interest-bearing liabilities. In the early 1990s, many
banking
9
<PAGE> 11

organizations experienced historically high interest rate spreads. More
recently, interest rate spreads have generally narrowed due to changing market
conditions and competitive pricing pressure. There can be no assurance that such
factors will not continue to exert such pressure or that high interest rate
spreads will return. Although economic conditions in the Banks' target market
areas have been generally favorable, there can be no assurance that such
conditions will continue to prevail. Like most banking institutions, the net
interest spread and margin will be affected by general economic conditions and
other factors that influence market interest rates and the Banks' ability to
respond to changes in such rates. At any given time, the Banks' assets and
liabilities will be such that they are affected differently by a given change in
interest rates. As a result, an increase or decrease in rates could have a
material adverse effect on the Banks' net income, capital and liquidity. While
management intends to take measures to guard against interest rate risk, there
can be no assurance that such measures will be effective in minimizing the
exposure to interest rate risk. See "Supervision and Regulation."

NEED FOR TECHNOLOGICAL CHANGE

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

RELIANCE ON TECHNOLOGY, NEED TO BE YEAR 2000 COMPLIANT

The Company will be dependent on technology to operate efficiently and
profitably. In the event that any of its technology or that of its vendors is
not Year 2000 compliant, the Company's business and results of operations could
be materially adversely effected as it may not be able to properly service or
maintain customer records. The Company has a procurement policy to only purchase
technological equipment that is Year 2000 compliant.

ANTI-TAKEOVER PROVISIONS

Chapters 7A and 7B of the Michigan Business Corporation Act (the "MBCA")
provide for super majority voting and impose other requirements on certain
business combinations with interested shareholders and limit voting rights of
certain acquirers of control shares. Federal law requires the approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
prior to acquisition of "control" of a bank holding company. The Company's
Articles of Incorporation (i) provide for a Board of Directors that is divided
into three classes of directors, (ii) require the Company's Board of Directors
to consider a variety of factors when evaluating any proposal involving a
potential merger or business combination for the Company, including the social
and economic impact of such a proposal on the Company, its employees, customers,
vendors and the communities in which the Company and its subsidiaries operate or
are located and (iii) require the affirmative vote of holders of at least
two-thirds of the voting stock of the Company to change any of such provisions
of the Articles of Incorporation. These provisions may have the effect of
delaying or preventing a change in control of the Company. As a result, these
provisions could adversely affect the price of the Common Stock by, among other
things, preventing a shareholder of the Company's Common Stock from realizing a
premium which might be paid as a result of a change in control of the Company.
See "Description of Capital Stock - Certain Anti-Takeover Provisions."

10
<PAGE> 12

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation provide for the indemnification of
its officers and directors to the fullest extent permitted by law in connection
with any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding in which a director or officer in his or her capacity
as a director, officer, employee, agent or fiduciary of the Company or of any
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise where the director or officer was serving at the request of the
Company. It is possible that the indemnification obligations imposed under these
provisions could result in a charge against the Company's earnings and thereby
affect the availability of funds for payment of dividends to the Company's
shareholders. See "Description of Capital Stock - Indemnification of Directors
and Officers."

DETERMINATION OF OFFERING PRICE; LIMITED TRADING MARKET EXPECTED

The initial public offering price of $15.00 per share was determined by the
Company in consultation with the Managing Underwriter. This price is not based
upon earnings or any history of operations and should not be construed as
indicative of the present or anticipated future value of the Common Stock. Prior
to the offering, there has been no public trading market for the Common Stock.
The price at which these shares are being offered to the public may be greater
than the market price for the Common Stock following the offering. The Managing
Underwriter has advised the Company that, upon completion of the offering, it
intends to use reasonable efforts to initiate quotations of the Common Stock on
the NASD OTC Bulletin Board and to act as a market maker of the Common Stock,
subject to applicable laws and regulatory requirements, although it is not
obligated to do so. Making a market in securities involves maintaining bid and
ask quotations and being able, as principal, to effect transactions in
reasonable quantities at those quoted prices, subject to various securities laws
and other regulatory requirements. The development of a public trading market
depends, however, upon the existence of willing buyers and sellers, the presence
of which is not within the control of the Company, the Banks or any market
maker. Market makers on the NASD OTC Bulletin Board are not required to maintain
a continuous two sided market, are required to honor firm quotations for only a
limited number of shares, and are free to withdraw firm quotations at any time.
Even with a market maker, factors such as the limited size of the offering, the
lack of earnings history for the Company and the absence of a reasonable
expectation of dividends within the near future mean that there can be no
assurance of an active and liquid market for the Common Stock developing in the
foreseeable future. Even if an active and liquid market develops, there can be
no assurance that such a market will continue, or that shareholders will be able
to sell their shares at or above the price at which these shares are being
offered to the public. Purchasers of Common Stock should carefully consider the
limited liquidity of their investment in the shares being offered hereby.

11
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered hereby are estimated to be approximately $13,950,000
($16,000,000 if the Underwriter's over-allotment option is exercised in full),
after deduction of the underwriting discounts, but before deducting estimated
offering expenses of $210,000. The Underwriters have agreed to limit
underwriting discounts to % of the public offering price for the first
shares sold by the Underwriters to the designated officers,
directors and organizers of the Company and the Banks and their designated
friends or family members. Such persons have provided non-binding expressions of
interest to purchase approximately shares. If such persons
purchase shares, underwriting discounts will be reduced by
$ , and net proceeds to the Company will be increased by $ .

The Company expects to contribute at least $4.55 million of the net
proceeds to LCB by purchasing all of the common stock to be issued by LCB. The
Company expects to contribute at least $4.6 million of the net proceeds to NOCB
by purchasing all of the common stock to be issued by NOCB. This purchase of
stock is intended to provide the Banks with the capital required by regulators
to commence operations. Currently, organizational expenses and other pre-opening
expenses, are being financed on an interim basis from interest free loans of
approximately $387,500 made to the Company by members of its Board of Directors
and other organizers. It is anticipated that the entire amount of these interest
free loans will be repaid by the Company from the proceeds of this offering
promptly following its completion. In addition, the Company expects to repay
approximately $350,000 which is currently outstanding on its line of credit. The
line of credit was primarily used to prepay the lease on the bank building to be
used by NOCB. Pre-opening interest income may offset some of these expenses.

The remaining net proceeds of approximately $4.063 million (plus any net
proceeds as a result of the exercise of the Underwriters' over-allotment option)
will initially be invested by the Company in investment grade securities and
otherwise held by the Company as working capital for general corporate purposes
and to pay operating expenses, as well as for possible future capital
contributions to the Banks. Management will have discretion over the use of
proceeds that remain after the initial capitalization of the Banks. Although the
Company has not allocated any of the proceeds to financing a third bank, the
Company may, if in the view of management the organization of such a new bank is
advisable, use a portion of the proceeds to finance such a third bank. Remaining
proceeds may also be used for the possible acquisition of branches or expansion
into other lines of business closely related to banking.

Of the proceeds contributed to the Banks, LCB and NOCB will each use
approximately $447,000 of the amount contributed for leasehold improvements and
related architectural and engineering services. In addition, LCB and NOCB will
each use approximately $223,000 of the amount contributed to purchase furniture,
fixtures and equipment and other necessary assets for the operation of the
Banks. The balance of the proceeds contributed to the Banks will be used to make
investments in loans and other securities and to pay expenses.

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<PAGE> 14

DIVIDEND POLICY

The Company initially expects that profits earned by the Banks or the
Company, if any, will be retained to finance the growth of the Company and the
Banks and that no cash dividends will be paid for the foreseeable future. After
the Banks achieve profitability, recover their operating deficit, and fund
adequate reserves for loan and lease losses, the Company may consider the
payment of dividends. However, the declaration of dividends is at the discretion
of the Board of Directors, and there is no assurance that dividends will be
declared at any time. If and when dividends are declared, the Company will be
largely dependent upon dividends paid by the Banks for funds to pay dividends on
the Common Stock. It is also possible, however, that the Company might at some
time in the future, pay dividends generated from income or investments and from
other activities of the Company.

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

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<PAGE> 15

CAPITALIZATION

The following table sets forth the capitalization of the Company as of July
31, 1998, and as adjusted to reflect the sale of the 1,000,000 shares of Common
Stock offered hereby and the application of the estimated net proceeds. See "Use
of Proceeds."

<TABLE>
<CAPTION>
JULY 31, 1998
---------------------------
ACTUAL AS ADJUSTED(1)
--------- --------------
<S> <C> <C>
Short-term debt............................................. $ 652,500 $ --
========= ===========
Shareholders' equity:
Preferred Stock, no par value - 1,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common Stock, no par value, $5 stated value - 9,000,000
shares authorized; 1 share issued and outstanding and
1,000,000 shares issued and outstanding, as
adjusted(2)............................................ $ 5 $ 5,000,000
Additional paid-in capital.................................. 10 8,820,000
Accumulated deficit(3)...................................... (248,482) (248,482)
--------- -----------
Total shareholders' equity.................................. (248,467) 13,571,518
--------- -----------
Total capitalization........................................ $ 404,033 $13,571,518
========= ===========
</TABLE>

- ---------------
(1) Adjusted to reflect the estimated net proceeds from the shares offered
hereby (assuming no exercise of the Underwriters' over-allotment option).
See "Use of Proceeds."

(2) Does not include 41,331 shares issuable pursuant to options granted under
the Company's 1998 Non-Employee Director Stock Option Plan and the Company's
1998 Employee Stock Option Plan.

(3) The accumulated deficit as of July 31, 1998, was comprised primarily of
organizational expenses, pre-opening expenses related principally to fees
and expenses incurred in the regulatory application process and office
occupancy costs and supplies. The accumulated deficit is expected to
increase further as anticipated initial operating losses are incurred.

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<PAGE> 16

BUSINESS

BACKGROUND

The liberalization of Michigan's branch banking laws, together with the
expansion of interstate banking has led to substantial consolidation of the
banking industry in Michigan, including Macomb and Oakland County, where the
Banks will be located. In the past, several of the financial institutions within
the primary market area of the Banks have either been acquired by, or merged
with, larger financial institutions or out-of-state financial institutions. When
these consolidations occurred, local boards of directors were dissolved and
local management relocated or terminated. As a result, many policy and credit
decisions have been centralized away from local management.

In the opinion of the Company's management, this situation has created a
favorable opportunity for a new commercial bank with local management and
directors. Management of the Company believes that such a bank can attract those
customers who wish to conduct business with a locally managed institution that
demonstrates an active interest in their business and personal financial
affairs. The Company believes that a locally managed institution will be able to
be more responsive to customer requests, provide customized financial products
and services, and offer the personal attention of the senior banking officers to
customers. The Banks will seek to take advantage of this opportunity by
emphasizing local management in their marketing plans and the ties and
commitments to their market area.

After the offering, the Company will own all of the issued and outstanding
stock of the Banks. Following completion of the offering and before commencement
of operations, each Bank intends to complete the furnishing of its main office,
training their staff and the purchase, lease and installation of equipment
necessary to transact banking business. Correspondent banking relationships and
other arrangements for services will be completed as necessary.

The Company was incorporated as a Michigan business corporation on January
28, 1998, and organized to acquire all of the issued and outstanding stock of
the Banks and to engage in the business of a bank holding company under the
federal Bank Holding Company Act of 1956, as amended. On July 23, 1998, the
Commissioner of the FIB issued orders approving the applications to establish
the Banks. [On 1998, the Banks' applications for FDIC deposit
insurance were approved.] These approvals were issued subject to the
satisfaction of certain conditions that the Company believes are customary in
transactions of this type, including conditions relating to capitalization of
the Bank and continuing capital adequacy. In August 1998 the Banks filed
applications for FDIC deposit insurance. The Company and the Banks expect to
receive the required FDIC and Federal Reserve Board approvals in September 1998
and to satisfy such conditions and commence business during the fourth quarter
of 1998. See "Risk Factors - Delay in Commencing Operations" and "Risk
Factors - Government Regulation and Monetary Policy."

BUSINESS STRATEGY

The Company intends to emphasize local management and strong commitment to
the communities located within the primary market areas of the Banks. The
Company's strategy is to locate the Banks in communities that are growing
quickly and where there has been a significant impact from the consolidation in
the banking industry. These communities have a history of community banking but
no longer have as many community banks. Management believes that the small and
medium-sized industrial and commercial businesses that are the target customers
of the Banks are not being adequately served by existing banks. Management also
believes that it has chosen communities where the officers and directors of the
Company and the Banks are active in the community and where community and
business leaders are anxious to welcome a locally owned and managed financial
institution. The Company and the Banks will be committed to providing
outstanding customer service and banking products and intend to compete
aggressively for banking business through a systematic program of directly
calling on both customers and referral sources such as attorneys, accountants,
mortgage brokers, insurance agents and other business people, many of whom are
known to the officers and directors. The Banks intend to provide a range of
business and consumer financial services to serve small to medium-sized business
customers and individuals. The foundation of this strategy is

15
<PAGE> 17

to emphasize local management and strong commitment to the communities located
within the primary market areas of the Banks. The team assembled to manage the
Company and the Banks have been selected based on their business and banking
experience in the primary market areas of the Banks.

BUSINESS FINANCIAL SERVICES. The Banks intend to offer products and
services consistent with the goal of attracting small to medium-sized business
customers as well as a variety of individuals. Commercial loans will be offered
primarily on a secured basis and to a limited extent on an unsecured basis. Such
loans will be available for working capital purposes, the purchase of equipment
and machinery, financing of accounts receivable and inventory and for the
purchase of real estate, primarily owner occupied real estate. As part of their
banking business, the Banks may make loans to all types of borrowers secured by
first and junior mortgages on various types of real estate, including without
limitation, single-family residential, multi-family residential, mixed use,
commercial, developed, and undeveloped.

In making such loans, the Banks will be subject to written policies,
reviewed and approved at least annually by the Banks' Boards of Directors,
pursuant to federal law and regulations. The policies address loan portfolio
diversification and prudent underwriting standards, loan administration
procedures, and documentation, approval and reporting requirements. In addition,
federal regulations impose supervisory loan-to-value ratios applicable to each
type of loan secured by real estate.

The Banks will generally look to a borrower's business operations as the
principal source of repayment and will also seek security interests in the
inventory, accounts receivable or other personal property of the borrower, and
personal guaranties. The Banks will make commercial loans to qualified
creditworthy borrowers on both a secured and unsecured basis. Generally, secured
loans will be at 75% loan to value ratios. Debt service ratios will generally be
1.20 to 1. In addition, borrowers must demonstrate positive working capital.
Although the Banks intend to be aggressive in seeking new loan growth, they also
intend to stress high credit quality. The Company anticipates that a significant
majority of the Banks' loan portfolio will eventually be comprised of commercial
loans and commercial real estate loans. The Company, as part of its credit
evaluation, will inquire as to the readiness of a customer's information and
other systems for the Year 2000 in those instances where failure to be Year 2000
compliant is likely to have a material adverse effect on the financial condition
or operations of the customer.

The Banks will actively pursue business checking accounts by offering
competitive rates, telephone banking, and other convenient services to its
business customers. In some cases the Banks may require business borrowers to
maintain minimum balances. The Management of the Banks also intend to establish
relationships with one or more correspondent banks and other independent
financial institutions to provide other services requested by customers,
including loan participation where the requested loan amount exceeds the legal
lending limit of the Banks.

CONSUMER FINANCIAL SERVICES. The retail banking strategy of the Banks will
initially focus on providing attractive products and services, including
telephone banking and automated bill paying services to individuals in the
respective market areas. Management believes that by offering these banking
products, which allow customers to bank 24 hours a day from any point at their
convenience, the Banks can attract new deposits and loans without the necessity
of expensive brick and mortar branch operations.

In addition, the Banks will originate residential real estate loans in the
form of first mortgages and home equity loans. The Banks intend to apply to the
Federal National Mortgage Association for approval as a seller-servicer of
residential mortgage loans. The Banks intend to sell most of the residential
mortgages into the secondary market. Most adjustable rate home equity loans will
be retained by the Banks as part of their loan portfolios.

The Banks intend to offer other consumer lending services, including credit
cards, auto loans, boat loans and other personal loan products on both a secured
and unsecured basis.

16
<PAGE> 18

third-party service providers to provide customers with convenient electronic
access to their accounts and other bank products through debit cards, voice
response and home banking. The use of third-party service providers is intended
to allow the Banks to remain at the forefront of technology while minimizing the
costs of delivering such products.

INVESTMENTS. The principal investment of the Company will be its purchase
of all of the common stock of the Banks. Funds retained by the Company from time
to time may be invested in various debt instruments, including, but not limited
to, obligations of, or guaranteed by the United States, general obligations of
states or political subdivisions thereof, bankers' acceptances or certificates
of deposit of U.S. commercial banks, or commercial paper of U.S. issuers rated
in the highest category by a nationally-recognized investment rating service.
Although the Company is permitted to make limited portfolio investments in
equity securities and to make equity investments in subsidiary corporations
engaged in certain non-banking activities, which may include real estate-related
activities, such as mortgage banking, community development, real estate
appraisals, arranging equity financing for commercial real estate, and owning
and operating real estate used substantially by the Banks or acquired for its
future use, the Company has no present plans to make any such equity investment
The Company's Board of Directors may alter the Company's investment policy
without shareholder approval. See "Supervision and Regulation."

The Banks may invest their funds in a variety of debt instruments and may
participate in the federal funds market with other depository institutions.
Subject to certain exceptions, the Banks are prohibited from investing in equity
securities. Under one such exception, in certain circumstances and with the
prior approval of the FDIC, a Bank can invest up to 10% of its total assets in
the equity securities of a subsidiary corporation engaged in certain real
estate-related activities. The Banks have no present plans to make such an
investment. Real estate acquired by the Banks in satisfaction of or in
foreclosure upon loans may be held by the Banks, subject to a determination by a
majority of the respective Bank's Board of Directors as to the advisability of
retaining the property, for a period not to exceed 60 months after the date of
acquisition or such longer period as the appropriate regulators may approve. The
Banks are also permitted to invest an aggregate amount not in excess of
two-thirds of the capital and surplus of the Banks in such real estate as is
necessary for the convenient transaction of its business. The Banks have no
present plans to make any such investment. The Board of Directors of each Bank
may alter the Bank's investment policy without shareholder approval.

MARKET AREA

LAKESIDE COMMUNITY BANK. The principal market areas anticipated to be
served by LCB will be Macomb County, primarily Sterling Heights, Clinton
Township, Utica, Mt. Clemens, Macomb Township, Washington Township and Ray
Township. Macomb County is one of the fastest growing counties in Michigan and
has a stable and diverse economic base. Macomb County, which is comprised of 27
cities, villages or townships, ranks third in population out of Michigan's 83
counties and 47th out of 3,100 counties nationally. With a current population of
over 700,000, Macomb County covers 482 square miles and is home to over 15,000
businesses employing 615,083 people with combined payrolls in 1993 of $18.8
billion.

Macomb County is also a large banking market. According to available
industry data, as of June 30, 1997 total deposits in this market, including
banks, thrifts and credit unions, were approximately $10.3 billion. The
principal market areas in Macomb County to be served by LCB have a population of
345,310 and median incomes ranging from $25,716 to $47,930 based on 1990 census
data. Approximately 20 banks, thrifts and credit unions currently service the
target market of LCB.

NORTH OAKLAND COMMUNITY BANK. The principal market areas anticipated to be
served by NOCB will be Oakland County, primarily Rochester, Rochester Hills,
Troy, Auburn Hills, Pontiac, Oakland Township, Avon Township, Orion Township and
Lake Orion Village. Oakland County is also one of the fastest growing counties
in Michigan. Oakland County, which is comprised of 61 cities, villages or
townships, ranks second in population out of Michigan's 83 counties and ranks as
the third wealthiest county in the United States among counties with populations
exceeding one million people. With a current population of over 1,100,000,
Oakland County covers 910 square miles and is home to over approximately 38,440
businesses employing 654,000 people with combined payrolls in 1995 of $21.7
billion.

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<PAGE> 19

Oakland County is also a large banking market. According to available
industry data as of June 30, 1997, total deposits in this market including
banks, thrifts and credit unions were approximately $18.7 billion. Approximately
30 banks, thrifts and credit unions service the target market of NOCB.

The principal market areas in Oakland County to be served by NOCB have a
population of 281,475, with median incomes ranging from $37,868 to $73,944,
based on 1995 data provided by Oakland County.

COMMUNITY INVOLVEMENT

In order to assure that the Banks are true community banks, the Company has
sought local community leaders to serve as members of the board of directors of
each bank.

LAKESIDE COMMUNITY BANK. The following individuals have agreed to serve on
the Board of Directors of Lakeside Community Bank:

Paul "Bud" E. Baltzer, Jr. is President of Pebco Sales, Inc. a business
located in Clinton Township, Michigan primarily engaged in the representation of
manufacturers in the installation and design of specialized industrial products.
Mr. Baltzer is active in the community and is treasurer of Epiphany Lutheran
Church and a member of the Construction Association of Michigan.

Frank D. Blowers was most recently employed by First of America Bank, N.A.
as a Senior Vice President where he was responsible for product sales for a
region with branches that held approximately $750 million in assets. Mr. Blowers
has over 30 years of banking experience and previously served as Senior Vice
President for Security Bank, St. Clair Shores, Michigan.

Gary Davison is owner of Davison & Associates, P.C., a Troy, Michigan based
accounting firm with numerous clients located in the target market areas of LCB.
Mr. Davison was previously a partner with Grant Thornton in Southfield,
Michigan.

Phillip T. Hernandez is President of Efficient Sanitation, a division of
Waste Management, Inc. located in Clinton Township, Michigan. Mr. Hernandez is a
member of the Board of Directors of Mt. Clemens General Hospital and a past
director of Macomb Community Bank.

Joseph S. Lentine is Vice President of Golden Dental Plans, Inc. a dental
delivery system company located in Warren, Michigan and President of LeCom,
Inc., a communications contracting firm located in Warren, Michigan.

David A. McKinnon is an attorney with the law firm of David A. McKinnon
P.C. located in Sterling Heights, Michigan. Mr. McKinnon previously served as
Vice Chairman of the Board of Directors of Macomb Community Bank.

Robert R. Peleman, M.D., is head of the anesthesiology department at St.
Joseph's Hospital, Clinton Township, Michigan. Mr. Peleman is a past director of
Macomb Community Bank, a member of the Board of Directors of St. Joseph's Mercy
Foundation and the past secretary of the Mt. Clemens Medical Association.

Jeff Tamaroff is President of Jeffrey Buick-Nissan, Tamaroff Dodge and
Tamaroff Buick, automobile dealerships located in Roseville, Michigan.

Gerald A. Tarquinio is the former President, Chief Executive Officer and a
Director of National Bank of Rochester (now a part of First of America Bank,
N.A.).

NORTH OAKLAND COMMUNITY BANK. In addition to Messrs. McKinnon and
Tarquinio, the following individuals have agreed to serve on the board of
directors of North Oakland Community Bank:

A. Frank Gerstenecker was City Manager of Troy, Michigan for 26 years. Mr.
Gerstenecker is currently a consultant to the Michigan Municipal League.

Frederick Maibauer, M.D., is Chief of Staff, Crittenton Hospital,
Rochester, Michigan and associated with Rochester Hills Orthopaedics, P.C.

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<PAGE> 20

John W. Melstrom, is an accountant and partner in the certified public
accounting firm of Fenner, Melstrom & Dooling located in Auburn Hills, Michigan.
Mr. Melstrom works with businesses in NOCB's market area and is active in the
community and serves on a variety of community boards.

Vernon Pixley is the President of the Pixley Funeral Home, Rochester,
Michigan.

James T. Polson has held various positions with First of America Bank, N.A.
most recently as a Senior Vice President and Branch Administration Manager where
he was responsible for the operations and services of approximately 500 branches
located throughout Michigan, Illinois and Indiana.

David F. Shellenbarger is President of Macro Computer Products, Inc., a
Rochester, Michigan based software/systems integration company which provides
imaging services to financial institutions.

Russell M. Shelton is Chief Executive Officer and President of Shelton
Pontiac-Buick, Inc., an automobile dealership located in Rochester Hills,
Michigan. Mr. Shelton is the 1998 President of the Detroit Automobile Dealers
Association.

COMPETITION

There are many thrifts, credit unions and bank offices located within the
respective primary market areas of the Banks. Most are branches of larger
financial institutions which, in management's view, are managed with a
philosophy of strong centralization. In addition, there are other community
banks in the Company's target market area. The Banks will face competition from
the thrifts, credit unions, and other banks as well as finance companies,
insurance companies, mortgage companies, securities brokerage firms, and other
providers of financial services. Most of the Banks' competitors have been in
business a number of years, have established customer bases, are larger and have
a higher lending limit than will the Banks. The Banks will compete for loans
principally through their ability to communicate effectively with customers and
understand and quickly meet their needs. Management believes that its personal
service philosophy will enhance its ability to compete favorably in attracting
individuals and small businesses. The Banks will actively solicit retail
customers and will compete for deposits by offering customers competitive
interest rates, personal attention, professional service, courier service, and
computerized banking.

BANK PROPERTIES

The Company has entered into a ten year lease for approximately 6,000
square feet in a one story building located at 43850 Schoenherr, Sterling
Heights, Michigan. Of the 6,000 square feet leased, 4,000 will be used as the
main office of LCB. The Company intends to move to the same location and utilize
the remaining 2,000 square feet for its headquarters. The Company has agreed to
pay monthly rent of approximately $8,400 for the first five years and $8,900 for
the remaining five years. The facility will contain an automated teller machine
("ATM") , a drive through teller window and teller stations inside the building.
The Company expects that the space provided by this building will be adequate
for the needs of LCB and the Company for the foreseeable future.

The Company is also leasing an approximately 3,100 square foot former bank
building located at 1467 North Rochester Road, Rochester Hills, Michigan until
December 31, 2004 to be used as the main office of NOCB. The Company has prepaid
the entire amount of the lease payments by making a payment of $250,000 and has
agreed to make monthly ground lease payments of $600 until December 31, 2004.
The facility contains an ATM, a drive through teller window and teller stations
inside the building. The Company expects that the space provided by this
building will be adequate for the needs of NOCB for the foreseeable future.

EMPLOYEES

Initially, the Company is expected to have approximately five full-time
employees, including the Chief Executive Officer/President, the Chief Financial
Officer, Vice President - Operations, and two support persons. In addition, the
Banks has assembled and will continue to assemble a staff of experienced
professionals. LCB is expected to have approximately six full-time employees
when it commences operations and seven full-time employees within the first few
months of operation. NOCB is expected to have

19
<PAGE> 21

approximately seven full-time employees when it commences operations and eight
full-time employees within the first few months of operation.

PLAN OF OPERATION

The Company's plan of operation for the twelve months following the
completion of the offering does not contemplate the need to raise additional
funds during that period. Management has concluded, based on current pre-opening
growth projections, that the Banks are likely to have adequate funds to meet
their cash requirements for the next twelve months. The Company expects to incur
losses in excess of $1.6 million in the first two years of operation based on
the Company's expectations concerning salaries, lease costs, equipment costs,
deposit growth and loan originations. The Company plans to spend approximately
$948,000 for leasehold improvements and approximately $476,000 for the purchase
of fixtures and equipment prior to commencing operations. During the first
twelve months of operation, the Company does not anticipate requiring
substantial additional equipment. No significant changes in the number of
employees is anticipated in the first twelve months of operations, however, the
Banks may require additional staff or equipment depending on growth and the need
to continue to provide a high quality service alternative to larger banks.

MANAGEMENT

DIRECTORS AND OFFICERS

The directors and senior officers of the Company as of the date hereof, and
their contemplated positions with the Banks upon completion of the offering, are
as follows:

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY POSITION
NAME AGE AND YEAR TERM EXPIRES (IF A DIRECTOR) WITH THE BANKS
---- --- ------------------------------------- --------------
<S> <C> <C> <C>
David A. McKinnon........... 49 Chairman, President, CEO, Director Chairman (LCB/NOCB)
(2001)
William L. Carley........... 52 Vice-President, Treasurer and Chief --
Financial Officer
Gail L.M. DiFranco.......... 45 Vice President - Operations --
Paul E. Baltzer, Jr......... 49 Director (1999) Director (LCB)
Phillip T. Hernandez........ 49 Director (2000) Director (LCB)
Joseph S. Lentine........... 38 Director (2001) Director (LCB)
John W. Melstrom............ 57 Director (2000) Director (NOCB)
Robert R. Peleman........... 40 Director (1999) Director (LCB)
Russell M. Shelton.......... 49 Director (1999) Director (NOCB)
David F. Shellenbarger...... 51 Director (2001) Director (NOCB)
Gerald A. Tarquinio......... 61 Director (2000) Director (LCB/NOCB)
Frank D. Blowers............ 50 -- President, Director (LCB)
James T. Polson............. 48 -- President, Director (NOCB)
</TABLE>

Under federal law and regulations and subject to certain exceptions, the
addition or replacement of any director, or the employment, dismissal or
reassignment of a senior executive officer of the Banks or the Company, is
subject to prior notice and disapproval by the FDIC at any time during the first
two years of operations, if there has been a change in control during the last
two years, if the Banks are not in compliance with applicable minimum capital
requirements, are otherwise in a troubled condition, or when the FDIC has
determined that such prior notice is appropriate.

The Company's Articles of Incorporation provide that the number of
directors are as determined from time to time by a vote of two-thirds of the
Board of Directors. The Board of Directors has presently fixed the number of
directors at 10. The Articles of Incorporation further provide that the
directors shall be divided into three classes, Class I, Class II, and Class III,
with each class serving a staggered three-year term and with the number of
directors in each class being as nearly equal as possible. The initial terms of
the Class I, Class II,

20
<PAGE> 22

and Class III directors has been established at one year, two years, and three
years, respectively. The subsequent terms of each class of director will be
three years.

It is anticipated that the entire Board of Directors of each Bank will be
elected annually by its sole shareholder, the Company.

Officers of the Company and the Bank will be elected annually by their
respective Boards of Directors and perform such duties as are prescribed in the
Bylaws or by the Board of Directors.

There are no family relationships among any of the Company's directors,
officers or key personnel.

EXPERIENCE OF DIRECTORS AND OFFICERS

Michigan Community Bancorp Limited

David A. McKinnon (Chairman of the Board/Chief Executive
Officer/President). Since July 1987, Mr. McKinnon has been an attorney with the
law firm of David A. McKinnon P.C. located in Sterling Heights, Michigan. From
October 1995 until December 1997, Mr. McKinnon served as Vice Chairman of the
Board of Directors of Macomb Community Bank. From 1990 until 1995, Mr. McKinnon
served on the Board of Directors and as legal counsel for First National Bank in
Mt. Clemens, located in Mt. Clemens, Michigan. From 1985 until 1991, Mr.
McKinnon was legal counsel for the First State Bank of East Detroit, located in
East Detroit, Michigan. Mr. McKinnon holds a J.D. from Thomas M. Cooley Law
School and a B.A. in economics from Wayne State University.

William L. Carley (Vice President, Treasurer and Chief Financial Officer).
Since 1995, Mr. Carley has been controller of Detroit Rolling Door & Gate, Inc.
From 1993 until 1994, Mr. Carley was Assistant Vice President and Financial
Planning Officer for Citizens Commercial & Savings Bank located in Flint,
Michigan. From 1983 until 1993, Mr. Carley was Vice President and Chief
Financial Officer for National Bank of Royal Oak located in Royal Oak, Michigan.
Mr. Carley has attended the Graduate School of Banking at the University of
Wisconsin and holds a B.A. in Business Administration from Northwood University.

Gail L.M. DiFranco (Vice President - Operations). From April 1996 until
February 1998, Ms. DiFranco was Assistant Vice President - Operations for Macomb
Community Bank located in Clinton Township, Michigan. From October 1994 until
April 1996, Ms. DiFranco was an Accounting Assistant at Dawson & Dawson, P.C.,
located in St. Clair Shores, Michigan a workers' compensation insurance fund
administrator. From 1993 to 1994, Ms. DiFranco was office manager for Sundries
Plus, Inc., located in Troy, Michigan. Ms. DiFranco holds an Associates Degree
in Business Accounting from Macomb Community College.

Paul "Bud" E. Baltzer (Director). Since June, 1973, Mr. Baltzer has been
President of Pebco Sales, Inc., Clinton Township, Michigan, a sales, design,
warehousing and manufacturing company supplying rubber products and flexible
components for piping and ducting service primarily to clients in the pollution
control and automotive paint finishing business.

Phillip T. Hernandez (Director). Since 1991, Mr. Hernandez has served as
President of the Efficient Sanitation Division of Waste Management of Michigan,
Inc., Clinton Township, Michigan, an environmental waste service company.

Joseph S. Lentine (Director). Since 1984, Mr. Lentine has served as Vice
President of Marketing and Office Administration for Golden Dental Plans, Inc.,
Warren, Michigan, a state-licensed dental care delivery system company. In
addition, since 1979, Mr. Lentine has served a President of LeCom, Inc., Warren,
Michigan, a communications contracting firm.

John W. Melstrom (Director). Since 1968, Mr. Melstrom has been a partner
with the certified public accounting firm of Fenner, Melstrom, Dooling LLP,
Auburn Hills, Michigan.

Robert R. Peleman (Director). Since 1987, Mr. Peleman has been employed as
an anesthesiologist with Macomb Anesthesia P.C., Mt. Clemens, Michigan, and as
head of the anesthesiology department at St. Joseph's Hospital in Mt. Clemens,
Michigan.

21
<PAGE> 23

Russell M. Shelton (Director). Since 1967, Mr. Shelton has been Chief
Executive Officer and President of Shelton Pontiac-Buick, Inc., an automobile
dealership located in Rochester Hills, Michigan.

David F. Shellenbarger (Director). Since 1981, Mr. Shellenbarger has been
President of Macro Computer Products, Inc., a computer products company located
in Rochester Hills, Michigan, which provides imaging services to financial
institutions.

Gerald A. Tarquinio (Director). Since 1995, Mr. Tarquinio has been a self
employed consultant and private investor. From 1988 until 1995, Mr. Tarquinio
was a Vice President/Commercial Loan Group Manager for First of America Bank,
N.A. located in Rochester, Michigan. From 1981 until 1988 Mr. Tarquinio was
President, Chief Executive Officer and Director of the National Bank of
Rochester.

Lakeside Community Bank

Frank D. Blowers (President and Director of LCB). From July 1992 until
August 1997, Mr. Blowers was employed by First of America Bank, N.A., most
recently as a Senior Vice President with responsibilities for Northern Michigan
operations. Mr. Blowers also has had a variety of southeastern Michigan regional
responsibilities. From 1983 until 1992, Mr. Blowers served as a Senior Vice
President for Security Bank, St. Clair Shores, Michigan.

North Oakland Community Bank

James T. Polson (President and Director of NOCB). From 1972 until 1998 Mr.
Polson held various positions with First of America Bank, N.A. most recently as
Vice President and Branch Administration Manager where he was responsible for
the operations and services of approximately 500 branches located throughout
Michigan, Illinois and Indiana.

BOARD COMMITTEES

The Company's Board of Directors has established a Compensation Committee.
The Compensation Committee is responsible for establishing base salaries and
administering the incentive compensation and bonus plans for officers and key
employees of the Company and the Banks. The Compensation Committee also
administers the 1998 Non-Employee Director Stock Option Plan and the 1998
Employee Stock Option Plan. The members of the Compensation Committee are
Messrs. Baltzer, Peleman and Shelton.

The Company's Board of Directors has established an Audit Committee. The
Audit Committee is responsible for reviewing with management the financial
controls, accounting, audit and reporting activities of the Company. The Audit
Committee reviews the qualifications of the Company's independent auditors,
makes recommendations to the Board of Directors regarding the selection of
independent auditors, reviews the scope, fees and results of any audit and
reviews non-audit services provided by the independent auditors. The members of
the Audit Committee are Messrs. Melstrom, Shellenbarger and Tarquinio.

DIRECTOR AND EXECUTIVE OFFICER COMPENSATION

In the first year of operation, no compensation is expected to be paid to
any directors of the Company for their services. The directors of each Bank will
be compensated at the rate of $100 per meeting attended. Depending on the
structure and operation of the Company, the operations of the Banks and other
factors, the Company's Board of Directors may thereafter determine that
reasonable fees or compensation for directors are appropriate. In that event, it
is likely that directors of the Company would receive compensation, such as
meeting fees, which would be consistent with the compensation paid to directors
of financial institution holding companies of similar size. Non-Employee
directors are eligible to participate in the Company's 1998 Non-Employee
Director Stock Option Plan.

22
<PAGE> 24

The Executive Officers have chosen to join the Company or the Banks at
compensation levels below those earned in their previous positions or in
comparison to market rates for similar positions. Their interest in accepting a
lower base level of compensation is to aid the Company and the Banks in
achieving earlier profitability by reducing operating expenses. The annual
compensation for Mr. McKinnon for the first year of operations will be $150,000,
Mr. Carley's compensation will be $55,000 and Ms. DiFranco's compensation for
the first year will be $45,000. The Presidents of LCB and NOCB, Mr. Blowers and
Mr. Polson, will each be compensated at the rate of $95,000, respectively for
the first year of operations. Compensation in subsequent years for executive
officers will be determined by the Compensation Committee. The Banks' officers
and employees will be eligible to participate in the Company's 1998 Employee
Stock Option Plan and in any benefit plan adopted for Bank employees. The Banks
expect to adopt a 401(k) plan for their employees promptly after commencing
operations. Neither the Company nor the Banks have an employment agreement with
any officer.

1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

The Board of Directors has adopted, and the sole shareholder of the Company
has approved, a 1998 Non-Employee Director Stock Option Plan (the "Non-Employee
Plan"). The adoption of the Non-Employee Plan is intended to promote the best
interests of the Company and its shareholders by attracting and motivating
highly qualified individuals to serve as directors and to allow them to acquire
an ownership interest in the Company, thus aligning their interests with those
of the shareholders of the Company. The following is a summary of the principal
provisions of the Non-Employee Plan.

ADMINISTRATION. The Non-Employee Plan will be administered by the
Compensation Committee of the Company as appointed by the Board of Directors.
The Compensation Committee will interpret the Non-Employee Plan, prescribe,
amend and rescind rules and regulations relating to the Non-Employee Plan and
make all other determinations necessary or advisable for the administration of
the Non-Employee Plan.

SHARES. The total number of shares of Common Stock available for grants
under the Non-Employee Plan cannot exceed 73,000 shares of Common Stock (subject
to adjustment for certain events).

OPTION AGREEMENT. Each option granted under the Non-Employee Plan will be
evidenced by an Agreement for Participants in accordance with the terms of the
Non-Employee Plan. Each Agreement for Participants will specify the exercise
price, the term of the option, the date or dates on which the option becomes
exercisable, the number of shares to which the option relates and such other
terms as the Compensation Committee determines.

EXERCISE PRICE. The exercise price for the options will be equal to the
fair market value per share of the Common Stock on the grant date. Fair Market
Value means, for purposes of the Non-Employee Plan, the average between the
published closing bid and asked prices of the Common Stock on the NASD OTC
Bulletin Board or if the Common Stock has become listed on The Nasdaq National
Market or another national securities exchange, the average of the high and low
price as quoted by the exchange. If the Common Stock is not quoted on either the
NASD OTC Bulletin Board or the Nasdaq Stock Market or any nationally recognized
stock exchange, a value determined by any fair and reasonable means prescribed
by the Compensation Committee. For purposes of the grant of options under the
Non-Employee Plan, and not for any other purpose, the Compensation Committee has
determined that $15 per share should be used as the market price for the Common
Stock prior to the completion of the offering.

DURATION OF OPTIONS. The duration of each option will be determined by the
Compensation Committee, except that the maximum duration may not exceed ten
years from the date of grant. The unexercised portion of each option
automatically expires three months after the person who was granted the options
ceases to be an employee and one year following the death or permanent
disability of the employee.

ADJUSTMENTS. The total amount of Common Stock for which options may be
granted under the Non-Employee Plan will be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Common Stock
resulting from payment of a stock dividend, stock split, recapitalization or
otherwise.

23
<PAGE> 25

CHANGE IN CONTROL. In the event of a change in control (as defined in the
Non-Employee Plan) of the Company, each option then outstanding shall
immediately become exercisable in full.

TERMINATION AND AMENDMENT. An option may not be granted pursuant to the
Non-Employee Plan after December 31, 2001. The Board of Directors may amend or
modify the Non-Employee Plan at any time, but no amendment or modification,
without the approval of the holders of a majority of the voting power of the
Company shall materially increase the benefits accruing to the participants
under the Non-Employee Plan, materially increase the amount of Common Stock for
which grants may be made under the Non-Employee Plan, or materially change the
provisions relating to the eligibility of individuals to whom grants may be made
under Non-Employee Plan. No amendment or termination of the Non-Employee Plan
may adversely affect any option granted under the Non-Employee Plan without the
consent of the optionee.

1998 EMPLOYEE STOCK OPTION PLAN

The Board of Directors has adopted, and the sole shareholder of the Company
has approved, the Employee Stock Option Plan (the "Employee Plan"). The Employee
Plan's adoption is intended to closely associate the interests of the management
of the Company and the Banks with shareholders by reinforcing the relationship
between optionees' rewards and shareholder gains; to provide management with an
equity ownership in the Company commensurate with the Company's performance, as
reflected in increased shareholder value; to maintain competitive compensation
levels; and to provide an incentive to management for continuous employment with
the Corporation. Pursuant to the Employee Plan, options may be granted that
qualify under the Internal Revenue Code as incentive stock options or as stock
options that do not qualify as incentive stock options. The following is a
summary of the principal provisions of the Employee Plan.

ADMINISTRATION. The Employee Plan will be administered by the Compensation
Committee of the Company as appointed by the Board of Directors. The
Compensation Committee will interpret the Employee Plan, prescribe, amend and
rescind rules and regulations relating to the Employee Plan and make all other
determinations necessary or advisable for the administration of the Employee
Plan.

SHARES. The total number of shares of Common Stock available for grants
under the Employee Plan cannot exceed 29,000 shares of Common Stock (subject to
adjustment for certain events).

OPTION AGREEMENT. Each option granted under the Employee Plan will be
evidenced by either an Incentive Stock Option Agreement or a Nonqualified Stock
Option Agreement in accordance with the terms of the Employee Plan. Each stock
option agreement will specify the exercise price, the term of the option, the
date or dates on which the option becomes exercisable, the number of shares to
which the option relates and such other terms as the Compensation Committee
determines.

OPTION PRICE. The option price will be equal to the fair market value per
share of the Common Stock on the grant date. Fair Market Value means, for
purposes of the Employee Plan, the average between the published closing bid and
asked prices of the Common Stock on the NASD OTC Bulletin Board or if the Common
Stock has become listed on The Nasdaq National Market or another national
securities exchange, the average of the high and low price as quoted by the
exchange. If the Common Stock is not quoted on either the NASD OTC Bulletin
Board or the Nasdaq Stock Market or any nationally recognized stock exchange, a
value determined by any fair and reasonable means prescribed by the Compensation
Committee. For purposes of the grant of options under the Non-Employee Plan, and
not for any other purpose, the Compensation Committee has determined that $15
per share should be used as the market price for the Common Stock prior to the
completion of the offering.

ADJUSTMENTS. The total amount of Common Stock for which options may be
granted under the Employee Plan will be appropriately adjusted for any increase
or decrease in the number of outstanding shares of Common Stock resulting from
payment of a stock dividend, stock split, recapitalization or otherwise.

24
<PAGE> 26

CHANGE IN CONTROL. In the event of a change in control (as defined in the
Employee Plan) of the Company, each option then outstanding shall immediately
become exercisable in full.

TERMINATION AND AMENDMENT. An option may not be granted pursuant to the
Employee Plan after December 31, 2007. The Board of Directors may amend or
modify the Employee Plan at any time, but no amendment or modification, without
the approval of the holders of a majority of the voting power of the Company
shall materially increase the benefits accruing to the participants under the
Employee Plan, materially increase the amount of Common Stock for which grants
may be made under the Employee Plan, or materially change the provisions
relating to the eligibility of individuals to whom grants may be made under
Employee Plan. No amendment or termination of the Employee Plan may adversely
affect any option granted under the Employee Plan without the consent of the
optionee.

FEDERAL INCOME TAX CONSEQUENCES. The grant of a non-qualified option or
incentive stock option has no federal tax consequences for the optionee or the
Company. Upon the exercise of a non-qualified option, the optionee will
recognize taxable compensation income to the extent that the fair market value
of the shares of Common Stock exceeds the option price. The Company is entitled
to a tax deduction for such amounts at the date of exercise. If any stock
received upon the exercise of a non-qualified option is later sold, any excess
of the sale price over the fair market value of the stock at the date of
exercise is taxable to the optionee.

No taxable income results to the optionee upon the exercise of an incentive
stock option if the incentive stock option is exercised during the period of the
optionee's employment or within three months thereafter, except in the case of
disability or death. However, the amount by which the fair market value of the
stock acquired pursuant to an incentive stock option exceeds the option price is
a tax preference item which may result in the imposition on the optionee of an
alternative minimum tax. If no disposition of the shares is made within two
years from the date the incentive stock option was granted and one year from the
date of exercise, any profit realized upon disposition of the shares may be
treated as a long-term capital gain by the optionee. A disposition prior to such
time will be taxable as described in the preceding paragraph. The Company will
not be entitled to a tax deduction upon such exercise of an incentive stock
option, nor upon a subsequent disposition of the shares unless such disposition
occurs prior to the expiration of these holding periods.

As of August 15, 1998, the Company had eight outstanding option agreements
to purchase an aggregate of 26,664 shares of its Common Stock pursuant to the
Non-Employee Plan at an exercise price of $15.00 per share. As of August 15,
1998, the Company had three outstanding option agreements to purchase an
aggregate of 14,667 shares of its Common Stock pursuant to the Employee Plan at
an exercise price of $15.00 per share.

25
<PAGE> 27

RELATED PARTY TRANSACTIONS

LOANS FROM ORGANIZERS

Over the past several months, several organizers of the Company have made
interest free loans of $387,500 to the Company to cover organizational and other
pre-opening expenses of the Banks and the Company. All of these loans will be
repaid by the Company from the net proceeds of the offering. Immediately after
the completion of this offering, the organizers intend to exercise options
granted to each of them and apply the proceeds from the repayment of such loans
to pay the exercise price for their option shares. Each of the organizers of the
Company is also a member of the Company's or one of the Banks' Board of
Directors.

SERVICES FROM ORGANIZERS

Since the Company's inception, David A. McKinnon, one of the organizers of
the Company, has provided legal services to the Company. The Company has paid
approximately $81,000 for such legal services, which the Company believes is the
fair market value of such legal services.

OPTION GRANTS

On May 19, 1998, in accordance with the Non-Employee Plan, for the purpose
of attracting and motivating the recipients to serve as directors, the Company
granted options to purchase 3,333 shares of Common Stock at an exercise price of
$15.00 per share to each of Paul E. Baltzer, Jr., Phillip T. Hernandez, Joseph
S. Lentine, John W. Melstrom, Robert R. Peleman, David F. Shellenbarger, Russell
M. Shelton and Gerald A. Tarquinio. On the effective date of this offering, 70%
of the options vest, on the first anniversary of the effective date of this
offering an additional 15% of the options vest, on the second anniversary of the
effective date of this offering an additional 5% of the options vest and on the
third anniversary of the effective date of this offering all of the options are
vested.

On May 19, 1998, in accordance with the Employee Plan, for the purpose of
providing management with an equity interest in the Company, the Company granted
options to purchase 6,667 shares of Common Stock at an exercise price of $15.00
per share to David A. McKinnon. On the effective date of this offering, 70% of
the options vest, on the first anniversary of the effective date of this
offering an additional 15% of the options vest, on the second anniversary of the
effective date of this offering, an additional 5% of the options vest and on the
third anniversary of the effective date of this offering all of the options are
vested.

On May 19, 1998, in accordance with the Employee Plan, for the purpose of
providing management with an equity interest in the Company, the Company granted
options to purchase 4,000 shares of Common Stock at an exercise price of $15.00
per share to each of Frank D. Blowers and James T. Polson. On the effective date
of this offering, 70% of the options vest, on the first anniversary of the
effective date of this offering an additional 15% of the options vest, on the
second anniversary of the effective date of this offering an additional 5% of
the options vest and on the third anniversary of the effective date of this
offering all of the options are vested.

BANKING TRANSACTIONS

It is anticipated that certain of the directors and officers and the
businesses with which they are associated will have banking and other
transactions with the Company and the Banks in the ordinary course of business.
Any loans and commitments to lend to such affiliated persons or entities
included in such transactions will be made in accordance with the applicable
laws and regulations and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated parties of similar creditworthiness, and will not
involve more than normal risk or present other unfavorable features to the
Company and the Banks. Transactions between the Company or the Banks, and any
officer, director, principal shareholder, or other affiliate of the Company or
the Banks will be on terms no less favorable to the Company or the Banks than
could be obtained on an arms-length basis from unaffiliated independent third
parties, and will be approved by a majority of the Company's or the Banks'
independent
26
<PAGE> 28

directors who do not have an interest in the transaction and who have had
access, at the Company's or the Bank's expense, to the Company's legal counsel
or independent legal counsel.

INDEMNIFICATION

The Articles of Incorporation of the Company provide for the
indemnification of directors and officers of the Company, including reasonable
legal fees, incurred by such directors and officers while acting for or on
behalf of the Company as a director or officer, subject to certain limitations.
See, "Description of Capital Stock -- Indemnification of Directors and
Officers." The scope of such indemnification otherwise permitted by Michigan law
may be limited in certain circumstances by federal law and regulations. See
"Supervision and Regulation." The Company intends to purchase directors' and
officers' liability insurance for directors and officers of the Company and the
Banks.

27
<PAGE> 29

PRINCIPAL SHAREHOLDERS

The Company has issued only one share of Common Stock held by David
McKinnon. Upon completion of this offering, this share will be repurchased by
the Company for the same price Mr. McKinnon paid for it. The following table
sets forth certain information with respect to the anticipated beneficial
ownership of the Company's Common Stock after the sale of shares offered hereby,
by (i) each person expected by the Company to beneficially own more than 5% of
the outstanding Common Stock (ii) each of the current directors and executive
officers of the Company, and (iii) all such directors and executive officers of
the Company as a group. Pursuant to the Underwriting Agreement between the
Company and the Underwriters dated the date of this Prospectus (the
"Underwriting Agreement"), the Company will direct the Underwriters to offer to
sell the number of shares listed below to the directors and executive officers
listed below (each being an organizer of the Bank). All share numbers are
provided based upon such directions from the Company and non-binding expressions
of interest supplied by the persons listed below:

<TABLE>
<CAPTION>
NUMBER OF SHARES TO BE PERCENTAGE OF
BENEFICIALLY OWNED OUTSTANDING SHARES
NAME AND ADDRESS(4) AFTER OFFERING(1)(2) AFTER OFFERING(3)
------------------- ---------------------- ------------------
<S> <C> <C>
David A. McKinnon........................................ 6,750 *
William L. Carley........................................ -- *
Gail L.M. DiFranco....................................... -- *
Paul E. Baltzer, Jr...................................... 5,083 *
Phillip T. Hernandez..................................... 4,416 *
Joseph S. Lentine........................................ 5,666 *
John W. Melstrom......................................... 4,416 *
Robert P. Peleman........................................ 12,083 1.2%
Russell M. Shelton....................................... 4,416 *
David F. Shellenbarger................................... 4,416 *
Gerald A. Tarquinio...................................... 3,000 *
Frank D. Blowers......................................... 4,883 *
James T. Polson.......................................... 3,467 *
Directors and executive officers of the Company as a
group (14 persons)..................................... 58,596 5.7%
</TABLE>

- ---------------
Notes:

* less than 1.0%.

(1) Some or all of the Common Stock listed may be held jointly with, or for the
benefit of, spouses and children of, or various trusts established by, the
person indicated.

(2) Includes shares that such person has the right to acquire within 60 days of
the effective date of this offering pursuant to the Company's 1998
Non-Employee Director Stock Option Plan and 1998 Employee Stock Option Plan.

(3) Percentages shown are based on the 1,000,000 shares offered hereby plus the
number of shares that each named person or group has the right to acquire
within 60 days of August 14, 1998; and in each case assumes no exercise of
the Underwriters' over-allotment option.

(4) c/o Michigan Community Bancorp Limited, 12900 Hall Road, Suite 395, Sterling
Heights, Michigan 48313.

Depending upon their individual circumstances at the time of the offering,
each person may purchase a greater or fewer number of shares than indicated, and
in fact, may elect not to purchase any shares.

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SUPERVISION AND REGULATION

GENERAL

Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Company and the Banks can be affected not only by management
decisions and general economic conditions, but also by the statutes administered
by, and the regulations and policies of, various governmental regulatory
authorities. Those authorities include, but are not limited to, the Federal
Reserve Board, the FDIC, the FIB, the Michigan Department of Consumer and
Industry Services, the Internal Revenue Service, and state taxing authorities.
The effect of such statutes, regulations and policies can be significant, and
cannot be predicted with certainty.

Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposit, capital levels relative to
operations, lending activities and practices, the nature and amount of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to the Company
and the Banks establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDIC's deposit
insurance funds, the depositors of the Banks, and the public, rather than
shareholders of the Banks or the Company.

The Federal Reserve Board, FDIC and the other federal banking agencies have
broad enforcement powers, including the power to terminate deposit insurance,
impose substantial fines and other civil and criminal penalties and appoint a
conservator or receiver. Failure to comply with applicable laws, regulations and
supervisory agreements could subject the Company or its banking subsidiaries, as
well as officers, directors and other institution-affiliated parties of these
organizations, to administrative sanctions and potentially substantial civil
money penalties. The appropriate federal banking agency may appoint the FDIC as
conservator or receiver for a banking institution (or the FDIC may appoint
itself, under certain circumstances) if any one or more of a number of
circumstances exist, including, without limitation, the fact that the banking
institution is undercapitalized and has no reasonable prospect of becoming
adequately capitalized; fails to become adequately capitalized when required to
do so; fails to submit a timely and acceptable capital restoration plan; or
materially fails to implement an accepted capital restoration plan.

The following references to statutes and regulations are intended to
summarize all material government regulation of the business of the Company and
the Banks, and are qualified by reference to the text of such statutes and
regulations. Any change in government regulations may have a material effect on
the business of the Company and the Banks.

THE COMPANY

GENERAL. When the Company becomes the sole shareholder of the Banks, the
Company will be a bank holding company and, as such, will be required to
register with, and will be subject to regulation by, the Federal Reserve Board
under the Bank Holding Company Act, as amended (the "BHCA"). Under the BHCA, the
Company will be subject to periodic examination by the Federal Reserve Board and
will be required to file periodic reports of its operations and such additional
information as the Federal Reserve Board may require.

In accordance with Federal Reserve Board policy, the Company will be
expected to act as a source of financial strength to the Banks and to commit
resources to support the Banks in circumstances where the Company might not do
so absent such policy. In addition, in certain circumstances a Michigan state
bank having impaired capital may be required by the FIB either to restore its
capital by a special assessment upon its shareholders, or to liquidate the bank.

Any capital loans by a bank holding company to a subsidiary bank are
subordinate in right of payment to deposits and to certain other indebtedness of
such subsidiary bank. In the event of a bankruptcy by a bank holding company,
any commitment by the bank holding company to a federal bank regulatory agency
to maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of

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payment. This priority would also apply to guarantees of capital plans under the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA").

INVESTMENTS AND ACTIVITIES. With certain limited exceptions, the BHCA
prohibits bank holding companies from acquiring direct or indirect ownership or
control of voting shares or assets of any company engaged in any activity other
than banking or managing or controlling banks, or one or more activities which
the Federal Reserve Board has determined to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. Under current
Federal Reserve Board regulations, such permissible non-bank activities include
such things as mortgage banking, equipment leasing, securities brokerage, and
consumer and commercial finance company operations. As a result of recent
amendments to the BHCA, certain types of acquisitions may be effected by bank
holding companies that satisfy certain statutory criteria concerning management,
capitalization, and regulatory compliance, provided that written notice is given
to the Federal Reserve Board within 10 business days after the transaction. For
other acquisitions, prior written notice to the Federal Reserve Board will be
required.

In evaluating a written notice of such an acquisition, the Federal Reserve
Board will consider various factors, including, among others, the financial and
managerial resources of the notifying bank holding company, and the relative
public benefits and adverse effects which may be expected to result from the
performance of the activity by an affiliate of such company. The Federal Reserve
Board may apply different standards to activities proposed to be commenced de
novo and activities commenced by acquisition, in whole or in part, of a going
concern. The required notice period may be extended by the Federal Reserve Board
under certain circumstances, including a notice for acquisition of a company
engaged in activities not previously approved by regulation of the Federal
Reserve Board. If such a proposed acquisition is not disapproved or subjected to
conditions by the Federal Reserve Board within the applicable notice period, it
is deemed approved, by the Federal Reserve Board.

In general, any direct or indirect acquisition by the Company of any voting
shares of any bank which would result in the Company's direct or indirect
ownership or control of more than 5% of any class of voting shares of such bank,
and any merger or consolidation of the Company with another such bank holding
company, will require the prior written approval of the Federal Reserve Board
under the BHCA. In acting on such applications, the Federal Reserve Board must
consider various statutory factors, including among others, the effect of the
proposed transaction on competition in relevant geographic and product markets,
the convenience and needs of the communities to be served, and each party's
financial condition, managerial resources, and record of performance under the
Community Reinvestment Act.

The merger or consolidation of an existing bank subsidiary of the Company
with another bank, or the acquisition by such a subsidiary of assets of another
bank, or the assumption of liability by such a subsidiary to pay any deposits in
another bank, will require the prior written approval of the responsible federal
depository institution regulatory agency under the Bank Merger Act, based upon a
consideration of statutory factors similar to those outlined above with respect
to the BHCA. In addition, in certain such cases an application to, and the prior
approval of, the Federal Reserve Board under the BHCA and/or the Commissioner
under the Michigan Banking Code, may be required.

CAPITAL REQUIREMENTS. The Federal Reserve Board uses capital adequacy
guidelines in its examination and regulation of bank holding companies. If
capital falls below minimum guidelines, a bank holding company may, among other
things, be denied approval to acquire or establish additional banks or non-bank
businesses.

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

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capital to total assets of 3% for the most highly rated companies, with minimum
requirements of 4% to 5% for all others.

The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum requirements, and higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. Further, any banking organization experiencing or anticipating
significant growth would be expected to maintain capital ratios, including
tangible capital positions (i.e., Tier 1 capital less all intangible assets),
well above the minimum levels.

The Federal Reserve Board's regulations provide that the foregoing capital
requirements will generally be applied on a bank-only (rather than a
consolidated) basis in the case of a bank holding company with less than $150
million in total consolidated assets. Nonetheless, on a pro forma basis,
assuming the issuance and sale by the Company of the 1,000,000 shares of Common
Stock offered hereby at $15.00 per share, the Company's leverage capital ratio,
risk-based capital ratio and Tier 1 leverage ratio, in each case as calculated
on a consolidated basis under the Federal Reserve Board's capital guidelines,
would exceed the minimum requirements.

In September 1996, the federal bank regulatory agencies adopted amendments
to their respective risk based capital standards to require banks and bank
holding companies having significant exposure to market risk arising from, among
other things, trading of debt instruments, (i) to measure that risk using an
internal value-at-risk model conforming to the parameters established in the
agencies' standards, and (ii) to maintain a commensurate amount of additional
capital to reflect such risk. The new rules were adopted effective January 1,
1997, with compliance mandatory from and after January 1, 1998.

DIVIDENDS. The Company is a corporation separate and distinct from the
Banks. Most of the Company's revenues will be received by it in the form of
dividends or interest paid by the Banks. The Banks are subject to statutory
restrictions on their ability to pay dividends. See "The Banks -- Dividends."
The Federal Reserve Board has issued a policy statement on the payment of cash
dividends by bank holding companies. In the policy statement, the Federal
Reserve Board expressed its view that a bank holding company should not pay cash
dividends exceeding its net income or which could only be funded in ways that
weakened the bank holding company's financial health, such as by borrowing.
Additionally, the Federal Reserve Board possesses enforcement powers over bank
holding companies and their non-bank subsidiaries to prevent or remedy actions
that represent unsafe or unsound practices or violations of applicable statutes
and regulations. Among these powers is the ability, in appropriate cases, to
proscribe the payment of dividends by banks and bank holding companies. Similar
enforcement powers over the Banks are possessed by the FDIC. It is also unlawful
for any insured depository institution to pay a dividend at a time when it is in
default of payment of any assessment to the FDIC. The "prompt corrective action"
provisions of the FDICIA impose further restrictions on the payment of dividends
by insured banks which fail to meet specified capital levels.

In addition to the restrictions on dividends imposed by the Federal Reserve
Board, the MBCA imposes certain restrictions on the declaration and payment of
dividends by Michigan corporations such as the Company. See "Description of
Capital Stock - Common Stock - Dividend Rights."

POTENTIAL LIABILITY FOR UNDERCAPITALIZED SUBSIDIARIES. Bank regulators are
required to take "prompt corrective action" to resolve problems associated with
insured depository institutions whose capital declines below certain levels. In
the event an insured depository institution becomes "undercapitalized," it must
submit a capital restoration plan. The capital restoration plan will not be
accepted by the regulators unless each company having control of the
undercapitalized institution guarantees the subsidiary's compliance with the
capital restoration plan up to a certain specified amount. Any such guarantee
from a depository institution's holding company is entitled to a priority of
payment in bankruptcy.

The aggregate liability of the holding company of an undercapitalized bank
is limited to the lesser of 5% of the institution's assets at the time it became
undercapitalized or the amount necessary to cause the institution to be
"adequately capitalized." The bank regulators have greater power in situations
where an institution becomes "significantly" or "critically" undercapitalized or
fails to submit a capital restoration plan. For example, a bank holding company
controlling such an institution can be required to obtain prior Federal

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<PAGE> 33

Reserve Board approval of proposed dividends, or might be required to consent to
a consolidation or to divest the troubled institution or other affiliates.

THE BANKS

GENERAL. Upon completion of their organization each of the Banks will be a
Michigan banking corporation, and their deposit accounts will be insured by the
Bank Insurance Fund (the "BIF") of the FDIC. As BIF-insured, Michigan-chartered
banks, each of the Banks will be subject to the examination, supervision,
reporting and enforcement jurisdiction of the FIB, as the chartering authority
for Michigan banks, and the FDIC as administrator of the BIF. These agencies and
federal and state law extensively regulate various aspects of the banking
business, including, among other things, permissible types and amounts of loans,
investments and other activities, capital adequacy, branching, interest rates on
loans and on deposits, the maintenance of non-interest bearing reserves on
deposit accounts, and the safety and soundness of banking practices.

DEPOSIT INSURANCE. As FDIC-insured institutions, each of the Banks will be
required to pay deposit insurance premium assessments to the FDIC. Pursuant to
FDICIA, the FDIC adopted a risk-based assessment system under which all insured
depository institutions are placed into one of nine categories and assessed
insurance premiums based upon their level of capital and supervisory evaluation.
Institutions classified as well-capitalized (as defined by the FDIC) and not
exhibiting financial, operational or compliance weaknesses, pay the lowest
premium while institutions that are less than adequately capitalized (as defined
by the FDIC) and considered substantial supervisory concern pay the highest
premium. Risk classification of all insured institutions is made by the FDIC for
each semi-annual assessment period.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound practices, or have
violated any applicable law, regulation, order, or any condition imposed in
writing by, or written agreement with, the FDIC, or if the institution is in an
unsafe or unsound condition to continue operations. The FDIC may also suspend
deposit insurance temporarily during the hearing process for a permanent
termination of insurance if the institution has no tangible capital.

CAPITAL REQUIREMENTS. The FDIC has established the following minimum
capital standards for state chartered, FDIC-insured, non-member banks, (i) a
leverage requirement consisting of a minimum ratio of Tier 1 capital to total
assets of 3% for the most highly-rated banks with minimum requirements of 4% to
5% for all others, and (ii) a risk-based capital requirement consisting of a
minimum ratio of total capital to total risk-weighted assets of 8%, at least
one-half of which must be Tier 1 capital. Tier 1 capital consists principally of
shareholders equity. In addition, the FDIC has adopted requirements for each
state chartered, FDIC-insured, non-member bank having trading activity as shown
on its most recent Consolidated Report of Condition and Income ("Call Report")
in an amount equal to 10% or more of its total assets, (i) to measure its market
risk using an internal value-at-risk model conforming to the FDIC's capital
standards, and (ii) to maintain a commensurate amount of additional capital to
reflect such risk. This regulation was adopted effective January 1, 1997, with
compliance mandatory on and after January 1, 1998.

The capital requirements described above are minimum requirements. Higher
capital levels will be required if warranted by the particular circumstances or
risk profiles of individual institutions. As a condition to the regulatory
approvals of the Banks' formation, the Banks will be required to have an initial
capitalization sufficient to provide a ratio of Tier 1 capital to total
estimated assets of at least % at the end of the third year of operations.

PROMPT CORRECTIVE ACTION. FDICIA establishes a system of prompt corrective
action to resolve the problems of undercapitalized institutions. Under this
system, federal depository institution regulators are required to take certain
mandatory supervisory actions, and may take certain discretionary supervisory
actions against undercapitalized institutions, the severity of which depends
upon the institution's degree of capitalization. In addition, subject to a
narrow exception, FDICIA generally requires the federal depository institution
regulators to appoint a receiver or conservator for an institution that is
critically undercapitalized.

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As mandated by FDICIA, the federal banking regulators have specified by
regulation the relevant capital measures at which an insured depository
institution is deemed well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. Pursuant to the FDIC's regulations implementing the prompt
corrective action provisions of FDICIA, a bank will be deemed to be (i) well
capitalized if the bank has a total risk-based capital ratio of 10% or greater,
a Tier 1 risk-based capital ratio of 6% or greater and a leverage ratio of 5% or
greater; (ii) adequately capitalized if the bank has a total risk-based capital
ratio of 8% or greater, a Tier 1 risk-based capital ratio above 4%, or a
leverage ratio of greater than 4% (3% for the most highly rated banks); (iii)
undercapitalized if the bank has a total risk-based capital ratio of less than
8%, a Tier 1 risk-based capital ratio of less than 4%, and a leverage ratio of
less than 4%; (iv) significantly undercapitalized if the bank has a total
risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of
less than 3% or a leverage ratio of less than 3%; and (v) critically
undercapitalized if the bank has a ratio of tangible equity to total assets of
2% or less.

Subject to certain exceptions, these capital ratios are generally
determined on the basis of Call Reports submitted by each depository institution
and the reports of examination by each institution's appropriate federal
depository institution regulatory agency.

Depending upon the capital category to which an institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan (which must include a holding company guarantee of
performance); placing limits on asset growth and restrictions on activities;
requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired; restricting transactions with
affiliates; restricting the interest rate the institution may pay on deposits;
ordering a new election of directors of the institution; requiring that senior
executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the holding company to
divest certain subsidiaries including the institution; requiring the institution
to divest certain subsidiaries; prohibiting the payment of principal or interest
on subordinated debt; and ultimately, appointing a receiver or conservator for
the institution.

In general, a depository institution may be reclassified to a lower
category than is indicated by its capital position if the appropriate federal
depository institution regulatory agency determines the institution to be
otherwise in an unsafe or unsound condition or to be engaged in an unsafe or
unsound practice. This could include a failure by the institution, following
receipt of a less-than-satisfactory rating on its most recent examination
report, to correct the deficiency.

DIVIDENDS. As banking corporations organized under Michigan law, the Banks
will be restricted as to the maximum amount of dividends they may pay on their
Common Stock. The Banks may not pay dividends except out of net profits after
deducting losses and bad debts. The banks may not declare or pay a dividend
unless they have a surplus amounting to at least 20% of its capital after the
payment of the dividend. If the Banks have a surplus less than the amount of
their capital they may not declare or pay any dividend until an amount equal to
at least 10% of net profits for the preceding half year (in the case of
quarterly or semi-annual dividends) or full year (in the case of annual
dividends) has been transferred to surplus. The Banks may, with the approval of
the Commissioner, by vote of shareholders owning two-thirds of the stock
eligible to vote, increase its capital stock by a declaration of a stock
dividend, provided that after the increase its surplus equals at least 20% of
its capital stock, as increased. The Banks may not declare or pay any dividend
until the cumulative dividends on preferred stock (should any such stock be
issued and outstanding) have been paid in full. The Banks have no present
intentions to issue preferred stock.

The Federal Deposit Insurance Act, as amended ("FDIA") generally prohibits
a depository institution from making any capital distribution (including payment
of a dividend) or paying any management fee to its holding company if the
depository institution would thereafter be undercapitalized. The FDIC may
prevent an insured bank from paying dividends if the bank is in default of
payment of an assessment due to the FDIC. In addition, payment of dividends by
the Banks may be prevented by the applicable federal regulatory authority if
such payment is determined, by reason of the financial condition of a Bank to be
an unsafe and unsound banking practice. The Federal Reserve Board has issued a
policy statement providing that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.

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CROSS-GUARANTEE PROVISIONS. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") contains a "cross-guarantee" provision which
generally makes commonly controlled insured depository institutions liable to
the FDIC for any losses incurred in connection with the failure of a commonly
controlled depository institution.

INSIDER TRANSACTIONS. The Banks are subject to certain restrictions imposed
by the Federal Reserve Act on any extensions of credit to the Company or its
subsidiaries, on investments in the stock or other securities of the Company or
its subsidiaries and the acceptance of the stock or other securities of the
Company or its subsidiaries as collateral for loans to any person. Certain
limitations and reporting requirements are also placed on extensions of credit
by the Banks to its directors and officers, to directors and officers of the
Company and its subsidiaries, to principal shareholders of the Company, and to
"related interests" of such directors, officers and principal shareholders. In
addition, such legislation and regulations may affect the terms upon which any
person becoming a director or officer of the Company or one of its subsidiaries
or a principal shareholder of the Company may obtain credit from banks with
which either of the Banks maintain a correspondent relationship.

FDIC regulations, which became effective April 1, 1996, impose limitations
(and in certain cases, prohibitions) on (i) certain "golden parachute" severance
payments by troubled depository institutions and their affiliated holding
companies to institution-affiliated parties (primarily directors, officers,
employees, or principal shareholders of the institution), and (ii) certain
indemnification payments by a depository institution or its affiliated holding
company, regardless of financial condition, to institution-affiliated parties.
The FDIC regulations impose limitations on indemnification payments which could
restrict, in certain circumstances payments by the Company or the Banks to their
respective directors or officers otherwise permitted under the MBCA or the
Michigan Banking Code, respectively. See "Description of Capital
Stock -- Indemnification of Directors and Officers."

SAFETY AND SOUNDNESS STANDARDS. On July 10, 1995, the FDIC, the Office of
Thrift Supervision, the Federal Reserve Board and the Office of the Comptroller
of the Currency published final guidelines implementing the FDICIA requirement
that the federal banking agencies establish operational and managerial standards
to promote the safety and soundness of federally insured depository
institutions. The guidelines, which took effect on August 9, 1995, establish
standards for internal controls, information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth,
and compensation, fees and benefits. In general, the guidelines prescribe the
goals to be achieved in each area and each institution will be responsible for
establishing its own procedures to achieve those goals. If an institution fails
to comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the institution to submit a
plan for achieving and maintaining compliance. The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such severity that it
could threaten the safe and sound operation of the institution. Failure to
submit an acceptable compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate regulator, would constitute grounds
for further enforcement action. Effective October 1, 1996, the agencies expanded
the guidelines to establish asset quality and earnings standards. As was the
case prior to August 9, 1995, each depository institution is responsible for
establishing its own procedures to meet such goals.

STATE BANK ACTIVITIES. Under FDICIA, as implemented by final regulations
adopted by the FDIC, FDIC-insured state banks are prohibited, subject to certain
exceptions, from making or retaining equity investments of a type, or in an
amount, that are not permissible for a national bank. FDICIA, as implemented by
FDIC regulations, also prohibits FDIC-insured state banks and their
subsidiaries, subject to certain exceptions, from engaging as principal in any
activity that is not permitted for a national bank or its subsidiary,
respectively, unless the bank meets, and continues to meet, its minimum
regulatory capital requirements and the FDIC determines the activity would not
pose a significant risk to the deposit insurance fund of which the bank is a
member. Impermissible investments and activities must be divested or
discontinued within certain time frames set by the FDIC in accordance with
FDICIA. These restrictions are not currently expected to have a material impact
on the operations of the Bank.

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CONSUMER BANKING. The business of the Banks will include making a variety
of types of loans to individuals. In making these loans, the Banks will be
subject to state usury and regulatory laws and to various federal statutes, such
as the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending
Act, Real Estate Settlement Procedures Act, and Home Mortgage Disclosure Act,
and the regulations promulgated thereunder, which prohibit discrimination,
specify disclosures to be made to borrowers regarding credit and settlement
costs, and regulate the mortgage loan servicing activities of the Banks,
including the maintenance and operation of escrow accounts and the transfer of
mortgage loan servicing. The Riegle Act imposed new escrow requirements on
depository and non-depository mortgage lenders and servicers under the National
Flood Insurance Program. In receiving deposits, the Bank will be subject to
extensive regulation under state and federal law and regulations, including the
Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy
Act, the Electronic Funds Transfer Act, and the FDIA. Violation of these laws
could result in the imposition of significant damages and fines upon the Banks,
and their directors and officers.

INTERSTATE BANKING AND BRANCHING. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Riegle-Neil Act"), substantially changed
the geographic constraints applicable to the banking industry. The Riegle-Neal
Act allows bank holding companies to acquire banks located in any state in the
United States without regard to geographic restrictions or reciprocity
requirements imposed by state law, but subject to certain conditions, including
limitations on the aggregate amount of deposits that may be held by the
acquiring holding company and all of its insured depository institution
affiliates. The Riegle-Neal Act allows banks to establish interstate branch
networks through acquisitions of other banks, subject to certain conditions,
including certain limitations on the aggregate amount of deposits that may be
held by the surviving bank and all of its insured depository institution
affiliates. The establishment of de novo interstate branches or the acquisition
of individual branches of a bank in another state (rather than the acquisition
of an out-of-state bank in its entirety) is allowed by the Riegle-Neal Act only
if specifically authorized by state law. The legislation allowed individual
states to "opt-out" of certain provisions of the Riegle-Neal Act by enacting
appropriate legislation prior to June 1, 1997.

In November, 1995, Michigan exercised its right to opt-in early to the
Riegle-Neal Act allowed and amended the Michigan Banking Code to permit, in
appropriate circumstances, (a) with the approval of the Commissioner, (i) the
acquisition of all or substantially all of the assets of a Michigan-chartered
bank by an FDIC-insured bank, savings bank, or savings and loan association
located in another state, (ii) the acquisition by a Michigan-chartered bank of
all or substantially all of the assets of an FDIC-insured bank, savings bank or
savings and loan association located in another state, (iii) the consolidation
of one or more Michigan-chartered banks and FDIC-insured banks, savings banks or
savings and loan associations located in other states having laws permitting
such consolidation, with the resulting organization chartered by Michigan, (iv)
the establishment by a foreign bank, which has not previously designated any
other state as its home state under the International Banking Act of 1978, of
branches located in Michigan, and (v) the organization of a branch in Michigan
by FDIC-insured banks located in other states, the District of Columbia or U.S.
territories or protectorates having laws permitting a Michigan-chartered bank to
establish a branch in such jurisdiction, and (b) upon written notice to the
Commissioner, (i) the acquisition by a Michigan-chartered bank of one or more
branches (not comprising all or substantially all of the assets) of an
FDIC-insured bank, savings bank or savings and loan association located in
another state, the District of Columbia, or a U.S. territory or protectorate,
(ii) the establishment by Michigan-chartered banks of branches located in other
states, the District of Columbia, or U.S. territories or protectorates, and
(iii) the consolidation of one or more Michigan chartered banks and FDIC-insured
banks, savings banks or savings and loan associations located in other states,
with the resulting organization chartered by one of such other states, and (c)
the sale by a Michigan chartered bank of one or more of its branches (not
comprising or all substantially all of its assets) to an, FDIC-insured bank,
savings bank or savings and loan association located in a state in which a
Michigan-chartered bank could purchase one or more branches of the purchasing
entity. The amending legislation also expanded the regulatory authority of the
Commissioner and made certain other changes.

COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act of 1977 ("CRA")
and the regulations issued thereunder are intended to encourage banks to help
meet the credit needs of their service area,

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including low and moderate income neighborhoods, consistent with the safe and
sound operations of the banks. These regulations also provide for regulatory
assessment of a bank's record in meeting the needs of its service area when
considering applications to acquire the assets and assume the liabilities of
another bank. FIRREA requires federal banking agencies to make public a rating
of a bank's performance under the CRA. In the case of a bank holding company,
the CRA performance record of the banks involved in the transaction are reviewed
in connection with the filing of an application to acquire ownership or control
of shares or assets of a bank or to merger with any other bank holding company.
An unsatisfactory record can substantially delay or block the transaction.

EFFECT ON ECONOMIC ENVIRONMENT. The policies of regulatory authorities,
including the monetary policy of the Federal Reserve Board, have a significant
effect on the operating results of bank holding companies and their
subsidiaries. Among the means available to the Federal Reserve Board to affect
the money supply are open market operations in U.S. Government securities,
changes in the discount rate on member bank borrowings, and changes in reserve
requirements against member bank deposits. These means are used in varying
combinations to influence overall growth and distribution of bank loans,
investments and deposits, and their use may affect interest rates charged on
loans or paid for deposits.

Federal Reserve Board monetary policies have materially affected the
operating results of commercial banks in the past and are expected to continue
to do so in the future. The nature of future monetary policies and the effect of
such policies on the business and earnings of the Company and its subsidiaries
cannot be predicted.

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DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 9,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. As of the date of this
Prospectus, there is one share of Common Stock issued and outstanding and held
by David A. McKinnon. No shares of Preferred Stock have been issued by the
Company.

Michigan law allows the Company's Board of Directors to issue additional
shares of stock up to the total amount of Common Stock and Preferred Stock
authorized without obtaining the prior approval of shareholders. Holders of
Common Stock do not have preemptive rights. Issuances of Preferred Stock, if
any, will not be offered to members of the Board of Directors, except on the
same terms as are offered to the public, unless approved by a majority of the
Company's independent directors who do not have an interest in the transaction
and who have had access, at the Company's expense, to the Company's legal
counsel or independent legal counsel.

PREFERRED STOCK

The Board of Directors of the Company is authorized to issue Preferred
Stock, in one or more series, from time to time, with such voting powers, full
or limited but not to exceed one vote per share, or without voting powers, and
with such designations, preferences rights, qualifications, limitations, and
restrictions as may be provided in the resolution or resolutions adopted by the
Board of Directors. The authority of the Board of Directors includes, but is not
limited to, the determination or fixing of the following with respect to shares
of such class or any series thereof (i) the number of shares and designation of
such series; (ii) the dividend rate and whether dividends are to be cumulative;
(iii) whether shares are to be redeemable, and, if so, whether redeemable for
cash, property or rights; (iv) the rights to which the holders of shares shall
be entitled and the preferences, if any, over any other series; (v) whether the
shares shall be subject to the operation of a purchase, retirement or sinking
fund, and, if so, upon what conditions; (vi) whether the shares shall be
convertible into or exchangeable for shares of any other class or of any other
series of any class of capital stock and the terms and conditions of such
conversion or exchange; (vii) the voting powers, full or limited, if any, of the
shares; (viii) whether the issuance of any additional shares, or any shares of
any other series, shall be subject to restrictions as to issuance, or as to the
powers, preferences or rights of any such other series; and (ix) any other
preferences, privileges and powers and relative, participating, optional or
other special rights and qualifications, limitations or restrictions.

COMMON STOCK

DIVIDEND RIGHTS. Subject to any prior rights of any holders of Preferred
Stock then outstanding, the holders of the Common Stock will be entitled to
dividends when, as and if declared by the Company's Board of Directors out of
funds legally available therefor. Under Michigan law, dividends may be legally
declared or paid only if after the distribution the corporation can pay its
debts as they come due in the usual course of business and the corporation's
total assets equal or exceed the sum of its liabilities plus (unless otherwise
provided for in the Articles of Incorporation) the amount that would be needed
to satisfy the preferential rights upon dissolution of any holders of preferred
stock then outstanding whose preferential rights are superior to those receiving
the distribution.

Funds for the payment of dividends by the Company are expected to be
obtained primarily from dividend payments of the Banks. There can be no
assurance that the Company will have funds available for dividends, or that if
funds are available, that dividends will be declared by the Company's Board of
Directors. As the Banks are not expected to be profitable during their start up
period, the Company does not expect to declare a dividend at any time in the
foreseeable future.

VOTING RIGHTS. Subject to the rights, if any, of holders of shares of
Preferred Stock then outstanding, all voting rights are vested in the holders of
shares of Common Stock. Each share of Common Stock entitles the holder thereof
to one vote on all matters, including the election of directors. Shareholders of
the Company do not have cumulative voting rights.

37
<PAGE> 39

LIQUIDATION RIGHTS. Subject to any rights of any Preferred Stock then
outstanding, holders of Common Stock are entitled to share on a pro rata basis
in the net assets of the company which remain after satisfaction of all
liabilities.

TRANSFER AGENT. Fifth Third National Bank will serve as the transfer agent
of the Company's Common Stock.

DESCRIPTION OF MATERIAL CHARTER PROVISIONS

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

CLASSIFICATION OF THE BOARD OF DIRECTORS. The Company's Articles of
Incorporation provide for the Board of Directors to be divided into three
classes of directors, each class to be as nearly equal in number as possible.
Pursuant to the Articles of Incorporation, the Company's directors have been
divided into three classes. Three (3) Class I directors have been elected for a
term expiring at the 1999 annual meeting of shareholders, four (4) Class II
directors have been elected for a term expiring at the 2000 annual meeting of
shareholders, and three (3) Class III directors have been elected for a term
expiring at the 2001 annual meeting of shareholders (in each case until their
respective successors are elected and qualified). After expiration of their
initial terms, Directors of each class shall be elected for a new three year
term. For identification of the persons serving as Class I, Class II and Class
III directors, see "Management."

REMOVAL OF DIRECTORS. The MBCA provides that, unless the articles of
incorporation otherwise provide, shareholders may remove a director or the
entire Board of Directors with or without cause. The Company's Articles of
Incorporation provide that a director may be removed at any time with or without
cause but that removal without cause requires the affirmative vote, at a meeting
of the shareholders called for that purpose, by the holders of at least
two-thirds of the voting power of all the shares of the Company entitled to vote
generally in the election of directors. Removal with cause requires the
affirmative vote, and a meeting of shareholders called for that purpose, by the
holders of a majority of the voting power of all the shares of the Company
entitled to vote.

FILLING VACANCIES ON THE BOARD OF DIRECTORS. The Company's Articles of
Incorporation provide that any vacancies on the Board of Directors for any
reason, may be filled by the Board of Directors only upon the affirmative vote
of two-thirds of the directors then remaining in office. Any director so chosen
to fill a vacancy on the Board of Directors will serve for the remainder of the
full term of the class in which the vacancy occurred and until his successor is
duly elected and qualified (or until his earlier resignation or removal).

RECOMMENDATION OF OFFERS. The Company's Articles of Incorporation also
provide that the Board of Directors shall not approve, adopt or recommend any
offer of any person or entity, other than the Company, to make a tender or
exchange offer for any capital stock of the Company, to merge or consolidate the
Company with any other entity or to purchase or otherwise acquire all or
substantially all of the assets or business of the Company unless and until the
Board of Directors has first evaluated the offer and determined that it would
comply with all applicable laws and is in the best interests of the Company and
its shareholders. In evaluating compliance with laws, the Board is entitled to
rely upon an opinion of independent counsel and may test compliance in any
appropriate court or before any appropriate administrative agency. In analyzing
whether an offer is in the best interests of the Company and its shareholders,
the Board of Directors is required to consider all factors which it deems
relevant, including without limitation (i) the adequacy and fairness of the
consideration to be received under the offer by the Company and/or its
shareholders, considering historical trading prices of the Company's stock, the
price that might be achieved in a negotiated sale of stock, the price that might
be achieved in a negotiated sale of the Company as a whole, premiums over
trading prices which have in the past been proposed or offered for the
securities of other companies in similar offers and the future prospects for the
Company and its business; (ii) the potential social and economic impact of the
offer and its consummation on the Company, its employees, customers and vendors;
and (iii) the potential social and economic impact of the offer and its
consummation on the communities in which the Company and any subsidiaries
operate or are located.

38
<PAGE> 40

CERTAIN SHAREHOLDER ACTION. The Company's Bylaws provide that special
meetings of shareholders must be called only by the Board of Directors, the
Chairman of the Board of Directors or the President. Shareholders of the Company
are not permitted to call a special meeting of shareholders or require that the
Board call such a special meeting. The MBCA permits shareholders holding 10% or
more of all of the shares entitled to vote at a meeting to request the Circuit
Court of the County in which the Company's principal place of business or
registered office is located to order a special meeting of shareholders for good
cause shown.

INCREASED SHAREHOLDERS' VOTE FOR ALTERATION, AMENDMENT OR REPEAL OF
PROVISIONS. The Company's Articles of Incorporation and Bylaws require the
affirmative vote of the holders of at least two-thirds of the voting stock of
the Company entitled to vote generally in the election of directors for the
alteration, amendment or repeal of, or the adoption of any provision
inconsistent with the foregoing provisions.

MICHIGAN FAIR PRICE ACT. Certain provisions of the MBCA establish a
statutory scheme similar to the supermajority and fair price provisions found in
many corporate charters (the "Fair Price Act"). The Fair Price Act provides that
a supermajority vote of 90% of the shareholders and no less than two-thirds of
the votes of noninterested shareholders must approve a "business combination."
The Fair Price Act defines a "business combination" to encompass any merger,
consolidation, share exchange, sale of assets, stock issue, liquidation, or
reclassification of securities involving an "interested-shareholder, or certain
"affiliates". An interested shareholder is generally any person who owns 10%
percent or more of the outstanding voting shares of the corporation. An
"affiliate" is a person who directly or indirectly controls, is controlled by,
or is under common control with a specified person.

The supermajority vote required by the Fair Price Act does not apply to
business combinations that satisfy certain conditions. These conditions include,
among others: (i) the purchase price to be paid for the shares of the
corporation in the business combination must be at least equal to the highest of
either (a) the market value of the shares or (b) the highest per share price
paid by the interested shareholder within the preceding two-year period or in
the transaction in which the shareholder became an interested shareholder,
whichever is higher, (ii) once becoming an interested shareholder, the person
may not become the beneficial owner of any additional shares of the corporation
except as part of the transaction which resulted in the interested shareholder
becoming an interested shareholder or by virtue of proportionate stock splits or
stock dividends and (iii) there has been five years between the date the
interested shareholder became an interested shareholder and the date the
business combination is consummated.

The requirements of the Fair Price Act do not apply to business
combinations with an interested shareholder that the Board of Directors has
approved or exempted from the requirements of the Fair Price Act by resolution
prior to the time that the interested shareholder first became an interested
shareholder.

CONTROL SHARE ACT. The MBCA regulates the acquisition of "control shares"
of certain Michigan corporations (the "Control Share Act"). Following completion
of the offering, the Control Share Act is expected to apply to the Company and
its shareholders.

The Control Share Act establishes procedures governing "control share
acquisitions." A control share acquisition is defined as an acquisition of
shares by an acquirer which, when combined with other shares held by that person
or entity, would give the acquirer voting power, alone or as part of a group, at
or above any of the following thresholds: 20%, 33% or 50%. Under the Control
Share Act an acquirer may not vote "control shares" unless the corporation's
disinterested shareholders (defined to exclude the acquiring person, officers of
the target corporation, and directors of the target corporation who are also
employees of the corporation) vote to confer voting rights on the control
shares. The Control Share Act does not affect the voting rights of shares owned
by an acquiring person prior to the control share acquisition.

The Control Share Act entitles corporations to redeem control shares from
the acquiring person under certain circumstances. In other cases, the Control
Share Act confers dissenters' right upon all of the corporation's shareholders
except the acquiring person.

39
<PAGE> 41

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation provide indemnification rights to
directors, officers and certain other persons for liabilities and expenses
incurred in connection with their service on behalf of the Company.

The Articles require the Company to indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, by reason of the fact that the person is
or was a director or officer of the Company, or is or was serving at the request
of the Company as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not. Indemnification is provided for all
types of proceedings, whether civil, criminal, administrative or investigative
and whether formal or informal, including actions by or in the right of the
corporation (such as derivative actions). Indemnification is provided for
expenses (including actual and reasonable attorneys' fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by the indemnified person in connection with such action, suit or proceeding. To
be entitled to indemnification, a person must have acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company or its shareholders, and with respect to any criminal
action or proceeding, must have had no reasonable cause to believe his or her
conduct was unlawful. In addition, no indemnification will be provided in
respect of any claim, issue or matter in which the person has been found liable
to the Company except to the extent that a court of competent jurisdiction
determines upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

The Articles provide that a person who has been successful, on the merits
or otherwise, in the defense of any action, suit or proceeding described above,
or in defense of any claim, issue or matter in the action, suit or proceeding,
will be indemnified against actual and reasonable expenses (including attorneys'
fees) incurred by in connection with the matter as well.

The Articles also provide for the payment by the Company of the expenses of
a person entitled to indemnification, in advance of the final disposition of the
proceeding, if the person furnishes the Company a written affirmation of his or
her good faith belief that he or she has met the applicable standard of conduct
described above and furnishes the corporation a written undertaking to repay the
advance if it is ultimately determined that he or she did not meet the standard
of conduct. The undertaking must be an unlimited general obligation of the
person receiving advances but need not be secured.

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

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

Limitation of Director Liability

The MBCA permits corporations to limit the personal liability of their
directors in certain circumstances. The Company's Articles of Incorporation
provide that a director of the Company shall not be personally liable to the
Company or its shareholders for money damages for any action taken or any
failure to take any action as a director, except liability for (i) the amount of
a financial benefit received by a director to which he or she is not entitled,
(ii) intentional infliction of harm on the corporation or the shareholders,
(iii) a violation of Section 551 of the MBCA relating to impermissible
distributions to shareholders or loans to directors, officers or employees, or
(iv) an intentional criminal act.

40
<PAGE> 42

SHARES ELIGIBLE FOR FUTURE SALE

As of August 15, 1998, the Company had one share of Common Stock
outstanding which is held by a member of the Board of Directors. Upon completion
of the offering, the Company expects to have 1,000,000 shares of its Common
Stock outstanding. The 1,000,000 shares of the Company's Common Stock sold in
the offering (plus any additional shares sold upon the Underwriters' exercise of
its over-allotment option) have been registered with the SEC and may generally
be resold without registration under the Securities Act unless they were
acquired by directors, executive officers, or other affiliates of the Company as
defined in Rule 144 of the Securities Act (collectively, "Affiliates").
Affiliates of the Company may generally only sell shares of the Common Stock
pursuant to Rule 144.

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

Prior to the offering, there has been no public trading market for the
Common Stock, and no predictions can be made as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the
prevailing market price of the Common Stock after completion of the offering.
The Officers and Directors of the Company and the Banks has agreed not to sell
or otherwise dispose of any of their shares of Common Stock for a period of 180
days after the effective date of this offering without the prior written consent
of the Managing Underwriter. Nevertheless, sales of substantial amounts of
Common Stock in the public market could have an adverse effect on prevailing
market prices.

41
<PAGE> 43

UNDERWRITING

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

If the Underwriting Agreement is terminated, except in certain limited
cases, the Underwriting Agreement provides that the Company will reimburse the
Underwriters for all accountable out-of-pocket expenses incurred in connection
with the proposed purchase and sale of the shares of Common Stock. The Company
has advanced $25,000 to the Underwriters in connection with such expense
reimbursement. The Underwriting Agreement provides that in the event the
accountable out-of-pocket expenses to be reimbursed upon such termination are
less than $25,000, the Underwriters shall refund the excess to the Company.

The Company and the Underwriters have agreed that the Underwriters will
purchase the 1,000,000 shares of Common Stock offered hereunder at a price to
the public $ per share less an underwriting discount of $ per share.
However, the Underwriters have agreed to limit the underwriting discounts to
2.5% of the public offering price ($ per share) with respect to shares that
the Company directs to be sold to designated officers, directors and organizers
of the Company and the Banks and their designated friends and family members.
The Underwriters propose to offer the shares of Common Stock to selected dealers
who are members of the NASD at a price of $ per share less a concession not
in excess of $ per share. The Underwriters may allow, and such dealers may
re-allow, concessions not in excess of $ per share to certain other brokers
and dealers. After the shares of Common Stock are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Underwriters.

The Underwriters have informed the Company that they do not intend to make
sales to any accounts over which they exercise discretionary authority.

The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to 150,000 additional shares of Common Stock on the same terms and
conditions set forth above solely to cover over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discounts, and Proceeds to Company will be approximately
$ , $ and $ , respectively.

The Underwriting Agreement contains indemnity provisions between the
Underwriters and the Company and the controlling persons thereof against certain
liabilities, including liabilities arising under the Securities Act. The Company
is generally obligated to indemnify the Underwriters and its controlling persons
in connection with losses or claims arising out of any untrue statement of a
material fact contained in this Prospectus or in related documents filed with
the Securities and Exchange Commission ("SEC") or with any state securities
administrator, or any omission of certain material facts from such documents.

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

42
<PAGE> 44

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Butzel Long, Detroit, Michigan. Dykema Gossett PLLC, Detroit,
Michigan, is acting as counsel for the Underwriters in connection with certain
legal matters relating to the shares of Common Stock offered hereby.

EXPERTS

The financial statements of the Company included in this Prospectus have
been audited by Plante & Moran LLP, independent public accountants, as indicated
in their report with respect thereto.

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate", believe", "estimate", "expect" and similar expressions as they
relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed under the caption "Risk Factors."

ADDITIONAL INFORMATION

The Company has filed a Form SB-2 Registration Statement with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the Rules and Regulations of
the SEC. For further information pertaining to the shares of Common Stock
offered hereby and to the Company, reference is made to the Registration
Statement, including the Exhibits filed as a part thereof, copies of which can
be inspected at and copied at the Public Reference Section of SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices located
at Northwestern Atrium - Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and World Trade Center, Suite 1300, New York New York 10048.
Copies of such materials can also be obtained on the SEC's Internet Website at
http://www.sec.gov and at prescribed rates by writing to the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company is not currently a reporting company pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), but will be required to
file reports pursuant to the Exchange Act following the completion of the
offering. The Company, which will use a December 31 fiscal year end, intends to
furnish its shareholders with annual reports containing audited financial
information and, for the first three quarters of each fiscal year, quarterly
reports containing unaudited financial information.

Requests for such documents should be directed to Kimberly A. Schauer,
Michigan Community Bancorp Limited, 12900 Hall Road, Sterling Heights, Michigan
48313.

43
<PAGE> 45

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditor's Report................................ F-2
Financial Statements........................................ F-3
Balance Sheet............................................. F-3
Statement of Shareholder's Deficit........................ F-4
Statement of Operations................................... F-5
Statement of Cash Flows................................... F-6
Notes to Financial Statements............................. F-7
</TABLE>

F-1
<PAGE> 46

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Michigan Community Bancorp Limited

We have audited the accompanying balance sheet of Michigan Community
Bancorp Limited (a Company in the development stage) as of July 31, 1998, and
the related statements of shareholder's equity, operations and cash flows for
the period from January 28, 1998 (inception) through July 31, 1998. These
financial statements are the responsibility of the Company'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 our 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 Michigan Community Bancorp
Limited (a Company in the development stage) as of July 31, 1998, and the
results of its operations and cash flows for the period from January 28, 1998
(inception) through July 31, 1998, in conformity with generally accepted
accounting principles.

PLANTE & MORAN, LLP

August 20, 1998
Bloomfield Hills, Michigan

F-2
<PAGE> 47

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)

BALANCE SHEET

JULY 31, 1998

<TABLE>
<S> <C>
ASSETS
Cash........................................................ $ 123,262
Deferred offering cost...................................... 3,000
Prepaid building lease (Note 4)............................. 246,795
Office equipment and leasehold improvement.................. 19,166
Other assets................................................ 17,000
---------
Total assets........................................... $ 409,223
=========

LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Accounts payable............................................ $ 5,190
Related party notes payable (Note 2)........................ 387,500
Line of credit (Note 3)..................................... 265,000

SHAREHOLDER'S EQUITY (DEFICIT)
Preferred stock, no par value; 1,000,000 shares
authorized, none issued................................ --
Common stock, $5 stated value, 9,000,000 shares
authorized, one share issued and outstanding........... 5
Additional paid in capital................................ 10
Deficit accumulated during development stage.............. (248,482)
---------
Total shareholder's deficit....................... (248,467)
---------
Total liabilities and shareholder's equity (deficit)........ $ 409,223
=========
</TABLE>

See Notes to Financial Statements.
F-3
<PAGE> 48

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)

STATEMENT OF SHAREHOLDER'S DEFICIT
PERIOD FROM JANUARY 28, 1998 (INCEPTION) TO JULY 31, 1998

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
PREFERRED COMMON PAID-IN DEVELOPMENT
STOCK STOCK CAPITAL STAGE TOTAL
--------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance at January 28, 1998............. $ -- $ -- $-- $ -- $ --
Issuance of common stock................ -- 5 10 -- 15
Net Loss................................ -- -- -- (248,482) (248,482)
-------- -------- --- --------- ---------
Balance at July 31, 1998................ $ -- $ 5 $10 $(248,482) $(248,467)
======== ======== === ========= =========
</TABLE>

See Notes to Financial Statements.
F-4
<PAGE> 49

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)

STATEMENT OF OPERATIONS
PERIOD FROM JANUARY 28, 1998 (INCEPTION) TO JULY 31, 1998

<TABLE>
<S> <C>
INTEREST INCOME............................................. $ 892
ORGANIZATIONAL EXPENSE...................................... 121,055
PREOPENING EXPENSES
Salaries.................................................. 64,654
Employee benefits......................................... 12,051
Contract labor............................................ 17,813
Rent...................................................... 10,438
Other..................................................... 23,363
---------
Total preopening expenses.............................. 128,319
---------
LOSS BEFORE INCOME TAXES.................................... (248,482)
PROVISIONS FOR INCOME TAXES (Note 6)........................ --
---------
NET LOSS.................................................... $(248,482)
=========
</TABLE>

See Notes to Financial Statements.
F-5
<PAGE> 50

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)

STATEMENT OF CASH FLOWS
PERIOD FROM JANUARY 28, 1998 (INCEPTION) TO JULY 31, 1998

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(248,482)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Increase in accounts payable........................... 5,190
Prepayment of building lease.............................. (246,795)
Increase in other assets............................... (17,000)
---------
Net cash used in operating activities................ (507,087)
CASH FLOWS FROM INVESTING ACTIVITIES --
Purchase of office equipment and leasehold (19,166)
improvements..........................................
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party notes payable................. 387,500
Net increase in line of credit............................ 265,000
Deferred offering costs................................... (3,000)
Sale of common stock...................................... 15
---------
Net cash provided by financing activities.............. 649,515
---------
Net increase in cash........................................ 123,262
CASH -- beginning balance................................... --
---------
CASH -- ending balance...................................... $ 123,262
=========
</TABLE>

See Notes to Financial Statements.
F-6
<PAGE> 51

MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization -- Michigan Community Bancorp (the "Company") was incorporated
on January 28, 1998 as a bank holding company to establish and operate two new
banks, Lakeside Community Bank (LCB) in Sterling Heights, Michigan and North
Oakland Community Bank (NOCB) in Rochester Hills, Michigan. The Company intends
to raise a minimum of $13,820,000 in equity capital through the sale of
1,000,000 shares of the Company's common stock at $15 per share, net of
underwriting discounts and offering costs. Proceeds from the offering will be
used to capitalize the Banks, lease facilities and provide working capital.

Basis of presentation -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Deferred Offering Costs -- Deferred offering costs include legal,
consulting and accounting costs incurred in connection with the registration of
the Company's common stock. Those costs will be charged against the stock
proceeds or, if the offering is not successful, charged to expense at that time.

Organization and preopening costs -- Organization and preopening costs
represent incorporation costs, salaries, legal and accounting costs and other
costs relating to the organization. Management anticipates that organization and
preopening costs could reach $390,000 through commencement of operations.

NOTE 2 -- NOTES PAYABLE RELATED PARTIES

Non interest bearing demand notes payable in the amount of $387,000 are
outstanding to the Company's organizers. Management intends to repay the loans
from the proceeds of the common stock offering.

NOTE 3 -- LINE OF CREDIT

The Company has a line of credit with a bank that expires October 31, 1998
under which the Company may borrow up to $500,000. Interest accrues on the
outstanding balance at prime rate (8.5% at July 31, 1998) plus 1% and the line
of credit is guaranteed by the Company's Chairman of the Board and one other
Board member. In addition to the guarantees, the bank has obtained an assignment
of the Company's lease of the NOCB building.

NOTE 4 -- LEASE COMMITMENTS

The company has entered into an assignment of a lease for a building to be
utilized for NOCB's branch operations. The assignment required the prepayment of
the lease totaling $250,000 and an ongoing monthly rental payment of $600. The
prepayment of rent will be expensed over the lease assignment term, which
expires on December 31, 2004.

The future minimum lease payments under the assignment are as follows:

<TABLE>
<S> <C>
1999........................................................ $ 7,200
2000........................................................ 7,200
2001........................................................ 7,200
2002........................................................ 7,200
2003........................................................ 7,200
Thereafter.................................................. 10,800
-------
$46,800
=======
</TABLE>

F-7
<PAGE> 52
MICHIGAN COMMUNITY BANCORP LIMITED
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1998

The Company is also negotiating a lease for its LCB location in Sterling
Heights. The Company is seeking a ten year sublease with monthly lease payments
approximating $8,400 to $8,900.

NOTE 5 -- STOCK OPTION PLANS

The Company has adopted a stock option plans for its employees and
nonemployee directors. The total number of shares that may be issued under the
two plans will not exceed 102,000 shares. The shares will be authorized but
unissued shares. At July 31, 1998, options have been granted to participants to
purchase 44,664 shares under the plans. The options granted will vest 70% upon
the effective date of Company's initial public stock offering.

NOTE 6 -- INCOME TAXES

At July 31, 1998, the Company had approximately $248,000 of net operating
loss carryforwards. The tax benefit of these carryforwards ($84,000) has been
offset by a valuation allowance.

NOTE 7 -- PREFERRED STOCK

The Company has authorized but not issued 1,000,000 shares of preferred
stock. Such stock will have preferences with respect to dividends and
liquidation and may have voting or other rights, or determined by the Board of
Directors.

NOTE 8 -- RELATED PARTY TRANSACTIONS

The Company utilizes the legal services of one of its Board members. Total
legal expenses incurred from inception through July 31, 1998 totalled $81,000.

F-8
<PAGE> 53

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 12
Dividend Policy....................... 13
Capitalization........................ 14
Business.............................. 15
Management............................ 20
Related Party Transactions............ 26
Principal Shareholders................ 28
Supervision and Regulation............ 29
Description of Capital Stock.......... 37
Shares Eligible for Future Sale....... 41
Underwriting.......................... 42
Legal Matters......................... 43
Experts............................... 43
Forward-Looking Statements............ 43
Additional Information................ 43
Index to Financial Statements......... F-1
</TABLE>

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

UNTIL , 1999 (90 DAYS AFTER THE EFFECTIVE DATE OF THE
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

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

1,000,000 SHARES

LOGO

COMMON STOCK
-------------------------
PROSPECTUS
-------------------------

[FIFTH THIRD/THE OHIO CO LOGO]
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE> 54

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation require the Company to indemnify
any director, officer, former director or officer of the Company or any person
who may have served at the request of the Company as a director or officer of
another corporation in which the Company owns shares of capital stock, or of
which it is a creditor, against reasonable expenses (including attorneys' fees)
actually and necessarily incurred by such person in connection with the defense
of any civil, criminal or administrative action, suit or proceeding in which
such person is made a party or with which such person is threatened by reason of
being or having been or because of any act as a director or officer of the
Company within the course of such person's duties or employment, except in
relation to matters as to which such person is adjudged to be liable for
negligence or misconduct in the performance of such person's duties. The Company
may also reimburse any director or officer for the reasonable costs of
settlement of any such action, suit or proceeding, if it is found by a majority
of a committee composed of the directors not involved in the matter in
controversy (whether or not a quorum) that it was in the interests of the
Company that such settlement be made and that the director officer was not
guilty of negligence or misconduct. The right of indemnification will extend to
the estate, personal representative, guardian and conservator of any deceased or
former director or officer or person who would have been entitled to
indemnification. Such rights of indemnification and reimbursement will not be
deemed exclusive of any other rights to which such direct or officer may be
entitled under any statute, agreement, vote of shareholders, or otherwise.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 5,088
NASD filing fee............................................. 2,225
Printing expenses........................................... 30,000
Legal fees and expenses..................................... 130,000
Blue sky fees and expenses.................................. 13,675
Accountants' fees and expenses.............................. 43,000
Miscellaneous............................................... 10,000
--------
Total..................................................... $223,998
========
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act:

On January 28, 1998, the Company issued one share of its Common Stock, no
par value, to David A. McKinnon, pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act.

On May 19, 1998, the Company granted 3,333 options to purchase Common Stock
at an exercise price of $15.00 pursuant to the 1998 Non-Employee Director Stock
Option Plan to each of Paul E. Baltzer, Jr., Phillip T. Hernandez, Joseph S.
Lentine, John W. Melstrom, Robert R. Peleman, David F. Shellenbarger, Russell M.
Shelton and Gerald Tarquinio, pursuant to the exemption from registration
provided by Rule 701 of the Securities Act.

On May 19, 1998, the Company granted 6,667 options to purchase Common Stock
at an exercise price of $15.00 pursuant to the 1998 Employee Stock Option Plan
to David A. McKinnon, pursuant to the exemption from registration provided by
Rule 701 of the Securities Act.

On May 19, 1998, the Company granted 4,000 options to purchase Common Stock
at an exercise price of $15.00 pursuant to the 1998 Employee Stock Option Plan
to Frank D. Blowers and James T. Polson, pursuant to the exemption from
registration provided by Rule 701 of the Securities Act.

II-1
<PAGE> 55

ITEM 27. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- ------- --------
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Restated Articles of Incorporation of the Company.
3.2* Bylaws of the Company.
4.1* See Exhibits 3.1 and 3.2 for provisions of the Restated
Articles of Incorporation and Restated Bylaws of the Company
defining rights of the holders of Common Stock of the
Company.
4.2** Specimen Stock Certificate.
5.1** Opinion of Butzel Long, counsel to the Company, as to the
legality of the shares being registered.
10.1* Sublease between the Company and Rite Aid of Michigan, Inc.
for property located at 43850 Schoenherr, Sterling Heights,
Michigan
10.2** Assignment and Acceptance of Lessee's Interest with Lessor's
Consent between the Company, First of America Bank, National
Association and North Hill Center, for property located at
1467 North Rochester Road, Rochester Hills, Michigan.
10.3* Data Processing Agreement between Lakeside Community Bank
and Rurbanc Data Services, Inc.
10.4* Data Processing Agreement between North Oakland Community
Bank and Rurbanc Data Services, Inc.
10.5* 1998 Non-Employee Director Stock Option Plan
10.6* 1998 Employee Incentive Stock Option Plan
10.7* Form of Stock Option Agreement
10.8* Credit Agreement between the Company and NBD Bank, N.A.
21.1* Subsidiaries of Registrant.
23.1** Consent of Butzel Long (included as Part of Exhibit 5.1).
23.2** Consent of Plante & Moran LLP
24.1* Power of Attorney (included on signature page).
27.1* Financial Data Schedule
</TABLE>

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

* Filed previously.

** Filed herewith.

II-2
<PAGE> 56

ITEM 28. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.

(2) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of Prospectus filed
as part of this Registration Statement in reliance upon rule 430A and
contained in a form of Prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective; and

(3) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described above or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-3
<PAGE> 57

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets the
requirements of filing a Form SB-2 and has authorized this Registration
Statement to be signed on behalf of the undersigned in the City of Sterling
Heights, Michigan on October 8, 1998.

MICHIGAN COMMUNITY BANCORP LIMITED

By: /s/ DAVID A. MCKINNON
------------------------------------
David A. McKinnon
Chairman and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signature" constitutes and appoints David A. McKinnon
as his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any or all amendments to this registration
Statement, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
foregoing, as fully for all intents and purpose as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DAVID A. MCKINNON Chairman, President and Chief October 8, 1998
- --------------------------------------------- Executive Officer
David A. McKinnon
/s/ WILLIAM L. CARLEY Chief Financial and Principal October 8, 1998
- --------------------------------------------- Accounting Officer
William L. Carley
/s/ PAUL E. BALTZER JR. Director October 8, 1998
- ---------------------------------------------
Paul E. Baltzer Jr.
/s/ PHILLIP T. HERNANDEZ Director October 8, 1998
- ---------------------------------------------
Phillip T. Hernandez
/s/ JOSEPH S. LENTINE Director October 8, 1998
- ---------------------------------------------
Joseph S. Lentine
/s/ JOHN W. MELSTROM Director October 8, 1998
- ---------------------------------------------
John W. Melstrom
</TABLE>

II-4
<PAGE> 58

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT R. PELEMAN Director October 8, 1998
- ---------------------------------------------
Robert R. Peleman
/s/ RUSSELL M. SHELTON Director October 8, 1998
- ---------------------------------------------
Russell M. Shelton
/s/ DAVID F. SHELLENBARGER Director October 8, 1998
- ---------------------------------------------
David F. Shellenbarger
/s/ GERALD A. TARQUINIO Director October 8, 1998
- ---------------------------------------------
Gerald A. Tarquinio
</TABLE>

II-5
<PAGE> 59

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S> <C>
1.1* Form of Underwriting Agreement
3.1* Restated Articles of Incorporation of the Company
3.2* Bylaws of the Company
4.1* See Exhibits 3.1 and 3.2 for provisions of the Restated
Articles of Incorporation and Restated Bylaws of the Company
defining rights of the holders of Common Stock of the
Company
4.2** Specimen Stock Certificate
5.1** Opinion of Butzel Long, counsel to the Company, as to the
legality of the shares being registered
10.1* Sublease between the Company and Rite Aid of Michigan, Inc.
for property located at 43850 Schoenherr, Sterling Heights,
Michigan
10.2** Assignment and Acceptance of Lessee's Interest with Lessor's
Consent between the Company, First of America Bank, National
Association and North Hill Center, for property located at
1467 North Rochester Road, Rochester Hills, Michigan.
10.3* Data Processing Agreement between Lakeside Community Bank
and Rurbanc Data Services, Inc.
10.4* Data Processing Agreement between North Oakland Community
Bank and Rurbanc Data Services, Inc.
10.5* 1998 Non-Employee Director Stock Option Plan
10.6* 1998 Employee Incentive Stock Option Plan
10.7* Form of Stock Option Agreement
10.8* Credit Agreement between the Company and NBD Bank, N.A.
21.1* Subsidiaries of Registrant
23.1** Consent of Butzel Long (included as Part of Exhibit 5.1).
23.2** Consent of Plante & Moran LLP
24.1* Power of Attorney (included on signature page)
27.1* Financial Data Schedule
</TABLE>

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

* Filed Previously

** Filed Herewith

<PAGE> 1
EXHIBIT 4.2

INCORPORATED UNDER THE LAWS OF THE STATE OF

Michigan
--------------

NUMBER SHARES
-00- -00-

MICHIGAN COMMUNITY BANCORP LIMITED

Common Stock
AUTHORIZED CAPITAL 9,000,000 SHARES No PAR VALUE
----------- --------------

This Certifies That SPECIMEN is the owner of ----0------ full paid and
non-assessable SHARES OF THE COMMON STOCK OF MICHIGAN COMMUNITY BANCORP LIMITED
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof the said Corporation has caused this Certificate to be
signed by its duly authorized officers and sealed with the Seal of the
Corporation,
this ________ day of _____________ A.D. 19_____

[SEAL]

______________________ _____________________________
SECRETARY PRESIDENT

<PAGE> 1
EXHIBIT 5.1

[BUTZEL LOG LETTERHEAD]

Michigan Community Bancorp Limited
12900 Hall Road
Sterling Heights, Michigan 48313

RE: REGISTRATION STATEMENT ON FORM SB-2

Ladies and Gentlemen:

You have requested our opinion in connection with the above-captioned
Registration Statement on Form SB-2 filed by Michigan Community Bancorp
Limited., a Michigan corporation (the "Company"), with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder (the "Rules"). The
Registration Statement relates to the offering of up to 1,150,000 shares (the
"Shares") of common stock (the "Common Stock").

We have examined such records and documents and have made such
examination of law as we considered necessary to form a basis for the opinions
set forth herein. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with the originals of all documents submitted to us as copies
thereof.

<PAGE> 2
Michigan Community Bancorp Limited
September 15, 1998
Page 2

Based upon such examination, it is our opinion that when there has been
compliance with the Act and applicable state securities laws and when the
Underwriting Agreement, a form of which has been filed as an exhibit to the
Registration Statement, is duly and validly executed and delivered, the Common
Stock, when issued, delivered and paid for in the manner described in such
Underwriting Agreement, will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration and to the reference to our firm under the caption "Legal Matters"
in the Registration Statement. In doing so, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Act or
under the Rules.

Very truly yours,

Butzel Long
---------------
Butzel Long

<PAGE> 1
EXHIBIT 10.2

ASSIGNMENT AND ACCEPTANCE OF LESSEE'S
INTEREST, WITH LESSOR'S CONSENT

THIS IS AN AGREEMENT made June 11, 1998, among FIRST OF AMERICA BANK,
NATIONAL ASSOCIATION, a national banking association (formerly Community
National Bank of Pontiac), ("Assignor"), MICHIGAN COMMUNITY BANCORP, LIMITED, a
Michigan banking corporation ("Assignee") and NORTH HILL CENTER, LLC, a Michigan
limited liability company (formerly North Hill Center Company, a Michigan
partnership), ("Landlord"), with reference to the following facts.

A. Landlord has leased to Assignor the Premises described in the
Amendment to Lease Agreement dated September 26, 1995 and survey dated July 24,
1994 in the attached Appendix A (the "Premises"), pursuant to a ground lease
dated October 31, 1963, as amended by letter agreement dated May 20, 1964, as
amended by letter agreement dated August 25, 1982, as amended by Amendment to
Lease Agreement dated September 26, 1995, which documents are attached hereto in
Appendix A, and collectively constitute and are hereinafter referred to as the
"Lease"; and

B. Assignor now desires to assign and Assignee desires to acquire and
assume Assignor's interest in and to the Lease; and

C. Assignor and Assignee desire to obtain Landlord's consent of such
assignment;

THEREFORE, in consideration of the premises and of the covenants herein
set forth and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:

1. Assignment. Assignor does hereby grant, transfer and assign to
Assignee all of Assignor's right, title and interest in and to the Lease and
Landlord hereby consents to this assignment. Such assignment and consent shall
be effective as of the date that all parties have executed this Agreement
("Effective Date"). Such assignment is made without recourse or warranty by
Assignor except as otherwise specifically stated herein.

2. Assumption and Indemnification. Assignee access this Assignment and
hereby assumes the Lease and shall pay all rents and perform all covenants and
obligations in accordance with its terms from and after the effective Date
hereof as if Assignee had originally executed the Lease as the tenant. Assignee
hereby acknowledges that the Lease has been read in its entirety and that the
terms of the Lease have been accepted on its behalf. Assignee shall indemnify
Assignor and hold Assignor harmless form all claims, damages and liabilities of
every nature whatsoever arising out of or in connection with the Lease,
including costs and attorneys' fees, that may accrue to Assignor as a result of
Assignee's failure to abide b the terms and conditions of the Lease on or after
the Effective Date.
<PAGE> 2
3. Payment. Upon execution of this document, Assignee shall pay
Assignor the sum of Two Hundred fifty Thousand and No/100 ($250,000.00) Dollars.

4. Condition of Premises. Assignee has caused the premises demised in
the lease to be inspected to its satisfaction and agrees to accept the premises
in their present "AS IS," `WHERE IS" and all faults condition. Assignee warrants
that it has relied upon no statement of Assignor or any employee or agent of
Assignor as to the condition of the premises.

5. Certification by Landlord and Assignor.

(a) Landlord hereby certifies that Assignor, and Assignor
represents that it has paid all rents under the Lease for all periods
up to an including June 30, 1998; that neither Landlord or Assignor is
in default in performance of any of its covenants or obligations under
the Lease; and that the Lease is unmodified and in full force and
effect except as stated above:

(b) Landlord and Assignor hereby certify that the monthly
base rent is $600.00 per month for every month through December 31,
2004.

6. Consent and Release by Landlord. Landlord hereby consents to the
assignment of the Lease by Assignor and its assumption by Assignee and releases
Assignor from any and all liability for the payment of rents and the performance
of covenants and obligations under the Lease accruing from and after the
Effective Date. Landlord's execution of this Agreement shall be considered such
written consent to the assignment.

7. Assignee's Expenses. All taxes and other governmental charges and
fees, if any, including, without limitation, an and all transfer taxes, stamp
taxes, sales taxes and recording fees relating to the transaction evidenced by
this Agreement, shall be paid by Assignee.

8. Agreement and Binding. This Agreement shall be binding upon the
successors and assigns of the parties. The parties shall execute and deliver
such further and additional instruments, agreements, and other documents a may
be necessary to evidence or carry out the provisions o this Agreement.

IN WITNESS WHEREOF the parties hereto have set their hands effective
the date and day first above written.

WITNESSES: "ASSIGNOR"
FIRST OF AMERICA BANK,
NATIONAL ASSOCIATION

By: /s/ H. Lincoln Lewis
- ---------------------- ------------------------------
Its: H. Lincoln Lewis, Senior Vice President
- ----------------------

2
<PAGE> 3

"ASSIGNEE"
MICHIGAN COMMUNITY BANCORP,
LIMITED

By: /s/ Davis McKinnon
- ---------------------- ----------------------------

- ---------------------- Its: Dave McKinnon, Chairman

"LANDLORD"
NORTH HILL CENTER, LLC

By: /s/ Joan E. Primo
- ---------------------- ----------------------------

- ---------------------- Its: Joan E. Primo, Managing Partner

<PAGE> 1
EXHIBIT 23.2

Independent Auditors' Consent

We consent to the use in this Registration Statement of Michigan Community
Bancorp Limited (the "Company") on Form SB-2 of our report dated August 20,
1998 on the financial statements for the period ended July 31, 1998 appearing
in this Registration Statement. We also consent to the reference to us under
the heading "Experts", and to the incorporation by reference of this consent
into any Rule 462(b) registration statement of the Company that incorporates by
reference this Registration Statement.

Plante & Moran, LLP
Bloomfield Hills, Michigan
October 8, 1998