FORM 10-KSB

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

For the fiscal year ended December 31, 1997

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from               to
Commission file number: 033-76832

MCB FINANCIAL CORPORATION
(Name of small business issuer in its charter)

California                                    68-0300300
(State or Other Jurisdiction of     (I.R.S. Employer Identification No.)
Incorporation or Organization)

1248 Fifth Avenue,
 San Rafael, California 94901
(415) 459-2265
(Address and telephone number of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act:
      None
(Title of class)

Securities registered under Section 12(g) of the Exchange Act:
     None
(Title of class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X   No .
     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ].
     The issuer's revenues for its most recent fiscal year were $12,338,826.
     At March 23, 1998, the aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $16,123,176.  For purposes of
this information, the outstanding shares of Common Stock owned by directors and
executive officers of the issuer were deemed to be shares of Common Stock held
by affiliates.
     At March 23, 1998, the issuer had outstanding 1,382,202 shares of Common
Stock, no par value, which is the issuer's only class of common stock.

Documents Incorporated by Reference:
  Part II of this Form 10-KSB incorporates information by reference from certain
portions of the issuer's 1997 Annual Report to Shareholders.  The information
required to be furnished pursuant to Part III of this Form 10-KSB will be set
forth in, and incorporated by reference from, the registrant's definitive proxy
statement for the annual meeting of stockholders to be held May 20, 1998, which
definitive proxy statement will be filed by the issuer with the Securities and
Exchange Commission not later than 120 days after the end of the fiscal year
ended December 31, 1997.


TABLE OF CONTENTS


                                                                      Page
PART I

 Item 1.  Description of Business                                        3
     MCB Financial                                                       3
     Metro Commerce                                                      3
     Competition                                                         5
     Insurance                                                           5
     Employees                                                           6
   Supervision and Regulation                                            6
     MCB Financial                                                       6
     Metro Commerce                                                     10
   Restrictions on Transfers of Funds to
     MCB Financial by Metro Commerce                                    25
 Item 2.  Description of Property                                       27
 Item 3.  Legal Proceedings                                             27
 Item 4.  Submission of Matters to a Vote of Security Holders           27


PART II

 Item 5.  Market for Common Equity and Related Stockholder Matters      28
 Item 6.  Management's Discussion and Analysis                          28
 Item 7.  Financial Statements                                          33
 Item 8.  Changes In and Disagreements With Accountants on
          Accounting and Financial Disclosure                           33


PART III

 Item 9.  Directors, Executive Officers, Promoters and Control Persons;
          Compliance With Section 16(a) of the Exchange Act             34
Item 10.  Executive Compensation                                        34
Item 11.  Security Ownership of Certain Beneficial Owners and
          Management                                                    34
Item 12.  Certain Relationships and Related Transactions                34
Item 13.  Exhibits and Reports on Form 8-K                              34

PART I

Item 1.  Description of Business.

MCB Financial

MCB Financial is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"). MCB Financial was incorporated
under the laws of the State of California on January 20, 1993.

On October 1, 1993, MCB Financial began operations as a bank holding company
with Metro Commerce Bank (Metro Commerce) as its wholly-owned subsidiary.  MCB
Financial's only significant asset is its investment in Metro Commerce. The
principal business and activity of MCB Financial is to serve as the bank holding
company for Metro Commerce and its principal source of income is dividends paid
by Metro Commerce.


Metro Commerce

Metro Commerce was licensed by the Office of the Comptroller of the Currency
("Comptroller") on June 12, 1989, and commenced operations as a national banking
association on December 8, 1989. As a national banking association, Metro
Commerce is subject to primary supervision, examination and regulation by the
Comptroller. Metro Commerce is also subject to certain other federal laws and
regulations. In addition, Metro Commerce is subject to applicable provisions of
California law insofar as such provisions do not conflict with or are not
preempted by federal banking laws. The deposits of Metro Commerce are insured
under the Federal Deposit Insurance Act up to the applicable limits thereof and,
like all national banks, Metro Commerce is a member of the Federal Reserve
System. Metro Commerce is a wholly-owned subsidiary of MCB Financial and
presently has no subsidiaries or other affiliates.

Metro Commerce is engaged in substantially all of the business operations
customarily conducted by independent commercial national banks in California.
Metro Commerce's banking services include the acceptance of checking and savings
deposits, and the making of commercial, construction, mortgage, real estate,
small business administration, home equity and other installment loans and term
extensions of credit.  Metro Commerce also offers travelers' checks, notary
public and other customary bank services to its customers.  Metro Commerce is
not a credit card issuing bank; however, it offers Visa cards through one of its
correspondent banks.

From 1992 through 1996, Metro Commerce was an active wholesale mortgage lender.
Due to continued changes in the mortgage industry and the unfavorable prospects
for future improvement, Metro Commerce decided to wind down its wholesale
mortgage banking operations at the end of 1996.  Metro Commerce will continue to
offer limited retail mortgage lending through its commercial bank.  Prior to
winding down its wholesale operations, Metro Commerce originated and sold its
mortgage loans in the secondary market to both government and private mortgage
purchasers.  Until the end of 1994, Metro Commerce retained servicing rights to
certain mortgage loans.  Mortgage loan servicing primarily encompasses the
collection of payments due, impound accounting, investor remitting and
foreclosure processing.  Metro Commerce sold all of its mortgage servicing
rights in 1994 and discontinued its mortgage servicing operations.

In January 1995, Metro Commerce began a Small Business Administration ("SBA")
Loan Division.  SBA is an agency of the U.S. Government that offers guaranteed
loan programs for small businesses which might not otherwise qualify for
standard bank credit.  SBA offers various business loan programs secured by both
residential and commercial real estate and business property.  Metro Commerce
primarily sells the guaranteed portion of SBA loans in the secondary market to
private investors.  Loan fundings through this division began during the first
quarter of 1995.

Metro Commerce does not operate a trust department; however, it has arranged
with a correspondent institution to offer trust services to Metro Commerce's
customers upon request.  Metro Commerce also does not offer international
banking services although such services are offered indirectly through
correspondent institutions.

Currently, Metro Commerce conducts its business operations through its head
office located in San Rafael, California, and through its four branch office
locations in San Francisco, South San Francisco, Hayward, and Upland,
California.  An application to establish the branch in South San Francisco,
California was approved by the Comptroller on September 7, 1993, and an
application to establish the branch in Upland, California was approved by the
Comptroller on February 27, 1995.  The South San Francisco office was opened on
May 9, 1994, and the Upland office was opened on  February 28, 1995.  An
application to establish the branch in San Francisco was approved by the
Comptroller on December 10, 1997.  This office opened January 8, 1998.

Metro Commerce's primary service area is central Marin County along with the
cities of San Francisco, South San Francisco, Hayward and Upland.  Most of Metro
Commerce's loans and deposits originate from small and medium sized businesses
and professionals located within Metro Commerce's primary service areas.

Metro Commerce's business has little, if any, emphasis on foreign sources and
application of funds.  Metro Commerce's business, based upon performance to
date, does not appear to be seasonal.  Metro Commerce is not dependent upon a
single customer or group of related customers for a material portion of its
deposits, nor is a material portion of Metro Commerce's loans concentrated
within a single industry or group of related industries.  Management of Metro
Commerce is unaware of any material effect upon Metro Commerce's capital
expenditures, earnings or competitive position as a result of federal, state or
local environmental regulation.

Metro Commerce holds no patents, licenses (other than licenses obtained from
bank regulatory authorities), franchises or concessions.


Competition

The banking business in California is highly competitive with respect to both
loans and deposits, and is dominated by a relatively small number of major banks
with many offices operating over a wide geographic area.  Metro Commerce
competes for deposits and loans principally with other commercial banks and also
with non-bank financial intermediaries, including savings and loan associations,
credit unions, thrift and loans, mortgage companies, money market and mutual
funds, finance and insurance companies and other financial and non-financial
institutions.  In addition, other entities (both governmental and private
industry) seeking to raise capital through the issuance and sale of debt or
equity securities and instruments provide competition for Metro Commerce in the
acquisition of deposits.

Among the advantages certain of these institutions have over Metro Commerce are
their ability to finance wide-ranging and effective advertising campaigns and to
allocate their investment resources to regions of highest yield and demand.
Many of the major commercial banks operating in Metro Commerce's service area
offer certain services (such as international banking and trust services) which
are not offered directly by Metro Commerce.  In addition, by virtue of their
greater total capitalization, such banks have substantially higher lending
limits than does Metro Commerce (legal lending limits to each customer are
restricted to a percentage of a bank's capital, the exact percentage depending
on the nature of the particular loan transaction involved).

From the time Metro Commerce commenced its operations, officers and employees of
Metro Commerce have continually engaged in marketing activities, including the
evaluation and development of new services, involvement in community service
groups, and direct marketing in order to retain and improve Metro Commerce's
competitive position in its service areas.

Insurance

Metro Commerce maintains insurance at levels deemed adequate by its Board of
Directors to protect against certain business risks, operational losses, and
property damage.  In accordance with rulings promulgated by the Comptroller and
pursuant to Metro Commerce's Articles of Association and certain contractual
obligations, the officers and directors are entitled to indemnification by Metro
Commerce, under certain circumstances, for certain expenses, liabilities and
losses including, but not limited to, costs of defense, settlements and
judgments rendered against them.  However, indemnification is not authorized
when a supervisory action results in a final order assessing civil money
penalties or when a supervisory action requires affirmative action in the form
of payments by an individual to Metro Commerce.  Metro Commerce has directors
and officers liability insurance to cover certain costs of indemnification.


Employees

Except for its officers, currently MCB Financial has no full-time or part-time
employees.  It is anticipated that MCB Financial will rely on its officers and
will utilize the employees of Metro Commerce until it becomes actively engaged
in additional business activities.  MCB Financial reimburses Metro Commerce for
a fair and reasonable amount for all services furnished to it.

As of December 31, 1997, Metro Commerce had a total of 53 full-time equivalent
employees.  The management of Metro Commerce believes that its employee
relations are satisfactory.


SUPERVISION AND REGULATION

     Bank holding companies and banks are extensively regulated under both
federal and state law.  The following discussion of statutes and regulations is
only a summary and does not purport to be complete.  This discussion is
qualified in its entirety by reference to such statutes and regulations.  No
assurance can be given that such statutes or regulations will not change
significantly in the future.

MCB Financial

     MCB Financial, as a registered bank holding company, is subject to
regulation under the BHC Act.  MCB Financial is required to file with the
Federal Reserve Board quarterly and annual reports and such additional
information regarding its business operations and those of its subsidiaries as
the Federal Reserve Board may require pursuant to the BHC Act.  MCB Financial
and its subsidiaries are also subject to examination by the Federal Reserve
Board.

     Under the BHC Act, MCB Financial is required to obtain the prior approval
of the Federal Reserve Board before acquiring, directly or indirectly, ownership
or control of more than 5 percent of the outstanding shares of any class of
voting securities, unless it already owns a majority of the voting securities,
or substantially all of the assets of any bank or bank holding company.  Prior
approval of the Federal Reserve Board is also required for the merger or
consolidation of MCB Financial and another bank holding company.  Furthermore,
the BHC Act provides that the Federal Reserve Board will not approve any such
acquisition that would result in or further the creation of a monopoly, or the
effect of which may be substantially to lessen competition, unless the
anticompetitive effects of the proposed transaction are clearly outweighed by
the probable effect in meeting the convenience and needs of the community to be
served.

     Under the BHC Act, MCB Financial is, except in certain statutorily
prescribed instances, prohibited from (i) acquiring direct or indirect ownership
or control of more than 5 percent of the outstanding voting shares of any
company which is not a bank or bank holding company or (ii) engaging, directly
or indirectly, in activities other than those of banking, managing or
controlling banks or furnishing services to its subsidiaries.  However, MCB
Financial may, subject to the prior approval of the Federal Reserve Board,
engage in any, or acquire shares of companies engaged in, activities that are
deemed by the Federal Reserve Board to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.  In making any
such determination, the Federal Reserve Board is required to consider whether
the performance of such activities by MCB Financial or an affiliate can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices.  The
Federal Reserve Board is also empowered to differentiate between activities
commenced de novo and activities commenced by acquisition, in whole or in part,
of a going concern.

     The Federal Reserve Board has by regulation determined that certain
activities are so closely related to banking as to be a proper incident thereto
within the meaning of the BHC Act.  These activities include, but are not
limited to the following: making, acquiring or servicing loans or other
extensions of credit such as would be made by a mortgage company, finance
company, credit card company, or factoring company; operating an industrial loan
company, industrial bank or Morris Plan bank; performing certain data processing
operations; providing investment and financial advice or operating as a trust
company in certain instances; selling travelers' checks, U.S. savings bonds and
certain money orders; providing certain courier services; performing real estate
appraisals; providing management consulting advice to nonaffiliated depository
institutions in some instances; acting as an insurance agent for certain types
of credit-related insurance and underwriting certain types of credit-related
insurance; leasing property or acting as agent, broker or advisor for leasing
property on a "full payout basis"; acting as a consumer financial counselor,
including providing tax planning and return preparation services; providing
futures and options advisory services, check guarantee services and discount
brokerage services; operating a collection agency or credit bureau; or
performing personal property appraisals.

     During 1996, the Federal Reserve Board increased the types of activities
in which bank holding companies can engage, and made it easier to engage in such
activities, by adopting interim regulations to implement Section 2208 of the
Economic Growth and Regulatory Paperwork Reduction Act of 1996 (the "Economic
Growth Act").  The Economic Growth Act permits certain well-capitalized bank
holding companies to engage (de novo or by acquisition) in activities previously
approved by regulation without submitting a prior application.  Under the new
procedure, a qualifying bank holding company can engage in new permitted
activities after providing 12 business days advance notice to the Federal
Reserve Board.  To qualify, the bank holding company must be well-capitalized
and must have received a sufficiently high composite rating and management
rating during its last examination.
     The interim rule defines well-capitalized for purposes of the new
procedures.  In general, in order for a bank holding company to be considered
well capitalized, it must (a) have a total risk-based capital ratio of 10% or
more, (b) have a  Tier 1 risk-based capital ratio of 6% or more, (c) have either
(i) a Tier 1 leverage ratio of 5% or more or (ii) a composite rating of 1 or use
a market risk adjustment to its risk-based capital ratio, and have a tier 1
leverage ratio of 3% or more, and (d) not be subject to any written agreement,
order or capital directive issued by the Federal Reserve Board.  This change in
the law provides an advantage to a well-capitalized bank holding company,
permitting it to engage in new activities more freely and quickly.  MCB
Financial is considered well-capitalized under this rule.

     The Federal Reserve Board also has determined that certain other
activities are not so closely related to banking as to be a proper incident
thereto within the meaning of the BHC Act.  Such activities include the
following: real estate brokerage and syndication; real estate development;
property management; underwriting of life insurance not related to credit
transactions; and, with certain exceptions, securities underwriting and equity
funding.  In the future, the Federal Reserve Board may add to or delete from the
list of activities permissible for bank holding companies.

     Under the BHC Act, a bank holding company and its subsidiaries are
generally prohibited from acquiring any voting shares of or interest in all or
substantially all of the assets of any bank located outside the state in which
the operations of the bank holding company's banking subsidiaries are
principally conducted, unless the acquisition is specifically authorized by the
law of the state in which the bank to be acquired is located, or unless the
transaction qualifies under federal law as an "emergency interstate acquisition"
of a closed or failing bank.  (See "Other Items - Interstate Banking and
Branching," herein.)

     Under the BHC Act and regulations adopted by the Federal Reserve Board, a
bank holding company and its non-banking subsidiaries are prohibited from
requiring certain tie-in arrangements in connection with any extension of
credit, sale or lease of property or furnishing of services.  For example, with
certain exceptions, a bank may not condition an extension of credit on a promise
by its customer to obtain other services provided by it, its holding company or
other subsidiaries, or on a promise by its customer not to obtain other services
from a competitor.  In 1995, the Federal Reserve Board loosened the anti-tying
restrictions somewhat, permitting banks to vary the consideration for a
traditional bank product on condition that the customer obtain another
traditional product from an affiliate of the bank.

Federal law also imposes certain restrictions on transactions between MCB
Financial and its subsidiaries, including Metro Commerce.  As an affiliate of
Metro Commerce, MCB Financial is subject, with certain exceptions, to provisions
of federal law imposing limitations on, and requiring collateral for, extensions
of credit by Metro Commerce to its affiliates.  (See "RESTRICTIONS ON TRANSFERS
OF FUNDS TO MCB FINANCIAL BY METRO COMMERCE", herein.)

     The Federal Reserve Board may require that MCB Financial terminate an
activity or terminate control of or liquidate or divest certain subsidiaries or
affiliates when the Federal Reserve Board believes the activity or the control
or the subsidiary or affiliate constitutes a serious risk to the financial
safety, soundness or stability of any of its banking subsidiaries and is
inconsistent with sound banking principles or the purposes of the BHC Act or the
Financial Institutions Supervisory Act of 1966, as amended.  The Federal Reserve
Board also has the authority to regulate provisions of certain bank holding
company debt, including authority to impose interest ceilings and reserve
requirements on such debt.  Under certain circumstances, MCB Financial must file
written notice and obtain approval from the Federal Reserve Board prior to
purchasing or redeeming its equity securities.

     Furthermore, MCB Financial is required by the Federal Reserve Board to
maintain certain levels of capital.  The Federal Reserve Board's risk-based
capital guidelines establish a minimum level of qualifying total capital to
risk-weighted assets of 8.00% (of which at least 4.00% should be in the form of
Tier I capital).  Tier I capital generally consists of common shareholder's
equity less goodwill.  The regulations set forth minimum requirements, and the
Federal Reserve Board has reserved the right to require that companies maintain
higher capital ratios.  As of December 31, 1997, MCB Financial had a ratio of
total qualifying capital to risk-weighted assets of 12.4% of which 11.5% was in
the form of Tier I capital.   Additionally, the Federal Reserve Board has
established a minimum leverage ratio of 4.00%, except that the most highly rated
bank holding companies may operate at a minimum leverage ratio of 3.00%.  The
leverage ratio consists of Tier I capital divided by quarterly average assets,
excluding goodwill.  As of December 31, 1997, MCB Financial's leverage ratio was
8.1%.  For a more complete description of the Federal Reserve Board's risk-based
and leverage capital guidelines, see "Effect of Governmental Policies and
Legislation - Capital Adequacy Guidelines."

     Under Federal Reserve Board regulations, a bank holding company is
required to serve as a source of financial and managerial strength to its
subsidiary banks and may not conduct its operations in an unsafe or unsound
manner.  In addition, it is the Federal Reserve Board's policy that in serving
as a source of strength to its subsidiary banks, a bank holding company should
stand ready to use available resources to provide adequate capital funds to its
subsidiary banks during periods of financial stress or adversity and should
maintain the financial flexibility and capital-raising capacity to obtain
additional resources for assisting its subsidiary banks.  A bank holding
company's failure to meet its obligations to serve as a source of strength to
its subsidiary banks will generally be considered by the Federal Reserve Board
to be an unsafe and unsound banking practice or a violation of the Federal
Reserve Board's regulations or both.  This doctrine has become known as the
"source of strength" doctrine.  Although the United States Court of Appeals for
the Fifth Circuit found the Federal Reserve Board's source of strength doctrine
invalid in 1990, stating that the Federal Reserve Board had no authority to
assert the doctrine under the BHC Act, the decision, which is not binding on
federal courts outside the Fifth Circuit, was reversed by the United States
Supreme Court on procedural grounds.  The validity of the source of strength
doctrine is likely to continue to be the subject of litigation until
definitively resolved by the courts or by Congress.

     MCB Financial is also a bank holding company within the meaning of Section
3700 of the California Financial Code.  As such, MCB Financial and its
subsidiaries are subject to examination by, and may be required to file reports
with, the California Department of Financial Institutions.

     A California corporation such as MCB Financial may make a distribution to
its shareholders if the corporation's retained earnings equal at least the
amount of the proposed distribution.  In the event sufficient retained earnings
are not available for the proposed distribution, such a corporation may
nevertheless make a distribution to its shareholders if, after giving effect to
the distribution, the corporation's assets equal at least 125 percent of its
liabilities and certain other conditions are met.  Since the 125 percent ratio
translates into a minimum capital ratio of 20 percent, most bank holding
companies, including MCB Financial based on its current capital ratios, are
unable to meet this last test and so must have sufficient retained earnings to
fund the proposed distribution.

     The primary source of funds for payment of dividends by MCB Financial to
its shareholders is the receipt of dividends from the Bank.  MCB Financial's
ability to receive dividends from the Bank is limited by applicable federal law.
Under FDICIA, a bank may not make any capital distribution, including the
payment of dividends, if after making such distribution the bank would be in any
of the "undercapitalized" categories under the FDIC's Prompt Corrective Action
regulations. A bank is undercapitalized for this purpose if its leverage ratio,
Tier 1 risk-based capital level and total risk-based capital ratio are not at
least four percent, four percent and eight percent, respectively.  See "Prompt
Corrective Regulatory Action."

     In addition, the National Bank Act prohibits a national bank from declaring
a dividend on its shares of common stock unless its surplus fund exceeds the
amount of its common capital (total outstanding common shares times the par
value per share).  Additionally, if losses have at any time been sustained equal
to or exceeding a bank's undivided profits then on hand, the bank may not pay
dividends.  Moreover, even if a bank's surplus exceeded its common capital and
its undivided profits exceed its losses, the approval of the OCC is required for
the payment of dividends if the total of all dividends declared by a national
bank in any calendar year would exceed the total of its net profits of that year
combined with its retained net profits of the two preceding years, less any
required transfers to surplus or a fund for the retirement of any preferred
stock.  A national bank must consider other business factors in determining the
payment of dividends.  The payment of dividends by the Bank is governed by the
Bank's ability to maintain minimum required capital levels and an adequate
allowance for loan losses.

     The FRB and the OCC have authority to prohibit a bank holding company or a
bank from engaging in practices which are considered to be unsafe and unsound.
Depending on the financial condition of the Bank and upon other factors, the FRB
or the OCC could determine that payment of dividends or other payments by MCB
Financial or the Bank might constitute an unsafe or unsound practice.  Finally,
any dividend that would cause a bank to fall below required capital levels could
also be prohibited.

Metro Commerce

     Metro Commerce, as a national banking association, is subject to primary
supervision, periodic examination and regulation by the Comptroller of the
Currency.  If, as a result of an examination of Metro Commerce, the OCC should
determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity, or other aspects of Metro Commerce's
operations are unsatisfactory or that Metro Commerce or its management is
violating or has violated any law or regulation, various remedies are available
to the OCC.  Such remedies include the power to enjoin "unsafe or unsound"
practices, to require affirmative action to correct any conditions resulting
from any violation or practice, to issue an administrative order that can be
judicially enforced, to direct an increase in capital, to restrict the growth of
Metro Commerce, to assess civil monetary penalties, to remove officers and
directors, and ultimately to terminate Metro Commerce's deposit insurance.  The
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") has
provided the Federal Deposit Insurance Corporation ("FDIC") with similar
enforcement authority in the absence of action by the OCC and upon a finding
that a bank is in an unsafe or unsound condition, is engaging in unsafe or
unsound activities, or that its conduct poses a risk to the deposit insurance
fund or may prejudice the interests of its depositors.  Metro Commerce has never
been the subject of any such actions by the OCC or the FDIC.

     The deposits of Metro Commerce are insured by the FDIC, which currently
insures deposits of each member bank generally to a maximum of $100,000 per
depositor.  For this protection, Metro Commerce, as is the case with all insured
banks, pays a semi-annual statutory assessment and is subject to certain of the
rules and regulations of the FDIC. (See "SUPERVISION AND REGULATION - Effect on
Governmental Policies and Legislation - Federal Deposit Insurance Corporation
Improvement Act of 1991 - Deposit Insurance Assessments", herein.)  Metro
Commerce is also a member of the Federal Reserve System, and as such is subject
to the applicable provisions of the Federal Reserve Act, as amended, and
regulations thereunder.  Metro Commerce is also subject to applicable provisions
of California law, insofar as they do not conflict with or are not preempted by
federal banking law.

     Various requirements and restrictions under the laws of the State of
California and the United States affect the operations of Metro Commerce.  (See
"SUPERVISION AND REGULATION - Effect of Government Policies and Recent
Legislation", herein.)  State and federal statutes and regulations relate to
many aspects of Metro Commerce's operations, including but not limited to
capital to assets ratios, reserves against deposits, maximum lending
limitations, loans, investments, mergers and acquisitions, borrowings, dividends
and locations of branch offices.

     Furthermore, Metro Commerce is required by the OCC to maintain certain
levels of capital.  For a description of the risk-based capital regulations, see
"SUPERVISION AND REGULATION - Effect on Governmental Policies and Legislation -
Federal Deposit Insurance Corporation Improvement Act of 1991 - Prompt
Corrective Action"; and "Capital Adequacy Guidelines".

     Supervision, regulation and examination of Metro Commerce by the OCC and
other banking regulatory agencies are generally intended to protect depositors
and are not intended for the protection of Metro Commerce's shareholders.

     The OCC has the authority to prohibit a bank from engaging in what, in the
OCC's opinion, constitutes an unsafe or unsound practice in conducting its
business.   Depending upon the financial condition of Metro Commerce and upon
other factors, the OCC could assert that the payment of dividends or other
payments by Metro Commerce to MCB Financial might be such an unsafe or unsound
practice.  Furthermore, the payment of dividends by Metro Commerce to MCB
Financial is subject to certain restrictions.  (See "RESTRICTIONS ON TRANSFERS
OF FUNDS TO MCB FINANCIAL BY METRO COMMERCE," herein.)  Also, if Metro Commerce
were to experience either significant loan losses or rapid growth in loans or
deposits, or if some other event resulting in a depletion or deterioration of
Metro Commerce's capital account were to occur, MCB Financial might be compelled
by federal or state bank regulatory authorities to invest additional capital in
Metro Commerce in an amount necessary to return the capital account to a
satisfactory level.

     Metro Commerce is also subject to certain restrictions imposed by federal
law on any extensions of credit by Metro Commerce to MCB Financial or other
affiliates.  (See "RESTRICTIONS ON TRANSFERS OF FUNDS TO MCB FINANCIAL BY METRO
COMMERCE," herein.)

Effect of Governmental Policies and Legislation

     Government Fiscal and Monetary Policies.  Banking is a business which
depends in large part on rate differentials.  In general, the difference between
the interest rate paid by Metro Commerce on its deposits and its other
borrowings and the interest rate received by Metro Commerce on loans extended to
its customers and securities held in Metro Commerce's portfolio comprise a major
portion of Metro Commerce's earnings.  These rates are highly sensitive to many
factors that are beyond the control of Metro Commerce.  Accordingly, the
earnings and growth of Metro Commerce and MCB Financial are subject to the
influence of domestic and foreign economic conditions, including recession,
unemployment and inflation.

     The commercial banking business is not only affected by general economic
conditions but is also influenced by the monetary and fiscal policies of the
federal government and the policies of regulatory agencies, particularly the
Federal Reserve Board.   The Federal Reserve Board implements national monetary
policies (with objectives such as curbing inflation and combating recession) by
its open-market operations in United States Government securities, by adjusting
the required level of reserves for financial institutions and intermediaries
subject to its reserve requirements and by varying the discount rates applicable
to borrowings by depository institutions.  The actions of the Federal Reserve
Board in these areas influence the growth of bank loans, investments and
deposits and also affect interest rates charged on loans and paid on deposits.
The nature and impact of any future changes in monetary policies cannot be
predicted.

     From time to time, legislation is enacted which has the effect of
increasing the cost of doing business, limiting or expanding permissible
activities or affecting the competitive balance between banks and other
financial institutions and intermediaries.  Proposals to change the laws and
regulations governing the operations and taxation of banks, bank holding
companies and other financial institutions and intermediaries are frequently
made in Congress, in the California legislature and before various bank
regulatory and other professional agencies.  The likelihood of any major changes
and the impact such changes might have on Metro Commerce or MCB Financial are
impossible to predict.  Certain of the potentially significant changes which
have been enacted, and proposals which have been made recently, are discussed
below.

     Federal Deposit Insurance Corporation Improvement Act of 1991.  In 1991
FDICIA was enacted into law.  Set forth below is a summary of certain provisions
of that law and enabling regulations that have been adopted or proposed by the
Federal Reserve Board, the OCC, the Office of Thrift Supervision and the FDIC
(collectively, the "federal banking agencies").

     Prompt Corrective Regulatory Action.  FDICIA requires each federal banking
agency to take prompt corrective action to resolve the problems of insured
depository institutions that fall below one or more prescribed minimum capital
ratios.  The purpose of this law is to resolve the problems of insured
depository institutions at the least possible long-term cost to the appropriate
deposit insurance fund.  The prompt corrective action provisions of FDICIA
provide for certain mandatory and discretionary actions by the appropriate
federal banking regulatory agency, and defines the following five categories in
which any insured depository institution will be placed based on the level of
its capital ratios: "Well capitalized" (significantly exceeding the required
minimum capital requirements), "adequately capitalized" (meeting the required
capital requirements), "undercapitalized" (failing to meet any one of the
capital requirements", "significantly undercapitalized" (significantly below any
one capital requirement), and "critically undercapitalized" (failing to meet all
capital requirements).

     In 1992 the federal banking agencies issued substantially uniform final
regulations implementing the prompt corrective action provisions of FDICIA.
Under the regulations, an insured depository institution will be deemed to be:

-"well capitalized" if it has (i) a total risk-based capital ratio of 10% or
 greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater, (iii) a
 leverage ratio of 5% or greater and (iv) is not subject to any written
 agreement, order or capital directive or prompt corrective action directive to
 meet and maintain a specific capital level for any capital measure;

-"adequately capitalized" if it has (i) a total risk-based capital ratio of 8%
 or greater, (ii) a Tier 1 risk-based capital ratio of 4% or greater, (iii) a
 leverage ratio of 4% or greater (or a leverage ratio of 3% or greater if the
 institution is rated composite 1 under the applicable regulatory rating system
 in its most recent report of examination); and (iv) does not meet the
 definition of a well capitalized bank;

-"undercapitalized" if it has (i) a total risk-based capital ratio of less than
 8%, (ii) a Tier 1 risk-based capital ratio of less than 4% or (iii) a leverage
 ratio of less than 4% (or a leverage ratio of less than 3% if the institution
 is rated composite 1 under the applicable regulatory rating system in its most
 recent report of examination);

-"significantly undercapitalized" if it has (i) a total risk-based capital ratio
 of less than 6%, (ii) a Tier 1 risk-based capital ratio of less than 3% or
 (iii) a leverage ratio of less than 3%; and

-"critically undercapitalized" if it has a ratio of tangible equity to total
 assets equal to or less than 2%.

     The federal banking agencies may also, under certain circumstances,
reclassify a "well capitalized" institution as "adequately capitalized" or
require an "adequately capitalized" or "undercapitalized" institution to comply
with supervisory actions as if it were in the next lower capital category.  The
federal banking agencies may take such action upon a showing that an institution
is in an unsafe or unsound condition or is engaged in an unsafe or unsound
practice (including failure to correct certain unsatisfactory examination
ratings).

     Insured depository institutions are subject to certain incremental
supervisory restraints based on their actual or imputed ranking within the five
capital categories.  All such institutions are prohibited from paying management
fees to controlling persons or, with certain limited exceptions, making a
capital distribution if, after such transaction, the institution would be
undercapitalized.  If an insured depository institution is undercapitalized, it
will be closely monitored by the appropriate federal banking agency, subject to
asset growth restrictions and required to obtain prior regulatory approval for
acquisitions, branching and engaging in new lines of business.  Any
undercapitalized depository institution must submit an acceptable capital
restoration plan to the appropriate federal banking agency 45 days after
becoming undercapitalized.  The appropriate federal banking agency cannot accept
a capital plan unless, among other things, it determines that the plan (i)
specifies the steps the institution will take to become adequately capitalized,
(ii) is based on realistic assumptions and (iii) is likely to succeed in
restoring the depository institution's capital.  Finally, the appropriate
federal banking agency may impose any of the additional restrictions or
sanctions that it may impose on significantly undercapitalized institutions if
it determines that such action will further the purpose of the prompt corrective
action provisions.  Also, Federal Reserve Bank advances to such institutions
(and institutions rated composite 5 under the applicable regulatory rating
system in its most recent report of examination) for more than 60 days are
generally restricted.  In order to receive regulatory approval of the required
capital restoration plan, a company controlling an undercapitalized institution
is required to guarantee its subsidiary's compliance with the capital
restoration plan, up to an amount equal to the lesser of 5% of the subsidiary
bank's assets or the amount of the capital deficiency when the bank first failed
to comply with the plan.

     Significantly or critically undercapitalized insured depository
institutions and undercapitalized insured depository institutions which fail to
submit or in a material respect to implement an acceptable capital restoration
plan are subject to one or more of the following additional regulatory actions
(one or more of which is mandatory): (i) forced sale of voting shares to raise
capital or, if grounds exist for conservatorship or receivership, a forced
merger; (ii) restrictions on affiliate transactions; (iii) limitations on
interest rates paid on deposits; (iv) restrictions on asset growth or required
shrinkage; (v) alteration or curtailment of activities determined by the
regulators to pose excessive risk to the institution: (vi) replacement of
directors or senior executive officers, subject to certain grandfather
provisions for those elected prior to enactment of FDICIA; (vii) prohibition on
acceptance of correspondent bank deposits; (viii) restrictions on capital
distributions by the holding companies of such institutions; (ix) forced
divestiture of an institution's subsidiaries or divestiture by a bank holding
company of an institution or a financially troubled non-banking affiliate; or
(x) other actions as determined by the appropriate federal regulator.  The
appropriate federal banking agency has discretion to determine which of the
foregoing restrictions or sanctions it will seek to impose; however, it is
required to force a sale of voting shares or merger, impose restrictions on
affiliate transactions and impose restrictions on rates paid on deposits unless
it determines that such actions would not further the purpose of the prompt
corrective action provisions.  In addition, without the prior written approval
of the appropriate federal banking agency, a significantly undercapitalized
institution may not pay any bonus to its senior executive officers or provide
compensation to any of them at a rate that exceeds such officer's average rate
of base compensation during the 12 calendar months preceding the month in which
the institution became undercapitalized.

     FDICIA and its enabling regulations provide for further restrictions
applicable solely to critically undercapitalized insured depository
institutions, including at a minimum, prohibitions on the following activities
without the appropriate federal regulator's prior written consent: (i) entering
into material transactions other than in the usual course of business; (ii)
extending credit for highly leveraged transactions; (iii) amending an
institution's charter or bylaws; (iv) making a material change in accounting
methods; (v) engaging in certain transactions with affiliates; (vi) paying
excessive compensation or bonuses; or (vii) paying rates on new or renewed
liabilities significantly in excess of market rates.  Additionally, 60 days
after becoming critically undercapitalized, an institution may not make payments
of interest or principal on subordinated debt without the permission of the FDIC
and its primary federal regulator.  Most importantly, however, except under
limited circumstances, the appropriate federal banking agency, not later than 90
days after an insured depository institution becomes critically
undercapitalized, is required to appoint a conservator or receiver for the
institution.  The board of directors of an insured depository institution will
not be liable to the institution's shareholders or creditors for consenting in
good faith to the appointment of a receiver or conservator or to an acquisition
or merger as required by the regulator.

     Although Metro Commerce was deemed to be well capitalized as of December
31, 1997 under the prompt corrective action provisions of FDICIA, a subsequent
reduction in Metro Commerce's capital could cause it to fall within a lower
capital category and subject it to the mandatory and discretionary sanctions
applicable to that category.  Further, as noted above, an institution that,
based upon its capital levels, is adequately capitalized or undercapitalized
can, under certain circumstances, be reclassified to the next lower capital
category.

     Rules Governing Insiders.  Directors, officers and principal shareholders
of MCB Financial, and the companies with which they are associated, may conduct
banking transactions with the Bank in the ordinary course of business.  Any
loans and commitments to loans included in such transactions must be made in
accordance with applicable law, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons of similar creditworthiness, and on terms not
involving more than the normal risk of collectability or presenting other
unfavorable features.

     FDICIA restates and enhances the scope of the Federal Reserve Act
limitations on extensions of credit to officers, directors, and principal
shareholders of member banks.  FDICIA expands the scope of the Federal Reserve
Act restrictions to include all state nonmember banks.  Under FDICIA, insider
loan limitations applicable to banks will also be made applicable to their
subsidiaries.

     FDICIA also provides that the total of all extensions of credit by an
institution to all insiders and related interests may not exceed the bank's
unimpaired capital and unimpaired surplus. FDICIA empowers the Federal Reserve
Board to impose more stringent limitations on such loans.  Extensions of credit
that were valid on the date of FDICIA's enactment are not affected.

     Standards for Safety and Soundness.  In 1995 the federal banking agencies
adopted safety and soundness standards establishing operational and managerial
standards for all insured depository institutions.  In 1996, the agencies
adopted additional guidelines for asset quality and earnings.  The standards,
which were issued in the form of guidelines rather than regulations, relate to
internal controls, information systems, internal audit systems, loan
underwriting and documentation, compensation and interest rate exposure.  In
general, the standards are designed to assist the federal banking agencies in
identifying and addressing problems at insured depository institutions before
capital becomes impaired.  If an institution fails to meet these standards, the
appropriate federal banking agency may require the institution to submit a
compliance plan.  Failure to submit a compliance plan may result in enforcement
proceedings.  The effect of the guidelines on Metro Commerce depends on how they
are implemented by the OCC.  Metro Commerce expects that the guidelines may
increase the cost of doing business, since it must now document compliance with
all of the requirements in the guidelines.

     Brokered Deposits.   The FDIC has adopted regulations pursuant to FDICIA
which govern the receipt of brokered deposits.  Under the regulations, brokered
deposits include any deposit obtained from or through a deposit broker, and
include deposits, however obtained, of institutions that offer rates
"significantly higher" than those in the market area.  An institution may only
accept brokered deposits if it is (i) "well capitalized" or (ii) "adequately
capitalized" and receives a waiver from the FDIC.  "Adequately capitalized"
institutions that receive waivers to accept brokered deposits are, however,
subject to certain limits on the maximum rates which they may pay on such
deposits.  "Undercapitalized" institutions may not accept brokered deposits, nor
may they offer deposit instruments yielding in excess of 75 basis points over
prevailing yields offered on comparable instruments in the relevant market area.
Also, FDICIA provides that the FDIC shall not, in most circumstances, provide
deposit insurance coverage on a "pass-through" basis for certain employee
benefit plans to institutions prohibited from accepting brokered deposits.  The
definitions of "well capitalized," "adequately capitalized" and
"undercapitalized" for purposes of the brokered deposit regulations generally
conform with the definitions of those terms adopted by the FDIC for purposes of
implementing the prompt corrective action provisions of FDICIA. (See "Effect of
Governmental Policies and Legislation - Federal Deposit Insurance Corporation
Improvement Act of 1991 - Prompt Corrective Regulatory Action.")  Metro Commerce
does not believe that the application of these rules will have a material effect
on its ability to fund operations or its financial condition.

     Real Estate Lending Standards.   Pursuant to authority contained in
FDICIA, the federal banking agencies adopted regulations which require insured
depository institutions to establish and maintain written internal real estate
lending policies.  These policies must be consistent with safe and sound banking
practices and be appropriate for the size and nature of the institution
involved.  Additionally, they must be established by each institution only after
it has considered the Interagency Guidelines for Real Estate Lending Policies,
which are made a part of the final regulations.  The regulations require that
certain specific standards be addressed relating to loan portfolio
diversification standards, prudent underwriting standards (including loan-to-
value limits), loan administration procedures, and documentation, approval and
reporting requirements.  Each institution's lending policies must be reviewed
and approved by the institution's board of directors at least once a year.
Finally, each institution is expected to monitor conditions in its real estate
market to ensure that its lending policies are appropriate for current market
conditions.  The regulations do not set forth specific loan-to-value limits, but
the Interagency Guidelines do provide certain limits which should not be
exceeded except under limited circumstances.

     Deposit Insurance Assessments.  The FDIC has established a risk-based
deposit insurance premium system that was mandated by FDICIA.  Under these
regulations, members of the Bank Insurance Fund ("BIF") are subject to an
assessment rate schedule of 0 cents per $100 of deposits to 27 cents per $100 of
deposits.

     To determine the risk-based assessment for each institution, the FDIC
categorizes an institution as well capitalized, adequately capitalized or
undercapitalized based on its capital ratios.  The FDIC also assigns each
institution to one of three subgroups based upon reviews by the institution's
primary federal or state regulator, statistical analyses of financial
statements, and other information relevant to evaluating the risk posed by the
institution.  As a result, the assessment rates for 1998 within each of three
capital categories will be as follows (expressed as cents per $100 of deposits):

                                                      Supervisory
                                                       Subgroup
                                                     A     B     C
             Well Capitalized                        0     3    17
             Adequately capitalized                  3    10    24
             Undercapitalized                       10    24    27

     Under the 1998 risk-related premium schedule, Metro Commerce is exempt
from the BIF premium.

     BIF and SAIF Recapitalization.  FDICIA provided the FDIC with three
additional sources of funds to protect deposits insured by the BIF:  The FDIC
was authorized to borrow up to $30 billion dollars from the U.S. Treasury; to
borrow from the Federal Financing Bank up to 90% of the fair market value of
assets of institutions acquired by the FDIC as receiver; and to borrow from
financial institutions that are members of the BIF.  Any borrowings not repaid
by asset sales are to be repaid through insurance premiums assessed to member
institutions.  These premiums must be sufficient to repay any borrowed funds
within 15 years and to provide insurance fund reserves of $1.25 for each $100 of
insured deposits.  The result of these provisions is that the assessment rate on
deposits of BIF members could increase in the future.  The FDIC also has
authority to impose special assessments against insured deposits.

     In addition, the crisis in the savings and loan industry during the late
1980's led to the dissolution of the Federal Savings and Loan Insurance
Corporation and the insurance of thrift deposits through a separate fund of the
FDIC called the Saving Association Insurance fund ("SAIF"), as well as the
issuance of bonds by the Financing Corporation ("FICO") to cover some of the
losses incurred by failed savings associations.  As the banking industry in
general has become more healthy since 1990, deposit insurance premiums for well-
managed and strongly-capitalized BIF insured institutions have decreased to the
low levels described above.  However, because of the cost of carrying the FICO
bonds and because the SAIF still needed to build reserves, deposit insurance
premiums for SAIF insured institutions have not decreased along with the
premiums for BIF insured institutions.  This created a large disparity between
the cost of deposit insurance for healthy banks and similarly situated thrifts,
leading healthy thrifts to seek ways to either convert to BIF insurance or to
obtain BIF insurance for some portions of their deposits in order to remain
competitive with banks.  This migration of deposits increased the pressure on
the remaining thrifts to build up reserves at the SAIF and to pay the cost of
servicing the FICO bonds.

     Subtitle G of the Economic Growth Act required the remaining SAIF
institutions to pay a one-time deposit assessment of $.657 per $100 of insured
deposits in order to recapitalize the SAIF fund, and required the banking
agencies to take action to prevent the migration of deposits from the SAIF to
the BIF funds until the year 2000.  In addition, the cost of carrying the FICO
bonds is now allocated between BIF insured institutions and SAIF insured
institutions, with BIF insured institutions paying 1/5 the amount paid by SAIF
insured institutions.  The FDIC recently estimated that BIF institutions will
pay an assessment of approximately $.0128 annually per $100 insured deposits,
and that SAIF institutions will pay approximately $.0644 annually per $100 of
insured deposits.  Starting in the year 2000, BIF and SAIF institutions will
share the FICO bond costs equally, with an estimated assessment of $.0243
annually per $100 of insured deposits.

     This legislation will increase Metro Commerce's premiums, as it will now
be required to share in the cost of carrying the FICO bonds.  The increase will
be slight until the year 2000, at which time it will increase.

     Improved Examinations.  All insured depository institutions must undergo a
full-scope, on-site examination by their appropriate federal banking agency at
least once every 18 months.  The cost of examinations of insured depository
institutions and any affiliates may be assessed by the appropriate federal
banking agency against each institution or affiliate as it deems necessary or
appropriate.

     Other Items.  FDICIA also, among other things, (i) directs the appropriate
federal banking agency to determine the amount of readily marketable purchased
mortgage servicing rights that may be included in calculating an institution's
tangible, core and risk-based capital; and (ii) provides, that, subject to
certain limitations, any federal savings association may acquire or be acquired
by any insured depository institution.

     The impact of FDICIA on Metro Commerce and MCB Financial remains uncertain
to some extent.  Certain provisions, such as those relating to the establishment
of the risk-based premium system, may adversely affect Metro Commerce's results
of operations.

     Interstate Banking and Branching.  The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Interstate Act") permits a bank holding
company that is adequately capitalized and managed to acquire an existing bank
located in another state without regard to state law.  A bank holding company is
not permitted to make such an acquisition if, upon consummation, it would
control (a) more than 10% of the total amount of deposits of insured depository
institutions in the United States or (b) 30% or more of the deposits in the
state in which the bank is located.  A state may limit the percentage of total
deposits that may be held in that state by any one bank or bank holding company
if doing so does not discriminate against out-of-state banks.  An out-of-state
bank holding company may not acquire a state bank that has been in existence for
less than the minimum length of time prescribed by state law, except that a
state may not impose more that a five year existence requirement.

     The Interstate Act permited, beginning June 1, 1997, mergers of insured
banks located in different states and conversion of the branches of the acquired
bank into branches of the resulting bank, although each state may adopt
legislation to prohibit interstate mergers, either in that state by out-of-state
banks or in other states by that state's banks.  The same concentration limits
discussed in the preceding paragraph apply.  The Interstate Act also permits a
national or state bank to establish branches in a state other than its home
state if permitted by the laws of that state, subject to the same requirements
and conditions as for a merger transaction.

     The Riegle-Neal Amendments Act of 1997 amends federal law to provide that
branches of state banks that operate in other states will be governed in most
cases by the laws of the home state, rather than the laws of the host state.
Exceptions are that a host state may apply its own laws of community
reinvestment, consumer protection, fair lending and interstate branching.  Host
states cannot supplement or restrict powers granted by a bank's home state.  The
amendment will assure state chartered banks with interstate branches uniform
treatment in most areas of their operation.

     In 1995 California enacted state legislation in accordance with the
Riegle-Neal Act.  The state law permits banks headquartered outside California
to acquire or merge with California banks that have been in existence for at
least five years, and to thereby establish one or more California branch
offices.  An out-of-state bank may not enter California by acquiring one or more
branches of a California bank or other operations constituting less than the
whole bank.  The law authorizes waiver of the 30% limit on state-wide market
share for deposits as permitted by the Riegle-Neal Act.  This law also
authorizes California state-licensed banks to conduct certain banking activities
(including receipt of deposits and loan payments and conducting loan closings)
on an agency basis on behalf of out-of-state banks and to have out-of-state
banks conduct similar agency activities on their behalf.

     The Interstate Act also authorizes California state-chartered banks to
appoint unaffiliated banks in other states to act as agents of the California
state-chartered bank by accepting deposits and evaluating loan applications on
behalf of the principal bank.  Since national banks may only establish agency
relationships with affiliated banks, the expanded authority for state-chartered
banks could place national banks in California at a disadvantage in the event
many state-chartered banks use agency relationships with unaffiliated entities
to increase their business.  Other than that possibility, management of MCB
Financial does not believe that the Interstate Act nor the California interstate
banking law has had or will have any material effect on Metro Commerce, MCB
Financial or the market for MCB Financial's common stock.

     The Riegle Community Development and Regulatory Improvement Act of 1994.
The Riegle Community Development and Regulatory Improvement Act of 1994
("Community Development Act") involves many aspects of banking regulation.
However, management does not anticipate that the Community Development Act will
have any material effect on Metro Commerce or its operations.

     Capital Adequacy Guidelines.    The Federal Reserve Board and the OCC have
issued guidelines to implement risk-based capital requirements.  The guidelines
establish a systematic analytical framework that makes regulatory capital
requirements more sensitive to differences in risk profiles among banking
organizations, takes off-balance sheet items into account in assessing capital
adequacy, and minimizes dis-incentives to holding liquid, low-risk assets.
Under these guidelines, assets and credit equivalent amounts of off-balance
sheet items, such as letters of credit and outstanding loan commitments are
assigned to one of several risk categories, which range from 0% for risk-free
assets, such as cash and certain U.S. Government securities, to 100% for
relatively high-risk assets, such as loans and investments in fixed assets,
premises and other real estate owned.  The aggregated dollar amount of each
category is then multiplied by the risk weight associated with that category.
The resulting weighted values from each of the risk categories are then added
together to determine the amount of total risk-weighted assets.

     A banking organization's qualifying total capital consists of two
components: Tier 1 capital (core capital) and Tier 2 capital (supplementary
capital).  Tier 1 capital consists primarily of common stock, related surplus,
retained earnings and certain perpetual preferred stocks and minority interests
in the equity accounts of consolidated subsidiaries.  Intangibles, such as
goodwill are generally deducted from Tier 1 capital; however purchased mortgage
servicing rights and purchase credit card relationships may be included subject
to certain limitations.  At least 50% of a banking organization's total
regulatory capital must consist of Tier 1 capital, less goodwill.

     Tier 2 capital may consist of (i) the allowance for possible loan and
lease losses in an amount up to 1.25% of risk weighted assets; (ii) cumulative
perpetual preferred stock and long-term preferred stock (which for bank holding
companies must have an original maturity of 20 years or more) and related
surplus; (iii) hybrid capital instruments (instruments with characteristics of
both debt and equity), perpetual debt and mandatory convertible debt securities;
and (iv) eligible term subordinated debt and intermediate-term preferred stock
with an original maturity of five years or more, including related surplus, in
an amount up to 50% of Tier 1 capital.  The inclusion of the foregoing elements
of Tier 2 capital is subject to certain requirements and limitations of the
federal banking agencies.

     The Federal Reserve Board and the OCC have each adopted a minimum leverage
ratio of Tier 1 capital to total assets of 4.00%, except that the highest rated
banks may operate at a minimum leverage ratio of 3.00%.  The leverage ratio is
only a minimum.  Institutions experiencing or anticipating significant growth or
those with other than minimum risk profiles will be expected to maintain capital
well above the minimum levels.

     Under the so-called "prompt corrective action" provisions of FDICIA and
the regulations promulgated thereunder, Metro Commerce will be considered
"adequately capitalized" if it has a ratio of qualifying total capital to risk-
weighted assets of 8.00%, Tier 1 capital to risk-weighted assets of 4.00% and a
leverage ratio of 4.00% or greater.  To be considered "well capitalized" Metro
Commerce must have a ratio of qualifying total capital to risk-weighted assets
of 10.00%, Tier 1 capital to risk-weighted assets of 6.00% and a leverage ratio
of 5.00% or greater as well as not be subject to any order or directive.  Under
certain circumstances, the OCC may require an "adequately capitalized"
institution to comply with certain mandatory or discretionary supervisory
actions as if Metro Commerce were undercapitalized.  (see "SUPERVISION AND
REGULATION - Effect of Governmental Policies and Recent Legislation - Federal
Deposit Insurance Corporation Improvement Act of 1991 - Prompt Corrective
Action", herein.)

     The capital adequacy guidelines of the Federal Reserve Board are generally
applicable to bank holding companies, such as MCB Financial, while the
guidelines of the OCC are generally applicable to national banks, such as Metro
Commerce.  However, the Federal Reserve Board's guidelines do not apply to bank
holding companies with total consolidated assets of less than $150 million.  As
of December 31, 1997, MCB Financial had total consolidated assets of  $139.9
million.  Accordingly, MCB Financial is not subject to any capital requirements
other than those of the OCC that are applicable to Metro Commerce.

     In 1996 the federal banking agencies adopted a joint agency policy
statement to provide guidance on managing interest rate risk.  The statement
indicated that the adequacy and effectiveness of a bank's interest rate risk
management process and the level of its interest rate exposures are critical
factors in the agencies' evaluation of the bank's capital adequacy.  If a bank
has material weaknesses in its risk management process or high levels of
exposure relative to its capital, the agencies will direct it to take corrective
action.  Such directives may include recommendations or directions to raise
additional capital, strengthen management expertise, improve management
information and measurement systems, reduce levels of exposure, or some
combination of these actions.

     In 1995 the federal banking agencies issued a rule relating to capital
standards and the risks arising from the concentration of credit and
nontraditional activities.  Pursuant to the rule, institutions which have
significant amounts of their assets concentrated in high risk loans or
nontraditional banking activities and who fail to adequately manage these risks,
will be required to set aside capital in excess of the regulatory minimums.  The
federal banking agencies have not imposed any quantitative assessment for
determining when these risks are significant, but have identified these issues
as important factors they will review in assessing an individual bank's capital
adequacy.

     The federal banking agencies have also issued an interagency policy
statement that, among other things, establishes certain benchmark ratios of loan
loss reserves to certain classified assets.  The benchmark set forth by such
policy statement is the sum of (i)100% of assets classified loss; (ii) 50% of
assets classified doubtful; (iii) 15% of assets classified substandard; and (iv)
estimated credit losses on other assets over the upcoming 12 months.  This
amount is neither a "floor" nor a "safe harbor" level for an institution's
allowance for loan losses.

     Federally supervised banks and savings associations are currently required
to report deferred tax assets in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109.  (See "SUPERVISION AND REGULATION -
Effect of Governmental Policies and Legislation - Accounting Changes," herein.)
The federal banking agencies have issued rules governing banks and bank holding
companies which limit the amount of deferred tax assets that are allowable in
computing an institution's regulatory capital.  Deferred tax assets that can
only be realized through future taxable earnings are limited for regulatory
capital purposes to the lesser of (i) the amount that can be realized within one
year of the quarter-end report date or (ii) 10% of Tier 1 capital.  The amount
of deferred taxes in excess of this limit, if any, would be excluded from Tier 1
capital and total assets in regulatory capital calculations.  Management does
not expect implementation of these rules to have a material impact on Metro
Commerce's regulatory capital levels.

     Community Reinvestment Act Developments.  The federal banking agencies
substantially amended the Community Reinvestment Act ("CRA") regulations in
1995, and issued guidelines and explanations of the new regulations in 1996.
CRA assesses a bank's record of meeting the credit needs of its entire
community, including minorities and low and moderate income groups.

     Under the revised CRA regulations, the agencies determine a bank's rating
under the CRA by evaluating its performance on lending, service and investment
tests, with the lending test being the most important.  The tests are applied in
an "assessment context" that is developed for the particular institution and
that takes into account demographic data about the bank's community, the
community's characteristics and needs, the institution's capacities and
constraints, the institution's product offerings and business strategy, the
institution's prior performance, and data on similarly situated lenders.  Since
the assessment context is developed by the agencies, a particular bank will not
know whether its CRA programs and efforts have been sufficient until it is
examined.

     The revised regulations require larger institutions to compile and report
certain data on their lending activities in order to measure performance.  Some
of this data is already required under other laws, such as the Equal Credit
Opportunity Act.
     Small institutions (those with less than $250 million in assets) are now
examined on a "streamlined assessment method."  The streamlined method focuses
on the institution's loan to deposit ratio, degree of local lending, record of
lending to borrowers and neighborhoods of differing income levels, and record of
responding to complaints.  The federal regulators have reported that under the
new regulations the time spent at the banks to conduct CRA examinations is
reduced, and that the banks spend less time on paperwork evidencing compliance.

     On March 8, 1996, the federal banking agencies issued joint examination
procedures applicable to compliance examination under the new CRA regulations.
On October 21, 1996, the Consumer Compliance Task Force of the Federal Financial
Institutions Examination Council issued additional guidelines for CRA
compliance.  Beginning July 1, 1997, the new procedures and guidelines were
applied to larger institutions.

     Large and small institutions have the option of being evaluated for CRA
purposes in relation to their own pre-approved strategic plan.  Such a strategic
plan must be submitted to the institution's regulator three months before its
effective date and must be published for public comment.

     Metro Commerce is currently considered a small institution under the CRA
regulations and it will be a small institution until it has assets of greater
than $250 million at the ends of two years in a row.  The initial impact of this
amendment on the business of Metro Commerce will be less than the impact when
Metro Commerce no longer qualifies as a small institution.  At that time, the
new regulations will increase the amount of reports Metro Commerce is required
to prepare and submit, and it could cause Metro Commerce to change its asset mix
in order to meet the performance standards.  At this time, the new regulations
have increased the uncertainty of Metro Commerce's business, both as the rating
and examination procedures change and as Metro Commerce grows to the extent that
it and may no longer qualify as a small institution.

     The federal regulators are required to take an institution's CRA record
into account when evaluating an application for new deposit facilities, such as
a bank merger, establishment of a branch, a new charter or relocation of a
branch or home office.  In the Metro Commerce's most recent compliance
examination dated August 31, 1995, Metro Commerce received a "satisfactory"
rating for its CRA performance.

     Accounting Changes.

     In June 1996, Statement of Financial Accounting Standards ("SFAS") No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" was issued.  This Statement establishes
standards for when transfers of financial assets, including those with
continuing involvement by the transferor, should be considered a sale.  SFAS No.
125 also establishes standards for when a liability should be considered
extinguished.  This statement is effective for transfers of assets and
extinguishments of liabilities after December 31, 1996.  In December 1996, the
Financial Accounting Standards Board ("FASB") reconsidered certain provisions of
SFAS No. 125 and issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125" to defer for one year the effective date
of implementation for transactions related to repurchase agreements, dollar-roll
repurchase agreements, securities lending and similar transactions.  Management
determined that the effect of adoption of SFAS No. 125 on the Company's
financial statements was not material and believes that the effect of adoption
of SFAS No. 127 will also not be material.

     In February 1997, the FASB issued SFAS No. 128, "Earnings per Share".
This Statement simplifies the standards for computing earnings per share ("EPS")
and makes them comparable to international EPS standards.  SFAS No. 128 replaces
the presentation of primary EPS with a presentation of basic EPS.  In addition,
all entities with complex capital structures are required to provide a dual
disclosure of basic and diluted EPS on the face of the income statement and a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.  This Statement
applies to entities with publicly held common stock or potential common stock
and is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods, and requires restatement of all
prior period EPS data presented.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which requires that an enterprise report, by major components and as a
single total, the change in its net assets during the period from nonowner
sources; and No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures about its products,
services, geographic areas, and major customers.  Adoption of these statements
will not impact the Company's consolidated financial position, results of
operations or cash flows, and any effect will be limited to the form and content
of its disclosures.  Both statements are effective for fiscal years beginning
after December 15, 1997, with earlier application permitted.

     Environmental Regulation

     Federal, state and local regulations regarding the discharge of materials
into the environment may have an impact on both MCB Financial and Metro
Commerce.  Under federal law, liability for  environmental damage and the cost
of cleanup may be imposed upon any person or entity who owns or operates
contaminated property.  State law provisions, which were modeled after Federal
law, impose substantially similar requirements.  Both federal and state laws
were amended in 1996 to provide generally that a lender who is not actively
involved in operating the contaminated property will not be liable to clean up
the property, even if the lender has a security interest in the property or
becomes an owner of the property through foreclosure.

     The Economic Growth Act includes protection for lenders from liability
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA") by adding a new section which specifies the actions a lender
may take with respect to lending and foreclosure activities without incurring
environmental clean-up liability or responsibility.  Under the new section
typical contractual provisions regarding environmental issues in the loan
documentation and due diligence inspections conducted in connection with lending
transactions will not lead to lender liability for clean-up, and a lender may
foreclose on contaminated property, so long as the lender merely maintains the
property and moves to divest it at the earliest possible time.

     Under California law, a lender generally will not be liable to the State
for the cost associated with cleaning up contaminated property unless the lender
realized some benefit from the property, failed to divest the property promptly,
caused or contributed to the release of the hazardous materials, or made the
loan primarily for investment purposes.  This amendment to California law became
effective with respect to judicial proceedings filed and orders issued after
January 1, 1997.

     The extent of the protection provided by both the federal and state lender
protection statutes will depend on the interpretation of those statutes
administrative agencies and courts, and Metro Commerce cannot predict whether it
will be adequately protected for the types of loans made by Metro Commerce.

     In addition, MCB Financial and Metro Commerce remain subject to the risk
that a borrower's financial position will be impaired by liability under the
environmental laws and that property securing a loan made by Metro Commerce may
be environmentally impaired and therefore not provide adequate security for
Metro Commerce.  California law provides some protection against the second risk
by establishing certain additional, alternative remedies for a lender in
circumstances where the property securing a loan is later found to be
environmentally impaired, permitting the lender to pursue remedies against the
borrower other than foreclosure under the deed of trust.

     Metro Commerce attempts to protect its position against the remaining
environmental risks by performing prudent due diligence.  Environmental
questionnaires and information on use of toxic substances are requested as part
of Metro Commerce's underwriting procedures.  Metro Commerce makes lending based
upon its evaluation of the collateral, the net worth of the borrower and the
borrower's capacity for unforeseen business interruptions or risks.

     Americans With Disabilities Act

The Americans With Disabilities Act ("ADA"), in conjunction with similar
California legislation, has increased the cost of doing business for banks.  The
legislation requires employers with 15 or more employees and all businesses
operating "commercial facilities" or "public accommodations" to accommodate
disabled employees and customers.  The ADA has two major objectives:  (1) to
prevent discrimination against disabled job applicants, job candidates and
employees, and (2) to provide disabled persons with ready access to commercial
facilities and public accommodations.  Commercial facilities, such as Metro
Commerce, must ensure that all new facilities are accessible to disabled
persons, and in some instances may be required to adapt existing facilities to
make them accessible.

     Economic Growth and Regulatory Paperwork Reduction Act of 1996

     In addition to the provisions discussed above, the Economic Growth Act
also included many regulatory relief provisions applicable to MCB Financial and
Metro Commerce.  National banks no longer need to submit branch applications
with respect to ATM machines.  Application procedures for MCB Financial to
engage in certain non-banking activities will be streamlined, so long as MCB
Financial maintains an adequate financial position and is considered well-
managed.  The lending restrictions on directors and officers have been relaxed
to permit loans having favorable terms under employee benefit plans.  The
Federal Reserve Board and the department of Housing and Urban Development
("HUD") are required to simplify and improve their regulations with respect to
disclosures relating to certain mortgage loans, and certain exemptions from the
disclosure requirements were added.

     The Economic Growth Act also provides protection for lenders who self-test
for compliance with the Equal Credit Opportunity Act (the "ECOA") and the Fair
Housing Act ("FHA").  The ECOA now provides that the results or report generated
or obtained by a bank from a self-test may not be obtained by an agency,
department or applicant to be used with respect to any proceeding or civil
action alleging a violation of the ECOA.  This change in the law protects Metro
Commerce against liability based on the results of internal tests done to
enhance compliance with the law and encourages Metro Commerce to use self-
testing to evaluate its compliance with the ECOA and the FHA.

     On November 20, 1996, the OCC issued final regulations permitting national
banks to engage in a wider range of activities through subsidiaries.  "Eligible
institutions" (that is, national banks that are well capitalized, have a high
overall rating and a satisfactory CRA rating, and are not subject to an
enforcement order) may engage in activities related to banking through operating
subsidiaries after going through a new expedited application process.  In
addition, the new regulations include a provision whereby a national bank may
apply to the OCC to engage in an activity through a subsidiary in which the bank
itself may not engage.   In determining whether to permit the subsidiary to
engage in the activity, the OCC will evaluate why the bank itself is not
permitted to engage in the activity and whether a Congressional purpose will be
frustrated if the OCC permits the subsidiary to engage in the activity.

     Although Metro Commerce is not currently intending to enter into any new
type of business, either relating to banking or that is not currently permitted
for a bank, this regulation could help Metro Commerce if it determines to expand
its operations in the future.  The amount of the benefit to Metro Commerce
depends on the extent to which the OCC permits banks to engage in new lines of
business, and whether Metro Commerce qualifies as an "eligible institution" at
such time as it might decide to expand.

     Self-Test Privilege Under ECOA

     In January 1998 the Federal Reserve Board revised its regulations under the
ECOA to create a legal privilege for information developed by creditors as a
result of "self-tests" they voluntarily conduct to determine the level of their
compliance with ECOA.  The privilege protects against use of such information by
a government agency for examination purposes or by private litigants in any
proceeding alleging a violation of the ECOA.  The privilege applies only if the
institution takes appropriate corrective action to address possible violations
that are discovered in the test.
     OCC Corporate Activities and Transaction Regulations

     Effective December 31, 1996  the OCC completely revised its rules to
simplify and streamline the procedures for corporate applications and notices by
national banks, including branch applications, fiduciary powers applications,
change in bank control, and changes in capital. Metro Commerce is not currently
anticipating filing any corporate applications with the OCC, but the new rules
could have an effect on Metro Commerce if any such application is required.

     New and Proposed Legislation and Regulation

     Legislation enacted in 1996 provides for the merger of the BIF and SAIF on
January 1, 1999, if there are no savings associations in existence on that date.
Pursuant to that legislation, the Department of Treasury in May 1997 recommended
in a report to Congress that the separate charters for thrifts and banks be
abolished.  Various proposals to eliminate the federal thrift charter, create a
uniform financial institutions charter, conform holding company regulation and
abolish the Office of Thrift supervision ("OTS") have been introduced in
Congress.  The House Committee on Banking and Financial Services has considered
and reported H.R. 10, the Financial Services Competition Act of 1997, including
Title III, the "Thrift Charter Transition Act of 1997."  This act would (i)
require federal savings associations to convert to national banks or some type
of state charter within two years of enactment: (ii) merge the BIF and SAIF; and
(iii) combine the OTS with the OCC.  A converted federal thrift generally would
be permitted to continue to engage in any activity, including the holding of any
asset, lawfully conducted on the date prior to enactment, retain all branches
established or proposed in a pending application as of enactment and establish
new branches in any state in which it has a branch.  Otherwise it may establish
new branches only under national bank rules.  Beginning two years after
enactment, national banks would be authorized to exercise all powers formerly
authorized for federal savings associations.

     Under H.R. 10, holding companies for converted savings associations
generally would become subject to the same regulation as bank holding companies,
with a grandfather provision for former unitary savings and loan holding
companies.  Grandfathered companies would be permitted to maintain and establish
affiliations with any type of company and to acquire additional depository
institutions, as long as any acquired depository institution is merged into its
converted savings association and such institution continues to comply with both
the qualified thrift lender test and certain asset and investment limitations to
which it was subject as a federal savings association.  Such a converted holding
company would be subject to the same capital requirements (if any) applicable
under OTS regulation if it were a savings and loan holding company on June 19,
1997, and for three years would be subject to substantially similar regulation,
reporting and examination as implemented by the OTS as of January 1, 1997.

     H.R. 10, if adopted, would substantially repeal the Glass-Steagall Act
restrictions on bank affiliations with securities firms and thereby allow
commercial banking and investment banking to be combined.  It would also repeal
restrictions on bank affiliations with insurance companies.

     Various revisions and alternatives to H.R. 10 have been proposed.  There
can be no assurance as to whether H.R. 10 or any other such legislation will be
enacted, what the provisions of any such final legislation may be, or the extent
to which the legislation would restrict, disrupt or otherwise have a material
effect on operations.

     Certain legislative and regulatory proposals that could affect MCB
Financial, Metro Commerce and the banking business in general are pending, or
may be introduced, before the United States Congress, the California State
Legislature, and Federal and state government agencies.  The United States
Congress in particular is considering numerous bills that could reform the
banking laws substantially.  Other proposals to permit banks to engage in
related financial services and to permit other financial services companies to
offer banking-related services are pending and, if adopted, would increase
competition for Metro Commerce.

     It is not known to what extent, if any, these proposals will be enacted
and what effect such legislation would have on the structure, regulation and
competitive relationship of financial institutions.  It is likely, however, that
many of these proposals would subject MCB Financial and Metro Commerce to
increased regulation, disclosure and reporting requirements and would increase
competition for Metro Commerce and increase its cost of doing business.

     In addition to pending legislative changes, the various banking regulatory
agencies frequently propose rules and regulations to implement and enforce
already existing legislation.  It cannot be predicted whether or in what form
any such legislation or regulations will be enacted or the effect that such
legislation may have on Metro Commerce's business.


RESTRICTIONS ON TRANSFERS OF FUNDS TO MCB FINANCIAL BY METRO COMMERCE

     Federal Reserve Board policy prohibits a bank holding company from
declaring or paying a cash dividend which would impose pressure on the capital
of subsidiary banks or would be funded only through borrowings or other
arrangements that might adversely affect the holding company's financial
position.  The policy further declares that a bank holding company should not
continue its existing rate of cash dividends on its common stock unless its net
income is sufficient to fully fund each dividend and its prospective rate of
earnings retention appears consistent with its capital needs, asset quality and
overall financial condition.  Other Federal Reserve Board policies forbid the
payment by bank subsidiaries to their parent companies of management fees which
are unreasonable in amount or exceed the fair market value of the services
rendered (or, if no market exists, actual cost plus a reasonable profit).

     MCB Financial is a legal entity separate and distinct from Metro Commerce.
At present, substantially all of MCB Financial's revenues, including funds
available for the payments of dividends and other operating expenses, are
expected to be obtained from dividends paid to MCB Financial from Metro
Commerce.  Metro Commerce paid dividends in the amount of $138,000, $50,000 and
$300,000 to MCB Financial in July, 1997, October, 1996 and  February, 1994,
respectively.  Until that time, funds to cover certain costs of MCB Financial in
connection with the Reorganization were provided by a $90,000 loan made to MCB
Financial by John Cavallucci, MCB Financial's President and Chief Executive
Officer and Metro Commerce's Chief Executive Officer. (See "INFORMATION
CONCERNING THE BUSINESS AND PROPERTIES OF MCB FINANCIAL - MCB Financial",
herein.)

     There are statutory and regulatory limitations on the amount of dividends
which may be paid to MCB Financial by Metro Commerce.  Sections 56 and 60 of
Title 12 of the United States Code contain the major limitations on the payment
of dividends by national banks.  Section 56 generally prohibits national banks
from paying dividends out of capital, and Section 60 further limits dividends,
absent the OCC's approval, to the amount of a national bank's recent earnings.

     Pursuant to Title 12, Metro Commerce may declare dividends from funds
legally available therefor, when and as declared by the Metro Commerce Board of
Directors; provided, however, that dividends may not be paid from Metro
Commerce's capital.  Dividends must be paid out of available net profits, after
deduction of all current operating expenses, actual losses, accrued dividends on
preferred stock, if any, and all federal and state taxes.  Additionally, a
national bank is prohibited from declaring a dividend on its shares of common
stock until its surplus fund equals its common capital, or, if its surplus fund
does not equal its common capital, until at least one-tenth of such bank's net
profits, for the preceding half year in the case of quarterly or semi-annual
dividends, or the preceding two half years in the case of an annual dividend,
are transferred to its surplus fund each time dividends are declared.  Title 12
also provides that the approval of the Comptroller is required if the total of
all dividends declared by a national bank in any calendar year exceeds the total
of its net profits for that year combined with its retained net profits of the
two preceding years, less any required transfers to surplus or a fund for the
retirement of any preferred stock.  Furthermore, the Comptroller also has
authority to prohibit the payment of dividends by a national bank when it
determines such payment to be an unsafe and unsound banking practice.

     At December 31, 1997, Metro Commerce had available $1,714,029 for the
payment of dividends.

     Under the prompt corrective action rules of FDICIA, no depository
institution, such as Metro Commerce, may issue a dividend or pay a management
fee if it would cause the institution to become undercapitalized.  Additionally,
undercapitalized institutions are subject to restrictions on dividends and
management fees, as well as other automatic actions.  Other supervisory actions
may be taken against institutions that are significantly undercapitalized, as
well as undercapitalized institutions that fail to submit any acceptable capital
restoration plan as required by law or that fail in any material respect to
implement an accepted plan.

     The OCC also has authority to prohibit Metro Commerce from engaging in
what, in the OCC's opinion, constitutes an unsafe or unsound practice in
conducting its business.  It is possible, depending upon the financial condition
of the bank in question and other factors, that the OCC could assert that the
payment of dividends or other payments might, under some circumstances, be such
an unsafe or unsound practice.  Further, the OCC and the Federal Reserve Board
have established guidelines with respect to the maintenance of appropriate
levels of capital by banks or bank holding companies under their jurisdiction.
Compliance with the standards set forth in such guidelines could limit the
amount of dividends which Metro Commerce or MCB Financial may pay.  (See "Effect
of Governmental Policies and Recent Legislation - Federal Deposit Insurance
Corporation Improvement Act of 1991" for a discussion of additional restrictions
on capital distributions.)

     Metro Commerce is subject to certain restrictions imposed by federal law
on any extension of credit to, or the issuance of a guarantee or letter of
credit on behalf of, MCB Financial or other affiliates, the purchase of or
investment in stock or other securities thereof, the taking of such securities
as collateral for loans and the purchase of assets of MCB Financial or other
affiliates.  Such restrictions prevent MCB Financial and such other affiliates
from borrowing from Metro Commerce unless the loans are secured by marketable
obligations of designated amounts.  Further, such secured loans and investments
by Metro Commerce in MCB Financial or in any other affiliate are limited to 10%
of Metro Commerce's capital and surplus (as defined by federal regulations) and
such secured loans and investments are limited, in the aggregate, to 20% of
Metro Commerce's capital and surplus (as defined by federal regulation).
Additional restrictions on transactions with affiliates may be imposed on Metro
Commerce under the prompt corrective action provisions of FDICIA.  (See
"SUPERVISION AND REGULATION - Effect of Governmental Policies and Recent
Legislation - Federal Deposit Insurance Corporation Improvement Act of 1991 -
Prompt Corrective Action", herein.)

     It is impossible to predict with any degree of accuracy the competitive
impact these laws have on commercial banking in general or on the business of
Metro Commerce in particular.  However, there appears to be a lessening of the
historical distinction between the services offered by insured depository
institutions and other businesses offering financial services.  It is
anticipated that commercial banks will experience increased competition for
deposits and loans and increases in their cost of funds in the future.



Item 2.  Description of Property

     Currently, MCB Financial does not own or lease any property.  MCB Financial
is not actively engaged in any business activities outside of the activities of
Metro Commerce.  Therefore, Metro Commerce's property is not significantly used
by MCB Financial.  MCB Financial will continue to utilize the premises of Metro
Commerce until it becomes actively engaged in additional business activities.
MCB Financial currently  reimburses Metro Commerce for a fair and reasonable
amount for all services furnished to it.

     Metro Commerce leases the land and the buildings at which its office
facilities are located.  Metro Commerce has five full-service banking offices.
The head office of Metro Commerce is located at 1248 Fifth Avenue, San Rafael,
California and consists of approximately 10,000 square feet of office space.  In
1995, Metro Commerce consolidated its mortgage operations into the head office
site.  Metro Commerce occupies the premises for its head office under a lease
which will expire in June 2014, with two five-year options to renew.

     Metro Commerce's four branch offices in San Francisco, South San Francisco,
Hayward and Upland, California occupy approximately 2,015, 12,300, 14,000 and
5,000 square feet, respectively, under leases that expire at various dates
through the year 2005.

     Metro Commerce believes that its existing facilities are adequate for its
current needs and anticipated growth.


Item 3.  Legal Proceedings

     MCB Financial is not a party to any pending legal proceeding and is unaware
of any proceeding being contemplated against it by any governmental authority.

     There are various legal actions pending against MCB Financial arising from
the normal course of business.  MCB Financial is also named as defendant in
various lawsuits in which damages are sought.  Management, upon the advice of
legal counsel handling such actions, believes that the ultimate resolution of
these actions will not have a material effect on the financial position of MCB
Financial.


Item 4. Submission of Matters to a Vote of Security Holders.

None.



PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

     The information required to be furnished pursuant to this item is set forth
under the caption "Market Price of MCB Financial Corporation" in the Annual
Report, which is incorporated herein by reference to Exhibit No. (13) of this
report.


Item 6. Management's Discussion and Analysis.

     Except for the information provided below, the information required to be
furnished pursuant to this item is set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in
the Notes to Consolidated Financial Statements in the Annual Report, which are
incorporated herein by reference to Exhibit No. (13) of this report.

     The maturities and weighted average yields of investment securities are
presented in the following table:

Maturities of Investment Securities at December 31, 1997 (At book value)

                                      After 1 Year   After 5 Years
                      Within 1 Year  Within 5 Years Within 10 Years     Total
(Dollars in thousands) Amount Yield   Amount Yield   Amount Yield   Amount Yield
Mortgage-backed
  securities(1)          $383 5.37%   $1,792 5.76%                  $2,175 5.69%
U.S. Treasury and U.S.
  government agencies   1,990 6.32%   22,760 6.38%   $6,497 6.51%   31,247 6.40%
Corporate securities                   1,992 6.32%                   1,992 6.32%
States and
  Municipalities(2)        40 6.84%      100 6.48%                     140 6.58%
    Total              $2,413 6.18%  $26,644 6.33%   $6,497 6.51%  $35,554 6.36%

  (1)Mortgage securities are shown at stated maturities; however, these
     securities are subject to substantial prepayments which will accelerate
     actual maturities.
  (2)Weighted-average yield calculated on a tax equivalent basis using
     statutory rates.


Maturities of Loans at December 31, 1997

     Currently, MCB Financial's data processing system does not have the
capability to provide, and therefore MCB Financial has not provided herein, the
dollar amount of floating rate loans maturing within one year, after one year
but within five years, and in more than five years or the total amount of loans
due after one year which have floating interest rates.  As of December 31, 1997,
the percentage of loans held for investment with fixed and floating interest
rates was 67% and 33%, respectively.

     The following table provides typical terms of maturity ranges offered by
MCB Financial for each loan category indicated:

Loan Category                         Typical Term in Years
Commercial Loans                      1 to 3
Real Estate Loans:
  Commercial                          5
  Construction                        1
  Land                                1
Home Equity                           5
Loans to Consumers and Individuals    1 to 5



Asset/Liability Management

     Net interest income and the net interest margin are largely dependent on
MCB Financial's ability to closely match interest-earning assets with interest-
bearing liabilities.  As interest rates change, MCB Financial must constantly
balance maturing and repricing liabilities with maturing and repricing assets.
This process is called asset/liability management and is commonly measured by
the maturity/repricing gap.  The maturity/repricing gap is the dollar difference
between maturing or repricing assets and maturing or repricing liabilities at
different intervals of time.

     The following tables sets forth rate sensitive interest-earning assets and
interest-bearing liabilities as of December 31, 1997, the interest rate
sensitivity gap (i.e. interest sensitive assets minus interest sensitive
liabilities), the cumulative interest rate sensitivity gap, the interest rate
sensitivity gap ratio (interest sensitive assets divided by interest sensitive
liabilities) and the cumulative interest rate sensitivity gap ratio.  For the
purposes of the following table, an asset or liability is considered rate
sensitive within a specified period when it matures or can be repriced within
that period pursuant to its original contractual terms (dollar amounts in
thousands):

December 31, 1997                    Over 90 Over 180  After One  After
                            90 days  days to  days to   Year to    Five
                            or less 180 days 365 days  Five Years Years    Total
Earning Assets
   (Rate Sensitive):
 Federal funds sold           4,900                                        4,900
 Interest-bearing deposits
  with other banks               90               196                        286
 Investment securities        1,126      126    1,548    26,257   6,497   35,554
 Loans, gross of allowance
  for possible losses        35,184    3,539    1,593    29,099  18,771   88,186
     Total                   41,300    3,665    3,337    55,356  25,268  128,926

Interest-Bearing Liabilities
   (Rate Sensitive):
 Interest-bearing
  transaction deposits                         32,752    42,736           75,488
 Time deposits,
  $100,000 or more            4,359    3,388    3,388       430           11,565
 Savings and
  other time deposits         3,048      287    3,964     2,629           21,493
 Other borrowings               750                                          750
     Total                    8,157    3,675   40,104    45,795          109,296

Period GAP                   33,143      (10) (36,767)    9,561  25,268

Cumulative GAP               33,143   33,133   (3,634)    5,927  31,195

Interest Sensitivity
  GAP Ratio                  80.25%   (0.27%)(1101.80%)   17.27% 100.00%

Cumulative Interest
  Sensitivity                80.25%   73.69%    (7.52%)    5.72%) 24.20%


     The Company classifies its interest-bearing transaction accounts and
savings accounts into the over 180 days to 365 days time period as well as the
after one year to five years time period.  This is done to adjust for the
relative insensitivity of these accounts to changes in interest rates.  Although
rates on these accounts can be contractually reset at the Company's discretion,
historically these accounts have not demonstrated strong correlations to changes
in the prime rate.  Generally, a positive gap at one year indicates that net
interest income and the net interest margin will increase if interest rates rise
in the future.  If interest rates decline in the future, a positve gap generally
indicates that net interest income and the net interest margin will decrease.
The Company neither currently utilizes financial derivatives to hedge its
asset/liability position nor has any plans to employ such strategies in the near
future.

     The following table summarizes, for the periods indicated, loan balances
at the end of each period and average balances during the period, changes in the
allowance for possible credit losses arising from credit losses, recoveries of
credits losses previously incurred, additions to the allowance for possible
credit losses charged to operating expense, and certain ratios relating to the
allowance for possible credit losses:

Analysis of the Allowance for Possible Credit Losses

(Dollars in thousands)                         1997       1996
Allowance for loan losses:
Beginning balance                            $   944    $   752
Provision for loan losses                        120        220
Charge-offs:
Commercial                                       105         47
Real estate
Consumer                                                      3
     Total charge-offs                           108         47
Recoveries:
Commercial                                        51         16
Real estate
Consumer                                                      3
     Total recoveries                             51         19
     Net charge-offs                              57         28
Ending balance                               $ 1,007    $   944
Loans (net of unearned income)
   outstanding at December 31 (1)            $88,186    $81,713
Average loans (net of unearned income)
   outstanding at December 31 (1)            $82,959    $72,393
Ratios:
Allowance to loans (net of unearned income)*   1.14%      1.16%
Net charge-offs to average loans
   (net of unearned income)*                    .07%       .04%
Net charge-offs to allowance                   5.66%      2.97%

(1) Includes mortgage loans sold and mortgage loans held for sale reported on
the Consolidated Balance Sheets.

     Based upon growth in the loan portfolio, MCB Financial provided $120,000
to the allowance for possible credit losses during 1997 as compared to $220,000
during the same period of 1996.  Net charge-offs totaled $57,000 and $28,000,
respectively.


     The following table sets forth the allocation of the allowance for
possible credit losses as of the dates indicated:

Allocation of the Allowance for Possible Credit Losses

                                        1997                        1996
                                             Percent                     Percent
                                            of loans                    of loans
                              Allowance      in Each      Allowance      in Each
                           for Possible  Category to   For Possible  Category to
(Dollars in thousands)    Credit Losses  Total Loans  Credit Losses  Total Loans
Commercial                       $  570       41.79%           $583       42.85%
Real estate                         245       52.39%            202       50.27%
Consumer                             43        5.82%             48        6.88%
Not allocated                       149          N/A            111          N/A
     Total                       $1,007      100.00%           $944      100.00%

     The allowance is available to absorb losses from all loans, although
allocations have been made for certain loans and loan categories.  The
allocation of the allowance as shown below should not be interpreted as an
indication that charge-offs in future periods will occur in these amounts or
proportions, or that the allocation indicates future charge-off trends.  In
addition to the most recent analysis of individual loans and pools of loans,
management's methodology also places emphasis on historical loss data,
delinquency and nonaccrual trends by loan classification category and expected
loan maturity.  This analysis, management believes, identifies potential losses
within the loan portfolio and therefore results in allocation of a large portion
of the allowance to specific loan categories.

Time Certificates, $100,000 and Over

     The following table sets forth the time remaining to maturity of MCB
Financial's time deposits in amounts of $100,000 or more (dollar amounts in
thousands):

Time remaining to maturity                 December 31, 1997
Three months or less                                 $ 4,359
After three months to six months                       3,388
After six months to one year                           3,388
After twelve months                                      430
     Total                                           $11,565



Item 7. Financial Statements.

     The information required to be furnished pursuant to this item is contained
in the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements in the Annual Report.  Such information and the
Independent Auditors'Report in the Annual Report are incorporated herein by
reference to Exhibit No. (13) of this report.


Item 8. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure.

None.



PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

     The information required to be furnished pursuant to this item will be set
forth under the captions "Election of Directors" and "Executive Officers" in the
registrant's proxy statement (the "Proxy Statement") to be furnished to
stockholders in connection with the solicitation of proxies by MCB Financial's
Board of Directors for use at the 1998 Annual Meeting of Shareholders to be held
on May 20, 1998, and is incorporated herein by reference.


Item 10. Executive Compensation

     The information required to be furnished pursuant to this item will be set
forth under the caption "Executive Compensation of MCB Financial and Metro
Commerce" of the Proxy Statement, and is incorporated herein by reference.


Item 11. Security Ownership of Certain Beneficial Owners and Management.

     The information required to be furnished pursuant to this item will be set
forth under the captions "Security Ownership of Certain Beneficial Owners" and
"Security Ownership of Management" of the Proxy Statement, and is incorporated
herein by reference.


Item 12. Certain Relationships and Related Transactions.

     The information required to be furnished pursuant to this item will be set
forth under the caption "Certain Relationships and Related Transactions
Regarding MCB Financial and Metro Commerce" of the Proxy Statement, and is
incorporated herein by reference.


Item 13. Exhibits and Reports on Form 8-K.

(a) List of  Exhibits:

Exhibits:

(2)         -- Plan of acquisition, reorganization (incorporated by reference to
               the registrant's registration statement on Form S-4
               (File No. 33-76832).
(3)(a)      -- Articles of incorporation (incorporated by reference to the
               registrant's registration statement on Form S-4
               (File No. 33-76832).
(3)(b)      -- By-laws (incorporated by reference to the
               registrant's registration statement on Form S-4
              (File No. 33-76832).
(10)(a)(1)  -- Stock Option Plan (incorporated by reference to the
               registrant's registration statement on Form S-4
               (File No. 33-76832).
(10)(a)(2)  -- Deferred Compensation Plan for Executives (incorporated by
               reference to Exhibit (10)(a)(2) to the registrant's Annual Report
               on Form 10-KSB for its fiscal year ended December 31, 1994).
(10)(b)     -- Leases
   (10)(b)(1)  -- San Rafael Office Lease  (incorporated by reference to
                  Exhibit (10)(b)(1) to the registrant's Annual Report on Form
                  10-KSB for its fiscal year ended December 31, 1994).
   (10)(b)(2)  -- South San Francisco Office Lease (incorporated by reference
                  to Exhibit (10)(b)(2) to the registrant's Annual Report on
                  Form 10-KSB for its fiscal year ended December 31, 1994).
   (10)(b)(3)  -- Hayward Office Lease (incorporated by reference to
                  Exhibit (10)(b)(3) to the registrant's Annual Report on Form
                  10-KSB for its fiscal year ended December 31, 1994).
   (10)(b)(4)  -- Upland Office Lease (incorporated by reference to
                  Exhibit (10)(b)(4) to the registrant's Annual Report on Form
                  10-KSB for its fiscal year ended December 31, 1994).
   (10)(b)(5)  -- San Francisco Office Lease
(11)        -- Statement re: computation of per share earnings (the
               information required to be furnished pursuant to this exhibit is
               contained in the Consolidated Financial Statements and the Notes
               to Consolidated Financial Statements in the Annual Report, which
               are incorporated herein by reference to Exhibit No. (13) of this
               report).
(13)        -- 1997 Annual Report to Shareholders (only those portions expressly
               incorporated by reference herein shall be deemed filed with the
               Commission).
(21)        -- Subsidiaries of the small business issuer (the information
               required to be furnished pursuant to this exhibit is contained in
               the Notes to Consolidated Financial Statements in the Annual
               Report, which is incorporated herein by reference to Exhibit No.
               of this report).
(27)        -- Financial Data Schedule

    (b) Reports on Form 8-K.  MCB Financial filed the following Current Report
        on Form 8-K during the last quarter of the period covering this report:

        (i) None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 26th day of March,
1998.

                                          By /s/ John Cavallucci
                                          John Cavallucci
                                          Chairman, President and
                                          Chief Executive Officer
                                          (Principal Executive Officer);
                                          Director


                                          By /s/ Patrick E. Phelan
                                          Patrick E. Phelan
                                          Chief Financial Officer
                                          (Principal Financial Officer)
                                          (Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 26th day of March, 1998.

Name                                            Title

/s/ John Cavallucci                             Chairman; Director
John Cavallucci

/s/ Robert E. Eklund                            Director
Robert E. Eklund

/s/ Timothy J. Jorstad                          Director
Timothy J. Jorstad

/s/ Catherine H. Munson                         Director
Catherine H. Munson

/s/ Gary T. Ragghianti                          Vice Chairman; Director
Gary T. Ragghianti

/s/ Michael J. Smith                            Director
Michael J. Smith

/s/ Edward P. Tarrant                           Director
Edward P. Tarrant

/s/ Randall J. Verrue                           Director
Randall J. Verrue