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

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2000

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

          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:
                           Common Stock, No Par Value
                                (Title of class)

         Securities registered under Section 12(g) of the Exchange Act:
                         Preferred Stock Purchase Rights
                                (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. [ ].

    The issuer's revenues for its most recent fiscal year were $19,114,000.

    At March 19, 2001,  the  aggregate  market value of the Common Stock held by
non-affiliates of the issuer was approximately $15,683,000. 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 19, 2001,  the issuer had  outstanding  1,775,182  shares of Common
Stock, no par value, which is the issuer's only class of common stock.

                      Documents Incorporated by Reference:

    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 16, 2001,  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, 2000.

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<TABLE>
<CAPTION>

                                         TABLE OF CONTENTS

                                                                                                          Page
                                              PART I

<S>                                                                                                         <C>
Item 1.  Description of Business.....................................................................       1
     MCB Financial Corporation.......................................................................       1
     Metro Commerce Bank.............................................................................       1
     Competition.....................................................................................       2
     Insurance.......................................................................................       2
     Employees.......................................................................................       3
     Supervision and Regulation......................................................................       3
Item 2.  Description of Property.....................................................................       9
Item 3.  Legal Proceedings...........................................................................       9
Item 4.  Submission of Matters to a Vote of Security Holders.........................................       9

                                              PART II

Item 5.  Market for Common Equity and Related Stockholder Matters....................................      10
Item 6.  Management's Discussion and Analysis........................................................      10
Item 7.  Financial Statements........................................................................      22
Item 8.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure........      46

                                              PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a)
         of the Exchange Act.........................................................................      46
Item 10. Executive Compensation......................................................................      46
Item 11. Security Ownership of Certain Beneficial Owners and Management..............................      46
Item 12. Certain Relationships and Related Transactions..............................................      46
Item 13. Exhibits and Reports on Form 8-K............................................................      46
</TABLE>


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                                     PART I

Item 1. Description of Business

MCB Financial Corporation

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

    On October 1, 1993, the Company began  operations as a bank holding  company
with Metro Commerce Bank (the "Bank") as its wholly-owned  bank subsidiary.  MCB
Statutory Trust I (the "Trust"),  which is a Connecticut  statutory trust formed
for the exclusive purpose of issuing and selling trust preferred securities,  is
also a subsidiary  of the Company.  The  principal  business and activity of the
Company is to serve as the bank holding  company for the Bank and its  principal
source of income is dividends paid by the Bank.

Metro Commerce Bank

    The Bank is a California state-chartered commercial bank that is a member of
the  Federal  Reserve  System.  The  Bank  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. On July 24,
1998, the Bank converted from a national  banking  association into a California
State  bank.  The  Bank is  subject  to  primary  supervision,  examination  and
regulation  by the State of  California  Department  of  Financial  Institutions
("DFI") and the  Federal  Reserve  Board  ("FRB").  The Bank is also  subject to
certain  federal  laws and  regulations,  and the Bank 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 the Bank are insured
under the Federal Deposit Insurance Act up to the applicable limits thereof. The
Bank  is  a  wholly-owned  subsidiary  of  the  Company  and  presently  has  no
subsidiaries or affiliates other than the Trust.

    The  Bank  is  engaged  in  substantially  all  of the  business  operations
customarily conducted by independent commercial banks in California.  The Bank's
banking  services  include  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.  The Bank
also offers travelers'  checks,  notary public and other customary bank services
to its customers. The Bank is not a credit card issuing bank; however, it offers
Visa cards through one of its correspondent banks.

    The Bank operates a Small Business Administration ("SBA") Loan Division. The
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. The
SBA  Loan  Division  offers  various  business  loan  programs  secured  by both
residential and commercial real estate and business property. The Bank 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.

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

    Currently, the Bank conducts its business operations through its head office
located in San Rafael,  California, and through its five branch office locations
in San Francisco, South San Francisco, Hayward, Petaluma and Upland, California.

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

    The Bank's  business  has little,  if any,  emphasis on foreign  sources and
application of funds. The Bank's business,  based upon performance to date, does
not appear to be seasonal.  The Bank 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 the Bank's loans  concentrated  within a single industry or
group of


<PAGE>


related  industries.  Management  of the Bank is unaware of any material  effect
upon the Bank's  capital  expenditures,  earnings or  competitive  position as a
result of federal, state or local environmental regulation.

    The Bank 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. The Bank 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 the  Bank in the
acquisition of deposits.

    Among the advantages  certain of these  institutions  have over the Bank 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 the Bank's service area offer certain
services  (such as  international  banking  and  trust  services)  which are not
offered  directly by the Bank.  In addition,  by virtue of their  greater  total
capitalization,  such banks have  substantially  higher lending limits than does
the Bank (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 the Bank commenced its  operations,  officers and employees of
the Bank  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  the  Bank's
competitive position in its service areas.

Insurance

    The Company and the Bank maintain 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 DFI
and  pursuant to the  Company's  and the Bank's  Articles of  Incorporation  and
certain  contractual  obligations,  the officers and  directors  are entitled to
indemnification,  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 the Bank.  The Company and the Bank  maintain  directors  and
officers liability insurance to cover certain costs of indemnification.

Employees

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

    As of December  31, 2000,  the Bank had a total of 58  full-time  equivalent
employees.  The management of the Bank believes that its employee  relations are
satisfactory.


<PAGE>



SUPERVISION AND REGULATION

Bank Holding Company Regulation

    The Company is a bank holding  company  registered  under the BHC Act and is
subject to the  supervision of the FRB. As a bank holding  company,  the Company
must obtain the  approval of the FRB before it may acquire all or  substantially
all of the assets of any bank,  or ownership or control of the voting  shares of
any bank if,  after giving  effect to such  acquisition  of shares,  the Company
would own or  control  more than 5% of the  voting  shares  of such  bank.  With
certain  limited  exceptions,  the  Company is  prohibited  from  engaging in or
acquiring direct or indirect  ownership or control of more than 5% of the voting
shares  of any  company  engaged  in  non-banking  activities,  unless  the  FRB
determines  that such  activities  are so closely  related to banking as to be a
proper incident thereof.

    The FRB has the authority to examine the Company periodically.  In 1997, the
FRB  adopted  a  policy  for  risk-focused  supervision  of small  bank  holding
companies that do not engage in significant non-banking  activities.  Under this
policy, examinations focus on whether the Company has systems in place to manage
the risks  inherent in its  business.  In analyzing  risk,  the FRB looks at the
financial  condition of the Company and the Bank,  management,  compliance  with
laws and  regulations,  inter-company  transactions  and any new or contemplated
activities.

    The  Company  and any  subsidiary  which it may  acquire or  organize in the
future are deemed to be  affiliates  of the Bank within the meaning set forth in
the Federal  Reserve Act and are subject to the Federal Reserve Act. This means,
for example,  that there are limitations on loans by the Bank to affiliates,  on
investments  by the Bank in any  affiliate's  stock and on the Bank's taking any
affiliate's  stock as  collateral  for  loans  to any  borrower.  All  affiliate
transactions  must satisfy  certain  limitations  and  otherwise be on terms and
conditions  that are consistent with safe and sound banking  practices.  In this
regard,  the Bank  generally  may not purchase  from any affiliate a low-quality
asset (as that term is defined in the Federal Reserve Act).  Also,  transactions
by the Bank with an affiliate must be on  substantially  the same terms as would
be available for non-affiliates.

    The  Company  and the Bank are also  subject  to certain  restrictions  with
respect  to  engaging  in the  underwriting,  public  sale and  distribution  of
securities.

    The  Company and the Bank are  prohibited  from  engaging in certain  tie-in
arrangements in connection with the extension of credit.  For example,  the Bank
generally may not extend credit on the condition  that the customer  obtain some
additional service from the Bank or the Company,  or refrain from obtaining such
service from a competitor.

Dividends Payable by the Company

    Holders of Common Stock of the Company are entitled to receive  dividends as
and when  declared by the  Company's  Board of  Directors  out of funds  legally
available therefor under the laws of the State of California.

    A California  corporation such as the Company 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,  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 25 percent, most bank holding companies,  including the
Company 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 FRB has advised bank holding  companies that it believes that payment of
cash dividends in excess of current  earnings from  operations is  inappropriate
and may be cause for supervisory  action. As a result of this policy,  banks and
their  holding  companies may find it difficult to pay dividends out of retained
earnings from historical periods prior to the most recent fiscal year or to take
advantage  of  earnings  generated  by  extraordinary  items  such as  sales  of
buildings or other large assets in order to generate  profits to enable  payment
of future  dividends.  Further,  the FRB's  position that holding  companies are
expected  to provide a source of  managerial  and  financial  strength  to their
subsidiary banks  potentially  restricts a bank holding company's ability to pay
dividends.


<PAGE>


Financial Services Modernization Legislation

    The  Gramm-Leach-Bliley  Act of 1999 (the "Financial Services  Modernization
Act") became effective March 11, 2000. The Financial Services  Modernization Act
repeals  the  two  provisions  of the  Glass-Steagall  Act:  Section  20,  which
restricted the  affiliation of Federal  Reserve Member Banks with firms "engaged
principally" in specified securities activities; and Section 32, which restricts
officer,  director, or employee interlocks between a member bank and any company
or person "primarily engaged" in specified securities  activities.  In addition,
the Financial Services Modernization Act also contains provisions that expressly
preempt any state law restricting the  establishment of financial  affiliations,
primarily related to insurance.  The general effect of the law is to establish a
comprehensive framework to permit affiliations among commercial banks, insurance
companies,  securities  firms, and other financial service providers by revising
and expanding the BHCA framework to permit a holding company system to engage in
a full range of financial  activities  through a new entity known as a Financial
Holding Company.  "Financial  activities" is broadly defined to include not only
banking,  insurance,  and securities  activities,  but also merchant banking and
additional  activities  that  the  Federal  Reserve,  in  consultation  with the
Secretary of the Treasury,  determines to be financial in nature,  incidental to
such  financial  activities,  or  complementary  activities  that do not  pose a
substantial  risk to the safety and soundness of depository  institutions or the
financial system generally.

Generally, the Financial Services Modernization Act:

         o Repeals  historical  restrictions on, and eliminates many federal and
state law barriers to,  affiliations  among banks,  securities firms,  insurance
companies, and other financial service providers;

         o Provides a uniform  framework  for the  functional  regulation of the
activities of banks, savings institutions, and their holding companies;

         o Broadens the  activities  that may be  conducted  by national  banks,
banking   subsidiaries   of  bank  holding   companies,   and  their   financial
subsidiaries;

         o Provides an enhanced framework for protecting the privacy of consumer
information;

         o  Adopts  a  number  of  provisions  related  to  the  capitalization,
membership,  corporate governance,  and other measures designed to modernize the
Federal Home Loan Bank system;

         o Modifies  the laws  governing  the  implementation  of the  Community
Reinvestment Act ("CRA"); and

         o Addresses a variety of other legal and  regulatory  issues  affecting
both day-to-day operations and long-term activities of financial institutions.

    In order for the Company to take  advantage of the ability to affiliate with
other financial services providers, the Company must become a "Financial Holding
Company" as  permitted  under an  amendment  to the BHCA.  To become a Financial
Holding Company,  the Company would file a declaration with the Federal Reserve,
electing to engage in activities permissible for Financial Holding Companies and
certifying  that it is eligible  to do so because all of its insured  depository
institution subsidiaries are well-capitalized and well-managed. In addition, the
Federal  Reserve must also  determine that each insured  depository  institution
subsidiary of the Company has at least a "satisfactory"  CRA rating. The Company
currently  meets the  requirements  to make an  election  to become a  Financial
Holding  Company.  The  Company's  management  has not  determined  at this time
whether it will seek an  election  to become a Financial  Holding  Company.  The
Company is examining its strategic business plan to determine whether,  based on
market  conditions,  the relative  financial  conditions  of the Company and its
subsidiaries,  regulatory capital requirements, general economic conditions, and
other  factors,  the  Company  desires to  utilize  any of its  expanded  powers
provided in the Financial Services Modernization Act.

    The Financial  Services  Modernization Act provides that designated  federal
regulatory agencies, including the FDIC, the FRB, the OCC and the Securities and
Exchange Commission,  are to publish regulations to implement certain provisions
of the Act.  These  agencies  have  cooperated  in the  release  of  rules  that
establish  minimum  requirements  to be followed by financial  institutions  for
protecting  the privacy of  financial  information  provided by  consumers.  The
FDIC's rule,  which would  establish  privacy  standards to be followed by state
nonmember  bank such as the  Banks,  requires  a  financial  institution  to (i)
provide  notice to  customers  about its



<PAGE>

privacy  policies and practices,  (ii) describe the  conditions  under which the
institution  may disclose  nonpublic  personal  information  about  consumers to
nonaffiliated third parties, and (iii) provide a method for consumers to prevent
the financial  institution  from  disclosing that  information to  nonaffiliated
third parties by "opting out" of that disclosure.

    The Financial  Services  Modernization  Act also permits  national  banks to
engage in expanded activities through the formation of financial subsidiaries. A
national  bank may have a  subsidiary  engaged in any  activity  authorized  for
national  banks  directly  or  any  financial  activity,  except  for  insurance
underwriting,  insurance investments,  real estate investment or development, or
merchant  banking,  which  may  only be  conducted  through  a  subsidiary  of a
Financial Holding Company. Financial activities include all activities permitted
under new sections of the BHCA or permitted by regulation.

    A national  bank  seeking to have a  financial  subsidiary,  and each of its
depository    institution    affiliates,    must   be   "well-capitalized"   and
"well-managed."  The total assets of all financial  subsidiaries  may not exceed
the lesser of 45% of a bank's total assets, or $50 billion. A national bank must
exclude from its assets and equity all equity  investments,  including  retained
earnings,  in a financial  subsidiary.  The assets of the  subsidiary may not be
consolidated  with the  bank's  assets.  The bank must also  have  policies  and
procedures to assess  financial  subsidiary  risk and protect the bank from such
risks and potential liabilities.

    The Financial Services  Modernization Act also includes a new section of the
Federal Deposit Insurance Act governing  subsidiaries of state banks that engage
in "activities as principal that would only be permissible"  for a national bank
to conduct in a financial  subsidiary.  It expressly  preserves the ability of a
state bank to retain  all  existing  subsidiaries.  Because  California  permits
commercial  banks  chartered by the state to engage in any activity  permissible
for national banks, the Bank will be permitted to form subsidiaries to engage in
the activities  authorized by the Financial  Services  Modernization Act, to the
same extent as a national  bank.  In order to form a financial  subsidiary,  the
bank must be well-capitalized, and the bank would be subject to the same capital
deduction,  risk  management  and affiliate  transaction  rules as applicable to
national banks.

    The  Company  and the  Bank  do not  believe  that  the  Financial  Services
Modernization  Act will have a material  adverse effect on our operations in the
near-term.  However, to the extent that it permits banks,  securities firms, and
insurance companies to affiliate, the financial services industry may experience
further  consolidation.  The Financial Services Modernization Act is intended to
grant to  community  banks  certain  powers  as a matter  of right  that  larger
institutions  have  accumulated on an ad hoc basis.  Nevertheless,  this act may
have the result of increasing the amount of competition that the Company and the
Bank  faces from  larger  institutions  and other  types of  companies  offering
financial  products,  many  of  which  may  have  substantially  more  financial
resources than the Company and the Bank.

Bank Regulation

    The Bank is subject to regulation,  supervision  and regular  examination by
the DFI and FRB.  The  deposits of the Bank are insured up to the maximum  legal
limits by the Bank  Insurance  Fund  ("BIF"),  which is managed  by the  Federal
Deposit  Insurance  Corporation  ("FDIC"),  and the Bank is therefore subject to
applicable  provisions of the Federal Deposit  Insurance Act. The regulations of
these  agencies  affect  most  aspects  of the  Bank's  business  and  prescribe
permissible  types of loans and  investments,  the amount of required  reserves,
requirements for branch offices,  the permissible scope of the Bank's activities
and various other requirements.

Supervision and Examination

    Federal law mandates  frequent  examinations of all banks, with the costs of
examinations to be assessed against the bank being examined.  In the case of the
Bank, its primary Federal  regulator is the FRB. The Federal banking  regulatory
agencies have substantial  enforcement  powers over the depository  institutions
that  they  regulate.  Civil  and  criminal  penalties  may be  imposed  on such
institutions  and persons  associated with those  institutions for violations of
laws or regulation.

    The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
places  limits on brokered  deposits  and extends the limits to any bank that is
not "well  capitalized"  or is notified  that it is in "troubled  condition."  A
well-capitalized  institution  (which generally  includes an institution that is
considered  well  capitalized  for  purposes  of the  prompt  corrective  action
regulations   discussed  below)  may  still  accept  brokered  deposits  without
restriction,  unless it has been informed by its appropriate  Federal regulatory
agency  that  it  is in  "troubled  condition."  All  other  insured  depository
institutions are prohibited from accepting  brokered deposits unless a waiver is
obtained  from the FDIC.  If a waiver is  obtained,  the  interest  paid on such
deposits may not exceed the rate paid for deposits in the bank's  normal  market
area, or the national rate as determined in the FDIC's regulation.


<PAGE>



Risk-Based Deposit Insurance Assessments

    FDICIA  required  the FDIC to develop and  implement a system to account for
risks  attributable  to different  categories and  concentrations  of assets and
liabilities  in  assessing  deposit  insurance  premiums.  The  FDIC  adopted  a
risk-assessment system effective January 1, 1994. Under this system, each bank's
deposit insurance premium assessment is calculated based on information relevant
to evaluating the risk posed by the institution.

California Law

    The  activities of the Bank are also  regulated by state law. State law, for
example,  regulates  certain  loans to any  officer  of the  Bank,  directly  or
indirectly,   or  to  any  related  corporation  in  which  such  officer  is  a
stockholder, director, officer or employee.

    Subject  to  certain   limitations,   California   law  permits   California
state-chartered  banks to invest in the stock  and  equity  securities  of other
corporations,  to engage directly in or invest  directly in  subsidiaries  which
conduct real estate related activities  (including  property management and real
estate  appraisal),  and  to  participate  in  management  consulting  and  data
processing  services  for third  parties.  FDICIA  limits the powers,  including
investment  authority and subsidiaries,  of state banks to those activities that
are either permitted to national banks, or activities that the FDIC finds do not
pose a significant  risk to the deposit  insurance  fund. In November  1998, the
FDIC  announced  it would make it easier  for well run state  banks to engage in
real estate and securities underwriting,  if permitted by state law. State banks
are now required to file notice of intention to engage in such activities.

Capital Standards

    The FRB and the FDIC have  adopted  risk-based  minimum  capital  guidelines
intended  to  provide a measure  of  capital  that  reflects  the degree of risk
associated  with a  banking  organization's  operations  for  both  transactions
reported on the  balance  sheet as assets and  transactions,  such as letters of
credit and recourse arrangements, which are recorded as off balance sheet items.
Under these  guidelines,  nominal dollar amounts of assets and credit equivalent
amounts  of off  balance  sheet  items are  multiplied  by one of  several  risk
adjustment  percentages,  which range from 0% for assets  with low credit  risk,
such as certain U.S.  Treasury  securities,  to 100% for assets with high credit
risk, such as commercial  loans.  The federal banking agencies require a minimum
ratio of qualifying  total capital to  risk-adjusted  assets of 8% and a minimum
ratio of Tier 1  capital  to  risk-adjusted  assets of 4%.  In  addition  to the
risked-based   guidelines,    federal   banking   regulators   require   banking
organizations  to maintain a minimum  amount of Tier 1 capital to total  assets,
referred  to as the  leverage  ratio.  For a banking  organization  rated in the
highest of the five categories used by regulators to rate banking organizations,
the minimum leverage ratio of Tier 1 capital to total assets must be 3%. For all
banking  organizations not rated in the highest  category,  the minimum leverage
ratio must be at least 100 to 200 basis  points  above the 3% minimum,  or 4% to
5%. In addition to these  uniform  risk-based  capital  guidelines  and leverage
ratios that apply across the industry, the regulators have the discretion to set
individual  minimum  capital  requirements  for specific  institutions  at rates
significantly above the minimum guidelines and ratios. See Notes to Consolidated
Financial  Statements  for the  capital  ratios of the  Company  and the Bank at
December 31, 2000.

Dividends Payable by the Bank to the Company

    The Bank is a legal entity which is separate and distinct  from the Company.
Aside  from  raising  capital  on its own,  the  exercise  of stock  options  or
borrowing funds for operating  capital,  it is anticipated  that the Company may
receive  additional  income through  dividends paid by the Bank.  Subject to the
regulatory  restrictions described below, future cash dividends by the Bank will
depend upon management's assessment of future capital requirements,  contractual
restrictions and other factors.

    The power of the Board of Directors  of the Bank to declare a cash  dividend
is subject to California  law,  which  restricts  the amount  available for cash
dividends  to the lesser of the  retained  earnings or the bank's net income for
its last three fiscal years (less any  distributions to shareholders made during
such period). Where the above test is not met, cash dividends may still be paid,
with  the  prior   approval  of  the   California   Commissioner   of  Financial
Institutions,  in an amount  not  exceeding  the  greatest  of (1) the  retained
earnings of the bank;  (2) the net income of the bank for its last fiscal  year;
or (3) the net income of the bank for its current  fiscal year. See the Notes to
Consolidated Financial Statements for the amount of funds the Bank had available
for the payment of dividends at December 31, 2000.

    Under the Federal Deposit Insurance Act, bank regulators also have authority
to prohibit a bank from engaging in business  practices  which are considered to
be unsafe or unsound. It is possible,  depending upon the financial condition of
the bank in question


<PAGE>


and other  factors,  that such  regulators  could  assert  that the  payment  of
dividends or other payments might, under certain circumstances,  be an unsafe or
unsound practice, even if technically permissible.

Prompt Corrective Action and Other Enforcement Mechanisms

    Federal  banking  agencies  possess  broad powers to take prompt  corrective
action to resolve the problems of insured depository institutions, including but
not  limited  to those that fall below one or more  prescribed  minimum  capital
ratios.  Each federal  banking agency has promulgated  regulations  defining the
following five  categories in which an insured  depository  institution  will be
placed,  based on the level of its capital ratios: well capitalized,  adequately
capitalized,  undercapitalized,  significantly  undercapitalized  and critically
undercapitalized.  At December 31, 2000,  the Company and the Bank  exceeded the
required ratios for classification as "well capitalized".

    An institution  that, based upon its capital levels,  is classified as "well
capitalized,"  "adequately  capitalized" or "undercapitalized" may be treated as
though it were in the next lower  capital  category if the  appropriate  federal
banking agency,  after notice and  opportunity  for hearing,  determines that an
unsafe or unsound  condition  or an unsafe or  unsound  practice  warrants  such
treatment.  At each successive  lower capital  category,  an insured  depository
institution  is subject to more  restrictions.  The  federal  banking  agencies,
however,  may  not  treat  a  significantly   undercapitalized   institution  as
"critically  undercapitalized"  unless its capital ratio actually  warrants such
treatment.

    In addition to measures taken under the prompt corrective action provisions,
commercial banking organizations may be subject to potential enforcement actions
by the federal  regulators for unsafe or unsound  practices in conducting  their
businesses  or for  violations  of any law,  rule,  regulation  or any condition
imposed in writing by the agency or any written agreement with the agency.

Impact of Monetary Policies

    Banking is a business which depends in large part on rate differentials.  In
general,  the  difference  between  the  interest  rate  paid by the Bank on its
deposits and its other  borrowings and the interest rate received by the Bank on
loans  extended to its customers  and  securities  held in the Bank's  portfolio
comprise  a major  portion  of the  Bank's  earnings.  These  rates  are  highly
sensitive to many factors that are beyond the control of the Bank.  Accordingly,
the earnings and growth of the Bank and the Company 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
FRB. The FRB 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 FRB 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.

Environmental Regulation

    Federal,  state and local  regulations  regarding the discharge of materials
into the environment may have an impact on both the Company and the Bank.  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
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.



<PAGE>


    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 by
administrative  agencies and courts, and the Bank cannot predict whether it will
be adequately protected for the types of loans made by the Bank.

    In  addition,  the Company  and the Bank  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 the Bank may be
environmentally  impaired and  therefore not provide  adequate  security for the
Bank.  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.

    The  Bank   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 the Bank's  underwriting  procedures.  The Bank makes lending decisions based
upon its  evaluation  of the  collateral,  the net worth of the borrower and the
borrower's capacity for unforeseen business interruptions or risks.

Public Interest Laws, Consumer and Lending Laws

    In addition to the other laws and regulations  discussed herein, the Bank is
subject to certain  consumer and public interest laws and  regulations  that are
designed to protect  customers in  transactions  with banks.  While the list set
forth below is not exhaustive,  these laws and regulations  include the Truth in
Lending Act, the Truth in Savings Act, the  Electronic  Funds  Transfer Act, the
Expedited Funds  Availability  Act, the Equal Credit  Opportunity  Act, the Fair
Housing  Act,  the Real Estate  Settlement  Procedures  Act,  the Home  Mortgage
Disclosure  Act,  the  Fair  Credit  Reporting  Act,  the Fair  Debt  Collection
Practices Act, the Right to Financial Privacy Act and the Community Reinvestment
Act. These laws and regulations  mandate  certain  disclosure  requirements  and
regulate the manner in which  financial  institutions  must deal with  customers
when  taking  deposits,  making  loans,  collecting  loans and  providing  other
services.  The Bank must comply with the applicable provisions of these laws and
regulations as part of its ongoing  customer  relations.  Failure to comply with
these laws and regulations can subject the Bank to various penalties,  including
but  not  limited  to  enforcement  actions,  injunctions,   fines  or  criminal
penalties,  punitive  damages to consumers  and the loss of certain  contractual
rights.

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 the Bank,
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.

New and Pending Legislation

    Certain legislative and regulatory  proposals that could affect the Company,
the Bank and the banking  business in general are pending or may be  introduced,
before the  United  States  Congress,  the  California  State  Legislature,  and
Federal, state and local government agencies.

    ATM Fees.  Legislation has been proposed in the past in the Congress and the
California  legislature  and  measures  are  currently  being  proposed in local
jurisdictions  to  regulate  the amount of ATM fees that  operators  of ATMs may
charge,  and to further  regulate the disclosure of such fees. If the collection
of interchange fees by the operator of an ATM were prohibited,  as some of these
bills  have  proposed,   the  Bank's  income  from  its  ATM  network  would  be
significantly  reduced.  Management  believes that the possible reduction in ATM
income would not have a material impact on the Company's  consolidated financial
statements.


<PAGE>


    Expansion  in Credit Union  Membership.  In 1999 a broad rule was adopted by
the National Credit Union Administration  ("NCUA") relaxing the limits on credit
union  membership.  The NCUA will now approve credit unions with  memberships of
more than 300,000  residents  with proof that they function as a community.  The
effect is to  substantially  expand the limits on credit union membership and to
make  credit  unions,  as tax  exempt  entities  serving  credit  needs of large
communities,  more  competitive to banks.  Litigation  attacking the new rule is
pending.

    The Office of Thrift Supervision  ("OTS") Expansion of Charters to Insurance
Industry.  In recent  years the OTS granted a number of charters  for  insurance
companies to operate a thrift or savings and loan subsidiary. These new charters
to the  insurance  industry are expected to result in yet more  competition  for
banks.

    It is not known to what  extent the  pending  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 the  Company and the Bank to  increased
regulation, disclosure and reporting requirements and would increase competition
to the Bank and 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 or regulations may have on the Bank's business.

Item 2. Description of Property

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

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

    The Bank's  five  branch  offices  in San  Francisco,  South San  Francisco,
Hayward,  Upland and Petaluma,  California occupy  approximately  3,600, 12,300,
3,400,  5,800 and 4,600 square feet,  respectively,  under leases that expire at
various dates through the year 2010.

    The Bank believes that its existing  facilities are adequate for its current
needs and anticipated growth.

Item 3. Legal Proceedings


    There are various  legal  actions  pending  against the Company and the Bank
arising from the normal course of business. 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 the
Company.

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

    None.



<PAGE>



PART II

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

<TABLE>
During most of 1999, the Company's common stock traded on the OTC Bulletin Board
under the symbol MCBF. On December 28, 1999,  the  Company's  common stock began
trading on the American Stock Exchange under the symbol MCB. The Company's stock
transfer agent is U.S. Stock Transfer Corporation.  There were approximately 700
shareholders  as of December 31, 2000.  The following are the high and low sales
prices  (for 2000) and high and low bid prices  (for  1999) as  reported  by the
markets  on  which  the  stock  was  traded   for  those   respective   periods.
Over-the-counter prices reflect inter-dealer prices which may not include retail
markups,  markdowns,  or  commissions.  Prices are  adjusted  to  reflect  stock
dividends and stock splits.
<CAPTION>


                           1999          Cash Dividend            2000           Cash Dividend
                     High            Low    Declared        High            Low     Declared
-------------------------------------------------------------------------------------------------
<S>                 <C>            <C>       <C>          <C>             <C>         <C>
First quarter       $9.05          $7.14                  $11.50          $7.38       $0.01
Second quarter       7.98           6.55                    8.75           7.56        0.01
Third quarter        9.25           6.67     $0.01          8.69           7.75        0.01
Fourth quarter      11.75           8.50      0.01         10.50           8.06        0.01
-------------------------------------------------------------------------------------------------
</TABLE>


Item 6. Management's Discussion and Analysis.

The  following  discussion  presents  information  pertaining  to the  financial
condition  and results of  operations  of the Company that may not  otherwise be
apparent from the financial statements and related notes. This discussion should
be read in  conjunction  with the  consolidated  financial  statements and notes
found in Item 7 of this report as well as other information presented throughout
this report.  Average balances,  including balances used in calculating  certain
financial ratios, are generally comprised of average daily balances.

This document may contain  forward-looking  statements that are subject to risks
and  uncertainties  that could cause actual  results to differ  materially  from
those indicated.

In addition to historical  information,  this  discussion and analysis  includes
certain  forward-looking  statements that are subject to risks and uncertainties
and include  information about possible or assumed future results of operations.
Many possible  events or factors could affect the future  financial  results and
performance  of the Company.  This could cause results or  performance to differ
materially from those expressed in our forward-looking statements.

Words such as "expects",  "anticipates",  "believes", "estimates", variations of
such  words  and  other  similar  expressions  are  intended  to  identify  such
forward-looking  statements.  These  statements  are not  guarantees  of  future
performance and involve certain risks,  uncertainties  and assumptions which are
difficult  to  predict.  Therefore,  actual  outcomes  and  results  may  differ
materially  from what is  expressed  or  forecasted  in,  or  implied  by,  such
forward-looking statements.


<PAGE>


Readers of the Company's  Form 10-KSB should not rely solely on forward  looking
statements and should consider all uncertainties and risks discussed  throughout
this report.  These statements are  representative  only on the date hereof, and
the Company  undertakes no obligation to update any  forward-looking  statements
made.  Some  possible  events  or  factors  that  could  occur  that  may  cause
differences  from expected  results  include the  following:  the Company's loan
growth is dependent  on economic  conditions,  as well as various  discretionary
factors,  such  as  decisions  to  sell,  or  purchase  certain  loans  or  loan
portfolios;  participations  of loans and the management of borrower,  industry,
product and geographic  concentrations  and the mix of the loan  portfolio.  The
rate of charge-offs and provision expense can be affected by local, regional and
international  economic  and market  conditions,  concentrations  of  borrowers,
industries,  products and geographical conditions, the mix of the loan portfolio
and management's  judgements  regarding the  collectibility of loans.  Liquidity
requirements  may change as a result of  fluctuations  in assets and liabilities
and  off-balance  sheet  exposures,  which  will  impact  the  capital  and debt
financing  needs of the Company  and the mix of funding  sources.  Decisions  to
purchase,  hold, or sell securities are also dependent on liquidity requirements
and market  volatility,  as well as on and off-balance sheet positions.  Factors
that may impact  interest rate risk include  local,  regional and  international
economic  conditions,  levels,  mix,  maturities,  yields or rates of assets and
liabilities and the wholesale and retail funding sources of the Company.

The Company is also  exposed to the  potential  of losses  arising  from adverse
changes  in market  rates and  prices  which can  adversely  impact the value of
financial products, including securities,  loans, and deposits. In addition, the
banking  industry in general is subject to various  monetary and fiscal policies
and  regulations,  which include those  determined by the Federal Reserve Board,
the Federal Deposit Insurance  Corporation and state regulators,  whose policies
and regulations could affect the Company's results.

Other factors that may cause actual  results to differ from the  forward-looking
statements  include the  following:  competition  with other local and  regional
banks, savings and loan associations,  credit unions and other nonbank financial
institutions,  such as investment  banking  firms,  investment  advisory  firms,
brokerage firms, mutual funds and insurance companies, as well as other entities
which offer financial services; interest rate, market and monetary fluctuations;
inflation;  market  volatility;  general economic  conditions;  introduction and
acceptance  of new  banking-related  products,  services and  enhancements;  fee
pricing  strategies,  mergers and  acquisitions  and their  integration into the
Company and management's ability to manage these and other risks.

OVERVIEW

Earnings  Summary.  The Company reported net income of $3,070,000,  or $1.52 per
share  basic and $1.45 per share  diluted,  for 2000  compared  to net income of
$2,333,000,  or $1.12 per share basic and $1.07 per share  diluted,  in 1999 and
net income of 1,621,000,  or $0.75 per share basic and $0.70 per share  diluted,
in 1998.

Return on average  assets for 2000 was 1.51% compared to 1.30% in 1999 and 1.03%
in 1998. Return on average equity for 2000 was 19.78% compared to 17.12% in 1999
and 12.61% in 1998.

FINANCIAL CONDITION

Summary. Assets increased by 6.7% during 2000 versus 15.7% and 21.2% in 1999 and
1998,  respectively.  The increase in assets during 2000 resulted primarily from
growth in existing operations.


<PAGE>


Loans. Loans held for investment  increased by $26.4 million,  or 19.4% in 2000,
as compared  to an increase of $26.5  million,  or 24.1%,  during  1999.  Strong
demand for commercial real estate  resulted in the loan growth for 2000.  Strong
demand for commercial  real estate and  construction  loans resulted in the loan
growth for 1999.

In the normal  practice  of  extending  credit,  the Bank  accepts  real  estate
collateral  on loans that have  primary  sources of  repayment  from  commercial
operations. Loans secured by real estate totaled $131.1 million, or 79.4% of all
loans, at December 31, 2000 versus $113.9 million, or 82.5% of all loans, a year
earlier.  Due to the Bank's limited lending area, its real estate  collateral is
primarily concentrated in the San Francisco Bay Area and Southern California and
is subject to economic  uncertainties  of these economies.  Management  believes
that its prudent underwriting  standards for real estate secured lending provide
reasonable safeguards against these uncertainties.

The Bank focuses its portfolio  lending on commercial,  commercial  real estate,
and construction  loans. These loans generally carry a higher level of risk than
conventional  real  estate  loans,  and  accordingly,  yields on these loans are
typically  higher than those on other loans.  The  performance of commercial and
construction  loans is generally  dependent upon future cash flows from business
operations  (including the sale of products,  merchandise  and services) and the
successful  completion  or  operation  of  large  real  estate  projects.  Risks
attributable to such loans can be  significantly  increased,  often to a greater
extent than on other loans, by regional  economic  factors,  real estate prices,
the demand for commercial  and retail office space,  and the demand for products
and  services  of  industries  which are  concentrated  within the  Bank's  loan
portfolio.  As of December 31,  2000,  the two largest  industry  concentrations
within the loan portfolio were real estate and related services at 30.2% and the
business/personal  service  industry at 22.3% of the  portfolio.  Because credit
concentrations  increase portfolio risk, the Bank places significant emphasis on
the purpose of each loan and the related sources of repayment.



<PAGE>



Nonperforming  Assets.  The Company  carefully  monitors the quality of its loan
portfolio  and  the  factors  that  affect  it,  including   regional   economic
conditions,  employment  stability,  and real  estate  values.  The  accrual  of
interest on loans is  discontinued  when the payment of principal or interest is
considered to be in doubt, or when a loan becomes  contractually  past due by 90
days or more with respect to  principal  or interest,  except for loans that are
well secured and in the process of collection.

<TABLE>
As of December  31, 2000 the Company had  nonperforming  assets in the amount of
$40,000 which  represented one loan 90 days or more past due and still accruing.
This loan is well secured and in the process of collection.  The following table
sets forth the balance of nonperforming assets as of the dates indicated (dollar
amounts in thousands):
<CAPTION>

Nonperforming Assets at December 31,
                                            1996              1997             1998             1999              2000
                                        -------------    --------------    -------------    -------------    -------------
<S>                                   <C>              <C>               <C>              <C>              <C>
Nonaccrual loans                      $           79   $            69   $          563   $        1,707
Loans 90 days or more
   past due and still accruing                                      40              404               40   $            40
                                        -------------    --------------    -------------    -------------    -------------
                                      $           79   $           109   $          967   $        1,747   $            40
                                        =============    ==============    =============    =============    =============

As a percent of total loans                     0.10%             0.12%            0.87%            1.27%             0.02%
As a percent of total assets                    0.06%             0.08%            0.57%            0.89%             0.02%
</TABLE>


Allowance  for Loan Losses.  The Company  maintains an allowance for loan losses
(the "ALL") which is reduced by credit losses and increased by credit recoveries
and provisions to the ALL charged against operations.  Provisions to the ALL and
the total of the ALL are based,  among other factors,  upon the Company's credit
loss  experience,  the performance of loans within the portfolio,  evaluation of
loan collateral  value,  and the prospects or worth of respective  borrowers and
guarantors.

In determining the adequacy of its ALL, the Company  segments its loan portfolio
into pools of  homogeneous  loans that share similar risk factors.  Each pool is
given a risk assessment  factor that largely reflects the expected future losses
from each category.  These risk assessment factors change as economic conditions
shift and actual loan losses are recorded. The ALL totaled $1,939,000,  or 1.18%
of total  loans,  as of December  31, 2000 versus  $1,492,000  or 1.08% of total
loans, a year earlier. In both periods, the ALL was determined to be an adequate
allowance  against  foreseeable  future  losses.  Note  3  to  the  consolidated
financial  statements provides a summary of the activity in the ALL for the five
years ended December 31, 2000.



<PAGE>


<TABLE>
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 loan losses  arising from credit  losses,  recoveries  of credits
losses previously  incurred,  additions to the allowance for loan losses charged
to operating  expense,  and certain  ratios  relating to the  allowance for loan
losses:
<CAPTION>

Analysis of the Allowance for Loan Losses
                                                 1996             1997             1998             1999              2000
                                              ------------     ------------     ------------     ------------     -------------
<S>                                        <C>              <C>              <C>               <C>              <C>
(Dollars in thousands)
Allowance for loan losses:
Beginning balance                          $          752   $          944   $        1,007    $       1,117    $        1,492
                                           ---------------  ---------------  ---------------   --------------   ---------------
Provision for loan losses                             220              120              153              365               420
Charge-offs:
   Commercial                                          47              105               53               62                 9
   Consumer                                                              3                                                   1
                                           ---------------  ---------------  ---------------   --------------   ---------------
      Total charge-offs                                47              108               53               62                10
                                           ---------------  ---------------  ---------------   --------------   ---------------
Recoveries:
   Commercial                                          16               51                9               72                37
   Consumer                                             3                                 1
                                           ---------------  ---------------  ---------------   --------------   ---------------
      Total recoveries                                 19               51               10               72                37
                                           ---------------  ---------------  ---------------   --------------   ---------------
Net charge-offs (recoveries)                           28               57               43              (10)              (27)
                                           ---------------  ---------------  ---------------   --------------   ---------------
Ending balance                             $          944   $        1,007   $        1,117    $       1,492    $        1,939
                                           ===============  ===============  ===============   ==============   ===============

Loans outstanding at December 31           $       81,713   $       88,186   $      111,075    $     137,966    $      164,823
Average loans outstanding during
    period ended December 31               $       72,393   $       82,959   $      100,130    $     125,035    $      149,645

Ratios:
Allowance to loans at end of period                 1.16%            1.14%            1.01%            1.08%             1.18%
Net charge-offs (recoveries)
    to average loans during period                  0.04%            0.07%            0.04%           -0.01%            -0.02%
Net charge-offs (recoveries)
    to allowance at beginning of period             3.72%            6.04%            4.27%           -0.90%            -1.81%
</TABLE>


<TABLE>
The following  table sets forth the  allocation of the allowance for loan losses
as of the dates indicated:

<PAGE>

Allocation of the Allowance for Loan Losses
(Dollars in thousands)
<CAPTION>

                         1996                     1997                    1998                  1999                    2000
                ---------------------- ------------------------ ----------------------- ----------------------- --------------------
                            Percent of               Percent of              Percent of             Percent of            Percent of
                Allowance     Loans     Allowance      Loans     Allowance     Loans     Allowance     Loans    Allowance   Loans
                  for        in Each      for         in Each      for        in Each      for        in Each     for      in Each
                  Loan     Category to    Loan      Category to    Loan     Category to    Loan     Category to   Loan   Category to
                 Losses    Total Loans   Losses     Total Loans   Losses    Total Loans   Losses    Total Loans  Losses  Total Loans
                ---------- ----------- ----------  ------------ ----------  ----------- ---------- ------------ --------- ----------

<S>             <C>           <C>      <C>             <C>      <C>            <C>      <C>           <C>       <C>          <C>
Commercial      $     583     42.85 %  $     570       41.79 %  $     641      42.79 %  $     904     47.87 %   $     793    43.34 %
Real Estate           202     50.27          245       52.39          245      53.27          260     48.98           978    53.47
Consumer               48      6.88           43        5.82           38       3.94           30      3.15            65     3.19
Not Allocated         111       N/A          149         N/A          193        N/A          298       N/A           103      N/A
                ---------- ----------- ----------  ------------ ----------  ----------- ---------- ------------ ---------- ---------
          Total $     944    100.00 %  $   1,007      100.00 %  $   1,117     100.00 %  $   1,492    100.00 %   $   1,939   100.00 %
                ========== =========== ==========  ============ ==========  =========== ========== ============ ========== =========
</TABLE>


    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 above 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.

Investments.  Total investment  securities decreased by $9,018,000,  or 25.0% in
2000, as compared to a decrease of $5,960,000, or 14.2% in 1999. At December 31,
2000, investment  securities held to maturity remained at $2,000,000,  unchanged
from December 31, 1999.  Investment securities available for sale decreased $9.0
million as the Company  used the proceeds of sales and  maturities  to fund loan
growth  during the year.  At December 31,  2000,  $2.0  million,  or 7.4% of the
Company's  investment  securities  were invested in callable  government  agency
debentures  compared  to $2.0  million,  or 5.5% at  December  31,  1999.  These
securities  offer above market yields,  but may be called if interest rates fall
below certain  levels.  If these  securities are called,  the Company may not be
able to reinvest the proceeds to obtain the same yield.

<TABLE>
Deposits.  Total  deposits  increased by $8.8 million,  or 4.9%,  during 2000 as
compared to an increase of $24.9 million, or 16.1%, during 1999. The increase in
2000 was  primarily the result of growth in existing  operations.  The Company's
cost of funds  increased  to 2.96%  during  2000 from 2.73%  during  1999 as the
Company's  rates paid on deposits in 2000  increased from the rates paid in 1999
in  response  to the  increase  in overall  interest  rates year over year.  The
following table  summarizes the distribution of average deposits and the average
rates paid for the periods indicated (dollar amounts in thousands):

<PAGE>

<CAPTION>

                                                                              For the Years Ended December 31,
                                                   --------------------------------------------------------------------------------
                                                             1998                        1999                       2000
                                                   ------------------------    ------------------------    ------------------------
                                                    Average        Average       Average       Average       Average       Average
                                                    Balance         Rate         Balance         Rate        Balance        Rate
                                                   ----------    ----------    ----------     ----------    ----------   ----------
<S>                                               <C>               <C>        <C>                       <C>                <C>
Noninterest-bearing demand deposits               $    31,371                  $   40,290                $  47,329

Interest-bearing transaction deposits
 (includes money market deposit accounts)              88,255        3.93%          98,954        3.42%      108,708        3.70%
Savings deposits                                        1,845        1.92%           2,259        1.90%        2,146        1.95%
Time deposits, $100,000 and over                       12,493        5.31%          13,477        4.85%       17,730        5.46%
Other time deposits                                     8,194        5.06%           8,816        4.41%        9,086        4.96%
                                                   ------------                ------------              ------------
    Total interest-bearing                            110,787        4.14%         123,506        3.62%      137,670        3.98%
                                                   ------------                ------------              ------------

Total deposits                                    $   142,158        3.23%      $  163,796        2.73%    $ 184,999        2.96%
                                                   ============                ============              ============
</TABLE>



<PAGE>



RESULTS OF OPERATIONS

Net Interest  Income / Net Interest  Margin.  Net interest  income  increased by
$2,214,000,  or 21.1%, during 2000 to reach $12.7 million.  This compares to net
interest  income of $10.5 million in 1999 and $8.6 million in 1998. The increase
in 2000 was  primarily  due to the growth in average  loans,  largely due to the
continuation of favorable economic conditions in the Company's market areas.


<TABLE>
The following table sets forth average assets,  liabilities,  and  shareholders'
equity; the amount of interest income or interest expense;  the average yield or
rate  for  each  category  of  interest-bearing   assets  and   interest-bearing
liabilities;  and the net interest margin for the periods indicated.  Nonaccrual
loans are  included  in the  average  balances  and only  collected  interest on
nonaccrual  loans  is  included  in the  interest  column.  (dollar  amounts  in
thousands):
<CAPTION>
                                       -----------------------------------------------------------------------------------
                                                    1998                       1999                        2000
                                       -----------------------------------------------------------------------------------
                                        Average                    Average                     Average
                                        Balance   Interest  Rate   Balance   Interest  Rate    Balance   Interest  Rate
                                       -----------------------------------------------------------------------------------
<S>                                     <C>         <C>      <C>    <C>       <C>       <C>     <C>       <C>        <C>
ASSETS
Federal funds sold                      $  9,005    $ 473    5.25%  $ 10,775  $   544   5.05%   $ 10,810  $    677   6.26%
Interest-bearing deposits with banks         286       17    5.94%       286       15   5.24%        286        17   5.94%
Investment securities                     36,431    2,156    5.93%    31,475    1,732   5.51%     29,440     1,713   5.82%
Loans                                    100,130   10,559   10.55%   125,035   12,735  10.19%    149,645    15,838  10.58%
                                       ------------------------------------------------------------------------------------
Total Earning Assets                     145,852   13,205    9.06%   167,571   15,026   8.97%    190,181    18,245   9.59%
Total Non-earning Assets                  10,894                      12,127                      13,566
                                       ----------                  ----------                 -----------
Total Assets                            $156,746                    $179,698                    $203,747
                                       ==========                  ==========                 ===========

LIABILITIES & SHAREHOLDERS' EQUITY
Demand deposits                         $ 31,371                    $ 40,290                    $ 47,329

Interest-bearing transaction accounts     88,255    3,472    3.93%    98,954    3,388   3.42%    108,708     4,020   3.70%
Time deposits, $100,000 or more           12,493      664    5.31%    13,477      653   4.85%     17,730       968   5.46%
Savings and other time                    10,039      450    4.48%    11,075      432   3.90%     11,232       493   4.39%
                                       ------------------------------------------------------------------------------------
     Total interest-bearing deposits     110,787    4,586    4.14%   123,506    4,473   3.62%    137,670     5,481   3.98%
                                       ------------------------------------------------------------------------------------
Other borrowings                             495       24    4.85%       793       37   4.67%      1,510        34   2.25%
                                       ------------------------------------------------------------------------------------
     Total interest-bearing liabilities  111,282    4,610    4.14%   124,299    4,510   3.63%    139,180     5,515   3.96%
Other liabilities                          1,243                       1,483                       1,714
Shareholders' equity                      12,850                      13,626                      15,524
Total Liabilities
                                       ----------                  ----------                 -----------
     and Shareholders' Equity           $156,746                    $179,698                    $203,747
                                       ==========                  ==========                 ===========

                                                 ---------                   ---------                   ----------
Net interest income                               $ 8,595                     $10,516                     $ 12,730
                                                 =========                   =========                   ==========

Net interest margin                                          5.89%                      6.28%                        6.69%
</TABLE>

<PAGE>


The  Company's  net  interest  margin (net  interest  income  divided by average
earning  assets)  increased to 6.69% during 2000. This compared to 6.28% in 1999
and  5.89% in 1998.  The  increases  were  primarily  attributable  to growth in
average   loans,   which   generally   provide  a  greater   return  than  other
interest-earning  assets.  The increase in average  loans was largely due to the
continuation of favorable economic conditions in the Company's market areas.

<TABLE>
         The following  table  presents the dollar amount of changes in interest
earned and interest paid for each major category of  interest-earning  asset and
interest-bearing  liability  and the  amount of change  attributable  to average
balances  (volume)  fluctuations  and average  rate  fluctuations.  The variance
attributable  to both balance and rate  fluctuations  is allocated to a combined
rate/volume variance (dollar amounts in thousands):
<CAPTION>
                                                    1999 Compared to 1998                       2000 Compared to 1999
                                                 Increase (decrease) due to                  Increase (decrease) due to
                                         ----------------------------------------------------------------------------------------
                                                                 Rate/                                      Rate/
                                           Volume      Rate      Volume    Total      Volume      Rate      Volume     Total
                                         ----------------------------------------------------------------------------------------
<S>                                           <C>     <C>         <C>        <C>         <C>      <C>          <C>      <C>
Interest Income:
   Federal funds sold                         $93     ($18)       ($4)       $71         $2       $131         $0       $133
   Interest-bearing deposits with banks         0       (2)         0         (2)         0          2          0          2
   Investment securities                     (292)    (153)        21       (424)      (111)        98         (6)       (19)
   Loans                                    2,626     (360)       (90)     2,176      2,514        492         97      3,103
                                         ------------------------------------------------------------------------------------
Total Interest Income                       2,427     (533)       (73)     1,821      2,405        723         91      3,219
                                         ------------------------------------------------------------------------------------

Interest Expense:
   Interest-bearing transaction accounts      421     (450)       (55)       (84)       331        274         27        632
   Time deposits, $100,000 or more             52      (58)        (5)       (11)       207         82         26        315
   Savings and other time                      46      (58)        (6)       (18)         6         54          1         61
   Other borrowings                            15       (1)        (1)        13         33        (19)       (17)        (3)
                                         ------------------------------------------------------------------------------------
Total Interest Expense                        534     (567)       (67)      (100)       577        391         37      1,005
                                         ------------------------------------------------------------------------------------

Net Interest Income                        $1,893      $34        ($6)    $1,921     $1,828       $332        $54     $2,214
                                         ====================================================================================
</TABLE>

Provision for Loan Losses.  The Company provided $420,000 to the ALL during 2000
compared to $365,000 in 1999 and $153,000 in 1998. The  provisions  during these
periods were recorded primarily due to growth in the loan portfolio.  Net credit
recoveries were $27,000 in 2000, compared to net credit recoveries of $10,000 in
1999 and net credit losses of $43,000 in 1998.

<PAGE>


Noninterest  Income.  The following table summarizes  noninterest income for the
years 1998, 1999 and 2000 and expresses these amounts as a percentage of average
assets (dollar amounts in thousands):

                                                     Years Ended December 31,
                                             -----------------------------------
Components of Noninterest Income                1998         1999         2000
-----------------------------------------    ---------    -----------  ---------
Gain on sale of SBA loans                  $     151     $      87    $      85
Service fees on deposit accounts                 522           610          468
Loan servicing fees                               45            53           56
Gain on sale of investment securities             53            13           (2)
Other income                                     238           225          262
                                             --------      --------     --------
    Total                                  $   1,009     $     988    $     869
                                             ========      ========     ========

As a Percentage of Average Assets
-----------------------------------------
Gain on sale of SBA loans                      0.10%         0.05%        0.04%
Service fees on deposit accounts               0.33%         0.34%        0.23%
Loan servicing fees                            0.03%         0.03%        0.03%
Gain on sale of investment securities          0.03%         0.01%        0.00%
Other income                                   0.15%         0.12%        0.13%
                                             --------      --------     --------
    Total                                      0.64%         0.55%        0.43%
                                             ========      ========     ========



<PAGE>


Noninterest  Expenses.  The following table summarizes  noninterest expenses and
the  associated  ratios to  average  assets  for the years  1998,  1999 and 2000
(dollar amounts in thousands):

--------------------------------------------------------------------------------
                                                Years Ended December 31,
                                       -----------------------------------------
--------------------------------------------------------------------------------
Components of Noninterest Expense         1998            1999          2000
--------------------------------------------------------------------------------
Salaries and employee benefits       $    3,646       $   4,069     $    4,464
Occupancy expense                           864             983          1,097
Furniture and equipment expense             414             414            464
Professional services                       310             300            272
Supplies                                    294             272            278
Promotional                                 361             293            305
Data processing                             323             369            361
Regulatory assessments                       58              41             61
Other                                       433             428            561
-------------------------------------------------------------------------------
    Total                            $    6,703       $   7,169     $    7,863
===============================================================================
Average full-time equivalent staff           55              56             58

As a Percentage of Average Assets
-------------------------------------------------------------------------------
Salaries and employee benefits            2.32%           2.26%          2.19%
Occupancy expense                         0.55%           0.55%          0.54%
Furniture and equipment expense           0.26%           0.23%          0.23%
Professional services                     0.20%           0.17%          0.13%
Supplies                                  0.19%           0.15%          0.14%
Promotional                               0.23%           0.16%          0.15%
Data processing                           0.21%           0.21%          0.18%
Regulatory assessments                    0.04%           0.02%          0.03%
Other                                     0.28%           0.24%          0.27%
-------------------------------------------------------------------------------
    Total                                 4.28%           3.99%          3.86%
===============================================================================


Income  Taxes.  The  Company's  effective tax rate was 41.1% in 2000 compared to
41.2% in 1999 and 41.0% in 1998. Note 6 to the consolidated financial statements
provides a  reconciliation  of the statutory tax rates to the effective tax rate
for each period.

Liquidity and Asset/Liability Management.  Liquidity is the Company's ability to
absorb  fluctuations in deposits while  simultaneously  providing for the credit
needs of its borrowers.  The objective in liquidity management is to balance the
sources and uses of funds.  Primary  sources of  liquidity  include  payments of
principal  and  interest  on loans and  investments,  proceeds  from the sale or
maturity of loans and  investments,  growth in deposits,  and increases in other
borrowings. The Company holds overnight federal funds as a cushion for temporary
liquidity needs. During 2000, federal funds sold averaged $10.8 million, or 5.3%
of total assets. In addition to its federal funds, the Company maintains various
lines of credit with  correspondent  banks,  the Federal  Reserve Bank,  and the
Federal Home Loan Bank.

As of December 31, 2000, the Company had cash, time deposits with banks, federal
funds sold, and unpledged investment  securities of approximately $35.7 million,
or 17.1% of total  assets.  This  represented  the total amount of liquid assets
available for sale and/or available to secure the Company's lines of credit.

<PAGE>


Several  methods  are used to measure  liquidity.  One method is to measure  the
balance between loans and deposits (gross loans divided by total  deposits).  In
general,  the closer  this  ratio is to 100%,  the more  reliant an  institution
becomes on its illiquid  loan  portfolio  to absorb  temporary  fluctuations  in
deposit  levels.  As of December 31, 2000, the  loan-to-deposit  ratio was 87.4%
compared to 76.7% a year earlier.

Another  frequently used method is the relationship  between  short-term  liquid
assets  (federal  funds  sold and  investments  maturing  within  one  year) and
short-term  liabilities (total deposits and other borrowings) as measured by the
liquidity  ratio. As of December 31, 2000, this ratio was 1.3% compared to 15.2%
a year earlier.

As of  December  31, 2000 the  Company  had no  material  commitments  that were
expected to adversely impact liquidity.

Net  interest  income and the net interest  margin are largely  dependent on the
Company's ability to closely match interest-earning assets with interest-bearing
liabilities.  As interest  rates  change,  the Company 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.

<TABLE>
         The following table sets forth rate sensitive  interest-earning  assets
and  interest-bearing  liabilities  as of December 31, 2000,  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):

<CAPTION>
December 31, 2000                                               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
                                                 -----------  ------------  ------------  -----------  -----------  ------------
<S>                                                  <C>    <C>                   <C>         <C>          <C>          <C>
Earning Assets (Rate Sensitive):
   Federal funds sold                          $        250                                                       $         250
   Interest-bearing deposits with other banks            90               $         196                                     286
   Investment securities, at amortized cost           2,000                       1,010 $     19,960 $      4,050        27,020
   Loans, gross of allowance for possible losses
       and deferred loan fees                        84,781 $       1,324         1,694       59,767       17,477       165,043
                                                 -----------  ------------  ------------  -----------  -----------  ------------
     Total                                           87,121         1,324         2,900       79,727       21,527       192,599
                                                 -----------  ------------  ------------  -----------  -----------  ------------

Interest-Bearing Liabilities (Rate Sensitive):
   Interest-bearing transaction deposits                                         45,326       59,958                    105,284
   Time deposits, $100,000 or more                   14,456         4,519         5,678          500                     25,153
   Savings and other time deposits                    2,924         2,600         1,529        3,712                     10,765
   Other borrowings                                     750                                                                 750
   Trust preferred securities                                                                               3,000         3,000
                                                 -----------  ------------  ------------  -----------  -----------  ------------
     Total                                           18,130         7,119        52,533       64,170        3,000       144,952
                                                 -----------  ------------  ------------  -----------  -----------  ------------
Period GAP                                     $     68,991 $      (5,795)$     (49,633)$     15,557 $     18,527
                                                 ===========  ============  ============  ===========  ===========
Cumulative GAP                                 $     68,991 $      63,196 $      13,563 $     29,120 $     47,647
                                                 ===========  ============  ============  ===========  ===========
Interest Sensitivity GAP Ratio                       79.19%      (437.69%)    (1711.48%)      19.51%       86.06%
                                                 ===========  ============  ============  ===========  ===========
Cumulative Interest Sensitivity                      79.19%        71.45%        14.85%       17.02%       24.74%
                                                 ===========  ============  ============  ===========  ===========
</TABLE>

<PAGE>

         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. A negative gap at one year indicates that net interest income and
the net  interest  margin will  decrease  if interest  rates rise in the future.
Currently,  the Company  neither  utilizes  financial  derivatives  to hedge its
asset/liability position nor has any plans to employ such strategies in the near
future.

<TABLE>
The  maturities  and  weighted  average  yields  of  investment  securities  are
presented in the following table:
<CAPTION>
Maturities of Investment Securities at December 31, 2000 (At amortized cost)

                                                    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
<S>                               <C>      <C>     <C>         <C>      <C>       <C>      <C>          <C>
U.S. Treasury and other
     U.S. government agencies     $2,010   5.32%   $19,031     5.76%    $4,050    5.61%    $25,091      5.70%
Corporate securities                                 1,929     6.32%                         1,929      6.32%
--------------------------------------------------------------------------------------------------------------
   Total                          $2,010   5.32%   $20,960     5.81%    $4,050    5.61%    $27,020      5.75%
==============================================================================================================

</TABLE>
<PAGE>

Time Certificates, $100,000 and Over

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

Time remaining to maturity                      December 31, 2000
                                              -------------------
Three months or less                             $        14,456
After three months to six months                           4,519
After six months to one year                               5,678
After twelve months                                          500
                                                -----------------
          Total                                  $        25,153
                                                =================


Maturities of Loans at December 31, 2000

Time remaining to maturity     Fixed rate     Adjustable rate     Total
                              --------------  --------------  -------------
One year or less                  $ 8,397        $ 36,118        $ 44,515
After one year to five years       58,294          19,972          78,266
After five years                   17,478          24,784          42,262
                              ------------    --------------  -------------
    Total                        $ 84,169        $ 80,874       $ 165,043
                              ============    ==============  =============


As of December 31, 2000, the percentage of loans held for investment  with fixed
and floating interest rates was 51% and 49%, respectively.

The following  table  provides  typical terms of maturity  ranges offered by the
Company 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


Capital Resources.  Total shareholders'  equity was $15.1 million as of December
31, 2000 compared to $14.4 million a year earlier.

Trust Preferred Securities

On  September  7, 2000,  the Company  completed  an  offering of 10.60%  capital
securities in an aggregate  amount of $3.0 million through MCB Statutory Trust I
(the  "Trust"),  a wholly owned trust  subsidiary  formed for the purpose of the
offering.  The  securities  issued in the  offering  were sold by the Trust in a
private transaction



<PAGE>


pursuant to an applicable  exemption from registration under the Securities Act.
The entire  proceeds of the issuance were invested by the Trust in $3,000,000 of
10.60% Junior Subordinated Deferrable Interest Debentures due 2030 issued by the
Company under a similar exemption from  registration.  The debentures  represent
the  sole  assets  of  the  Trust.   Interest  on  the   debentures  is  payable
semi-annually  and the  principal  is  redeemable  by the  Company  at a premium
beginning  on or after  September  7, 2010  through  September  6, 2020 plus any
accrued and unpaid  interest to the  redemption  date. On or after  September 7,
2020,  the  principal  is  redeemable  by the  Company at 100% of the  principal
amount.  The trust preferred  securities are subject to mandatory  redemption to
the extent of any early  redemption of the  debentures  and upon maturity of the
debentures on September 7, 2030. The debentures bear the same terms and interest
rates as the trust preferred securities.

The Company has guaranteed,  on a subordinated  basis,  distributions  and other
payments due on the trust preferred securities.

The  debentures  and  related  Trust  investment  in the  debentures  have  been
eliminated in consolidation and the trust preferred  securities are reflected as
outstanding in the accompanying consolidated financial statements.

Under applicable regulatory guidelines, the trust preferred securities currently
qualify  as  Tier 1  capital  up to a  maximum  of 25% of  Tier I  capital.  Any
additional portion of trust preferred securities would currently qualify as Tier
2 capital. As of December 31, 2000, the entire $3.0 million outstanding of trust
preferred securities qualified as Tier I capital.

Stock Repurchase Plan

In October,  2000 the Board of Directors authorized the Company to repurchase an
additional  $3 million  of the  Company's  common  stock in  addition  to the $2
million  authorized  pursuant to the repurchase  program  announced in February,
1999.  The 1999  repurchase  program was  completed  in  November,  2000.  As of
December 31, 2000, 160,815 shares had been repurchased under the 2000 repurchase
program for a total purchase price of $1,768,965.

Shareholder Rights Plan

In  January,  1999 the Company  adopted a  shareholder  rights plan  designed to
maximize  the  long-term  value of the  Company  and to  protect  the  Company's
shareholders  from improper takeover tactics and takeover bids that are not fair
to all shareholders.

In accordance with the plan, preferred share purchase rights were distributed as
a dividend at the rate of one right for each  common  share held of record as of
the close of business on February 8, 1999. The rights, which are not immediately
exercisable, entitle the holders to purchase one one-hundredth of a share of the
Company's  Series A Junior  Participating  Preferred  Stock at a price of $37.00
upon the occurrence of certain triggering events. In the event of an acquisition
not approved by the Board of  Directors,  each right  enables its holder  (other
than the  prospective  acquirer) to purchase the  Preferred  Stock at 50% of the
market  value.  Further,  in the event the  Company is  acquired  in an unwanted
merger or business combination, each right enables the holder to purchase shares
of the acquiring entity at a similar discount. Under certain circumstances,  the
rights may be exchanged for common shares of the Company.  The Board may, in its
sole  discretion,  redeem the rights at any time prior to any of the  triggering
events.

The rights can be exercised and separate rights certificates distributed only if
any of the following events occur: acquisition by a person of 10% or more of the


<PAGE>


Company's  common shares; a tender offer for 10% or more of the Company's common
shares;  or  ownership  of 10% or  more  of the  Company's  common  shares  by a
shareholder  whose actions are likely to have a material  adverse  impact on the
Company or shareholder interests.  The rights will initially trade automatically
with the common  shares.  The rights are not deemed by the Board of Directors to
be presently exercisable.

Cash Dividends
During the third  quarter  of 1999 the  Company  began the  payment of a regular
quarterly cash dividend of $0.01 per share. Total dividends paid in 2000 totaled
$81,000.

Risk Based Capital
Regulatory  authorities  have established  minimum capital  adequacy  guidelines
requiring that qualifying  capital be 8% of risk-based assets, of which at least
4% must be tier 1 capital (primarily  shareholders'  equity). As of December 31,
2000 the  Company's  qualifying  capital was 11.5%,  of which the tier 1 capital
ratio was 10.4%. In addition,  the Company, under the guidelines established for
adequately capitalized institutions, must also maintain a minimum leverage ratio
(tier 1 capital  divided by total  assets) of 4%. As of December 31,  2000,  the
Company's leverage ratio was 8.3%.



<PAGE>


Item 7. Financial Statements.
<TABLE>

MCB Financial Corporation and Subsidiaries
Consolidated Balance Sheets
December 31, 1999 and 2000
<CAPTION>
Dollar amounts in thousands                                               1999           2000

Assets

<S>                                                                     <C>          <C>
Cash and due from banks                                                 $   6,556    $  12,040
Federal funds sold                                                         10,400          250
                                                                        ---------    ---------

           Total cash and cash equivalents                                 16,956       12,290

Interest-bearing deposits with banks                                          286          286
Investment securities available for sale at fair value                     34,118       25,100
Investment securities held to maturity at amortized cost (fair values
   of $1,979 in 1999 and $1,999 in 2000)                                    2,000        2,000
Loans held for investment (net of allowance for loan losses of $1,492
  in 1999 and $1,939 in 2000)                                             136,474      162,884
Premises and equipment - net                                                2,791        3,470
Accrued interest receivable                                                 1,077        1,276
Deferred income taxes                                                       1,068        1,019
Other assets                                                                1,349          929
                                                                        ---------    ---------

Total assets                                                            $ 196,119    $ 209,254
                                                                        =========    =========

Liabilities and Shareholders' Equity

Liabilities:
  Deposits:
    Noninterest-bearing                                                 $  41,011    $  47,383
    Interest-bearing:
      Transaction accounts                                                112,742      105,284
      Time certificates, $100,000 and over                                 14,471       25,153
      Savings and other time deposits                                      11,560       10,765
                                                                        ---------    ---------

           Total interest-bearing deposits                                138,773      141,202
                                                                        ---------    ---------

            Total deposits                                                179,784      188,585
  Other borrowings                                                            750          750
  Accrued interest payable and other liabilities                            1,188        1,813
                                                                        ---------    ---------

           Total liabilities                                              181,722      191,148
                                                                        ---------    ---------

  Company obligated mandatorily redeemable cumulative
   trust preferred securities of subsidiary trust holding solely
   junior subordinated debentures                                                        3,000


Shareholders' equity:
  Preferred stock, no par value:  authorized 20,000,000 shares;
    none issued or outstanding
  Common stock, no par value:  authorized 20,000,000 shares;
    issued and outstanding 2,078,501 shares in 1999 and 1,834,877
    in 2000                                                                10,750        9,501
  Accumulated other comprehensive (loss) income                              (518)          47
  Retained earnings                                                         4,165        5,558
                                                                        ---------    ---------

           Total shareholders' equity                                      14,397       15,106
                                                                        ---------    ---------

Total liabilities and shareholders' equity                              $ 196,119    $ 209,254
                                                                        =========    =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
MCB Financial Corporation and Subsidiaries
Consolidated Statements of Operations
Years ended December 31, 1998, 1999 and 2000
<CAPTION>
In thousands, except per share amounts                                         1998        1999        2000

<S>                                                                           <C>        <C>        <C>
Interest Income:
  Loans, including fees                                                       $ 10,559   $ 12,735   $ 15,838
  Federal funds sold                                                               473        544        677
  Investment securities                                                          2,173      1,747      1,730
                                                                              --------   --------   --------

           Total interest income                                                13,205     15,026     18,245

Interest Expense:
  Interest-bearing transaction, savings and other  time deposits                 3,922      3,820      4,513
  Time certificates, $100,000 and over                                             664        653        968
  Other interest                                                                    24         37         34
                                                                              --------   --------   --------

           Total interest expense                                                4,610      4,510      5,515
                                                                              --------   --------   --------

Net Interest Income                                                              8,595     10,516     12,730

Provision for Loan Losses                                                          153        365        420
                                                                              --------   --------   --------

Net Interest Income After Provision for Loan Losses                              8,442     10,151     12,310

Other Income:
  Gain on sale of loans                                                            151         87         85
  Service fees on deposit accounts                                                 522        610        468
  Loan servicing fees                                                               45         53         56
  Gain on sale of investment securities                                             53         13         (2)
  Other                                                                            238        225        262
                                                                              --------   --------   --------

           Total other income                                                    1,009        988        869
                                                                              --------   --------   --------

Other Expenses:
  Salaries and employee benefits                                                 3,646      4,069      4,464
  Occupancy expense                                                                864        983      1,097
  Furniture and equipment expense                                                  414        414        464
  Professional services                                                            310        300        272
  Supplies                                                                         294        272        278
  Promotional expenses                                                             361        293        305
  Data processing fees                                                             323        369        361
  Regulatory assessments                                                            58         41         61
  Other                                                                            433        428        561
                                                                              --------   --------   --------

           Total other expenses                                                  6,703      7,169      7,863
                                                                              --------   --------   --------

Income Before Income Taxes and Dividends Paid on Trust Preferred Securities      2,748      3,970      5,316

Income Tax Provision                                                             1,127      1,637      2,145
                                                                              --------   --------   --------

Income Before Dividends Paid on Trust Preferred Securities                       1,621      2,333      3,171

Dividends paid on trust preferred securities                                                             101

Net Income                                                                    $  1,621   $  2,333   $  3,070
                                                                              ========   ========   ========
Basic Earnings Per Share                                                      $   0.75   $   1.12   $   1.52
                                                                              ========   ========   ========
Diluted Earnings Per Share                                                    $   0.70   $   1.07   $   1.45
                                                                              ========   ========   ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>

<TABLE>

MCB  Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Years ended December 31, 1998, 1999 and 2000
<CAPTION>

In thousands                                                                              1998         1999        2000
<S>                                                                                      <C>          <C>         <C>
Net Income                                                                               $1,621       $2,333      $3,070

Other comprehensive income:
   Unrealized gains (losses) on securities:
      Unrealized holding gains (losses) arising during period (net of taxes                 159         (717)        566
         of $110 in 1998, $(498) in 1999 and $393 in 2000)
      Less: reclassification adjustment for gains (losses) included
         in net income (net of taxes of $22 in 1998, $5 in 1999 and $(1) in 2000)            31            8          (1)
                                                                                   --------------------------------------
   Other comprehensive income (loss)                                                        190         (709)        565
                                                                                   --------------------------------------
   Comprehensive income                                                                  $1,811       $1,624      $3,635
                                                                                   ======================================
<FN>

See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
MCB Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
Years ended December 31, 1998, 1999 and 2000
<CAPTION>

                                                                          Accumulated
                                                    Common Stock             Other
                                            ----------------------------- Comprehensive     Retained
Dollar amounts in thousands                   Shares        Amount        Income (Loss)     Earnings          Total
-------------------------------------------------------------------------------------------------------------------------
<S>              <C>                          <C>              <C>                  <C>          <C>             <C>
Balance, January 1, 1998                      2,054,715        $10,300              $1           $1,666          $11,967
  Net income                                                                                      1,621            1,621
  Other comprehensive income, net of taxes                                         190                               190
  Common stock issued upon
     exercise of stock options                   26,457            115                                               115
  Tax benefit of stock options exercised                                                             36               36
  Purchases of common stock                     (92,156)          (461)                            (386)            (847)
-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                    1,989,016          9,954             191            2,937           13,082
  Net income                                                                                      2,333            2,333
  Other comprehensive income, net of taxes                                        (709)                             (709)
  Dividends on common stock (5%)
     Cash payment                                                                                    (2)              (2)
     Stock issued                                98,427            867                             (867)
  Cash Dividends                                                                                    (40)             (40)
  Common stock issued upon
     exercise of stock options                   77,831            363                                               363
  Tax benefit of stock options exercised                                                            110              110
  Purchases of common stock                     (86,773)          (434)                            (306)            (740)
-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                    2,078,501         10,750            (518)           4,165           14,397
  Net income                                                                                      3,070            3,070
  Other comprehensive income, net of taxes                                         565                               565
  Cash Dividends                                                                                    (81)             (81)
  Common stock issued upon
     exercise of stock options                   44,212            191                                               191
  Tax benefit of stock options exercised                                                             41               41
  Purchases of common stock                    (287,836)        (1,440)                          (1,637)          (3,077)
-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                    1,834,877         $9,501             $47           $5,558          $15,106
=========================================================================================================================
<FN>

See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
MCB Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 1998, 1999 and 2000
<CAPTION>

Dollar Amounts In Thousands                                                        1998        1999        2000

<S>                                                                               <C>         <C>         <C>
Cash Flows From Operating Activities:
  Net income                                                                      $  1,621    $  2,333    $  3,070
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Provision for loan losses                                                          153         365         420
    Depreciation and amortization                                                      479         463         428
    Gain on sale of investment securities, net                                         (53)        (13)          2
    Deferred income taxes                                                              (32)        (17)       (352)
    Changes in:
        Accrued interest receivable                                                    (82)         75        (199)
        Other assets                                                                   124        (309)        420
        Accrued interest payable and other liabilities                                  96         161         683
                                                                                  --------    --------    --------
           Net cash provided by operating activities                                 2,306       3,058       4,472
                                                                                  --------    --------    --------
Cash Flows From Investing Activities:
  Held to maturity securities:
     Calls                                                                          21,250       4,055
     Purchases                                                                      (2,055)
  Available for sale securities:
     Maturities                                                                      3,046       4,272       5,000
     Calls                                                                           1,000
     Purchases                                                                     (30,642)    (26,760)     (6,925)
     Sales                                                                           1,206      23,164      11,957
  Decrease in interest-bearing deposits with banks
  Net (increase) in loans held for investment                                      (22,932)    (26,881)    (26,830)
  Purchases of premises and equipment                                                 (278)       (811)     (1,174)
                                                                                  --------    --------    --------
          Net cash used by investing activities                                    (29,405)    (22,961)    (17,972)
                                                                                  --------    --------    --------
Cash Flows From Financing Activities:
  Net increase in noninterest-bearing demand deposits                                9,637       2,223       6,372
  Net increase in interest-bearing transaction, savings and
    other time deposits                                                             19,135      22,657       2,429
  Net increase (decrease) in other borrowings                                         (394)        394
  Proceeds from Company obligated mandatorially redeemable preferred securities
    of subsidiary trust holding solely junior subordinated debentures                                        3,000
  Cash dividends paid                                                                              (40)        (81)
  Cash payment for fractional shares resulting from stock dividend                                  (2)
  Proceeds from the exercise of stock options                                          115         362         191
  Purchases of common stock                                                           (847)       (739)     (3,077)
                                                                                  --------    --------    --------
           Net cash provided by financing activities                                27,646      24,855       8,834
                                                                                  --------    --------    --------
Net Increase in Cash and Cash Equivalents                                              547       4,952      (4,666)
                                                                                  --------    --------    --------
Cash and Cash Equivalents:
  Beginning of year                                                                 11,457      12,004      16,956
                                                                                  --------    --------    --------

  End of year                                                                     $ 12,004    $ 16,956    $ 12,290
                                                                                  ========    ========    ========
Cash Paid During the Year for:
  Interest on deposits and other borrowings                                       $  4,648    $  4,522    $  5,361
                                                                                  ========    ========    ========

  Income taxes                                                                    $    976    $  1,666    $  2,255
                                                                                  ========    ========    ========

Noncash Investing and Financing Activities:
  Stock dividends paid on common stock                                                        $    867
                                                                                              ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>



MCB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MCB Financial  Corporation  (the  "Company" on a  consolidated  basis) is a bank
holding company with one bank subsidiary:  Metro Commerce Bank (the"Bank").  MCB
Statutory Trust I (the Trust), which is a Connecticut statutory trust formed for
the exclusive purpose of issuing and selling trust preferred securities, is also
a subsidiary  of the  Company.  The  accounting  and  reporting  policies of the
Company conform to accounting principles generally accepted in the United States
of America  and  general  practice  in the  banking  industry.  The  Company was
incorporated  in  California  on January  20, 1993 for the purpose of becoming a
bank holding company registered under the Bank Holding Company Act of 1956.

The following is a summary of the significant  accounting policies and reporting
methods used by the Company:

Nature of Operations

The Company  operates five branches in the San Francisco Bay Area and one branch
in Upland,  California.  The  Company's  primary  source of revenue is providing
loans to small and middle-market businesses.

Use of Estimates in the Preparation of Financial Statements

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

Basis of Consolidation

The accompanying  consolidated  financial statements include the Company and its
wholly owned subsidiaries,  the Bank and the Trust. All intercompany amounts are
eliminated in consolidation.

Cash and Due from Banks

Cash and due from banks  include  balances with the Federal  Reserve  Bank.  The
Company is required by federal  regulations to maintain  certain minimum average
balances with the Federal  Reserve,  based  primarily on the  Company's  average
daily deposit balances.  At December 31, 2000, the Company had required balances
and compensating balances with the Federal Reserve of $1,676,000.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, due from banks and federal funds
sold. Generally, federal funds are sold for one-day periods.


<PAGE>

Investment Securities

The Company classifies its qualifying investments as trading, available for sale
or held to  maturity.  Management  has  reviewed the  securities  portfolio  and
classified  securities  as either held to maturity or  available  for sale.  The
Company's  policy of  classifying  investments as held to maturity is based upon
its  ability  and  management's  intent to hold  such  securities  to  maturity.
Securities  expected to be held to maturity are carried at amortized  historical
cost. All other  securities are classified as available for sale and are carried
at fair  value.  Fair value is  determined  based upon  quoted  market  prices .
Unrealized  gains and losses on securities  available for sale are included as a
component of  shareholders'  equity on an after-tax  basis.  Gains and losses on
dispositions of investment securities are included in noninterest income and are
determined using the specific identification method.

Loans

Loans  which  are  held  for  investment  are  stated  at the  principal  amount
outstanding,  net of deferred loan  origination fees and costs and the allowance
for possible credit losses.  Interest  income is recognized  using methods which
approximate  a level  yield on  principal  amounts  outstanding.  The accrual of
interest on loans is  discontinued  when the payment of principal or interest is
considered to be in doubt, or when a loan becomes  contractually  past due by 90
days or more with respect to  principal  or interest,  except for loans that are
well secured and in the process of  collection.  Loan  origination  fees, net of
certain  related direct loan  origination  costs,  are deferred and amortized as
yield adjustments over the contractual lives of the underlying loans.

Sale and Servicing of Small Business Administration ("SBA") Loans

The Company  originates  loans to customers  under SBA programs  that  generally
provide for SBA  guarantees  of 70% to 90% of each loan.  The Company  generally
sells the  guaranteed  portion of the  majority of the loans to an investor  and
retains the  unguaranteed  portion and  servicing  rights in its own  portfolio.
Funding  for the SBA  programs  depend  on  annual  appropriations  by the  U.S.
Congress.

Gains on these sales are earned  through the sale of the  guaranteed  portion of
the loan for an amount in excess of the adjusted  carrying  value of the portion
of the loan sold. The Company allocates the carrying value of such loans between
the portion  sold,  the portion  retained  and a value  assigned to the right to
service the loan.  The  difference  between the adjusted  carrying  value of the
portion  retained  and the face amount of the portion  retained is  amortized to
interest  income  over  the  life  of the  related  loan  using a  method  which
approximates the interest method.

Allowance for Loan Losses

The allowance for loan losses is  maintained  at a level deemed  appropriate  by
management  to provide for known and inherent  risks in the loan  portfolio  and
commitments  to  extend  credit.   The  allowance  is  based  upon  management's
continuing  assessment of various factors affecting the  collectibility of loans
and  commitments  to extend  credit,  including  current and projected  economic
conditions,  past credit experience, the value of the underlying collateral, and
such other factors that in management's  judgment deserve current recognition in
estimating  potential credit losses.  Loans deemed uncollectible are charged-off
and deducted from the allowance, while subsequent recoveries are credited to the
allowance.


<PAGE>

A loan is considered  impaired when  management  determines  that it is probable
that the Company  will be unable to collect all  amounts  due  according  to the
original contractual terms of the loan agreement.  Impaired loans are carried at
the estimated  present value of total expected future cash flows,  discounted at
the loan's  effective rate, or the fair value of the collateral,  if the loan is
collateral  dependent,  if  less  than  the  recorded  investment  in  the  loan
(including  accrued  interest,  net deferred loan fees or costs and  unamortized
premium or discount).  An impairment is recognized by adjusting an allocation of
the existing allowance for loan losses.

Premises and Equipment

Premises  and  equipment  consist  of  leasehold  improvements,   furniture  and
equipment,   and  automobiles   which  are  stated  at  cost,  less  accumulated
depreciation and amortization. Depreciation is computed on a straight-line basis
over the  estimated  useful  lives of the  assets,  primarily  from three to ten
years. Leasehold improvements are amortized over the terms of the lease or their
estimated useful lives, whichever is shorter.

Stock-based Compensation

The Company continues to account for its stock-based  awards using the intrinsic
value method in accordance with Accounting  Principles Board No. 25,  Accounting
for Stock Issued to Employees and its related interpretations.  Accordingly,  no
compensation  expense  has  been  recognized  in the  financial  statements  for
employee stock arrangements.

Income Taxes

The  Company  and the Bank file  consolidated  income tax  returns.  The Company
provides a deferred  tax expense or benefit  equal to the net change in deferred
tax assets and  liabilities  during the year.  Deferred income taxes reflect the
net tax effects of temporary  differences  between the carrying amount of assets
and liabilities for financial reporting purposes and the amounts used for income
tax purposes.

Stock Splits and Stock Dividends

In February  1998, the Company's  outstanding  shares of common stock were split
four-for-three.  In August 1998,  outstanding  shares of common stock were split
three-for-two.  In  September  1999,  outstanding  shares of common  stock  were
increased  due to the payment of a 5% stock  dividend.  All shares and per share
amounts reported have been restated to reflect the splits and dividends.

Comprehensive Income

Comprehensive  income  is  equal  to  net  income  plus  the  change  in  "other
comprehensive  income" which includes income and (loss) from non-owner  sources.
The only component of other  comprehensive  income  currently  applicable to the
Company is the net unrealized gain or loss on available for sale investments.

Net Income Per Common Share

Basic net income per common  share is  computed  by  dividing  net income by the
weighted average number of common shares  outstanding  during the year.  Diluted
net income per common  share is computed by dividing  net income by the weighted
average  number of common  shares  plus  common  equivalent  shares  outstanding
including dilutive stock options.


<PAGE>


Segment Information

The Company operates as a single business segment - commercial banking.

Derivatives and Hedging Activities

Statement of  Financial  Accounting  Standards  (SFAS) No.  133,"Accounting  for
Derivative  Instruments and Hedging Activities," is effective for the Company in
the first  quarter of the fiscal  year  beginning  January 1, 2001.  SFAS 133 as
amended   establishes   accounting   and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts and for hedging  activities.  Under SFAS 133,  certain  contracts that
were not  formerly  considered  derivatives  may now meet  the  definition  of a
derivative.  The  Company  will adopt the  standard  effective  January 1, 2001.
Management  does not expect the  adoption of SFAS No. 133 to have a  significant
impact on the financial position or results of operations,  or cash flows of the
Company.

Accounting Pronouncements

SFAS No.  140,"Accounting  for Transfers  and Servicing of Financial  Assets and
Extinquishments of Liabilities," was issued in September 2000. SFAS No. 140 is a
replacement of SFAS No. 125,"Accounting for Transfers and Servicing of Financial
Assets and  Extinquishments of Liabilities".  Most of the provisions of SFAS No.
125  were  carried  forward  to SFAS  No.  140  without  reconsideration  by the
Financial Standards Board ("FASB"), and some were changed only in minor ways. In
issuing  SFAS  No.140,  the FASB  included  issues and  decisions  that had been
addressed and  determined  since the original  publication of SFAS No. 125. SFAS
No. 140 is effective for transfers  after March 31, 2001.  Required  disclosures
about  securitization and collateral and for recognition and reclassification of
collateral  for fiscal years ending after  December 15, 2000 have been  included
herein.  Management  does not expect the  adoption  of SFAS No. 140 on March 31,
2001 to have a  significant  impact on the  financial  position  or  results  of
operations of the Company.

Reclassifications

Certain  1998  and  1999  amounts  were  reclassified  to  conform  to the  2000
presentation.



<PAGE>


2.    INVESTMENT SECURITIES

<TABLE>
The amortized  cost and  approximate  market value of  investment  securities at
December 31 were as follows (dollar amounts in thousands):
<CAPTION>
                                                    Gross         Gross        Estimated
                                     Amortized    Unrealized    Unrealized       Fair      Carrying
                                       Cost         Gains         Losses         Value       Value
<S>                                   <C>                        <C>           <C>          <C>
2000:
  Held to maturity securities:
    U.S. Government agencies          $ 2,000                    $    (1)      $ 1,999      $ 2,000
                                      -------      -------       -------       -------      -------

           Total held to maturity       2,000                         (1)        1,999        2,000
                                      -------      -------       -------       -------      -------

  Available for sale securities:
    U.S. Treasury                      13,983          188           (42)       14,129       14,129
    U.S. Government agencies            9,108            5           (75)        9,038        9,038
    Corporate securities                1,929            4         1,933         1,933
                                      -------      -------       -------       -------      -------

           Total available for sale    25,020          197          (117)       25,100       25,100
                                      -------      -------       -------       -------      -------

Total investment securities           $27,020      $   197       $  (118)      $27,099      $27,100
                                      =======      =======       =======       =======      =======

</TABLE>
<TABLE>

<CAPTION>
                                                    Gross         Gross        Estimated
                                     Amortized    Unrealized    Unrealized       Fair      Carrying
                                       Cost         Gains         Losses         Value       Value
<S>                                   <C>                        <C>           <C>          <C>
1999:
  Held to maturity securities:
    U.S. Government agencies          $  2,000                   $   (21)       $ 1,979     $ 2,000
                                      --------     ------        -------        -------     -------
           Total held to maturity        2,000                       (21)         1,979       2,000
                                      --------     ------        -------        -------     -------
  Available for sale securities:
    U.S. Treasury                       21,920                   $  (320)        21,600      21,600
    U.S. Government agencies            11,134                      (537)        10,597      10,597
    Coporate securities                  1,950                       (29)         1,921       1,921
                                      --------     ------        -------        -------     -------
           Total available for sale     35,004                      (886)        34,118      34,118
                                      --------     ------        -------        -------     -------
Total investment securities           $ 37,004     $             $  (907)       $36,097     $36,118
                                      ========     ======        =======        =======     =======

</TABLE>

<PAGE>

<TABLE>

<CAPTION>
                                                    Gross         Gross        Estimated
                                     Amortized    Unrealized    Unrealized       Fair      Carrying
                                       Cost         Gains         Losses         Value       Value
<S>                                   <C>                        <C>           <C>          <C>
1998:
  Held to maturity securities:
    U.S. Government agencies          $ 6,055           26                      $ 6,081     $ 6,055
                                      -------      -------       -----          -------     -------

           Total held to maturity       6,055           26                        6,081       6,055
                                      -------      -------       -----          -------     -------

  Available for sale securities:
    U.S. Treasury                      15,206          214       $  (6)          15,414      15,414
    U.S. Government agencies           17,247          137         (60)          17,324      17,324
    Mortage-backed securities           1,172            5                        1,177       1,177
    Coporate securities                 1,971           36                        2,007       2,007
    Municipal bonds                       100            1                          101         101
                                      -------      -------       -----          -------     -------

           Total available for sale    35,696          393         (66)          36,023      36,023
                                      -------      -------       -----          -------     -------

Total investment securities           $41,751      $   419       $ (66)         $42,104     $42,078
                                      ========        ======     =====          =======     =======


</TABLE>

    The following table shows the amortized cost and  approximate  fair value of
    investment  securities by contractual  maturity at December 31, 2000 (dollar
    amounts in thousands):




<TABLE>
<CAPTION>

                                                      Held to Maturity                 Available for Sale
                                               --------------------------------  --------------------------------
                                                  Amortized         Fair            Amortized         Fair
                                                    Cost            Value             Cost            Value
<S>                                               <C>             <C>               <C>             <C>
Within one year                                   $ 1,000         $   999           $ 1,010         $ 1,003
After one but within five years                     1,000           1,000            19,960          20,078
Over five years                                                                       4,050           4,019
                                                  -------         -------           -------         -------

Total                                             $ 2,000         $ 1,999           $25,020         $25,100
                                                  =======         =======           =======         =======

</TABLE>


The Bank carries its Federal Reserve Bank stock and Federal Home Loan Bank stock
as other assets.  These securities are not covered by the provisions of SFAS No.
115 and are recorded at historical  cost.  The total  carrying value at December
31, 1999 and 2000 was $791,000 and $327,000, respectively.

Securities with an amortized cost of approximately $8,062,000 as of December 31,
1999,  and  $6,050,000  as of December  31,  2000,  were pledged to secure other
borrowings.

In 2000,  proceeds  from the sale of  investment  securities  available for sale
totaled $11,957,000. Realized net losses on these sales totaled $2,000. In 1999,
proceeds  from the sale of  investment  securities  available  for sale  totaled
$23,164,000.  Realized  net  gains  on these  sales  totaled  $13,000.  In 1998,
proceeds  from  sale  of  investment   securities  available  for  sale  totaled
$1,206,000, and the realized net gains totaled $53,000.
<PAGE>

3.    LOANS AND ALLOWANCE FOR LOAN LOSSES


Loans at December 31, consisted of the following (dollar amounts in thousands):

                                              1998         1999         2000

Commercial                                  $  22,504    $  23,413    $  27,137
Real estate:
  Commercial                                   72,605       83,737      108,557
  Construction                                  9,619       23,546       24,157
  Land                                          2,592        4,440        1,675
Home equity                                     1,703        1,289        1,581
Loans to consumers and individuals              2,085        1,672        1,936
                                            ---------    ---------    ---------

           Total                              111,108      138,097      165,043

Deferred loan fees                                (33)        (131)        (220)
Allowance for loan losses                      (1,117)      (1,492)      (1,939)
                                            ---------    ---------    ---------

Total                                       $ 109,958    $ 136,474    $ 162,884
                                            =========    =========    =========



The Company is  principally  engaged in commercial  banking in the San Francisco
Bay and Greater Los Angeles Areas of California.  The Company  primarily  grants
commercial  loans,  the majority of which are secured by commercial  properties.
Although the Company has a diversified  portfolio,  a substantial portion of its
debtors'  ability to honor their contracts is dependent upon the economic sector
of Northern  California,  including the real estate markets of the San Francisco
Bay Area.  Approximately 49% of the Company's loans have interest rates that are
variable and tied to the prime rate, whereas the remaining are fixed rate loans.

Following  is a schedule  of the  activity in the  allowance  for loan losses on
loans for the years ended December 31 (dollar amounts in thousands):

                                             1998           1999          2000

Balances, January 1                         $ 1,007       $ 1,117       $ 1,492
Provision for loan losses                       153           365           420
Loans charged-off                               (53)          (62)          (10)
Recoveries                                       10            72            37
                                            -------       -------       -------

Total                                       $ 1,117       $ 1,492       $ 1,939
                                            =======       =======       =======


At December  31,  1999 and 2000,  the  Company  had  nonperforming  loans in the
amounts of  $1,747,000  and $40,000,  respectively.  At December  31, 1999,  the
nonperforming  loans included  nonaccrual loans totaling  $1,707,000.  Had these
loans performed under their contractual  terms,  $66,000 in additional  interest
income would have been recognized during the year.

At December 31, 2000, the nonperforming  loans included one loan 90 days or more
past due and still accruing totaling  $40,000.  This loan is well secured and in
the process of collection.


<PAGE>

At December 31, 1999 and 2000, the Company had loans identified as impaired,  in
the  aggregate  amounts of  $1,747,000  and $40,000,  respectively.  The Company
provided no specific allowance for loan losses at December 31, 1999 and 2000 for
these impaired loans since they were adequately collateralized.


4.       PREMISES AND EQUIPMENT

The components of premises and equipment at December 31, are as follows  (dollar
amounts in thousands):

                                                    1999       2000

Leasehold improvements                             $ 2,494    $ 2,936
Furniture and equipment                              2,574      2,838
Automobiles                                            274        356
Construction in progress                                          387
                                                   -------    -------
           Total                                     5,342      6,517
Less accumulated depreciation and amortization      (2,551)    (3,047)
                                                   -------    -------

Premises and equipment, net                        $ 2,791    $ 3,470
                                                   =======    =======




The amount of depreciation and  amortization  was $433,000 in 1998,  $451,000 in
1999and $496,000 in 2000.


5.       DEPOSITS

The aggregate amount of short-term jumbo CD's, each with a minimum  denomination
of $100,000,  was  approximately  $13,714,000  and $24,653,000 in 1999 and 2000,
respectively.

At December 31, 2000, the scheduled maturities of CDs are as follows:


             2001                                         $  32,574
             2002                                               654
             2003                                               338
             2004                                                12
             2005                                                96
                                                        --------------
                      Total                                $ 33,674
                                                        ==============
<PAGE>


6.       INCOME TAXES

The  components of the provision  (benefit) for income taxes for the years ended
December 31 are as follows (dollar amounts in thousands):

                                                   1998       1999       2000

Current payable (benefit):
  Federal                                         $   867    $ 1,245    $ 1,864
  State                                               292        409        633
                                                  -------    -------    -------

           Total current payable (benefit)          1,159      1,654      2,497

Deferred:
  Federal                                             (37)       (15)      (316)
  State                                                 5         (2)       (36)
                                                  -------    -------    -------

           Total deferred                             (32)       (17)      (352)
                                                  -------    -------    -------

Total                                             $ 1,127    $ 1,637    $ 2,145
                                                  =======    =======    =======


A  reconciliation  of the statutory  federal income tax rates with the Company's
effective income tax rates is as follows:

                                               1998         1999         2000

Statutory federal tax rate                      34.0 %       34.0 %       34.0 %
State income taxes, net of federal income
  tax benefit                                    7.1          7.1          7.1
Municipal interest                              (0.1)        (0.2)
Other                                                         0.3
                                            -----------------------------------

Effective tax rate                              41.0 %       41.2 %       41.1 %
                                            ===================================


<PAGE>


Deferred  income taxes  reflect the impact of  "temporary  differences"  between
amounts of assets and  liabilities  for  financial  reporting  purposes and such
amounts as measured by tax laws.  Temporary  differences and carryforwards which
give rise to deferred tax assets and  liabilities are as follows (dollar amounts
in thousands):

                                                             December 31
                                                      ------------------------
                                                         1999           2000
Deferred tax assets:
  Net operating loss carryforwards                       $ 259          $ 224
  Reserves not currently deductible                        542            709
  Unrealized loss on securities available for sale         368
  State income taxes                                       108            181
  Other                                                     14            208
                                                      ------------------------
           Total                                         1,291          1,322

Deferred tax liabilities:
  Tax over book depreciation                               223            270
  Unrealized gain on securities available for sale                         33
                                                      ------------------------
           Total                                           223            303
                                                      ------------------------
Net deferred tax asset                                 $ 1,068        $ 1,019
                                                      ========================


The Company has acquired net operating loss carryforwards  ("NOL") in connection
with the  acquisition  of the Bank of Hayward in 1994.  The  utilization of NOLs
acquired  through  acquisition  is limited by federal tax laws.  The Company has
determined that the annual  limitation on its ability to utilize NOLs is $78,130
for the  fifteen-year  period.  The  following  table  presents  the NOLs (after
limitation) at December 31, 2000, by expiration date:

              Expiration Date                                Federal Amount

            December 31, 2004                                    $ 391
            December 31, 2005                                       78
            December 31, 2006                                       11
            December 31, 2007                                      145
            December 31, 2008                                       78


The Company  reduced its 2000 federal  current tax  liability  by  approximately
$27,000 by utilizing $78,130 in net operating loss carryforwards.

<PAGE>


7.       RELATED PARTY TRANSACTIONS

In the  ordinary  course of  business,  the Company has made loans and  advances
under lines of credit to directors and their related  interests.  All such loans
and advances were made under terms that are consistent with the Company's normal
lending policies.


At December 31, 2000,  loans  outstanding to related parties were $2,892,000 and
loan commitments to related parties amounted to $3,905,000.

8.       STOCK OPTION PLANS

Stock Option Plans

Under the Company's 1989 Stock Option Plan (the "1989 Plan"), a total of 499,284
stock options were authorized for grant.  The 1989 Plan terminated  according to
its terms in December 1999.  Options granted pursuant to the 1989 Plan generally
had lives of 10 years from the date of grant,  subject to earlier  expiration in
certain cases, such as termination of the grantee's employment.

On  May  19,  1999,  the  Company's  shareholders  approved  the  MCB  Financial
Corporation  1999 Stock  Option  Plan (the  "Plan").  The Plan was  designed  to
replace the 1989 Plan which terminated in December 1999.

The Plan authorizes the Company to grant options that qualify as incentive stock
options ("ISO") under the Internal Revenue Code of 1986 and  nonqualified  stock
options ("NQSO") to officers and employees of the Company. Nonemployee directors
are eligible to receive only NQSOs.

The Plan has set aside 415,485 authorized, but unissued, shares of the Company's
common stock for grant at not less than the fair market  value of the  Company's
common stock on the date the option is granted.  The term of the options may not
exceed 10 years from the date of grant,  and the options  generally  vest over a
four year period.


<PAGE>


<TABLE>
The following is a summary of changes in options outstanding:
<CAPTION>
                                                                                               Weighted
                                                                                Number          Average
                                                                                  of           Exercise
                                                                                Shares           Price
                                                                            ----------------------------
<S>                                                                              <C>            <C>
Outstanding at January 1, 1998
   (234,817 exercisable at a weighted average price of $4.18)                    285,070        $ 4.30
Granted (weighted average fair value of $4.39)                                    10,762          9.72
Exercised                                                                        (27,779)         4.17
                                                                            ---------------------------
Outstanding at December 31, 1998
   (227,533 exercisable at a weighted average price of $4.26)                    268,053          4.52
Granted (weighted average fair value of $3.96)                                    87,147          7.59
Exercised                                                                        (80,797)         4.48
Canceled                                                                          (7,560)         7.27
                                                                            ---------------------------
Outstanding at December 31, 1999
   (181,080 exercisable at a weighted average price of $4.51)                    266,843          5.46
Granted (weighted average fair value of $4.92)                                    42,500         10.12
Exercised                                                                        (44,212)         4.32
Canceled                                                                         (12,810)         7.43
                                                                            ---------------------------
Outstanding at December 31, 2000                                                 252,321        $ 6.34
                                                                            ===========================

</TABLE>


<TABLE>
Additional  information regarding options outstanding as of December 31, 2000 is
as follows:
<CAPTION>
                            Options Outstanding                                               Options Exercisable
         --------------------------------------------------------------------------    -------------------------------
                                                    Remaining         Weighted                            Weighted
                  Range of          Number         Contractual         Average           Number           Average
             Exercise Prices     Outstanding      Life (Yrs.)      Exercise Price      Exercisable     Exercise Price
         --------------------    --------------   --------------   ----------------    ------------    ---------------
<S>       <C>         <C>               <C>            <C>                  <C>             <C>                <C>
          $ 3.24  --  $ 3.98            99,436         2.0                  $ 3.84          99,436             $ 3.84
            4.11  --    5.61            26,123         3.8                    4.74          25,021               4.71
            7.62  --    8.50            88,500         8.7                    7.77          32,400               7.70
            9.05  --   11.50            38,262         8.7                   10.64          11,957              10.31
                                 --------------                                        ------------
                                       252,321                                             168,814
                                 ==============                                        ============
</TABLE>



At December 31, 2000, 341,485 options were available for future grants under the
Plan.

The Company continues to account for its stock-based  awards using the intrinsic
value method in accordance with Accounting  Principles Board No.  25,"Accounting
for Stock Issued to Employees" and its related interpretations.  Accordingly, no
compensation  expense  has  been  recognized  in the  financial  statements  for
employee stock arrangements.

Statement of Financial Accounting Standards No. 123 (SFAS 123),  "Accounting for
Stock-Based  Compensation",  requires the disclosure of pro forma net income and
earnings  per share had the  Company  adopted  the fair  value  method as of the
beginning of fiscal 1995.  Under SFAS 123, the fair value of stock-based  awards
to employees is calculated through the use of option pricing models, even though
such models were


<PAGE>


developed  to estimate  the fair value of freely  tradable,  fully  transferable
options  without  vesting  restrictions,  which  significantly  differ  from the
Company's stock option awards. These models also require subjective assumptions,
including  future stock price  volatility  and expected time to exercise,  which
greatly affect the calculated values. The Company's calculations were made using
the  Black-Scholes  option  pricing  model with the following  weighted  average
assumptions:  expected life, 36 months following full vesting; stock volatility,
34% in 1998,  42% in 1999 and 41% in 2000;  risk free  interest  rates,  4.7% in
1998, 6.3% in 1999 and 4.8% in 2000; no dividend yield in 1998, a dividend yield
of  0.48%  in 1999  and a  dividend  yield  of  0.45%  in  2000.  The  Company's
calculations are based on a multiple option  valuation  approach and forfeitures
are  recognized  as they occur.  If the computed  fair values of the 1995 - 2000
awards had been amortized to expense over the vesting period of the awards,  pro
forma net income would have been as follows (dollar amounts in thousands, except
per share amounts):

                                        Years Ended December 31,
                                       1998       1999       2000
                                 --------------------------------------
Net Income:
   As reported                        $1,621     $2,333     $3,070
   Pro forma                           1,594      2,266      2,987
Basic earnings per share:
   As reported                         $0.75      $1.12      $1.52
   Pro forma                            0.74       1.09       1.48
Diluted earnings per share:
   As reported                         $0.70      $1.07      $1.45
   Pro forma                            0.70       1.04       1.41



<PAGE>


9. TRUST PREFERRED SECURITIES

On  September  7, 2000,  the Company  completed  an  offering of 10.60%  capital
securities in an aggregate  amount of $3.0 million through MCB Statutory Trust I
(the  "Trust"),  a wholly owned trust  subsidiary  formed for the purpose of the
offering.  The entire  proceeds of the  issuance  were  invested by the trust in
$3,000,000 of 10.60% Junior Subordinated Deferrable Interest Debentures due 2030
issued by the Company.  The  debentures  represent the sole assets of the Trust.
Interest  on the  debentures  is  payable  semi-annually  and the  principal  is
redeemable by the Company at a premium  beginning on or after  September 7, 2010
through September 6, 2020 plus any accrued and unpaid interest to the redemption
date. On or after  September 7, 2020, the principal is redeemable by the Company
at 100% of the principal amount.  The trust preferred  securities are subject to
mandatory redemption to the extent of any early redemption of the debentures and
upon maturity of the debentures on September 7, 2030.  The  debentures  bear the
same terms and interest rates as the trust preferred securities.

The Company has guaranteed,  on a subordinated  basis,  distributions  and other
payments due on the trust preferred securities.

The  debentures  and  related  Trust  investment  in the  debentures  have  been
eliminated in consolidation and the trust preferred  securities are reflected as
outstanding in the accompanying consolidated financial statements.

Under applicable regulatory guidelines, the trust preferred securities currently
qualify  as  Tier 1  capital  up to a  maximum  of 25% of  Tier 1  capital.  Any
additional portion of trust preferred securities would currently qualify as Tier
2 capital. As of December 31, 2000, the entire $3.0 million outstanding of trust
preferred securities qualified as Tier 1 capital.


10.   COMMITMENTS AND CONTINGENCIES

The Bank leases its  premises  under  noncancelable  operating  leases  expiring
through June 30, 2014.  Future minimum lease  commitments  are $611,000 in 2001,
$604,000 in 2002,  $604,000 in 2003,  $561,000  in 2004,  $491,000 in 2005,  and
$2,839,000, thereafter.

Rental expense for premises under operating leases included in occupancy expense
was $583,000, $676,000 and $744,000 in 1998, 1999 and 2000, respectively.

There are various legal actions pending against the Company and the Bank arising
from the normal course of business. 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  or  results  of
operations of the Company.


11.   FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to various  financial  instruments with on-balance sheet and
off-balance  sheet risk in the normal  course of business to meet the  financing
needs of its  customers.  Financial  instruments  include  commitments to extend
credit,  standby  letters-of-credit and financial guarantees.  Those instruments
involve, to varying degrees, elements of credit and interest rate risk in excess
of the amounts  recognized in the balance sheet.  The contract  amounts of those
instruments reflect the extent of involvement the Bank has in particular classes
of financial instruments.


<PAGE>



The Bank's exposure to credit loss in the event of  nonperformance  by the other
party to the financial  instrument for  commitments to extend credit and standby
letters-of-credit  and financial  guarantees is represented  by the  contractual
amount of those  instruments.  The Bank uses the same credit  policies in making
commitments  and  conditional  obligations  as  it  does  for  on-balance  sheet
instruments.  The Bank  controls the credit risk of these  transactions  through
credit approvals, credit limits and monitoring procedures.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future  cash   requirements.   The  Bank  evaluates  each  customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained,  if
deemed necessary by the Bank upon extension of credit,  is based on management's
credit evaluation of the counterparty.  Collateral held varies,  but may include
marketable  securities,  accounts  receivable,  inventory,  property,  plant and
equipment.

Standby  letters-of-credit  and  financial  guarantees  are written  conditional
commitments  issued by the Bank to guarantee the  performance of a customer to a
third party. Those guarantees are primarily issued to support public and private
borrowing  arrangements.  Most  guarantees  extend  for less than five years and
expire  in   decreasing   amounts.   The  credit   risk   involved   in  issuing
letters-of-credit  is  essentially  the same as that involved in extending  loan
facilities to customers.


The following table summarizes these financial instruments and other commitments
and contingent liabilities at December 31 (dollar amounts in thousands):

                                                               1999       2000
Financial instruments whose credit risk is represented
  by contract amounts:
  Commitments to extend credit - loans                        $33,750    $36,698
  Standby letters-of-credit and financial guarantees              495      1,551
                                                              -------    -------

Total                                                         $34,245    $38,249
                                                              =======    =======

<PAGE>


12.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts of financial  instruments  have been determined
using the available market information and appropriate  valuation  methodologies
consistent with the requirements of SFAS No. 107,  Disclosures  about Fair Value
of Financial Instruments. However, considerable judgment is necessarily required
to interpret  market data to develop the  estimates of fair value.  Accordingly,
the estimates presented herein are not necessarily indicative of the amounts the
bank could realize in a current  market  exchange.  The use of different  market
assumptions  and/or  estimation  methodologies may have a material effect on the
estimated fair value amounts.

                                                             December 31, 2000
                                                           ---------------------
                                                            Carrying   Estimated
                                                             Amount   Fair Value
Financial assets:
  Cash and due from banks                                   $ 12,040   $ 12,040
  Federal funds sold                                             250        250
  Interest-bearing deposits with banks                           286        286
  Available for sale securities                               25,100     25,100
  Held to maturity securities                                  2,000      1,999
  Loans, net                                                 162,884    161,665
Financial liabilities:
  Noninterest-bearing deposits                                47,383     47,383
  Interest-bearing deposits                                  141,202    141,220
  Other borrowings                                               750        750
  Company obligated mandatorily redeemable cumulative
     trust preferred securities of subsidiary trust holding
     solely junior subordinated debentures                     3,000      3,000



                                                             December 31, 1999
                                                           ---------------------
                                                            Carrying   Estimated
                                                             Amount   Fair Value
Financial assets:
  Cash and due from banks                                   $  6,556   $  6,556
  Federal funds sold                                          10,400     10,400
  Interest-bearing deposits with banks                           286        286
  Available for sale securities                               34,118     34,118
  Held to maturity securities                                  2,000      1,979
  Loans, net                                                 136,474    135,489
Financial liabilities:
  Noninterest-bearing deposits                                41,011     41,011
  Interest-bearing deposits                                  138,773    138,718
  Other borrowings                                               750        750



The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Short-Term  Financial  Assets - This category  includes cash and due from banks,
federal funds sold and  interest-bearing  deposits with banks.  Because of their
relatively short  maturities,  the fair value of these financial  instruments is
considered to be equal to book value.

Available-For-Sale and Held-To-Maturity Securities - Fair value is quoted market
price,  if available.  If a quoted market price is not available,  fair value is
estimated using quoted market prices for similar instruments.


<PAGE>



Loans - The fair  value of  floating  rate loans is deemed to  approximate  book
value. The fair value of all other performing loans is determined by discounting
expected  future cash flows using the current rates at which similar loans would
be made to borrowers  with  similar  credit  ratings and for the same  remaining
maturities.

In  addition  to the  above,  the  allowance  for loan  losses is  considered  a
reasonable  adjustment for credit risk relating to the entire credit  portfolio,
including obligations to extent credit and other off-balance-sheet transactions.

Deposits - The fair value of demand,  savings and money market deposits is equal
to the  amount  payable  on demand at the  reporting  date.  For other  types of
deposits  with  fixed  maturities,   fair  value  is  estimated  by  discounting
contractual  cash flows at interest  rates  currently  being offered on deposits
with similar characteristics and maturities.  A fair value for the deposits base
is not practicable.

Other  Borrowings and Trust  Preferred  Securities - The fair value of the other
borrowings is determined by discounting contractual cash flows at current market
interest rates for similar instruments.

Off-Balance-Sheet Financial Instruments - The Company has not estimated the fair
value of  off-balance-sheet  commitments  to extend credit,  standby  letters of
credit  and  financial  guarantees.  Because  of  the  uncertainty  involved  in
attempting to assess the likelihood and timing of a commitment being drawn upon,
coupled  with the lack of an  established  market and the wide  diversity of fee
structures,  the  Company  does not  believe  it is  practicable  to  provide  a
meaningful estimate of fair value.

The fair value  estimates  presented  herein are based on pertinent  information
available to  management  as of December 31, 2000.  Although  management  is not
aware of any factors that would  significantly  affect the estimated  fair value
amounts,  such  amounts have not been  comprehensively  revalued for purposes of
these financial statements since that date and, therefore,  current estimates of
fair  value  may  differ   significantly  from  the  amounts  presented  herein.
Management does not intend to dispose of a significant  portion of its financial
instruments.

13.   REGULATORY MATTERS

The  Company  and Bank are  subject  to  various  regulations  issued by Federal
banking  agencies,  including  minimum  capital  requirements.  Failure  to meet
minimum  regulatory capital  requirements  could result in regulators  requiring
prompt  corrective  action to be taken which could have a material effect on the
financial  statements.  As of  December  31,  2000,  both the  Company  and Bank
exceeded the capital adequacy requirements for a well capitalized institution.

Under  capital  adequacy  guidelines  and the  regulatory  framework  for prompt
corrective  action,  the Company and Bank must meet specific capital  guidelines
that  involve  quantitative   measures  of  the  Company's  and  Bank's  assets,
liabilities,  and certain off-balance-sheet items as calculated under regulatory
accounting   practices.   The   Company's   and  Bank's   capital   amounts  and
classifications  are also subject to  qualitative  judgements by the  regulators
about components, risk weightings, and other factors.

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


<PAGE>



As of  December  31,  1999 and  2000,  the  most  recent  notification  from the
regulators  categorized  the  Bank  as well  capitalized  under  the  regulatory
framework for prompt  corrective  action.  To be categorized as well capitalized
the Bank must maintain minimum total risk-based,  tier 1 risk-based,  and tier 1
leverage  ratios as set forth in the table.  There are no  conditions  or events
since that notification that management  believes have changed the institution's
category.

<TABLE>
The  Company and Bank's  actual  capital  amounts and ratios are also  presented
below (dollar amounts in thousands):
<CAPTION>
                                                                        For Capital                 Required to be
                                         Actual                      Adequacy Purposes              Well Capitalized
-------------------------------------------------------------------------------------------------------------------------
2000                                     Amount       Ratio            Amount       Ratio             Amount      Ratio
-------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>             <C>            <C>
Total Capital (to risk weighted assets)
   Company                              $ 19,815      11.5 %          $ 13,790       8.0 %                n/a
   Bank                                   18,080      10.5 %            13,782       8.0 %           $ 17,228      10.0%

Tier 1 Capital (to risk weighted assets)
   Company                                17,876      10.4 %             6,895       4.0 %                n/a
   Bank                                   16,141       9.4 %             6,891       4.0 %             10,337       6.0%

Tier 1 Capital (to average assets)
   Company                                17,876       8.3 %             8,577       4.0 %                n/a
   Bank                                   16,141       7.5 %             8,574       4.0 %             10,717       5.0%


                                                                        For Capital                 Required to be
                                         Actual                      Adequacy Purposes              Well Capitalized
-------------------------------------------------------------------------------------------------------------------------
1999                                     Amount       Ratio            Amount       Ratio             Amount      Ratio
-------------------------------------------------------------------------------------------------------------------------

Total Capital (to risk weighted assets)
   Company                              $ 16,190      10.9 %          $ 11,865       8.0 %               n/a
   Bank                                   15,419      10.4 %            11,863       8.0 %          $ 14,829       10.0%

Tier 1 Capital (to risk weighted assets)
   Company                                14,698       9.9 %             5,932       4.0 %               n/a
   Bank                                   13,927       9.4 %             5,932       4.0 %             8,897        6.0%

Tier 1 Capital (to average assets)
   Company                                14,698       7.4 %             7,976       4.0 %               n/a
   Bank                                   13,927       7.0 %             7,976       4.0 %             9,970        5.0%
</TABLE>


Management  believes,  as of December 31, 2000,  that the Bank meets all capital
requirements to which it is subject.

The Bank is subject to certain  restrictions  on the amount of dividends that it
may declare without prior regulatory  approval.  At December 31, 2000,  retained
earnings of $4,986,000  were not restricted as to the payment of dividends.  The
Bank paid $750,000 in dividends  during 1999, and $1,000,000 in dividends to the
Company during 2000.


<PAGE>


The Bank is subject to  certain  restrictions  under the  Federal  Reserve  Act,
including restrictions on the extension of credit to affiliates.  In particular,
the  Company is  prohibited  from  borrowing  from the Bank unless the loans are
secured by specified types of collateral.  Such secured loans and other advances
from the Bank are  limited  to 10% of the Bank's  shareholders'  equity on a per
affiliate basis. There were no such extensions of credit by the Bank in 1999 and
2000.


14.   EMPLOYEE BENEFIT PLANS

In 1999,  the Company  established  an Employee  Stock  Ownership Plan (ESOP) to
provide  an  ownership  interest  in the  Company  and  retirement  benefits  to
substantially all full-time employees. The amount of the annual contributions is
at the discretion of the Board of Directors.  The Company contributed $90,000 in
1999 and 2000.  The ESOP  purchased  6,000 and 12,400 shares of Company stock in
the open market during 1999 and 2000, respectively.

The Company has a Deferred  Compensation  Plan for Executives.  Participation in
the Plan is limited  to a select  group of  management  and other  employees  as
determined by the Board of Directors.  Under the terms of the Plan, participants
may defer a portion of their cash  compensation and receive minimum 50% matching
contributions from the Company,  which vest over the employee's  remaining years
of employment to retirement.  The Company has guaranteed  participants a certain
minimum   return  on  their   contributions   and  on  the  Company's   matching
contributions. Net expenses incurred by the Company for the years ended December
31, 1998, 1999 and 2000 were $39,000, $43,000 and $7,000, respectively.

The Company also has a defined  contribution plan covering all eligible salaried
employees.  Employees may, up to prescribed limits,  contribute to the plan. The
Company may also elect to make discretionary  contributions to the plan based on
the Company's earnings.  No contributions were made by the Company in 1998, 1999
or 2000.


15.   EARNINGS PER SHARE

<TABLE>
The following table  reconciles the numerators and the denominators of the basic
and  diluted  per  share  computations  in  accordance  with  SFAS  No.  128 (in
thousands, except per share amounts):
<CAPTION>
                                                                           Year Ended December 31,
                         -----------------------------------------------------------------------------------------------------------
                                          1998                                1999                              2000
                         -----------------------------------------------------------------------------------------------------------
                           Income        Shares    Per Share   Income       Shares     Per Share   Income       Shares     Per Share
                         (Numerator) (Denominator)  Amount   (Numerator) (Denominator)  Amount   (Numerator) (Denominator)   Amount
                          ---------   -----------   ------    ---------   -----------   ------    ---------   -----------    -----
<S>                        <C>              <C>     <C>        <C>             <C>      <C>        <C>              <C>      <C>
Basic EPS
Income available to        $ 1,621          2,158   $ 0.75     $ 2,333         2,075    $ 1.12     $ 3,070          2,022    $ 1.52
  common shareholders
Effect of Dilutive
Securities
Stock options                                 146                                107                                   99
                         -----------------------------------------------------------------------------------------------------------
Diluted EPS
Income available to
  common shareholders
  plus assumed conversions $ 1,621          2,304   $ 0.70     $ 2,333         2,182    $ 1.07     $ 3,070          2,121    $ 1.45
                         ===========================================================================================================
</TABLE>

<PAGE>


16.   PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

The  condensed  financial  information  for MCB  Financial  Corporation  (parent
company only) at December 31, 1999 and 2000,  and the results of its  operations
and cash flows for the years  then  ended,  is  summarized  as  follows  (dollar
amounts in thousands):

                                                             1999        2000
Financial Condition:

Assets:
    Cash and due from banks                                $    702     $  1,695
    Investment in subsidiaries                               13,625       16,465
    Other                                                        70          144
                                                           --------     --------

Total                                                      $ 14,397     $ 18,304
                                                           ========     ========

Liabilities and shareholders' equity:
  Other liabilities                                        $            $    105
  Subordinated debt                                                        3,093
                                                           --------     --------

           Total liabilities                                      0        3,198
                                                           --------     --------

  Shareholders' equity:
    Common stock                                           $ 10,750        9,501
    Accumulated other comprehensive (loss) income              (518)          47
    Retained earnings                                         4,165        5,558
                                                           --------     --------

           Total shareholders' equity                        14,397       15,106
                                                           --------     --------

Total                                                      $ 14,397     $ 18,304
                                                           ========     ========


<PAGE>
                                                  1998        1999         2000
Results of Operations:

Income:
   Interest income                                $ 32         $ 28         $ 42
   Dividend income from Bank                       500          750        1,000
                                             -----------------------------------
      Total                                        532          778        1,042

Expenses:
   Interest expense                                                          105
   Other expenses                                  140          102          160
                                             -----------------------------------
      Total                                        140          102          265
Income before taxes and equity in
   undistributed net income of Bank                392          676          777
Income tax benefit                                  53           37          110
                                             -----------------------------------
Income before equity in undistributed
   net income of Bank                              445          713          887
Equity in undistributed net income of Bank       1,176        1,620        2,183
                                             -----------------------------------
      Net income                               $ 1,621      $ 2,333      $ 3,070
                                             ===================================


<PAGE>
<TABLE>
<CAPTION>

                                                                                    1998          1999         2000
<S>                                                                                <C>          <C>           <C>
Cash Flows:

Cash flows from operating activities:
  Net income                                                                       $ 1,621      $ 2,333       $ 3,070
  Reconciliation to cash used in operating activities:
    (Increase) in equity in undistributed net income
       of Bank                                                                      (1,175)      (1,621)       (2,182)
    Amortization                                                                        11                          2
    Decrease in other assets                                                            29           53           (35)
    Decrease in accrued interest payable and other liabilities                          (1)                       105
                                                                             -----------------------------------------
     Cash provided by operating activities                                             485          765           960

Cash flows from investing activities:
  Capital contribution to MCB Statutory Trust I                                                                   (93)
  Net (increase) decrease in loans held for investment                                 (92)          92
                                                                             -----------------------------------------
    Cash (used in) provided by investing activities                                    (92)          92           (93)

Cash flows from financing activities:
  Cash dividends paid                                                                               (40)          (81)
  Cash payment for fractional shares resulting from stock dividend                                   (2)
  Proceeds from the exercise of stock options                                          115          362           191
  Proceeds from issuance of subordinated debt                                                                   3,093
  Purchases of common stock                                                           (847)        (739)       (3,077)
                                                                             -----------------------------------------
   Cash (used in) provided by financing activities                                    (732)        (419)          126

Net (decrease) increase in cash and equivalents                                       (339)         438           993
Cash and equivalents:
  Beginning of period                                                                  603          264           702

  End of period                                                                      $ 264        $ 702       $ 1,695

</TABLE>

17.    SUBSEQUENT EVENTS

The 2000  stock  repurchase  program  was  completed  in  January  2001 with the
purchase of 105,060 shares for a total purchase price of $1,231,031.

<PAGE>



18.    SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


<TABLE>
Certain amounts in the following unaudited quarterly financial  information have
be  reclassified  to conform  with the current  presentation.  In the opinion of
management,   all  adjustments  necessary  to  fairly  present  the  results  of
operations have been made.
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
2000 Quarters ended                                        March 31            June 30          September 30        December 31
----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S>                                                             <C>                <C>                 <C>                <C>
Interest income                                                 $ 4,190            $ 4,431             $ 4,737            $ 4,887
Interest expense                                                  1,256              1,328               1,416              1,515
                                                        ----------------   ----------------    ----------------   ----------------
Net interest income                                               2,934              3,103               3,321              3,372
Provision for loan losses                                           120                100                 100                100
Other income                                                        211                237                 194                227
Other expenses                                                    1,918              1,934               1,975              2,036
                                                        ----------------   ----------------    ----------------   ----------------
Income before income taxes and dividends paid
    on trust preferred securities                                 1,107              1,306               1,440              1,463
Income tax provision                                                454                545                 580                566
                                                        ----------------   ----------------    ----------------   ----------------
Net income before dividends paid
    on trust preferred securities                                   653                761                 860                897
Dividends paid on trust preferred securities                                                                21                 80
                                                        ----------------   ----------------    ----------------   ----------------
Net income                                                        $ 653              $ 761               $ 839              $ 817
                                                        ================   ================    ================   ================
Basic earnings per share                                         $ 0.32             $ 0.37              $ 0.41             $ 0.41
Diluted earnings per share                                       $ 0.30             $ 0.36              $ 0.39             $ 0.39
Dividends per share                                              $ 0.01             $ 0.01              $ 0.01             $ 0.01



----------------------------------------------------------------------------------------------------------------------------------
1999 Quarters ended                                        March 31             June 30         September 30        December 31
----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)

Interest income                                                 $ 3,436             $ 3,637            $ 3,908            $ 4,045
Interest expense                                                  1,040               1,053              1,164              1,253
                                                        ----------------    ----------------   ----------------   ----------------
Net interest income                                               2,396               2,584              2,744              2,792
Provision for loan losses                                            90                  35                120                120
Other income                                                        291                 242                245                210
Other expenses                                                    1,815               1,743              1,781              1,830
                                                        ----------------    ----------------   ----------------   ----------------
Income before income taxes                                          782               1,048              1,088              1,052
Income tax provision                                                321                 433                448                435
                                                        ----------------    ----------------   ----------------   ----------------
Net income                                                        $ 461               $ 615              $ 640              $ 617
                                                        ================    ================   ================   ================
Basic earnings per share                                         $ 0.22              $ 0.30             $ 0.31             $ 0.30
Diluted earnings per share                                       $ 0.21              $ 0.29             $ 0.30             $ 0.28
Dividends per share                                                                                     $ 0.01             $ 0.01
</TABLE>

<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of MCB Financial Corporation:

We have audited the  accompanying  consolidated  balance sheets of MCB Financial
Corporation  and  subsidiaries as of December 31, 1999 and 2000, and the related
consolidated   statements  of  operations,   comprehensive  income,  changes  in
shareholders'  equity,  and cash flows for each of the three years in the period
ended December 31, 2000. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of MCB Financial  Corporation and its
subsidiaries  as of  December  31,  1999  and  2000,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.


/s/ Deloitte & Touche LLP

San Francisco, California
January 12, 2001




<PAGE>


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 the Company's
Board of Directors for use at the 2001 Annual Meeting of Shareholders to be held
on May 16, 2001, 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 the Company 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 The
Company and Metro Commerce" of the Proxy Statement,  and is incorporated  herein
by reference.



<PAGE>


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

      (a)  Exhibits:  The Exhibit Index is incorporated by reference.

      (b)  Reports on Form 8-K.  The Company filed the following Current Reports
            on Form 8-K:
                  None


<PAGE>


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 28th day of March,
2001.


                                        By /s/ Charles O. Hall
                                        ----------------------------------------
                                        Charles O. Hall
                                        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)



<PAGE>


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 28th day of March, 2001.


Name                                                  Title
----                                                  -----

/s/ John Cavallucci                                   Director
------------------------------------
John Cavallucci

/s/ Charles O. Hall                                   Director
------------------------------------
Charles O. Hall

/s/ Timothy J. Jorstad                                Chairman; Director
------------------------------------
Timothy J. Jorstad

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

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

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

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



<PAGE>



Exhibit Index:

Exhibit    Description
-------    -----------

2       -- Plan of acquisition, reorganization (1)
3.1     -- Articles of incorporation (1)
3.2     -- By-laws (1)
4       -- Rights Agreement (2)
4.1     -- Amended and Restated Declaration of Trust dated as of
           September 7, 2000 (13)
4.2     -- Indenture, dated as of September 7, 2000, between MCB Financial
           Corporation and State Street Bank and Trust Company, as Trustee (14)
4.3     -- Guarantee Agreement, dated as of September 7, 2000, between MCB
           Financial Corporation and State Street Bank and Trust Company,
           as Trustee (15)
4.4     -- Placement Agreement dated as of August 31, 2000 (16)
4.5     -- Subscription Agreement dated as of September 7, 2000 (17)
10.1.1  -- San Rafael Office Lease (6)
10.1.2  -- South San Francisco Office Lease (7)
10.1.3  -- Hayward Office Lease (1151 A Street) (8)
10.1.4  -- Upland Office Lease (9)
10.1.5  -- San Francisco Office Lease (353 Sacramento Street) (10)
10.1.6  -- Petaluma Office Lease (11)
10.1.7  -- San Francisco Office Lease (650 Townsend Street) (12)
10.1.8  -- Hayward Office Lease (B Street Marketplace) (18)
10.2.1  -- 1989 Stock Option Plan (1)
10.2.2  -- 1999 Stock Option Plan (4)
10.2.3  -- Deferred Compensation Plan for Executives (3)
10.2.4  -- Employee Stock Ownership Plan (5)
10.3    -- Severance Agreement, dated as of May 15, 2000, between MCB
           Financial Corporation, Metro Commerce Bank and Patrick E. Phelan (19)
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)
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)
23.1    -- Consent of Deloitte & Touche LLP


<PAGE>


----------

(1)      Incorporated by reference to the registrant's registration statement on
         Form S-4 (File No. 33-76832).

(2)      Incorporated by reference from the registrant's  Form 8-A12G filed with
         the SEC on January 25, 1999.

(3)      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.

(4)      Incorporated by reference to Exhibit A of registrant's  Proxy Statement
         on Schedule 14A filed with the SEC on April 27, 1999.

(5)      Incorporated  by reference to Exhibit  (10)(a)(4)  to the  registrant's
         Annual  Report on Form  10-KSB for its fiscal year ended  December  31,
         1999.

(6)      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.

(7)      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.

(8)      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.

(9)      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)     Incorporated  by reference to Exhibit  (10)(b)(5)  to the  registrant's
         Annual  Report on Form  10-KSB for its fiscal year ended  December  31,
         1997.

(11)     Incorporated  by reference to Exhibit  (10)(b)(6)  to the  registrant's
         Annual  Report on Form  10-KSB for its fiscal year ended  December  31,
         1998.

(12)     Incorporated  by reference to Exhibit  (10)(b)(7)  to the  registrant's
         Annual  Report on Form  10-KSB for its fiscal year ended  December  31,
         1999.

(13)     Incorporated by reference to Exhibit 4.1 to the registrant's Form 10QSB
         for its quarter ended September 30, 2000.

(14)     Incorporated by reference to Exhibit 4.2 to the registrant's Form 10QSB
         for its quarter ended September 30, 2000.

(15)     Incorporated by reference to Exhibit 4.3 to the registrant's Form 10QSB
         for its quarter ended September 30, 2000.

(16)     Incorporated by reference to Exhibit 4.4 to the registrant's Form 10QSB
         for its quarter ended September 30, 2000.

(17)     Incorporated by reference to Exhibit 4.5 to the registrant's Form 10QSB
         for its quarter ended September 30, 2000.

(18)     Incorporated by reference to Exhibit 10 to the registrant's  Form 10QSB
         for its quarter ended September 30, 2000.

(19)     Incorporated by reference to Exhibit 10 to the registrant's  Form 10QSB
         for its quarter ended June 30, 2000.