<PAGE>

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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the Quarter Ended September 30, 1999


                        Commission File Number: 0-11223

                          PROFESSIONAL BANCORP, INC.
            (Exact name of registrant as specified in its charter)


              Pennsylvania                              95-3701137
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)


              606 Broadway
        Santa Monica, California                          90401
(Address of principal executive offices)                (Zip Code)


      Registrant's telephone number, including area code:  (310) 458-1521


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
                                       -----    -----

As of November 12, 1999, 2,025,321 shares of the Registrant's $0.008 par value
common stock were outstanding.

                                       1
<PAGE>

                           PROFESSIONAL BANCORP, INC.
                                     INDEX

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----
<S>                                                                                                   <C>
PART I.   FINANCIAL INFORMATION

          Item 1   Financial Statements

                   Consolidated Statements of Financial Condition as of
                   September 30, 1999 and December 31, 1998                                             3

                   Consolidated Statements of Operations
                   for the three and nine months ended September 30, 1999 and 1998                      4

                   Consolidated Statements of Comprehensive Income
                   for the three and nine months ended September 30, 1999 and 1998                      5

                   Consolidated Statements of Cash Flows for the nine months
                   ended September 30, 1999 and 1998                                                    6

                   Notes to Consolidated Financial Statements                                           7

          Item 2   Management's Discussion and Analysis of Financial Condition
                   and Results of Operations                                                            8

          Item 3   Quantitative and Qualitative Disclosures About Market Risk                          23

PART II.  OTHER INFORMATION

          Item 1.  LEGAL PROCEEDINGS                                                                   25

          Item 2.  CHANGES IN SECURITIES                                                               25

          Item 3.  DEFAULTS UPON SENIOR SECURITIES                                                     25

          Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                 25

          Item 5.  OTHER INFORMATION                                                                   25

          Item 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                    26

SIGNATURES
</TABLE>

                                       2
<PAGE>

PART I -  FINANCIAL INFORMATION
ITEM I -  FINANCIAL STATEMENTS

                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         September 30,                      December 31,
                                                                             1999                              1998
                                                                         -------------                      ------------
                                                                          (Unaudited)
<S>                                                                      <C>                               <C>
Assets
Cash and due from banks:
     Noninterest-bearing                                                 $ 24,379,114                      $ 20,992,183
     Interest-bearing                                                         503,881                           572,519
Federal funds sold                                                         26,000,000                        10,400,000
                                                                         ------------                      ------------
Cash and cash equivalents                                                  50,882,995                        31,964,702

Securities available-for-sale (cost of $49,213,510 and
     $81,369,000 in 1999 and 1998, respectively)                           47,311,283                        80,891,072
Securities held-to-maturity (fair value of $19,390,124
     and $24,135,000 in 1999 and 1998, respectively)                       19,430,825                        24,080,592
Loans (net of allowance for loan losses of $6,213,041
     and $2,200,000 in 1999 and 1998, respectively)                       142,741,302                       115,518,693
Premises and equipment, net                                                 1,263,071                         1,390,128
Deferred tax asset                                                          3,934,433                         1,242,748
Accrued interest receivable and other assets                                4,473,829                         4,613,504
                                                                         ------------                      ------------
                                                                         $270,037,738                      $259,701,439
                                                                         ============                      ============

Liabilities and Shareholders' Equity
Liabilities
Deposits:
     Demand, noninterest-bearing                                         $101,129,194                      $109,421,629
     Demand, interest-bearing                                              14,252,287                        16,710,541
     Savings and money market                                              92,788,733                        75,500,642
     Time deposits                                                         36,304,428                        28,947,934
                                                                         ------------                      ------------
Total deposits                                                            244,474,642                       230,580,746

Convertible notes                                                             748,000                         1,116,000
Accrued interest payable and other liabilities                              2,353,390                         2,683,582
                                                                         ------------                      ------------
Total liabilities                                                         247,576,032                       234,380,328
                                                                         ------------                      ------------

Commitments and contingent liabilities

Shareholders' equity:
Common stock, $.008 par value; 12,500,000 shares
     authorized; 2,064,710 and 2,064,710 issued
     and 2,025,321 and 1,996,344 outstanding in 1999 and 1998,                 16,758                            16,526
     respectively
Additional paid-in-capital                                                 21,207,979                        20,873,603
Retained earnings                                                           2,851,413                         5,239,275
Treasury stock, at cost  (69,467 shares in  both 1999 and 1998)              (537,251)                         (537,251)
Unrealized loss on securities available-for-sale, net of taxes             (1,077,193)                         (271,042)
                                                                         ------------                      ------------
Total shareholders' equity                                                 22,461,706                        25,321,111
                                                                         ------------                      ------------
                                                                         $270,037,738                      $259,701,439
                                                                         ============                      ============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                      PROFESSIONAL BANCORP AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                          Three Months Ended             Nine Months Ended
                                                                             September 30,                 September 30,
                                                                       -------------------------------------------------------
                                                                           1999          1998           1999           1998
                                                                       -------------------------------------------------------
<S>                                                                    <C>            <C>           <C>            <C>
Interest income
Loans                                                                  $ 3,433,006    $2,597,151    $ 9,511,179    $ 7,575,159
Securities                                                               1,031,858     1,142,606      3,411,061      3,498,895
Federal funds sold and securities purchased
     under agreements to resell                                            315,785       600,982        562,084      1,392,638
Interest-bearing deposits in other banks                                    20,039         1,909         56,100          5,044
                                                                       -------------------------------------------------------
Total interest income                                                    4,800,688     4,342,648     13,540,424     12,471,736
                                                                       -------------------------------------------------------

Interest expense
Deposits                                                                   858,649       856,147      2,319,749      2,460,676
Convertible notes                                                            4,986       (62,710)        34,775        127,038
Federal funds purchased and securities
     sold under agreements to repurchase                                         -             -        108,737          3,055
                                                                       -------------------------------------------------------
Total interest expense                                                     863,635       793,437      2,463,261      2,590,769
                                                                       -------------------------------------------------------
Net interest income                                                      3,937,053     3,549,211     11,077,163      9,880,967
Provision for loan losses                                                4,426,000             -      5,598,000              -
                                                                       -------------------------------------------------------
Net interest income after provision
     for loan losses                                                      (488,947)    3,549,211      5,479,163      9,880,967
                                                                       -------------------------------------------------------

Other operating income
Net gain (loss) on sale securities available-for-sale                            -             -         39,610         (8,735)
Merchant discount                                                           80,529        48,983        221,022        158,260
Mortgage brokering fees                                                     12,225        49,943         75,319        133,466
Service charges on deposits                                                229,617       208,448        687,224        688,237
Other income                                                               135,606       110,808        398,499        373,961
                                                                       -------------------------------------------------------
Total other operating income                                               457,977       418,182      1,421,674      1,345,189
                                                                       -------------------------------------------------------

Other operating expenses
Salaries and employee benefits                                           1,667,914     1,420,166      5,158,962      4,611,245
Occupancy                                                                  398,836       368,015      1,136,793      1,069,478
Furniture and equipment                                                    196,442       208,547        619,648        598,812
Meetings and business development                                           45,973        53,464        166,728        147,414
Donations                                                                   26,286        19,475        116,432         82,227
Other promotion                                                             54,290       105,372        196,836        257,634
Legal fees                                                                 392,213       105,575        710,325        357,472
Audit, accounting and examinations                                          49,045        41,140        221,650        125,175
Professional services                                                      334,840       360,319        977,445        999,548
Strategic planning and other outside consulting                             17,947        30,159         40,576        121,547
Office supplies                                                             60,904        60,478        187,561        181,972
Telephone                                                                   91,557        76,649        215,288        217,161
Postage                                                                     39,237        41,570        107,969        122,964
Messenger service                                                           22,165         8,446         36,293         25,944
FDIC assessment                                                             21,301         6,303         33,994         19,065
Other assessments                                                           43,025        53,930        134,658        141,759
Other expense                                                              119,592       136,297        418,960        444,685
                                                                       -------------------------------------------------------
Total other operating expenses                                           3,581,567     3,095,905     10,480,118      9,524,102
                                                                       -------------------------------------------------------
Earnings before taxes                                                   (3,612,537)      871,488     (3,579,281)     1,702,054
Provision for income taxes                                              (1,249,215)      359,000     (1,292,170)       661,000
                                                                       -------------------------------------------------------
Net earnings                                                           $(2,363,322)   $  512,488    $(2,287,111)   $ 1,041,054
                                                                       =======================================================

Earnings per share
     Basic                                                             $     (1.17)   $     0.26    $     (1.14)   $      0.62
     Diluted                                                           $     (1.17)   $     0.22    $     (1.14)   $      0.52
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                  PROFESSIONAL BANCORP, INC.  AND SUBSIDAIRY
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended                    Nine Months Ended
                                                                   September 30,                         September 30,
                                                                   -------------                         -------------
                                                              1999                 1998             1999                1998
                                                              ----                 ----             ----                ----
<S>                                                       <C>                    <C>            <C>                  <C>
Net earnings                                              $(2,363,322)           $512,488       $(2,287,111)         $1,041,054
Other Comprehensive Income, net of tax
  Unrealized gains (losses) on securities
      available for sale:
    Unrealized holding gains (losses) arising
       during the period                                      222,031              30,325          (825,386)            148,256
    Reclassification adjustment                                     -                   -            19,235             (11,434)
                                                          ---------------------------------------------------------------------
    Other Comprehensive Income                                222,031              30,325          (806,151)            136,822
                                                          ---------------------------------------------------------------------

Comprehensive Income (Loss)                               $(2,141,291)           $542,813       $(3,093,262)         $1,177,876
                                                          =====================================================================
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                  PROFESSIONAL BANCORP, INC.  AND SUBSIDAIRY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(Unaudited)                                                                    Nine Months Ended September 30,
                                                                             1999                          1998
                                                                             ----                          ----
<S>                                                                      <C>                           <C>
Cash flows from operating activities:
   Net earnings                                                          $ (2,287,111)                 $  1,041,054
   Adjustments to reconcile net earnings to net
    cash provided by operating activities:
     Depreciation and amortization                                            442,923                       441,839
     Provision for loan losses                                              5,598,000                             -
     (Gain) loss on sales of securities available-for-sale                    (39,610)                        8,735
     Amortization of convertible note expense                                  12,702                        63,796
     Increase in deferred tax asset                                        (1,034,265)                     (214,292)
     Decrease in accrued interest receivable and other assets                  93,582                        93,871
     Increase (increase) in accrued interest payable and other
     liabilities                                                             (891,536)                      115,578
     Net amortization of premiums and discounts
        on securities held-to-maturity                                        174,499                       263,920
     Net amortization of premiums and discounts
        on securities available-for-sale                                      183,959                       218,687
                                                                         ------------                  ------------
   Net cash provided by operating activities                                2,253,143                     2,033,188
                                                                         ------------                  ------------
Cash flows from investing activities:
  Proceeds from:
    Maturities of securities held-to-maturity                                 250,000                       500,000
    Maturities of securities available-for-sale                                     -                     6,550,000
    Sales of securities available-for-sale                                 27,187,262                    10,234,664
  Principal payments and maturities of:
    Mortgage-backed securities held-to-maturity                             4,225,268                     7,850,368
    Mortgage-backed securities available-for-sale                           6,771,892                     8,881,458
  Purchases of securities available-for-sale                               (2,425,942)                  (29,588,004)
  Net (increase) decrease in loans                                        (32,820,609)                   (1,856,257)
  Purchase of bank premises and equipment, net                               (315,867)                     (401,704)
                                                                         ------------                  ------------
  Net cash provided by investing activities                                 2,872,004                     2,170,525
                                                                         ------------                  ------------
Cash flows from financing activities:
  Net increase (decrease) in demand deposits and
   savings accounts                                                         6,537,402                   (10,794,888)
  Net increase in time deposits                                             7,356,494                     5,323,722
  Cash dividends                                                             (100,750)                      (85,532)
  Proceeds from exercise of stock options                                           -                     3,794,363
                                                                         ------------                  ------------
Net cash used in financing activities                                      13,793,146                    (1,762,335)
                                                                         ------------                  ------------
Net decrease in cash and cash equivalents                                  18,918,293                     2,441,378
                                                                         ------------                  ------------
Cash and cash equivalents, beginning of period                             31,964,702                    54,339,670
                                                                         ------------                  ------------
Cash and cash equivalents, end of period                                 $ 50,882,995                  $ 56,781,048
                                                                         ============                  ============
Supplemental disclosure of cash flow information -
     Cash paid during the period for:
     Interest                                                            $  2,473,721                  $  2,743,927
     Income taxes                                                        $  1,120,000                  $    132,000
Supplemental disclosure of noncash items:
     Pretax change in unrealized losses on securities
        available for sale securities                                       1,902,227                  $    224,060
     Conversion of notes                                                      334,608                  $  3,788,439
     Tax benefit on stock options exercised                                         -                  $    560,384
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - BASIS OF PRESENTATION

         The unaudited consolidated financial statements included herein have
been prepared by Professional Bancorp, Inc. (the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission.  In the opinion
of management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the results of operations for the periods covered
have been made.  Certain information and note disclosures normally included in
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.  Management believes that the disclosures are adequate to make the
information presented not misleading.

         The financial position at September 30, 1999, and the results of
operations for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results of operations that may be expected for the
year ending December 31, 1999.  These unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles on a basis consistent with the Company's audited financial
statements, and these interim financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto included in
the Company's Form 10-K for the year ended December 31, 1998.


Note 2 - Earnings Per Share

         The actual number of shares outstanding at September 30, 1999 was
2,025,321.  Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period.  Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted from issuance of common
stock that then shared in earnings.

<TABLE>
<CAPTION>
                                                             Three Months Ended                       Nine Months Ended
                                                                September 30,                           September 30,
                                                     -----------------------------------      ----------------------------------
                                                           1999                1998                 1999               1998
                                                     ---------------     ---------------      ---------------    ---------------
<S>                                                   <C>                <C>                  <C>                <C>
Net income
 (used in basic EPS computation)                       $(2,363,322)      $  512,488             $(2,287,111)       $1,041,054

Adjustments to net income per
  assumed effect of dilutive securities:

    Interest on convertible notes, net of
     tax effect                                                             (36,999)                                   74,952
                                                       -----------       ----------             -----------        ----------

Adjusted earnings for diluted earnings per
  share computation                                    $(2,363,322)      $  475,489             $(2,287,111)       $1,116,006
                                                       ===========       ==========             ===========        ==========


Weighted average number of shares
  outstanding for calculating basic earnings
  per share                                              2,017,718        1,963,825               2,013,389         1,692,022

Effect of dilutive securities:
  Options and warrants                                                       64,265                                   150,547
  Convertible notes                                                         120,406                                   309,817
                                                       -----------       ----------             -----------        ----------

Weighted average number of shares
  outstanding for calculation of diluted
  earnings per share                                     2,017,718        2,148,496               2,013,389         2,152,386
                                                       ===========       ==========             ===========        ==========

Basic earnings per share                               $     (1.17)       $    0.26             $     (1.14)        $    0.62
                                                       ===========       ==========             ===========        ==========

Diluted earnings per share                             $     (1.17)       $    0.22             $     (1.14)        $    0.52
                                                       ===========       ==========             ===========        ==========
</TABLE>
/(1)/  Anti-dilutive

                                       7
<PAGE>

Item 2. Management's Discussion And Analysis Of Financial Condition And Results
-------------------------------------------------------------------------------
        Of Operations
        -------------

     Professional Bancorp, Inc. (the "Company") is the holding company for First
Professional Bank, N.A. (the "Bank"). Since the Bank constitutes substantially
all the business of the Company, references to the Company in this Item 2
reflect the consolidated activities of the Company and the Bank. For a more
complete understanding of Professional Bancorp and its operations, reference
should be made to the financial statements in this report and in the Company's
1998 Annual Report on Form 10K. Certain statements in this report on Form 10Q
constitute "forward-looking statements" under the Private Securities Litigation
Reform Act of 1995 which involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in such forward-
looking statements. Factors that might cause such a difference include, but are
not limited to, economic conditions, competition in the geographic and business
areas in which the Company conducts operations, fluctuations in interest rates,
credit quality, year 2000 data systems compliance, and government regulations.
For additional information concerning these factors, see "Item 1. Business -
Factors That May Affect Results" contained in the Company's Annual Report on
Form 10K for the year ended December 31, 1998.

Results of Operations

     The Company recorded a net loss of $(2,363,322) or $(1.17) per basic share
for the third quarter of 1999, compared with net earnings of $512,488 or $0.26
per basic share for the third quarter of 1998. For the nine months ended
September 30, 1999, the Company had a net loss of $(2,287,111) or $(1.14) per
basic share, compared to net earnings of $1,041,054 or $0.62 per share for the
first nine months of 1998. The Company had total assets of $270,037,738 at
September 30, 1999, compared to $259,701,439 at December 31, 1998.

     The Company reported a consolidated net loss of $(2,363,322) for the third
quarter of 1999, compared with net earnings of $512,488 for the third quarter of
1998. Basic and diluted earnings (loss) per share for the third quarter of 1999
was $(1.17) compared to basic and diluted earnings per share of $0.26 and $0.22,
respectively, for the same period in 1998. Return on average shareholders'
equity for the third quarter of 1999 and 1998, were (37.04)% and 8.35%,
respectively. Additionally, return on average assets for the third quarter of
1999 and 1998, were (3.48)% and 0.81%, respectively.

     For the first nine months of 1999, the Company reported a net loss of
$(2,287,111) compared to $1,041,054 for the same period in 1998. Basic and
diluted earnings (loss) per share for the nine months ended September 30, 1999
was $(1.14) compared to basic and diluted earnings per share of $0.62 and $0.52,
respectively, for the same period in 1998. Return on average shareholders'
equity for the nine months ended September 30, 1999 and 1998, were (11.92)% and
5.42%, respectively. Additionally, return on average assets for the nine months
ended September 30, 1999 and 1998, were (1.17)% and 0.57%, respectively.

     The decrease of net earnings in 1999 is primarily due to increased
provisions for loan losses. The Company recorded provisions for loan losses of
$4,426,000 and $5,598,000, for the three and nine months periods ended September
30, 1999, respectively. This compares to zero provisions recorded in the same
periods in 1998. The additional provisions relate primarily to identified
weaknesses in a small number of loans, of substantial dollar amounts, which may
take an extended period of time to resolve. Secondarily, changes in the health
care industry and the increased complexity of the credits extended to the
industry made increases in the loan loss provisions prudent. Finally, growth in
the loan portfolio and increases in non-performing assets also contributed to
the increased provision. In addition, the other operating expense increased
$486,000, or 15.7%, to $3,582,000 for the third quarter of 1999 compared to
$3,096,000 for the same period in 1998. Other expenses for nine months ended
September 30, 1999 and 1998 were $10,480,000 and $9,524,000, an increase of
$956,000 or 10.0%.

Net Interest Income

     The Company's earnings depend primarily on net interest income, which is
the difference between the interest and fees earned on loans and investments
less the interest paid on deposits, borrowings and convertible notes. For the
quarter ended September 30, 1999, net interest income increased 10.9% to
$3,937,000 from $3,549,000 for the quarter ended September 30, 1998. For the
nine months ended September 30, 1999 and 1998 net interest income was
$11,077,000 and $9,881,000, respectively. The increase in net interest income
for the third quarter ended

                                       8
<PAGE>

September 30, 1999 as compared to the same period in 1998, is primarily the
result of a 42% or $43,315,000 increase in average loans outstanding during the
quarter. For the nine months ended September 30, 1999 average loans outstanding
grew 35.2% to $137,675,000 as compared to $101,852,000 for the same period in
1998. For the three and nine months ended September 30, 1999, the net interest
margin was 6.52% and 6.40%, respectively, compared to 6.31% and 6.13% for the
same respective periods in 1998.

     The following tables present the distribution of average assets,
liabilities and shareholders' equity as well as the total dollar amount of
interest income from average interest-earning assets and resultant yields, and
the dollar amounts of interest expense and average interest-bearing liabilities,
expressed both in dollars and rates for the three months ended September 30,
1999 and 1998.

<TABLE>
<CAPTION>

                                                                        Three Months Ended September 30,
                                                                        --------------------------------
                                                                     1999                                 1998
                                                                     ----                                 ----
                                                        Average     Yield/                   Average     Yield/
(in thousands)                                          Balance      Rate     Interest       Balance      Rate     Interest
                                                       ---------    ------    --------      ---------    ------    --------
<S>                                                    <C>          <C>       <C>           <C>          <C>       <C>
Assets
Interest-earning assets:
   Securities                                           $ 67,673      6.05%     $1,032       $ 76,761      5.91%     $1,143
   Loans/(1)/                                            146,698      9.28       3,433        102,883     10.02       2,597
   Federal funds sold                                     24,424      5.13         316         43,206      5.52         601
   Interest-earning deposits - banks                         642     12.39          20            374      2.12           2
                                                        --------                ------       --------                ------
        Total interest-earning assets                    239,437      7.95       4,801        223,224      7.72       4,343
                                                        --------                ------       --------                ------
Deferred loan fees                                          (224)                                 (81)
Allowance for loan losses                                 (2,365)                              (1,871)
Noninterest-earning assets:
   Cash and due from banks                                24,371                               23,162
   Premises and equipment                                  1,349                                1,523
   Other assets                                            6,580                                5,830
                                                        --------                             --------
        Total assets                                    $269,148                             $251,787
                                                        ========                             ========

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
   Interest-bearing demand deposits                     $ 14,007      0.71%     $   25       $ 14,660      0.93%     $   35
   Savings and money market deposits                      86,590      2.07         452         86,036      2.16         469
   Time deposits under $100,000                            8,324      4.14          87          8,543      4.65         100
   Time deposits of $100,000 and over                     27,564      4.24         295         20,798      4.82         253
   Convertible notes                                         828      2.39           5          1,479    -16.83         (63)
   Repurchase agreements                                       -         -           -              -         -           -
                                                        --------                ------       --------                ------
        Total interest-bearing liabilities               137,313      2.50         864        131,516      2.39         794
                                                        --------                ------       --------                ------

Noninterest-bearing liabilities:
   Noninterest-bearing demand deposits                   104,018                               93,399
   Other liabilities                                       2,506                                2,516
   Shareholders' equity                                   25,311                               24,356
                                                        --------                             --------
        Total liabilities and shareholders'             $269,148                             $251,787
        equity                                          ========                             ========

Interest income as a percentage of average
   earning assets                                                     7.96%                                7.72%
Interest expense as a percentage of average
   interest-bearing liabilities                                       2.50                                 2.39
Net interest margin and income                                        6.52%     $3,937                     6.31%     $3,549
                                                                                ======                               ======

/(1)/  Nonaccrual loans are included in average balances and rate calculations.
</TABLE>

                                       9
<PAGE>

     The following tables present the distribution of average assets,
liabilities and shareholders' equity as well as the total dollar amount of
interest income from average interest-earning assets and resultant yields, and
the dollar amounts of interest expense and average interest-bearing liabilities,
expressed both in dollars and rates for the nine months ended September 30, 1999
and 1998.

<TABLE>
<CAPTION>


                                                                        Nine Months Ended September 30,
                                                                        -------------------------------
                                                                    1999                                 1998
                                                                    ----                                 ----
                                                        Average     Yield/                   Average     Yield/
(in thousands)                                          Balance      Rate     Interest       Balance      Rate     Interest
                                                       ---------    ------    --------      ---------    ------    --------
<S>                                                    <C>          <C>       <C>           <C>          <C>       <C>
Assets
Interest-earning assets:
   Securities                                           $ 77,204      5.91%    $ 3,411       $ 79,252      5.90%    $ 3,499
   Loans/(1)/                                            137,843      9.23       9,511        101,852      9.94       7,575
   Federal funds sold                                     15,111      4.97         562         34,066      5.47       1,393
   Interest-earning deposits - banks                       1,117      6.71          56            397      1.68           5
                                                        --------               -------       --------               -------
        Total interest-earning assets                    231,275                13,540        215,567                12,472
                                                        --------               -------       --------               -------
Deferred loan fees                                          (216)                                (106)
Allowance for loan losses                                 (2,182)                              (1,841)
Noninterest-earning assets:
   Cash and due from banks                                24,318                               23,190
   Premises and equipment                                  1,397                                1,543
   Other assets                                            6,133                                6,100
                                                        --------                             --------
        Total assets                                    $260,725                             $244,453
                                                        ========                             ========

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
   Interest-bearing demand deposits                     $ 13,801      0.73%    $    75       $ 13,735      0.93%    $    96
   Savings and money market deposits                      82,255      1.96       1,206         82,510      2.10       1,297
   Time deposits under $100,000                            8,603      4.21         271          7,982      4.65         278
   Time deposits of $100,000 and over                     24,151      4.24         767         22,574      4.68         790
   Convertible notes                                         888      5.23          35          3,693      4.60         127
   Repurchase agreements                                   2,896      5.02         109             73      5.49           3
                                                        --------               -------       --------               -------
        Total interest-bearing liabilities               132,594                 2,463        130,567                 2,591
                                                        --------               -------       --------               -------

Noninterest-bearing liabilities:
   Noninterest-bearing demand deposits                   100,047                               91,154
   Other liabilities                                       2,410                                1,651
   Shareholders' equity                                   25,674                               21,081
                                                        --------                             --------
        Total liabilities and shareholders'
        equity                                          $260,725                             $244,453
                                                        ========                             ========
Interest income as a percentage of average
   earning assets                                                     7.83%                                7.74%
Interest expense as a percentage of average
   interest-bearing liabilities                                       2.48                                 2.65
Net interest margin and income                                        6.40     $11,077                     6.13     $ 9,881
                                                                               =======                              =======

/(1)/ Nonaccrual loans are included in average balances and rate calculations.
</TABLE>

                                       10
<PAGE>

     The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
"volume change." It is also affected by changes in yields earned on interest-
earning assets and interest rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following table sets forth
changes in interest income and interest expense for each major category of
interest-earning assets and interest-bearing liabilities, and the amount of
change attributable to volume and rate changes for the three and nine months
ended September 30,1999 and 1998. The changes due to both rate and volume have
been allocated to rate and volume in proportion to the relationship between
their absolute dollar amounts.

<TABLE>
<CAPTION>
                                             Three Months Ended                Nine Months Ended
                                          September 30, 1999 and 1998      September 30, 1999 and 1998

(in thousands)                            Volume     Rate      Total        Volume     Rate      Total
                                          ------    ------    ------       -------    ------    ------
<S>                                       <C>       <C>       <C>          <C>        <C>       <C>
Increase (decrease) in interest income:
  Securities                              $ (138)    $  27     $(111)       $  (90)    $   3    $  (87)
  Loans                                    1,037      (201)      836         2,516      (580)    1,936
  Federal funds sold                        (245)      (40)     (285)         (715)     (116)     (831)
  Interest-bearing deposits - banks            2        16        18            19        32        51
                                          ------     -----     -----        ------     -----    ------
                                          $  656     $(198)    $ 458         1,730      (661)    1,069
                                          ------     -----     -----        ------     -----    ------

Increase (decrease) in interest expense:
  Interest-bearing demand deposits        $   (1)    $  (8)    $  (9)       $    -     $ (22)   $  (21)
  Savings and money market deposits            3       (20)      (17)           (4)      (86)      (90)
  Time deposits under $100,000                (3)      (11)      (14)           21       (27)       (7)
  Time deposits of $100,000 and over          75       (33)       42            53       (77)      (24)
  Convertible notes                           19        49        68          (108)       16       (92)
  Repurchase agreements                        -         -         -           106         -       106
                                          ------     -----     -----        ------     -----    ------
                                              93       (23)       70            68      (196)     (128)
                                          ------     -----     -----        ------     -----    ------
Increase (decrease) in net interest       $  563     $(175)    $ 388        $1,662     $(465)   $1,197
income                                    ======     =====     =====        ======     =====    ======
</TABLE>

     Interest income represents interest earned on loans, investment securities
and federal funds sold. Interest income increased $458,000 to $4,801,000 for the
three months ended September 30, 1999 from $4,343,000 for the same period in
1998. For the nine months ended September 30, 1999, interest income increased
8.6% to $13,540,000 from $12,472,000 for the same period in 1998. Interest
earned on loans increased 32% and 26% for the three and nine months ended
September 30, 1999 and 1998, respectively. The Company continues to benefit from
strong loan demand, which has been funded by the sale of investment securities
and reduced levels of federal funds sold during the three and nine months ended
September 30, 1999. Overall average interest earning assets increased
$15,708,000 or 7.3% for the nine months ended September 30, 1999 as compared to
the same period in 1998.

     Interest expense represents interest paid on deposits, Company borrowings
and convertible notes. Interest expense for the three months ended September 30,
1999 was $864,000 compared to $793,000 for the same period in 1998, an increase
of 9.0%. For the nine months ended September 30, 1999, interest expense
decreased to $2,463,000 from $2,591,000 for the same period in 1998. The
decrease in interest expense is primarily related to a $68,000 and a $92,000
decrease in interest expenses on convertible notes, for the three and nine
months periods ended September 30, 1999 as compared to the same periods in 1998.
Average convertible notes outstanding decreased to $828,000 and $888,000 for the
three and nine months period ended September 30, 1999, from $1,479,000 and
$3,693,000 for the same periods in 1998. In addition, interest expense was
further impacted by an increase in average repurchase agreements outstanding
during the nine month period ended September 30, 1999 as compared to the same
period in 1998. Interest expense on repurchase agreements increased to $109,000
for the nine months period ended September 30, 1999 from $3,000 for the same
period in 1998. The increase in average repurchase agreements outstanding during
the periods presented, was a result of the reduced level of federal funds sold
and the growth in the loan portfolio.

                                       11
<PAGE>

Provision for Loan Losses

     The provision for loan losses is determined by management based upon the
Company's loan loss experience, the performance of loans in the Company's
portfolio, the quality of loans in the Company's portfolio, evaluation of
collateral for such loans, the economic conditions affecting collectibility of
loans, the prospects and financial condition of the respective borrowers or
guarantors and such other factors which in management's judgment deserve
recognition in the estimation of probable loan losses. In addition, regulatory
agencies, as an integral part of their examination process, periodically review
the Bank's allowance for loan losses. Such agencies may require the Bank to
recognize additions to the allowance or to take charge-offs (reductions in the
allowance) in anticipation of losses.

     The Company recorded provisions for loan losses of $4,426,000 and
$5,598,000 for the three and nine months period ended September 30, 1999,
respectively. The Company had made no provision for loan losses for the same
periods in 1998. The increase in the provision for loan losses in 1999 relate
primarily to identified weaknesses in a small number of loans, of substantial
dollar amounts, which may take an extended period of time to resolve.
Secondarily, changes in the health care industry and the increased complexity
of the credits extended to this industry made increases in the loan loss
provisions prudent. Finally, growth in the loan portfolio and increases in non-
performing assets also contributed to the increased provision. Net charge-offs
(recoveries) to average outstanding loans for the first nine months of 1999 and
1998 were 1.15% and (0.11)%, respectively.

Other Operating Income

     For the nine months ended September 30, 1999, other operating income
totaled $1,422,000 compared with $1,345,000 for the same period in 1998. The
increase was primarily related to a $40,000 net gain recognized on the sale of
investment securities and a $63,000 increase in merchant discount income during
the first nine months of 1999 as compared to 1998. In addition, other operating
income was adversely impacted by declines in mortgage brokering fees on a
comparative basis, for the periods presented.

Other Operating Expense

     Other operating expenses for the first nine months of 1999, increased to
$10,480,000 from $9,524,000 for the same period in 1998. The increase primarily
occurred in salaries and other employee benefits, legal fees and audit/
accounting fees.

     Salaries and other employee benefits increased approximately $548,000 to
$5,159,000 for the first nine months of 1999 from $4,611,000 for the same period
in 1998. The increase primarily relates to an increase in staff and salaries and
increased group health insurance expenses. Legal fees and audit/accounting fees
increased $449,000 during the first nine months of 1999 as compared to the same
period in 1998, primarily due to an increase in audit fees of $96,000 related to
the completion of the 1998 annual report and an increase of $353,000 in legal
expenses related to the planned merger and lending activities. Legal expenses
related to the workout of problem loans may be recovered after the loan is fully
paid. There was also a decrease of $142,000 due to reduced promotional
activities and use of outside consultants.

Income Taxes

     For the nine months ended September 30, 1999, the provision (benefit) for
income taxes was $(1,292,000) compared to $661,000 for the same period in 1998.

                                       12
<PAGE>

BALANCE SHEET ANALYSIS

Investment Securities

     The Company reported total investment securities of $66.7 million at
September 30, 1999. This represented a decrease of $38.2 million, or 36.4% from
$105.0 million at December 31, 1998.

     Securities available-for-sale decreased $33.6 million, or 41.5%, to $47.3
million at September 30, 1999. The unrealized loss on securities held-for-sale
was $1.9 million at the end of the third quarter, with an adjustment to equity
capital of $1.1 million and deferred taxes of $0.8 million. The following table
sets forth the amortized cost and fair value of securities available-for-sale as
of September 30, 1999 and December 31, 1998:

<TABLE>
<CAPTION>
                                                                            September 30, 1999
                                                        -----------------------------------------------------------
                                                                           Gross             Gross
                                                        Amortized        Unrealized        Unrealized        Fair
(in thousands)                                             Cost             Gain              Loss           Value
                                                        ---------        ----------        ----------       --------
<S>                                                     <C>              <C>               <C>              <C>
U.S. Government securities                               $     -          $       -            $    -        $     -
U.S. Government agency and
   mortgage-backed securities                             38,405                  -             1,352         37,053
Small Business Administration securities                     654                  -                21            633
Municipal securities                                       2,551                  -               133          2,418
Federal Reserve Bank Stock                                   439                  -                 -            439
Collateralized mortgage obligations                        7,163                  -               395          6,768
                                                         -------          ---------            ------        -------
        Total                                            $49,212          $       -            $1,901        $47,311
                                                         =======          =========            ======        =======

                                                                            December 31, 1998
                                                        -----------------------------------------------------------
                                                                           Gross             Gross
                                                        Amortized        Unrealized        Unrealized        Fair
(in thousands)                                             Cost             Gain              Loss           Value
                                                        ---------        ----------        ----------       --------
<S>                                                     <C>              <C>               <C>              <C>
U.S. Government securities                               $    -                $  -            $    -        $     -
U.S. Government agency and
   mortgage-backed securities                             68,487                153               514         68,126
Small Business Administration securities                     858                  1                 7            852
Municipal securities                                       2,551                  3                 8          2,546
Federal Reserve Bank Stock                                   439                  -                 -            439
Collateralized mortgage obligations                        9,034                  -               106          8,928
                                                         -------          ---------            ------        -------
        Total                                            $81,369               $157            $  635        $80,891
                                                         =======          =========            ======        =======
</TABLE>


                                       13
<PAGE>

     Securities held-for-sale decreased $4.7 million, or 19.5%, to $19.4 million
at September 30,1999, from $24.1 million at December 31, 1998. The amortized
cost and fair value of securities held-to-maturity as of September 30, 1999, and
December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                           September 30, 1999
                                                  ---------------------------------------------------------------------
                                                                       Gross                 Gross
                                                  Amortized          Unrealized            Unrealized             Fair
(in thousands)                                      Cost                Gain                  Loss               Value
                                                  ---------          ----------            -----------          --------
<S>                                               <C>                <C>                   <C>                  <C>
U.S. Government securities                          $ 3,035                $ 38                   $  -           $ 3,073
U.S. Government agency securities                     2,000                   -                      -             2,000
U.S. Government agency
   mortgage-backed securities                        14,396                  29                    107            14,318
                                                    -------                ----                   ----           -------
        Total                                       $19,431                $ 67                   $107           $19,391
                                                    =======                ====                   ====           =======


                                                                           December 31, 1998
                                                  ---------------------------------------------------------------------
                                                                       Gross                 Gross
                                                  Amortized          Unrealized            Unrealized             Fair
(in thousands)                                      Cost                Gain                  Loss               Value
                                                  ---------          ----------            -----------          --------
<S>                                               <C>                <C>                   <C>                  <C>
U.S. Government securities                          $ 3,043                $151                   $  -           $ 3,194
U.S. Government agency securities                     2,250                  21                      -             2,271
U.S. Government agency                                    -                   -                      -                 -
   mortgage-backed securities                        18,788                   1                    119            18,670
                                                    -------                ----                   ----           -------
        Total                                       $24,081                $173                   $119           $24,135
                                                    =======                ====                   ====           =======
</TABLE>


     During the nine months ended September 30, 1999 and the twelve months ended
December 31, 1998, securities available-for-sale were sold for aggregate
proceeds of $27,148,000 and $15,337,000, respectively. These sales resulted in
gross realized gains and losses of $97,000 and ($57,000) for the nine months
ended September 30, 1999 and $12,000 and ($18,000) for the twelve months period
ended December 31, 1998.

                                       14
<PAGE>

Loans

     The following table sets forth the amount of loans outstanding by category
and the percentage of each category to the total loan portfolio.
<TABLE>
<CAPTION>
                                                  September 30, 1999                   December 31, 1998
                                               -----------------------              -----------------------
(in thousands)                                  Amount      % of Total                Amount     % of Total
                                               --------     ----------               --------    ----------
<S>                                            <C>          <C>                     <C>          <C>
Commercial                                     $113,408           76.0%              $ 93,952          79.7%
Real estate secured commercial                   26,736           17.9                 11,698           9.9
                                               --------     ----------               --------    ----------
                                                140,144           93.9                105,650          89.6
Equity lines of credit                            4,320            2.9                  5,931           5.0
Other lines of credit                             3,205            2.2                  4,817           4.1
Installment                                       1,501            1.0                  1,482           1.3
Lease financing                                       -              -                     32             -
                                               --------     ----------               --------    ----------
      Gross loans                               149,170          100.0%               117,912         100.0%
Less:
   Allowance for loan losses                      6,213                                 2,200
   Deferred loan fees, net                          216                                   193
                                               --------                              --------
      Net loans                                $142,741                              $115,519
                                               ========                              ========
</TABLE>

     Gross loans outstanding increased by $31.3 million or 26.5% to $149.2
million at September 30, 1999 compared to $117.9 at December 31, 1998. This was
primarily due to increases in commercial and real estate secured commercial
loans of $19.5 million and $15.8 million, respectively. The table above
indicates that the loan portfolio mix at September 30, 1999 had a larger portion
of real estate secured commercial loans, representing 17.9% of gross loans as
compared to 9.9% at December 31, 1998, while commercial loans decreased from
79.7% to 76.0%.

     The commercial and real estate secured commercial loans consist primarily
of short-to medium-term financing for small-to medium-sized health care-related
companies and professionals located in Southern California. These loans are
primarily concentrated in the same sectors of the medical community that the
Bank's deposit base is drawn from and consists of sole medical practitioners,
small group practices, large specialty groups, multi-specialty medical groups
and other outpatient health care service companies. Approximately 76% of total
loans at September 31, 1999 were commercial loans which were unsecured or
collateralized by various business and personal property assets, including
equipment, accounts receivable contracts, and proceeds thereof, including
capitation payments.

     In accordance with management's credit administration and regulatory
policy, loans are placed on nonaccrual status when the collection of principal
or interest is questionable. Generally, this means that loans are placed on
nonaccrual status when interest is 90 days or more past due, unless the loan is
well secured and in the process of collection or in the process of renewal.
Nonperforming loans and nonperforming assets do not include accruing loans 90
days or more past due where loan quality is not impaired, but rather the renewal
in process is pending receipt of the borrower's updated financial information.

     Credit administrative policies discourage the use of "short-term"
extensions while awaiting receipt of updated financial packages from borrowers.
The policy is aimed at facilitating timely credit renewals.  However, as a
result of this policy, aggregate "past due" volumes will not necessarily be
correlative to absolute asset quality measurement.

                                       15
<PAGE>

     The following table sets forth information about nonperforming assets
(which include nonaccrual loans, other real estate owned and other repossessed
assets), accruing loans 90 days or more past due, and certain ratios.

<TABLE>
<CAPTION>
                                                                  September 30,                December 31,
(in thousands)                                                        1999                         1998
                                                                  -------------                ------------
<S>                                                               <C>                          <C>
Nonperforming loans                                               $       4,325                $      1,359
Other real estate owned (OREO)                                                -                           -
Other repossessed assets                                                    272                         272
                                                                  -------------                ------------
     Total nonperforming assets                                   $       4,597                $      1,631
                                                                  =============                ============

Accruing loans 90 days or more past due                           $       2,990                $        100
                                                                  =============                ============
Allowance for loan losses as a percent of
     nonperforming loans                                                 143.7%                      617.7%
Nonperforming loans to total loans(1)                                     2.90%                       1.15%
Nonperforming assets(1)
     to total loans                                                       3.08%                       1.38%
     to total loans, OREO and repossessed assets                          3.08%                       1.38%
     to total assets                                                      1.70%                       0.63%
</TABLE>
     (1)   Nonperforming loans and nonperforming assets do not include accruing
loans 90 days or more past due.

     Nonperforming loans increased to $4.3 million at September 30,1999 from
$1.4 million at December 31, 1998. This increase was primarily due to a single
borrower being placed on nonaccrual status during the third quarter of 1999.

    The $2,990,000 in accruing loans over 90 days or more past due and still
accruing as of September 30, 1999 were all in the process of being renewed, paid
off or the credit quality was not impaired. As a result of the Company's
practice to discourage "short-term" extensions, these loans are carried as "past
due" to ensure proper underwriting and administrative controls. The total
accrued interest on loans 90 days or more past due and still accruing was
approximately $7,934 at September 30, 1999, and the Company had no accrued
interest due on loans 90 days past due at December 31, 1998.


Allowance for loan losses

     Management's determination of the allowance for loan losses requires the
use of estimates and assumptions related to the actual and inherent risks in the
loan portfolio. Actual results may, however, differ significantly from such
estimates. In connection with the determination of the allowance for loan losses
where real estate secures the loan, management generally obtains independent
appraisals for all properties. Management believes its current appraisal policy
conforms to regulatory guidelines.

     An evaluation of the overall quality of the portfolio is performed at least
quarterly to determine the level of the allowance for loan losses. This
evaluation takes into consideration the classification of loans and the
application of loss estimates attributable to these classifications. The Company
classifies loans as pass, watch, special mention, substandard, doubtful, or loss
based on classification criteria believed by management to be consistent with
the criteria applied by regulatory agencies and consistent with sound banking
practices. These classifications and loss estimates take into consideration all
sources of repayment, underlying collateral, the value of the collateral,
current and anticipated economic conditions, trends and uncertainties and the
historical accuracy of specific reserves attached to loans with serious
perceived weakness. Additionally, the Company utilizes "migration analysis' as
another means to assist management in estimating the level of the allowance for
loan losses. Migration analysis is a statistical method that examines historic
charge-off and classification trends prior to charge-off to estimate potential
losses inherent in the loan portfolio. In addition, the Company utilizes a
comprehensive program that considers numerous variables, of which migrations is
one, to determine the adequacy of the allowance for loan losses for reserves
nonspecific to certain credits. This program is consistent with the
methodologies in Banking Circular 201. Amongst others, consideration is given
to historical and current trends in past due loans, charged-off loans,
nonaccruals, and

                                       16
<PAGE>

the nature and mix of the loan portfolio; local, regional, industry, and
national economic trends in determining loan loss adequacy. Finally, credit
administration, corresponding loan policies and procedures, and timely problem
loan identification are integral to the sound determination of the allowance for
loan losses. Based on information available at September 30, 1999, management
believes that a $6.2 million allowance for loan losses, which constitutes 4.17%
of gross loans, was adequate as an allowance against probable and estimable
losses.

While the Company's policy is to charge-off in the current period those loans
for which a loss is considered probable, there also exists the risk of future
losses which cannot be precisely quantified or attributed to particular loans.
As this risk continually changes in response to factors beyond the control of
the Company, such as the state of the economy, management's judgment as to the
adequacy of the allowance for loan losses in future periods, while approximate,
is in part based on a reasonable methodology.  In addition, various regulatory
agencies, as an integral part of their examination process, review the Company's
allowance for loan losses.  Such agencies may require the Bank to record
additions or deletions to the allowance based on their judgments of information
available to them at the time of their examination.


     The following table provides a summary of the Company's allowance for loan
losses and charge-off and recovery activity during the nine months ended
September 30, 1999, the year ended December 31, 1998, and the nine months ended
September 30, 1998:

<TABLE>
<CAPTION>
                                                                                      Period Ended
                                                                                      ------------
                                                              September 30,            December 31,         September 30,
(in thousands)                                                    1999                     1998                 1998
                                                              -------------            ------------         -------------
<S>                                                           <C>                      <C>                  <C>
Balance at beginning of period                                $       2,200            $      1,802         $       1,802
Provision for loan losses                                             5,598                     406                     -
                                                              -------------            ------------         -------------
                                                                      7,798                   2,208                 1,802
                                                              -------------            ------------         -------------
Loan charge-offs                                                      1,690                     269                   122
Recoveries on loans previously charged-off                             (105)                   (261)                 (205)
                                                              -------------            ------------         -------------
   Net charge-offs (recoveries)                                       1,585                       8                   (83)
                                                              -------------            ------------         -------------
Balance at end of period                                      $       6,213            $      2,200         $       1,885
                                                              =============            ============         =============

Loans outstanding at end of period                            $     149,170            $    117,912         $     107,719
Average loans outstanding during period                             137,675                 103,548               101,852

Net charge-offs (recoveries) to average loans outstanding             1.15%                   0.01%                -0.11%
Allowance for loan losses:

     to total loans                                                    4.17                    1.87                  1.75
     to nonperforming loans/(1)/                                       1.44                  161.88                324.44
     to nonperforming assets/(1)/                                      1.35                  134.89                220.98
</TABLE>
/(1)/  Nonperforming loans and nonperforming assets do not include accruing
loans 90 days or more past due.


     The allowance for losses on loans was $6.2 million at September 30, 1999,
an increase of $4.0 million and $4.3 million from at December 31, 1998 and
September 30, 1998, respectively. The additional provisions relate primarily to
identified weaknesses in a small number of loans, of substantial dollar amounts,
which may take an extended period of time to resolve. Secondarily, changes in
the health care industry and the increased complexity of the credits extended to
this industry made increases in the loan loss provisions prudent. Finally,
growth in the loan portfolio and increases in non-performing assets also
contributed to the increased provision. The Company also added $1.0 million of
allowance for losses on loans during the second quarter of 1999.

     Net loan charge-offs for the nine months ended September 30, 1999 amounted
to $1.6 million as compared to a total net recovery of $0.1 million for the same
period in 1998.  Of the $1.7 million in charge-offs in 1999, $1.5 was
attributable to a single credit in the second quarter.

                                       17
<PAGE>

     Management considers a loan to be impaired when, based upon available
information and current events, it believes that it is probable the Company will
be unable to collect all amounts due on a timely basis in accordance with the
contractual terms of the loan agreement.  Impairment of a loan is measured by
the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's observable market price, or the fair value
of the collateral if the loan is collateral dependent.  Impairment is recognized
by the establishment of a valuation allowance equal to the excess of the
Company's recorded investment in the loan over its measured value.

     The Company had $4,545,000 in impaired loans as of September 30,1999.  The
carrying value of impaired loans for which there is a related allowance for loan
losses was $264,000, with the amount of specific allowance for loan losses
allocated to these loans of $61,000.  There was $4,281,000 in impaired loans for
which there was a general allowance allocated consistent with the Company's
allowance for loan loss methodology.  The average recorded investment in
impaired loans during the first nine months of 1999 was approximately $2,915,000
and income recorded utilizing the cash basis and accrual basis method of
accounting was $60,038.  Impaired loans at September 30, 1999, included
$4,325,000 of nonaccrual loans.  Included in impaired loans as of September 30,
1999 were $999,000 of troubled debt restructured loans, $778,000 of which were
on nonaccrual and the remaining $221,000 were in compliance with the modified
terms.

     The Company had approximately $1,836,000 in impaired loans as of December
31, 1998. The carrying value of impaired loans for which there is a related
allowance for loan losses was $153,000, with the amount of specific allowance
for loan losses allocated to these loans of $41,000. There were $1,683,000 in
impaired loans for which there was no related specific allowance for loan
losses. However, general allowance consistent with the level of allowance for
similar loans with similar risk characteristics were maintained for impaired
loans without specific allowance. The average recorded investment in impaired
loans during 1998 was $1,131,000. Impaired loans at December 31, 1998 included
$1,359,000 of nonaccrual loans. Included in impaired loans as of December 31,
1998 were $614,000 of troubled debt restructured loans, $341,000 of which were
on nonaccrual and the remaining $273,000 were in compliance with the modified
terms.

          The Company had $875,000 in impaired loans as of September 30, 1998.
The carrying value of impaired loans for which there is a related allowance for
loan losses was $171,000, with the amount of specific allowance for loan losses
allocated to these loans of $48,000. However, general allowance consistent with
the level of allowance for similar loans with similar risk characteristics were
maintained for impaired loans without specific allowance. The average recorded
investment in impaired loans during the first nine months of 1998 was
approximately $955,000 and income recorded utilizing the cash basis and accrual
basis method of accounting was $34,000.  Impaired loans at September 30, 1998,
included $581,000 of nonaccrual loans.  Included in impaired loans as of
September 30, 1998 were $319,000 of troubled debt restructured loans, $25,000 of
which were on nonaccrual and the remaining $294,000 were in compliance with the
modified terms.

Deposits

     Total deposits at September 30, 1999 were $244,475,000, an increase of
$13,894,000 or 6.03% from $230,581,000 at December 31, 1998. The Company
attracts deposits primarily from individuals and businesses related to the
health care services industry, as well as other professionals and professional
services firms. The Company has no brokered deposits and the Company's practice
is to not purchase brokered deposits.

     The following table sets forth the amount of deposits by category and the
percentage of each category to total deposits as of September 30, 1999 and
December 31, 1998:

<TABLE>
<CAPTION>

                                                      September 30, 1999                    December 31, 1998
                                                     Amount     % of Total                 Amount     % of Total
                                                    --------    ----------                --------    ----------
(in thousands)
<S>                                                 <C>         <C>                       <C>         <C>
Demand, noninterest-bearing                         $101,129         41.37%               $109,422         47.46%
Demand, interest-bearing                              14,253          5.83                  16,711          7.25
Savings deposits                                      13,604          5.56                  12,553          5.44
Money market deposits                                 79,184         32.39                  62,947         27.30
Time deposits under $100,000                           8,252          3.38                   8,625          3.74
Time deposits of $100,000 and over                    28,053         11.47                  20,323           .81
                                                    --------    ----------                --------    ----------
                                                    $244,475        100.00%               $230,581        100.00%
                                                    ========    ==========                ========    ==========
</TABLE>


                                       18
<PAGE>

     Historically, deposit levels increase substantially at year-end as clients
increase cash reserves required for first and second quarter tax payments and
bonuses.   In addition, increasing competition for operating cash deposits comes
from broker dealer products and accounts.  In order to minimize the effects of
such "disintermediation" from the Company to such accounts, the Company is
currently offering to clientele such accounts through its CNET products. The
CNET product is a money market mutual fund. The goal of the fund is to provide
as high a level of current income as is consistent with preservation of
principal and liquidity.  The fund is managed by The Cadre Network Health
Financial Services Liquid Asset Fund, and is not insured by the FDIC and is not
an obligation of, or guaranteed by the Company or its subsidiaries and is
subject to investment risk, including possible loss of principal invested.

Capital

     The Office of the Comptroller of the Currency (the "OCC"), the Bank's
primary regulator, has established minimum leverage ratio guidelines for
national banks. These guidelines provide for a minimum Tier 1 capital leverage
ratio (Tier 1 capital to adjusted average total assets) of 3.0% for national
banks that meet certain specified criteria, including having the highest
regulatory rating. All other national banks will generally be required to
maintain a minimum Tier 1 capital leverage ratio of 3.0% plus an additional
cushion of 100 to 200 basis points. The OCC has not advised the Bank of any
specific minimum Tier 1 capital leverage ratio applicable to it.

     The Federal Reserve Bank, as Bancorp's primary regulator, has similarly
established minimum leverage ratio guidelines for bank holding companies.  These
guidelines also provide for a minimum Tier 1 leverage ratio of 3.0% for bank
holding companies that meet certain specified criteria, including having the
highest regulatory rating.  All other bank holding companies will generally be
required to maintain a minimum Tier 1 capital leverage ratio of 3.0% plus an
additional cushion of 100 to 200 basis points.  The Federal Reserve Bank has not
advised the Bancorp of any specific minimum Tier 1 capital leverage ratio
applicable to it.

     Federal banking agencies risk-based capital standards were implemented on
December 31, 1992.  Since December 31, 1992, banking organizations have been
expected to meet a minimum ratio for qualifying total capital to risk-weighted
assets of 8.0%, 4.0% of which must be Tier 1 capital.  A banking organization's
risk-based capital ratios are obtained by dividing its qualifying capital by its
total risk-adjusted assets and risk-weighted off-balance sheet items.

     The Federal Deposit Insurance Act of 1991 contains "prompt correction
action" provisions pursuant to which insured depository institutions are to be
classified into one of five categories based primarily upon capital adequacy,
ranging from "well-capitalized" to "critically undercapitalized" and which
require, subject to certain exceptions, the appropriate federal banking agency
to take prompt corrective action with respect to an institution which becomes
"undercapitalized" and to take additional actions if the institution becomes
"significantly undercapitalized" or "critically undercapitalized."

                                       19
<PAGE>

     The following table presents the capital ratios for the Company and the
Bank, compared with the standards for "well-capitalized" depository institutions
(which standards do not apply to bank holding companies) and the minimum
required capital ratios to be deemed "adequately capitalized" under applicable
federal regulations, as of September 30, 1999.

<TABLE>
<CAPTION>
                                                                                              To Be Well
                                                                                           Capitalized Under
                                                                For Capital                Prompt Corrective
                                       Actual                Adequacy Purposes             Action Provisions
                                 ------------------         --------------------         --------------------
(in thousands)                    Amount     Ratio           Amount       Ratio           Amount       Ratio
                                 --------   -------         -------      -------         --------     -------
<S>                              <C>        <C>             <C>          <C>             <C>          <C>
Company
Leverage/(1)/                    $23,539      8.76%          $10,747        4.00%         $13,434        5.00%
Tier 1 Risk-Based                 23,539     13.24%            7,114        4.00%          10,671        6.00%
Total Risk-Based                  26,559     14.93%           14,228        8.00%          17,785       10.00%

Bank
Leverage                          20,101      7.53%           10,675        4.00%          13,344        5.00%
Tier 1 Risk-Based                 20,101     11.45%            7,021        4.00%          10,531        6.00%
Total Risk-Based                  22,345     12.73%           14,041        8.00%          17,552       10.00%
</TABLE>

/1/  The minimum required by the FRB is 3%; for all but the most highly rated
bank holding companies, the FRB expects a leverage ratio of 3% plus 100 to 200
basis points.

     The Company and the Bank, at September 30, 1999, were considered "well-
capitalized" and exceeded all applicable minimum capital requirements.  Capital
requirements of the federal banking regulators, however, could limit the
Company's future growth if the Company were to rely solely on the retention of
earnings to generate additional capital or rapid growth.

     On May 29, 1998, the Company gave notice of its' call for partial
redemption of $2,625,000 principal amount of the Professional Bancorp, Inc.,
8.50% Convertible Subordinated Reset Notes due March 1, 2004. As a result of
this call, approximately $2,552,000 of the notes converted to 200,955 shares of
common stock and $73,000 in notes were redeemed by the June 30, 1998 redemption
date. For the nine months ended September 30, 1999, approximately $368,000 of
notes were converted to 28,977 shares of common stock. The principal balance of
notes outstanding at September 30, 1999 were $748,000.

Liquidity

     The Company's primary source of liquidity is dividends from the Bank.
Dividends from the Bank to the Company are subject to certain regulatory
restrictions. Under federal banking law, dividends declared by the Bank in any
calendar year may not, without the approval of the OCC, exceed its net earnings,
as defined, for that year combined with its retained net earnings for the
proceeding two years.

     The Bank's primary sources of liquidity are federal funds sold to other
banks and the investment securities portfolio. For the nine months ended
September 30, 1999, federal funds sold averaged $15,111,000 and compared to
$34,066,000 for the same period in 1998. In addition, securities in the
available-for-sale portfolio can be sold in response to liquidity needs or used
as collateral under reverse repurchase agreements. Securities held-to-maturity
are available for liquidity needs primarily as collateral for reverse repurchase
agreements. The fair value of securities available-for-sale and securities held-
to-maturity at September 30, 1999, were $47,311,000 and $19,390,000,
respectively.

                                       20
<PAGE>

     The Bank sells securities under agreements to repurchase.  Securities sold
under repurchase agreements are recorded as short-term obligations.  During the
first nine months of 1999, the highest daily outstanding balance and the average
balance of securities sold under agreements to repurchase were $25,000,000 and
$4,368,000, respectively; the average rate paid was 4.95%.  At September 30,
1999, there were no securities sold under agreements to repurchase.

Year 2000

     The Year 2000 issue presents a very real and significant challenge to the
Company, along with the entire financial services industry. This problem has the
potential to affect a wide range of systems and equipment, including software
and hardware, utilities, communications platforms and devices, and facilities.
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to represent the calendar year.  Software so developed
and not corrected could produce inaccurate or unpredictable results when dates
change in the year 2000. Such occurrences may have a material adverse effect on
the Company's financial condition, results of operations, or business as the
Company, like most financial organizations, is significantly subject to the
potential Year 2000 issues due to the nature of financial information.

     While no one can accurately predict what will happen with the date change
to the Year 2000, the Company's management and Board of Directors take the
potential risks seriously, and have been working since early in 1997, and will
continue to work hard, to be prepared for the Year 2000 transition.

     There are a number of broad concerns that may affect the Company, our
customers, and business partners. In the event of a Year 2000 failure, the
Company could be adversely impacted in a number of ways.  Internal operations
problems and problems resulting from primary vendors and suppliers inability to
perform could cause increased costs in determining correct results and lost
customers resulting in lost revenue.  Large customers negatively effected by
Year 2000 problems could lead to deposit outflows or increased risk of
collecting loans.  As part of our efforts to ensure compliance with government
regulatory standards and establish prudent business practices for Year 2000
issues, the Board of Directors and senior management have previously developed
and approved a Year 2000 preparedness plan, which is currently being
implemented.  The Company's Year 2000 risk mitigation program is a dynamic
process of reassessment, evaluation and testing.  As a result, responses may
change especially as vendors and manufacturers find and report Year 2000 product
and services issues.  The following outlines major areas within the plan and
provides the status of our efforts:

     Awareness: Our plan provides for a Year 2000 task force which continues to
report at least quarterly reporting to the Audit Committee and Board of
Directors of the Company.  The task force, which meets monthly, consists of
members of senior management representatives from key areas within the Company.
The task force, among other roles, monitors and report progress, and provides
direction toward preparation for the Year 2000 date change.

     Assessment:  The task force developed an overall strategy which identified
and categorized internal information and operating systems, and external
vendors, customers, auditors and business partners, according to risk of
business disruption. Each operating system, process, vendor, or other business
partner was risk assessed based upon the impact on the Company's business.  High
risk processes and systems were categorized as "mission critical" and were
prioritized in our Year 2000 risk mitigation process. Testing plans were
developed, and we completed testing all mission critical and other identified
systems. The testing of all systems was completed by September 30, 1999.  We
identified contingency plans and alternatives, including replacement or
elimination, for mission critical systems and other systems. Also, we
integrated the Year 2000 business risks into our overall bankwide business
resumption plans.

     In addition, as a lending institution, the Bank is exposed to potential
risk if its customers suffer Year 2000 related difficulties. Therefore, we have
developed, and implemented, a process to assess the potential risks to the Bank
of both our lending and deposit customer's preparedness for the Year 2000 date
change. Also, potential borrower's readiness for Year 2000 is assessed and
included within the credit underwriting and approval process.

                                       21
<PAGE>

     Remediation:  The remediation phase included upgrading or replacing
information or operating systems, vendor certifications, and other associated
changes.  We have completed renovation of systems, including non-information
technology systems that were identified as non-compliant to Year 2000, including
replacement of some personal computers and upgrade of  software and other
operating systems.

     The renovation of mission critical systems is complete. The extent of our
identified renovation needs were budgeted within our corporate budgeting process
or expensed in accordance with generally accepted accounting procedures.

     Additionally, we have received vendor responses or certification for all of
our mission critical systems, along with most of our other information and
operating systems.  These responses are monitored continually to determine the
vendors' progress toward preparedness.

     Validation/Implementation: As operating systems were validated, upgraded,
and successfully tested the systems were integrated into ongoing operations. As
with any new system, or system change, internal/external users are provided
training, connectivity with other systems is determined and integration into
current processes occurs. Validation and implementation of mission critical
systems was completed by December 31, 1998.  In addition, we instituted an
independent third party review of our Year 2000 efforts for all mission critical
systems.  This independent audit of the Bank's Year 2000 readiness plan recently
confirmed that 100 percent of our mission-critical systems are Y2K Compliant.

     Significant progress has been accomplished in our efforts to prepare for
the Year 2000-century date change.  All of our mission critical systems have
been tested and none have failed. Additionally, we are 100% complete assessing,
renovating, testing and implementing Year 2000 preparedness for all other
identified systems. Management currently estimates the overall cost of Year 2000
risk mitigation not to exceed $100,000 in operating expenses and $300,000 in
fixed asset purchases for fiscal 1999, of which 100% has been incurred.

     While we expect we are fully prepared for the Year 2000 transition, it is
not possible to guaranty that the Bank has eliminated every conceivable risk or
the potential that one or more of our systems may be affected by the actions or
events controlled by third parties.  We have, therefore, developed and tested a
comprehensive contingency plan outlining emergency procedures should key
services be disrupted.

     We continue with the execution of our Year 2000 Preparedness Plan and have
met or remain on schedule to meet our internal timeline and regulatory
expectations. Also, we have developed and presented internal and external
awareness programs, which reinforce the awareness and the need for preparedness
to the Year 2000 problem for the Company's Board of Directors, employees, and
our customers. Based upon the information we have developed through our Year
2000 Preparedness Plan, we have not identified risks associated with the date
change to Year 2000 that will have a material financial impact on the Company.

                                       22
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

         Interest Rate Sensitivity

         The table below provides information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates, including interest rate swaps. Investment securities
and loans are presented based upon contractual maturity and related weighted
average interest rates by expected maturity dates. The information is presented
in US dollar equivalents, which is the Company's reporting currency.

<TABLE>
<CAPTION>
                                                                                                   There                  Fair
                                              1999       2000       2001      2002       2003      After      Total       Value
                                            -------    -------     ------    ------    -------    -------    --------    --------
                                                                      (U.S. $ equivalent in thousands)
<S>                                         <C>        <C>         <C>       <C>       <C>        <C>        <C>         <C>
ASSETS (1)
----------

Securities
  U.S. government securities
     Fixed                                  $     -    $     -     $1,013    $    -    $ 2,022    $     -    $  3,035    $  3,073
       Weighted average interest rate                               6.81%                5.89%                  6.20%
  U.S. government agency and
    mortgage-backed securities
     Fixed                                        -          -          -         -      2,000     36,907      38,907      37,751
       Weighted average interest rate                                                    5.65%      6.26%       6.32%
     Variable                                     -          -          -         -          -     15,896      15,896      15,621
       Weighted average interest rate                                                              5.76%       5.76%
  Municipal securities
     Fixed                                        -          -          -         -         -      2,551       2,551       2,418
       Weighted average interest rate                                                              5.82%       5.82%
  Small Business Administration securities
     Variable                                     -          -          -         -          -        694         694         633
       Weighted average interest rate                                                               5.40%       5.40%
  Collateralized mortgage securities
     Fixed                                        -          -          -         -          -      7,163       7,163       6,767
       Weighted average interest rate                                                               6.32%       6.32%
     Variable                                     -          -          -         -          -          -           -           -
       Weighted average interest rate
  Federal Reserve Bank Stock
     Fixed                                        -          -          -         -          -        439         439         439
       Weighted average interest rate             -          -          -         -          -      6.08%       6.08%

Loans
     Fixed                                    6,762      4,434      2,310     4,434      3,851     11,223      33,014      37,148
       Weighted average interest rate         9.59%      8.95%      9.37%     9.65%      9.78%      7.94%       9.21%
     Variable                                24,853     34,589      6,371     9,607     13,816     26,920     116,156     116,156
       Weighted average interest rate         9.81%      9.78%     10.00%     9.99%     10.00%      9.73%       9.89%
</TABLE>

                                       23
<PAGE>

     The table below provides information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates, including rate interest swaps.  Certificates of
deposit and convertible notes are presented based upon contractual maturity and
related weighted average interest rates by expected maturity dates.  For
interest rate swaps and caps, the table present notional amounts and weighted
average interest rates by contractual maturity dates.  The information is
presented in US dollar equivalents, which is the Company's reporting currency.

<TABLE>
<CAPTION>
                                                                                                     There                 Fair
                                                        1999       2000      2001    2002    2003    After     Total       Value
                                                      --------    ------     -----   -----   -----   -----    --------    --------
                                                                         (U.S. $ equivalent in thousands)
<S>                                                   <C>         <C>        <C>     <C>     <C>     <C>      <C>         <C>
LIABILITIES (1)
---------------

Deposits
  Noninterest-bearing transaction accounts            $101,129    $    -     $   -   $   -   $   -   $   -    $101,129    $101,129
              Weighted average interest rate             0.00%         -         -       -       -       -       0.00%
  Interest-bearing transaction accounts                 14,252         -         -       -       -       -      14,252      14,252
              Weighted average interest rate             0.73%         -         -       -       -       -       0.73%
  Savings and money market accounts                     92,789         -         -       -       -       -      92,789      92,789
              Weighted average interest rate             1.96%         -         -       -       -       -       1.96%
  Certificates of deposit and other time deposits
          Fixed                                         29,662     6,642         -       -       -       -      36,304      36,435
              Weighted average interest rate             4.46%     4.22%         -       -       -       -       4.34%

Convertible notes                                            -         -         -       -       -     748         748         752
              Weighted average interest rate                 -         -         -       -       -   5.23%       5.23%

OFF-BALANCE SHEET ASSETS                                     -         -         -       -       -       -           -           -
------------------------
</TABLE>

(1)  The Company used certain assumptions to estimate fair values and expected
maturities.  For loans, expected maturities are contractual maturities adjusted
for estimated prepayments of principal based on market indicators.  Investment
securities are at quoted market rates and stated maturities.  For loan fair
value computations, the company used a discounted cashflow model with discount
rates based upon prevailing market rates for similar types of loans,
incorporating adjustments for credit risk.  For deposit liabilities, fair values
were calculated using discounted cashflow models based on market interest rates
for different product types and maturity dates for which the deposits are held.

     Exchange Rate Sensitivity

     All of the Company's derivative financial instruments and other financial
instruments are denominated in US dollars. The Company does not have, or
anticipate having, any foreign currency exchange rate exposure.

     Commodity Price Sensitivity

     The Company does not have, or anticipate having, any derivative commodity
instruments.

                                       24
<PAGE>

                          PART II - OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

      None.

Item 2.    CHANGES IN SECURITIES

      None.

Item 3.    DEFAULTS UPON SENIOR SECURITIES

      None.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

Item 5.    OTHER INFORMATION

      None.

                                       25
<PAGE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

      (a)  Exhibits

Exhibit No.
-----------
   3.1    Articles of Incorporation (filed as Exhibit 3.3 to Bancorp's 1989 Form
          10-K Report and incorporated herein by this reference).

   3.2    Amendment to Articles of Incorporation, dated September 8, 1992 (filed
          as Exhibit 3.3 to Bancorp's 1995 Form 10-K/A Report filed on June 3,
          1996 and incorporated herein by this reference).

   3.3    Bylaws adopted April 25, 1990, as amended July 25, 1990 (filed as
          Exhibit 3.2 to Bancorp's 1995 Form 10-K/A Report filed on June 3, 1996
          and incorporated herein by this reference).

   4.1    Warrant to purchase 100,000 shares of Common Stock dated 12-31-92,
          issued to Robert H. Leshner (filed as Exhibit 4.1 in Bancorp's 1992
          Form 10-K Report and incorporated herein by this reference).

   4.2    Warrant to purchase 12,500 shares of Common Stock dated 12-31-92
          issued to Andrew E. Haas. (filed as Exhibit 4.2 in Bancorp's 1998 Form
          10-K Report and incorporated herein by this reference).

   4.3    Warrant to purchase 12,500 shares of Common Stock dated 12-31-92,
          issued to Curtis Swindall. (filed as Exhibit 4.3 in Bancorp's 1998
          Form 10-K Report and incorporated herein by this reference).

  10.1*   Indemnity Agreement entered into with directors and certain officers
          dated October 25, 1989 (filed as Exhibit 10.11 to Bancorp's 1995 Form
          10-K/A Report filed on June 3, 1996 and incorporated herein by this
          reference).

  10.2*   1990 Stock Option Plan (filed as Exhibit 28.A in Bancorp's 1990 Form
          10-K Report on Form 8, Amendment No. 1 dated April 29, 1991 and
          incorporated herein by this reference).

  10.3*   1992 Stock Option Plan (filed as Exhibit A in Bancorp's 1992 Proxy
          Statement and incorporated herein by this reference).

  10.4*   1998 Stock Option Plan. (filed as Exhibit 10.4 to Bancorp's 1998 Form
          10-K Report and incorporated herein by this reference).

  10.5*   Stock repurchase agreement (filed as Exhibit 10.1 in Form 8-K, dated
          December 18, 1990 and incorporated herein by this reference).

  10.6*   Consulting Agreement dated as of August 12, 1996 between Bancorp,
          First Professional Bank, N.A. and Network Health Financial Services,
          Inc. (filed as Exhibit 10.6 to Bancorp's 1996 Form 10-K Report and
          incorporated herein by this reference).

  10.7*   Amendment No. 1 to Consulting Agreement dated as of August 12, 1996
          between Professional Bancorp, Inc., First Professional Bank, N.A. and
          Network Health Financial Services, Inc. (Filed as Exhibit 10.7 to
          Bancorp's 1998 Form 10-K Report and incorporated herein by reference).

  10.8*   Salary Continuation Agreement entered into between the Bank and Joel
          W. Kovner dated May 1, 1992 (filed as Exhibit 10.25 to Bancorp's 1992
          10-K Report and incorporated herein by this reference).

  10.9    Settlement Agreement dated as of July 8, 1996 among Bancorp, the Bank,
          the Shareholders Protective Committee and certain officers and
          directors (filed as Exhibit 1 to Bancorp's Form 8-K filed July 22,
          1996 and incorporated herein by this reference).

                                       26
<PAGE>

   10.10  Lease for premises at 606 Broadway, Santa Monica, California (filed as
          Exhibit 10(a) to Bancorp's Registration Statement on Form S-1, File
          No. 2-76371 filed March 8, 1982 and incorporated herein by this
          reference).

   10.11  Lease for premises at 520 Broadway, Santa Monica, California (filed as
          Exhibit 10.5 in Bancorp's 1983 10-K Report and incorporated herein by
          this reference).

   10.12  Lease for premises at 8600 West 3rd Street, Suite #1, Los Angeles,
          California (filed as Exhibit 10.6 in Bancorp's 1983 10-K Report and
          incorporated herein by this reference.

   10.13  Lease for second floor premises and extension of lease of entire
          premises at 606 Broadway, Santa Monica, California (filed as Exhibit
          10.8 in Bancorp's 1984 10-K Report and incorporated herein by this
          reference).

   10.14  Lease for premises at 9629 Brighton Way, Beverly Hills, California
          (filed as Exhibit 10.9 in Bancorp's 1984 10-K Report and incorporated
          herein by this reference).

   10.15  Lease for premises at 5525 Etiwanda Street, Tarzana, California (filed
          as Exhibit 10.8 in Bancorp's 1986 10-K Report and incorporated herein
          by  this reference).

   10.16  Lease for premises at 55 E. California, Pasadena, California (filed as
          Exhibit 10.65 in Bancorp's 1991 10-K Report and incorporated herein by
          this reference).

   10.17  Lease for premises at 10 North 5th Street, Redlands, California,
          (filed as Exhibit 10.7 in Bancorp's 1991 10-K Report and incorporated
          herein by  this reference).

   10.18  Lease for premises at 9900 Norwalk Boulevard, Santa Fe Springs,
          California, (filed as Exhibit 10.75 in Bancorp's 1992 10-K Report and
          incorporated herein by this reference).

   10.19* Employment agreement effective November 1, 1999, among First
          Professional Bank, N.A., Professional Bancorp, Inc. and Larry
          Patapoff.

   10.20* Employment agreement effective October 21, 1999, among First
          Professional Bank, N.A., Professional Bancorp, Inc. and Gene Gaines.

   21     Subsidiaries of the Registrant (filed as Exhibit in Bancorp's 1986 10-
          K Report and incorporated herein by this reference).

   27     Financial Data Schedule

*Identified as a management contract or compensatory agreement pursuant to Item
 14(a)# of Form 10-K.

                                       27
<PAGE>

(b)   Reports on Form 8-K: None

                                       28
<PAGE>

                                   SIGNATURES


Pursuant to requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.


                                PROFESSIONAL BANCORP, INC.
                                --------------------------
                                (Registrant)



Date:  November 12, 1999        /s/ Julie P. Thompson
                                ---------------------
                                Julie P. Thompson
                                Chairman of the Board


Date:  November 12, 1999        /s/ Larry Patapoff
                                -----------------------
                                Chief Financial Officer

                                       29