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

                                   FORM 10-KSB

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

                   For the Fiscal Year ended December 31, 1999

                          Commission File No. 333-4984

                                PCB BANCORP, INC.
             (Exact Name of Registrant as Specified in its Charter)

          Tennessee                                   62-1641671
(State or other jurisdiction             (I.R.S. Employer Identification Number)
      of incorporation)

300 Sunset Dr : Johnson City, Tennessee                  37604
(Address of Principal Executive Office)                (Zip Code)

                                 (423) 915-2222
                 (Issuer's Telephone Number Including Area Code)


               Securities Registered Pursuant to Section 12(b) or
                               12(g) of the Act:
                                      None

Indicate by the check mark whether the Issuer: (1) has filed all reports
required 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

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB

                                    Yes  X      No

            State issuer's revenues for its most recent fiscal year:
                                   $ 7,642,679

The aggregate market value of the issuer's voting stock held by non-affiliates,
computed by reference the price at which the stock was sold as of January 28,
2000, is $14,846,983 for 645,521 shares, at an estimated $23.00 per share.

                                     806,200
    (Outstanding shares of the issuer's common stock as of February 9, 2000)
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PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

         PCB Bancorp, Inc. (the "Company" or "PCB") is a registered bank holding
company which was incorporated under Tennessee law in May 1996. The Company's
activities are conducted through its wholly-owned subsidiary, People's Community
Bank (the "Bank"), a Tennessee state bank which began business in December 1995.
The Bank was acquired by the Company in a tax-free share exchange in October of
1996, and after four years of operations, on December 31, 1999, the Bank had
grown to total assets of more than $102,496,000.

         The Bank's primary trade area is Johnson City, Tennessee, which had a
population of 50,000 according to the 1990 Census. Current population is
estimated to be 54,000.

         At the present time, the Bank operates a full service banking business
through it main office and branch locations in Johnson City. The Bank provides
such customary banking services as checking and savings accounts, various other
types of time deposits, safe deposit facilities and money transfers. It also
finances commercial transactions, makes secured and unsecured loans, and
provides other financial services to its customers. The Bank is not authorized
to provide trust services.

         The Bank considers its primary market for loans and deposits to be
individuals, small-to-medium size businesses and professionals in Johnson City,
Tennessee. The Bank is actively soliciting business in this target market and
considers the potential growth opportunities to be favorable. No material
portion of the Bank's deposits have been obtained from any single person or
group of persons.

         The Bank is subject to the regulatory authority of the Department of
Financial Institutions of the State of Tennessee and the Federal Deposit
Insurance Corporation ("FDIC").

         The Bank has approximately 39 full-time employees (excluding
maintenance employees) as of December 31, 1999.

Competition

         Competition for consumer demand and savings deposits is quite intense
in Washington County. Such competition is heightened by the fact that Tennessee
law now permits any bank or savings institution located in Tennessee to branch
in any county in Tennessee. The Bank currently competes in the Washington County
area with ten commercial banks and two savings institutions. The Bank also
competes generally with insurance companies, credit unions, and other financial
institutions, and institutions which have expanded into the quasi-financial
market, including some institutions that are much larger than the Bank. Many of
the institutions with which the Bank competes have been located in Washington
County for many years and have much greater resources and deposit strength, as
well as offering services such as securities investing and trust services which
the Bank does not provide to its customers.

Loans

         Various types of secured and unsecured commercial, consumer and real
estate loans are offered by the Bank. The Bank's current policy is to make loans
primarily to borrowers who maintain depository relationships with the Bank or
reside or work in the Bank's market areas. Real estate loans usually are made
only when such loans are secured by real property located in Washington County.
In addition, the Bank purchases finance contracts for motor vehicles.

         The Bank provides each lending officer with written loan guidelines.
Lending authority is delegated by the Board of Directors to loan officers, each
of whom has limited authority to extend secured and unsecured credit. Any credit
in excess of $500,000 must have the approval of the Loan Committee of the Board
of Directors (the "Loan Committee"), which consists of both management and
non-management directors of the Bank.

Loan Review



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         The Bank continually reviews its loan portfolio to determine
deficiencies and the corrective actions to be taken. The Bank grades its loans
with respect to quality and risk and requires each loan officer to assign a
grade when a loan is booked and to review loan grades annually. The Bank
contracts with an experienced loan review officer, who does not have loan
origination responsibilities and who conducts periodic reviews of all borrowers
with aggregate indebtedness in excess of $50,000. During 1999 approximately 54%
of the dollar amount of the Bank's loan portfolio was reviewed by loan review.
All the new loans are reviewed within three months of origin. The Bank's loan
review officer advises as to the quality, structure and renewability of the
loans and assigns each loan grade. Past due loans and technical exceptions are
reviewed at least weekly by an internal loan officer committee, and a summary
report of such loans is reviewed monthly by the Loan Committee.

Investment Policy

         The Bank's general investment portfolio policy is to provide maximum
safety of funds invested to insure solvency and to balance risk taken in other
areas of funds management, to provide sufficient liquidity, to provide maximum
return on funds invested, to meet basic pledging requirements and to comply with
all laws and regulations. This policy is reviewed from time to time by both the
Bank's Investment Committee and the Board of Directors. Individual transactions,
portfolio composition and performance are reviewed and approved monthly by the
Board of Directors or a committee thereof. The CEO of the Bank implements the
policy and reports to the full Board of Directors on a monthly basis information
as to maturities, sales, purchases, resultant gains or losses, average maturity,
federal taxable equivalent yields and appreciation or depreciation by investment
category.

Monetary Policies

         The result of operations of the Bank and the Company are affected by
credit policies of monetary authorities, particularly the Federal Reserve Board.
The instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. government securities, changes in the discount
rate on bank borrowings and changes in reserve requirements against bank
deposits. In view of changing conditions in the national economy and in the
money markets, as well as the effects of actions by monetary and fiscal
authorities, including the Federal Reserve Board, no prediction can be made as
to possible future changes in interest rates, deposit levels, loan demand or the
effect of such matters on the business and earnings of the Company.

Personnel

         At December 31, 1999, the Company had approximately 39 full-time
equivalent employees. The Company is not a party to any collective bargaining
agreement and believes that its employee relations generally are good.

         In July of 1999, Michael T. Christian was hired by the Bank to the
position of President. At that time, Phillip Carriger assumed the duties of
Chief Executive Officer and Chairman of the Board. Prior to the hiring of Mr.
Christian, Mr. Carriger was performing the duties of both President and CEO. The
move was intended to free up time for Mr. Carriger to concentrate on the
marketing and long-term growth of the Bank, while Mr. Christian focused the
majority of his time and energies to the day-to-day operations of the Bank.

Supervision and Regulation

         The Company and the Bank are subject to extensive regulation under
state and federal statutes and regulations. The discussion in this section,
which briefly summarizes certain of such statutes, does not purport to be
complete, and is qualified in its entirety by reference to such statutes. Other
state and federal legislation and regulations directly and indirectly affecting
banks and other financial institutions likely are to be enacted or implemented
in the future; however, such legislation and regulations and their effect on the
business of the Company and the Bank cannot be predicted.

PCB Bancorp, Inc.

         The Company is a bank holding company subject to the supervision of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
under the Bank Holding Company Act of 1956, as amended. As a bank holding
company, the Company is required to file annual reports with, and is subject to
examination by the Federal Reserve Board.

People's Community Bank.



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         The Bank is incorporated under the banking laws of the State of
Tennessee, and as such, is subject to the provisions of the Tennessee Banking
Act and the supervision of and the regular examination by the Tennessee
Department of Financial Institutions (the "Department"). The Bank is a member of
the FDIC and, therefore, also is subject to the provisions of the Federal
Deposit Insurance Act and to supervision and examination by the FDIC.

         Capital. The Federal Reserve Board and the FDIC have adopted final
risk-based capital guidelines for bank holding companies. The minimum guidelines
for the ratio of total capital ("Total Capital") to risk weighted assets
(including certain off-balance sheet activities, such as standby letters of
credit) is 8.00%. At least half of the Total Capital must be composed of "Tier 1
or core capital," which consists of common stockholders' equity, minority
interests in the equity accounts of consolidated subsidiaries non-cumulative
perpetual preferred stock, less goodwill ("Tier 1 Capital"). The remainder, Tier
2 Capital, may consist of subordinated debt, other preferred stock, and a
limited amount of loan loss reserves. At December 31, 1999, the Company's
risk-based Tier 1 Capital and risk-based Total Capital ratios were 10.3% and
11.3%, respectively. At December 31, 1998, the Company's risk-based Tier 1
Capital and risk-based Total Capital ratios were 12.1% and 13.3%, respectively.

         In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum leverage ratio (Tier 1 Capital to total assets, less goodwill) of 4% to
5% for most bank holding companies. The Company's leverage ratio at December 31,
1999 was 8.7% and at December 31, 1998 was 9.3%.

         Failure to meet FDIC capital requirements can subject an FDIC-insured
state bank to a variety of enforcement remedies, including issuance of a capital
directive, termination of deposit insurance and a prohibition on the taking of
brokered deposits. Substantial additional restrictions cam be imposed under the
"prompt corrective action" regulations, as described below.

         Payment of Dividends. The Company is a legal entity separate and
distinct from the Bank. The principal source of the Company's revenues, however,
is from dividends declared by the Bank. Under Tennessee law, the Bank can only
pay dividends out of its undivided profits, which at December 31, 1999 were
approximately $878,421. This amount will be increased by the Bank's net earnings
and decreased by any losses. The Bank's ability to pay dividends also may depend
on its ability to meet minimum capital levels established from time to time by
FDIC. Under such regulations, FDIC-insured state banks are prohibited from
paying dividends, making other distributions or paying any management fee to a
parent if, after such payment, the Bank would fail to have a risk-based Total
Capital ratio of 8% and a Tier 1 leverage capital ratio of 4%. In 1999, the Bank
paid a dividend of $120,310 to the Company to pay stockholder dividends.

         Under Tennessee law, the Company may pay common stock dividends if,
after giving effect to the dividends, the Company can pay its debts as they
become due in the ordinary course of business and the Company's total assets
exceed its total liabilities. The payment of dividends by the Company also may
be affected or limited by certain factors, such as the requirements to maintain
adequate capital above regulatory guidelines. In addition, if, in the opinion of
the applicable regulatory authority, a bank holding company or a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could include
the payment of dividends), such authority may take supervisory actions to
prevent such action, including a cease and desist order prohibiting such
practice. In 1999, the Company paid quarterly dividends equivalent to $.05 per
outstanding share.

         The Company's Support of the Bank. Under the Federal Reserve Board
policy, the Company is expected to act as a source of financial strength and to
commit resources to the Bank. Such support may be required at times when, absent
such Federal Reserve Board policy, the Company may not be inclined to provide
it.

         Under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA"), a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC in connection with (I) the default of a commonly controlled FDIC-insured
depository institution or (II) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance.

         Any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right or payment to deposits and to certain other
indebtedness of such subsidiary banks. In the event of a bank holding company's
bankruptcy, any commitment by





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the bank holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank must be assumed by the bankruptcy trustee and
entitled to a priority of payment over certain other creditors.

Prompt Corrective Action

         The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires the Federal banking regulators to assign to each insured
institution one of five capital categories ("well-capitalized", "adequately
capitalized" or one of three under-capitalized categories) and to take
progressively more restrictive regulatory actions depending upon the assigned
category. Under the "prompt corrective action" regulations adopted pursuant to
FDICIA, in order to be considered "adequately capitalized", national banks must
have a risk-based Tier 1 Capital ratio of at least 4%, a risk-based Total
Capital ratio of 8% and a Tier 1 leveraged capital ratio of at least 4%.
Well-capitalized institutions are those which have a risk-based Tier 1 Capital
ratio above 6%, a risk-based Total Capital ratio above 10% and a Tier 1
leveraged capital ratio above 5%, and which are not subject to a written
agreement, order or capital directive to maintain capital at a specific level.
The Bank is considered a "well-capitalized" institution under these definitions.

All institutions, regardless of their capital levels, are restricted from making
any capital distribution or paying any management fees that would cause the
institution to fail to satisfy the minimum levels to be considered adequately
capitalized. An institution that fails to meet the minimum level for any
relevant capital measure (an "undercapitalized institution") is: (I) subject to
increased monitoring by the appropriate federal banking regulator, (II) required
to submit an acceptable capital restoration plan within 45 days, (III) subject
to asset growth limits, and (IV) required to obtain prior regulatory approval
for acquisitions, branching, and new lines of business. The capital restoration
plan must include a guarantee by the institution's holding company that the
institution will comply with the plan until it has been adequately capitalized
on average for four consecutive quarters. Pursuant to the guarantee, the
institution's holding company would be liable up to the lesser of 5% of the
institutions total assets or the amount necessary to bring the institution into
capital compliance as of the date it failed to comply with its capital
restoration plan. If the controlling bank holding company fails to fulfill its
obligations under the Federal Bankruptcy Code, the appropriate federal banking
regulator could have a claim as a general creditor of the bank holding company,
and, if the guarantee were deemed to be a commitment to maintain capital under
the Federal Bankruptcy Code, the claim would be entitled to priority in such
bankruptcy proceeding over third-party creditors and shareholders of the bank
holding company.

         The bank regulatory agencies have discretionary authority to reclassify
well-capitalized institutions as adequately capitalized or to impose on
adequately capitalized institutions requirements or actions specified for
undercapitalized institutions if the agency determines after notice and an
opportunity for hearing that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice, which can consist of
the receipt of an unsatisfactory examination rating if the deficiencies cited
are not corrected. A significantly undercapitalized institution, as well as any
restoration plan, may be subject to regulatory demands for recapitalization,
broader applications of restrictions on transactions with affiliates,
limitations on interest rates paid on deposits, asset growth and other
activities, possible placement of directors and officers, and restrictions on
capital distributions by any bank holding company controlling the institution.
Any company controlling the institution could also be required to divest the
institution or the institution could be required to divest subsidiaries. The
senior executive officers of a significantly undercapitalized institution may
not receive bonuses or increases in compensation without prior approval and the
institution is prohibited from making payments of principal or interest on its
subordinated debt. If an institution's ratio of tangible capital to total assets
falls below a level established by the appropriate federal banking regulator
(the "Critical capital level") , which may not be less than 2% nor more than 65%
of the minimum tangible capital level otherwise required, the institution will
be subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better protect
the deposit insurance fund. Unless appropriate findings and certifications are
made by the appropriate federal bank regulatory agencies, a critically
undercapitalized institution must be placed in receivership if it remains
critically undercapitalized on average during the calendar quarter beginning 270
days after the date it became critically undercapitalized.

         Acquisition and Expansion. The Bank Holding Company Act requires any
bank holding company to obtain the prior approval of the Federal Reserve Board
before it may acquire substantially all the assets of any bank, or ownership or
control of any voting shares of any bank, if, after acquiring such shares, it
would own or control directly or indirectly, more than 5% of the voting shares
of such bank. Effective September 29, 1995, the Tennessee Bank Structure Act of
1974 was amended to, among other things, prohibit (subject to certain
exceptions) a bank holding company from acquiring a bank for which the home
state is Tennessee if, upon consummation, the company would directly or
indirectly control 30% or more of the total deposits in insured depository
institutions in Tennessee. As of December 31, 1999, the Company estimates it
held less than 1% of such deposits. Subject to certain exceptions, the




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Tennessee Bank Structure Act prohibits a bank holding company from acquiring a
bank in Tennessee, which has been in operation for less than five years.
Tennessee banks may open additional branches in any county in the state.

         The Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation beginning one year after enactment. In
addition, beginning June 1, 1997, a bank may merge with a bank in another state
as long as neither of the states has opted out of interstate branching between
the date of enactment of the IBBEA and May 31, 1997. The IBBEA further provides
that states may enact laws permitting interstate merger transactions prior to
June 1, 1997. A bank may establish and operate a de novo branch in a state in
which the bank does not maintain a branch if that state expressly permits de
novo branching. Once a bank has established branches in a state through an
interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through de
novo branching may establish and acquire additional branches in such state in
the same manner and to the same extent as a bank having a branch in such state
as a result of an interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may establish a
branch in the opting out of state, whether through an acquisition or de novo.
Tennessee law allows banks and bank holding companies in any state to acquire
banks and bank holding companies in Tennessee provided that the state in which
such acquiror is headquartered also permits Tennessee banks and bank holding
companies to acquire banks and bank holding companies in that state.
Acquisitions of banks or bank holding companies in Tennessee require the
approval of the Commissioner of Financial Institutions.

         The Bank Holding Company Act also prohibits a bank holding company,
with certain exceptions, from acquiring more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks. The Federal Reserve Board is authorized to
approve ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. Certain activities have been found to be closely related to
banking by Federal Reserve Board regulations, including operating a trust
company, a mortgage company, finance company or factoring company, performing
data processing operations, providing investment advice, and engaging in certain
kinds of credit-related insurance activities.

         FDIC Insurance Assessments; DIFA. The FDIC reduced the insurance
premiums it charges on bank deposits insured by the Bank Insurance Fund ("BIF")
to the statutory minimum of $2,000.00 for "well-capitalized" banks, effective
January 1, 1996. Premiums related to deposits assessed by the Savings
Association Insurance Fund ("SAIF"), including savings association deposits
acquired by banks, continued to be assessed at a rate of between 23 cents and 31
cents per $100.00 of deposits. On September 30, 1996, the Deposit Insurance
Funds Act of 1996 ("DIFA") was enacted and signed into law. DIFA provided for a
special assessment to recapitalize the SAIF to bring the SAIF up to statutory
required levels. The assessment imposed a one-time fee to banks that own
previously acquired thrift deposits of $.526 per $100 of thrift deposits they
held at March 31, 1995. This assessment did not apply to the Company. DIFA
further provides for assessments to be imposed on insured depository
institutions with respect to deposits insured by the BIF (in addition to
assessments currently imposed on depository institutions with respect to
SAIF-insured deposits) to pay for the cost of Financing Corporation ("FICO")
bonds. All banks will be assessed to pay the interest due on FICO bonds starting
on January 1, 1997. The Company expects the cost to the Company to be
immaterial.

         Under the FDICIA, insurance of deposits may be terminated by the FDIC
upon finding that the institution has engaged in unsafe and unsound practices,
is in unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by a federal bank
regulatory agency.

         The Bank Holding Company Act also prohibits a bank holding company,
with certain exceptions, from acquiring more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks. The Federal Reserve Board is authorized to
approve ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. Certain activities have been found to be closely related to
banking by Federal Reserve Board regulations, including operating a trust
company, mortgage company, finance company or factoring company; performing data
processing operations; providing investment advice; and engaging in certain
kinds of credit-related insurance activities.



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         Certain Transactions by the Company with its Affiliates. There also are
various legal restrictions on the extent to which the Company and any nonbank
subsidiary can borrow or otherwise obtain credit from its bank subsidiaries. An
insured bank and its subsidiaries are limited in engaging in "covered
transactions" with its nonbank or nonsavings bank affiliates to the following
amounts: (I) in the case of any such affiliate, the aggregate amount of covered
transactions of the insured bank and its subsidiaries will not exceed 10% of the
capital stock and surplus of the insured bank; and (II) in the case of all
affiliates, the aggregate amount of the covered transactions of the insured bank
and its subsidiaries will not exceed 20% of the capital stock and surplus of the
Bank. "Covered Transactions" are defined by statute to include a loan or
extension of credit, as well as purchase of securities issued by an affiliate, a
purchase of assets (unless otherwise exempted by the Federal Reserve Board), the
acceptance of securities issued by the affiliate as a collateral for a loan and
the issuance of a guarantee, acceptance, or letter of credit on behalf of an
affiliate. Further, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.

         Recent Banking Legislation.

         The most significant new legislation was the passage of the
Gramm-Leach-Bliley (GLB) Act of 1999. The Act sweeps away large parts of the
regulatory structure established in the 1930's and creates new opportunities for
banks, other depository institutions, insurance companies, and securities firms
to enter into combinations that permit a single financial services organization
to offer customers a complete array of financial services. The 1999 financial
services reforms dramatically increase the ability of eligible banking
organizations to affiliate with insurance, securities, and other financial firms
and insured depository institutions.
         Under the GLB Act, two types of banking organizations may engage in
expanded securities activities. The act authorizes a new type of bank holding
company called a financial holding company (FHC) to have a subsidiary company
that engages in securities underwriting and dealing without limitation as to the
types of securities involved. The GLB Act enlarges the activities in which a
bank holding company may engage and authorizes affiliations with a broader range
of nonblank enterprises than the prior provisions of the Bank Holding Company
Act permitted. New regulatory standards must be satisfied for an FHC or a
financial subsidiary to qualify for the new types of securities activities.
Banking institutions will face a new host of challenges, as well as,
opportunities as a result of the GLB Act.

         In addition to the matters discussed above, FDICIA made other extensive
changes to the federal banking laws.

         Standards for safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions and depository institution holding companies relating
to: (I) internal controls, information systems and audit systems; (II) loan
documentation; (III) credit underwriting; (IV) interest rate risk exposure; (V)
asset growth; and (VI) compensation, fees and benefits. The compensation
standards must prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits that
could lead to material financial loss, but (subject to certain exceptions) may
not prescribe specific compensation levels or ranges for directors, officers or
employees. In addition, the federal banking regulatory agencies would be
required to prescribe by regulation standards specifying: (I) maximum classified
assets to capital ratios; (II) minimum earnings sufficient to absorb losses
without impairing capital; and (III) to the extent feasible, a minimum ratio of
market value to book value for publicly-traded shares of depository institutions
and depository institution holding companies.


         Brokered Deposits. FDICIA amends the Federal Deposit Insurance Act to
prohibit insured depository institutions that are not well-capitalized from
accepting brokered deposits unless a waiver has been obtained from the FDIC.
Deposit brokers will be required to register with the FDIC.

         Consumer Protection Provisions. FDICIA seeks to encourage enforcement
of existing consumer protection laws and enacts new consumer-oriented
provisions including a requirement of notice to regulators and customers for any
proposed branch closing and provisions intended to encourage the offering of
"lifeline" banking accounts and lending in distressed communities. FDICIA also
requires depository institutions to make additional disclosures to depositors
with respect to the rate of interest and the terms of their deposit accounts.

         Miscellaneous. FDICIA extends the deadline for the mandatory use of
state-certified and state-licensed appraisers and authorizes acquisitions of
banks by savings associations on the same terms as savings associations may be
acquired by banks. With certain exceptions, state-chartered banks are limited to
the activities of national banks. Within nine months of the date of enactment of






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FDICIA, the federal bank regulatory agencies are required to biannually review
risk-based capital standards to ensure that they adequately address interest
rate risk, concentration of credit risk and risks from non-traditional
activities.

         FDICIA also made extensive changes in the applicable rules regarding
audit, examinations and accounting. FDICIA generally requires annual on-site
full-scope examinations by each bank's primary federal regulator. FDICIA also
imposes new responsibilities on management, the independent audit committee and
outside accountants to develop, approve or attest to reports regarding the
effectiveness of internal controls, legal compliance and off-balance-sheet
liabilities and assets.

         Interest Rate Limitations. The maximum permissible rates of interest on
most commercial and consumer loans made by the Bank are governed by Tennessee's
general usury. Certain other usury laws affect limited classes of loans, but the
law referenced above are by far the most significant. Tennessee's general usury
law authorizes a floating rate of base prime rate plus 4% per annum and also
allows certain loan charges, generally on a more liberal basis that does the
general usury law.

         Effect of Government Policies. The earnings and business of the Company
are and will be affected by the policies of various regulatory authorities of
the United States, especially by the Federal Reserve Board. The Federal Reserve
Board, among other functions, regulates the supply of credit and deals with
general economic conditions within the United States. The instruments of
monetary policy employed by the Federal Reserve Board for these purposes
influence in various ways the overall level of investments, loans, other
extensions of credit and deposits, and the interest rates paid on liabilities
and received on assets.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company's main office is currently located at 300 Sunset Drive in
Johnson City, Tennessee in a two-story brick building owned by the Company. The
Company also operates two branch locations. One branch is located on 202 East
Main Street in Johnson City in a two-story brick building leased by the Company.
A second branch location is located at 2681 Boones Creek Road in Johnson City,
Tennessee in a custom-built, commercial-grade mobile unit.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time the bank is named as a defendant in suits arising
from the ordinary conduct of its affairs. In the opinion of management, the
ultimate outcome of any litigation to which the Bank is a party as of the date
of this Form 10-KSB will not materially affect its financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

         No matter was submitted to a vote of security holders during the fourth
quarter of the Company's fiscal ending December 31, 1999.


PART  II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The Company's common stock is not traded on an exchange nor is there a
known active trading market. Based solely on information made available to the
Company from a limited number of buyers and seller's, management of the Company
believes that the following table sets forth the high and low sales prices for
the Company's common stock during 1998 and 1997:

<TABLE>
<CAPTION>
    1999                                        High                 Low
                                             -----------         -----------
<S>                                           <C>                 <C>
        First Quarter ..........              $   25.00           $   25.00
        Second Quarter .........              $   25.00           $   25.00
        Third Quarter ..........              $   25.00           $   25.00
        Fourth Quarter .........              $   25.00           $   20.00
</TABLE>

                                       8
<PAGE>   9


<TABLE>
<CAPTION>
    1998                                        High                 Low
                                             -----------         -----------
<S>                                           <C>                 <C>
        First Quarter ..........              $   16.00           $   16.00
        Second Quarter .........              $   18.00           $   16.00
        Third Quarter ..........              $   18.00           $   18.00
        Fourth Quarter .........              $   22.00           $   20.00
</TABLE>


The most recent trade of the Company's common stock known to the Company
occurred on January 28, 2000 at a price of $23.00 per share (no stock has traded
since that date). These sales are isolated transactions and, given the small
volume of trading in the Company's stock, may not be indicative of its present
value. As of March 6, 2000, there were approximately 418 holders of record of
the Company's common stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

The Bank represents virtually all of the assets of the Company. The Company's
consolidated results of operations are dependent primarily on net interest
income, which is the difference between the interest income earned on interest
-earning assets, such as loans and investments, and the interest expense
incurred on interest-bearing liabilities, such as deposits and other borrowings.

Financial Condition

The Bank, which was opened in December 1995, has experienced substantial growth
during 1998 and 1999. Total assets have grown $10.9 million or more than 11.8%
from December 1998 to December 1999. The growth in total assets has been funded
by an increase in deposits of $21.9 million from December 1997 to December 1998
and $9.0 million from December 1998 to December 1999. Loans have increased $8.8
million during 1998, but decreased $4.3 million in 1999 and investment
securities have increased $8.5 million in 1998 and have increased $7.9 million
in 1999. This growth and the anticipated future growth will allow the Bank to
satisfy its cash requirements. It is not anticipated that it will be necessary
to raise any additional funds.

Nonperforming Assets and Risk Elements

The Bank discontinues the accrual of interest on loans which become ninety days
past due. The Bank had loans totaling $144 thousand which were ninety days past
due as of December 31, 1998 and had loans totaling $299 thousand which were past
due at December 31, 1999. The Bank also had no concentrations of ten percent or
more of total loans in any single industry nor any geographical area outside the
immediate market area of the Bank.

Liquidity and Capital

Liquidity is adequate with cash and due form banks of $2.1 million and $6.1
million at December 31, 1998 and 1999, respectively, and federal funds sold of
$6.6 million and $1.4 million at December 31, 1998 and 1999, respectively.
Additionally, investment securities, which are available-for-sale, at December
31, 1999, had a fair value of $20 million. Loans maturing in one year or less,
from December 31, 1999, are estimated to be $29.3 million. There are no known
trends, demands, commitments, events or uncertainties that will result in or
that are reasonably likely to result in the registrant's liquidity decreasing in
a material way.


Total equity capital at December 31, 1998 was $8.4 million or 9.2% of total
assets and at December 31, 1999 is $8.5 million or 8.3% of total assets, which
represents a strong capital position.

Results of Operations

The Company had net income of $552,556 for the year ended December 31, 1998. For
the year ended December 31, 1998, For the year-ended December 31, 1999, the
Company had net income of $671,022. The improvement resulted largely from growth
in earning





                                       9
<PAGE>   10

assets generated by an increased customer base. The Company anticipates, with
the continued growth it is experiencing, an increased net profit for the
2000 year.

Interest income and interest expense both increased dramatically because of the
increase in earning assets and deposits from December 31, 1998 to December 31,
1999. The growth in noninterest income reflects the increase in loans and
deposits, resulting primarily from the introduction of service charges on
deposit accounts.

The provision for loan losses has increased due to the increase in loans. The
allowance of $825,649 and $863,816 at December 31, 1998 and 1999, respectively,
is considered by management to be adequate to cover losses inherent in the loan
portfolio. Management evaluates the adequacy of the allowance for loan losses
periodically and makes provisions for loan losses based on this evaluation. At
the present time, the Company has impaired loans totaling $293 thousand. In
reference to the impaired loans, the Company has related allowance for credit
losses totaling $158 thousand, leaving a balance classified as substandard of
$134 thousand.

Net Interest Earnings

As depicted in the table below there was a substantial growth in the 1999 year.
Since December 31, 1998, growth was primarily from the volume increase in
business. Any increases due to rate changes would have been insignificant.


<TABLE>
<CAPTION>
   Dollar                                                                     Average           Interest
   Average          Increase                                                 Balances            Earned
    Yield           from 1998                                                  1999             or Paid
--------------     ------------                                            --------------     -------------
        <C>            <C>        <S>                                        <C>                <C>
                                    Interest Earning Assets:
                                       Loans:
        8.65%          $ 7,705           Commercial                             $ 34,249           $ 2,956
        0.00%                0           Real Estate Construction                      0                 0
        8.25%              105           Commercial Real Estate                      151                13
        7.78%             (696)          Residential Real Estate                  12,654               994
        8.60%            5,193           Installments                             18,690             1,640
        8.92%              408           Consumer Single Pay                       2,091               172
        0.00%             (135)          Loans Held for Sale                          23                 0
       14.16%               (8)          Other                                       133                15
--------------     ------------                                            --------------     -------------
        8.51%          $ 5,243      Totals                                      $ 67,991           $ 5,790
==============     ============                                            ==============     =============
</TABLE>




<TABLE>
<CAPTION>

   Dollar                                                                            Average           Interest
   Average          Increase                                                        Balances            Earned
    Yield           from 1997                                                         1998             or Paid
--------------     ------------                                                   --------------     -------------
        <C>            <C>         <S>                                             <C>                <C>
                                    Interest Earning Assets:
                                       Loans:
        8.58%          $ 7,705           Commercial                                    $ 33,873           $ 3,000
        0.00%               --           Real Estate Construction                            --                --
        8.50%             (249)          Commercial Real Estate                              46                13
        8.03%            6,168           Residential Real Estate                         13,350             1,097
        8.93%            3,059           Installments                                    13,497             1,192
        8.53%              116           Consumer Single Pay                              1,683               147
</TABLE>




                                       10
<PAGE>   11

<TABLE>
       <C>            <C>          <S>                                             <C>                <C>
        0.00%                3           Loans Held for Sale                                158                --
       17.87%               69           Other                                              141                15
--------------     ------------                                                   --------------     -------------
        8.55%         $ 16,871      Totals                                             $ 62,748           $ 5,464
--------------     ------------                                                   --------------     -------------
</TABLE>

The Bank has $299 thousand of non-accruing loans from the date of inception
through December 31, 1999. The Bank had $144 thousand of non-accruing loans from
the date of inception through December 31, 1998. In the calculation of changes
of interest there are not included in the interest income computations.


Interest Bearing Liabilities:

<TABLE>
<CAPTION>
   Dollar                                                                           Average          Interest
   Average          Increase                                                        Balances          Earned
    Yield           from 1998                                                         1999            or Paid
--------------     ------------                                                   -------------     ------------
        <C>            <C>         <S>                                             <C>                <C>
        2.03%           $  893      NOW Accounts                                      $  2,886          $    59
        4.12%            1,068      Money Market Accounts                                5,344              221
        4.67%           18,331      Savings Accounts                                    35,929            1,800
        5.49%           (6,270)     Certificates of Deposit                             33,721            1,740
--------------     ------------                                                   -------------     ------------
        4.39%         $ 14,022         Totals                                         $ 77,880          $ 3,820
--------------     ------------                                                   -------------     ------------

        4.12%      Net Yield
</TABLE>



<TABLE>
<CAPTION>
   Dollar                                                                           Average          Interest
   Average          Increase                                                        Balances          Earned
    Yield           from 1997                                                         1998            or Paid
--------------     ------------                                                   -------------     ------------
        <C>            <C>         <S>                                             <C>                <C>
        2.23%           $  484      NOW Accounts                                       $ 1,993          $    44
        4.27%               (4)     Money Market Accounts                                4,276              193
        4.91%            9,820      Savings Accounts                                    17,598              847
        5.64%           10,908      Certificates of Deposit                             39,991            2,348
--------------     ------------                                                   -------------     ------------
        4.53%          $21,208         Totals                                          $63,858          $ 3,432
--------------     ------------                                                   -------------     ------------

        4.03%      Net Yield
</TABLE>



Investment Portfolio

Held-to-Maturity:

<TABLE>
<CAPTION>
    December 31,     Average                                                            December 31,     Average
       1998           Yield         State and Municipal Governments:                       1999           Yield
  ---------------   ---------     ------------------------------------------------     --------------  ------------
  <C>              <C>             <S>                                                   <C>              <C>
         0            0.00%         Maturity within one year                                  0            0.00%
         0            0.00%         Maturity within one to five years                         0            0.00%
         0            0.00%         Maturity within five to ten years                         0            0.00%
         0            0.00%         After Ten Years                                          97            5.00%
   ---------       ---------                                                            ---------       ---------
         0            0.00%           Total Held-to-Maturity                                 97            5.00%
   ---------       ---------                                                            ---------       ---------
</TABLE>

                                       11
<PAGE>   12




<TABLE>
<CAPTION>
   December 31,           Average                                                               December 31,          Average
       1998                Yield         U.S. Government & Government Agency:                       1999               Yield
-------------------     ------------     ------------------------------------------------     -----------------     ------------
<C>                     <C>             <S>                                                    <C>                 <C>
                 0            0.00%      Maturity within one year                                            0            0.00%
                 0            0.00%      Maturity within one to five years                                   0            0.00%
               500            7.42%      Maturity within five to ten years                                 500            7.42%
-------------------     ------------                                                          -----------------     ------------
             $ 500            7.42%         Total Held-to-Maturity                                         500            7.42%
-------------------     ------------                                                          -----------------     ------------
</TABLE>

Yields on State and Municipal Government securities do not reflect savings due
to tax-exemption status.


Available-for-Sale:

<TABLE>
<CAPTION>
   December 31,           Average                                                               December 31,          Average
       1998                Yield         U.S. Government & Government Agency:                       1999               Yield
-------------------     ------------     ------------------------------------------------     -----------------     ------------
<C>                     <C>             <S>                                                    <C>                 <C>
                 0                0      Maturity within one year                                            0            0.00%
             2,210            6.08%      Maturity within one to five years                               2,938            6.36%
               758            6.52%      Maturity within five to ten years                               3,582            6.69%
               899            7.55%      After ten years                                                   911            7.56%

                                         State and Municipal Governments:

                65            4.00%      Maturity within one year                                           50            4.15%
               832            4.19%      Maturity within one to five years                               1,393            4.20%
             2,891            4.35%      Maturity within five to ten years                               2,785            4.39%
             1,318            4.39%      After ten years                                                 2,881            4.91%

             3,184            6.25%      Mortgage-Backed Securities                                      5,498            6.82%

-------------------     ------------                                                          -----------------     ------------
            12,157            5.53%         Total Available-for-Sale                                    20,042            5.96%
===================     ============                                                          =================     ============
</TABLE>





The Bank had no foreign loans at December 31, 1999.

Summary of Loan Loss Experience

<TABLE>
<CAPTION>
    1998                                                                          1998
--------------                                                                 ------------
<C>               <S>                                                        <C>
       $ 728      Balance at Beginning of Period                                   $ 826
--------------                                                                 ------------
         (22)       Charge-Offs                                                      (42)
           2        Recoveries                                                         6
--------------                                                                 ------------
         (20)    Net Recoveries                                                      (36)
--------------                                                                 ------------
         118     Additions Charged to Operations                                      74
--------------                                                                 ------------
       $ 826     Balance at the End of Period                                      $ 864
==============                                                                 ============
</TABLE>



                                       12
<PAGE>   13
<TABLE>

<C>              <S>                                                         <C>
                   Ratio of net charge-offs during the period to
        0.03%       average Loans outstanding during the period              0.06%
</TABLE>

The allowance for loan loss represents 1.23% of the outstanding loan balance at
year-end. Management believes this amount will be sufficient to cover all loan
losses inherent in the loan portfolio.

Return on Equity and Assets

<TABLE>
<CAPTION>
                                    1999                     1998
                                ------------             ------------
<S>                                 <C>                      <C>
Return on Assets                    0.69%                    0.69%
Return on Equity                    8.00%                    6.80%
</TABLE>

The Bank had no foreign banking offices.


Interest Sensitivity

The Company monitors and manages the pricing and maturity of its assets and
liabilities in order to diminish the potential adverse impact that changes in
interest rates could have on its net interest income. The principal monitoring
technique employed by the Company is the measurement of the Company's interest
sensitivity "gap", which is the positive or negative dollar difference between
assets and liabilities that are subject to interest rate repricing within a
given period of time. Interest rate sensitivity can be managed by repricing
assets or liabilities, selling available-for-sale securities, replacing an asset
or liability at maturity, or adjusting the interest rate during the life of an
asset or liability. Managing the amount of assets and liabilities repricing in
this same time interval helps to hedge the risk and minimize the impact on net
interest income of rising or falling interest rates.

The Company evaluates interest sensitivity risk and then formulates guidelines
regarding asset generation and repricing, funding sources and pricing, and
off-balance sheet commitments in order to decrease interest sensitivity risk.

Asset/Liability Management

It is the objective of the Bank to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing and capital policies. Certain
officers of the Bank and the Bank's Investment and Asset/Liability Committees
are charged with the responsibility for developing and monitoring policies and
procedures that are designed to seek an acceptable composition of the
asset/liability mix. It is the overall philosophy of management to support asset
growth primarily through growth of core deposits, which include deposits of all
categories made by individuals, partnerships, and corporations. Management of
the Bank seeks to invest the largest portion of the Bank's assets in
consumer/installment, commercial, real estate and construction loans.

The Bank's asset/liability mix is monitored with a report reflecting the
interest-sensitive assets and interest-sensitive liabilities being prepared and
presented to the Bank's Investment Committee on a monthly basis. The objective
of this policy is to match interest-sensitive assets and liabilities so as to
minimize the impact of substantial movements in interest rates on the Bank's
earnings.

Gap analysis measures how the Bank is positioned for interest rate changes. An
analysis of rate sensitivity assets and liabilities as of December 31, 1999 and
December 31, 1998 are presented on the following pages.

As indicated in this table, the negative gap between rate sensitivity assets and
rate sensitive liabilities during the 0-3 month period would allow the Company
to reprice its liabilities faster than its assets. In a rising interest rate
environment, this could cause the Company to either narrow it's spread between
yields on assets and liabilities, or to use alternative sources of funding such
as lines of credit to fund asset growth. However, the Company's gap analysis is
not a precise indicator of its timing of maturities and repricing opportunities,
without taking into consideration that changes in interest rates do not affect
all assets and liabilities equally. Net interest income may be impacted by other
significant factors in a given interest rate environment, including changes in
the volume and mix of earning assets and interest-bearing liabilities.

                                       13
<PAGE>   14

                             People's Community Bank
                       Rate Sensitivity Analysis (in 000)
                                December 31, 1999
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                              3 Months                12 Months               60 Months
Assets                                    RSA1        FRA2         RSA1        FRA2        RSA1        FRA2      NEA3        Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>         <C>         <C>         <C>        <C>         <C>
Cash and Due From Banks                                                                                        $ 6,002     $  6,002
Federal Funds Sold                       1,359                     1,359                   1,359                              1,359
U.S. Treasury Securities                                                                                                       --

U.S. Government Agencies                                500                      500                     500                    500
Available for Sale Securities           12,648                    12,648                  12,648                             12,648
Municipal Securities                     7,396          101        7,396         101       7,396         101                  7,497
Federal Home Loan Bank Stock               276                       276                     276                                276
Loans & Leases (net unearn disc.)       21,975       49,077       29,294      41,758      69,964       1,088                 71,052
Allowance for Loan Losses                                                                                         (864)        (864)
Premises, Furn, Fixt, Equip                                                                                      3,151        3,151
Other Assets                                                                                                       675          675
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                          $ 43,654     $ 49,678     $ 50,973    $ 42,359    $ 91,643    $  1,689   $ 8,964     $102,296
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Liabilities & Capital                     RSL4         FRL5         RSL4        FRL5        RSL4        FRL5        NPL6       Total
------------------------------------------------------------------------------------------------------------------------------------
Demand Deposits                                                                                                  9,966        9,966
NOW Accounts                             3,520                     3,520                   3,520                              3,520
Invest. Money Market Accounts            4,974                     4,974                   4,974                              4,974
Regular Savings                         32,220                    32,220                  32,220                             32,220
Certificates of Deposit                  9,628       31,218       35,089       5,757      40,846                             40,846
Fed Funds Purch & Securities Repos                    2,000                                                                   2,000
Other Liabilities                                                                                                  327          327
Common Stock & Surplus                                                                                           8,000        8,000
Undivided Profits                                                                                                  878          878
Unrealized Holding G/L on AFS Sec                                                                                 (435)        (435)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIAB. & CAPITAL                 $ 50,342     $ 33,218     $ 75,803    $  5,757    $ 81,560    $   --     $19,171     $102,296
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                             3 mo         12 mo      60 mo                  3 mo         12 mo        60 mo
                                       ------------------------------------             -------------------------------------
<S>                                        <C>           <C>        <C>       <C>       <C>           <C>           <C>
                                   RSA      43,654        50,973     91,643        RSL      50,342       75,803        81,560
                                   FRA      49,678        42,359      1,689        FRL      33,218        5,757             -
                                   NEA       8,964         8,964      8,964        NPL      10,293       10,293        10,293
                                                                                EQUITY       8,443        8,443         8,443
                                       ------------------------------------             -------------------------------------
                                  TOTAL    $102,296      102,296    102,296              $ 102,296     $100,296      $100,296
                                       ====================================             =====================================
</TABLE>


<TABLE>
<CAPTION>
<S>                                    <C>         <C>        <C>                              <C>
    RATE SENSITIVITY MEASURES:            3 mo       12 mo     60 mo                            1RSA = RATE SENSITIVE ASSETS
------------------------------------------------------------------------                        2FRA = FIXED RATE ASSETS
             RSA/RSL                      86.71%      67.24%   112.36%                          3NEA = NON EARNING ASSETS
             RSA-RSL                     (6,688)    (24,830)   10,083                           4RSL = RATE SENSITIVE LIABILITIES
           GAP/Equity                    -79.21%    -294.09%   119.42%                          5FRL = FIXED RATE LIABILITIES
             GAP/TA                       -6.54%     -24.27%     9.86%                          6NPL = NON PAYING LIABILITIES
</TABLE>




                                       14
<PAGE>   15


<TABLE>
<CAPTION>
                                                              People's Community Bank
                                                        Rate Sensitivity Analysis (in 000)
                                                                 December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                             3 Months                 12 Months               60 Months
Assets                                   RSA1         FRA2         RSA1        FRA2        RSA1        FRA2        NEA3       Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>          <C>         <C>         <C>         <C>         <C>        <C>
Cash and Due From Banks                                                                                         $  2,046   $  2,046
Federal Funds Sold                       6,574                     6,574                   6,574                              6,574
U.S. Treasury Securities                                                                                                         --
U.S. Government Agencies                                500                      500                    500                     500
Available for Sale Securities            7,151                     7,151                   7,151                              7,151
Municipal Securities                     5,006                     5,006                   5,006                              5,006
Federal Home Loan Bank Stock               266                       266                     266                                266
Loans & Leases (net unearn disc.)       24,817       42,256       28,171      38,902      64,390       2,683                 67,073
Allowance for Loan Losses                                                                                           (825)      (825)
Premises, Furn, Fixt, Equip                                                                                        3,216      3,216
Other Assets                                                                                                         553        553
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                          $ 43,814     $ 42,756     $ 47,168    $ 39,402    $ 83,387    $  3,183    $  4,990   $ 91,560
------------------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------------------
Liabilities & Capital                     RSL4         FRL5         RSL4        FRL5        RSL4        FRL5        NPL6      Total
------------------------------------------------------------------------------------------------------------------------------------
Demand Deposits                                                                                                    9,866      9,866
NOW Accounts                             2,786                     2,786                   2,786                              2,786
Invest. Money Market Accounts            3,856                     3,856                   3,856                              3,856
Regular Savings                                      29,535       29,535                  29,535                             29,535
Certificates of Deposit                  9,780       26,619       23,643      12,756      36,399                             36,399
Fed Funds Purch & Securities Repos        --                                                                                     --
Other Liabilities                                                                                                    752        752
Common Stock & Surplus                                                                                             8,000      8,000
Undivided Profits                                                                                                    297        297
Unrealized Holding G/L on AFS Sec.                                                                                    69         69
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIAB. & CAPITAL                 $ 16,422     $ 56,154     $ 59,820    $ 12,756    $ 72,576    $   --      $ 18,915   $ 91,560
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                             3 mo     12 mo     60 mo                    3 mo     12 mo     60 mo
                                        -------------------------------              -------------------------------
<S>                                        <C>       <C>       <C>       <C>         <C>        <C>       <C>
                                    RSA     43,814    47,168    83,387        RSL       16,422    59,820     72,576
                                    FRA     42,756    39,402     3,183        FRL       56,154    12,756         --
                                    NEA      4,990     4,990     4,990        NPL       10,618    10,618     10,618
                                                                           EQUITY        8,366     8,366      8,366
                                        -------------------------------              -------------------------------
                                  TOTAL   $ 91,560    91,560    91,560                $ 91,560  $ 91,560   $ 91,560
                                        ===============================              ===============================
</TABLE>



<TABLE>

<S>                                    <C>         <C>        <C>                <C>
       RATE SENSITIVITY MEASURES:           3 mo     12 mo     60 mo              1RSA = RATE SENSITIVE ASSETS
-----------------------------------------------------------------------           2FRA = FIXED RATE ASSETS
                RSA/RSL                    266.80%    78.85%   114.90%            3NEA = NON EARNING ASSETS
                RSA-RSL                    27,392   (12,652)   10,811             4RSL = RATE SENSITIVE LIABILITIES
              GAP/Equity                   327.42%  -151.23%   129.23%            5FRL = FIXED RATE LIABILITIES
                GAP/TA                      29.92%   -13.82%    11.81%            6NPL = NON PAYING LIABILITIES
</TABLE>



                                       15
<PAGE>   16

Year 2000 Report

People's Community Bank, like all other banks and financial institutions, worked
diligently and comprehensively on the Year 2000 issue. Through the hard work of
many individuals and committees, The Bank and the Company entered the Year 2000
without any set-backs or business interruptions which could be attributed the
Year 2000 issue. Total expenses incurred related to the Year 2000 issue were $41
thousand.





                                       16
<PAGE>   17








                                PCB BANCORP, INC.



                              FINANCIAL STATEMENTS

                                      WITH

                          INDEPENDENT AUDITORS' REPORT




                 For the Years Ended December 31, 1999 and 1998








                                       17
<PAGE>   18

                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Audit Committee
PCB Bancorp, Inc.
Johnson City, Tennessee  37602

We have audited the accompanying consolidated statements of financial condition
of PCB Bancorp, Inc. and wholly-owned subsidiary People's Community Bank as of
December 31, 1999 and 1998, and the related consolidated statements of income,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of Bancorp's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PCB Bancorp, Inc.
and wholly-owned subsidiary People's Community Bank at December 31, 1999 and
1998, and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.




                                               BLACKBURN, CHILDERS AND STEAGALL,

PLC

January 31, 2000




                                       18
<PAGE>   19




                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                              1999                    1998
                                                                         -------------           -------------
<S>                                                                      <C>                        <C>
                                   ASSETS

Cash and Due from Banks                                                  $   6,049,616               2,048,350
Federal Funds Sold                                                           1,359,000               6,574,000
Securities Held-to-Maturity                                                    600,749                 500,000
Securities Available-for-Sale                                               20,043,328              12,157,224
Loans Held for Sale                                                               --                   380,250
Loans Receivable, Net of Allowance for Loan Losses of $863,816
 and $825,649, respectively                                                 70,146,050              65,846,157
Accrued Interest Receivable                                                    619,196                 501,780
Premises and Equipment, Net of Accumulated Depreciation of
   $681,627 and $405,602, respectively                                       3,152,084               3,217,238
Restricted Investments - Stock in Federal Home Loan Bank, Cost                 275,500                 265,700
Organization Costs, Net of Accumulated Amortization of $127,950
  and $75,682, respectively                                                       --                    52,268
Deferred Tax Asset                                                             152,612                    --
Other Assets                                                                    98,340                  30,935
                                                                         -------------           -------------
           Total Assets                                                  $ 102,496,475              91,573,902
                                                                         =============           =============


                      LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
    Deposits:
       Demand Deposits                                                   $   9,841,868               9,431,912
       Savings and NOW Deposits                                             40,130,428              35,977,968
       Other Time Deposits                                                  40,845,777              36,398,861
    Accrued Interest Payable                                                   321,903                 404,921
    Dividend Payable                                                              --                    40,000
    Accounts Payable and Other Liabilities                                   2,865,411                 941,206
                                                                         -------------           -------------
           Total Liabilities                                                94,005,387              83,194,868
                                                                         -------------           -------------

SHAREHOLDERS' EQUITY:
    Common Stock - $1 par value; 3,000,000 shares authorized;
       806,200 shares issued and outstanding                                   806,200                 800,000
    Additional Paid-in Capital                                               7,259,000               7,200,000
    Retained Earnings                                                          861,168                 310,456
    Accumulated Other Comprehensive Income                                    (435,280)                 68,578
                                                                         -------------           -------------
           Total Shareholders'Equity                                         8,491,088               8,379,034
                                                                         -------------           -------------

           Total Liabilities and Shareholders' Equity                    $ 102,496,475              91,573,902
                                                                         =============           =============
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                       19
<PAGE>   20


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                        CONSOLIDATED STATEMENTS OF INCOME
                 For the Years Ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                      1999                1998
                                                                   ----------          ----------

<S>                                                                <C>                  <C>
INTEREST INCOME:
    Interest on Loans                                              $5,790,389           5,464,044
    Interest on Investments                                           971,948             362,324
    Interest on Federal Funds Sold                                    258,871             310,390
                                                                   ----------          ----------
       Total Interest Income                                        7,021,208           6,136,758
                                                                   ----------          ----------

INTEREST EXPENSE:
    Interest on Interest Bearing Checking Accounts                     68,456              44,420
    Interest on Money Market Accounts                                 221,183             194,053
    Interest on Passbook Accounts                                   1,697,987             863,478
    Interest on Certificates of Deposit                             1,832,145           2,331,038
    Interest on Other Borrowed Funds                                    1,044                 432
                                                                   ----------          ----------
       Total Interest Expense                                       3,820,815           3,433,421
                                                                   ----------          ----------

Net Interest Income                                                 3,200,393           2,703,337
    Provision for Loan Losses                                          79,677             118,398
                                                                   ----------          ----------

Net Interest Income after Provision for Loan Losses                 3,120,716           2,584,939
                                                                   ----------          ----------

NON-INTEREST INCOME:
    Service Charges                                                   327,230             181,262
    Loan Origination Fees                                             263,423             312,812
    Net Gains from Sale of Loans                                       16,612              42,828
    Net Realized Gain (Loss) on Sales and Calls of Securities          10,782              (3,150)
    Miscellaneous                                                       3,424               3,717
                                                                   ----------          ----------
       Total Non-Interest Income                                      621,471             537,469
                                                                   ----------          ----------
NON-INTEREST EXPENSES:
    Salaries                                                        1,287,783           1,104,177
    Payroll Taxes                                                     107,105              89,984
    Employee Benefits                                                 109,488              71,974
    Occupancy Expense                                                  90,427              79,904
    Rental Expense                                                     28,800              25,200
</TABLE>



                                   (Continued)



                                       20
<PAGE>   21



                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                        CONSOLIDATED STATEMENTS OF INCOME
                 For the Years Ended December 31, 1999 and 1998


<TABLE>
<CAPTION>

                                                       1999               1998
                                                    ----------          ----------
<S>                                               <C>                    <C>
    NON-INTEREST EXPENSES (CONTINUED):
    Furniture and Equipment Expense                   18,259              33,217
    Computer Equipment Expense                       143,235              75,990
    Stationery, Supplies and Printing                 77,350              72,832
    Postage, Express and Freight                      69,791              54,505
    Telephone Expense                                 57,150              42,904
    Vehicle Expense                                   15,392              10,458
    Outside Services                                  85,790              82,556
    Teller Over and Short                                344                 821
    Advertising and Promotion                         94,280              93,449
    Loan Collection Expense                           11,236              12,905
    Bank Security and Protection                       3,255               2,596
    FDIC Assessment                                   10,240               7,523
    Insurance                                         37,089              31,031
    Dues and Subscriptions                            20,968              16,837
    Franchise Tax Expense                             24,000              20,720
    Refunds and Reimbursements                        13,865               2,599
    Travel and Meetings                                7,917               2,555
    Contributions                                      5,825               6,372
    Depreciation and Amortization                    328,294             236,992
    Directors' Fees                                   32,612              28,359
    Miscellaneous Expenses                            71,414              51,529
                                                  ----------          ----------
       Total Non-Interest Expenses                 2,751,909           2,257,989
                                                  ----------          ----------
Income Before Taxes                                  990,278             864,419

INCOME TAX PROVISION:
    Income Tax Expense                               319,256             311,863
                                                  ----------          ----------
Net Income                                        $  671,022             552,556
                                                  ==========          ==========
Net Income per Share - Basic                      $      .84                 .69
                                                  ==========          ==========
Net Income per Share - Assuming Dilution          $      .76                 .64
                                                  ==========          ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       21


<PAGE>   22

                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 For the Years Ended December 31, 1999 and 1998


<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                        Additional                           Other
                                         Common          Paid-in          Retained       Comprehensive
                                         Stock           Capital          Earnings           Income           Total
                                       ----------       ----------       ----------      -------------      ---------
<S>                                    <C>               <C>                <C>               <C>           <C>
Balances, January 1, 1998              $  800,000        7,200,000         (202,100)           3,437        7,801,337


COMPREHENSIVE INCOME:
Net Income                                   --               --            552,556             --            552,556
Other Comprehensive Income
    Net of Tax:
      Change In Unrealized
        Gain (Loss) on Securities
        Available-For-Sale, Net
        of Deferred Income Tax
        of $43,427                                                                            65,141           65,141
                                                                                                           ----------
Total Comprehensive Income                                                                                    617,697
Cash Dividends                               --               --            (40,000)            --            (40,000)
                                       ----------        ---------       ----------        ---------        ---------
Balances, December 31, 1998            $  800,000        7,200,000          310,456           68,578        8,379,034
                                       ----------        ---------       ----------        ---------        ---------

COMPREHENSIVE INCOME:

Net Income                                   --               --            671,022             --            671,022
Other Comprehensive Income
    Net of Tax:
      Change in Unrealized
        Gain (Loss) on Securities
        Available-For-Sale, Net
        of Deferred Income Tax
        of $(335,906)                                                                       (503,858)        (503,858)
                                                                                                           ----------
Total Comprehensive Income                                                                                    167,164
Stock Option Exercises                      6,200           59,000                              --             65,200
Cash Dividends                               --               --           (120,310)            --           (120,310)
                                       ----------        ---------       ----------        ---------        ---------
Balances, December 31, 1999            $  806,200        7,259,000          861,168         (435,280)       8,491,088
                                       ==========       ==========       ==========       ==========       ==========

</TABLE>



   The accompanying notes are an integral part of these financial statements.




                                       22
<PAGE>   23



                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                 1999               1998
                                                                             ------------       ------------
<S>                                                                          <C>                <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income                                                               $    671,022            552,556
    Adjustments to Reconcile Net Income to Net Cash
      Provided by Operating Activities:
        Depreciation Expense                                                      276,026            211,403
        Amortization Expense                                                       52,268             25,589
        Provision for Loan Losses                                                  79,677            118,398
        Discount Accretion Net of Premium Amortization                            (53,946)           (16,564)
        Origination of Mortgage Loans Held for Sale                              (496,300)        (4,168,418)
        Proceeds from Mortgage Loans Sold                                         876,550          4,000,968
        Net Realized (Gains) Losses on Sales and Calls of Securities              (10,782)             3,150
        Deferred Income Tax                                                         8,363            209,847
        (Increase) Decrease in Interest Receivable                               (117,416)          (115,890)
        (Increase) Decrease in Other Assets                                       (67,405)            (5,209)
        Increase (Decrease) in Accrued Interest Payable                           (83,018)           (90,414)
        Increase (Decrease) in Other Liabilities                                2,058,840            245,876
                                                                             ------------       ------------
Net Cash Provided by Operating Activities                                       3,193,879            971,292
                                                                             ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Net (Increase) Decrease in Federal Funds Sold                               5,215,000         (4,451,000)
    Purchases of Held-to-Maturity Securities                                     (100,814)              --
    Purchases of Available-for-Sale Securities                                (14,360,228)        (2,097,002)
    Proceeds from Maturities and Calls of Held-to-Maturity Securities                --            2,220,000
    Proceeds from Maturities and Calls of Available-For-Sale Securities         5,739,450          1,504,796
    Purchases of Restricted Investments                                            (9,800)          (185,100)
    Purchases of Premises and Equipment                                          (210,872)        (1,129,271)
    Loan Participations Bought                                                   (880,673)          (548,928)
    Loan Participations Sold                                                    4,227,511          1,275,216
    Net Increase in Loans                                                      (7,726,408)       (19,440,145)
                                                                             ------------       ------------
Net Cash Used for Investing Activities                                         (8,106,834)       (22,851,434)
                                                                             ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Dividends Paid                                                               (160,310)              --
    Stock Options Exercised                                                        65,200               --
    Net Increase in Deposits                                                    9,009,331         21,777,400
                                                                             ------------       ------------
Net Cash Provided by Financing Activities                                       8,914,221         21,777,400
                                                                             ------------       ------------

Increase (Decrease) in Cash and Cash Equivalents                                4,001,266           (102,742)
                                                                             ------------       ------------
</TABLE>




                                   (Continued)
                                       23




<PAGE>   24


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                         1999            1998
                                                      ----------      ----------
<S>                                                   <C>              <C>
Increase (Decrease) in Cash and Cash Equivalents       4,001,266        (102,742)
   (Brought Forward)

Cash and Cash Equivalents, Beginning of Year           2,048,350       2,151,092
                                                      ----------      ----------


Cash and Cash Equivalents, End of Year                $6,049,616       2,048,350
                                                      ==========      ==========



SUPPLEMENTAL DISCLOSURES:
    Cash Paid During the Year for Interest            $3,903,008       3,523,835
                                                      ==========      ==========

    Cash Paid During the Year for Income Taxes        $  256,526          19,503
                                                      ==========      ==========
</TABLE>











   The accompanying notes are an integral part of these financial statements.



                                       24
<PAGE>   25




                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES:


     Basis of Consolidation
     The consolidated financial statements include the accounts of PCB Bancorp,
     Inc. (Company), a one-bank holding company, formed on October 1, 1996 and
     its wholly-owned subsidiary People's Community Bank (Bank). All material
     intercompany balances and transactions have been eliminated in
     consolidation.

     Nature of Operations
     People's Community Bank is a state-chartered bank formed on December 15,
     1995. On October 1, 1996 the Bank became a wholly owned subsidiary of PCB
     Bancorp, Inc., a one bank holding company. People's Community Bank provides
     a variety of banking services to individuals and businesses in Upper East
     Tennessee through its main office on Sunset Drive and branch locations in
     Boones Creek and on Main Street in Johnson City. Its primary deposit
     products are demand deposits, savings deposits and certificates of deposit;
     and its primary lending products are commercial business, real estate
     mortgage and installment loans. As a state bank, the Bank is subject to
     regulation by the Tennessee State Banking Department and the Federal
     Deposit Insurance Corporation.

     Financial Reporting
     The Company reports on the accrual basis of accounting for financial
     purposes.

     Cash and Cash Equivalents
     For purposes of the statement of cash flows, the Company considers cash and
     cash equivalents as those amounts included in the statement of financial
     condition as captioned "cash and due from banks". Federal funds sold are
     not included as cash or cash equivalents.

     Use of Estimates
     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates. Material estimates that are particularly susceptible to
     significant change relate to the determination of the allowance for losses
     on loans. While management uses available information to recognize losses
     on loans, future additions to the allowance may be necessary based on
     changes in local economic conditions. In addition, regulatory agencies, as
     an integral part of their examination process, periodically review the
     Bank's allowances for losses on loans. Such agencies may require the Bank
     to recognize additions to the allowances based on their judgements about
     information available to them at the time of their examination. Because of
     these factors, it is reasonably possible that the allowances for losses on
     loans may change materially in the near term. However, the amount of the
     change that is reasonably possible cannot be estimated.


                                       25
<PAGE>   26


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Investment Securities
     Securities Held-to-Maturity: Debt securities that management has the
     positive intent and ability to hold to maturity are reported at cost,
     adjusted for amortization of premiums and accretion of discounts that are
     recognized in interest income using methods approximating the interest
     method over the period to maturity.

     Securities Available-for-Sale: Debt securities not classified as
     held-to-maturity are classified as available-for-sale. Securities
     available-for-sale are carried at fair value with unrealized gains and
     losses reported separately net of tax, through a separate component of
     stockholder's equity. Gains and losses on sales of securities are
     determined using the specific-identification method. The amortization of
     premiums and the accretion of discounts are recognized in interest income
     using methods approximating the interest method.

     Loans Held for Sale
     Mortgage loans originated and intended for sale in the secondary market are
     carried at the lower of cost or estimated market value in the aggregate.
     Net unrealized losses are recognized through a valuation allowance of
     charges to income.

     Loans
     Loans are stated at unpaid principal, less the allowance for loan losses
     and net deferred loan fees and unearned discounts.

     Unearned discounts on installment loans are recognized as income over the
     term of the loans using a method that approximates the interest method.

     Loan origination and commitment fees, as well as certain direct origination
     costs, are deferred and amortized as a yield adjustment over the lives of
     the related loans using a method that approximates the interest method.
     Amortization of the deferred loan fees is discontinued when a loan is
     placed on nonaccrual status.

     Interest income generally is not recognized on specific impaired loans
     unless the likelihood of further loss is remote. Interest payments received
     on such loans are applied as a reduction of the loan principal balance.
     Interest income on other impaired loans is recognized only to the extent of
     interest payments received.




                                       26
<PAGE>   27


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Allowance for Loan Losses
     The allowance for loan losses is maintained at a level which, in
     management's judgement, is adequate to absorb credit losses inherent in the
     loan portfolio. The amount of the allowance is based on management's
     evaluation of the collectibility of the loan portfolio, including the
     nature of the portfolio, credit concentrations, trends in historical loss
     experience, specific impaired loans, economic conditions, and other risks
     inherent in the portfolio. Allowances for impaired loans are generally
     determined based on collateral values or the present value of estimated
     cash flows. Although management uses available information to recognize
     losses on loans, because of the uncertainties associated with local
     economic conditions, collateral values, and future cash flows on impaired
     loans, it is reasonably possible that a material change could occur in the
     allowance for loan losses in the near term. However, the amount of the
     change that is reasonably possible cannot be estimated. The allowance is
     increased by a provision for loan losses, which is charged to expense and
     reduced by charge-offs, net of recoveries. Changes in the allowance
     relating to impaired loans are charged or credited to the provision for
     loan losses.

     Premises and Equipment
     Premises and equipment are stated at cost less any accumulated
     depreciation. Depreciation is provided for using the straight-line method
     over the useful lives of the assets. Maintenance and repairs are expensed
     as incurred while major additions and improvements are capitalized. Gains
     and losses on dispositions are included in current operations.

     Organization Costs
     In 1999 the Bank elected to adopt Statement of Position 98-5 Reporting on
     the Costs of Start Up Activities which requires start up costs to be
     expensed as incurred. Previously, organization costs were being amortized
     over 5 years using the straight-line method. SOP-98-5 does not require
     retroactive application, therefore, the bank expensed the unamortized
     balance of $52,286 during the year ending December 31, 1999. The effect in
     1999 on net income was $.06 per share.

     Income Taxes
     Income taxes are provided for the tax effects of the transactions reported
     in the financial statements and consist of taxes currently due plus
     deferred taxes related primarily to differences between the depreciation
     for financial and income tax reporting. The deferred tax assets and
     liabilities represent the future tax consequences of those differences,
     which will either be taxable or deductible when the assets and liabilities
     are recovered or settled. Deferred tax assets and liabilities are reflected
     at income tax rates applicable to the period in which the deferred tax
     assets or liabilities are expected to be realized or settled. As changes in
     tax laws or rates are enacted, deferred tax assets and liabilities are
     adjusted through the provision for income tax.






                                       27
<PAGE>   28

                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):


     Fair Values of Financial Instruments
     Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures
     about Fair Value of Financial Instruments, requires disclosure of fair
     value information about financial instruments, whether or not recognized in
     the statement of financial condition. In cases where quoted market prices
     are not available, fair values are based on estimates using present value
     or other valuation techniques. Those techniques are significantly affected
     by the assumptions used, including the discount rate and estimates of
     future cash flows. In that regard, the derived fair value estimates cannot
     be substantiated by comparison to independent markets and, in many cases,
     could not be realized in immediate settlement of the instruments. SFAS No.
     107 excludes certain financial instruments and all non-financial
     instruments from its disclosure requirements. Accordingly, the aggregate
     fair value amounts presented do not represent the underlying value of the
     Bank.

     The following methods and assumptions were used by the Bank in estimating
     its fair value disclosures for financial instruments:

        Cash and Cash Equivalents: The carrying amounts reported in the
        statement of financial condition for cash and cash equivalents
        approximate their fair value.

        Investment securities: Fair values for investment securities are based
        on quoted market prices, where available. If quoted market prices are
        not available, fair values are based on quoted market prices of
        comparable instruments.

        Loans: For variable-rate loans that re-price frequently and with no
        significant change in credit risk, fair values are based on carrying
        amounts. The fair values for other loans (for example, fixed rate
        commercial real estate and rental property mortgage loans and commercial
        and industrial loans) are estimated using discounted cash flow analysis,
        based on interest rates currently being offered for loans with similar
        terms to borrowers of similar credit quality. Loan fair value estimates
        include judgments regarding future expected loss experience and risk
        characteristics. The carrying amount of accrued interest receivable
        approximates its fair value.

        Deposits: The fair values disclosed for demand deposits (for example,
        interest-bearing checking accounts and passbook accounts) are, by
        definition, equal to the amount payable on demand at the reporting date
        (that is, their carrying amounts). The carrying amounts of
        variable-rate, fixed-term money market accounts and certificates of
        deposit approximate their fair values. The fair values for fixed rate
        certificates of deposit are estimated using a discounted cash flow
        calculation that applies interest rates currently being offered on
        certificates to a schedule of aggregated contractual maturities on such
        time deposits.



                                       28
<PAGE>   29

                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):


     Fair Values of Financial Instruments (continued):

        Accrued Interest: The carrying amount of accrued interest approximates
        the fair values.

        Off-Balance-Sheet Instruments: Fair values for off-balance-sheet lending
        commitments are based on fees currently charged to enter into similar
        agreements, taking into account the remaining terms of the agreements
        and the counterparties' credit standings.

     Advertising
     The Bank expenses advertising costs as they are incurred.

     Net Income Per Share
     Net income per share of common stock has been computed on the basis of the
     weighted-average number of shares of common stock outstanding.

     Comprehensive Income

     In 1998, the Bank adopted Statement of Financial Accounting Standards
     (SFAS) No. 130 - Reporting Comprehensive Income. Under SFAS No. 130,
     comprehensive income is defined as the change in equity from transactions
     and other events from non-owner sources. It includes all changes in equity
     except those resulting from investments by shareholders and distributions
     to shareholders. Comprehensive income includes net income and certain
     elements of "other comprehensive income" such as foreign currency
     transactions, accounting for futures contracts; employers accounting for
     pensions; and accounting for certain investments in debt and equity
     securities.

     The Bank has elected to report its comprehensive income in the Statement of
     Shareholders' Equity. The only element of "other comprehensive income" that
     the Bank has is the unrealized gains or losses on available for sale
     securities.

     The component of the change in net unrealized gains (losses) on securities
     were as follows:

<TABLE>
<CAPTION>
                                                               1999            1998
                                                             ---------       ---------
<S>                                                          <C>                <C>
     Unrealized holding gains (losses)
       arising during the year                               $(828,982)        105,419

     Reclassification adjustment for (gains)/losses
       realized in net income                                  (10,782)          3,150
                                                             ---------       ---------

     Net unrealized holding gains (losses) before taxes       (839,764)        108,569

     Tax effect                                                335,906         (43,428)
                                                             ---------       ---------

     Net change                                              $(503,858)         65,141
                                                             =========       =========
</TABLE>



                                       29
<PAGE>   30


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 2.  INVESTMENTS:

The amortized costs of securities and their approximate fair values are as
follows:

<TABLE>
<CAPTION>
                                         December 31, 1999                                   December 31, 1998
                          --------------------------------------------------  --------------------------------------------------

                                         Gross         Gross                                 Gross       Gross
                           Amortized   Unrealized    Unrealized                Amortized   Unrealized  Unrealized
                             Cost        Gains         Losses    Fair Value       Cost       Gains       Losses      Fair Value
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------


<S>                       <C>                <C>        <C>       <C>          <C>             <C>           <C>      <C>
Available-for-Sale
U.S. Government
  Federal Agencies        $ 7,720,191         --        288,194    7,431,997    3,847,337       26,641        5,195    3,868,783
State and Municipal
  Governments               7,395,994          204      283,339    7,112,859    5,006,120       98,604         --      5,104,724
Mortgage-Backed
  Securities                5,652,610        2,895      157,033    5,498,472    3,189,469        3,105        8,857    3,183,717
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------

Total Available-for-Sale   20,768,795        3,099      728,566   20,043,328   12,042,926      128,350       14,052   12,157,224
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------

Held-to-Maturity
US Government Agencies        500,000         --          4,548      495,452      500,000        7,242         --        507,242
State and Municipal
  Governments                 100,749         --          4,442       96,307         --           --           --           --
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------

Total Held-to-Maturity        600,749         --          8,990      591,759      500,000        7,242            0      507,242
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------

Total Investment
  Securities              $21,369,544        3,099      737,556   20,635,087   12,542,926      135,592       14,052   12,664,466
                          ===========  ===========  ===========  ===========  ===========  ===========  ===========  ===========
</TABLE>


The amortized cost and market value of debt securities at December 31, 1999, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                  Held-to-Maturity              Available-for-Sale
                                             --------------------------      --------------------------
                                             Amortized          Fair          Amortized        Fair
                                                Cost            Value           Cost           Value
                                             ----------      ----------      ----------      ----------
<S>                                          <C>                <C>          <C>             <C>
Amounts maturing in:
     One year or less                        $     --              --            50,000          49,924
     After one year through five years             --              --         4,263,672       4,182,011
     After five years through ten years         500,000         495,452       6,528,760       6,231,773
     After ten years                            100,749          96,307       4,273,753       4,081,148
     Mortgage-Backed Securities                    --              --         5,652,610       5,498,472
                                             ----------      ----------      ----------      ----------
                                             $  600,749         591,759      20,768,795      20,043,328
                                             ==========      ==========      ==========      ==========
</TABLE>

Accrued interest on investments at December 31, 1999 and 1998 was $241,885 and
$144,637, respectively. During 1999 and 1998 the bank received $4,711,563 and
$3,724,776 proceeds from sales and calls of securities with a carrying value
based on historical cost and adjusted for amortization of premiums and accretion
of discounts of $4,700,781 and $3,727,946 resulting in a realized gain of
$10,782 and a loss of $3,150 on sales and calls of securities, respectively.





                                       30
<PAGE>   31


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 3.  LOANS RECEIVABLE:

Loans at December 31 are summarized as follows:
<TABLE>
<CAPTION>
                                                     1999                 1998
                                                 ------------         ------------
<S>                                              <C>                    <C>
Commercial                                       $ 35,563,247           34,352,002
       Commercial Real Estate                         147,015              154,968
       Residential Real Estate                     11,726,358           14,607,152
       Installment                                 21,768,308           15,088,966
       Consumer                                     1,666,176            2,352,892
       Other                                          181,453              138,682
                                                 ------------         ------------
                                                   71,052,557           66,694,662
       Allowance for Loan Losses                     (863,816)            (825,649)
       Unearned Discount on Mortgages and
         Installment Loans                               (232)              (1,595)
       Net Deferred Loan Origination Fees             (42,459)             (21,261)
                                                 ------------         ------------
                                                 $ 70,146,050           65,846,157
                                                 ============         ============
</TABLE>

An analysis of the change in the allowance for loan losses follows:

<TABLE>
<CAPTION>
                                             1999              1998
                                           ---------         ---------
<S>                                        <C>                 <C>
       Balance at Beginning of Year        $ 825,649           727,598
       Provision for Loan Losses              79,677           118,398
       Loans Charged Off                     (47,821)          (22,291)
       Recoveries on Loans                     6,311             1,944
                                           ---------         ---------
       Balance at End of Year              $ 863,816           825,649
                                           =========         =========
</TABLE>

A summary of loans by estimated maturity as of December 31, 1999 is as follows:

<TABLE>
<S>                                        <C>
       Maturity within one year            $ 29,296,509
       One to five years                     40,670,129
       Over five years                        1,085,919
                                           ------------
                                           $ 71,052,557
                                           ============
</TABLE>

Accrued interest receivable on loans at December 31, 1999 and 1998 was $377,311
and $357,143, respectively.

At December 31, 1999 and 1998, the total recorded investment in impaired loans
amounted to $292,818 and $0, respectively. The amount of the recorded investment
in impaired loans for which there is a related allowance for credit losses at
December 31, 1999 and 1998, is $158,411 and $0, respectively. The amount of the
recorded investment in impaired loans for which there is no related allowance
for credit loss and is classified as substandard is $134,407 and $0,
respectively. The amount of accrued interest is recognized prior to principal
for any cash receipts on impaired loans. Interest income in the amount of
$17,812 was recognized for cash receipts during 1999.




                                       31
<PAGE>   32


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 3.  LOANS RECEIVABLE (CONTINUED):

The Bank has no commitments to loan additional funds to borrowers whose loans
have been modified.

The Bank services loans for others of $8,601,891 and $4,374,379 at December 31,
1999 and 1998 under loan participation agreements. The Bank receives no fees for
servicing these loans and no fees have been received in connection with the
origination of the loan participation agreements.

In the ordinary course of business, the Bank has and expects to continue to have
transactions, including borrowings, with certain of its officers, executive
directors, significant stockholders and their affiliates. In the opinion of
management, such transactions were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time of comparable
transactions with other persons and did not involve more than a normal risk of
collectibility or present any other unfavorable features to the Bank. Loans to
such borrowers at December 31, 1999 and 1998 were $742,529 and $41,862. During
1999, there were additional loans to such related parties in the amount of
$717,500 and repayments amount to $16,833.


NOTE 4.  PREMISES AND EQUIPMENT:

Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                           1999              1998
                                         ----------        ----------
<S>                                      <C>                <C>
       Bank Building                     $1,307,338         1,420,335
       Land                                 867,625           754,430
       Land Improvements                    263,058           263,058
       Leasehold Improvements                47,210            47,210
       Furniture and Equipment              721,411           646,440
       Computer Equipment                   568,359           454,836
       Computer Software                     58,710            36,531
                                         ----------        ----------
            Total                         3,833,711         3,622,840
                                                           ----------
       Accumulated Depreciation             681,627           405,602
                                         ----------        ----------
       Premises and Equipment-Net        $3,152,084         3,217,238
                                         ==========        ==========
</TABLE>

       Depreciation expense for the years ended December 31, 1999 and 1998 was
$276,026 and $211,403, respectively.


NOTE 5.  OTHER ASSETS:

Other Assets at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                       1999           1998
                                      -------        -------
<S>                                   <C>             <C>
       Other Real Estate Owned        $48,128           --
       Prepaid Expense                 48,034         20,291
       Other Receivables                2,178         10,644
                                      -------        -------
                                      $98,340         30,935
                                      =======        =======
</TABLE>



                                       32
<PAGE>   33


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 6.  DEPOSITS:

A summary of deposit account balances at December 31 is as follows:

<TABLE>
<CAPTION>
                                         1999               1998
                                      -----------        -----------
<S>                                   <C>                <C>
       Regular Checking               $ 2,536,443          2,573,984
       Club Checking                       17,900             15,533
       Discount Checking                   81,325               --
       Small Business Accounts          3,452,867          3,638,557
       Commercial Checking              3,169,821          3,004,434
       Primetime Checking                 583,512            199,404
       NOW Accounts                     2,936,344          2,586,531
       Money Market Accounts            4,973,571          3,856,406
       Saving Accounts                 32,220,513         29,535,031
       Certificates of Deposit         40,845,777         36,398,861
                                      -----------        -----------
       Total                          $90,818,073         81,808,741
                                      ===========        ===========
</TABLE>

At December 31, 1999, scheduled maturities of certificates of deposit are as
follows:

<TABLE>
<S>                                        <C>
          2000                             $ 35,013,479
          2001                                4,693,174
          2002                                1,016,024
          2003                                  123,100
          2004 and Thereafter                      --
                                           ------------
                                           $ 40,845,777
                                           ============
</TABLE>

The aggregate amount of short-term jumbo certificates of deposit with a minimum
denomination of $100,000 was $16,599,069 and $11,033,273 at December 31, 1999
and 1998.

The Bank held deposits of approximately $1,703,422 and $1,208,164 for related
parties at December 31, 1999 and 1998, respectively.


NOTE 7.  ACCOUNTS PAYABLE AND OTHER LIABILITIES:

Accounts Payable and Other Liabilities at December 31 consisted of the
following:

<TABLE>
<CAPTION>
                                                              1999              1998
                                                           ----------        ----------
<S>                                                        <C>                <C>
       Line of Credit                                      $2,000,000              --
       Property Tax Payable                                     5,970            11,016
       Payroll Taxes Payable                                    2,293             2,182
       Miscellaneous Payables and Other Liabilities           722,998           660,264
       Accrued State Franchise Tax                             23,227            20,274
       Deferred Income Tax                                       --             145,454
       Current Income Tax                                     110,923           102,016
                                                           ----------        ----------
                                                           $2,865,411           941,206
                                                           ==========        ==========
</TABLE>



                                       33
<PAGE>   34


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 8.  ADVANCES FROM FEDERAL HOME LOAN BANK:

Effective June 13, 1997, People's Community Bank became members of the Federal
Home Loan Bank (FHLB) of Ohio. The Bank has been authorized to borrow up to
$2,000,000 on a line of credit from the FHLB. The Bank's total borrowing
capacity is a component of both capital stock and the member's most recent
Qualified Thrift Lender rating and access to borrowing is dependent upon
submission of advance application. The Bank has outstanding advances of
$2,000,000 and $0 from the FHLB at December 31, 1999 and 1998, respectively. In
addition, the Bank has pledged $1,500,000 of their line of credit with the FHLB
to the State of Tennessee Collateral Pool to secure public funds on deposit with
the Bank at December 31, 1999.


NOTE 9.  UNUSED LINES OF CREDIT:

The Bank entered into an open-ended unsecured line of credit with First American
Bank for $2,000,000 for federal fund purchases and daylight overdrafts. Funds
issued under this agreement are at the First American federal funds rate
effective at the time of borrowing. The line matured at May 1, 1999 and was
renewed for $2,500,000 maturing May 1, 2000. The Bank had not drawn on these
funds at December 31, 1999 and 1998.

On November 12, 1999 the Bank also entered into an open-ended unsecured line of
credit with Columbus Bank and Trust for $2,500,000 for Federal Fund purchases.
Funds issued under this agreement are at the Columbus Bank and Trust federal
funds rate effective at the time of borrowing. The Bank had not drawn any of
these funds at December 31, 1999.


NOTE 10.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:

At December 31, the Bank had outstanding commitments for unused lines and
letters of credit that are not reflected in the accompanying financial
statements as follows:

<TABLE>
<CAPTION>
                                       Variable Rate
                                ----------------------------
                                  1999               1998
                                ----------        ----------
<S>                             <C>                <C>
       Lines of Credit          $8,822,305         4,176,724
       Letters of Credit           672,800           629,900
                                ----------        ----------
          Total                 $9,495,105         4,806,624
                                ==========        ==========
</TABLE>

Commitments to extend credit are financial instruments with off-balance sheet
risk entered into by the Bank in the normal course of business to meet the
financing needs of its customers. These commitments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the statement of financial condition. The Bank is at risk from the possible
inability of borrowers to meet the terms of their contracts and from movements
in interest rates. The Bank's exposure to credit loss in the event of
nonperformance by the borrower is represented by the contractual amount of the
financial instruments described above.




                                       34
<PAGE>   35


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 10.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (CONTINUED):

Standby letters of credit written are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. Those guarantees
are issued to support public and private borrowing arrangements, bond financing,
and similar transactions. The credit risk involved in issuing a letter of credit
is essentially the same as that involved in extending loan facilities to
customers.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses. Since many
of the commitments may never be drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank uses the same credit
policies in making commitments as it does for on-balance sheet instruments. The
Bank evaluates each customer's creditworthiness on a case by case basis.


NOTE 11.  COMMITMENTS AND CONTINGENT LIABILITIES:

The Bank is subject to claims and lawsuits, which arise, primarily in the
ordinary course of business. It is the opinion of management that the
disposition or ultimate resolution of such claims and lawsuits will not have a
material adverse effect on the financial position of the Bank.


NOTE 12.  SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK:

Most of the Bank's business activity is with customers within the Upper East
Tennessee area.

The Bank evaluates each customer's creditworthiness on a case by case basis. The
amount of collateral obtained if deemed necessary by the Bank upon extension of
credit is based on management's credit evaluation of the customer. Collateral
held varies but generally includes real estate, vehicles, equipment and income
producing commercial properties. As of the completion of the audit, management
is not aware of any such outstanding claims or lawsuits.




                                       35
<PAGE>   36


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 13.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair values of the Bank's financial instruments at December 31
were as follows:

<TABLE>
<CAPTION>
                                                            1999                              1998
                                                 ---------------------------       ---------------------------
                                                  Carrying                          Carrying
                                                   Amount         Fair Value         Amount         Fair Value
                                                 ----------       ----------       ----------       ----------
    <S>                                          <C>              <C>              <C>              <C>
    Financial Assets:
      Cash and Due from Banks and
      Federal Funds Sold                        $ 7,361,447        7,361,447        8,620,256        8,620,256
      Securities Held-to-Maturity                   600,749          591,759          500,000          507,242
      Securities Available-for-Sale              20,043,328       20,043,328       12,157,224       12,157,224
      Loans Receivable:
      Adjustable Rate Loans under 30 years       17,246,876       17,246,876       19,300,225       19,300,225
      Fixed Rate Loans with original
        maturities of 30 years                      163,803           88,243          180,638          192,452
      Fixed Rate Loans with original
        maturities of 5 to 30 years              35,911,687       27,515,573        2,482,797        2,542,573
      Fixed Rate Loans with original
        maturities of 1 to 5 years               14,723,306       14,500,371       35,828,463       35,490,710
      Fixed Rate Loans with original
        maturities of less than one year          3,006,885        3,006,885        8,902,539        8,902,539
      Loans Held for Sale                              --               --            380,250          380,250
      Accrued Interest Receivable                   619,196          619,196          501,780          501,780
    Financial Liabilities:
      Deposit Liabilities                        90,818,073       90,818,073       81,808,741       81,808,741
    Off Balance Sheet Instruments:
      Commitments to Extend Credit                     --               --               --               --
</TABLE>


NOTE 14.  FEDERAL INCOME TAXES:

The provision for income tax for 1999 and 1998 consists of the following:

<TABLE>
<CAPTION>
                                               1999                  1998
                                             --------              --------
    <S>                                      <C>                    <C>
    Income Tax Expense:
       Current Tax Expense
          Federal                            $249,608                72,195
          State                                61,285                29,822
       Deferred Tax (Benefit)
          Federal                               8,363               178,370
          State                                  --                  31,476
                                             --------              --------
                                             $319,256               311,863
                                             ========              ========
</TABLE>





                                       36
<PAGE>   37


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 14.  FEDERAL INCOME TAXES (CONTINUED):

A cumulative net deferred tax asset for 1999 is included in Other Assets. A
cumulative net deferred tax liability for 1998 is included in Other Liabilities.
The components of the asset and liability are as follows:

<TABLE>
<CAPTION>
                                                        1999                1998
                                                      ---------           ---------
       <S>                                            <C>                  <C>
       Differences in Depreciation Methods            $(134,634)            (96,794)
       Net Unrealized Gain/Loss on
         Available-For-Sale Securities                  287,246             (48,660)
                                                      ---------           ---------
                                                      $ 152,612            (145,454)
                                                      =========           =========


       Deferred Tax Assets                            $ 287,246                --
       Deferred Tax Liabilities                        (134,634)           (145,454)
                                                      ---------           ---------
       Net Deferred Tax Assets (Liabilities)          $ 152,612            (145,454)
                                                      =========           =========
</TABLE>

The following is a reconciliation of the statutory federal income tax rate
applied to pre-tax accounting income, with the income tax provisions in the
statements of income.

<TABLE>
<CAPTION>
                                                               1999                 1998
                                                             ---------           ---------
       <S>                                                   <C>                   <C>
       Federal Income Tax Expense at the
          Statutory Rate (34%)                               $ 347,281             300,027
       Increases (Decreases) Resulting from:
          Nontaxable Interest Income, Net of Non-
            deductible Interest Expense                        (89,310)            (41,110)
          State Income Taxes, Net of Federal Income
            Tax Benefit                                         61,285              52,946
                                                             ---------           ---------
       Provision for Income Taxes                            $ 319,256             311,863
                                                             =========           =========
</TABLE>


NOTE 15. EMPLOYEE BENEFIT PLANS:

Effective May 1, 1998 the Bank adopted a simple IRA plan covering all employees.
Employees may contribute up to $6,000 per year to the plan. The Bank may
contribute up to 3% of the employees annual compensation. Employee contributions
in the amount of $12,000 and $0 were accrued at December 31, 1999 and December
31, 1998, respectively.



                                       37
<PAGE>   38


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 16.  REGULATORY MATTERS:

The Bank is subject to various regulatory capital requirements administered by
its primary federal regulator, the Federal Deposit Insurance Corporation (FDIC).
Failure to meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgements by the regulator
about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier I
capital to risk-weighted assets (as defined). Management believes, as of
December 31, 1999, that the Bank meets all capital adequacy requirements to
which it is subject.

As of March 31, 1998 the most recent notification from the FDIC, the Bank was
categorized as well capitalized under the regulatory framework for prompt
corrective action. To remain categorized as well capitalized, the Bank will have
to maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage
ratios as disclosed in the table below. There are no conditions or events since
the most recent notification that management believes have changed the Bank's
prompt corrective action category.

The Bank's actual capital and ratio amounts are presented in the following
table:

<TABLE>
<CAPTION>                                                                                    To Be Well Capitalized
                                                                                                 Under the Prompt
                                                                   For Capital                     Corrective
                                          Actual                Adequacy Purposes               Action Provisions
                                 -----------------------    --------------------------       ------------------------
                                   Amount         Ratio         Amount         Ratio           Amount        Ratio
                                 ----------      -------    --------------    --------       ----------     ---------
<S>                              <C>               <C>      <C>                <C>          <C>             <C>
As of December 31, 1999:

Total Risk-Based Capital
  (To Risk Weighted Assets)      $9,742,237        11.3%    $ * 6,865,600      * 8.0%      $8,582,000      * 10.0%
Tier I Capital
  (To Risk Weighted Assets)       8,878,421        10.3%      * 3,432,800      * 4.0%       5,149,200      * 6.0%
Tier I Capital
  (To Average Assets)             8,878,421         8.7%      * 4,089,640      * 4.0%       5,112,050      * 5.0%
</TABLE>
---------
* Greater or equal to


                                       38
<PAGE>   39

                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

NOTE 16. REGULATORY MATTERS (CONTINUED):

<TABLE>
<CAPTION>                                                                                    To Be Well Capitalized
                                                                                                Under the Prompt
                                                                    For Capital                    Corrective
                                          Actual                 Adequacy Purposes              Action Provisions
                                 -----------------------    --------------------------       ------------------------
                                   Amount         Ratio         Amount         Ratio           Amount        Ratio
                                 ----------      -------    --------------    --------       ----------     ---------
<S>                              <C>               <C>      <C>               <C>          <C>             <C>

As of December 31, 1998:

Total Risk-Based Capital
  (To Risk Weighted Assets)      $9,080,577        13.3%    * 5,455,120      * 8.0%       6,818,900      * 10.0%
Tier I Capital
  (To Risk Weighted Assets)       8,254,928        12.1%    * 2,727,560      * 4.0%       4,091,340      * 6.0%
Tier I Capital
  (To Average Assets)             8,254,928         9.3%    * 3,549,567      * 4.0%       4,436,900      * 5.0%
</TABLE>
---------
* Greater or equal to



The Bank received notice from the FDIC that the Bank's deposits are insured up
to $100,000 for each depositor, the FDIC assessment for the years ended December
31, 1999 and 1998 was $10,239 and $7,523, respectively.


NOTE 17.  BANK HOLDING COMPANY:

People's Community Bank is a wholly-owned subsidiary of PCB Bancorp, Inc. The
retained earnings of PCB Bancorp, Inc. reflect the accumulated earnings of
People's Community Bank and the consolidated statement of income reflects the
income and expenses of People's Community Bank for the years ended December 31,
1999 and 1998.

The Parent Company's sole source of funds is the receipt of dividends from the
Bank.

                   Condensed Statements of Financial Condition
                                  (Parent Only)

<TABLE>
<CAPTION>
                                                                           1999               1998
                                                                        ----------          ----------
<S>                                                                     <C>                  <C>
          ASSETS
       Cash On Deposit with Subsidiary                                  $   47,169               2,093
       Investment in Subsidiary                                          8,443,141           8,365,151
       Dividends Receivable                                                   --                40,000
       Premises and Equipment, Net of Accumulated Depreciation
          of $1,342 and $954, respectively                                     778               1,166
       Organization costs, Net of Accumulated Amortization                    --                10,624
                                                                        ----------          ----------
            Total Assets                                                $8,491,088           8,419,034
                                                                        ==========          ==========

</TABLE>




                                       39
<PAGE>   40

                                PCB BANCORP, INC
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 17.  BANK HOLDING COMPANY (CONTINUED):

             Condensed Statements of Financial Condition (Continued)
                                  (Parent Only)
<TABLE>
<CAPTION>
                                                                                  1999                1998
                                                                             ------------       ----------
<S>                                                                            <C>                <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
       Dividends Payable                                                                -            40,000
       Common Stock                                                               806,200           800,000
       Additional Paid-In Capital                                               7,259,000         7,200,000
       Retained Earnings (Deficit)                                                861,168           310,456
       Net Unrealized Gain (Loss) on Available-for-Sale Securities
          Net of Tax of $287,246 and ($48,660) respectively                      (435,280)           68,578
                                                                               ----------       -----------
Total Liabilities and Shareholders' Equity                                     $8,491,088         8,419,034
                                                                               ==========       ===========

                             Condensed Statements of Income and Retained Earnings
                                                  (Parent Only)

       OPERATING INCOME
            Dividend from Subsidiary                                            $ 120,310            52,000
                                                                               ----------       -----------
       Total Operating Income                                                     120,310            52,000
                                                                               ----------       -----------

       OPERATING EXPENSES
            Amortization of Organization Costs                                     10,625             3,862
            Advertising and Promotion                                                   -             2,074
            Postage and Printing                                                    3,702                 -
            Education and Development                                               1,195                 -
            Travel                                                                  1,457                 -
            Interest Expense                                                          824                 -
            Depreciation Expense                                                      388               424
            Dues and Membership                                                        20                20
            Outside Services                                                       12,926            11,635
                                                                               ----------       -----------
       Total Operating Expenses                                                    31,137            18,015
                                                                               ----------       -----------

       Income from Operations                                                      89,173            33,985

       OTHER INCOME (EXPENSE)
            Undistributed Net Income from Investment
               in Wholly-Owned Subsidiary                                         581,849           518,571
                                                                               ----------       -----------

       Net Income                                                                 671,022           552,556
       Beginning Retained Earnings (Deficit)                                      310,456          (202,100)
       Cash Dividends                                                            (120,310)          (40,000)
                                                                               ----------       -----------
       Ending Retained Earnings                                                 $ 861,168           310,456
                                                                               ==========       ===========
</TABLE>


                                       40
<PAGE>   41
                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE 17.  BANK HOLDING COMPANY (CONTINUED):

                       Condensed Statements of Cash Flows
                                  (Parent Only)

<TABLE>
<CAPTION>
                                                                                  1999              1998
                                                                               ----------       -----------
<S>                                                                            <C>                <C>
       Cash Flows from Operating Activities:
            Net Income (Loss)                                                  $  671,022           552,556
            Undistributed Net (Income) Loss of Wholly-Owned
               Subsidiary                                                        (581,849)         (518,571)
            Depreciation Expense                                                      388               424
            Amortization of Organization Costs                                     10,625             3,862
            (Decrease) in Dividends Payable                                             -           (40,000)
                                                                               ----------       -----------

       Net Cash Provided by (Used for) Operating Activities                       100,186            (1,729)
                                                                               ----------       -----------

       Cash Flows from Financing Activities:
            Stock Options Exercised                                                65,200                 -
            Dividends Paid                                                       (120,310)                -
                                                                               ----------       -----------

       Net Cash Used for Financing Activities                                     (55,110)                0
                                                                               ----------       -----------

       Increase (Decrease) in Cash and Cash Equivalents                            45,076            (1,729)
       Beginning Cash and Cash Equivalents                                          2,093             3,822
                                                                               ----------       -----------

       Ending Cash and Cash Equivalents                                         $  47,169             2,093
                                                                                =========       ===========
</TABLE>


NOTE 18.  STOCK OPTIONS:

During 1996, PCB Bancorp, Inc. adopted a stock option plan for key employees.
The plan is established to provide "Incentive Stock Options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, or "non-statutory" stock
options. The Board of Directors administers the plan.

In addition to the plan for the key employees, PCB Bancorp, Inc. adopted a plan
for non-employee directors. All eligible directors can participate and receive
non-qualified stock options. Directors were granted an initial option to acquire
5,000 shares at an option price of $10, which was the fair value at the date of
the grant. This option was fully vested immediately. Directors are granted an
additional 1,000 shares each year through the year 2000. The shares are granted
at the fair value on the date of grant. Options vest ratably at twenty percent
per year over five years.





                                       41
<PAGE>   42



                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 18.  STOCK OPTIONS (CONTINUED):


Under both plans, no incentive stock option shall be exercisable after the
expiration of 10 years from the date it is granted and the total number of
shares of the Company's common stock that may be transferred pursuant to the
exercise of stock options under the Plan shall not exceed in the aggregate
100,000 shares for the employee stock option plan and 60,000 shares for the
directors stock option plan.

The Company has elected to account for the stock option plan under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related interpretations. Accordingly, no compensation expense has been
recognized for the stock option.

Had compensation expense for the stock option plan been determined based on the
fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", the Company's net income in 1999 and
1998 would have been $638,785 and $528,166, respectively. The restated earnings
per share would have been $0.80 and $0.66 in 1999 and 1998, respectively. The
Company calculates a weighted-average fair value for each option. The
weighted-average fair value for the options in 1999 and 1998 were $17.61 and
$14.09, using the following assumptions for both years:


       Risk-free interest rate                   5%
       Expected life (years)                    10
       Expected volatility                       8%
       Expected dividends                       None




                                       42
<PAGE>   43


                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 18.  STOCK OPTIONS (CONTINUED):

A summary of option transactions during the years ended December 31, 1999 and
1998 is shown below:

<TABLE>
<CAPTION>
                                                                     Number             Weighted-Average
                                                                    of Shares            Exercise Price
                                                                    ---------            --------------

<S>                                                                  <C>                     <C>
Outstanding at January 1, 1998                                       107,500                 10.29
       Granted: Directors                                              5,000                 20.00
                Employees                                              2,500                 20.00
                                                                     -------
Outstanding at December 31, 1998                                     115,000                 10.50
                                                                     =======

Exercisable at December 31, 1998                                      54,000                 10.50
                                                                     =======

Outstanding at January 1, 1999                                       115,000                 10.50
       Granted:  Employees                                             5,000                 25.00
                  Directors                                           10,000                 25.00
                                                                     -------
                                                                     130,000                 12.54
Exercised during 1999                                                  6,200                 10.71
                                                                     -------

Outstanding at December 31, 1999                                     123,800                 12.63
                                                                     =======
</TABLE>

A summary of options outstanding as of December 31, 1999 is shown below:

<TABLE>
<CAPTION>
                                             Weighted-Average            Number of      Number of
    Exercise        Number of Options      Remaining Contractual          Options        Options
     Price            Outstanding            Life Outstanding           Exercisable     Exercised        Remaining
  -----------     ---------------------   --------------------------  ---------------   ---------        ---------

<S>                  <C>                     <C>                       <C>               <C>             <C>
    $ 10.00             102,500                 6.5 years                 69,500            6,000           63,500
      16.00               5,000                 7.5 years                  2,000              200            1,800
      20.00               2,500                   9 years                    500                -              500
      20.00               5,000                 8.5 years                  1,000                -            1,000
      25.00               5,000                 9.5 years                      -                -                -
      25.00              10,000                  10 years                      -                -                -
                      ---------                                          -------         --------          -------
                        130,000                                           73,000            6,200          66,800
                                                                         =======         ========          =======
Exercised                (6,200)
                      ---------
                        123,800
                      =========

</TABLE>


                                       43
<PAGE>   44

                                PCB BANCORP, INC.
                           AND WHOLLY-OWNED SUBSIDIARY
                             PEOPLE'S COMMUNITY BANK
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998



NOTE 19.  EARNINGS PER SHARE:

<TABLE>
<CAPTION>
                                                                        FOR THE YEAR ENDED
                                        ----------------------------------------------------------------------------------------
                                                             1999                                        1998
                                        --------------------------------------------   -----------------------------------------
                                                       Weighted-Average                            Weighted-Average
                                           Income              Shares      Per-Share     Income            Shares      Per-Share
                                         (Numerator)        (Denominator)   Amount     (Numerator)       (Denominator)  Amount
                                        ------------        ------------   ---------   ------------      ------------  ---------

<S>                                    <C>                      <C>           <C>        <C>               <C>            <C>
Net Income                              $    671,022                 -           -        552,556                -           -

Basic EPS
  Income Available to
  Common Stockholders                        671,022             802,633       .84        552,556           800,000        .69

Effect of Dilutive Options

Stock Options
  (using the Treasury Stock
  Method)                                          -              76,563         -              -            63,336          -
                                        ------------        ------------  --------   ------------      ------------  ---------

Diluted EPS

Income Available to
  Common Stockholders plus
  Assumed Exercise of Options           $    671,022             879,196       .76        552,556           863,336        .64
                                        ============        ============  ========   ============      ============  =========
</TABLE>




                                       44
<PAGE>   45




ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The names of the Company's directors and executives officers, together with
certain information regarding them, are as follows:

<TABLE>
<CAPTION>
   Name, Age, and Address             Company Position          Principal Occupation
-----------------------------        -------------------------  ----------------------------
<S>                                 <C>                         <C>
Phillip R. Carriger (52)             Director and               Banker
819 Xanadu Court                     Chief Executive Officer
Johnson City, TN 37604

Michael T. Christian (57)            Director and               Banker
                                     President

Thomas J. Garland (65)               Director                   College Professor/Consultant
1208 Christy Court
Greeneville, TN 37743

Timothy P. Jones (57)                Director                   Newspapers
824 E. Myrtle Avenue
Johnson City, TN 37601

C.C. Marshall (66)                   Director                   Real Estate Developer
1805 Sherwood Dr.
Johnson City, TN 37601

James D. Swartz (64)                 Director                   Newspapers
112 Barberry, Unit 30
Johnson City, TN 37604

James W. Gibson, M.D. (66)           Director                   Radiologist
810 Cloudland Drive
Johnson City, TN 37601
</TABLE>

Biographies of Directors and Officers

Phillip R. Carriger, age 52, has been the Chief Executive Officer of People's
Community in Johnson City since 1995. Prior to that time, he was the Senior Vice
President of Hamilton Bank's Corporate Division. Mr. Carriger has over 26 years
of experience in the banking industry, having worked for the Comptroller of the
Currency as an Assistant National Bank Examiner, C&C Bank of Anderson County as
a Senior Vice President and First American National Bank (in the Knoxville and
Johnson City offices) as a Senior Vice President. Mr. Carriger graduated from
the University of Tennessee with a B.S. Degree in Economics in 1971. Mr.
Carriger is a member of the Kiwanis Club, East Tennessee State University
Foundation Board of Trustees, Economic Development Board, Johnson City
Development Authority Board, United Way and Girl's Inc. Board of Directors and
President of the Johnson City Country Club Board of Directors.

Michael T. Christian, age 57, spent 28 years with NationsBank and its
predecessors. He last served as Executive Vice President in charge of retail
banking for Tennessee and Kentucky. Prior to that, he was Executive Vice
President over all of Tennessee and Kentucky community banks. Mr. Christian
graduated from the University of Tennessee in 1966. He has served on numerous
civic



                                       45
<PAGE>   46

and professional boards of directors including the Tennessee Bankers
Association, the Federal Reserve Bank of Nashville, the Tennessee Manufacturer's
Association and Tusculum College. He is a former Captain, U.S. Army, Armor.

C.C. Marshall, age 66, has been President of Mountcastle Corporation, a real
estate development and construction firm, since 1967. Mr. Marshall was a
director of Hamilton Bank for 17 years. He is a graduate of East Tennessee State
University and a native of Johnson City.

Timothy P. Jones, age 57, is a Vice President, director and stockholder of Press
Holding Corporation, the publisher of the Johnson City Press newspaper and seven
other newspapers. Mr. Jones received his A.B. Degree in Economics from Wofford
College, has a Masters degree in Mass Communications from Texas Tech University
and is a former directors of the Tennessee Press Association. He is also a
former director of Hamilton Bank and a past Chairman of the Board of Directors
of the Johnson City/Jonesborough/Washington County Chamber of Commerce. Mr.
Jones is Past President of the Johnson City Evening Rotary Club, Past President
of the Johnson City Country Club Board of Directors, a member of the East
Tennessee State University Foundation Board of Trustees, Economic Development
Board and Johnson City Development Authority Board.

Thomas J. Garland, age 65, served for 21 years in the Tennessee State Senate (17
years as Senate Minority Leader). He is a former Chancellor of the Tennessee
Board of Regents, former Chairman of the Board of Commerce Union Bank (now
NationsBank) in Greeneville, Tennessee, and also served as Executive Vice
President and a director of First American Bank, Tri-Cities. Mr. Garland, a
graduate of East Tennessee State University, currently serves as Chairman of the
Tusculum Institute for Public Leadership and Policy at Tusculum College. He is a
member of the Board of Directors of Atmos Energy Corporation, Dallas Texas, and
a former director of Tri-State Container, now Inland Container, in Elizabethton,
Tennessee. Mr. Garland is a member of the boards of the Johnson City Medical
Center, the Sequoyah Council Boy Scouts of America, ETSU National Alumni
Association, the Greater Tri-Cities Business Alliance and the East Tennessee
State University Foundation Board of Trustees.

James D. Swartz, age 64, has been a co-owner of Swartz-Morris Media (which owns
two newspapers) and Swart Media Consultants, a company that advises newspapers
in operation systems, since 1988. Prior to that time, Mr. Swartz was President
or Worrell Enterprises, a media company with 33 newspapers and three television
stations. Mr. Swartz was born in Johnson City, Tennessee, and currently serves
on the East Tennessee State University Foundation Board of Trustees and ETSU
College of Business Board of Advisors.

James W. Gibson, M.D., age 66, is currently associated with Mountain Empire
Radiology , P.C. and has practiced his specialty of radiology in Johnson City
since 1965. Dr. Gibson received his undergraduate education from Vanderbilt
University, his Medical Degree from the University of Tennessee Medical School
in Memphis and served his residency in radiology at Duke University Medical
Center, Durham, North Carolina. He presently serves on the National Alumni
Council for the University of Tennessee Medical School and is a member of the
ETSU Foundation. He has served on the Johnson City Medical School Board of
Directors and the Watauga Mental Health Center Board of Directors.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table summarizes the compensation paid or accrued for the
years ended December 31, 1999, 1998, and 1997 to the Chief Executive Officer.
There are no other officers of the Company or Bank whose total annual salary
exceeds $100,000; accordingly, disclosure regarding executive compensation is
provided in the below tables only with respect to the Chief Executive Officer.




                                       46
<PAGE>   47








<TABLE>
<CAPTION>
                                                            Annual
                                                         Compensation
                                          Fiscal                                   Salary
Name and Current Position                  Year       Salary ($)   Bonus ($)     Compensation
--------------------------------        ---------     ----------  -----------  ----------------
<S>                                        <C>         <C>                         <C>
Phillip R. Carriger                        1999        $114,150                    $1,901 (1)
   President and Chief Executive           1998        $108,750                    $1,304 (1)
   Officer, Director                       1997        $102,000                    $3,800 (1)
</TABLE>


(1)      Represents automobile reimbursement.


Option Grants in Preceeding Fiscal Years

         The following table sets forth information concerning stock option
grants to the Company's Chief Executive Officer during 1996. There were no
grants prior to that time or after that time.

<TABLE>
<CAPTION>
                           # OF SECURITIES               % OF TOTAL
                          UNDERLYING OPTIONS         OPTIONS GRANTED TO
Name                           GRANTED               EMPLOYEES IN 1996
--------------------     --------------------       --------------------
<S>                           <C>                        <C>
Phillip R. Carriger             40,000                     51.61%
</TABLE>



Value of Unexercised Options

         This table presents information regarding the value of unexercised
options held at December 31, 1999. No stock options were exercised, and there
were no SARs outstanding during 1999, 1998, 1997, or 1996.

<TABLE>
<CAPTION>
                                                        VALUE OF UNEXERCISABLE
                          NUMBER OF UNEXERCISED          IN-THE-MONEY OPTIONS
                          OPTIONS AT FY-END (#)              AT FY-END (1)
Name                     EXERCISABLE/UNEXERCISABLE     EXERCISABLE/UNEXERCISABLE
--------------------     -------------------------     -------------------------
<S>                          <C>                         <C>
Phillip R. Carriger           24,000/16,000               $360,000/$240,000
</TABLE>

(1)      Dollar values were calculated by determining the difference between the
         price of common stock on December 31, 1999 of $25.00 per share and the
         exercise price of such options

Director Compensation

         Members of the Board of Directors have never received any fees for
attending meetings. However, the outside directors of the Company are entitled
to receive options under the PCB Bancorp, Inc. Outside Directors' Stock Option
Plan. See "Stock Incentive Plans."

Stock Incentive Plans

         The Company's Board of Directors and its shareholders have adopted and
approved the 1996 Stock Option Plan (the "Employee Plan") and the Outside
Directors' Stock Option Plan (the "Directors' Plan"). The Plans are intended to
promote the interests of the Company and its shareholders, to improve the
long-term financial performance of the Company, and to attract and retain the
Company's management team by providing competitive financial incentives.

         1996 Stock Option Plan. The persons to whom options may be granted
under the Employee Plan will be determined from time to time by the Company's
Compensation Committee (the "Committee"). Officers and key employees of the
Company of the Company and its subsidiary, as determined by the Board or the
Committee, are eligible for grants of options.



                                       47
<PAGE>   48



         The Employee Plan provides for the granting of incentive stock options
and non-statutory stock options. Incentive stock options offer employees the
possibility of deferring taxes until the underlying shares of stock acquired
upon exercise of the option are sold. For some of the Company's employees, the
benefits of incentive stock options are outweighed by the disadvantages of
certain restrictions imposed by the Internal Revenue Code. In addition, with
non-statutory stock options, the Company receives a tax deduction at the time
the employee recognizes ordinary income in an amount of such income to the
employee. With incentive stock options, the Company does not receive a tax
deduction at any time (assuming that the employee meets the holding period
requirements for capital gain treatment).

         The Employee Plan is administered by the Committee. No person while a
member of the Committee is eligible to be granted an option under the Employee
Plan. Members of the Committee are appointed, and vacancies thereon filled, by
the Board of Directors of the Company, and the Board has the power to remove
members of the Committee.

         An aggregate of 100,000 shares of the Company's common stock, no par
value, may be issued pursuant to the exercise of stock options by such officers
and key employees of the Company and its subsidiary as the Committee determine.
As of December 31, 1996, options covering a total of 77,500 shares had been
granted under the Employee Plan. There are no limitations on the number of
shares of common stock which may be optioned to any one person, except that the
aggregate fair market value (determined as of the time the option is granted) of
Company Common Stock with respect to which incentive stock options are
exercisable for the first time by an employee during any calendar under the
Employee Plan (and any other incentive stock option plan of the Company or any
subsidiary) may not exceed $100,000.

         Outside Directors' Stock Option Plan. The Directors' Plan provides that
each person (except Dr. Gibson) who was a non-employee director of the Company
in April 1996, will receive an option to purchase 5,000 shares of the Company's
common stock, no par value. This option was exercisable immediately. In
addition, on the first business day following the annual meeting of shareholders
of each of the years 1996 through and including 2000, each outside director
immediately following such annual meeting will be granted an option to purchase
1,000 shares of stock. These options will vest at a rate of 20% per year on the
anniversary date of the annual meeting of shareholders. The exercise price of
all options shall equal the fair market of the Company's common stock on the
date of the grant.

         An aggregate of 60,000 shares are reserved for grants of options
pursuant to the Directors' Plan. Shares subject to options which terminate or
expire unexercised will be available for future option grants. The total number
of shares subject to the Director's Plan and the number covered under each
individual option is subject to automatic adjustment in the event of stock
dividends, recapitalizations, mergers, consolidations, split-ups, combinations
or exchanges of shares and the like, as determined by the Board of Directors.

         If any non-employee director ceases to be a director as a result of
death or total disability while holding an option that has not expired and has
not been fully exercised, such person or such person's executors,
administrators, heirs, personal representative, conservator, or distributees
may, at any time within six months after the date of such death or total
disability, exercise the option in its entirety with respect to all remaining
shares covered by that option.

         The options under the Directors' Plan are nonstatutory options intended
not to qualify as incentive stock options under Section 422 of the Internal
Revenue Code. The grant of options will not result in taxable income to the
non-employee director or a tax deduction to the Company. The exercise of an
option by a non-employee director will result in taxable ordinary income to the
non-employee director and a corresponding deduction for the Company, in each
case equal to the difference between the option price and the fair market value
of the shares on the date the option is exercised.

         The Director's Plan is administered by the Board of Directors who is
authorized to interpret the Plan but has no authority with respect to the
selection of directors to receive options or the option price for shares subject
to the Directors' Plan. The Board has no authority to materially increase the
benefits under the plan. The Board may amend the Directors' Plan as it shall
deem advisable but may not, without further shareholder approval, increase the
maximum number of shares under the plan or options granted thereunder, reduce
the minimum option price, extend the period during which options may be granted
or exercised, or change the class of persons eligible to receive options.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




                                       48
<PAGE>   49




         The following table sets forth as of December 31, 1999 certain
information with respect to the shares of the common stock of the Company
beneficially owned by the shareholders known to the Company to own beneficially
more than 5% of the shares and the shares of common stock beneficially owned by
the Company's directors and executive officers and by all of its executive
officers and directors as a group. The shares listed below and the percentage of
ownership for each person named below have been calculated assuming that all
presently exercisable options and options that will become exercisable within
120 days from the date of this table, that have been issued pursuant to any of
the Company's stock option plans, have been exercised.

<TABLE>
<CAPTION>
             Name and Address                                            Number of Shares Beneficially
           of Beneficial Owners                                              Owned on 12/31/99 (%)
-------------------------------------------                            -----------------------------------
<S>                                                                       <C>              <C>
Phillip R. Carriger (1)                                                     45,000           (5.29%)
819 Xanadu Court
Johnson City, TN 37604

Thomas J. Garland (2)                                                       13,700           (1.61%)
1208 Christy Court
Greeneville, TN 37743

Timothy P. Jones (2)                                                        16,200           (1.91%)
824 E. Myrtle Avenue
Johnson City, TN 37601

C.C. Marshall (2)                                                           53,989           (6.35%)
1805 Sherwood Dr.
Johnson City, TN 37601

James D. Swartz                                                             51,200           (6.02%)
112 Barberry, Unit 30
Johnson City, TN 37604

James W. Gibson, M.D. (3)                                                   11,200           (1.32%)
810 Cloudland Drive
Johnson City, TN 37601

All Directors and Executive Officers as a group (six persons) (4)           191,289          (22.5%)
</TABLE>

(1) Includes 24,000 shares which Mr. Carriger currently has a right to acquire
    under Company stock options.
(2) Includes 6,200 shares which each of these directors currently has a right to
    acquire under Company stock options.
(3) Includes 1,200 chares which Dr. Gibson currently has a right to acquire
    under Company stock options.
(4) Includes 43,800 shares which all officers and directors as a group currently
    have a right to purchase under Company stock options.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company's directors and officers, as well as business organizations
and individuals associated with them, are customers of the Bank. All loan
transactions to such individuals and entities are made in the ordinary course of
business and on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unrelated
borrowers and do not involve more than the normal risk of collectibility or
present other unfavorable features.

There are no cases in which aggregate extensions of credit outstanding to any
one director or officer and his associates exceeds 10% of the equity capital of
the Bank. At December 31, 1999, the total amount of loans to directors and
executive officers was $91 thousand, or approximately 1.1% of shareholder's
equity.



                                       49
<PAGE>   50


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      List of Exhibits Filed

Exhibit
Number    Description

 3.1      Charter of Registrant (previously filed as Exhibit 3(a) as part of the
          Registration Statement on Form S-4 No. 333-4984, filed June 6, 1996,
          which incorporated herein by reference).

 3.2      Bylaws of Registrant (previously filed as Exhibit 3 (b) as part of the
          Registration Statement No. 333-4984, which exhibit is incorporated
          herein by reference).

 10.1     PCB Bancorp, Inc. 1996 Stock Option Plan (previously filed as
          Appendix C to Registration Statement No. 333-4984, which appendix is
          incorporated herein by reference).

 10.2     PCB Bancorp, Inc. Outside Directors' Stock Option Plan (previously
          filed as Appendix D to Registration Statement No. 33-4984, which
          appendix is incorporated herein by reference).

 21       Subsidiaries of the Registrant - The Registrant's sole subsidiary is
          "People's Community Bank", a Tennessee state chartered banking
          institution.

 27.1     1999 Financial Data Schedule

 (b)      Reports on Form 8-K. No reports on Form 8-K filed during the fourth
          quarter of the Registrant's last fiscal year.


          In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                       PCB BANCORP, INC.
                       (Registrant)


                       By:/s/ Phillip R. Carriger
                       ---------------------------------------------------------
                       Phillip R. Carriger, Chairman and Chief Executive Officer
                       (Principal Executive Officer)

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ Larry Parks
                       ---------------------------------------------------------
                       Larry Parks, Vice President
                       (Principal Accounting Officer)


                       Date: March 27, 2000
                       ---------------------------------------------------------




                                       50
<PAGE>   51



              In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.


                       By:/s/ Phillip R. Carriger
                       ---------------------------------------------------------
                       Phillip R. Carriger, Chairman and Chief Executive Officer
                       (Principal Executive Officer)

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ Michael T. Christian
                       ---------------------------------------------------------
                       Michael T. Christian, President and Director

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ Thomas J. Garland
                       ---------------------------------------------------------
                       Thomas J. Garland, Director

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ Timothy P. Jones
                       ---------------------------------------------------------
                       Timothy J. Jones, Director

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ C.C. Marshall
                       ---------------------------------------------------------
                       C.C. Marshall, Director

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ J.D. Swartz
                       ---------------------------------------------------------
                       J.D. Swartz, Director

                       Date: March 27, 2000
                       ---------------------------------------------------------


                       By:/s/ James W. Gibson
                       ---------------------------------------------------------
                       James W. Gibson, Director

                       Date: March 27, 2000
                       ---------------------------------------------------------



                                             51