EXHIBIT 22.2

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


                         The Commercial Bancorp, Inc.'s

                               1999 Annual Report


<PAGE>














                          THE COMMERCIAL BANCORP, INC.

                               1999 ANNUAL REPORT


<PAGE>




                       ABOUT THE COMMERCIAL BANCORP, INC.

The Commercial Bancorp,  Inc. (the "Holding Company") was incorporated on August
15, 1996. The Holding Company owns 100% of the  outstanding  common stock of The
Commercial  Bank of Volusia County  ("TCB-Volusia")  (collectively  "TCB").  The
Holding  Company was  organized  simultaneously  with  TCB-Volusia  and its only
business is the ownership and operation of TCB-Volusia. TCB-Volusia is a Florida
state-chartered  commercial  bank and its  deposits  are  insured by the Federal
Deposit Insurance  Corporation.  TCB-Volusia  opened for business on October 14,
1997, and provides  community  banking services to businesses and individuals in
Volusia County,  Florida.  At December 31, 1999, TCB operated one retail banking
office in Ormond Beach,  Florida and had total assets of $25.7 million and total
stockholders' equity of $3.3 million.

                        COMMON STOCK PRICES AND DIVIDENDS

TCB's common stock is not actively traded. The common stock was sold in a public
offering  in which  TCB sold  units  including  one  common  share and a warrant
entitling the holder to purchase an additional common share. The units were sold
for $10 each. TCB has never paid cash dividends.  Future dividends, if any, will
be determined by the Board of Directors.

As of March 1, 2000, the Company had 334 holders of record of common stock.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report  contains  certain  forward-looking  statements  which represent the
issuers  expectations  or beliefs,  including,  but not  limited to,  statements
concerning  the  banking  industry  and  the  issuers  operations,  performance,
financial  condition,  and growth. For this purpose, any statements contained in
this  Report  that are not  statements  of  historical  fact may be deemed to be
forward-looking  statements.  Without  limiting the generality of the foregoing,
words such as may, will, expect,  believe,  anticipate,  intend,  could, should,
can,  estimate,  or continue  or the  negative  of other  variations  thereof or
comparable  terminology  are  intended to identify  forward-looking  statements.
These statements by their nature involve  substantial  risks and  uncertainties,
certain of which are beyond the issuers  control,  and actual results may differ
materially depending on a variety of important factors,  including  competition,
general economic conditions, changes in interest rates, and changes in the value
of real  estate  and other  collateral  securing  loans  made by The  Commercial
Bancorp, Inc. among other things.

                                    CONTENTS

                                                                            Page

Consolidated Financial Highlights..............................................1

Message from the President...................................................2-3

Officers and Directors.......................................................4-5

Selected Financial Data........................................................6

Management's Discussion and Analysis of Financial Condition and
  Results of Operations.....................................................7-19

Selected Quarterly Results....................................................20

Consolidated Financial Statements..........................................21-39

Independent Auditors' Report..................................................40

Corporate Information..........................................Inside Back Cover







<PAGE>

<TABLE>

                        CONSOLIDATED FINANCIAL HIGHLIGHTS

            At December 31, 1999 and 1998 or For the Years Then Ended
                (Dollars in thousands, except per share figures)

                                                                                                 1999             1998
                                                                                                 ----             ----
At Year End:

<S>                                                                                       <C>                    <C>
     Total assets.......................................................................  $    25,732            21,676
     Securities.........................................................................  $     7,897             3,302
     Loans, net.........................................................................  $    14,373            11,563
     Deposits...........................................................................  $    21,220            16,785
     Borrowings.........................................................................  $     1,000             1,365
     Stockholders' equity...............................................................  $     3,296             3,257
     Book value per share...............................................................  $      6.93              7.01
     Shares outstanding.................................................................      475,491           464,791
     Warrants outstanding to purchase one share of common stock.........................      439,300           450,000
     Equity-to-assets ratio.............................................................        12.81%            15.03%
     Nonperforming assets-to-total assets ratio.........................................          N/A              5.53%

For The Year:

     Interest income....................................................................        1,468               989
     Interest expense...................................................................          852               632
     Net interest income................................................................          616               357
     (Credit) provision for loan losses.................................................         (309)              725
     Cumulative effect of accounting change for organization costs......................            -              (100)
     Net earnings (loss)................................................................            6            (1,071)
     Return on average assets...........................................................          .03%            (6.35)%
     Return on average equity...........................................................          .18%           (28.23)%
     Average equity-to-average assets ratio.............................................        14.87%            22.51%
     Noninterest expenses to average assets.............................................         4.91%             7.32%


                                                                                                     Average Yield
                                                                                                     or Rate
                                                                                                     During the
                                                                                                     Year Ended
                                                                                                     December 31,

                                                                                                 1999            1998
                                                                                                 ----            ----
Yields and Rates:

     Loans (1)...........................................................................        8.16%            8.14%
     Securities..........................................................................        5.67%            4.07%
     Other interest-earnings assets (2)..................................................        5.03%            5.41%
     Total interest-earnings assets......................................................        7.28%            6.71%
     Deposits............................................................................        4.80%            5.17%
     Borrowings..........................................................................        5.38%            6.86%
     Total interest-bearing liabilities..................................................        4.84%            5.22%
     Net interest spread (3).............................................................        2.44%            1.49%
     Net interest margin (4).............................................................        3.06%            2.42%
----------------
<FN>
  (1)   Includes nonaccrual loan
  (2)   Includes federal funds sold, interest bearing deposits and Federal Home
        Loan Bank stock.
  (3)   Yield on average interest-earning assets less rate on average interest-
        bearing liabilities.
  (4)   Net interest income divided by average interest-earning assets.
</FN>
</TABLE>
                                       1
<PAGE>



                           MESSAGE FROM THE PRESIDENT



Letter to our Shareholders
The Commercial Bancorp, Inc.

Dear Shareholder:

While  most  of the  nation's  media  concerned  itself  with  the  dreaded  Y2K
Millennium  change and the possible  ill-effect it might have on automation  all
over the world,  our Company was excited  about  ending it's second full year of
operations  with  positive news in almost every area of the bank. As many of you
know,  our  confidence  in the Bank's  automation  and our ability to handle the
change  from 1999 to 2000 was  supreme.  In fact,  our Bank hosted an Open House
event at our Main Office in The Trails Shopping Center and we were proud to meet
and share the January  1st Holiday  with more than 200 guests over the course of
the day. For those of you who missed that event, we'll plan another  celebration
for January 1, 3000 and will look forward to seeing you then.  In the  meantime,
we'd like to use the  opportunity  of this Annual Report to bring you up-to-date
with  the  positive  performance  of our  Bank and  Company  for the year  ended
December 31, 1999.

First, note the growth of the Bank in Total Assets. The year ended with the Bank
at a record high of $25.7 Million.  We were pleased with this ending balance for
several reasons. First, a great deal of the growth had come in the final quarter
and we set records for opening  new  accounts  for the months of August  through
November. We were also very pleased to note that the Total Assets ended with our
Bank within $1.5 Million of our originally  projected  budget.  We are extremely
pleased to be so close to our targeted growth for the second year,  particularly
because we could not have  anticipated  being in competition  with so many other
new banks when we originally applied for our charter.

Second, and maybe of more importance to our Shareholders,  note the Bank and the
Company both reported an operating profit for the year's operations.  While some
of the profits were the result of our  recovering  reserves,  the Bank's  growth
also  allowed  us to  turn  a  profit  from  operations.  This  is an  extremely
significant  event and our  Management  and  Board of  Directors  are  extremely
pleased to report the result to you.

Some concerns had been expressed  regarding problem loans from the year ended in
1998.  Management  is pleased to report  that  substantially  all of our problem
loans were resolved with only minimal losses during this year. In addition sound
underwriting and prudent  administration  of our current loan portfolio have led
to a  great  deal  of  confidence  in our  existing  portfolio.  While  economic
conditions are always unpredictable and may lead to unforeseen and unpredictable
loan  losses,  the  existing  loans  and  customer  base  through  today are not
demonstrating any significant performance problems.

Our Management and Personnel  within the Bank have  stabilized  this year and we
are pleased to report that our staff may be the strongest performing team in our
history.  We believe this asset cannot be underestimated and that it contributes
as much as our competitive pricing in attracting new customers to our Bank.

And so, our Bank  excels in the three areas we consider  most  important  to our
future.  We have  Quality,  Profitability,  and Growth.  We find  Quality in our
management,   our  personnel,  our  equipment,  and  the  assets  of  the  Bank.
Profitability  has been achieved through  successful  operations and should only
improve as the Bank continues to increase in size. And, we have proven Growth in
a market that has become extremely  competitive in the short period of time that
we have been open. We are extremely proud of these factors.  We hope you will be
also.

Finally,  we are considering the future of our  organization  and its' continued
success.  As our  growth  continues  we face the  challenge  of needing a second
location.  Our Board of Directors  has spent a great deal of time  considering a
Strategic  Plan  that  will  allow  us to  offer  a  competitive  return  to our
Shareholders  over the next 36 months.  A key  component in that  strategy  will
include  additional  branches  in our  immediate  future.  We of our  plans  and
progress in this area.

As you know,  the  stock  originally  purchased  by our  Shareholders  came with
Warrants  which will expire in April this year.  We want to encourage all of our
Shareholders to take advantage of those  Warrants.  There are no immediate plans
for additional  stock in the future and exercising the Warrants will be the most
effective method for you to maximize your equity in our Company. If you have any
questions  regarding  the  Warrants,  please  feel  free to  call  me or  Harvey
Buckmaster.





                                       2
<PAGE>





As always,  we thank you for your  support and look  forward to meeting with you
when  convenient to discuss your banking needs as well as your investment in the
Company.

Sincerely,

/s/ Gary G. Campbell

Gary G. Campbell
President















                                       3
<PAGE>




                            DIRECTORS AND OFFICERS OF

                          THE COMMERCIAL BANCORP, INC.

                                    OFFICERS

                                Gary G. Campbell
                      President and Chief Executive Officer

                              Harvey E. Buckmaster
                      Chief Financial Officer and Secretary

                                    DIRECTORS

                                   Larry Kent
                 Chairman of the Board - Burger King Franchiser

                                James R. Peacock
               Vice Chairman of the Board - Real Estate Developer

                                Gary G. Campbell
                      President and Chief Executive Officer

                                Richard R. Dwyer
                                   Stockbroker

                               Clarence Singletary
                              Real Estate Developer



                                       4
<PAGE>






                            DIRECTORS AND OFFICERS OF

                      THE COMMERCIAL BANK OF VOLUSIA COUNTY

                                    OFFICERS

                                Gary G. Campbell
                      President and Chief Executive Officer

                              Harvey E. Buckmaster
           Senior Vice President - Chief Financial Officer and Cashier

                                 Charles E. Merz
                        Vice President - Commercial Loans

                                Barbara A. Cloyd
                           Vice President - Operations

                                   Sandy Bowe
                 Assistant Vice President - Loan Administration

                                  Ginny Goodin
                            Assistant Vice President

                                    DIRECTORS

                                   Larry Kent
                 Chairman of the Board - Burger King Franchiser

                                   Kirk Bauer
                                 Attorney at Law

                               Stanley S. Bronski
                                     Retired

                                Gary G. Campbell
                          The Commercial Bancorp, Inc.

                                Michael D. Crotty
                                 Attorney at Law

                                Richard R. Dwyer
                                   Stockbroker

                                Thomas R. Horton
                           Trustee/Stetson University

                               William L. Oliveri
                           Certified Public Accountant

                                James R. Peacock
                              Real Estate Developer

                               Clarence Singletary
                              Real Estate Developer



                                       5
<PAGE>

<TABLE>

                             SELECTED FINANCIAL DATA

            At December 31, 1999 and 1998 or For the Years Then Ended
                (Dollars in thousands, except per share figures)

                                                                                              1999               1998
                                                                                              ----               ----
At Year End:

<S>                                                                                       <C>                   <C>
Cash and cash equivalents...............................................................  $   1,819             4,949
Securities..............................................................................      7,897             3,302
Loans, net..............................................................................     14,373            11,563
All other assets........................................................................      1,643             1,862
                                                                                            -------           -------
     Total assets.......................................................................  $  25,732            21,676
                                                                                            =======           =======

Deposits................................................................................     21,220            16,785
Borrowings..............................................................................      1,000             1,365
All other liabilities...................................................................        216               269
Stockholders' equity....................................................................      3,296             3,257
                                                                                            -------           -------
     Total liabilities and stockholders' equity.........................................  $  25,732            21,676
                                                                                            =======           =======

For the Year:

Total interest income...................................................................      1,468               989
Total interest expense..................................................................        852               632
                                                                                            -------           -------

Net interest income.....................................................................        616               357
(Credit) provision for loan losses......................................................       (309)              725
                                                                                            -------           -------

Net interest income (loss) after provision (credit) for loan losses.....................        925              (368)
                                                                                            -------           -------

Noninterest income......................................................................        167                52
Noninterest expenses....................................................................      1,083             1,233
                                                                                            -------           -------

Earnings (loss) before income tax provision (benefit) and cumulative
     effect of change in accounting principle...........................................          9            (1,549)

Income tax provision (benefit)..........................................................          3              (578)
                                                                                            -------           -------

Net earnings (loss) before cumulative effect of change in accounting principle                    6              (971)

Cumulative effect of accounting change for organization costs...........................         --              (100)
                                                                                            -------           -------

Net earnings (loss).....................................................................$         6            (1,071)
                                                                                            =======           =======

Basic and diluted earnings (loss) per share:

     Earnings (loss) before cumulative effect of change in accounting principle.........        .01             (2.09)
     Cumulative effect of accounting change for organization costs......................         --              (.22)
                                                                                            -------           -------

     Net earnings (loss)................................................................$       .01             (2.31)
                                                                                            =======           =======

Weighted-average number of shares outstanding for basic and diluted.....................    471,822           464,791
                                                                                            =======           =======


Ratios and Other Data:

Return on average assets................................................................        .03%            (6.35%)
Return on average equity................................................................        .18%           (28.23%)
Average equity to average assets........................................................      14.87%            22.51%
Net interest margin.....................................................................       3.06%             2.42%
Noninterest expenses to average assets..................................................       4.91%             7.32%
Ratio of average interest-earning assets to average interest-bearing liabilities               1.14%             1.22%
Nonperforming loans as a percentage of total assets at end of year......................         - %             5.53%
Allowance for loan losses as a percentage of total loans at end of year                        1.98%             6.17%
Allowance for loan loses as a percentage of nonperforming loans.........................         - %           127.24%
Number of banking offices...............................................................          1                 1
Total shares outstanding at end of year.................................................    475,491           464,791
Book value per share at end of year.....................................................    $  6.93              7.01
Dividend pay-out ratio..................................................................         -                 -
</TABLE>
                                       6
<PAGE>




                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                     Years Ended December 31, 1999 and 1998

                                     General

The Commercial  Bancorp,  Inc.  ("TCB") was incorporated on August 15, 1996. TCB
owns 100% of the  outstanding  common  stock of The  Commercial  Bank of Volusia
County   ("TCB-Volusia")   (collectively   also   "TCB").   TCB  was   organized
simultaneously  with  TCB-Volusia  and its only  business is the  ownership  and
operation of TCB-Volusia.  TCB-Volusia is a Florida  state-chartered  commercial
bank and its deposits are insured by the Federal Deposit Insurance  Corporation.
TCB-Volusia  opened for  business on October 14, 1997,  and  provides  community
banking services to businesses and individuals in Volusia County, Florida.

At December 31, 1999, TCB had total  consolidated  assets of $25.7  million,  an
increase  of 18.7% over total  assets of $21.7  million at  December  31,  1998.
During the year ended December 31, 1999, net loans receivable increased to $14.4
million from $11.6 million at December 31, 1998.  TCB's  portfolio of securities
increased  to $7.9 million at December 31,  1999.  TCB's  deposits  increased to
$21.2  million at December 31, 1999 from $16.8  million as of December 31, 1998.
TCBs  borrowings  decreased to $1.0  million as of December  31,  1999.  TCB had
consolidated net earnings of $5,867 or $.01 basic and diluted earnings per share
for the year ended  December  31,  1999  compared  to  consolidated  net loss of
$1,071,000 or $2.31 basic and diluted loss per share for 1998.

                                New Bank Charter

During 1998, TCB along with a group of local  organizers made application to the
state of Florida for a bank charter in  Highlands  County,  Florida.  Management
planned to raise the  capital  for the new bank from a public  offering  of TCBs
common  stock.  In early 1999,  TCB  withdrew  their  application  and the local
organizers from Highlands County ("Organizers") elected to continue without TCB.
Because  of  this,   management  terminated  its  planned  public  offering  and
charged-off  $88,986 in prepaid offering  expenses during 1998. During 1999, TCB
and the Organizers  entered into a settlement  agreement in which the Organizers
paid TCB  $402,993  in  proceeds,  including  repayment  of debt and for certain
premises and equipment and as partial reimbursement of organization expenses.

                           Regulation and Legislation

As a  state-chartered  commercial  bank,  TCB-Volusia  is subject  to  extensive
regulation by the Florida  Department of Banking and Finance ("Florida DBF") and
the Federal Deposit Insurance  Corporation  ("FDIC").  TCB-Volusia files reports
with the  Florida  DBF and the FDIC  concerning  its  activities  and  financial
condition,  in addition to obtaining regulatory approvals prior to entering into
certain  transactions  such as mergers with or  acquisitions  of other financial
institutions.  Periodic  examinations  are  performed by the Florida DBF and the
FDIC  to  monitor   TCB-Volusia's   compliance   with  the  various   regulatory
requirements. TCB and TCB-Volusia are also subject to regulation and examination
by the Federal Reserve Board of Governors.

                              Year 2000 Compliance

TCB's operating and financial systems have been found to be compliant;  the "Y2K
Problem" has not adversely  affected TCB's operations nor does management expect
that it will.

                         Liquidity and Capital Resources

A  state-chartered  commercial  bank is  required  under  Florida  law and  FDIC
regulations  to  maintain  a  liquidity  reserve  of at least  15% of its  total
transaction  accounts  and 8% of its total  nontransaction  accounts  subject to
certain restrictions.  The reserve may consist of cash-on-hand,  demand deposits
due from  correspondent  banks, and other investments and short-term  marketable
securities.  At December 31, 1999 and 1998,  TCB-Volusia exceeded its regulatory
liquidity requirements.



                                       7
<PAGE>





TCBs primary source of cash and cash equivalents  during the year ended December
31, 1999 was net deposit  inflows of $4.4 million and  repayments  on securities
available  for sale of $1.4  million.  During  this same  period,  cash and cash
equivalents were used to originate loans, net of repayments, of $2.5 million and
purchase  securities  available  for  sale of $6.2  million  resulting  in a net
decrease in cash and cash equivalents of approximately $3.1 million.

                                   Credit Risk

TCB's primary business is making  commercial,  consumer,  and real estate loans.
That activity entails potential loan losses, the magnitude of which depends on a
variety of economic factors affecting  borrowers which are beyond the control of
TCB.  While  TCB  has  instituted  underwriting  guidelines  and  credit  review
procedures  to protect  TCB from  avoidable  credit  losses,  some  losses  will
inevitably  occur.  The credit for loan losses for the year ended  December  31,
1999 was $308,571 and the allowance for loan losses was $290,000 at December 31,
1999. The credit  resulted from the settlement of four  commercial  loans to two
borrowers  during  1999 which were  placed on  nonaccrual  status in 1998.  This
settlement  resulted in a partial recapture of the specific allowance related to
these loans and charge-offs of the remaining  balances.  Management believes the
allowance at December 31, 1999 is adequate.  These four loans were on nonaccrual
status at December 31, 1998. TCB had no nonaccrual loans at December 31, 1999.

The  following  table sets forth  information  with  respect to activity in TCBs
allowance for loan losses during the periods indicated (dollars in thousands):

                                                     Year Ended December 31,
                                                     1999             1998
                                                     ----             ----

   Average loans outstanding...................   $ 13,678            8,466
                                                    ======           ======

   Allowance at beginning of year..............        760               35
   (Credit) provision for loan losses..........       (309)             725
   Charge-offs, net of recoveries..............       (161)              --
                                                    ------           ------

   Allowance at end of year.................... $      290              760
                                                    ======           ======

   Allowance as a percent of total loans.......       1.98%            6.17%
                                                    ======           ======

   Total gross loans at end of year............   $ 14,660           12,319
                                                    ======           ======

The following  table presents  information  regarding  TCB's total allowance for
losses as well as the  allocation  of such amounts to the various  categories of
loans (dollars in thousands):

                                                        At December 31,
                                                   1999               1998
                                            ------------------ -----------------
                                                       Loans               Loans
                                                         to                  to
                                                       Total               Total
                                             Amount    Loans     Amount    Loans

  Commercial................................ $ 160      44.5%     $ 733    75.1%
  Commercial real estate....................    72      30.8          6     5.8
  Residential real estate...................    42      17.9         13    11.8
  Consumer and home equity..................    16       6.8          8     7.3
                                              ----     -----      -----   ------

  Total allowance for loan losses........... $ 290     100.0%     $ 760   100.0%
                                              ====     =====      =====   ======


                                       8
<PAGE>

                           Loan Portfolio Composition

Commercial loans and commercial real estate loans comprise the largest groups of
loans in TCBs  portfolio.  As of  December  31,  1999  and  December  31,  1998,
commercial  loans amounted to $6.5 million or 44.5% and $9.3 million or 75.1% of
the total loan portfolio.  Commercial real estate loans amounted to $4.5 million
or 30.8% and $717,000 or 5.8% as of December 31, 1999 and December 31, 1998,  of
which approximately 91.7% and 89.5% are first mortgage loans.

As of December 31, 1999 and December 31, 1998,  residential  real estate  loans,
amounted to $2.6  million or 7.9% and $1.5  million or 11.8%,  of the total loan
portfolio.  Consumer  and home  equity  loans  amounted  to $989,000 or 6.8% and
$897,000  or 7.3% of the  total  loan  portfolio  as of  December  31,  1999 and
December 31, 1998.

The  following  table sets forth the  composition  of TCB's  loan  portfolio  at
December 31, 1999 and 1998:

<TABLE>


                                                                                   1999                    1998
                                                                           ----------------------    -------------------
                                                                                          % of                  % of
                                                                              Amount      Total       Amount    Total
                                                                                            (In thousands)

<S>                                                                         <C>             <C>     <C>           <C>
               Commercial................................................   $  6,527        44.5%   $  9,255      75.1%
               Commercial real estate....................................      4,519        30.8         717       5.8
               Residential real estate...................................      2,625        17.9       1,450      11.8
               Consumer and home-equity..................................       989          6.8         897       7.3
                                                                            --------       -----      ------     -----

                                                                              14,660       100.0%     12,319     100.0%
                                                                                           =====                 =====

               (Subtract) add:
                 Allowance for loan losses...............................       (290)                   (760)
                 Net deferred costs......................................          3                       4
                                                                            --------                  ------

               Loans, net................................................   $ 14,373                $ 11,563
                                                                            ========                  ======
</TABLE>

                                   Securities

The  securities  portfolio is comprised of  mortgage-backed  securities and U.S.
agency  securities.  According to Financial  Accounting  Standards  No. 115, the
securities  portfolio must be categorized as either held to maturity,  available
for sale or trading.  Securities  held to maturity  represent  those  securities
which TCB has the positive  intent and ability to hold to  maturity.  Securities
available for sale  represent  those  investments  which may be sold for various
reasons, including changes in interest rates and liquidity considerations. These
securities  are reported at fair market value with  unrealized  gains and losses
being reported as a net amount in other comprehensive income (loss), net of tax.
Trading  securities are held primarily for resale and are recorded at their fair
values.   Unrealized  gains  or  losses  on  trading   securities  are  included
immediately  in earnings.  At December 31, 1999 and 1998,  TCB had no securities
categorized as held to maturity or trading.

The following  table sets forth the carrying  value and average  yields of TCB's
securities portfolio (dollars in thousands):

<TABLE>

                                                           At December 31,     Average        At December 31,     Average
                                                                1999            Yield             1998             Yield
                                                                ----           --------           ----            -------
         Securities available for sale:
<S>                                                           <C>                <C>              <C>               <C>
               Mortgage-backed securities.................    $ 6,429            6.94%            $ 3,303           4.07%
               U.S. agency securities.....................      1,468            6.01                -                -
                                                                -----                             -------

                                                              $ 7,897            6.67%            $ 3,303           4.07%
                                                                =====            ====             =======           ====

</TABLE>



                                       9
<PAGE>



The scheduled maturities of securities available for sale were as follows:

                                                           At December 31,

                                                        1999             1998
                                                        ----             ----

      Due from five to ten years...................  $ 1,468                -
      Mortgage-backed securities...................    6,429            3,303
                                                       -----            -----

                                                     $ 7,897            3,303
                                                       =====            =====


                         Regulatory Capital Requirements

TCB and  TCB-Volusia  are  subject to various  regulatory  capital  requirements
administered by various  regulatory  banking  agencies.  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 TCB's consolidated  financial  statements.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
TCB-Volusia  must meet specific  capital  guidelines  that involve  quantitative
measures of TCB-Volusia's  assets,  liabilities,  and certain  off-balance-sheet
items as calculated under regulatory accounting practices. TCB-Volusia's capital
amounts and  classification  are also subject to  qualitative  judgements by the
regulators about components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  TCB-Volusia to maintain  minimum amounts and percents (set forth in the
table  below) of total and Tier I capital  (as  defined in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets  (as  defined).  Management  believes,  as of  December  31,  1999,  that
TCB-Volusia meets all capital adequacy requirements to which it is subject.

<TABLE>

                                                                                                   To Be Well
                                                                        Minimum                  Capitalized Under
                                                                      For Capital                 Prompt Corrective
                                         Actual                     Adequacy Purposes:           Action Provisions
                                 ---------------------------      ----------------------      ---------------------
                                       Amount            %          Amount           %          Amount            %
                                       ------         ------        ------        ------        ------         ----
                                                                     (dollars in thousands)
     As of December 31, 1999:
         <S>                          <C>                <C>       <C>               <C>        <C>            <C>
         Total capital (to Risk-
         Weighted Assets).........    $ 2,751            18.3%     $ 1,206           8.0%       $ 1,507        10.0%
         Tier I Capital (to Risk-
         Weighted Assets).........      2,561            17.0          603           4.0            904         6.0
         Tier I Capital
         (to Average Assets)......      2,561            10.6          965           4.0          1,206         5.0

     As of December 31, 1998:
         Total capital (to Risk-
         Weighted Assets).........      3,168            23.2        1,081           8.0          1,352        10.0
         Tier I Capital (to Risk-
         Weighted Assets).........      2,504            18.3          541           4.0            811         6.0
         Tier I Capital
         (to Average Assets)......      2,504            12.6          798           4.0            997         5.0
</TABLE>




                                       10
<PAGE>

                                   Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates.
TCB's market risk arises  primarily  from  interest-  rate risk  inherent in its
lending and deposit taking activities. To that end, management actively monitors
and manages its interest-  rate risk  exposure.  The  measurement of market risk
associated  with financial  instruments is meaningful  only when all related and
offsetting  on-  and  off-balance-sheet  transactions  are  aggregated,  and the
resulting  net  positions are  identified.  Disclosures  about the fair value of
financial instruments,  which reflect changes in market prices and rates, can be
found in Note 8 of Notes to Consolidated Financial Statements.

TCB's  primary  objective  in managing  interest-rate  risk is to  minimize  the
adverse  impact of changes in interest  rates on TCB's net  interest  income and
capital,  while adjusting TCB's asset-liability  structure to obtain the maximum
yield-cost spread on that structure. TCB relies primarily on its asset-liability
structure  to control  interest-rate  risk.  However,  a sudden and  substantial
increase in interest rates may adversely  impact TCB's  earnings,  to the extent
that the  interest  rates borne by assets and  liabilities  do not change at the
same speed,  to the same  extent,  or on the same basis.  TCB does not engage in
trading activities.

                           Asset - Liability Structure

As part of its asset and liability management,  TCB has emphasized  establishing
and  implementing  internal  asset-liability  decision  processes,  as  well  as
communications  and  control  procedures  to aid  in  managing  TCB's  earnings.
Management  believes that these processes and procedures provide TCB with better
capital planning, asset mix and volume controls,  loan-pricing  guidelines,  and
deposit  interest-rate  guidelines  which should result in tighter  controls and
less exposure to interest-rate risk.

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such  assets and  liabilities  are  "interest  rate  sensitive"  and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap  is  defined  as  the  difference   between   interest-earning   assets  and
interest-bearing  liabilities  maturing or repricing within a given time period.
The gap ratio is computed as rate sensitive assets/rate sensitive liabilities. A
gap ratio of 1.0 represents perfect matching.  A gap is considered positive when
the amount of  interest-rate  sensitive assets exceeds  interest-rate  sensitive
liabilities  (ratio is greater than 1.0). A gap is considered  negative when the
amount of interest-rate  sensitive liabilities exceeds  interest-rate  sensitive
assets (ratio is less than 1.0).  During a period of rising  interest  rates,  a
negative gap would adversely  affect net interest  income,  while a positive gap
would result in an increase in net interest  income.  During a period of falling
interest  rates,  a negative  gap would  result in an increase  in net  interest
income, while a positive gap would adversely affect net interest income.

In order to minimize the potential for adverse effects of material and prolonged
increases  in interest  rates on the  results of  operations,  TCB's  management
continues to monitor asset and liability management policies to better match the
maturities   and   repricing   terms   of  its   interest-earning   assets   and
interest-bearing  liabilities.  Such policies have  consisted  primarily of: (i)
emphasizing the origination of adjustable-rate  loans; (ii) maintaining a stable
core deposit base; and (iii) maintaining a significant  portion of liquid assets
(cash and federal funds sold).



                                       11
<PAGE>



The  following   table  sets  forth  certain   information   relating  to  TCB's
interest-earning  assets and  interest-bearing  liabilities at December 31, 1999
that are estimated to mature or are scheduled to reprice within the period shown
(dollars in thousands):
<TABLE>

                                                             More       More
                                                             Than       Than
                                                             Three       Six           More         More
                                               Three         Months     Months       than One       than
                                              Months         to Six     to One       Year to        Five
                                              or Less        Months       Year      Five Years      Years       Total
                                             --------        ------    -------      ----------    -------      ------
Loans (1):
<S>                                          <C>                <C>        <C>           <C>        <C>          <C>
    Commercial............................   $  4,570           100        103           745        1,009        6,527
    Commercial real estate................      4,488             -          -            31            -        4,519
    Residential real estate...............          -           802        812           101          910        2,625
    Consumer and home equity..............        131            20         22           816            -          989
                                               ------         -----     ------         -----        -----       ------

         Total loans......................      9,189           922        937         1,693        1,919       14,660

Securities................................        506           506      2,354             -        4,531        7,897
Other interest-earning assets (2)               1,116             -          -             -            -        1,116
                                               ------         -----     ------         -----        -----       ------

         Total rate-sensitive assets           10,811         1,428      3,291         1,693        6,450       23,673
                                               ------         -----     ------         -----        -----       ------

Deposit accounts (3):
    Money-market deposits.................        226             -          -             -            -          226
    Savings and NOW deposits..............      4,975             -          -             -            -        4,975
    Time deposits.........................      2,748         3,697      7,559           917            -       14,921
                                               ------         -----     ------         -----        -----       ------

         Total deposits...................      7,949         3,697      7,559           917            -       20,122

    Borrowings............................          -             -          -             -        1,000        1,000
                                               ------         -----     ------         -----        -----       ------

         Total rate-sensitive liabilities       7,949         3,697      7,559           917        1,000       21,122
                                               ------         -----     ------         -----        -----       ------

GAP (repricing differences)...............   $  2,862        (2,269)    (4,268)          776        5,450        2,551
                                               ======         =====     ======         =====        =====       ======

Cumulative GAP............................   $  2,862           593     (3,675)       (2,899)       2,551
                                               ======         =====     ======         =====        =====

Ratio of interest-earning assets to
    interest-bearing liabilities..........       1.36           .39        .44          1.85         6.45
                                               ======         =====     ======         =====        =====

Ratio of cumulative interest-bearing
    assets to cumulative interest-
    bearing liabilities...................       1.36          1.05        .81           .86         1.12
                                               ======        ======     ======         =====        =====

Cumulative GAP/total assets...............       11.1%          2.3%     (14.3)%       (11.3)%        9.9%
                                               ======        ======     ======         =====        =====

<FN>
(1) In preparing the table above, adjustable-rate loans are included in the
    period in which the interest rates are next scheduled to adjust rather than
    in the period in which the loans  mature.  Fixed-rate loans are scheduled,
    including repayment, according to their maturities.
(2) Includes federal funds sold and Federal Home Loan Bank stock.
(3) Money-market, NOW, and savings deposits are regarded as readily accessible
    withdrawable accounts.  Time deposits are scheduled according to their
    respective maturity dates.
</FN>
</TABLE>


                                       12
<PAGE>




The following table reflects the contractual  principal  repayments by period of
TCB's loan portfolio at December 31, 1999 (in thousands):
<TABLE>

                                                              Commercial    Residential       Consumer
         Years Ending                                            Real           Real          and Home
         December 31,                          Commercial       Estate         Estate          Equity          Total
         ------------                          ----------     ----------    -----------      ---------        ------

           <S>                                      <C>             <C>             <C>             <C>          <C>
           2000.............................      $ 3,960         1,529           154             378          6,021
           2001.............................          710           791           137             221          1,859
           2002-2003........................        1,122         1,273           263             303          2,961
           2004-2005........................          618           741           266              86          1,711
           2006 & beyond....................          117           185         1,805               1          2,108
                                                    -----         -----         -----            ----         ------

           Total............................      $ 6,527         4,519         2,625             989         14,660
                                                    =====         =====         =====            ====         ======
</TABLE>

Of the $8.6 million of loans at December  31, 1999 due after one year,  34.4% of
such loans have fixed interest rates and 65.6% have adjustable interest rates.

Scheduled  contractual  principal  repayments of loans do not reflect the actual
life of such assets.  The average life of loans is substantially less than their
average contractual terms due to prepayments.  In addition,  due-on-sale clauses
on loans generally give TCB the right to declare a conventional loan immediately
due and payable in the event,  among other things,  that the borrower  sells the
real  property  subject to the mortgage and the loan is not repaid.  The average
life of mortgage loans tends to increase,  however,  when current  mortgage loan
rates are  substantially  higher  than  rates on  existing  mortgage  loans and,
conversely,  decrease when rates on existing mortgages are substantially  higher
than current mortgage loan rates.

Origination  and  Repayment  of  Loans.  The  primary  focus  of TCBs  new  loan
originations are to commercial  borrowers.  These loans are attributable to TCBs
relationship  with their depositors and other existing  customers as well as its
local advertising.  TCB generally originates loans on real estate located in its
primary geographical lending area in Volusia County, Florida.

The following table sets forth total loan originations and principal repayments:



                                                         Year Ended December 31,
                                                         1999               1998
                                                         ----               ----
                                                             (In thousands)

Originations:
     Commercial.....................................    $ 3,465           6,948
     Commercial real estate.........................      2,901           1,019
     Residential real estate........................      1,512           1,237
     Consumer and home equity.......................        611             743
                                                          -----           -----

        Total loans originated......................      8,489           9,947

     Principal reductions...........................     (6,148)         (1,398)
                                                          -----           -----

     Increase in total loans........................    $ 2,341           8,549
                                                          =====           =====


                                       13
<PAGE>


Deposits and Other Sources of Funds

General. In addition to deposits, the sources of funds available for lending and
other business  purposes  include loan  repayments  and principal  repayments on
securities.  Loan  repayments  are a relatively  stable  source of funds,  while
deposit inflows and outflows are influenced  significantly  by general  interest
rates and money-market conditions. Borrowings may be used on a short- term basis
to compensate  for  reductions in other  sources,  such as deposits at less than
projected levels.

Deposits. Deposits are attracted principally from TCBs primary geographic market
areas in  Volusia  County,  Florida.  TCB  offers a broad  selection  of deposit
instruments  including  demand  deposit  accounts,  NOW accounts,  money- market
accounts,  regular savings accounts,  term certificate accounts,  and retirement
savings plans (such as IRA  accounts).  Certificate  of deposit rates are set to
encourage longer  maturities as cost and market  conditions will allow.  Deposit
account  terms vary,  with the  primary  differences  being the minimum  balance
required,  the time period the funds must remain on  deposit,  and the  interest
rate.  TCB has  emphasized  commercial  banking  relationships  in an  effort to
increase demand deposits as a percentage of total deposits.

Management  sets the deposit  interest rates weekly based on a review of deposit
flows for the previous  week and a survey of rates among  competitors  and other
financial institutions in Florida.

The following  table shows the  distribution  of, and certain other  information
relating to, TCB's deposit accounts by type (dollars in thousands):
<TABLE>

                                                                                      At December 31,
                                                                              1999                        1998
                                                                    -------------------------       -------------------
                                                                                       % of                       % of
                                                                             Amount   Deposits       Amount     Deposits

<S>                                                                        <C>            <C>           <C>        <C>
         Demand deposits................................................   $  1,098       5.2%          905        5.4%
         NOW deposits      .............................................      4,661      22.0         4,859       28.9
         Money-market deposits..........................................        226       1.1           329        2.0
         Savings deposits...............................................        314       1.4           209        1.2
                                                                             ------     -----        ------      -----

              Subtotal     .............................................      6,299      29.7         6,302       37.5
                                                                             ------     -----        ------      -----

         Certificates of deposit:
              3.00% - 3.99%.............................................          2        .1           164        1.0
              4.00% - 4.99%.............................................      3,136      14.8         1,310        7.8
              5.00% - 5.99%.............................................      8,434      39.6         5,262       31.4
              6.00% - 6.99%.............................................      3,349      15.8         3,747       22.3
                                                                             ------     -----        ------      -----

         Total certificates of deposit..................................     14,921      70.3        10,483       62.5
                                                                             ------     -----        ------      -----

         Total deposits.................................................   $ 21,220     100.0%     $ 16,785      100.0%
                                                                             ======     =====        ======      =====
</TABLE>

The following table presents by various  interest rate categories the amounts of
certificates  of deposit at December  31, 1999 which  mature  during the periods
indicated (in thousands):

                                                      Year Ending December 31,
                                                   -----------------------------
                                                   2000         2001       Total
                                                   ----         ----       -----
  3.00% - 3.99%.............................. $       2            -           2
  4.00% - 4.99%..............................     2,703          433       3,136
  5.00% - 5.99%..............................     7,950          484       8,434
  6.00% - 6.99%..............................     3,349            -       3,349
                                                 ------        -----      ------

  Total certificates of deposit..............  $ 14,004          917      14,921
                                                 ======        =====      ======


                                       14
<PAGE>




Jumbo certificates ($100,000 and over) mature as follows (in thousands):

                                                               December 31,
                                                          -------------------
                                                          1999           1998
                                                          ----           ----

Due three months or less.............................   $   300           402
Due over three months to six months..................       311           100
Due over six months to one year......................       444           201
Due over one year....................................         -           827
                                                          -----         -----

                                                        $ 1,055         1,530
                                                          =====         =====

The  following  table sets forth the net deposit flows of TCB during the periods
indicated (in thousands):

                                                         Year Ended December 31,
                                                         -----------------------
                                                               1999        1998
                                                               ----        ----

  Net increase before interest credited................     $ 3,765       13,494
  Net credited.........................................         670          613
                                                              -----       ------

       Net deposit increase............................     $ 4,435       14,107
                                                              =====       ======

The  following  table shows the average  amount of and the average  rate paid on
each of the following  interest-bearing  deposit account  categories  during the
periods indicated (dollars in thousands):
<TABLE>

                                                     1999                   1998
                                              -------------------- -----------------------
                                                 Average   Average      Average    Average
                                                 Balance     Yield      Balance      Yield

<S>                                             <C>          <C>       <C>           <C>
 Savings and NOW deposits.....................  $  4,628     3.54%     $  3,282      3.90%
 Money-market deposits........................       325     2.77           184      2.72
 Time deposits................................    11,507     5.36         8,289      5.73
                                                  ------                 ------

      Total interest-bearing deposits.........  $ 16,460     4.80%     $ 11,755      5.17%
                                                  ======     ====        ======      ====
</TABLE>



                                       15
<PAGE>
                              Results of Operations

The operating results of TCB depend primarily on its net interest income,  which
is the  difference  between  interest  income  on  interest-earning  assets  and
interest  expense  on  interest-bearing  liabilities,  consisting  primarily  of
deposits.  Net interest  income is determined by the  difference  between yields
earned on interest-earning assets and rates paid on interest-bearing liabilities
("interest-rate spread") and the relative amounts of interest-earning assets and
interest-bearing   liabilities.   TCB's  interest-rate  spread  is  affected  by
regulatory,  economic,  and competitive  factors that influence  interest rates,
loan demand, and deposit flows. In addition,  TCB's net loss is also affected by
the  level of  nonperforming  loans,  as well as the  level  of its  noninterest
income,  and its noninterest  expenses,  such as salaries and employee benefits,
occupancy and equipment costs and income taxes.

The following table sets forth, for the periods indicated, information regarding
(i) the  total  dollar  amount  of  interest  and  dividend  income  of TCB from
interest-earning  assets and the resultant  average yield; (ii) the total dollar
amount of interest  expense on  interest-bearing  liabilities  and the resultant
average costs; (iii) net  interest/dividend  income; (iv) interest-rate  spread;
(v) net interest margin. Average balances are based on average daily balances.
<TABLE>

                                                                 Year Ended December 31,
                                                ------------------------------------------------------------------------
                                                            1999                                     1998
                                                ------------------------------------------------------------------------
                                                                Interest    Average                Interest     Average
                                                    Average       and        Yield/      Average      and        Yield/
                                                    Balance    Dividends     Rate        Balance   Dividends     Rate
                                                -----------    ---------    -------      -------  ----------   ---------
                                                                       (Dollars in thousands)

Interest-earning assets:
<S>        <C>                                     <C>            <C>        <C>       <C>              <C>       <C>
     Loans (1)..................................   $ 13,678       1,116      8.16%     $  8,466         690       8.14%
     Securities.................................      3,961         225      5.67         2,973         121       4.07
     Other interest-earning assets (2)..........      2,523         127      5.03         3,292         178       5.41
                                                    -------       -----                  ------         ---
         Total interest-earning assets..........     20,162       1,468      7.28        14,731         989       6.71
                                                                  -----                                 ---

Noninterest-earning assets......................      1,875                               2,128
                                                    -------                              ------

         Total assets...........................   $ 22,037                            $ 16,859
                                                    =======                              ======

Interest-bearing liabilities:
     Savings and NOW deposits...................      4,628         164      3.54         3,282         128       3.90
     Money-market deposits......................        325           9      2.77           184           5       2.72
     Time deposits..............................     11,507         617      5.36         8,289         475       5.73
     Borrowings.................................      1,152          62      5.38           350          24       6.86
                                                    -------      ------                  ------         ---
         Total interest-bearing liabilities          17,612         852      4.84        12,105         632       5.22
                                                                 ------                                 ---

Noninterest-bearing deposits....................        925                                 430
Noninterest-bearing liabilities.................        223                                 529
Stockholders' equity............................      3,277                               3,795
                                                    -------                              ------
         Total liabilities and stockholders'
              equity............................   $ 22,037                            $ 16,859
                                                    =======                              ======

Net interest/dividend income....................               $    616                               $ 357
                                                                 ======                                 ===

Interest-rate spread (3)........................                             2.44%                                1.49%
                                                                             ====                                 ====

Net interest margin (4).........................                             3.06%                                2.42%
                                                                             ====                                 ====

Ratio of average interest-earning assets to
     average interest-bearing liabilities              1.14                                1.22
                                                       ====                                ====
-------------------------------
<FN>
(1)   Includes nonaccrual loans.
(2)   Other interest-earning assets include federal funds sold, interest-earning
      deposits and Federal Home Loan Bank stock.
(3)   Interest-rate spread represents the difference between the average yield
      on interest-earning assets and the average cost of interest-bearing
      liabilities.
(4)   Net interest margin is net interest/dividend income divided by average
      interest-earning assets.
</FN>
</TABLE>
                                       16
<PAGE>




Rate/Volume Analysis

The following table sets forth certain information regarding changes in interest
income and interest expense of TCB for the periods indicated.  For each category
of  interest-earning  assets and  interest-bearing  liabilities,  information is
provided  on  changes  attributable  to (1)  changes  in  rate  (change  in rate
multiplied by prior volume),  (2) changes in volume (change in volume multiplied
by prior  rate) and (3) changes in  rate-volume  (change in rate  multiplied  by
change in volume).

                                                  Year Ended December 31,
                                                       1999 vs. 1998
                                                  -----------------------
                                                Increase (Decrease) Due to
                                                --------------------------
                                                                Rate/
                                            Rate    Volume     Volume     Total
                                            ----    ------     ------     -----
                                                          (In thousands)

Interest earning assets:
    Loans................................   $  2        424         -       426
    Securities...........................     48         40        16       104
    Other interest-earning assets........    (13)       (42)        4       (51)
                                              --        ---        --       ---

      Total..............................     37        422        20       479
                                              --        ---        --       ---

Interest-bearing liabilities:
    Deposits:
      Savings and NOW deposits...........    (12)        52        (4)       36
      Money-market deposits..............      -          4         -         4
      Time deposits......................    (31)       184       (11)      142
      Borrowings.........................     (5)        55       (12)       38
                                              --        ---        --       ---

      Total..............................    (48)       295       (27)      220
                                              --        ---        --       ---

Net change in net interest income........   $ 85        127        47       259
                                              ==        ===        ==       ===



                                       17
<PAGE>


The Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998

General. Net  earnings  for the year ended  December 31, 1999 was $5,867 or $.01
     per basic and  diluted  share  compared  to a net loss of  $(1,071,398)  or
     $(2.31) per basic and diluted  share for the year ended  December 31, 1998.
     The increase in earnings  resulted from an increase in net interest  income
     and a credit for loan losses in 1999.

Interest Income.  Interest income totaled $1,467,714 for the year ended December
     31,  1999  compared to $988,527  for 1998,  an increase of 48.5%.  Interest
     income earned on loans increased  $426,280,  or 61.8% to $1,115,627 in 1999
     compared to $689,347 for 1998. The increase  resulted from increases in the
     average loan balance from $8.5 million to $13.7  million and an increase in
     the average yield from 8.14% to 8.16%.

     Interest on  securities  totaled  $224,516 in 1999 compared to $121,109 for
     1998,  an increase of 85.4%.  This  increase  resulted  from an increase in
     average securities outstanding from $3.0 million in 1998 to $4.0 million in
     1999,  and an increase in the  average  yield  earned from 4.07% in 1998 to
     5.67% in 1999.

     Interest on other interest earning assets totaled $127,571 in 1999 compared
     to $178,071 for 1998. The average balance of these assets decreased to $2.5
     million  1999  from $3.3  million  in 1998 and the  weighted-average  yield
     decreased to 5.03% in 1999 from 5.41% in 1998.

Interest  Expense.  Interest  expense  increased  to $851,566 for the year ended
     December 31, 1999 from  $631,798 for the year ended  December 31, 1998,  an
     increase  of 34.8%.  Interest  expense  on  deposit  accounts  amounted  to
     $789,606 for the year ended  December 31, 1999 compared to $607,970 for the
     year ended December 31, 1998.  Interest increased because of an increase in
     the average  balance of deposits of $11.8 million during 1998 to an average
     of  $16.5   during   1999,   partially   offset  by  a   decrease   in  the
     weighted-average cost of deposits to 4.80% during 1999 compared to 5.17% in
     1998.  Interest  expense on borrowed funds amounted to $61,960 for the year
     ended December 31, 1999 compared to $23,828 for 1998.

Provision  (Credit) for Loan Losses.  The  provision  (credit) fo loan losses is
     charged  to  earnings  to  bring  the  total  allowance  to a level  deemed
     appropriate  by management and is based upon the volume and type of lending
     conducted by TCB, industry standards, the amount of nonperforming loans and
     general  economic  conditions,  particularly  as they relate to TCBs market
     areas,  and other  factors  related  to the  collectibility  of TCB's  loan
     portfolio.  The credit for the year ended  December 31, 1999 was  $308,571.
     The credit  resulted from the  settlement of four  commercial  loans to two
     borrowers during 1999 which were placed on nonaccrual  status in 1998. This
     settlement  resulted  in a  partial  recapture  of the  specific  allowance
     related  to  these  loans  and  charge-offs  of  the  remaining   balances.
     Management  believes  that the  allowance  for loan  losses of  $290,000 is
     adequate at December 31, 1999.

Noninterest  Income.  Noninterest  income  totaled  $167,280  for the year ended
     December 31, 1999  compared to $52,526 for 1998.  This  increase was mainly
     the result of a recovery organization expenses of $109,609 during 1999.

Noninterest Expense.  Noninterest  expense totaled $1,082,732 for the year ended
     December 31, 1999  compared to $1,233,963  for 1998.  Salaries and employee
     benefits was the largest,  amounting  to $524,906  during 1999  compared to
     $514,629 during 1998.

Income Taxes.  TCB  recognized  a provision  for income  taxes of $3,400 in 1999
     (effective tax rate of 36.7%) compared to a benefit of $577,850  (effective
     tax rate of 37.3%) in 1998.



                                       18
<PAGE>




                     Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in
accordance with GAAP,  which requires the measurement of financial  position and
operating results in terms of historical dollars, without considering changes in
the relative  purchasing power of money over time due to inflation.  Unlike most
industrial companies, substantially all of the assets and liabilities of TCB are
monetary in nature. As a result,  interest rates have a more significant  impact
on  TCB-Volusia's  performance  than the effects of general levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or in the same
magnitude as the prices of goods and services, since such prices are affected by
inflation to a larger extent than interest rates.

                         Future Accounting Requirements

Financial Accounting  Standards 133 - Accounting for Derivative  Investments and
Hedging Activities requires companies to record derivatives on the balance sheet
as assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those  derivatives  would be accounted for depending on
the use of the  derivatives and whether they qualify for hedge  accounting.  The
key criterion  for hedge  accounting  is that the hedging  relationship  must be
highly  effective in achieving  offsetting  changes in fair value or cash flows.
TCB  will be  required  to adopt  this  Statement  effective  January  1,  2001.
Management  does not anticipate  that this Statement will have a material impact
on TCB.



                                       19
<PAGE>

<TABLE>



                     Selected Quarterly Results (Unaudited)

The following table presents summarized quarterly data (in thousands, except per
share amounts):

                                                                            Year Ended December 31, 1999
                                                            ----------------------------------------------------------
                                                               First      Second         Third      Fourth
                                                              Quarter     Quarter       Quarter     Quarter      Total
                                                              -------     -------       -------     -------      ------
<S>                                                             <C>          <C>           <C>         <C>       <C>
         Interest income...................................     $ 317        327           359         465       1,468
         Interest expense..................................       198        190           210         254         852
                                                                  ---        ---           ---         ---      ------

              Net interest income..........................       119        137           149         211         616

         Provision (credit) for loan losses................        27       (158)         (150)        (28)       (309)
                                                                  ---        ---           ---         ---      ------

              Net interest income after provision (credit)
                  for loan losses..........................        92        295           299         239         925
                                                                  ---        ---           ---         ---      ------

         Noninterest income................................        11        122            17          17         167
         Noninterest expense...............................       305        286           247         245       1,083
                                                                  ---        ---           ---         ---      ------
         (Loss) earnings before income tax (benefit)
              provision....................................      (202)       131            69          11          9

         Income tax (benefit) provision....................       (76)        49            26           4          3
                                                                  ---       ----          ----        ----      ------

         Net (loss) earnings...............................     $(126)        82            43           7          6
                                                                  ===       ====          ====        ====      ======

         Basic and diluted (loss) earnings per
              common share.................................      (.27)       .17           .09         .02        .01
                                                                  ===        ===           ===         ===      ======

                                                                            Year Ended December 31, 1998
                                                              ---------------------------------------------------------
                                                                First     Second         Third      Fourth
                                                              Quarter    Quarter       Quarter     Quarter       Total
                                                              -------    -------       -------     -------      ------
         Interest income...................................     $ 169        257           288         275         989
         Interest expense..................................        81        156           188         207         632
                                                                  ---        ---           ---        ----       -----

              Net interest income..........................        88        101           100          68         357

         Provision for loan losses.........................        29         26           190         480         725
                                                                  ---        ---           ---        ----       -----

              Net interest income (loss) after provision
                  for loan losses..........................        59         75           (90)       (412)       (368)
                                                                  ---        ---           ---        ----       -----

         Noninterest income................................        10          9            17          16          52
         Noninterest expense...............................       229        249           320         435       1,233
                                                                  ---        ---           ---        ----       -----
         Loss before income tax benefit and cumulative
              effect of change in accounting principle.....      (160)      (165)         (393)       (831)     (1,549)
         Income tax benefit ...............................       (50)       (53)         (135)       (340)       (578)
                                                                  ---        ---           ---        ----       -----

         Net loss before cumulative effect of change in
              accounting principle.........................      (110)      (112)         (258)       (491)       (971)
         Cumulative effect of accounting change for
              organization costs...........................       -          -             -          (100)       (100)
                                                                  ---        ---           ---        ----       -----

         Net loss..........................................     $(110)      (112)         (258)       (591)     (1,071)
                                                                  ===        ===           ===        ====       =====

         Basic and diluted loss per common share...........      (.24)      (.24)         (.55)      (1.28)      (2.31)
                                                                  ===        ===           ===        ====       =====
</TABLE>

                                       20
<PAGE>




                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                              Ormond Beach, Florida

                    Audited Consolidated Financial Statements

           At December 31, 1999 and 1998 and For the Years Then Ended

                  (Together with Independent Auditors' Report)



<TABLE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                                                                                              At December 31,

                                                                                            1999            1998
                                                                                            ----            ----
    Assets

<S>                                                                                   <C>                    <C>
Cash and due from banks...........................................................    $     766,972          689,903
Federal funds sold................................................................        1,051,995        4,258,602
                                                                                         ----------       ----------

              Total cash and cash equivalents.....................................        1,818,967        4,948,505

Securities available for sale.....................................................        7,897,493        3,302,486

Loans receivable, net of allowance for loan losses of $290,000
    in 1999 and $760,000 in 1998..................................................       14,372,913       11,563,373
Accrued interest receivable.......................................................          146,202           89,527
Premises and equipment, net.......................................................          519,639          838,931
Federal Home Loan Bank stock, at cost.............................................           64,500           50,000
Deferred tax asset................................................................          862,611          824,981
Other assets......................................................................           49,819           58,003
                                                                                         ----------       ----------

              Total assets........................................................     $ 25,732,144       21,675,806
                                                                                         ==========       ==========

    Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing demand deposits...........................................        1,098,188          904,585

    Savings and NOW deposits......................................................        4,974,284        5,068,758
    Money-market deposits.........................................................          226,115          329,293
    Time deposits.................................................................       14,921,394       10,482,545
                                                                                         ----------       ----------

              Total deposits......................................................       21,219,981       16,785,181

    Advance from Federal Home Loan Bank...........................................        1,000,000        1,000,000
    Other borrowings..............................................................               -           364,749
    Official checks...............................................................          112,738          127,342
    Accrued interest payable and other liabilities................................          103,098          141,642
                                                                                         ----------       ----------

              Total liabilities...................................................       22,435,817       18,418,914
                                                                                         ----------       ----------

Commitments and contingencies (Notes 4, 8 and 16)

Stockholders' equity:
    Common stock, $.01 par value; 10,000,000 shares authorized, 475,491
         shares in 1999 and 464,791 shares in 1998 issued and outstanding.........            4,755            4,648
    Additional paid-in capital....................................................        4,735,435        4,628,542
    Accumulated deficit...........................................................       (1,364,936)      (1,370,803)
    Accumulated other comprehensive income (loss).................................          (78,927)          (5,495)
                                                                                         ----------       ----------

              Total stockholders' equity..........................................        3,296,327        3,256,892
                                                                                         ----------       ----------

              Total liabilities and stockholders' equity..........................     $ 25,732,144       21,675,806
                                                                                         ==========       ==========


See Accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                       21


<PAGE>
<TABLE>

                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations

                                                                                              Year Ended December 31,

                                                                                            1999           1998
                                                                                            ----           ----
Interest income:
<S>                                                                                     <C>                 <C>
    Loans receivable................................................................    $ 1,115,627         689,347
    Securities......................................................................        224,516         121,109
    Other interest-earning assets...................................................        127,571         178,071
                                                                                          ---------       ---------
       Total interest income........................................................      1,467,714         988,527
                                                                                          ---------       ---------

Interest expense:
    Deposits........................................................................        789,606         607,970
    Borrowings......................................................................         61,960          23,828
                                                                                          ---------       ---------

       Total interest expense.......................................................        851,566         631,798
                                                                                          ---------       ---------

       Net interest income..........................................................        616,148         356,729

(Credit) provision for loan losses..................................................       (308,571)        725,000
                                                                                          ---------       ---------

       Net interest income (loss) after (credit) provision for loan losses                  924,719        (368,271)
                                                                                          ---------       ---------

Noninterest income:
    Service charges and fees........................................................         57,671          52,526
    Recovery of organizational expenses.............................................        109,609              -
                                                                                          ---------       ---------
       Total noninterest income.....................................................        167,280          52,526
                                                                                          ---------       ---------

Noninterest expense:
    Salaries and employee benefits..................................................        524,906         514,629
    Occupancy expense...............................................................        252,157         242,093
    Offering costs..................................................................             -           88,986
    Advertising.....................................................................         31,815          74,563
    Professional fees...............................................................         66,696          48,638
    Telephone.......................................................................         18,652          33,365
    Data processing.................................................................         39,308          30,657
    Printing and office supplies....................................................         18,360          24,435
    Amortization of organization costs..............................................             -           30,000
    Other ..........................................................................        130,838         146,597
                                                                                          ---------       ---------
       Total noninterest expense....................................................      1,082,732       1,233,963
                                                                                          ---------       ---------

Earnings (loss) before income tax provision (benefit) and cumulative effect of
    change in accounting principle..................................................          9,267      (1,549,708)

       Income tax provision (benefit)...............................................          3,400        (577,850)
                                                                                          ---------       ---------

Net earnings (loss) before cumulative effect of change in accounting principle                5,867        (971,858)


       Cumulative effect of change in accounting principle, net of income
          tax benefit of $60,600 ...................................................             -          (99,540)
                                                                                          ---------       ---------

Net earnings (loss).................................................................   $      5,867      (1,071,398)
                                                                                          =========       =========

Basic and diluted earnings (loss) per share:

    Before cumulative effect of change in accounting principle......................            .01           (2.09)

    Cumulative effect of change in accounting principle.............................             -             (.22)
                                                                                          ---------       ----------

    Net earnings (loss).............................................................  $         .01           (2.31)
                                                                                          =========       =========

Weighted-average shares outstanding for basic and diluted...........................        471,822         464,791
                                                                                          =========       =========

See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
                                        22

<PAGE>

<TABLE>


                                             THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                                     Consolidated Statements of Changes in Stockholders' Equity


                                                                                                Accumulated
                                                                                                 Other
                                                                                                 Compre-
                                                 Common Stock        Additional                  hensive                Total
                                               ---------------       Paid-In        Accumulated   Income         Stockholders'
                                              Shares     Amount      Capital        Deficit       (Loss)             Equity
                                             -------    -------      ---------      -----------   ---------     -------------
<S>                 <C> <C>                  <C>        <C>          <C>              <C>                            <C>
Balance at December 31, 1997.............    464,791    $ 4,648      4,628,542        (299,405)        -             4,333,785
                                                                                                                     ---------

Comprehensive income:

     Net loss............................       -           -             -         (1,071,398)        -            (1,071,398)

     Net change in unrealized loss on
         securities available for sale,
         net of tax of $3,370............       -           -             -              -           (5,495)            (5,495)
                                                                                                                     ---------

     Comprehensive income (loss).........                                                                           (1,076,893)
                                             -------    -------      ---------      ----------     --------          ---------

Balance at December 31, 1998.............    464,791      4,648      4,628,542      (1,370,803)      (5,495)         3,256,892
                                                                                                                     ---------

Comprehensive income:

     Net earnings........................       -           -             -              5,867         -                 5,867

     Net change in unrealized loss on
         securities available for sale,
         net of tax of $41,030...........       -           -             -              -          (73,432)           (73,432)
                                                                                                                     ---------

     Comprehensive income (loss).........                                                                              (67,565)
                                                                                                                     ---------

Common stock issued upon exercise
     of 10,700 warrants..................     10,700        107        106,893           -            -                107,000
                                             -------    -------      ---------      ----------     --------          ---------

Balance at December 31, 1999.............    475,491    $ 4,755      4,735,435      (1,364,936)     (78,927)         3,296,327
                                             =======    =======      =========      ==========     ========          =========


See Accompanying Notes to Consolidated Financial Statements.
</TABLE>



                                       23

<PAGE>
<TABLE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                                                                                            Year Ended December 31,

                                                                                          1999             1998
                                                                                          ----             ----
Cash flows from operating activities:

<S>                                                                                  <C>                 <C>
    Net earnings (loss)............................................................. $      5,867        (1,071,398)
    Adjustments to reconcile net earnings (loss) to net
      cash used in operating activities:
         Depreciation and amortization..............................................       98,568            81,557
         (Credit) provision for loan losses.........................................     (308,571)          725,000
         Provision (credit) for deferred income taxes...............................        3,400          (638,450)
         Net amortization of fees, costs, premiums and discounts....................       52,032            72,085
         Increase in accrued interest receivable....................................      (56,675)          (73,856)
         Decrease in other assets...................................................        8,184           146,914
         (Decrease) increase in official checks.....................................      (14,604)           73,204
         (Decrease) increase in accrued interest payable and other liabilities......      (38,544)          129,698
                                                                                        ---------        ----------

              Net cash used in operating activities.................................     (250,343)         (555,246)
                                                                                        ---------        ----------

Cash flows from investing activities:

    Purchases of securities available for sale......................................   (6,195,969)       (6,297,091)
    Principal repayments on securities available for sale...........................    1,436,583         2,924,447
    Net increase in loans...........................................................   (2,503,084)       (8,553,588)
    Purchase of Federal Home Loan Bank stock........................................      (14,500)          (50,000)
    Purchases of premises and equipment.............................................      (72,660)         (457,704)
    Net proceeds from sale of premises and equipment................................      293,384                -
                                                                                        ---------        -----------

              Net cash used in investing activities.................................   (7,056,246)      (12,433,936)
                                                                                        ---------        ----------

Cash flows from financing activities:

    Net increase in deposits........................................................    4,434,800        14,107,121
    Net increase in advance from Federal Home Loan Bank.............................           -          1,000,000
    Net (decrease) increase in other borrowings.....................................     (364,749)          364,749
    Proceeds from issuance of common stock upon exercise of warrants................      107,000                -
                                                                                        ---------        ----------

              Net cash provided by financing activities.............................    4,177,051        15,471,870
                                                                                        ---------        ----------

Net (decrease) increase in cash and cash equivalents................................   (3,129,538)        2,482,688

Cash and cash equivalents at beginning of year......................................    4,948,505         2,465,817
                                                                                        ---------        ----------

Cash and cash equivalents at end of year............................................  $ 1,818,967         4,948,505
                                                                                        =========        ==========

Supplemental disclosure of cash flow information: Cash paid during the year for:

         Interest...................................................................  $   838,682           669,266
                                                                                        =========        ==========

         Income taxes...............................................................  $        -                 -
                                                                                        =========        ==========

    Noncash transaction-
         Accumulated other comprehensive income (loss), net change in
              unrealized loss on securities available for sale, net of tax            $   (73,432)            5,495
                                                                                        =========        ==========


See Accompanying Notes to Consolidated Financial Statements.
</TABLE>



                                       24


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

             December 31, 1999 and 1998 and For the Years Then Ended

(1)  Summary of Significant Accounting Policies

Organization.  The Commercial  Bancorp,  Inc. ("TCB") was incorporated on August
     15, 1996. TCB owns 100% of the  outstanding  common stock of The Commercial
     Bank of Volusia County  ("TCB-Volusia").  TCB was organized  simultaneously
     with  TCB-Volusia  and its only  business is the ownership and operation of
     TCB-Volusia.  TCB- Volusia is a Florida state-chartered commercial bank and
     it's  deposits are insured by the Federal  Deposit  Insurance  Corporation.
     TCB-Volusia  opened for business on October 14, 1997 and provides community
     banking  services,  from its  office in Ormond  Beach,  to  businesses  and
     individuals in Volusia County, Florida.

Basis of  Presentation.  The  accompanying   consolidated  financial  statements
     include the accounts of TCB and TCB- Volusia. All significant  intercompany
     accounts  and  transactions  have been  eliminated  in  consolidation.  The
     accounting  and  reporting  practices of TCB conform to generally  accepted
     accounting principles and to general practices within the banking industry.

Use  of Estimates.  In preparing consolidated financial statements in conformity
     with generally accepted  accounting  principles,  management is required to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities as of the date of the balance sheet and 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  in  the  near  term  relate  to  the
     determination of the allowance for loan losses and deferred tax assets.

Cash and Cash Equivalents.  For purposes of the consolidated  statements of cash
     flows,  cash and cash equivalents  include cash and balances due from banks
     and federal funds sold.

Securities. TCB must classify its securities as either trading, held to maturity
     or available for sale.  Trading  securities are held principally for resale
     and recorded at their fair values.  Unrealized  gains and losses on trading
     securities   are  included   immediately   in  earnings.   Held-to-maturity
     securities are those which TCB has the positive  intent and ability to hold
     to  maturity  and  are  reported  at  amortized  cost.   Available-for-sale
     securities  consist of securities not classified as trading  securities nor
     as held-to-maturity securities. Unrealized holding gains and losses, net of
     tax, on available-for-sale securities are reported as a net amount in other
     comprehensive   income   (loss).   Gains   and   losses   on  the  sale  of
     available-for-sale      securities     are     determined     using     the
     specific-identification  method.  Premiums and discounts on securities  are
     recognized in interest  income using the interest method over the period to
     maturity.

Loans Receivable. Loans  receivable that management has th intent and ability to
     hold for the  foreseeable  future or until maturity or pay-off are reported
     at their outstanding principal adjusted for any charge-offs,  the allowance
     for loan losses, and any deferred fees or costs on originated loans.

     Loan origination fees and certain direct  origination costs are capitalized
     and recognized as an adjustment of the yield of the related loan.

     The accrual of interest  on loans is  discontinued  at the time the loan is
     ninety days delinquent  unless the credit is well-secured and in process of
     collection.  In all cases, loans are placed on nonaccrual or charged-off at
     an earlier  date if  collection  of  principal  or interest  is  considered
     doubtful.
                                                                (continued)
                                        25

<PAGE>




                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(1)  Summary of Significant Accounting Policies, Continued

Loans Receivable, Continued.  All interest  accrued but not  collected for loans
     that are placed on nonaccrual or charged- off is reversed  against interest
     income.  The interest on these loans is accounted for on the  cash-basis or
     cost- recovery method,  until  qualifying for return to accrual.  Loans are
     returned to accrual  status when all the  principal  and  interest  amounts
     contractually  due are brought  current and future  payments are reasonably
     assured.

Allowance for Loan  Losses.  The  allowance  for loan losses is  established  as
     losses are estimated to have  occurred  through a provision for loan losses
     charged to earnings.  Loan losses are charged  against the  allowance  when
     management  believes the  uncollectibility  of a loan balance is confirmed.
     Subsequent recoveries, if any, are credited to the allowance.

     The allowance for loan losses is evaluated on a regular basis by management
     and is based upon management's periodic review of the collectibility of the
     loans in light of historical experience,  the nature and volume of the loan
     portfolio,  adverse  situations  that may affect the borrower's  ability to
     repay, estimated value of any underlying collateral and prevailing economic
     conditions.  This  evaluation  is  inherently  subjective  as  it  requires
     estimates that are susceptible to significant  revision as more information
     becomes available.

     A loan is  considered  impaired  when,  based on  current  information  and
     events,  it is probable  that TCB will be unable to collect  the  scheduled
     payments of principal  or interest  when due  according to the  contractual
     terms  of  the  loan  agreement.   Factors   considered  by  management  in
     determining  impairment  include payment status,  collateral value, and the
     probability of collecting  scheduled  principal and interest  payments when
     due.  Loans  that  experience  insignificant  payment  delays  and  payment
     shortfalls generally are not classified as impaired.  Management determines
     the significance of payment delays and payment shortfalls on a case-by-case
     basis,  taking into consideration all of the circumstances  surrounding the
     loan and the borrower,  including the length of the delay,  the reasons for
     the delay,  the  borrower's  prior  payment  record,  and the amount of the
     shortfall in relation to the  principal  and interest  owed.  Impairment is
     measured on a loan by loan basis for commercial loans by either the present
     value of expected  future  cash flows  discounted  at the loan's  effective
     interest rate, the loan's obtainable market price, or the fair value of the
     collateral if the loan is collateral dependent.

     Large  groups  of  smaller  balance   homogeneous  loans  are  collectively
     evaluated for  impairment.  Accordingly,  TCB does not separately  identify
     individual consumer and residential loans for impairment disclosures.

Premises and  Equipment.  Leasehold  improvements,  fixtures and  equipment  are
     stated at cost less accumulated depreciation and amortization. Depreciation
     and amortization  expense is computed using the  straight-line  method over
     the estimated useful life of each type of asset.

                                                             (continued)

                                        26


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(1)  Summary of Significant Accounting Policies, Continued

Transfer of Financial Assets. Transfers of financial assets are accounted for as
     sales,  when  control  over the assets has been  surrendered.  Control over
     transferred  assets is deemed to be  surrendered  when (1) the assets  have
     been  isolated  from TCB,  (2) the  transferee  obtains  the right (free of
     conditions that constrain it from taking advantage of that right) to pledge
     or exchange the transferred assets, and (3) TCB does not maintain effective
     control over the transferred assets through an agreement to repurchase them
     before their maturity.

Income Taxes. Deferred income tax assets and liabilities are recorded to reflect
     the tax  consequences  on future  years of  temporary  differences  between
     revenues and expenses  reported for financial  statement and those reported
     for income tax purposes.  Deferred tax assets and  liabilities are measured
     using the  enacted  tax rates  expected  to apply to taxable  income in the
     years in which those  temporary  differences are expected to be realized or
     settled.  Valuation  allowances  are provided  against assets which are not
     likely to be realized.

Stock-Based Compensation. Statement of Financial Accounting Standards (SFAS) No.
     123, Accounting for Stock- Based  Compensation,  encourages all entities to
     adopt  a  fair  value  based  method  of  accounting   for  employee  stock
     compensation plans, whereby compensation cost is measured at the grant date
     based on the value of the award and is recognized  over the service period,
     which is usually the vesting period.  However,  it also allows an entity to
     continue to measure  compensation  cost for those plans using the intrinsic
     value based method of accounting  prescribed by Accounting Principles Board
     Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   whereby
     compensation  cost is the excess, if any, of the quoted market price of the
     stock at the grant  date (or other  measurement  date)  over the  amount an
     employee must pay to acquire the stock.  Stock  options  issued under TCB's
     stock  option plan have no  intrinsic  value at the grant  date,  and under
     Opinion No. 25 no compensation cost is recognized for them. TCB has elected
     to continue  with the  accounting  methodology  in Opinion No. 25 and, as a
     result, has provided proforma  disclosures of net earnings and earnings per
     share  and  other  disclosures,  as if  the  fair  value  based  method  of
     accounting had been applied.

Per  Share  Amounts.  Per share  amounts have been  computed on the basis of the
     weighted-average number of shares of common stock outstanding.  TCBs common
     stock  equivalents  are not  dilutive  during  the years  presented  in the
     consolidated statements of operations.

Accounting Change.  Effective  December 1, 1998,  TCB adopte AICPA  Statement of
     Position  98-5   Reporting  on  the  Costs  of  Start-Up   Activities   and
     Organization  Expenses. The effect of this accounting change was to expense
     all unamortized  organizational  costs in the current period which resulted
     in an after tax charge against operations of $99,540.

Off-Balance-Sheet  Instruments.  In the  ordinary  course  of  business  TCB has
     entered  into   off-balance-sheet   financial  instruments   consisting  of
     commitments to extend credit.  Such financial  instruments  are recorded in
     the financial statements when they are funded.

Advertising.  TCB expenses all media advertising as incurred.

                                                        (continued)

                                        27


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(1)  Summary of Significant Accounting Policies, Continued

Fair Values of Financial  Instruments.  The fair value of a financial instrument
     is the current  amount that would be  exchanged  between  willing  parties,
     other than in a forced  liquidation.  Fair value is best  determined  based
     upon quoted market prices. However, in many instances,  there are no quoted
     market  prices for TCB's  various  financial  instruments.  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.  Accordingly,  the fair value estimates
     may not be realized in an immediate settlement of the instrument.  SFAS 107
     excludes certain  financial  instruments and all  nonfinancial  instruments
     from its  disclosure  requirements.  Accordingly,  the aggregate fair value
     amounts  presented may not necessarily  represent the underlying fair value
     of  TCB.  The  following  methods  and  assumptions  were  used  by  TCB in
     estimating fair values of financial instruments:

     Cash  and  Cash  Equivalents.   The  carrying  amounts  of  cash  and  cash
     equivalents approximate their fair value.

     Securities.  Fair values for  available for sale 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.  The
     carrying value of Federal Home Loan Bank stock approximates fair value.

     Loans Receivable. For variable-rate  loans that reprice frequently and have
     no  significant  change in credit  risk,  fair values are based on carrying
     values.  Fair  values for certain  fixed-rate  mortgage  (e.g.  one-to-four
     family  residential),  commercial  real  estate  and  commercial  loans are
     estimated  using  discounted  cash  flow  analyses,  using  interest  rates
     currently  being  offered  for loans with  similar  terms to  borrowers  of
     similar credit quality.

     Accrued  Interest.  The carrying  amounts of accrued  interest  approximate
     their fair values.

     Deposits.  The fair values  disclosed  for demand,  NOW,  money-market  and
     savings deposits are, by definition,  equal to the amount payable on demand
     at the reporting  date (that is, their carrying  amounts).  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  expected  monthly  maturities on
     time deposits.

     Borrowed Funds. The carrying amounts of other borrowings  approximate their
     fair  values.  Fair  values of  advances  from  Federal  Home Loan Bank are
     estimated  using  discounted  cash  flow  analysis  based  on TCBs  current
     incremental borrowing rates for similar types of borrowing arrangements.

     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 standing.

Reclassifications. Certain amounts in the 1998 consolidated financial statements
     have been reclassified to conform to the 1999 presentation.

Future Accounting Requirements.  Financial Accounting Standards 133 - Accounting
     for Derivative  Investments and Hedging  Activities  requires  companies to
     record derivatives on the balance sheet as assets or liabilities,  measured
     at fair  value.  Gains or losses  resulting  from  changes in the values of
     those  derivatives  would  be  accounted  for  depending  on the use of the
     derivatives  and  whether  they  qualify  for  hedge  accounting.  The  key
     criterion  for hedge  accounting is that the hedging  relationship  must be
     highly  effective  in  achieving  offsetting  changes in fair value or cash
     flows.  TCB will be required to adopt this Statement  effective  January 1,
     2001.  Management  does not  anticipate  that  this  Statement  will have a
     material impact on TCB.

                                                                  (continued)


                                        28


<PAGE>
<TABLE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(2) Securities  Available for Sale

     The carrying  amounts of securities and their  approximate fair values were
as follows:

                                                                               Gross        Gross
                                                                  Amortized  Unrealized   Unrealized      Fair
                                                                   Cost         Gains       Losses        Value

           December 31, 1999:

             <S>                                                <C>                          <C>           <C>
              U.S. agency securities....................        $ 1,507,873       -          (39,154)      1,468,719
              Mortgage-backed securities................          6,512,947      7,878       (92,051)      6,428,774
                                                                  ---------      -----       -------       ---------

                                                                $ 8,020,820      7,878      (131,205)      7,897,493
                                                                  =========      =====       =======       =========

         December 31, 1998-

              Mortgage-backed securities................        $ 3,311,351      1,264       (10,129)      3,302,486
                                                                  =========      =====       =======       =========
</TABLE>

The scheduled maturities of securities available for sale were as follows:

                                                 At December 31, 1999
                                                ------------------------
                                                Amortized       Fair
                                                  Cost          Value
                                                -----------    ---------
Due from five to ten years                      $ 1,507,873    1,468,719
Mortgage-backed securities                        6,512,947    6,428,774
                                                -----------    ---------
                                                $ 8,020,820    7,897,493

There were no sales of  securities  during the years ended  December 31, 1999 or
1998.

At December 31, 1999,  securities  with a carrying  value of  approximately
$1.9 million were  pledged as  collateral  for the advance from the Federal Home
Loan Bank (see Note 6). There were no pledged securities at December 31, 1998.

(3)  Loans

    The components of loans were as follows:


                                                           At December 31,
                                                       -----------------------
                                                           1999         1998
                                                           ----         ----
Commercial......................................      $ 6,527,174     9,254,806
Commercial  real estate.........................        4,518,649       716,633
Residential  real estate........................        2,625,368     1,449,602
Consumer and home equity........................          988,980       897,475
                                                       ----------    ----------

Loans, gross....................................       14,660,171    12,318,516

(Subtract) add:
   Allowance for loan losses....................         (290,000)     (760,000)
   Net deferred costs...........................            2,742         4,857
                                                       ----------     ---------
Loans, net......................................      $14,372,913    11,563,373
                                                       ==========    ==========

Loans serviced  for  others, which  consist  of  participations  sold,  are  not
     included in the accompanying  consolidated balance sheets and were $384,939
     at December 31, 1999.  There were no loans  serviced for others at December
     31, 1998.
                                                                (continued)
                                        29


<PAGE>

                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(3)  Loans, Continued

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

                                                          Year Ended
                                                          December 31,
                                                     ---------------------
                                                        1999       1998
                                                        ----       ----
  Balance at January 1............................  $ 760,000      35,000
  (Credit) provision for loan losses..............   (308,571)    725,000
  Loans charged-off...............................   (161,429)          -
                                                      -------     -------

  Balance at December 31..........................  $ 290,000     760,000
                                                      =======     =======

    The following summarizes the collateral dependent amounts of impaired loans:

<TABLE>

                                                                                          At December 31,
                                                                                       ----------------------
                                                                                       1999           1998
                                                                                       ----           ----
   Loans identified as impaired:
<S>                                                                                <C>
       Gross loans with no related allowance for loan losses.......................$    -                 -
       Gross loans with related allowance for loan losses recorded.................     -          1,199,025
       Less: Allowances on these loans.............................................     -           (599,512)
                                                                                     ---------    ----------

   Net investment in impaired loans................................................$    -            599,513
                                                                                     =========     =========
</TABLE>

     The average net investment in impaired loans and interest income recognized
and received on impaired loans were as follows:

                                                              Year Ended
                                                              December 31,
                                                          ---------------------
                                                          1999           1998
                                                          ----           ----

   Average net investment in impaired loans............ $ 329,804       338,572
                                                         ========       =======

   Interest income recognized on impaired loans........ $      -         75,589
                                                         ========       =======

   Interest income received on impaired loans.......... $      -         75,589
                                                         ========       =======

(4)  Premises and Equipment

    A summary of premises and equipment follows:

                                                                At December 31,
                                                          ---------------------
                                                            1999          1998
                                                            ----          ----

 Land..............................................  $         -        261,246
 Building and leasehold improvements...............       137,808       138,437
 Furniture, fixtures and equipment.................       578,535       537,384
                                                          -------       -------

     Total, at cost................................       716,343       937,067

 Less accumulated depreciation and amortization....      (196,704       (98,136)
                                                          -------       --------

     Premises and equipment, net...................     $ 519,639        838,931
                                                          =======       ========

                                                                   (continued)

                                       30


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(4)  Premises and Equipment, Continued

During 1999,  TCB sold premises and equipment  with a carrying value of $293,384
(see Note 17).

TCB  leases its office facilities under operating  leases.  These leases contain
     escalation  clauses and provide for annual  adjustments  for TCB's  prorata
     share of operating expenses as well as renewal options.  Rent expense under
     operating  leases  during the years  ended  December  31, 1999 and 1998 was
     $73,036  and  $55,210,  respectively.  Estimated  future  rentals  over the
     remaining noncancellable lease terms follow (in thousands):

       Year Ending
      December 31,                                             Amount
      -------------                                            ------
      2000................................................     $   73
      2001................................................         76
      2002................................................         33
      2003................................................         21
                                                                  ---

   Total minimum lease payments...........................     $  203
                                                                  ===

(5)  Deposits

The  aggregate  amount of time deposits with a minimum  denomination of $100,000
     was  approximately  $1.1  million and $1.5 million at December 31, 1999 and
     1998, respectively.

A schedule of maturities of time deposits at December 31, 1999 follows:

    Year Ending
    December 31,                                                        Amount

      2000....................................................... $ 14,003,883
      2001.......................................................      917,511
                                                                    ----------

                                                                  $ 14,921,394
                                                                    ==========

(6) Advance from Federal Home Loan Bank

The maturity  and  interest  rate on the advance from the Federal Home Loan
Bank (FHLB) was as follows:

                                                            At December 31,
  Year Ending                     Interest                 ------------------
  December 31,                      Rate                    1999        1998
  ------------                   ---------                  ----        ----

     2008......................     4.80%              $ 1,000,000    1,000,000
                                                         =========    =========

At   December 31, 1999,  this advance was  collateralized  by securities  with a
     carrying value of  approximately  $1.9 million.

At   December 31, 1998, this advance was  collateralized by $1.0 million of TCBs
     federal funds sold.

(7) Other Borrowings

At   December 31, 1998, TCB had two variable-rate  lines of credit at 7.75% from
     other  financial  institutions,  totaling  $700,000.  At December 31, 1998,
     borrowings  against these lines totaled  $364,749.  These  borrowings  were
     collateralized by TCB-Volusias  stock. These borrowings were repaid in 1999
     using the proceeds from the  settlement  with Highlands  County  organizers
     (see Note 17). There were no other borrowings at December 31, 1999.

                                                                  (continued)


                                       31


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(8) Financial Instruments

TCB  is a party to  financial  instruments  with  off-balance-sheet  risk in the
     normal  course of business to meet the  financing  needs of its  customers.
     These  financial  instruments  are unused  lines of credit and  undisbursed
     loans in process and may involve,  to varying  degrees,  elements of credit
     and  interest-rate  risk in excess of the amount  recognized in the balance
     sheet.  The  contract  amounts of these  instruments  reflect the extent of
     involvement TCB has in these financial instruments.

TCB's exposure to credit loss in the event of nonperformance  by the other party
     to the  financial  instrument  for unused  lines of credit and  undisbursed
     loans  in  process  is  represented  by the  contractual  amount  of  those
     instruments.  TCB uses the same credit policies in making commitments as it
     does for on-balance-sheet instruments.

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  does or other  termination
     clauses and may require payment of a fee. Since some of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do not necessarily  represent future cash requirements.  TCB evaluates each
     customer's  credit  worthiness  on a  case-by-case  basis.  The  amount  of
     collateral obtained,  if any, is based on management's credit evaluation of
     the counterparty.

The  estimated fair values of TCB's  financial  instruments  were as follows (in
thousands):

<TABLE>

                                                                                 At
                                                           December 31, 1999           December 31, 1998
                                                           ----------------------      ---------------------
                                                        Carrying          Fair       Carrying           Fair
                                                          Amount          Value       Amount            Value
                                                        --------          -------     ------            -----
Financial assets:
<S>                                                     <C>               <C>           <C>             <C>
     Cash and cash equivalents........................  $  1,819          1,819         4,949           4,949

     Securities.......................................     7,897          7,897         3,302           3,302

     Loans receivable.................................    14,373         14,347        11,563          11,643

     Accrued interest receivable......................       146            146            90              90

Financial liabilities:
     Deposits.........................................    21,220         21,649        16,785          17,352

     Advance from Federal Home Loan Bank..............     1,000            967         1,000             958

     Other borrowings.................................        -              -            365             365
                                                        ========       ========       =======         =======
</TABLE>

A  summary  of the  notional  amounts  of TCB's  financial  instruments  which
     approximate fair value,  with  off-balance  sheet-risk at December 31, 1999
     was as follows (in thousands):

     Unused lines of credit..............................    $ 1,519
                                                               =====

     Undisbursed loans in process........................    $   427
                                                               =====

                                                                  (continued)


                                       32


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(9) Related Party Transactions

In   the  ordinary  course of  business,  TCB has made  loans at terms and rates
     prevailing  at  the  time  to  officers  and  directors  of TCB  and  their
     affiliates.  The aggregate dollar amount of these loans totaled  $2,516,771
     and $2,192,033  December 31, 1999 and 1998,  respectively.  During the year
     ended  December 31, 1999,  new loans  originated to these  related  parties
     totaled $518,873 and principal repayments totaled $194,135.

(10)  Commitments and Contingencies

In   the ordinary course of business,  TCB has various  outstanding  commitments
     and  contingent  liabilities  that are not  reflected  in the  accompanying
     financial   statements.   In  the  opinion  of  management,   the  ultimate
     disposition  of these  matters is not  expected to have a material  adverse
     effect on the financial condition of TCB.

(11)  Credit Risk

TCB  grants the majority of its loans to borrowers  throughout  Volusia  County,
     Florida.  Although TCB has a  diversified  loan  portfolio,  a  significant
     portion of its  borrowers'  ability to honor their  contracts  is dependent
     upon the economy in Volusia County, Florida.

(12)  Income Taxes

Income taxes are included in the  consolidated  statements  of operation as
follows:

<TABLE>

                                                                                    Year Ended
                                                                                    December 31,
                                                                            ----------------------------
                                                                               1999              1998
                                                                               ----              ----
  Income tax provision (benefit) on loss before cumulative effect
<S>                                                                          <C>               <C>
      of change in accounting principal...................................   $ 3,400           (577,850)
  Cumulative effect of change in accounting principal.....................         -            (60,600)
                                                                               -----            -------
                                                                             $ 3,400           (638,450)
                                                                               =====            =======
</TABLE>

    The income tax  benefit  before  cumulative  effect of change in  accounting
principal consisted of the following:

                                                           Year Ended
                                                          December 31,
                                                     ------------------------
                                                     1999              1998
                                                     ----              ----
 Deferred:
     Federal...................................... $ 2,900          (493,400)
     State........................................     500           (84,450)
                                                     -----           -------
        Total deferred provision (benefit)........ $ 3,400          (577,850)
                                                     =====           =======

The  income  tax  benefit  before  cumulative  effect of  change  in  accounting
     principal is different than that computed by applying the Federal statutory
     rate of 34%, as indicated in the following analysis:

<TABLE>
                                                                              Year Ended December 31,
                                                                        1999                    1998
                                                                     ----------------------------------------
                                                                                % of                    % of
                                                                               Pretax                  Pretax
                                                                       Amount    Loss        Amount      Loss
                                                                       ------  ------        ------    ------
 Income tax provision (benefit) at statutory Federal
<S>                                                                  <C>        <C>        <C>         <C>
      income tax rate..........................................      $ 3,151    34.0%      $(526,901)  (34.0)%
 (Increases) decreases resulting from
      State taxes, net of federal tax benefit..................          328     3.5         (55,737)   (3.6)
      Other....................................................          (79)    (.8)          4,788     0.3
                                                                     -------     ----        --------   ----
                                                                     $ 3,400     36.7%     $(577,850)  (37.3)%
                                                                     =======     ====        =======    ====
</TABLE>
                                                                    (continued)
                                       33
<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(11)  Income Taxes, Continued

The  tax effects of temporary differences that give rise to significant portions
     of the  deferred  tax assets and deferred  tax  liabilities  are  presented
     below.

                                                              At December 31,
                                                           --------------------
                                                           1999          1998
                                                           ----          ----
 Deferred tax assets:
     Unrealized loss on securities available for sale.....$  44,400        3,370
     Allowance for loan losses............................   56,000      250,000
     Organization and startup costs.......................  117,000      120,000
     Net operating loss carryforwards.....................  734,000      484,000
     Other................................................    4,211        1,611
                                                            -------      -------

       Gross deferred tax assets..........................  955,611      858,981
                                                            -------      -------

 Deferred tax liabilities:
     Accrued income net of accrued expenses...............   44,000       14,000
     Premises and equipment...............................   49,000       20,000
                                                            -------      -------

       Gross deferred tax liabilities.....................   93,000       34,000
                                                            -------      -------

       Net deferred tax asset.............................$ 862,611      824,981
                                                            =======      =======

TCB  had net  operating  loss  carryforwards  for federal  and state  income tax
purposes as follows:


                                                         At December 31,
                                                         ---------------
 Year Expires                                                1999
                                                             ----
     2011...........................................   $      4,000
     2012...........................................        231,000
     2018..........................................         839,000
     2019..........................................         876,000
                                                          ----------
                                                        $ 1,950,000
                                                          ==========

                                                                    (continued)




                                       34


<PAGE>
                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(12) Stock Option Plan

TCB  adopted  an  employee   stock   option  plan  which  was  approved  by  the
     stockholders on April 21, 1998. During 1998, the Plan was amended to adjust
     the number of options  which may be  granted to 10% of the  original  stock
     issuance or 46,479 shares.  At December 31, 1999,  23,279 remain  available
     for grant. A summary of stock option transactions follows:

<TABLE>
                                                                                            Weighted-
                                                                   Number     Range of       Average       Aggregate
                                                                   of         Per Share     Per Share       Option
                                                                   Shares    Option Price     Price          Price

<S>                                   <C> <C>                               <C>
              Outstanding at December 31, 1997...............        -      $     -             -               -
              Options granted................................      18,500        10.00         10.00         185,000
                                                                   ------        -----                       -------

              Outstanding at December 31, 1998...............      18,500        10.00         10.00         185,000

              Options forfeited..............................      (8,500)       10.00         10.00         (85,000)
              Options granted................................      13,200        10.00         10.00         132,000
                                                                   ------        -----                       -------

              Outstanding at December 31, 1999...............      23,200      $ 10.00         10.00         232,000
                                                                   ======        =====         =====         =======
</TABLE>
The weighted-average remaining contractual life of the outstanding stock options
  at December 31, 1999 and 1998 was 109 months and 110 months, respectively.

    These options are exercisable as follows:

<TABLE>
                                                                          Number           Weighted-Average
              Year Ending                                               of Shares            Exercise Price
              -----------                                                 ------            --------------
<S>                                                                        <C>                <C>
                  Currently exercisable..............................      4,330              $ 10.00
                  2000...............................................      4,640                10.00
                  2001...............................................      4,640                10.00
                  2002...............................................      4,640                10.00
                  2003...............................................      2,640                10.00
                  2004...............................................      2,310                10.00
                                                                          ------
                                                                          23,200              $ 10.00
                                                                          ======                =====
</TABLE>

FASB Statement 123 requires proforma information regarding net loss and loss per
     share.  For purposes of proforma  disclosures,  the estimated fair value is
     included in expense during the vesting  period.  This proforma  information
     has been determined as if TCB had accounted for its stock options under the
     fair value method of that Statement and was as follows:

<TABLE>
                                                                                      Year Ended December 31,
                                                                                   --------------------------
                                                                                   1999              1998
                                                                                   ----              ----

<S>                                                                               <C>                <C>
              Grant date fair value of stock options issued during year.........  $ 57,077           55,363
                                                                                    ======        =========
              Net earnings (loss):
                  As reported...................................................  $  5,867       (1,071,398)
                                                                                    ======        ==========

                  Proforma......................................................  $ (8,960)      (1,082,071)
                                                                                    ======        ==========
              Earnings (loss) per share:
                  As reported...................................................       .01            (2.31)
                                                                                    ======        ===========

                  Proforma......................................................      (.02)           (2.33)
                                                                                    =======       ===========
</TABLE>

The  fair value of each option grant is estimated on the date of grant using the
     minimum  value  option  pricing  method  with  the  following  assumptions:
     Risk-free  interest rate 6.0% in 1999 and 5.0% in 1998, no dividends and an
     expected life-in years 10.
                                                                  (continued)
                                       35
<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(13) Regulatory Matters

Banking regulations place certain restrictions on dividend and loans or advances
made by TCB-Volusia to TCB.

TCB-Volusia is subject to various regulatory capital  requirements  administered
     by the  regulatory  banking  agencies.  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  TCB's  financial  statements.  Under  capital
     adequacy  guidelines  and the  regulatory  framework for prompt  corrective
     action,  TCB-Volusia  must meet specific  capital  guidelines  that involve
     quantitative   measures   of  their   assets,   liabilities,   and  certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices.  The capital  amounts  and  classification  are also  subject to
     qualitative judgements by the regulators about components, risk weightings,
     and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
     require  TCB-Volusia to maintain minimum amounts and percentages (set forth
     in the  following  table) of total and Tier 1 capital  (as  defined  in the
     regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as
     defined)  to  average  assets  (as  defined).  Management  believes,  as of
     December  31,  1999  and  1998,   TCB-Volusia  met  all  capital   adequacy
     requirements to which they are subject.

As   of December  31, 1999,  the most recent  notification  from the  regulatory
     authorities   categorized   TCB-Volusia  as  well  capitalized   under  the
     regulatory  framework for prompt  corrective  action.  To be categorized as
     well  capitalized,  an institution must maintain minimum total  risk-based,
     Tier I  risk-based,  and Tier I  leverage  percentages  as set forth in the
     following tables. There are no conditions or events since that notification
     that management believes have changed TCB-Volusia's category. TCB-Volusia's
     actual capital amounts and percentages as of December 31, 1999 and 1998 are
     also presented in the table (dollars in thousands).

<TABLE>

                                                                                                    To Be Well
                                                                        Minimum                  Capitalized Under
                                                                      For Capital                  Prompt Corrective
                                          Actual                    Adequacy Purposes:            Action Provision:
                               -----------------------------      ----------------------     ----------------------
                                       Amount            %          Amount           %          Amount            %
                                       ------          -----        ------         -----        ------          ---
     At December 31, 1999:
         Total capital (to Risk-
<S>                                   <C>                <C>     <C>                <C>      <C>                 <C>
         Weighted Assets)..........   $ 2,751            18.3%   $ 1,206            8.0%     $ 1,507             10.0%
         Tier I Capital (to Risk-
         Weighted Assets)..........     2,561            17.0        603            4.0          904              6.0
         Tier I Capital
         (to Average Assets).......     2,561            10.6        965            4.0        1,206              5.0

     At December 31, 1998:
         Total capital (to Risk-
         Weighted Assets)..........     3,168            23.2      1,081            8.0        1,352             10.0
         Tier I Capital (to Risk-
         Weighted Assets)..........     2,504            18.3        541            4.0          811              6.0
         Tier I Capital
         (to Average Assets).......     2,504            12.6        798            4.0          997              5.0


                                                                  (continued)
</TABLE>


                                       36


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(14)  Stockholders' Equity

During the initial  offering  period,  shares were  offered in units with a unit
     consisting  of one share of  common  stock and one  warrant.  Each  warrant
     entitles  the holder  thereof to purchase  one  additional  share of common
     stock for $10 per share during the thirty-six month period ending April 27,
     2000.  During  the year ended  December  31,  1999,  10,700  warrants  were
     exercised.  There were 439,300 and 450,000 warrants outstanding at December
     31, 1999 and 1998, respectively.

(15)  Parent Company Only Financial Information

Unconsolidated financial information for The Commercial Bancorp, Inc., is as
follows:

                            Condensed Balance Sheets

                                                                At December 31,
                                                            -------------------
                                                             1999          1998
                                                            ----           ----
         Assets

     Cash............................................   $     19,572      37,432
     Investment in subsidiary........................      3,122,380   3,162,731
     Deferred tax asset..............................        178,250     161,650
     Premises and equipment, net.....................             -      342,122
     Other assets....................................          3,270       5,555
                                                         -----------   ---------

         Total assets................................    $ 3,323,472   3,709,490
                                                           =========   =========

         Liabilities and Stockholders' Equity

     Borrowings......................................             -      364,749
     Other liabilities...............................         27,145      87,849
     Stockholders' equity............................      3,296,327   3,256,892
                                                           ---------   ---------

         Total liabilities and stockholders' equity..    $ 3,323,472   3,709,490
                                                           =========   =========
<TABLE>

                       Condensed Statements of Operations

                                                                                                      Year Ended

                                                                                                     December 31,

                                                                                                  1999           1998
                                                                                                  ----           ----

<S>                                                                                             <C>              <C>
              Revenues..................................................................        $ 109,624        5,529
              Expenses..................................................................         (136,838)    (295,137)
                                                                                                 --------   ----------

                  Loss before earnings (loss) of subsidiary.............................          (27,214)    (289,608)
                  Earnings (loss) of subsidiary.........................................           33,081     (781,790)
                                                                                                 --------   ----------

                  Net earnings (loss)...................................................       $    5,867   (1,071,398)
                                                                                                 ========   ==========

</TABLE>

                                                                    (continued)

                                       37


<PAGE>



                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(15)  Parent Company Only Financial Information, Continued

                       Condensed Statements of Cash Flows
<TABLE>

                                                                                                       Year Ended

                                                                                                       December 31,

                                                                                                   1999          1998
                                                                                                   ----          ----
         Cash flows from operating activities:

<S>                                                                                            <C>          <C>
              Net earnings (loss)............................................................  $    5,867   (1,071,398)
              Adjustments to reconcile net earnings (loss) to net cash  provided by (used in)
                operating activities:
                  Equity in undistributed (earnings) loss of subsidiary......................     (33,081)     781,790
                  Credit for deferred income taxes...........................................     (16,600)    (161,650)
                  Net proceeds from sale and transfer of premises and equipment..............     342,122           -
                  Net decrease in other assets...............................................       2,285        6,445
                  (Decrease) increase in other liabilities...................................     (60,704)      87,849
                                                                                                 --------     --------

                  Net cash provided by (used in) operating activities........................     239,889     (356,964)
                                                                                                 --------     --------

         Cash flows from investing activities-
              Purchases of premises and equipment............................................          -      (342,122)
                                                                                                 --------     --------

         Cash flows from financing activities:

              Sale of common stock upon exercise of warrants.................................     107,000           -
              Net (decrease) increase in borrowings..........................................    (364,749)     364,749
                                                                                                 --------     --------

                  Net cash (used in) provided by financing activities........................    (257,749)     364,749
                                                                                                 --------     --------

         Net decrease in cash and cash equivalents...........................................     (17,860)    (334,337)

         Cash and cash equivalents at beginning of the year..................................      37,432      371,769
                                                                                                 --------     --------

         Cash and cash equivalents at end of year............................................   $  19,572       37,432
                                                                                                 ========     ========

         Noncash transaction -
              Net change  in  investment  in  subsidiary  due to net  change  in
                  accumulated other comprehensive income (loss), unrealized loss
                  on securities
                 available for sale, net of tax.............................................    $ (73,432)      (5,495)
                                                                                                  ========     ========

</TABLE>
                                                                   (continued)

                                       38


<PAGE>


                   THE COMMERCIAL BANCORP, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued

(16)  Year 2000 Issues

TCB'soperating  and financial  systems have been found to b compliant;  the "Y2K
     Problem" has not adversely  affected TCB's  operations nor does  management
     expect that it will.

(17) New Bank Charter and Planned Public Offering

During 1998, TCB along with a group of local  organizers made application to the
     state  of  Florida  for  a  bank  charter  in  Highlands  County,  Florida.
     Management  planned  to raise  the  capital  for the new bank from a public
     offering  of  TCB's  common  stock.  In  early  1999,  TCB  withdrew  their
     application and the local organizers from Highlands  County  ("Organizers")
     elected to continue without TCB. Because of this, management terminated its
     planned  public  offering  and  charged-off  $88,986  in  prepaid  offering
     expenses  during 1998.  During 1999, TCB and the Organizers  entered into a
     settlement agreement in which the Organizers paid TCB $402,993 in proceeds,
     including  repayment of debt and for certain  premises and equipment and as
     partial reimbursement of organization expenses.

                                       39


<PAGE>




                          Independent Auditors' Report

Board of Directors
The Commercial Bancorp, Inc.
Ormond Beach, Florida:

   We  have  audited  the  accompanying   consolidated  balance  sheets  of  The
Commercial  Bancorp,  Inc. and Subsidiary ("TCB") at December 31, 1999 and 1998,
and the related consolidated statements of operations,  changes in stockholders'
equity, and cash flows for the years then ended. These financial  statements are
the  responsibility  of TCB'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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

   In our  opinion,  the  consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the  financial  position of TCB 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.

   As discussed in Note 1 to the consolidated financial statements,  TCB changed
its method of accounting  for  organizational  costs.  During 1998,  TCB adopted
AICPA   Statement  of  Position  98-5   "Reporting  on  the  Costs  of  Start-Up
Activities."

HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
February 1, 2000

                                       40
<PAGE>


                              CORPORATE INFORMATION

Corporate
Headquarters                   258 North Nova Road
                               Ormond Beach, Florida 32174
                               (904) 672-3003

Annual Meeting                 The Annual Meeting of the Stockholders will be
                               held at the Trails Homeowners Association
                               Community  Center, 201 Main Trail,  Ormond Beach,
                               Florida at 2:00 P.M., April 18, 2000.


Transfer Agent and
Registrar                      Continental Stock Transfer & Trust Company
                               2 Broadway
                               New York, New York 10004

Form 10-KSB                    A copy of the Form 10 KSB, as filed with the
                               Securities and Exchange Commission,  may be
                               obtained by  stockholders  without  charge upon
                               written request to Mr. Harvey E. Buckmaster,
                               Chief  Financial Officer, The Commercial Bancorp,
                               Inc., 258 North Nova Road, Ormond Beach, Florida
                               32174.


Corporate Counsel              Igler & Dougherty, P.A.
                               1501 Park Avenue East
                               Tallahassee, Florida  32301



Independent
Auditors                       Hacker, Johnson, Cohen & Grieb PA
                               Certified Public Accountants
                               500 North Westshore Boulevard, Suite 1000
                               Tampa, Florida  33609