10KSB

FORM 10-KSB

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

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

For the fiscal year ended December 31, 1997

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

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

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

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

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

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

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

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

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


TABLE OF CONTENTS


                                                                      Page
PART I

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


PART II

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


PART III

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

PART I

Item 1.  Description of Business.

MCB Financial

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

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


Metro Commerce

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

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

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

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

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

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

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

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

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


Competition

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

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

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

Insurance

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


Employees

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

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


SUPERVISION AND REGULATION

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

MCB Financial

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Metro Commerce 

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

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

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

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

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

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

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

Effect of Governmental Policies and Legislation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     Accounting Changes.  

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

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

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

     Environmental Regulation

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

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

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

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

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

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

     Americans With Disabilities Act

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

     Economic Growth and Regulatory Paperwork Reduction Act of 1996

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

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

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

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

     Self-Test Privilege Under ECOA

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

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

     New and Proposed Legislation and Regulation

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

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

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

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

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

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

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


RESTRICTIONS ON TRANSFERS OF FUNDS TO MCB FINANCIAL BY METRO COMMERCE

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

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

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

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

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

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

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

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

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



Item 2.  Description of Property

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

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

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

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


Item 3.  Legal Proceedings

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

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


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

None.



PART II

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

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


Item 6. Management's Discussion and Analysis.

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

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

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

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

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


Maturities of Loans at December 31, 1997

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

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

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



Asset/Liability Management

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

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

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

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

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

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

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

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


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

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

Analysis of the Allowance for Possible Credit Losses

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

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

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


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

Allocation of the Allowance for Possible Credit Losses

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

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

Time Certificates, $100,000 and Over

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

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



Item 7. Financial Statements.

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


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

None.



PART III

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

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


Item 10. Executive Compensation

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


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

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


Item 12. Certain Relationships and Related Transactions.

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


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

(a) List of  Exhibits:

Exhibits:

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

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

        (i) None.

SIGNATURES

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

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


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

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

Name                                            Title

/s/ John Cavallucci                             Chairman; Director
John Cavallucci

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

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

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

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

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

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

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

EX-10

EXHIBIT 10(b)(5)

353 SACRAMENTO STREET
OFFICE LEASE AGREEMENT

This Office Lease Agreement ("Lease") is made and entered into as of December 
1997, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts
corporation ("Landlord"), and METRO COMMERCE BANK, a [California 
Corporation]("Tenant").

Section 1.  Premises

1.1 Subject to all of the terms and conditions set forth in this Lease, Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord those certain 
premises (the "Leased Premises"), as described in the attached Exhibit A. The 
Leased Premises are part of the of floe building known as 353 Sacramento Street 
(the "Building''), located in San Francisco, California.  The Leased Premises 
and the Building contain the Rentable Area set forth in the Basic Lease 
Information.  The Building, the land and improvements under and surrounding the 
Building and designated from time to time by Landlord as land or common areas 
appurtenant to the Building, together with utilities, facilities, drives, 
walkways and other amenities appurtenant to or servicing the Building are herein
sometimes collectively called the "Real Property. "  Tenant is hereby granted 
the right to the non- exclusive use of the common corridors and hallways, 
stairwells, elevators, electrical and telephone closets, restrooms and other 
public or common areas; provided, however, that the manner in which the public 
and common areas are maintained and operated shall be at Landlord's sole 
discretion and the use of the same shall be subject to such rules, regulations 
and restrictions as Landlord may make from time to time.  Tenant shall also have
the right to the non-exclusive use of the loading dock of the Building without 
charge, which use shall also be subject to such rules, regulations and 
restrictions as Landlord may make from time to time.  Landlord reserves the 
right to make alterations or additions to or to change the location of elements 
of the Real Property and the common areas of the Real Property and the Building.

1.2 The term "RentableArea" shall be computed by measuring from the inside 
surface of the exterior glass of the outer building walls, to the center of 
corridor walls, and to the center of all partitions which separate the Leased 
Premises from adjoining areas, plus Tenant's pro rata portion of areas common to
all tenants of the Building including, without limitation, corridors, lobbies, 
rest rooms, public areas, mechanical, electrical, telephone, janitorial or 
equipment room, closet or space, and spaces within the entire Building. Elevator
shafts shall be excluded in computing Rentable Area.

Section 2.  Term

    2.1 This Lease shall remain in effect for a term (the "Term") commencing 
on the date which is the earlier to occur of the Scheduled Term Commencement 
Date specified in the Basic Lease Information or the date Tenant occupies any 
portion of the Premises (the "Commencement Date',) and expiring at 6:00 P.M. on 
the Term Expiration Date specified in the Basic Lease Information (the 
"Expiration Date") unless sooner terminated or extended as provided in this 
Lease.  The earlier of the Expiration Date or the date this Lease is terminated 
is herein referred to as the "Termination Date".

    2.2 Tenant accepts the Leased Premises in its "as is" condition, as of the 
date hereof.  Landlord shall have no obligation to modify or improve the Leased 
Premises and shall not be liable for any claims or damages arising in connection
with any modifications or improvements.

Section 3.  Use, Nuisance or Hazard

3.1The Leased Premises shall be used and occupied by Tenant solely for general 
office and commercial banking (excluding retail banking) purposes without 
Landlord's prior written consent, which may be given or withheld in Landlord's 
sole discretion.

3.2 Tenant shall not use, occupy or permit the use or occupancy of the Leased 
Premises for any purpose which Landlord, in its reasonable discretion, deems to 
be illegal, immoral or dangerous; permit any public or private nuisance; do or 
permit any act or thing which may disturb the quiet enjoyment of any other 
tenant or occupant of the Building; keep any substance or carry on or permit any
operation which might introduce offensive odors or conditions into other 
portions of the Building; use any apparatus which might make undue noise or set 
up vibrations in or about the Building; permit anything to be done which would 
increase the premiums paid by Landlord for fire and extended coverage insurance 
on the Building or its contents or cause a cancellation of any insurance policy 
covering the Building or any part thereof or any of its contents; or take any 
action, fail to act or permit anything to be done which is prohibited by or 
which shall in any way conflict with any Law. Should Tenant do any of the above 
without Landlord's prior written consent, it shall constitute an Event of 
Default and Landlord shall be entitled to exercise any of its rights and 
remedies under this Lease, at law or in equity.  Landlord recognizes that 
tenant's business is commercial banking, however, Tenant shall not have any more
than (15) fifteen visitors in any given day.

3.3  Without limiting the generality of the above, Tenant shall promptly comply 
with all requirements of the Americans with Disabilities Act (codified at 42 
U.S.C.    12101, et seq.) and the regulations promulgated under it in effect 
from time to time ("ADA Requirements'') relating to the conduct of Tenant's 
business.  Tenant shall have exclusive responsibility for compliance with ADA 
Requirements pertaining to the interior of the Premises, including the design 
and construction of access and egress.  Landlord shall have responsibility for 
compliance with ADA Requirements which affect the common areas of the Building, 
subject to Tenant's obligation to pay for its share of the expense of such 
compliance pursuant to Section 5 of this Lease.  Tenant shall comply promptly 
with any direction of any governmental authority having jurisdiction which 
imposes any duty upon Tenant or Landlord with respect to the Premises or with 
respect to the use or occupancy thereof.  Tenant shall furnish Landlord with a 
copy of any such direction promptly after receipt of the same.  In addition, 
Tenant shall comply with any reasonable plan adopted by Landlord which is 
designed to fulfill the requirements of any Laws, including ADA Requirements.

Should compliance by Tenant with this Section 3.3 require Landlord's consent 
under Section 14.1, Tenant shall promptly seek such consent, provide the 
assurances and documents required by Section 14.1 and, following receipt of such
consent, promptly comply with the provisions of Section 15.1 and this Section 
3.3.

If Tenant fails to comply with ADA Requirements as required in this Section 3.3,
then, after notice to Tenant, Landlord may comply or cause such compliance, in 
which case Tenant shall reimburse Landlord upon demand for Landlord's costs 
incurred in effecting compliance.

Section 4.  Rent

    4.1 Tenant shall pay to Landlord an initial base annual rental ("Base 
Rent") in the amount specified in the Basic Lease Information.  Reference to 
"Base Rent" shall refer both to the initial Base Rent and the adjustment to it 
specified in the Basic Lease Information.  The Base Rent shall be due and 
payable, without notice, in twelve equal installments ("Monthly Rent") in the 
amount described in the Basic Lease Information by check or money order, in 
advance, on or before the first day of each calendar month.  In addition to the 
Base Rent, Tenant shall pay any and all other sums of money as shall be become 
due and payable by Tenant as set forth in this Lease ("Additional Rent").  The 
Monthly Rent and/or Additional Rent are sometimes collectively called the "Rent"
and shall be paid when due in lawful money of the United States without demand, 
deduction, abatement or offset at the address specified in the Basic Lease 
Information or such other place as Landlord may designate from time to time.  
All Rent and any other charges due and unpaid as of the Termination Date shall 
be deemed due and payable on the Termination Date and, if unpaid as of such 
date, shall survive the Termination Date.  Landlord expressly reserves the right
to apply the payment of Base Rent to any other items of Rent that are not paid 
by Tenant.

    4.2 If any Rent or other amounts owing under this Lease are not paid 
within five (5) days after the date due under this Lease, then Landlord and 
Tenant agree that Landlord will incur additional administrative expenses, the 
amount of which will be difficult, if not impossible, to determine.  
Accordingly, in addition to such required payment, Tenant shall pay to Landlord,
upon demand, an additional late charge ("Late Charge"), as Additional Rent, for 
any such late payment in the amount of ten percent (10%) of the amount of such 
late payment.  Failure to pay any applicable Late Charge shall be deemed a 
Monetary Default (as defined in Section 22).  This provision for the Late Charge
is in addition to all other rights and remedies available to Landlord under this
Lease, at law or in equity, and shall not be construed as liquidated damages or 
limiting Landlord's remedies in any manner.  Failure to charge or collect such 
Late Charge in connection with any one or more such late payments shall not 
constitute a waiver of Landlord's right to charge and collect such Late Charges 
in connection with any other late payments.

    4.3 If the Term commences on a date other than the first day of a calendar 
month or terminates on a date other than the last day of a calendar month, the 
Rent for such partial months shall be prorated to the actual number of days the 
Lease is in effect for said partial months.

    4.4 All Rents and any other amounts payable by Tenant to Landlord, if not 
paid when due, shall bear interest from the date due until paid at the rate of 
interest publicly announced from time to time by Bank of America National Trust 
and Savings Association in San Francisco as its Reference Rate (the "Reference 
Rate") plus four percent (4%) per annum, but not in excess of the maximum legal 
rate permitted by law.  Failure to charge or collect such interest in connection
with any one or more such late payments shall not constitute a waiver of 
Landlord's right to charge and collect such interest in connection with any 
other payments.

4.5 If Tenant fails to timely make two consecutive payments of Monthly Rent or 
makes two consecutive payments of Monthly Rent which are returned to Landlord by
Tenant's financial institution for insufficient funds, Landlord may require, by 
giving written notice to Tenant, that all future payments

of Rent shall be made in cashier's check or money order.  The above is available
to Landlord under this Lease, at law or in equity.

in addition to all other remedies

4.6 Tenant shall pay to Landlord the first payment of Monthly Rent upon Tenant's
execution of this Lease.  This sum shall be applied to the Base Rent for the 
first month of the Term.  Additionally, upon Tenant's execution of this Lease, 
Tenant shall pay to Landlord the security deposit (the "Security Deposit") in 
the amount specified in the Basic Lease Information as security for Tenant's 
faithful performance of this Lease.  Without waiving any of Landlord's other 
rights and remedies under this Lease, Landlord may apply any part or all of the 
Security Deposit to remedy any failure by Tenant to perform its obligations 
under this Lease or to compensate Landlord for damages incurred in connection 
with such failure.  If Landlord so applies the Security Deposit, Tenant shall 
within ten (10) days after demand from Landlord restore the Security Deposit to 
the full amount required.  Tenant's failure of Tenant to do so shall be an Event
of Default under this Lease.  Landlord's application of the Security Deposit 
shall in no event be construed as in any way limiting Tenant's liability or 
obligation with respect to any such default.  If Tenant has kept and performed 
all terms, covenants and conditions of this Lease, Landlord will, within thirty 
days following termination of this Lease, return the Security Deposit to Tenant 
or the last permitted assignee of Tenant's interest under this Lease.  Landlord 
shall not be required to keep the Security Deposit separate from its general 
funds, and Tenant shall not be entitled to interest on the Security Deposit.  No
trust or fiduciary relationship is created by this Lease between Landlord and 
Tenant with respect to the Security Deposit.  If the Security Deposit is in the 
form of a letter of credit, the letter of credit shall conform to the Letter of 
Credit Requirements provided by Landlord to Tenant and shall be drawable at a 
location in the San Francisco Bay Area.

Section 5.  Additional Rent; Operating Expenses and Applicable Taxes

    5.1 As used in this Lease, the following terms have the meanings set forth 
below:

(a) "Expense Base Year" and "Tax Base Year" shall mean calendar year 1998.

(b) "Expense Comparison Year" and "Tax Comparison Year" shall mean each 
successive calendar year after calendar year 1998.

(c) "Base Year" shall mean either or both of the Expense Base Year and the Tax 
Base Year, and "Comparison Year" shall mean either or both of the Expense 
Comparison Year and the Tax Comparison Year.

(d) "Tenant's Expense Share" shall mean the percentage of Operating Expenses set
forth in the Basic Lease Information.  Tenant's Expense Share was calculated by 
dividing the Rentable Area of the Premises by the total Rentable Area of the of 
floe space in the Building.  In the event either the Rentable Area of the 
Premises and/or the total Rentable Area of the of rice space in the Building is 
changed, Tenant's Expense Share shall be appropriately adjusted, and, as to the 
Expense Comparison Year in which such change occurs, Tenant's Expense Share for 
such year shall be prorated for the periods before and after such change on the 
basis of the number of days during such Expense Comparison Year.

(e) "Tenant's Tax Share" shall mean the percentage of Applicable Taxes set forth
in the Basic Lease Information.  Tenant's Tax Share was calculated by dividing 
the Rentable Area of the Premises by

the total Rentable Area of the office and retail space in the Building. In the 
event either the Rentable Area of the Premises or the total Rentable Area of the
office and retail space in the Building is changed, Tenant's Tax Share shall be 
appropriately adjusted, and, as to the Tax Comparison Year in which such change 
occurs, Tenant's Tax Share for such year shall be prorated for the periods 
before and after such change on the basis of the number of days during such Tax 
Comparison Year.

(f) "Operating Expenses " shall mean any and all costs and expenses paid or 
incurred by Landlord in connection with the operation, maintenance, management, 
repair and replacement of the Real Property. By way of illustration but not 
limitation, Operating Expenses shall include the following: (i) the cost of 
heating, ventilating, air conditioning, electricity, steam, water, sanitary and 
storm drainage, refuse disposal and all other utilities, escalators and 
elevators and the cost of supplies, equipment, maintenance, service contracts 
and repairs and replacements of the systems referenced above in connection with 
the same, including without limitation, costs, fees and expenses incurred by 
Landlord in connection with any change of the entity providing electric service;
(ii) the cost of repairs and general maintenance and cleaning, including all 
services and supplies purchased by Landlord in connection with the same; (iii) 
the cost of fire, extended coverage, boiler, sprinkler, liability, property 
damage, loss of rent, earthquake and other insurance covering operations of the 
Building, including endorsements, all in such amounts as Landlord may reasonably
determine, and the cost of any losses payable by Landlord as a deductible; (iv) 
wages, salaries and other labor costs, including supplying, replacing and 
cleaning uniforms, taxes, insurance, retirement, medical and other employee 
benefits; (v) reasonable fees, charges and other costs of all lawyers, 
accountants, consultants and other independent contractors engaged by Landlord 
in connection with the Real Property; (vi) the cost of licenses, permits and 
inspections and the cost of contesting the validity or applicability of any Laws
which may affect Operating Expenses; (vii) the cost of repairs, changes, 
alterations or improvements of any kind to the Building (collectively, 
"Changes") in a good faith effort to comply with the requirements of any Laws 
that were not applicable to the Building at the time that permits for 
construction of the Building were issued, the entire cost of such changes ("Code
Costs',) to be deemed Operating Expenses in the year in which they accrue or are
paid by Landlord, except that if Landlord's accountants determine that any 
portion of Code Costs must be capitalized rather than expensed, then each year 
Landlord shall include in Operating Expenses only the properly chargeable 
portion of capitalized Code Costs during such year based on a determination of 
the useful life of the Changes for which the Code Costs were incurred together 
with interest on the unamortized balance at the Reference Rate plus two percent 
(2%) per annum; (viii) the cost of window coverings, carpeting and other wall or
floor coverings furnished by Landlord from time to time in public corridors and 
common areas, to be capitalized, if appropriate, under clause (vii); (ix) the 
cost of any capital improvements made to the Building after completion of its 
construction as a labor-saving or energy conservation device or to effect other 
economies in the operation or maintenance of the Building, to be capitalized if 
appropriate under clause (vii); and (x) management fees paid by Landlord to 
third parties or to management companies owned by, or management divisions of, 
Landlord for management services directly rendered to the Building.

For purposes of computing Tenant's Expense Share under this Section 5.1, 
Operating Expenses for the entire Building that are not, in Landlord's sole 
discretion, allocable or chargeable solely to either the office or retail space 
of the Building shall be allocated between and charged to the of Lice and retail
space of the Building on an equitable basis as determined by Landlord.

For purposes of this Lease, Operating Expenses shall not include Applicable 
Taxes covered under clause (g) below, depreciation on the improvements contained
in the Building (except as provided above), the cost of capital improvements 
(except as provided above). The computation of Operating Expenses, and whether a
particular item must be capitalized or expensed, shall be consistent with 
generally accepted real estate accounting practices.

(g) "Applicable Taxes" shall mean all taxes, assessments and charges levied on 
or with respect to the Building, the Real Property, or any personal property of 
Landlord used in the operation of the same and payable by Landlord. Applicable 
Taxes shall include, without limitation, all general real property taxes and 
general and special assessments; fees, assessments or charges for transit, 
police, fire, housing, other governmental services, or purported benefits to the
Building; service payments in lieu of taxes; and any tax, fee or excise on the 
act of entering into this Lease or on the use or occupancy of the Building or 
any part of it, or on the rent payable under any lease or in connection with the
business of renting space in the Building, that are now or hereafter levied on 
or assessed against Landlord by, or payable by Landlord as a result of, the 
requirements of the United States of America, the State of California, or any 
political subdivision, public corporation, district or other political or public
entity. Applicable Taxes shall also include any other tax, fee or other excise, 
however described, that may be levied or assessed as a substitute for, or as an 
addition to, in whole or in part, any of taxes specified above. Applicable Taxes
shall not include franchise, transfer, inheritance or capital stock taxes or 
income taxes measured by the net income of Landlord from all sources, unless, 
due to a change in the method of taxation, any of such taxes are levied or 
assessed against Landlord as a substitute for, in whole or in part, any other 
tax which would otherwise constitute an Applicable Tax. Applicable Taxes shall 
also include reasonable legal fees, costs and disbursements incurred in 
connection with proceedings to contest, determine or reduce Applicable Taxes. 
Notwithstanding anything to the contrary in this Lease, if any Applicable Taxes 
are payable in installments, such Applicable Taxes shall be deemed to have been 
paid in installments over the longest period available, and Tenant's share of 
such Applicable Taxes shall only include those installments which would become 
due and payable during the Term.

5.2 If, with respect to any Expense Comparison Year, the Operating Expenses 
shall be higher than the Operating Expenses for the Expense Base Year, Tenant 
shall pay to Landlord, as Additional Rent, Tenant's Expense Share of such 
increase. If, with respect to any Tax Comparison Year, the Applicable Taxes 
shall be higher than the Applicable Taxes for the Tax Base Year, Tenant shall 
pay to Landlord as Additional Rent Tenant's Tax Share of such increase.

5.3 The payments contemplated under Section 5.2 shall be made as follows:

(a) During each month of each Comparison Year, Tenant shall pay to Landlord, 
with each installment of Monthly Rent, such amounts as are reasonably estimated 
by Landlord to be one-twelfth ( 1/1 2th) of the amounts payable under Section 
5.2 with respect to each of the Tax Comparison Year and the Expense Comparison 
Year. Landlord may, by written notice to Tenant, reasonably revise its estimates
for such year and subsequent payments during the Comparison Year shall be based 
upon the revised estimates.

(b) With reasonable promptness after the end of each Tax and/or Expense 
Comparison Year, Landlord shall deliver to Tenant a statement setting forth the 
actual Operating Expenses and Applicable Taxes for the Comparison Year, a 
comparison with the Operating Expenses and Applicable Taxes for

the Base Year and a comparison of any amounts payable under Section 5.2 with the
estimated payments made by Tenant. If the amounts payable under Section 5.2 are 
less than the estimated payments made by Tenant, the statement shall be 
accompanied by a refund of the excess by Landlord to Tenant, or, at Landlord's 
election, a notice that Landlord shall credit the excess to the next succeeding 
monthly installments of the Monthly Rent. If the amounts payable under Section 
5.2 are more than the estimated payments made by Tenant, Tenant shall pay the 
deficiency to Landlord within ten (10) days after delivery of such statement. 
Statements provided by Landlord shall be final and binding upon Tenant, if 
Tenant fails to contest the same within ninety (90) days after the date of 
delivery to Tenant.

5.4 If the Expiration Date shall occur on a date other than the first or last 
day of a Comparison Year, Tenant's Tax Share and Tenant's Expense Share for such
Comparison Year shall be prorated according to the ratio that the number of days
during said Comparison Year that the Lease was in effect bears to 365.

5.5 Notwithstanding anything to the contrary in this Lease, if during any 
Expense Base Year or Expense Comparison Year the Building is less than 95% 
occupied, for the purposes of computing Tenant's share of Operating Expenses for
said year, those Operating Expenses which vary based upon occupancy levels shall
be adjusted as though the Building were 95% occupied; provided, however, in no 
event shall the aggregate amount billed by Landlord to all tenants in the 
Building exceed the actual Operating Expenses for said year.

5.6 Tenant shall reimburse Landlord upon demand for any and all taxes required 
to be paid by Landlord (subject to the same exclusions provided for in Section 
5.1(g) in connection with Applicable Taxes), whether or not now customary or 
within the contemplation of the parties, when:

(a) Said taxes are measured by or reasonably attributable to the cost or value 
of Tenant's equipment, furniture, fixtures and other personal property located 
in the Premises or by the cost or value of any leasehold improvements made in or
to the Leased Premises by or for Tenant, regardless of whether title to such 
improvements shall be vested in Tenant or Landlord;

(b)Said taxes are measured by or reasonably attributable to the Base Rent and/or
Additional Rent payable hereunder, or either of them, including, without 
limitation, any gross income tax or excise tax levied by any governmental entity
(local, state or federal), with respect to the receipt of such Base Rent and/or 
Additional Rent;

(c) Said taxes are assessed upon or with respect to the possession, leasing, 
operation, management, maintenance, alteration, repair, use or occupancy by 
Tenant of the Leased Premises or any portion thereof; or

(d) Said taxes are assessed upon this transaction or any document to which 
Tenant is a party creating or transferring an interest or an estate in the 
Leased Premises.

The portion of any taxes payable by Tenant under this Section 5.6 and other 
tenants of the Building under similar provisions in their leases shall be 
excluded from Applicable Taxes for purposes of computing Tenant's Tax Share 
thereof.

5.7 In the event that it shall not be lawful for Tenant to reimburse Landlord 
for the items specified in Section 5.6, the Monthly Rent payable to Landlord 
under this Lease shall be increased to net Landlord the same net rent, after 
imposition of any such tax upon Landlord, as would have been payable to Landlord
if any such tax had not been imposed.

Section 6. Services to be Provided by Landlord

6.1 Landlord shall furnish to Tenant, while Tenant is occupying the Leased 
Premises, the following services:

(a) Electrical facilities to furnish sufficient power for building standard 
lighting and customary and usual office machinery in the Leased Premises, such 
as typewriters, calculating machines, personal computers, and other machines of 
similar low electrical consumption, but not including any item of electrical 
equipment which requires electricity in excess of the building standard. Tenant 
shall pay to Landlord monthly, as billed, such charges as may be separately 
metered (the cost of such meter and its installation shall be borne by Tenant) 
or as Landlord's engineer may compute for any electrical service in excess of 
that stated above;

(b) Water for lavatory and drinking purposes at those points of supply provided 
for general use of all tenants in the Building;

(c) Air conditioning and heating as reasonably required for comfortable use and 
occupancy under ordinary office conditions during reasonable and customary 
office hours, as determined by Landlord; and

(d) Replacement of all standard fluorescent bulbs in all areas and all 
incandescent bulbs in public areas, rest room areas, and stairwells, and routine
maintenance and electric lighting service for all public areas of the Building 
in a manner and to the extent deemed by Landlord to be standard.

6.2 Landlord shall not be liable for any loss or damage arising or alleged to 
arise in connection with the failure, stoppage or interruption of any such 
services; nor shall the same be construed as an eviction of Tenant, result in an
abatement of Rent, entitle Tenant to any reduction in Rent, or relieve Tenant 
from the operation of any covenant or condition of this Lease. Landlord reserves
the right to temporarily discontinue such services or any of them at such times 
as may be necessary or appropriate by reason of accident, unavailability of 
employees, repairs, alterations, or improvements, or strikes, lockouts, riots, 
acts of God or any other happening or occurrence beyond Landlord's reasonable 
control. In the event of any such failure, stoppage or interruption of services,
Landlord shall use reasonable diligence to have the same restored. Neither 
diminution nor shutting off of light or air or both nor any other effect on the 
Building by any structure erected or condition now or subsequently existing on 
lands adjacent to the Building shall affect this Lease, abate Rent, or otherwise
impose any liability on Landlord.

6.3 Landlord shall have the right to reduce heating, cooling or lighting within 
the Leased Premises and in the public area in the Building as required by any 
mandatory fuel or energy-saving

program. Landlord shall be entitled to cooperate voluntarily in a reasonable 
manner with the efforts of national, state or local governmental bodies or of 
utilities suppliers in reducing energy or other resources consumption. 
Landlord's acts under this Section 6.3 shall not affect this Lease, abate Rent 
or otherwise impose any liability on Landlord.

6.4 Unless otherwise provided by Landlord, Tenant shall separately arrange with 
the applicable local public authorities or utilities, as the case may be, for 
the furnishing of and payment for all telephone services as may be required by 
Tenant in the use of the Leased Premises. Tenant shall directly pay for such 
telephone services, including the establishment and connection thereof, at the 
rates charged for such services by said authority or utility. Tenant's failure 
to obtain or to continue to receive such services for any reason whatsoever 
shall not relieve Tenant of any of its obligations under this Lease.

6.5 Landlord shall have the right to contract for electrical service with a 
different entity than currently providing electrical service to the Building. 
Tenant shall cooperate with Landlord at all times, and as reasonably necessary, 
shall allow Landlord or any electrical service provider designated by Landlord, 
access to the electric lines, wiring, feeders, risers and other machinery in the
Premises. Landlord shall in no way be liable or responsible for any loss, damage
or expense that Tenant may sustain by reason of any change, failure, 
interference, disruption or defect in the supply or character of the electricity
supplied to the Leased Premises as a result of such change in the electric 
service provider.

6.6 The above services are the only services which Landlord shall be required to
provide to Tenant. Without limiting the above, Landlord shall not be required to
provide, and Tenant expressly waives, any right to receive, any security 
services with respect to the Leased Premises or the Building. It is expressly 
understood and agreed that Landlord shall have no liability to Tenant for injury
or losses due to theft or burglary caused by unauthorized persons in the 
Building.

Section 7. Repairs and Maintenance by Landlord

7.1 Landlord shall provide for the cleaning and maintenance of the Building in 
keeping with the ordinary standard for office buildings similar to the Building 
as a part of Operating Expenses. Unless otherwise expressly stipulated herein, 
Landlord shall not be required to make any improvements or repairs of any kind 
or character to the Leased Premises during the Term, except such repairs as may 
be required to the Building's exterior walls, corridors, windows, roof and other
structural elements and equipment of the Building, and such additional 
maintenance as may be necessary because of the damage caused by persons other 
than Tenant, its agents, employees, licensees or invitees.

7.2 Landlord, or Landlord's officers, agents and representatives (subject to any
security regulations imposed by any governmental authority) shall have the right
to enter all parts of the Leased Premises at all reasonable hours to inspect, 
make repairs, alterations, and additions to the Building or the Leased Premises 
which Landlord may deem necessary or desirable, to make repairs to adjoining 
spaces, to cure any Event of Default that Landlord elects to cure, to show the 
Leased Premises to prospective Tenants, or to provide any service which it is 
obligated or elects to furnish to Tenant. Tenant shall not be entitled to any 
abatement or reduction of Rent by reason of Landlord's right of entry. Landlord 
shall have the right to enter the Leased Premises at any time and by any means 
in the case of an emergency. Tenant hereby waives and releases its right to make
repairs at Landlord's expenses under Sections

1932(1), 1941 and 1942 of the California Civil Code or under any similar law, 
statute or ordinance now or subsequently in effect.

Section 8. Repairs and Care of Building by Tenant

8.1 If the Building or any portion of the Building, including without 
limitation, the elevators, boilers, engines, pipes and other apparatus, or 
elements of the Building (or any of them) used for the purpose of climate 
control of the Building or operating the elevators, or if the water pipes, 
drainage pipes, electric lighting or other equipment of the Building or the roof
or outside walls of the Building or the Leased Premises' improvements, including
without limitation, the carpet, wall covering, doors and woodwork, become 
damaged or are destroyed through negligence, carelessness or misuse by Tenant, 
its agents, employees, licensees or invitees, then the cost of the necessary 
repairs, replacements or alterations shall be borne by Tenant, who shall 
promptly pay the same on demand to Landlord as Additional Rent. Landlord shall 
have the exclusive right, but not the obligation, to make any repairs 
necessitated by such damage.

At its sole cost and expense, Tenant shall repair or replace any damage or 
injury done to the Building, or any part of the Building, caused by Tenant, 
Tenant's agents, employees, licensees or invitees which Landlord elects not to 
repair. Tenant shall not darnage or injure the Building or the Leased Premises 
and shall maintain the Leased Premises in a clean, attractive condition and in 
good repair. If Tenant fails to keep the Leased Premises in such good order, 
condition and repair as required under this Lease to Landlord's satisfaction, 
Landlord may restore the Leased Premises to such good order and condition and 
make such repairs without liability to Tenant for any loss or damage that may 
accrue to Tenant's Property or business by reason of the same, Tenant shall pay 
to Landlord the cost of repairs and of restoring the Leased Premises to good 
order and condition, plus an additional charge of fifteen percent (15%) upon 
billing by Landlord. Upon the Termination Date, Tenant shall surrender and 
deliver up the Leased Premises to Landlord in the same condition as existed at 
the Commencement Date, excepting only ordinary wear and tear and damage arising 
from any cause not required to be repaired by Tenant.

Section 9. Tenant's Equipment and Installations; Excess Utilities

Except for desk or table mounted typewriters, calculating machines, personal 
computers, and other similar office equipment, Tenant shall not install any 
fixtures, equipment, facilities or other improvements without Landlord's 
specific prior written consent. Tenant shall not, without Landlord's prior 
written consent, use heat generating machines other than normal fractional 
horsepower office machines, or equipment or lighting, other than building 
standard lights in the Leased Premises, which may affect the temperature 
otherwise maintained by the air conditioning system or increase the electricity 
or water normally furnished for the Leased Premises. If such consent is given, 
Landlord shall have the right to install supplementary air conditioning units or
other facilities in the Leased Premises, and the cost thereof, including the 
cost of installation, operation and maintenance, increased wear and tear on 
existing equipment and other similar charges, shall by paid by Tenant to 
Landlord upon billing by Landlord. Said costs shall include the cost of 
electrical metering or surveying necessary to determine the additional operating
cost attributable to the supplementary equipment. Landlord shall also have the 
right to impose reasonable additional charges (payable by Tenant to Landlord 
upon billing) by reason of Tenant's off- hours or additional use of utilities or
services, for the use of non-standard machines,

equipment or lighting, and because of the carelessness of Tenant or the nature 
of Tenant's business. Tenant shall not, without Landlord's prior written 
consent, install additional lighting or equipment requiring electric current to 
be supplied to the Leased Premises in excess of the building standard. If such 
consent is given, Tenant shall pay to Landlord upon billing for the cost of such
excess consumption.

Section 10. Force Majeure

Landlord shall not be liable for, and Tenant shall not be entitled to any 
reduction of the Base Rent or Additional Rent by reason of, Landlord's failure 
to furnish any of the services or utilities described in this Lease whether such
failure is caused by acts of God, accident, breakage, repairs, strikes, lockouts
or other labor disturbances or disputes of any character, interruption of 
service by suppliers thereof, unavailability of materials or labor, or by any 
other cause, similar or dissimilar, beyond the reasonable control of Landlord, 
or by rationing or restrictions on the use of said services and utilities due to
energy shortages or other causes, or the making of repairs, alterations or 
improvements to the Leased Premises or Building, whether or not any of the above
result from acts or omissions of Landlord. Furthermore, Landlord shall not be 
liable under any circumstances for a loss of or injury to Tenant's Property or 
for injury to or interference with Tenant's business, including without 
limitation, loss of profits, however occurring, and Tenant shall not be relieved
of its obligation to pay the full Base Rent or Additional Rent by reason of the 
same.

Section 11. Mechanic's and Materialman's Liens

11.1 Tenant shall not suffer or permit any mechanic's or materialman's lien to 
be filed against the Leased Premises or any portion of the Building by reason of
work, labor, services, or materials supplied or claimed to have been supplied to
Tenant. Nothing in this Lease shall be deemed or construed in any way as 
constituting the consent or request of Landlord, expressed or implied, by 
inference or otherwise, for any contractor, subcontractor, laborer or 
materialman to perform any labor or to furnish any materials or to make any 
specific improvement, alteration or repair of or to the Leased Premises or any 
portion of the Building, nor of giving Tenant any right, power or authority to 
contract for, or permit the rendering of, any services or the furnishing of any 
materials that could give rise to the filing of any mechanic's or materialman's 
lien against the Leased Premises or any portion of the Building. Landlord shall 
have the right at all times to post and keep posted on the Leased Premises any 
notices which it deems necessary for protection from such liens.

11.2 If any such mechanic's or materialman's lien shall at any time be filed 
against the Leased Premises or any portion of the Building as the result of any 
act or omission of Tenant, Tenant covenants that it shall, within ten (10) days 
after Tenant has notice of the claim for lien, procure the discharge thereof by 
payment or by giving security or in such other manner as may be required or 
permitted by law or which shall otherwise satisfy Landlord. If Tenant fails to 
take such action, Landlord, in addition to any other right or remedy it may 
have, may take such action as may be necessary to protect its interests. Any 
amounts paid by Landlord in connection with such action and all reasonable legal
and other expenses of Landlord incurred in connection with the same, including 
attorney's fees and costs, court costs and other necessary disbursements shall 
be repaid by Tenant to Landlord on billing by Landlord as Additional Rent.

Section 12. Insurance

12.1 Landlord may maintain during the Term a commercial (comprehensive) 
liability insurance policy (written on an occurrence, not claims made, basis) 
including coverage for contractual liability, public liability and property 
damage in a commercially reasonable amount, as determined by Landlord, covering 
the Building. Landlord may maintain during the Term a policy of insurance 
insuring the Building against loss or damage due to fire and other casualties 
covered by a standard "all risk" coverage policy. Such coverage in such amounts 
as Landlord may from time to time determine may include the risks of lightning, 
vandalism and malicious mischief, and, at the option of Landlord, the risks of 
earthquakes and additional hazards, a rental loss endorsement and one or more 
loss payee endorsements in favor of the holders of any mortgages or deeds of 
trust encumbering the interest of Landlord in the Building or the ground or 
underlying lessors. The parties acknowledge that the premiums for insurance 
specified in Section 12.1 are Operating Expenses, as defined in Section 5.

12.2 At its own expense, Tenant shall maintain during the Term a commercial 
(comprehensive) liability insurance policy (written on an occurrence, not claims
made, basis),including~ ,/ coverage for contractual liability public liability 
and property damage in the amount of Four Million and 00/100 Dollars 
($4,000,000.00) Per person and per occurrence for personal injuries or deaths of
persons occurring in or about the Leased Premises.

12.3 At its own expense, Tenant shall maintain during the Term "all risk" 
casualty insurance for the full replacement value of all Alterations and all of 
Tenant's Property and other items in the Premises.

12.4 At its own expense, Tenant shall maintain during the Term workers' 
compensation insurance and all such other insurance as may be required by 
applicable Laws.

12.5 All insurance required of Tenant shall: (a) as to any liability policies, 
name Landlord, and any other party which Landlord so specifies, as additional 
insureds; (b) specifically cover the liability assumed by Tenant under this 
Lease; (c) be issued by an insurance company which has a general policy holder's
rating of not less than "A", and a financial rating of not less than Class "X", 
in the most current edition of Best's Insurance Reports, and which is licensed 
to do business in the State of California; (d) be primary insurance as to all 
claims thereunder; (e) provide that said insurance shall not be canceled or 
coverage changed unless thirty (30) days' prior written notice shall have been 
given to Landlord, any other named insured and the holders of any mortgages or 
deeds of trust referred to above; and (f) shall not eliminate cross-liability 
and shall contain a severability of interest clause. Tenant shall deliver 
certificates thereof to Landlord on or before the Commencement Date and at least
thirty days before the expiration dates thereof. In the event Tenant shall fail 
to procure such insurance, or to deliver such certificates, Landlord may, 
without waiving any of its rights or remedies, procure such policies for the 
account of Tenant, and the cost thereof shall be paid by Tenant as Additional 
Rent upon billing by Landlord. Tenant's compliance with the provisions of this 
Section 12 shall in no way limit Tenant's liability under any of the other 
provisions of this Lease. The limits of insurance required to be maintained by 
Tenant shall not be a limitation on any obligation of Tenant, including Tenant's
indemnification obligations under Section 21 below. Not more frequently than 
once every two years, Landlord may require Tenant to increase the amount of 
liability insurance coverage if, in the opinion of Landlord's lender or 
insurance consultant, the amount of such coverage is not then adequate.

12.6 Landlord and Tenant shall have their respective insurance companies issuing
property damage insurance waive any rights of subrogation that such companies 
may have against Landlord or Tenant, as the case may be, so long as the 
insurance carried by Landlord and Tenant, respectively, is not invalidated 
thereby. As long as such waivers of subrogation are contained in their 
respective insurance policies, Landlord and Tenant hereby waive any right that 
either may have against the other on account of any loss or damage to their 
respective property to the extent such loss or damage is insured under policies 
of insurance for fire and all risk coverage, theft, public liability, worker's 
compensation or other similar insurance.

Section 13. Quiet Enjoyment

Provided Tenant has performed all its obligations under this Lease, including 
but not limited to the payment of Rent and all other sums due, Tenant shall 
peaceably and quietly hold and enjoy the Leased Premises for the Term, without 
hindrance by Landlord, subject to the provisions and conditions set forth in 
this Lease.

Section 14. Alterations

14.1 Tenant shall not make or allow to be made any alterations, physical 
additions, or improvements in or to the Leased Premises (collectively, 
"Alteratinfzs") without first obtaining Landlord's written consent in each 
instance, which consent may be given or withheld in Landlord's sole discretion. 
At the time of said request, Tenant shall submit to Landlord plans and 
specifications of the proposed Alterations. Landlord shall have a period of not 
less than sixty (60) days in which to review and approve or disapprove said 
plans. Tenant shall pay upon demand the reasonable costs of Landlord's review of
such plans and specifications, not to exceed One Thousand Dollars ($1,000.00). 
The contractor or person selected by Tenant to make Alterations must be approved
in writing by Landlord prior to commencement of any work. Such contractor or 
person shall carry insurance in forms and amounts reasonably satisfactory to 
Landlord and shall at all times be subject to Landlord's rules and regulations 
while in the Building. All Alterations shall be performed in full compliance 
with plans and specifications approved by Landlord, all applicable Laws and the 
requirements of the Board of Underwriters, Fire Rating Bureau or similar body. 
All Alterations shall be performed at Tenant's sole cost and expense (including 
reasonable costs for Landlord's supervision), at such time and in such manner as
Landlord may designate, and shall be promptly completed in a good and 
workmanlike manner. Tenant shall pay to Landlord its review and supervision 
costs upon billing by Landlord. Landlord's approval of the plans, specifications
and working drawings for Tenant's Alterations shall create no responsibility or 
liability on the part of Landlord for their completeness, design sufficiency, or
compliance with all applicable Laws.

14.2 In addition to, and not in limitation of, the sixty (60) day period 
Landlord has to review Tenant's plans and specifications for the Alterations, 
Tenant shall give to Landlord at least fifteen (15) business days' prior written
notice of commencement of construction of any Alterations. Landlord shall have 
the right to require that (a) any contractor hired by Tenant shall, prior to 
commencing work in the Leased Premises, provide Landlord with a performance bond
and labor and materials payment bond in the amount of the contract price for the
work, naming Landlord and Tenant (and any other persons designated by Landlord) 
as co-obligees, and that (b) any such contractor employ such labor as necessary

to avoid any delay in or interruption to the progress of work undertaken in the 
Leased Premises or elsewhere in the Building due to union picket lines. Tenant's
contractors shall not use any portion of the common areas of the Building for 
performance of the work unless Landlord's written consent is first obtained. The
granting or withholding of such consent shall be at Landlord's sole discretion.

14.3 All Alterations, whether made by Tenant or Landlord or at either's expense,
including, without limitation, all Tenant Improvement Work and all carpeting and
fixtures of any kind, shall become a part of the Building immediately upon 
installation in the Leased Premises, and shall be and remain the property of 
Landlord, except for trade fixtures, office supplies and moveable furniture and 
furnishings placed on the Premises by Tenant that are removable without damage 
to the Building or the Leased Premises, which shall be subject to Section 16. 
Notwithstanding any other provisions of this Lease, upon Landlord's written 
request made within thirty (30) days prior to the expiration or termination of 
this Lease, Tenant at Tenant's sole cost and expense shall promptly remove any 
Alterations or Tenant Improvement Work (if any), designated by Landlord to be 
removed, and promptly repair any damage to the Premises or the Building 
resulting from such removal.

14.4 Tenant shall be responsible for the entire cost of the Alterations, 
including any cost or expense of Landlord, relating to the interior of the 
Leased Premises, on account of the need to comply with the ADA (as defined in 
Section 33) or other Laws. Under no circumstances shall Landlord be responsible 
to Tenant or any third party for determining whether the Alterations comply with
all applicable Laws, including the ADA, regardless of whether Tenant must obtain
Landlord's approval of the Alterations or the plans and specifications therefor 
as a condition to making them.

14.5 Should any construction, alteration, addition, improvements or decoration 
of the Leased Premises, or moving into or out of Building, by Tenant interfere 
with harmonious labor relations at the Building, all such work shall be halted 
immediately by Tenant until such time as construction can proceed without such 
interference.

Section 15. Furniture, Fixtures and Personal Property

15.1 Tenant, at its sole cost and expense, may remove its trade fixtures, of 
flee supplies and moveable office furniture and equipment not attached to the 
Building or Leased Premises ("Tenant's Property") provided:

(a) such removal is made prior to the Termination Date;

(b) no Event of Default exists at the time of such removal, and

(c) Tenant promptly repairs all damage to the Premises or the Building caused
by such removal.

15.2 If Tenant does not remove Tenant's Property prior to the Termination Date 
(unless prior arrangements have been made with Landlord and Landlord has agreed 
in writing to permit Tenant to leave any items of Tenant's Property in the 
Leased Premises for an agreed period), then, in addition to its other remedies 
at law or in equity, Landlord shall have the right to have such items removed 
and stored at Tenant's sole cost and expense and all damage to the Building or 
the Leased Premises resulting

from said removal shall be repaired at Tenant's cost. Any such items not removed
prior to the Termination Date, shall, at Landlord's option, subject to 
applicable Laws, become the property of Landlord upon the Termination Date, and 
Tenant shall not have any further rights with respect thereto or reimbursement 
therefor.

15.3 All furnishings, fixtures, equipment, effects and property of every kind, 
nature and description of Tenant and of all persons claiming by, through or 
under Tenant which, during the Term or any occupancy of the Leased Premises by 
Tenant or anyone claiming under Tenant, may be on the Leased Premises or 
elsewhere in the Building shall be at the sole risk and hazard of Tenant. If the
whole or any part thereof is destroyed or damaged by fire, water or otherwise, 
or by the leakage or bursting of water pipes, steam pipes, or other pipes, by 
theft, or from any other cause, no part of said loss or damage is to be charged 
to or be borne by Landlord.

Section 16. Taxes

During the Term, Tenant shall pay, prior to delinquency, all business and other 
taxes, charges, notes, duties and assessments levied, and rates or fees imposed,
charged, or assessed against or in respect of Tenant's occupancy of the Leased 
Premises or in respect of the trade fixtures, furnishings, equipment, and all 
other personal property of Tenant contained in the Building, and shall hold 
Landlord harmless from and against all payment of such taxes, charges, notes, 
duties, assessments, rates, and fees. Tenant shall cause said fixtures, 
furnishings, equipment, and other personal property to be assessed and billed 
separately from the real and personal property of Landlord. In the event any or 
all of Tenant's fixtures, furnishings, equipment, and other personal property 
shall be assessed and taxed with Landlord's real property, Tenant shall pay to 
Landlord Tenant's share of such taxes within ten (10) days after delivery to 
Tenant by Landlord of a statement in writing setting forth the amount of such 
taxes applicable to Tenant's Property.

Section 17. Assignment and Subletting

17.1 Neither Tenant nor Tenant's legal representatives nor successors in 
interest by operation of law or otherwise shall assign this Lease or sublease 
the Leased Premises or any part thereof or mortgage, pledge or hypothecate its 
leasehold interest, nor make any attempt to do so, without Landlord's prior 
written consent. Any such attempt shall be void and constitute an Event of 
Default. This prohibition against assigning or subletting shall be construed to 
include a prohibition against any assignment or subletting by operation of law. 
The voluntary or other surrender of this Lease by Tenant or a mutual 
cancellation of it shall not work a merger and shall, at the option of Landlord,
terminate all or any existing subleases or may, at the option of Landlord, 
operate as an assignment to Landlord of Tenant's interest in any or all such 
subleases.

17.2 The following shall constitute a prohibited assignment subject to Section 
17.1: (a) a sale, transfer, pledge or hypothecation by Tenant of all or 
substantially all of its assets or all or substantially all of its stock, if 
Tenant's stock is publicly traded; (b) a merger of Tenant with another 
corporation; (c) the sale, transfer, pledge or hypothecation of fifty percent or
more of Tenant's stock if Tenant's stock is not publicly traded; or (d) the 
sale, transfer, pledge or hypothecation of fifty percent (50%) or more Tenant's 
beneficial ownership interest if Tenant is a partnership, limited liability 
company, or other entity; provided, however, that Landlord's consent shall not 
be required for the assignment of the Lease

or subletting of the Leased Premises to a Permitted Affiliate. For purposes 
hereof, the term "Permitted Affliate" means a subsidiary of Tenant with an 
independent net worth as of the date of the proposed assignment or subletting 
equal to or greater than the net worth of Tenant as of the date of this Lease.

17.3 Tenant shall give Landlord written notice of its desire to assign this 
Lease or sublease the Leased Premises or any portion thereof. At the time of 
giving such notice, Tenant shall provide Landlord with a copy of the proposed 
assignment or sublease document, and such information as Landlord may reasonably
request concerning the proposed sublessee or assignee to assist Landlord in 
making an informed judgment regarding the financial condition, reputation, 
operation and general desirability of the proposed sublessee or assignee. 
Landlord shall then have a period of thirty (30) days following receipt of such 
notice within which to notify Tenant in writing of Landlord's election to:

(a) terminate this Lease as to the space so affected as of the date specified by
Tenant, in which event Tenant shall be relieved of all obligations accruing 
under this Lease after the termination as to the Leased Premises or such 
portion, after paying all Rent due as of the Termination Date, or

(b) permit Tenant to assign or sublet the Leased Premises or such portion, or

(c) refuse to consent to Tenant's assignment or subletting of the Leased 
Premises or such portion and to continue this Lease in full force and effect as 
to the entire Leased Premises.

If Landlord should fail to notify Tenant of its election within the thirty (30) 
day period, Landlord shall be deemed to have elected option (c). In the event of
any approved assignment or subletting, the rights of any such assignee or 
sublessee shall be subject to all of the terms, conditions and provisions of 
this Lease, including without limitation restrictions on use and the covenant to
pay Rent. If Landlord approves the proposed assignment or subletting, Tenant 
may, not later than ninety (90) days thereafter, enter into such assignment or 
sublease with the proposed assignee or sublessee upon the terms and conditions 
set forth in the notice provided to Landlord, and eighty percent (80%) of the 
Excess Rent received by Tenant shall be paid to Landlord as and when received by
Tenant. "Excess Rent" means any rent or other consideration received by Tenant 
in excess of (i) the Base Rent and Additional Rent payable hereunder (or the 
amount thereof proportionate to the portion of the Leased Premises subject to 
such sublease in the case of a sublease of a portion of the Premises) and (ii) 
reasonable brokerage commissions incurred in connection with such sublease or 
assignment. No such consent to or recognition of any such assignment or 
subletting shall constitute a release of Tenant or any guarantor of Tenant's 
performance from further performance by Tenant or such guarantor of covenants 
undertaken to be performed by Tenant. Tenant and/or such guarantor shall remain 
liable and responsible for all Rent and other obligations of Tenant under this 
Lease. Consent by Landlord to a particular assignment, sublease or other 
transaction shall not be deemed a consent to any other or subsequent 
transaction. Whether or not Landlord consents to any assignment, sublease or 
other transaction, Tenant shall pay Landlord an administrative fee of Five 
Hundred Dollars ($500) and any reasonable attorneys' fees or accountant's fees 
and costs actually incurred by Landlord in connection with such transaction. All
documents utilized by Tenant to evidence any subletting or assignment for which 
Landlord's consent has been requested, shall be subject to prior approval by 
Landlord or its attorney.

17.4 If this Lease is assigned to any person or entity under the United States 
Bankruptcy Code, 11 U.S.C. Section 101 et. seq. (the "Bankruptcy Code"), any and
all monies or other consideration

payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be and remain the exclusive property of 
Landlord, and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any such monies or other 
consideration not paid or delivered to Landlord shall be held in trust for the 
benefit of Landlord and shall be promptly paid or delivered to Landlord. Any 
person or entity to whom this Lease is so assigned shall be deemed, without 
further act or deed, to have assumed all of the obligations arising under this 
Lease as of the date of such assignment. Upon demand therefor, any such assignee
shall execute and deliver to Landlord an instrument confirming such assumption. 
In no event shall Tenant have any right to sublet or assign if there exists any 
Event of Default or circumstances which, with notice or passage of time,

would constitute an Event of Default.

17.5 Subject to the above, any consents required by Landlord under this Section 
18 shall not be unreasonably withheld or untimely delayed. In considering a 
proposed assignment or sublease, it shall not be unreasonable for Landlord to 
consider (a) whether a proposed use is compatible with the tenant mix in the 
Building, (b) the extent of Alterations required, (c) financial condition, 
character and reputation of the proposed sublessee or assignee, and (d) other 
non-economic factors, in considering whether to give its consent.

Section 18. Fire and Casualty

18.1 Tenant shall promptly notify Landlord of any damage to the Leased Premises 
resulting from fire or any other casualty. Subject to the remaining provisions 
of this Section 19, if the Leased Premises or the Building are damaged by fire 
or other casualty insured against by Landlord's fire and all risk coverage 
insurance policy, and sufficient proceeds (apart from any applicable deductible)
are made available to Landlord to fully cover the cost of repair, Landlord shall
promptly undertake such repairs, so long as such repairs can, in Landlord's 
reasonable opinion, be made within one hundred-eighty (180) days after the date 
of such damage and this Lease shall remain in full force and effect. If (a) such
repairs cannot, in Landlord's reasonable opinion, be made within one hundred 
eighty (180) days after the date of such damage, or (b) insufficient proceeds 
are made available to Landlord to fully cover the cost of repair, or (c) the 
casualty is not covered by insurance policies Landlord is required to carry 
pursuant to Section 12.1, then Landlord may elect, by written notice to Tenant 
given within sixty (60) days after the date of such damage, to either: (i) 
restore or repair such damage, in which event this Lease shall continue in full 
force and effect, or (ii) terminate this Lease as of a date specified in such 
notice, which date shall not be less than thirty (30) nor more than sixty (60) 
days after the date such notice is given. In calculating the cost of repair, 
Landlord shall be entitled to take into account the cost of bringing the 
damaged, destroyed or remaining portions of the Leased Premises and the Building
into compliance with any then-applicable Laws (including ADA Requirements).

18.2 If such fire or other casualty shall have damaged the Leased Premises, and 
if such damage is not the result of the negligence or willful misconduct of 
Tenant or any persons claiming by, through or under Tenant or any of their 
employees, agents, contractors, invitees or licensees, then during the period a 
portion of the Leased Premises is rendered unusable by such damage Tenant shall 
be entitled to a reduction in the Base Rent and Additional Rent in the 
proportion that the Rentable Area of the Leased Premises rendered unusable as a 
result of such damage bears to the total Rentable Area of the

Leased Premises. If any damage to the Leased Premises is due to the negligence 
or willful misconduct of Tenant or any of the other parties described in the 
preceding sentence, then there shall be no abatement of the Base Rent or 
Additional Rent by reason of such damages, except to the extent Landlord is 
reimbursed for such abatement of the Base Rent or Additional Rent pursuant to 
any rental insurance policies Landlord has chosen to obtain pursuant to Section 
12.1.

18.3 Notwithstanding any other provision of this Lease, Landlord shall not be 
required to repair any injury or damage to or to make any repairs to or 
replacements of any Alterations or any other improvements installed in the 
Leased Premises by or for Tenant, other than the Tenant Improvements, and Tenant
shall, at Tenant's sole cost and expense, repair and restore all such 
Alterations and improvements in the same condition as existed prior to such 
event. Except as provided in Section 19.2, Tenant shall not be entitled to any 
compensation or damages from Landlord for damage to any Alterations, or Tenant's
Property, for loss of use of the Premises or any part thereof, for any damage to
or interference with Tenant's business, loss of profits, or for any disturbance 
to Tenant caused by any casualty or the restoration of the Leased Premises 
following such casualty.

18.4 The provisions of this Lease, including this Section 19, constitute an 
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any part of the Leased Premises, the Building or 
any other portion of the Real Property, and any statute or regulation of the 
State of California, including without limitation, Sections 1932(2) and 1933(4) 
of the California Civil Code, with respect to any rights or obligations 
concerning damage or destruction in the absence of an express agreement between 
the parties and any other statute or regulation, now or subsequently in effect, 
shall have no application to this Lease or any damage or destruction to all or 
any part of the Leased Premises, the Building or any other portion of the Real 
Property. Tenant hereby specifically waives all rights to terminate this Lease 
under said Civil Code sections or any similar laws.

18.5 If the Building or the Leased Premises are damaged to any extent during the
last twelve months of the Term, Landlord may elect to terminate this Lease by 
written notice to the other within thirty (30) days after the damage occurs.

Section 19. Condemnation

19.1 If more than fifty percent (50%) of the Rentable Area ofthe Leased Premises
is taken under power of eminent domain or sold, transferred or conveyed in lieu 
thereof, either Landlord or Tenant shall have the right to terminate this Lease 
as of the earliest of the date of vesting of title or the date possession is 
taken by the condemning authority. Such right shall be exercised by giving of 
written notice to the other party on or before said date. If any part of the 
Building other than the Leased Premises is taken under power of eminent domain 
or sold, transferred or conveyed in lieu thereof, Landlord may terminate this 
Lease at its option as of the earlier of the date of vesting of title or the 
date possession is taken by the condemning authority. In either of such events, 
Landlord shall receive the entire award which may be made in such taking or 
condemnation, and Tenant hereby assigns to Landlord any and all rights of Tenant
now or hereafter arising in or to the same whether or not attributable to the 
value of the unexpired portion of this Lease; provided, however, that nothing 
contained herein shall be deemed to give Landlord any interest in or to require 
Tenant to assign to Landlord any award made to Tenant for the taking of Tenant's
Property or for the interruption of or damage to Tenant's business or for 
Tenant's moving expenses.

19.2 In the event of a taking of any portion which is less than fifty percent 
(50%) of the Rentable Area of the Leased Premises, or a sale, transfer, or 
conveyance in lieu thereof, or if this Lease is not terminated by Landlord or 
Tenant as provided above, then this Lease shall automatically terminate as to 
the portion of the Leased Premises so taken as of the earlier of the date of 
vesting of title or the date possession is taken by the condemning authority, 
and the Base Rent as well as the Additional Rent shall be apportioned according 
to the ratio that the remaining Rentable Area of the Leased Premises bears to 
the total original Rentable Area of the Leased Premises. Tenant hereby waives 
any and all rights it might otherwise have pursuant to Section 1265.130 of 
California Code of Civil Procedure or any similar provisions of Laws now or 
hereafter in effect.

19.3 In the event of temporary taking of all or any portion of the Leased 
Premises for a period of ninety (90) days or less, then this Lease shall not 
terminate but the Base Rent and the Additional Rent shall be abated for the 
period of such taking in proportion to the ratio that the remaining Rentable 
Area of the Premises bears to the total Rentable Area of the Leased Premises. 
Landlord shall be entitled to receive the entire award made in connection with 
any such temporary taking.

Section 20. Indemnification

20.1 Landlord shall not be liable to Tenant for and Tenant hereby waives all 
claims against Landlord for damage to any property or injury, illness or death 
of any person in, upon, or about the Leased Premises, the Building or the Real 
Property arising at any time and from any cause whatsoever except to the extent 
caused by the gross negligence or willful misconduct of Landlord or its 
employees or agents. Without limiting the generality of the foregoing, Landlord 
shall not be liable for any damage or damages of any nature whatsoever to 
persons or property caused by explosion, fire, theft, breakage or the misconduct
of third parties, by sprinkler, drainage or plumbing systems, by failure for any
cause to supply adequate drainage, by the interruption of any public utility or 
service, by steam, gas, water, rain or other substances leaking, issuing or 
flowing into any part of the Leased Premises, by the existence of asbestos or 
other hazardous or toxic substances in the Building or the Premises as more 
particularly described in Section 32, by natural occurrence, acts of a public 
enemy, riot, strike, insurrection, war, court order, requisition or order of 
governmental body or authority, or for any damage or inconvenience which may 
arise through repair, maintenance or alteration of any part of the Building, or 
by anything done or omitted to be done by any tenant, occupant or person in the 
Building. In addition, Landlord shall not be liable for any loss or damage for 
which Tenant is required to insure or for any loss or damage resulting from any 
construction, alterations or repair by Landlord or by others.

20.2 Tenant shall defend, with counsel approved by Landlord, indemnify and save 
harmless, Landlord, any partner, trustee, stockholder, of ricer, director, 
employee or beneficiary of Landlord, holders of mortgages or deed to trust 
covering the Leased Premises or the Building and any other party having an 
interest therein ( "Indemnif ed Parties ") from and against any and all 
liabilities, losses damages, costs, expenses (including reasonable attorneys' 
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature (a) to which any Indemnified Party is subject because of its estate or 
interest in the Leased Premises, the Building or the Real Property, or (b) 
arising from (i) injury to or death of any person, or damage to or loss of 
property, on the Leased Premises, the Building or the Real Property, or on 
adjoining sidewalks, streets or ways, or connected with the use, condition or 
occupancy of any thereof (except to the extent caused by the gross negligence or
willful misconduct of

Landlord or its agents or employees), (ii) any violation by Tenant in the 
observance or performance of its obligations under this Lease, or (iii) any act,
fault, omission, negligence or other misconduct of Tenant or its agents, 
contractors, licenses, sublessees or invitees. Tenant shall use and occupy the 
Leased Premises and other facilities of the Building at its own risk, and hereby
releases the Indemnified Parties from any and all claims for any damage or 
injury to the fullest extent permitted by Law.

20.3 The provisions of this Section 21 shall survive the expiration or sooner 
termination of this
Lease.                        

Section 21. Default by Tenant

21.1 The term "Event of Default" refers to the occurrence of any one or more of 
the following:

(a) failure of Tenant to pay when due any Base Rent, Additional Rent or any 
other monetary sum required to be paid hereunder (a "Monetary Default");

(b) failure of Tenant, after ten (10) days written notice, to observe and 
perform any other of Tenant's obligations, covenants or agreements under this 
Lease; provided, however, that if such nonmonetary default cannot reasonably be 
cured within ten ( 10) days, then the default shall not be deemed to be uncured 
if Tenant commences to cure the default promptly, and in any event within ten 
(10) days from Landlord's notice, and continues to diligently complete the cure 
within a reasonable time;

(c) if Tenant, or any guarantor of Tenant's obligations under this Lease (a 
"Guarantor',), admits in writing that it cannot meet its obligations as they 
become due; or is declared insolvent according to any law; or assignment of 
Tenant's or Guarantor's property is made for the benefit of creditors; or a 
receiver or trustee is appointed for Tenant or Guarantor or its property; or the
interest of Tenant or Guarantor under this Lease is levied on under execution or
other legal process; or any petition is filed by or against Tenant or Guarantor 
to declare Tenant bankrupt or to delay, reduce or modify Tenant's debts or 
obligations; or any petition is filed or other action taken to reorganize or 
modify Tenant's or Guarantor's capital structure, if Tenant is a corporation or 
other entity; provided that, any involuntary levy, execution, legal process or 
petition filed against Tenant or Guarantor shall not constitute an Event of 
Default provided Tenant or Guarantor shall vigorously contest the same by 
appropriate proceedings and shall remove or vacate the same within sixty days 
from the date of its creation, service or filing;

(d) the abandonment of the Leased Premises by Tenant, which shall mean that 
Tenant has vacated the Leased Premises for ten (10) consecutive days, whether or
not Tenant is in Monetary Default; or that Tenant, in the judgment of Landlord, 
is vacating the Leased Premises by removing furniture and fixtures;

(e) the discovery by Landlord that any financial statement given by Tenant or 
any of its assignees, subtenants or successors-in-interests, or Guarantors, was 
materially false; or

 (f) if Tenant or any Guarantor shall die, cease to exist as a corporation or 
partnership or be otherwise dissolved or liquidated or become insolvent, or 
shall make a transfer in fraud of creditors.

21.2 Upon the occurrence of any Event Default by Tenant, Landlord may at any 
time thereafter, without limiting Landlord in the exercise of any right or 
remedy which Landlord may have under this Lease, at law or in equity by reason 
of such Event of Default:

(a) Terminate this Lease and recover from Tenant as provided by California Civil
Code Section 1951.2: (i) the worth at the time of award of the unpaid Rent and 
other amounts which had been earned at the time of termination; (ii) the worth 
at the time of award of the amount by which the unpaid Rent which would have 
been earned after termination until the time of award exceeds the amount of such
Rent loss that Tenant proves could have been reasonably avoided; (iii) the worth
at the time of award of the amount by which the unpaid Rent for the balance of 
the Term after the time of award exceeds the amount of such Rent loss that 
Tenant proves could be reasonably avoided; and (iv) any other amount necessary 
to compensate Landlord for all the detriment proximately caused by Tenant's 
failure to perform its obligations under this Lease or which, in the ordinary 
course of things, would be likely to result therefrom. The "worth at the time of
award" of the amount referred to in (iii) shall be computed by discounting such 
amount at the discount rate of the Federal Reserve Bank of San Francisco at the 
time of award plus one percent (1%). For purposes of computing unpaid Rent which
would have accrued and become payable under this Lease pursuant to the 
provisions of this subsection (a), unpaid Rent shall consist of the sum of the 
unpaid Base Rent and the Additional Rent as reasonably estimated by Landlord for
the balance of the Term; or

 (b) Continue this Lease in effect and enforce all of its rights and remedies 
under this Lease, as provided by California Civil Code Section 1951.4, including
the right to recover Base Rent and Additional Rent as they become due, for so 
long as Landlord does not terminate Tenant's right to possession; provided, 
however, if Landlord elects to exercise its remedies described in this 
subsection (b) and Landlord does not terminate this Lease, and if Tenant 
requests Landlord's consent to an assignment of this Lease or a sublease of the 
Leased Premises, Landlord shall not unreasonably withhold its consent to such 
assignment or sublease. Acts of maintenance or preservation, efforts to relet 
the Leased Premises, or the appointment of a receiver upon Landlord's initiative
to protect its interest under this Lease, shall not constitute a termination of 
Tenant's right to possession; or

(c) With or without terminating this Lease, to reenter the Leased Premises and 
remove all persons and property from the Leased Premises. Such property may be 
removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant. No such reentry shall constitute an election to terminate 
this Lease unless a written notice of such intention is given to Tenant or 
unless the termination thereof is decreed by a court of competent jurisdiction. 
In addition to its other rights under this Lease, Landlord shall have the right,
even though tenant is in default and has abandoned the Leased Premises, (i) to 
maintain this Lease in effect and not terminate Tenant's right to possession, 
and (ii) to enforce its rights and remedies under this Lease, including the 
right to recover Base Rent and Additional Rent as they become due under this 
Lease.

21.3 If Tenant fails to make any payment or cure any Event of Default hereunder 
within the time permitted, Landlord, without being under any obligation to do so
and without thereby waiving such Event of Default, may make the payment and/or 
remedy the Event of Default for the account of Tenant (and enter the Leased 
Premises for such purpose), and Tenant shall pay Landlord, upon demand, all 
reasonable costs, expenses and disbursements plus fifteen percent (15%) overhead
cost, incurred by Landlord in connection with such payment or cure.

21.4 Nothing contained in this Section 21 shall limit or prejudice the right of 
Landlord to prove and obtain as liquidated damages in any bankruptcy, 
insolvency, receivership, reorganization or dissolution proceeding, an amount 
equal to the maximum allowed by applicable Law, whether or not such amount is 
greater, equal to or less than the amounts recoverable, either as damages or 
Rent, referred to in any of the preceding provisions of this Section 21. 
Notwithstanding anything contained in this Section 21 to the contrary, any such 
proceeding or action involving bankruptcy, insolvency, reorganization, 
arrangement, assignment for the benefit of creditors, or appointment of a 
receiver or trustee, shall be considered to be an Event of Default only when 
such proceeding, action or remedy shall be taken or brought by or against the 
then holder of the leasehold estate under this Lease or the guarantor under a 
Guaranty of this Lease.

21.5 In connection with an Event of Default, Tenant shall also be liable and 
shall pay to Landlord, in addition to any sums provided to be paid above, 
broker's fees incurred by Landlord in connection with reletting the whole or any
part of the Leased Premises, the costs of removing and storing Tenant's or other
occupants' property, the costs of repairing, altering, remodeling, or otherwise 
putting the Leased Premises into condition acceptable to a new tenant or 
tenants, and all reasonable expenses incurred by Landlord in enforcing or 
defending Landlord's rights and/or remedies, including reasonable attorneys' 
fees whether suit was actually filed or not.

21.6 Landlord is entitled to accept, receive, in check or money order, and 
deposit any payment made by Tenant for any reason or purpose or in any amount 
whatsoever, and apply them at Landlord's option to any obligation of Tenant, and
such amounts shall not constitute payment of any amount owed except that to 
which Landlord has applied them. No endorsement or statement on any check or 
letter of Tenant shall be deemed an accord and satisfaction or recognized for 
any purpose whatsoever. The acceptance of any such check or payment shall be 
without prejudice to Landlord's rights to recover any and all amounts owed by 
Tenant and shall not be deemed to cure any other default nor prejudice 
Landlord's rights to pursue any other available remedy.

21.7 Landlord shall not be in default unless Landlord fails to perform 
obligations required of Landlord within thirty (30) days after written notice 
thereof from Tenant to Landlord, and after the notice and other requirements of 
Section 35 have been met; provided that, if such default cannot reasonably be 
cured within thirty (30) days then Landlord shall not be in default if it 
commences to cure the default within the thirty (30) day period and continues 
diligently to complete the cure within a reasonable time. Any such notice of 
default shall specify the obligation Landlord has allegedly failed to perform, 
and shall identify the Lease provision containing such obligation. If, by reason
of the occurrence of any of the events specified in Section 10 hereof, Landlord 
is unable to fulfill or is delayed in fulfilling any of Landlord's obligations 
under this Lease or any collateral instrument, no such inability or delay shall 
constitute an actual or constructive eviction, in whole or in part, or entitle 
Tenant to any

abatement or diminution of Base Rent or Additional Rent, or relieve Tenant from 
any of its obligations under this Lease, or impose any liability upon Landlord 
or its agents by reason of inconvenience or annoyance to Tenant or by reason of 
injury to or interruption of Tenant's business, loss of profits, or otherwise. 
Tenant hereby waives and releases its right to terminate this Lease under 
Section 1932(1) of the California Civil Code or under any similar law, statute 
or ordinance now or later in effect.

Section 22. Lien for Rent

To secure the payment of all Rent and the faithful performance of all the other 
covenants of this Lease to be performed by Tenant, Tenant hereby gives to 
Landlord an express contract lien on and first security interest in and to all 
property, equipment, machinery, trade fixtures, chattels and merchandise

("Lien") which may be placed in the Leased Premises and also upon all proceeds 
of any insurance which may accrue to Tenant by reason of damage to or 
destruction of any such property, and agrees that this

Lease shall constitute a security agreement with respect thereto. All exemption 
laws are hereby waived by Tenant. This Lien is given in addition to any 
statutory liens and shall be cumulative thereto. Tenant agrees to execute from 
time to time at the request of Landlord WCC-l Financing Statements referencing 
this security agreement in a form satisfactory to Landlord, and to file 
originals of such statements with the clerk of the cities or towns where (a) the
Leased Premises are located, and (b) Tenant maintains its principal business 
office or residence, or wherever else such statements would ordinarily be filed 
to

protect creditor's rights under California law. In addition to all other rights 
of Landlord under this Lease, upon Tenant's default, Landlord shall have all of 
the remedies of a secured party with respect to said

property, equipment, machinery, trade fixtures, chattels and merchandise.

Section 23. Right to Relocate

Notwithstanding anything in this Lease to the contrary, Landlord in all cases 
shall retain the right and power to relocate Tenant, upon thirty (30) days' 
written notice, within the Building to space which is comparable in size and 
location and suited to Tenant's use, such right and power to be exercised 
reasonably. Landlord shall not be liable or responsible for any claims, damages 
or liabilities in connection with such relocation. Landlord's reasonable 
exercise of such right and power shall include, but not be limited to, a 
relocation to consolidate the Rentable Area occupied in order to provide 
Landlord's services more efficiently or a relocation to provide contiguous 
vacant space for a prospective tenant. If Landlord shall exercise said option, 
the substituted premises shall thereafter be deemed the "Leased Premises" under 
this Lease, and a new amended Exhibit A showing the new Leased Premises will be 
substituted for the original Exhibit A.

Section 24. Attorneys' Fees

If either party commences litigation against the other in connection with this 
Lease, the parties hereby waive any right to a trial by jury. In the event of 
such litigation, the prevailing party shall be entitled to recover from the 
other party such costs and reasonable attorneys' fees as may have been incurred.
The "prevailing party" shall be the party who receives substantially the result 
sought, whether by settlement, dismissal or judgment and shall be conclusively 
determined by the court. Further, if for any reason Landlord consults legal 
counsel or otherwise incurs any costs or expenses as a result of its rightful 
attempt to enforce the provisions of this Lease, even though no litigation is 
commenced, or if commenced is not pursued to final judgment, Tenant shall pay to
Landlord, in addition to all other

amounts for which Tenant is obligated, all of Landlord's reasonable costs and 
expenses incurred in connection with any such acts, including reasonable 
attorneys fees.

Section 25. Non-Waiver

Neither acceptance of any payment by Landlord from Tenant nor failure by 
Landlord to complain of any action, non-action, or default of Tenant shall 
constitute a waiver of any of Landlord's rights. No action of Landlord shall be 
deemed to be an acceptance of a surrender of this Lease by Tenant, including 
without limitation, the acceptance of keys from Tenant, unless stated in a 
written agreement or other written document signed by Landlord. Time is of the 
essence with respect to the performance of every obligation of Tenant under this
Lease. Waiver by Landlord of any right in connection with any Event of Default 
shall not constitute a waiver of such right or remedy or any other right or 
remedy arising in connection with either a subsequent Event of Default with 
respect to the same obligation or any other obligation. No right or remedy of 
Landlord or covenant, duty, or obligation of Tenant shall be deemed waived by 
Landlord unless such waiver is in writing, signed by Landlord or Landlord's duly
authorized agent.

Section 26. Rules and Regulations

Tenant shall comply with the rules and regulations set forth in Exhibit B. 
Landlord shall have the right at all times to change such rules and regulations 
or to amend them in any manner as may be deemed advisable by Landlord, all of 
which changes and amendments shall be sent by Landlord to Tenant in writing. 
Tenant shall thereafter comply with the changed or amended rules and 
regulations. Landlord shall have no liability to Tenant for any failure of any 
other tenants of the Building to comply with such rules and regulations.

Section 27. Assignment by Landlord

Landlord shall have the right to transfer, in whole or in part, all its rights 
and obligations under this Lease and in the Leased Premises and the Building.

Section 28. Liability of Landlord

The obligations of Landlord under this Lease shall be binding upon Landlord and 
its successors and assigns and any future owner of the Building only with 
respect to events occurring during its and their respective ownership of the 
Building. In addition, Tenant shall look solely to Landlord's interest in the 
Building for recovery of any judgment against Landlord arising in connection 
with this Lease, it being agreed that neither Landlord nor any successor or 
assign of Landlord nor any future owner of the Building, nor any trustee, 
director, of ricer, employee, beneficiary, partner, shareholder, or agent of any
of the foregoing shall ever be personally liable for any such judgment.

Section 29. Subordination and Attornment

At Landlord's option, this Lease shall be subordinate to any mortgage, deed of 
trust (now or subsequently placed upon the Building or the Real Property), 
ground lease, declaration of covenants (subsequently placed upon the Building or
the Real Property) regarding maintenance and use of any

areas contained in any portion of the Building or the Real Property, and to any 
and all advances made under any mortgage or deed of trust and to all renewals, 
modifications, consolidations, replacements and extensions of the same. With 
respect to any of the above documents, Tenant agrees that no documentation other
than this Lease shall be required to evidence the subordination. Any holder of a
mortgage or deed of trust may elect, by written notice to Tenant, to make this 
Lease superior to the lien of its mortgage or deed of trust, in which case this 
Lease shall automatically be deemed prior to such mortgage or deed of trust, 
whether this Lease is dated earlier or later than the date of the mortgage or 
deed of trust or the date the same was recorded. Tenant shall execute such 
documents as may be required to evidence the subordination or to make this Lease
prior to the lien of any mortgage or deed of trust, as the case may be. By 
failing to do so within five days after written demand, Tenant does hereby make,
constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact to do 
so. This power of attorney is coupled with an interest. Tenant hereby attorns to
all successor owners of the Building, whether or not such ownership is acquired 
as a result of a sale through foreclosure of a deed of trust or mortgage, or 
otherwise. Additionally, at such time or times as Landlord may request, upon not
less than five days' prior written request by Landlord, Tenant shall sign and 
deliver to Landlord a certificate stating whether this Lease is in full force 
and effect; whether any amendments or modifications exist; whether there are any
Events of Default or circumstances that, with notice or the passage of time may 
become an Event of Default; and such other information and agreements as may be 
reasonably requested. Any such statement delivered pursuant to this Section 29 
may be relied upon by Landlord and by any prospective purchaser of all or any 
portion of Landlord's interest, or a holder or prospective holder of any 
mortgage or deed of trust encumbering the Building. Tenant's failure to deliver 
such statement within such time shall constitute an Event of Default and shall 
conclusively be deemed to be an admission by Tenant of the matters set forth in 
the request for an estoppel certificate.

Section 30. Holding Over

In the event Tenant, or any party claiming under Tenant, retains possession of 
the Leased Premises after the Termination Date, the possession shall be an 
unlawful detainer. No tenancy or interest shall result from such possession, and
such parties shall be subject to immediate eviction and removal. Tenant or any 
such party shall pay Landlord, as Rent for the period of such holdover, an 
amount equal to two hundred percent (200%) of the Rent otherwise provided for in
this Lease during the time of holdover. Tenant also shall be liable for any and 
all damages sustained by Landlord as a result of such holdover. Tenant shall 
vacate the Leased Premises and deliver the Leased Premises to Landlord 
immediately upon Tenant's receipt of notice from Landlord to so vacate. The Rent
during such holdover period shall be payable to Landlord on demand. No holding 
over by Tenant, whether with or without Landlord's consent, shall operate to 
extend this Lease.

Section 31. Signs

No sign, symbol or identifying marks shall be put upon the Building or the Real 
Property, or in the halls, elevators, staircases, entrances, parking areas or 
upon the doors or walls, without Landlord's prior written approval, which may be
given or withheld in Landlord's sole discretion Should such approval be granted,
the signs or lettering shall conform in all respects to the sign and/or 
lettering criteria established by Landlord. Landlord, at Landlord's sole cost 
and expense, reserves the right to change the door plaques as Landlord deems 
reasonably desirable.

Section 32. Hazardous Substances

With respect to Tenant's use of the Building, Tenant at all times, at its own 
cost and expense, shall comply with all Laws relating to the use, analysis, 
production, storage, sale, disposal or transportation of any hazardous materials
("Hazardous Substance Laws',), including, without limitation, oil or petroleum 
products or their derivatives, solvents, PCB's, explosive substances, asbestos, 
radioactive materials or waste, and any other toxic, ignitable, reactive, 
corrosive, infectious, contaminating or pollution materials ("Hazardous 
Substances',) which now or in the future are subject to any governmental 
regulation.

Tenant shall not use, generate, store or dispose of any Hazardous Substances in 
or on the Leased Premises or the Building (except to the extent and in the 
quantities any such Hazardous Substances are commonly used for general office 
purposes and then only in strict accordance with all Hazardous Substance Laws). 
Except in emergencies or as otherwise required by Law, Tenant shall not take any
remedial action in response to the presence or release of any Hazardous 
Substances on or about the Building without first giving written notice of the 
same to Landlord. Tenant shall not enter into any settlement agreement, consent 
decree or other compromise with respect to any claims relating to any Hazardous 
Substances in any way connected with the Building without first notifying 
Landlord of Tenant's intention to do so and affording Landlord the opportunity 
to participate in any such proceedings.

Landlord shall have the right at all reasonable times to (a) inspect the Leased 
Premises, (b) conduct tests and investigations to determine whether Tenant is in
compliance with the above provisions, and (c) request lists of all Hazardous 
Substances used, stored or located on the Leased Premises by Tenant. All costs 
and expenses incurred by Landlord in connection with any environmental 
investigation shall be paid by Landlord (and may be included in Operating 
Expenses), except that if any such environmental investigation shows that Tenant
has failed to comply with the provisions of this Section, or that the Building 
or the Real Property (including surrounding soil and any underlying or adjacent 
groundwater) have become contaminated due to the operations or activities in any
way attributable to Tenant, then all of the costs and expenses of such 
investigation shall be paid by Tenant. Tenant's indemnity under Section 20 shall
specifically extend to all liability, including all foreseeable and 
unforeseeable consequential damages, directly or indirectly arising out of the 
use, generation, disposal or storage of Hazardous Substances by Tenant, 
including without limitation the costs of any required repair, cleanup or 
detoxification and the preparation of any closure or other required plans, 
whether such action is required or necessary prior to or following the 
termination of this Lease, to the full extent that such action is proximately 
caused by the use, generation, storage, or disposal of Hazardous Substances by 
Tenant. Neither the written consent by Landlord to the use, generation, disposal
or storage of Hazardous Substances by Tenant nor the strict compliance by Tenant
with all Hazardous Substances Laws shall excuse Tenant from its indemnity 
obligation.

In the event Tenant's occupancy or conduct of business in or on the Leased 
Premises, whether or not Landlord has consented to the same, results in any 
increase in premiums for the insurance carried from time to time by Landlord 
with respect to the Building, Tenant shall pay any such increase in premiums 
upon billing by Landlord. In determining whether increased premiums are a result
of Tenant's use or occupancy of the Leased Premises, a schedule issued by the 
organization computing the insurance rate on the Building showing the various 
components of such rate shall be conclusive evidence of the

several items and charges which make up such rate. Tenant shall promptly comply 
with all reasonable requirements of the insurance authority or of any insurer 
now or later in effect relating to the Leased Premises.

Landlord hereby discloses to Tenant that a Phase I Environmental Site Assessment
and Limited Asbestos Survey and Hazard Assessment were performed on the Property
by Hygienetics, Inc. of Emeryville, California in 1990. Hygienetics, Inc. 
supplemented the Limited Asbestos Survey in June, 1991 and March, 1995. Such 
surveys and assessment revealed 13 samples of vinyl tile floor mastic, and two 
samples of vinyl floor tiles, in the Building, which contained asbestos and 
revealed the presence of limited quantities of hazardous and toxic substances 
such as cleaning materials, lead and acid batteries in the basement and diesel 
fuel storage tanks. Complete copies of the Site Assessment and Asbestos Surveys 
are available for inspection in the Building management office. Except as 
disclosed in the Site Assessment and Asbestos Surveys, Landlord has no actual 
knowledge of Hazardous Substances in the Building that must be removed in order 
for the Building to comply with Hazardous Substances Laws in effect as of the 
date of this Lease. Tenant has had the opportunity, prior to execution and 
delivery of this Lease, to make such further investigation and inquiry about 
such matters as Tenant deems appropriate and Tenant accepts the Premises with 
knowledge of the risks that may be associated with the presence of all materials
or conditions disclosed in such surveys and assessment.

Section 33. Compliance with Laws and Other Regulations

At its sole cost and expense, Tenant shall promptly comply with (a) all laws, 
statutes, ordinances, decrees, orders, and governmental rules, regulations or 
requirements now in force or which may later become in force, of federal, state,
county, and municipal authorities, including but not limited to ADA 
Requirements, (b) with the requirements of any board of fire underwriters or 
other similar body now or hereafter constituted, (c) with any occupancy 
certificate issued pursuant to any law by any public officer or officers and (d)
with any covenants, conditions and restrictions encumbering the Building or the 
Real Property, which impose any duty upon Landlord or Tenant, insofar as any 
thereof relate to or affect the condition, use, alteration or occupancy of the 
Leased Premises (collectively, "Laws").

Section 34. Governing Law; Severability

This Lease shall be construed in accordance with the laws of the State of 
California. If any provision of this Lease or the application of it to any 
person or circumstance shall be invalid or unenforceable to any extent, it shall
be adjusted, if possible, rather than voided, in order to achieve the intent of 
the parties. In any event, the remainder of this Lease and the application of 
such provision to the other persons or circumstances shall not be affected 
thereby and shall be enforced to the greatest extent permitted by Law. This 
Lease shall be construed as though the covenants between Landlord and Tenant are
independent. Tenant hereby expressly waives the benefit of any statute to the 
contrary and agrees that if Landlord fails to perform its obligations, Tenant 
shall not be entitled to make any repairs or perform any acts at Landlord's 
expense or to any set-off of Rent or other amounts owing to Landlord.

Section 35. Notices

All notices, demands, statements or communications (collectively, "Notices") 
given or required to be given by either party to the other shall be in writing, 
shall be sent by nationally recognized

overnight courier service, or United States certified or registered mail, 
postage prepaid, return receipt requested, or delivered personally addressed as 
follows:

TO THE LANDLORD: John Hancock Mutual Life Insurance Company
                 c/o LaSalle Partners Limited
                 444 Market Street, Suite 2600
                 San Francisco, CA 94111
                 Att'n: Kathleen Freer, General Manager


with a copy to: John Hancock Mutual Life Insurance Company
                Att'n Investment Officer Real Estate Investment Group
                200 Clarendon St. Floor T-53
                Boston, MA 02117

TO THE TENANT: Metro Commerce Bank
               1248 5th Avenue
               San Rafael,CA 94901
               Att'n: Charles Hall

Any Notice will be deemed given upon the date actually received. If Tenant is 
notified of the identity and address of the holder of any mortgage or deed of 
trust given by Landlord, or any ground or underlying lessor, Tenant shall give 
to such holder or ground or underlying lessor written notice of any default by 
Landlord under the terms of this Lease by registered or certified mail, and such
holder or ground or underlying lessor shall be given a reasonable opportunity to
cure such default prior to Tenant's exercising any termination remedy available 
to Tenant. Such addresses may be changed from time-totime by either party 
serving notice as provided above.

Section 36. Obligations of Successors, Plurality, Gender

Except as otherwise expressly provided, this Lease shall bind and inure to the 
benefit of the parties hereto, their respective heirs, legal representatives, 
successors and assigns. If the rights of Tenant are owned by two or more parties
or two or more parties are designated as Tenant, then all such parties shall be 
jointly and severally liable for the obligations of Tenant. Whenever the 
singular or plural number, masculine or feminine or neuter gender is used, it 
shall equally include the other.

Section 37. Entire Agreement

This Lease and any attached addenda or exhibits constitute the entire agreement 
between Landlord and Tenant. No prior or contemporaneous written or oral 
representations shall be binding. This Lease shall not be amended, changed or 
extended except by written instrument signed by Landlord and Tenant.

Section 38. Section Captions

Section captions are for Landlord's and Tenant's convenience only, and neither 
limit nor amplify the provisions of this Lease.

Section 39. Changes

Tenant shall consent to a modification of this Lease requested by any mortgagee 
or beneficiary under a deed of trust as long as the modification does not 
increase Tenant's costs or substantially change Tenant's rights and obligations.

Section 40. Authority

All rights and remedies of Landlord under this Lease, or those which may be 
provided by Law, may be exercised by Landlord in its own name individually, or 
in its name by its agent, and all legal proceedings for the enforcement of any 
such rights or remedies, including actions for Rent, unlawful detainer, and any 
other legal or equitable proceedings, may be commenced and prosecuted to final 
judgment and be executed by Landlord in its own name individually or in its name
by its agent. Landlord and Tenant each represent to the other that each has full
power and authority to execute this Lease and to make and perform the agreements
contained in it. Tenant expressly stipulates that any rights or remedies 
available to Landlord, either by the provisions of this Lease or otherwise, may 
be enforced by Landlord in its own name individually or in its name by its agent
or principal.

Section 41. Brokerage

Landlord and Tenant hereby warrant to each other that they have had no dealings 
with any real estate broker or agent in connection with the negotiation of this 
Lease, excepting only the real estate brokers or agents specified in the Basic 
Lease Information, and that they know of no other real estate broker or agent 
who is entitled to a commission in connection with this Lease. Each party shall 
defend, indemnify and hold the other party harmless from and against all claims,
actions, loss, cost, damage, expense and liability (including without limitation
reasonable attorneys' fees and court costs) with respect to any leasing 
commission or equivalent compensation alleged to be owing on account of the 
indemnifying party's dealings with any real estate broker or agent other than 
that specified herein. Additionally, Tenant acknowledges and agrees that 
Landlord shall have no obligation for payment of any brokerage fee or similar 
compensation to any person with whom Tenant has dealt or may in the future deal 
with respect to leasing of any additional or expansion space in the Building or 
renewals or extensions of this Lease.

Section 42. Additions to Lease

Exhibits "A" and "B" are attached hereto and incorporated in this Lease for all 
purposes and are hereby acknowledged by both parties to this Lease.

IN WITNESS WHEREOF, Landlord and Tenant, acting herein through duly authorized 
individuals, have caused this Lease to be executed in multiple counterparts, 
each of which shall have the force and effect of an original as of the date 
first above written

TENANT:   Metro Commerce Bank
          By:  /s/Charles Hall
          Title President:

TAX ID OR TAX EXEMPT NO. 68-0300300

LANDLORD: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
          a Massachusetts corporation

          By:  /s/Meliha E. Niemann
          Its: Investment Officer

EX-13

EXHIBIT 13

MCB FINANCIAL CORPORATION 
1997 ANNUAL REPORT


Corporate Profile
MCB Financial Corporation, headquartered in San Rafael, California, is the 
holding company of Metro Commerce Bank, N.A. ("Metro").  Metro is a full service
commercial bank specializing in the delivery of financial services to the local 
business communities it serves.   Through its five branch offices located in San
Rafael, South San Francisco, Hayward, Upland and San Francisco, Metro offers a 
broad range of deposit and loan products designed for small businesses.  The 
mission of Metro is to achieve superior financial performance for our 
shareholders by ranking among the top 10% of all banks within California as 
measured by return on equity and return on assets.  This objective will be 
accomplished by talented banking professionals working with a firm commitment to
community based lending, management of credit risk, and the delivery of a unique
service experience.   Shares of MCB Financial Corporation are traded over-the-
counter under the ticker symbol of MCBF.  

Table of Contents

Financial Highlights

Letter to Shareholders

Management's Discussion and Analysis

Market Price of MCB Financial Corporation

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Report of Independent Auditors


SELECTED FINANCIAL DATA FOR MCB FINANCIAL CORPORATION
(Dollar amounts in thousands, except per share amounts)

Years ended December 31,
                                       1997    1996     1995     1994    1993

Interest income                      $11,500  $10,385   $8,716   $5,525   $4,041
Interest expense                       4,253    4,018    3,841    1,806    1,526
   Net interest income                 7,247    6,367    4,875    3,719    2,515
Provision for possible credit losses     120      220      100      100      125
Other income                             839    2,768    1,344    3,070    4,522
Other expense                          5,673    5,565    8,552    5,837    5,440
Income (loss) before income taxes      2,293    3,350   (2,433)     852    1,472
Provision for income taxes               943    1,379     (935)     326      238
Net income (loss)                     $1,350   $1,971  ($1,498)    $526   $1,234
Net income (loss) per share-diluted    $1.28    $1.98   ($1.51)   $0.54    $1.32

Period End
Total assets                        $139,877 $131,504 $122,316  $90,443  $64,247
Total loans                           87,179   80,122   58,612   46,622   24,440
Total deposits                       126,132  119,858  110,263   76,043   55,052
Other borrowings                         750      447      213    4,521      763
Shareholders' equity                  11,967   10,185    8,271    9,197    8,076
Book value per share                  $11.65   $10.29    $8.35    $9.17    $9.11

Financial Ratios
For period:
   Return on assets                    0.97%    1.56%   (1.37%)    0.70%   1.96%
   Return on equity                   12.22%   20.97%  (17.04%)    5.99%  16.31%
At period end:
   Equity to assets                    8.56%    7.75%    6.76%    10.17%  12.57%



LETTER TO SHAREHOLDERS


To Our Shareholders

1997 was another very good year for MCB Financial Corporation and our 
shareholders, with record core earnings, record core revenues and a 56% gain in
our share price.

Financial Performance  The Company reported net income of $1,350,000, up 23% 
from 1996 net income before litigation expense recoveries.  Net income for 1996
was $1,971,000, which included a pre-tax recovery of approximately $1.8 million
in litigation expenses.  Earnings per share were $1.34 basic and $1.28 diluted 
in 1997, compared to $1.99 basic and $1.98 diluted in 1996.  Excluding the 
litigation expense recovery, net income for 1996 would have been approximately 
$1,099,000.  Earnings per share would have been $1.11 basic and $1.10 diluted.

Excluding the litigation expense recovery in 1996, return on equity improved to
12.22% in 1997 compared to 11.69% in 1996.  Return on assets also improved, 
reaching 0.97% in 1997 compared to 0.87% in 1996.

The capital position continued to improve as the equity to assets ratio averaged
7.96% in 1997 compared to 7.44% in 1996.  The Company continues to exceed all 
minimum required ratios for well capitalized  institutions.

The market for the Company's stock continued to develop as trading volume 
increased throughout the year.  The shares opened 1997 at $10.24 (adjusted for 
stock dividends) and closed the year at $16.00, representing an increase of 56%
in market value.  As a result of the continued growth of the Company and the 
confidence of the board of directors in the Company's future , a 5% stock 
dividend was paid in August 1997 and a 4-for-3 stock split was declared in 
January 1998.  It was the second stock dividend paid by the Company in as many
years and the Company's first stock split.  

The Company continued to benefit from its strategy of de-emphasizing asset 
growth in favor of improving existing profit margins.  Although asset growth was
limited to 6.4%, the average loan to deposit ratio increased to 65.2% and the 
average noninterest-bearing deposit to total deposit ratio increased to 21.5% 
during1997.  These ratios were 62.4% and 19.7%, respectively, during 1996.  As 
these ratios increase, the Company's capital position is utilized more 
efficiently and the net interest margin is favorably impacted.  Accordingly, the
Company's net interest margin increased to 5.68% for the year ended 1997 
compared to 5.52% in 1996.

The Company also strives to utilize its capital more efficiently by keeping its
efficiency ratio (other expenses ses divided by net interest income plus other 
income) as low as possible.  This ratio decreased from 99.7% in 1995 and 76.1% 
in 1996 (excluding litigation expense recoveries) to 70.2% in 1997.

Branch Expansion  The Company remains focused in evaluating expansion 
opportunities through branch openings and/or acquisitions.  In January 1998, the
Company opened a San Francisco branch.  The San Francisco office becomes the 
fourth branch opened by the Company in the past four years.  The branch provides
a presence in San Francisco while also solidifying the markets in areas adjacent
to San Francisco.  We are hopeful that our continued efforts will produce other 
expansion opportunities in the near future.

Leadership  The Company's success relates to the board of director's and 
management's motivation to think and act as shareholders.  The board of 
directors and management own a large percentage of the Company's common stock.  
As a result, every management decision considers the impact on shareholders.  We
are ever mindful of the need to offer products and services that are additive to
earnings and shareholder value.   

Adopting Change  In banking, nothing is consistent except change.  Emerging 
trends, advancing technologies, changes in regulatory law - all require a 
resilience and willingness to adapt and evolve.  In 1997, the Company converted
its information systems to a new state-of-the-art configuration.  This 
significant investment in technology will help us better serve our customers and
increase the return on our shareholders' investment in 1998 and beyond.

Continued Optimism  Management continues to be optimistic for the near and 
intermediate term regarding continued earnings improvement.  We appreciate the 
loyalty and support of the shareholders, directors and employees of MCB 
Financial Corporation and look forward to your continued encouragement as we 
work to build even greater value.

Sincerely,



John Cavallucci                           Charles O. Hall
Chairman, President &                     President & Chief Operating Officer
Chief Executive Officer                   Metro Commerce Bank, N.A.
MCB Financial Corporation



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

The following discussion presents information pertaining to the financial 
condition and results of operations of MCB Financial Corporation that may not 
otherwise be apparent from the financial statements and related notes.  This 
discussion should be read in conjunction with the financial statements and notes
found on pages 16 through 27 as well as other information presented throughout 
this report.  Within this discussion, MCB Financial Corporation shall be 
referred to as "MCBF" and Metro Commerce Bank, N.A. shall be referred to as 
"Metro."  Average balances, including balances used in calculating certain 
financial ratios, are generally comprised of average daily balances.

This document may contain forward-looking statements that are subject to risks 
and uncertainties that could cause actual results to differ materially from 
those indicated.  For a discussion of factors that could cause actual results to
differ, please see the discussion contained herein and in the Company's publicly
available Securities and Exchange Commission filings and press releases.


OVERVIEW
Earnings Summary.  MCBF reported net income of $1,350,000, or $1.34 per share 
basic and $1.28 per share diluted, for 1997 compared to net income of 
$1,971,000, or $1.99 per share basic and $1.98 per share diluted, in 1996 and a
net operating loss of $1,498,000, or $1.51 per share basic and diluted, in 1995.
The results for 1996 reflected a recovery of approximately $1.8 million (pre-
tax) in litigation expenses originally recorded in the prior year.  The net 
operating loss in 1995 was attributable to the creation of a $2.8 million 
litigation contingency reserve during the second quarter of that year.
     Return on average assets for 1997 was 0.97% compared to 1.56% in 1996 and 
(1.37%) in 1995. Return on average equity for 1997 was 12.22% compared to 20.97%
in 1996 and (17.04%) in 1995.

FINANCIAL CONDITION
Summary. Assets increased by 6.4% during 1997 versus 7.5% and 35.2% in 1996 and
1995, respectively.
Asset growth slowed during 1997 as management continued to implement a strategy
of de-emphasizing growth in order to improve profit margins on existing market 
share.

Loans.  Loans held for investment increased by $7.1 million, or 8.8% in 1997, as
compared to an increase of $21.5 million, or 36.7%, during 1996.  Commercial 
real estate loans represented a majority of the 1996 increase as Metro 
lengthened the duration of its loan portfolio and increased commercial real 
estate loans through the offering of a competitively priced fixed rate, 
intermediate-term loan product.
     In the normal practice of extending credit, Metro accepts real estate 
collateral on loans that have primary sources of repayment from commercial 
operations.  Loans secured by real estate totaled $71.3 million, or 81.8% of all
loans, at December 31, 1997 versus $66.2 million, or 82.7% of all loans, a year 
earlier.  Due to Metro's limited marketing area, its real estate collateral is 
primarily concentrated in the San Francisco Bay Area and Southern California.  
Management believes that its prudent underwriting standards for real estate 
secured lending provide an adequate safeguard against changing real estate 
prices.
     Metro focuses its portfolio lending on commercial, commercial real estate,
and construction loans.  These loans generally carry a higher level of risk than
conventional real estate loans, and accordingly, yields on these loans are 
typically higher than those on other loans.  The performance of commercial and 
construction loans is generally dependent upon future cash flows from business 
operations (including the sale of products, merchandise and services) and the 
successful completion or operation of large real estate projects.  Risks 
attributable to such loans can be significantly increased, often to a greater 
extent than on other loans, by regional economic factors, real estate prices, 
the demand for commercial and retail office space, and the demand for products 
and services of industries which are concentrated within Metro's loan portfolio.
As of December 31, 1997, the two largest industry concentrations within the loan
portfolio were real estate and related services at 26.5% and the 
business/personal service industry at 20.1% of the portfolio.  Because credit 
concentrations increase portfolio risk, Metro places significant emphasis on the
purpose of each loan and the related sources of repayment.

Mortgage Banking.  No mortgage loans sold pending settlement existed at December
31, 1997 versus $648,000 at December 31, 1996.  Due to production changes in the
mortgage industry and the unfavorable prospects for future improvement, the 
Company decided to wind down its wholesale Mortgage Banking operations at the 
end of 1996.  The mortgage industry continues to shift away from the use of 
wholesalers in favor of direct lending.  In addition, competitive pressures 
continue to reduce the gross margins earned by wholesalers.

Nonperforming Assets.   Metro carefully monitors the quality of its loan 
portfolio and the factors that effect it including regional economic conditions,
employment stability, and real estate values.  The accrual of interest on loans
is discontinued when the payment of principal or interest is considered to be in
doubt, or when a loan becomes contractually past due by 90 days or more with 
respect to principal or interest, except for loans that are well secured and in
the process of collection.  At December 31, 1997, nonperforming assets totaled 
$109,000, or 0.08% of total assets, versus $79,000, or 0.06% at December 31, 
1996.

Allowance for Possible Credit Losses.  The Company maintains an allowance for 
possible credit losses (the "APCL") which is reduced by credit losses and 
increased by credit recoveries and provisions to the APCL charged against 
operations.  Provisions to the APCL and the total of the APCL are based, among
other factors, upon Metro's credit loss experience, the performance of loans 
within the portfolio, evaluation of loan collateral value, and the prospects or
worth of respective borrowers and guarantors.
     In determining the adequacy of its APCL, Metro segments its loan portfolio
into pools of homogeneous loans that share similar risk factors.  Each pool is 
given a risk assessment factor that largely reflects the expected future losses
from each category.  These risk assessment factors change as economic conditions
shift and actual loan losses are recorded.  The APCL totaled $1,007,000, or 
1.14% of total loans, as of December 31, 1997 versus $944,000 or 1.16% of total
loans, a year earlier.  In both periods, the APCL was determined to be an 
adequate allowance against foreseeable future losses.  Note 3 to the 
consolidated financial statements provides a summary of the activity in the APCL
for the three years ended December 31, 1997.  The increase in net credit losses
during 1995 resulted from the charge-off of substandard loans acquired by Metro
through its acquisition of the Bank of Hayward ("Hayward").  These loans were 
reflected in the $400,000 APCL acquired from Hayward. 

Investments. Total investment securities increased by $476,000 or 1.4% in 1997,
as compared to a decrease of $4.2 million, or 10.6% in 1996.  Metro continues to
invest in callable government agency debentures.  These securities offer above 
market yields, but do not offer the same investment performance as non-callable
bonds.  Market prices for callable bonds decrease when interest rates rise; 
however, they remain relatively unchanged when interest rates fall due to the 
increased probability of the call option being exercised.  If these securities 
are called Metro may not be able to reinvest the proceeds to obtain the same 
investment yield.



Deposits.  Total deposits increased by $6.3 million, or 5.2%, during 1997 as 
compared to an increase of $9.6 million, or 8.7%, during 1996.  During 1996, 
management made a decision to slow Metro's rate of growth in order to 
concentrate on improving profit margins.  This policy included repositioning the
Company's deposit rates in the marketplace so as to limit non-relationship 
deposit growth.  This policy continued during 1997 resulting in lower interest
rates paid on deposits in 1997 compared to 1996.  Average noninterest-bearing 
demand deposits increased 19.5% during 1997 contributing to the decrease in the
cost of funds to 3.36% from 3.48% during 1996.  The following table summarizes 
the distribution of average deposits and the average rates paid for the periods
indicated (dollar amounts in thousands):

For the Years Ended December 31,
                              1997                1996                1995
                       Average   Average   Average   Average   Average   Average
                       Balance     Rate    Balance     Rate    Balance     Rate
Noninterest-bearing
 transaction deposits  $27,019             $22,607             $16,691

Interest-bearing transaction deposits
 (includes money market
   deposit accounts)    78,521     4.10%    70,533     4.11%    55,927     4.46%
Savings deposits         1,928     1.93%     2,363     1.95%     2,430     2.22%
Time deposits,
 $100,000 and over      10,214     5.42%     9,023     5.50%     8,541     5.78%
Other time deposits      8,080     5.13%    10,009     5.40%    13,357     5.50%
    Total interest-
     bearing            98,743     4.28%    91,928     4.34%    80,255     4.70%

Total deposits        $125,762     3.36%  $114,535     3.48%   $96,946     3.89%



RESULTS OF OPERATIONS
Net Interest Income/Net Interest Margin.  Net interest income increased by 
$880,000, or 13.8%, during 1997 to reach $7.2 million.  This compares to net 
interest income of $6.4 million in 1996 and $4.9 million in 1995.  As in prior
years, the increase in net interest income during 1997 was due to growth in 
earning assets as well as improvement in the net interest margin.

     The following table sets forth average assets, liabilities, and 
shareholders' equity; the amount of interest income or interest expense; the 
average yield or rate for each category of interest-bearing assets and interest-
bearing liabilities; and the net interest margin for the periods indicated 
(dollar amounts in thousands):



For the Years Ended December 31,
                                      1997                    1996                    1995
                            Average                 Average                 Average
                            Balance Interest Rate   Balance Interest Rate   Balance Interest Rate
ASSETS
                                                                   
Federal funds sold           $6,613    356   5.38%   $4,465   $233   5.22%   $7,750   $450  5.81%
Interest-bearing
  deposits with banks           348     21   6.03%      656     41   6.25%      934     61  6.53%
Investment securities        38,797  2,485   6.41%   38,736  2,375   6.18%   34,523  1,992  5.83%
Mortgage loans                   66      5   7.58%    1,433    117   8.16%    2,353    180  7.65%
Loans                        81,923  8,633  10.54%   70,082  7,619  10.87%   53,346  6,033 11.31%
Total earning assets        127,747 11,500   9.00%  115,372 10,385   9.02%   98,906  8,716  8.83%
Total non-earnings assets    10,928                  11,014           10,087
Total Assets               $138,675                $126,386                $108,993

LIABILITIES & SHAREHOLDERS' EQUITY
Demand deposits             $27,019                 $22,607                 $16,691
Interest-bearing
  transaction accounts       78,521  3,219   4.10%   70,533  2,902   4.11%   55,927  2,492  4.46%
Time deposits,
  $100,000 or more           10,214    554   5.42%    9,023    496   5.50%    8,541    493  5.77%
Savings and other time       10,009    452   4.52%   12,372    587   4.74%   15,787    789  5.00%
  Total interest-
    bearing deposits         98,744  4,225   4.28%   91,928  3,985   4.33%   80,255  3,774  4.70%
Other borrowings                591     28   4.74%      729     33   4.53%    1,163     67  5.76%
  Total interest-
    bearing liabilities      99,335  4,253   4.28%   92,657  4,018   4.34%   81,418  3,841  4.72%
Other liabilities             1,278                   1,723                   2,094
Shareholder's equity         11,043                   9,399                   8,790
Total Liabilities
  and shareholders equity  $138,675                $126,386                $108,993

Net interest income                 $7,247                  $6,367                  $4,875

Net interest margin                          5.68%                   5.52%                  4.95%


     Metro's net interest margin (net interest income divided by average earning
assets) increased to 5.68% during 1997.  This compared to 5.52% in 1996 and 
4.95% in 1995.  The improvements in 1997 and 1996 were due to higher investment
yields, increased loan volume and lower deposit costs.

     The following table presents the dollar amount of changes in interest 
earned and interest paid for each major category of interest-earning asset and
interest-bearing liability and the amount of change attributable to average 
balances (volume) fluctuations and average rate fluctuations.  The variance 
attributable to both balance and rate fluctuations is allocated to a combined 
rate/volume variance (dollar amounts in thousands):  

                          1997 Compared to 1996       1996 Compared to 1995
                        Increase (decrease) due to  Increase (decrease) due to
                                       Rate/                       Rate/
                        Volume  Rate  Volume  Total Volume  Rate  Volume  Total
Interest Income:
  Federal funds sold      $112     $7     $4   $123  ($191)  ($46)   $20  ($217)
  Interest-bearing
   deposits with banks     (20)    (1)     1    (20)   (18)    (3)    $1    (20)
  Investment securities      4    106      0    110    246    121    $16    383
  Mortgage loans held
   for sale               (112)    (8)     8   (112)   (70)    12     (5)   (63)
  Loans                  1,284   (231)   (39) 1,014  1,893   (235)   (72) 1,586
Total Interest Income    1,268   (127)   (26) 1,115  1,860   (151)   (40) 1,669

Interest Expense:
  Interest-bearing
  transaction accounts     325     (7)    (1)   317    651   (196)   (45)   410
  Time deposits,
    $100,000 or more        66     (7)    (1)    58     28    (23)    (2)     3
  Savings and other time  (113)   (27)     5   (135)  (171)   (41)    10   (202)
  Other borrowings          (6)     2     (1)    (5)   (25)   (14)     5    (34)
Total Interest Expense     272    (39)     2    235    483   (274)   (32)   177

Net Interest Income       $996   ($88)  ($28)  $880 $1,377   $123    ($8)$1,492



Provision for Possible Credit Losses.  MCBF provided $120,000 to the APCL during
1997 compared to $220,000 in 1996 and $100,000 in 1995.  The provisions during 
those periods were recorded primarily due to growth in the loan portfolio.  Net
credit losses were $57,000 in 1997, $28,000 in 1996 and $254,000 in 1995.  The 
net credit losses in 1995 resulted from the write-off of substandard loans 
acquired from the Bank of Hayward.  These losses were reflected in the APCL 
originally acquired from the Bank of Hayward.


Noninterest Income.  The following table summarizes noninterest income for the 
years 1997, 1996 and 1995 and expresses these amounts as a percentage of average
assets (dollar amounts in thousands):

Years Ended December 31,                           1997      1996      1995
Components of Noninterest Income
Gain on sale of mortgage loans                      $13      $351      $465
Gain on sale of SBA loans                           133        47        66
Service fees on deposit accounts                    494       390       252
Loan servicing fees                                  34        21
Recovery of litigation expenses                             1,825       452
Other income                                        165       135       109
    Total                                          $839    $2,769$   $1,344

As a Percentage of Average Assets
Gain on sale of mortgage loans                     0.01%     0.28%     0.43%
Gain on sale of SBA loans                          0.10%     0.04%     0.06%
Service fees on deposit accounts                   0.36%     0.31%     0.23%
Loan servicing fees                                0.02%     0.02%
Recovery of litigation expenses                              1.44%     0.41%
Other income                                       0.12%     0.11%     0.10%
    Total                                          0.61%     2.20%     1.23%

During the first quarter of 1996, MCBF recovered approximately $1.8 million in 
litigation expenses in conjunction with the complete settlement and release of 
its outstanding litigation.  In addition, MCBF reached a settlement with its 
insurance carriers during 1995 on an unrelated matter and received a recovery of
prior litigation expenses in the amount of $452,000.  Gains from the sale of 
mortgage loans decreased in 1997 due to MCBF's decision to wind down its 
wholesale Mortgage Banking operations (see discussion of Mortgage Banking).


Noninterest Expenses.  The following table summarizes noninterest expenses and
the associated ratios to average assets for the years 1997, 1996 and 1995 
(dollar amounts in thousands):

Years Ended December 31,
Components of Noninterest Expense                  1997      1996      1995
Salaries and employee benefits                   $3,011    $3,120    $3,010
Occupancy expense                                   774       724       723
Furniture and equipment expense                     322       388       343
Professional services                               365       202       463
Supplies                                            212       236       247
Promotional                                         202       233       277
Data processing                                     354       276       230
Regulatory assessments                               61        46       131
Provision for legal settlement                                        2,800
Other                                               372       340       328
    Total                                        $5,673    $5,565    $8,552
Average full-time equivalent staff                   49        50        49

As a Percentage of Average Assets
Salaries and employee benefits                    2.17%     2.47%     2.76%
Occupancy expense                                 0.56%     0.57%     0.66%
Furniture and equipment expense                   0.23%     0.31%     0.31%
Professional services                             0.26%     0.16%     0.42%
Supplies                                          0.15%     0.19%     0.23%
Promotional                                       0.15%     0.18%     0.25%
Data processing                                   0.26%     0.22%     0.21%
Regulatory assessments                            0.04%     0.04%     0.12%
Provision for legal settlement                                        2.57%
Other                                             0.27%     0.27%     0.30%
    Total                                         4.09%     4.40%     7.85%

The increase in noninterest expense during 1995 was attributable to the creation
of a $2.8 million litigation settlement reserve during the second quarter.  The 
reserve was established after a Marin County Jury awarded, in favor of a 
Southern California bank, a judgment of $795,000 against Metro and its Chief 
Executive Officer.  The reserve included estimates for the award of attorney's 
fees against Metro.  This litigation was completely settled during the first 
quarter of 1996 and resulted in a recovery of approximately $1.8 million from 
the reserve.
     In 1997, data processing fees included charges incurred in connection with
making Metro's computer systems year 2000 compliant. The Year 2000 Issue is a 
computer programming situation that may affect many electronic data processing 
systems.  In order to minimize the length of data fields, most computer programs
eliminated the first two digits in the year date field.  This problem could 
affect date sensitive calculations that would treat "00" as the year 1900, 
rather than 2000.  Secondly, years that end in "00" are not leap years, except 
when it is a millenium year.  This anomaly could result in miscalculations in 
the processing of critical date-sensitive information after December 31, 1999. 
     The Company has prepared a project plan, identified all the major 
Application systems that are not Year 2000 compliant, and sought external and 
internal resources to replace, or develop and test the software.  The Company 
plans to complete the Year 2000 project well in advance of December 31, 1999. 
The total remaining cost of the Year 2000 project is not expected to have a 
material effect on the results of operations.  As with all financial 
institutions, there is a high degree of reliance being placed on the systems of
other financial institutions to properly settle transactions.  Their inability 
to process transactions properly could have a significant adverse impact on the
Company.
     The cost of the project and the date on which the Company plans to complete
the Year 2000 modifications are based on management's best estimates, which were
derived utilizing a number of assumptions of future events including the 
continued availability of internal and external resources, third party 
modifications and other factors.  However, there can be no guarantee that these
estimates will be achieved and actual results could differ.

Income Taxes.  MCBF's effective tax rate was 41.1% in 1997 compared to 41.2% in
1996 and a tax benefit of 38.4% in 1995.  Note 6 to the consolidated financial 
statements provides a reconciliation of the statutory tax rates to the effective
tax rate for each period.  

Liquidity and Asset/Liability Management.  Liquidity is Metro's ability to 
absorb fluctuations in deposits while simultaneously providing for the credit 
needs of its borrowers.  The objective in liquidity management is to balance the
sources and uses of funds.  Primary sources of liquidity include payments of 
principal and interest on loans and investments,  proceeds from the sale or 
maturity of loans and investments, growth in deposits, and increases in other 
borrowings.  Metro holds overnight federal funds as a cushion for temporary 
liquidity needs.  During 1997, federal funds sold averaged $6.6 million, or 4.8%
of total assets.  In addition to its federal funds, Metro maintains various 
lines of credit with correspondent banks, the Federal Reserve Bank, and the 
Federal Home Loan Bank.
     As of December 31, 1997, Metro had cash, time deposits with banks, federal
funds sold, and unpledged investment securities of approximately $43.4 million,
or 31.0% of total assets.  This represented the total amount of liquid assets 
available for sale and/or available to secure Metro's lines of credit.
     Several methods are used to measure liquidity.  One method is to measure 
the balance between loans and deposits (gross loans divided by total deposits).
In general, the closer this ratio is to 100%, the more reliant an institution 
becomes on its illiquid loan portfolio to absorb temporary fluctuations in 
deposit levels.  As of December 31, 1997, the loan-to-deposit ratio was 69.9% 
compared to 67.6% a year earlier.
     Another frequently used method is the relationship between short-term 
liquid assets (federal funds sold and investments maturing within one year) and
short-term liabilities (total deposits and other borrowings) as measured by the
liquidity ratio.  As of December 31, 1997, this ratio was 6.3% as compared 5.1%
a year earlier.
     As of December 31, 1997, the Company had no material commitments that were
expected to adversely impact liquidity.

Capital Resources.  The principal source of capital for MCBF is and will 
continue to be the retention of operating profits.  Total shareholders' equity 
was $12.0 million as of December 31, 1997 compared to $10.2 million a year 
earlier.
     Regulatory authorities have established minimum capital adequacy 
guidelines requiring that qualifying capital be 8% of risk-based assets, of 
which at least 4% must be tier 1 capital (primarily shareholders' equity).  As 
of December 31, 1997, MCBF's qualifying capital was 12.4%, of which the tier 1 
capital ratio was 11.5%.  In addition, MCBF, under the guidelines established 
for adequately capitalized institutions, must also maintain a minimum leverage 
ratio (tier 1 capital divided by total assets) of 4%.  As of December 31, 1997,
MCBF's leverage ratio was 8.1%.


Market Price of MCB Financial Corporation.  MCBF is aware of two securities 
dealers, Black & Co. in Portland, OR and Monroe Securities in Rochester, NY 
which make a market in its common stock.  Threre were approximately 436 
shareholders as of December 31, 1997.  The following high and low bid prices 
reflect actual transactions which may not include retail markups, markdowns, or
commissions.  Prices are adjusted to reflect stock dividends.

1995                 1996                 1997
                   High       Low       High       Low       High        Low
First quarter     $8.73     $7.93      $8.06     $6.81     $12.14     $10.24
Second quarter     8.16      8.16       8.06      7.26      12.14      11.19
Third quarter      8.16      8.16       8.17      7.71      14.50      11.79
Fourth quarter     8.16      6.80      10.90      7.71      16.88      14.38



CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
Dollar amounts in thousands                                 1997           1996

Assets
Cash and due from banks                                    6,557          9,609
Federal funds sold                                         4,900            770
   Total cash and cash equivalents                        11,345         10,379
Interest-bearing deposits with banks                         286            384
Investment securities available for sale at fair value    10,314          9,340
Investment securities held to maturity; fair values
   of $25,197 in 1997 and $25,534 in 1996                 25,242         25,740
Mortgage loans sold spending settlement                                     648
Loans held for investment
 (net of allowance for possible credit losses of $1,007
  in 1997 and $944 in 1996) (Notes 3 and 7)               87,179         80,121
Premises and equipment - Net (Note 4)                      2,586          2,278
Accrued interest receivable                                1,070          1,003
Deferred income taxes                                        568            621
Other assets                                               1,175            990

Total assets                                            $139,765       $131,504

Liabilities and Shareholders' Equity
Liabilities:
  Deposits:
    Noninterest-bearing                                 $ 29,151       $ 26,266
    Interest-bearing:
      Transaction accounts                                75,488         73,532
      Time certificates, $100,000 and over                11,565          9,483
      Savings and other time deposits                      9,928         10,577
           Total interest-bearing deposits                96,981         93,592

           Total deposits                                126,132        119,858
  Other borrowings                                           750            447
  Accrued interest payable and other liabilities (Note 9)  1,028          1,014

           Total liabilities                             127,910        121,319

Commitments and contingencies (Notes 9 and 10)

Shareholders' equity:
  Preferred stock, no par value:  authorized 20,000,000 shares;
    none issued or outstanding
  Common stock, no par value:  authorized 20,000,000 shares;
    issued 1,039,120 shares in 1997 and 954,422 shares in 1996,
    outstanding 1,027,540 shares in 1997
    and 942,842 shares in 1996                            10,310          9,398
  Net unrealized gain (loss) on investment securities
   available for sale - net of taxes                           1            (45)
  Retained earnings                                        1,656            832

           Total shareholders' equity                     11,967         10,185

Total liabilities and shareholders' equity              $139,877       $131,504

See notes to consolidated financial statements.



CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1997, 1996 and 1995
In thousands, except per share amounts             1997         1996       1995

Interest income:
  Loans, including fees                          $8,638       $7,736     $6,213
  Federal funds sold                                356          233        450
  Investment securities                           2,506        2,416      2,053
           Total interest income                 11,500       10,385      8,716

Interest expense:
  Interest-bearing transaction, savings
   and other  time deposits                       3,671        3,489      3,281
  Time certificates, $100,000 and over              554          496        493
  Other interest                                     28           33         67
           Total interest expense                 4,253        4,018      3,841

Net interest income                               7,247        6,367      4,875

Provision for possible credit losses (Note 3)       120          220        100
Net interest income after provision
 for possible credit losses                       7,127        6,147      4,775

Other income:
  Gain on sale of loans                             146          398        531
  Service fees on deposit accounts                  494          390        252
  Loan servicing fees                                34           21
  Loss on sale of investment securities (net)                                (1)
  Recovery of litigation expenses (Note 9)                  1,824           451
  Other                                             165          135        111
           Total other income                       839        2,768      1,344

Other expenses:
  Salaries and employee benefits                  3,011        3,120      3,010
  Occupancy expense                                 774          724        723
  Furniture and equipment expense                   322          388        343
  Professional services                             365          202        463
  Supplies                                          212          236        247
  Promotional expenses                              202          233        277
  Data processing fees                              354          276        229
  Regulatory assessments                             61           46        131
  Provision for legal settlement (Note 9)                                 2,800
  Other                                             372          340        329
           Total other expenses                   5,673        5,565      8,552

Income (loss) before income taxes                 2,293        3,350     (2,433)

Income tax provision (benefit) (Note 6)             943        1,379       (935)

Net income (loss)                                $1,350       $1,971    $(1,498)
Basic earnings per share (Note 14)               $ 1.34       $ 1.99    $ (1.51)
Diluted earnings per share (Note 14)             $ 1.28       $ 1.98    $ (1.51)

See notes to consolidated financial statements.



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 1997, 1996 and 1995
Dollar amounts in thousands
                                                     Net                       
                                                 Unrealized                    
                                                Gain(Loss)on                   
                                                 Investment                    
                                                 Securities   Retained         
                                                  Available   Earnings         
                                Common Stock    For Sale-Net (Accumulated      
                              Shares     Amount   of Taxes     Deficit)   Total
Balance, December 31, 1994   909,904     $9,014      ($667)      $850    $9,197
  Net loss                                                     (1,498)   (1,498)
  Change in unrealized
   loss - net                                          677                  677
  Purchases of common stock  (11,580)      (105)                           (105)

Balance, December 31, 1995   898,324      8,909         10       (648)    8,271
  Net income                                                    1,971     1,971
  Net change in unrealized
   gain - net of taxes                                 (55)                 (55)
  Dividends on common stock (5%)
     Cash payment                                                  (2)       (2)
     Stock issued             44,518        489                  (489)

Balance, December 31, 1996   942,842      9,398        (45)       832    10,185
  Net income                                                    1,350     1,350
  Net change in unrealized
   loss - net of taxes                                  46                   46
  Dividends on common stock (5%)
     Cash payment                                                  (2)       (2)
     Stock issued             47,714        591                  (591)
Common stock issued upon
     exercise of stock
      options                 36,984        321                             321
Tax benefit of stock
 options exercised                                                 67        67
Balance, December 31,1997  1,027,540    $10,310         $1     $1,656   $11,967

See notes to consolidated financial statements.



CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1997, 1996 and 1995
Dollar Amounts In thousands                          1997       1996       1995
Cash Flows From Operating Activities:
  Net income (loss)                                $1,350     $1,971    $(1,498)
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Originations of loans for sale                           (29,865)   (44,124)
    Settlement of mortgage loans sold                 648     32,733     45,676
    Provision for possible credit losses              120        220        100
    Depreciation and amortization                     318        498        302
    Loss on sale of other real estate owned                                  10
    Provision for legal settlement                                        2,800
    Loss on sale of investment securities (net)                               2
    Recovery of litigation expenses                           (1,800)          
    Change in deferred income taxes                    20        902       (816)
    (Increase) in accrued interest receivable         (67)       (20)      (326)
    (Increase) decrease in other assets              (199)     2,334       (915)
    Increase (decrease) in accrued interest
     payable and other liabilities                     98     (1,972)       107
      Net cash provided by operating activities     2,288      5,001      1,318
Cash Flows From Investing Activities:
  Held to maturity securities:
     Maturities                                                3,000     11,100
     Calls                                          7,500      8,000      1,000
     Purchases                                     (7,000)   (19,239)   (29,299)
  Available for sale securities:
     Maturities                                     5,127     13,171      1,586
     Calls                                          4,000
     Purchases                                    (10,012)    (1,000)      (933)
     Sales                                                                3,798
  Decrease (increase) in interest-bearing
   deposits with banks                                 98        885       (683)
  Proceeds from sale of other real estate owned                             286
  Net (increase) in loans held for investment      (7,178)   (21,730)   (12,091)
  Purchases of premises and equipment                (641)      (102)      (386)
      Net cash used by investing activities        (8,106)   (17,015)   (25,622)
Cash Flows From Financing Activities:
  Net increase in noninterest-bearing
   demand deposits                                  2,885      4,507      5,940
  Net increase in interest-bearing transaction,
   savings and other time deposits                  3,389      5,088     28,280
  Net increase (decrease) in other borrowings         303        234     (4,308)
  Cash dividends paid                                  (2)        (2)          
  Proceeds from the exercise of stock options         321                      
  Purchases of common stock                                                (105)
      Net cash provided by financing activities     6,896      9,827     29,807
Net Increase (Decrease) in Cash
 and Cash Equivalents                               1,078     (2,187)     5,503
Cash and Cash Equivalents:
  Beginning of year                                10,379     12,566      7,063
  End of year                                     $11,457    $10,379    $12,566
Cash Paid During the Year for:
  Interest on deposits and other borrowings        $4,217     $4,134     $3,703
  Income taxes                                     $1,111       $250         $1
Noncash Investing and Financing Activities:
  Stock dividends paid on common stock               $591       $489           

See notes to consolidated financial statements.



MCB FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of MCB Financial Corporation (the 
"Company") and its wholly owned subsidiary, Metro Commerce Bank, N.A. (the 
"Bank"), conform to generally accepted accounting principles and general 
practice in the banking industry.  The Company was incorporated in California on
January 20, 1993 for the purpose of becoming a ank holding company registered 
under the Bank Holding Company Act of 1956.
The following is a summary of the significant accounting policies and reporting 
methods used by the Company:

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

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

Basis of Consolidation - The accompanying consolidated financial statements 
include the Company and its wholly owned subsidiary, the Bank.  All intercompany
amounts are eliminated in consolidation.

Cash and due from banks include balances with the Federal Reserve Bank.  The 
Bank is required by federal regulations to maintain certain minimum average 
balances with the Federal Reserve, based primarily on the Bank's average daily 
deposit balances.  At December 31, 1997, the Bank had required balances and 
compensating balances with the Federal Reserve of $427,000 (1996 - $533,000).

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

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

Loans which are held for investment are stated at the principal amount 
outstanding, net of deferred loan origination fees and costs and the allowance 
for possible credit losses.  Interest income is recognized using methods which 
approximate a level yield on principal amounts outstanding.  The accrual of 
interest on loans is discontinued when the payment of principal or interest is 
considered to be in doubt, or when a loan becomes contractually past due by 90 
days or more with respect to principal or interest, except for loans that are 
well secured and in the process of collection.  Loan origination fees, net of 
certain related direct loan origination costs, are deferred and amortized as 
yield adjustments over the contractual lives of the underlying loans.
 
Allowance for possible credit losses is maintained at a level deemed appropriate
by management to provide for known and inherent risks in the loan portfolio and 
commitments to extend credit.  The allowance is based upon management's 
continuing assessment of various factors affecting the collectibility of loans 
and commitments to extend credit, including current and projected economic 
conditions, past credit experience, the value of the underlying collateral, and 
such other factors as in management's judgment deserve current recognition in 
estimating potential credit losses.  Loans deemed uncollectible are charged-off 
and deducted from the allowance, while subsequent recoveries are credited to the
allowance.
     A loan is considered impaired when management determines that it is 
probable that the Company will be unable to collect all amounts due according
to the original contractual terms of the loan agreement.  Impaired loans are 
carried at the estimated present value of total expected future cash flows, 
discounted at the loan's effective rate, or the fair value of the collateral,
if the loan is collateral dependent, if less than the recorded investment in
the loan (including accrued interest, net deferred loan fees or costs and 
unamortized premium or discount).  An impairment is recognized by adjusting an
allocation of the existing allowance for credit losses.

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

Organization costs of the Company are included in other assets and amortized 
over a 60 month period on a straight-line basis. 

Stock-based compensation - The Company accounts for stock-based awards to 
employees using the intrinsic value method as allowed under the provisions of 
SFAS No. 123, "Accounting for Stock-Based Compensation."

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

Stock Dividends - In August 1997, outstanding shares of common stock were 
increased due to the payment of a 5% stock dividend.  All per share amounts have
been restated to reflect the issuance of such shares.

Net Income Per Common Share - The Company adopted the disclosure provisions of  
SFAS No. 128, "Earnings per Share" for the year ended December 31, 1997.  SFAS 
No. 128 replaces the presentation of primary EPS with a presentation of basic 
EPS.  In addition, all entities with complex capital structures are required to 
provide a dual disclosure of basic and diluted EPS on the face of the income 
statement and a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.  
Under the new requirements, the computation of basic EPS does not differ from 
the Company's computation of EPS in prior periods, and therefore there is no 
restatement of EPS data presented herein.

Pending Accounting Pronouncements - In December 1996, the Financial Accounting 
Standards Board (FASB) issued SFAS No. 127, "Deferral of the Effective Date of 
Certain Provisions of FASB Stataement No. 125", which defers the implementation 
of SFAS No. 125 for transactions related to repurchase agreements, dollar-roll 
repurchase agreements, securities lending and similar transactions until January
1, 1998.  Management believes that the effect of adoption of SFAS No. 125, for 
those transactions covered under SFAS No. 127, on the Company's consolidated 
financial statements will not be material.
     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive 
Income", which requires that an enterprise report, by major components and as a 
single total, the change in its net assets during the period from non-owner 
sources; and No. 131, "Disclosures about Segments of an Enterprise and Related 
Information", which establishes annual and interim reporting standards for an 
enterprise's operating segments and related disclosures about its products, 
services, geographic areas, and major customers.  Adoption of these Statements 
will not impact the Company's consolidated financial position, results of 
operations or cash flows, and any effect will be limited to the form and content
of its disclosures.  Both statements are effective with the year-end 1998 
financial statements.  In addition, disclosure of comprehensive income is 
required in the interim financial statements beginning with the first quarter of
1998.

Reclassifications - Certain 1996 and 1995 amounts were reclassified to conform 
to the 1997 presentation.

2.     INVESTMENT SECURITIES
The amortized cost and approximate market value of investment securities at 
December 31 were as follows (dollar amounts in thousands):

Gross   Gross  Estimated
                              Amortized Unrealized Unrealized    Fair   Carrying
                                   Cost      Gains     Losses   Value      Value
1997:
 Held to maturity securities:
  U.S. Government agencies      $25,242        $44      $(89) $25,197    $25,242
    Total held to maturity       25,242         44       (89)  25,197     25,242

 Available for sale securities:
  U.S. Treasury                   5,004         29              5,033      5,033
  U.S. Government agencies        1,000                   (2)     998        998
  Mortgage-backed securities      2,176                  (30)   2,146      2,146
  Corporate securities            1,992          5        (1)   1,996      1,996
  Municipal bonds                   140          1                141        141
    Total available for sale     10,312         35       (33)  10,314     10,314

Total investment securities     $35,554        $79     $(122) $35,511    $35,556


                                                        Gross   Gross  Estimated
                              Amortized Unrealized Unrealized    Fair   Carrying
                                   Cost      Gains     Losses   Value      Value
1996:
 Held to maturity securities:
  U.S. Government agencies      $25,740         $9     $(215) $25,534    $25,740
    Total held to maturity       25,740          9      (215)  25,534     25,740

 Available for sale securities:
  U.S. Treasury                   4,977         22        (1)   4,998      4,998
  Mortgage-backed securities      4,275                  (99)   4,176      4,176
  Municipal bonds                   165          1                166        166
    Total available for sale      9,417         23      (100)   9,340      9,340

Total investment securities     $35,157        $32     $(315) $34,874    $35,080


The following table shows the amortized cost and approximate fair value of 
investment securities by contractual maturity at December 31, 1997:

                                  Held to Maturity          Available for Sale
                               Amortized         Fair     Amortized         Fair
                                    Cost        Value          Cost        Value
Within one year                                               2,906        2,898
After one but within five years   19,745       19,744         6,406        6,418
Over five years                    5,497        5,453         1,000          998

Total                             25,242       25,197        10,312       10,314


The Bank carries its Federal Reserve Bank stock and Federal Home Loan Bank stock
as other assets.  These securities are not covered by the provisions of SFAS No.
115 and are recorded at historical cost.  The total carrying value at December 
31, 1997 and 1996 was $678,000 and $653,000, respectively.
     Mortgage-backed securities are classified, in the table above, based on 
final maturity dates.  These securities are issued by the Federal National 
Mortgage Association, $1,284,000, ($1,526,000 in 1996), and the Federal Home 
Loan Mortgage Corporation, $862,000 ($2,651,000 in 1996), and may be prepaid at
the option of the issuer.
     The Bank has purchased U.S. government agency securities totaling 
$26,240,000 that contain certain issuer call option features.  These securities
have a weighted average yield of 6.45% and may be called if interest rates fall
below certain levels.  If these securities are called the Bank may not be able 
to reinvest the proceeds to obtain the same weighted average yield.
     Securities with an amortized cost of approximately $3,866,000 as of 
December 31, 1997, and $2,455,000 as of December 31, 1996, were pledged to 
secure other borrowings.

3.     LOANS AND ALLOWANCE FOR POSSIBLE CREDIT LOSSES
Loans at December 31, consisted of the following:

                                              1997        1996

Commercial                                 $21,217     $16,851
Real estate:
  Commercial                                57,385      49,855
  Construction                               3,757       7,348
  Land                                       1,307       1,807
Home equity                                  2,314       2,809
Loans to consumers and individuals           2,331       2,458

           Total                            88,311      81,128

Deferred loan fees                            (125)        (63)
Allowance for possible credit losses        (1,007)       (944)

Total                                      $87,179     $80,121

The Bank is principally engaged in commercial banking in the San Francisco Bay 
Area of California and Upland, California.  The Bank primarily grants commercial
loans, the majority of which are secured by commercial properties.  Although the
Bank has a diversified portfolio, a substantial portion of its debtors' ability 
to honor their contracts is dependent upon the economic sector of Northern 
California, including the real estate markets of the San Francisco Bay Area.  
Approximately 34% of the Bank's loans have interest rates that are variable and 
tied to the prime rate, whereas the remaining are fixed rate loans.
     Following is a schedule of the activity in the allowance for possible 
credit losses on loans for the years ended December 31:

                                             1997      1996      1995

Balances, January 1                        $  944     $ 752      $906
Provision for possible credit losses          120       220       100
Loans charged-off                            (108)      (47)     (263)
Recoveries                                     51        19         9

Total                                      $1,007     $ 944      $752


At December 31, 1997 and 1996, the Company had nonperforming loans in the 
amounts of $109,000 and $79,000, respectively.  Had these loans performed under
their contractual terms, $6,000 and $10,000, respectively, in additional 
interest income would have been recognized during the year.
     At December 31, 1997 and 1996, the Company had loans identified as 
impaired, in the aggregate amounts of $109,000 and $79,000, respectively.  The 
Company provided no specific allowance for possible credit losses at December 
31, 1997 and 1996 for these impaired loans since they were adequately 
collateralized.

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

                                                        1997       1996

Leasehold improvements                                $2,071     $1,995
Furniture and equipment                                2,025      1,508
Automobiles                                              180        201
Construction in progress                                  50
           Total                                       4,326      3,704
Less accumulated depreciation and amortization        (1,740)    (1,426)

Premises and equipment, net                           $2,586     $2,278


The amount of depreciation and amortization was $333,000 in 1997, $375,000 in 
1996 and $346,000 in 1995.

5.     DEPOSITS
The aggregate amount of short-term jumbo CD's, each with a minimum denomination 
of $100,000, was approximately $11,265,000 and $7,928,000 in 1997 and 1996, 
respectively.
     At December 31, 1997, the scheduled maturities of CDs are as follows:


        1998                           $18,431
        1999                               479
        2000                               479
        2001                               177
        2002
       Total                           $19,566


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

                                         1997       1996      1995

Current payable (benefit):
  Federal                                $672     $  362     $ (98)
  State                                   243        115       (21)

   Total current payable (benefit)        915        477      (119)

Deferred:
  Federal                                  17        634      (580)
  State                                    11        268      (236)

   Total deferred                          28        902      (816)

Total                                    $943     $1,379     $(935)

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

                                    1997      1996      1995

Statutory federal tax rate          34.0%     34.0%     34.0%
State income taxes, net of
   federal income tax benefit        7.1       7.5       7.6
Municipal interest                  (0.1)     (0.1)     (0.5)
Other                                0.1      (0.2)     (2.7)

Effective tax rate                  41.1%     41.2%     38.4%

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

                                              December 31
                                             1997     1996
Deferred tax assets:
  Net operating loss carryforwards           $329     $366
  Reserves not currently deductible           384      417
  Unrealized loss on
    securities available for sale               1       32
  State income taxes                           45        5
  Other                                                  8

           Total                              759      828

Deferred tax liabilities:
  Accrual to cash                                       45
  Tax over book depreciation                  158      120
  Other                                        33       42

           Total                              191      207

Net deferred tax asset                       $568     $621

The Company has acquired net operating loss carryforwards ("NOL") in connection 
with the acquisition of the Bank of Hayward in 1994.  The utilization of NOLs 
acquired through acquisition is limited by certain state and federal tax laws.  
The Company has determined that the annual limitation on its ability to utilize 
NOLs is $78,130 for the fifteen-year period.  The following table presents the 
NOLs (after limitation) at December 31, 1997, by expiration date:

                                  Federal          State
        Expiration Date            Amount         Amount

       December 31, 2004             $431
       December 31, 2005              126
       December 31, 2006               11           $43
       December 31, 2007              180            63
       December 31, 2008               78             5
       December 31, 2009                            329

The Company reduced its 1997 federal and state current tax liability by 
approximately $27,000 and $9,000 by utilizing $78,130 in net operating loss 
carryforwards.

7.     RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Bank has made loans and advances under 
lines of credit to directors and their related interests.  All such loans and 
advances were made under terms that are consistent with the Bank's normal 
lending policies.
     At December 31, 1997, loans outstanding to related parties were $960,000 
and loan commitments to related parties amounted to $1,506,000.

8.     STOCK OPTION PLAN
The Company has a Stock Option Plan (the "Plan") for certain of its directors, 
organizers and key employees under which up to 237,754 shares of common stock 
have been authorized to be granted.  Up to 10% of the number of outstanding 
shares of the Company's common stock is available for granting solely to the 
directors and organizers of the Company, provided, however, that the sum of all
shares granted to directors, organizers and key employees of the Company does 
not exceed the maximum number of options that may be granted by the Plan.
     Under the Plan, options may not be granted at a price less than the fair 
market value at the date of grant.  Options for key employees are exercisable as
determined at the sole discretion of the Stock Option Plan Committee (the 
"Committee"), but not exceeding 10 years from the date of grant.  All options 
granted to nonemployee directors of the Bank are nonstatutory options that have 
a term of 10 years.  Furthermore, 20% of the nonstatutory options granted to a 
director are immediately vested and exercisable, and the remainder of the 
options vest at 20% annually for each of the four years from the date of grant. 
Each option granted to an organizer is exercisable as determined at the sole 
discretion of the Committee, but not exceeding five years from the date of 
grant.

The following is a summary of changes in options outstanding:
                                                                        Weighted
                                                                Number   Average
                                                                  of    Exercise
                                                                Shares     Price

Outstanding at January 1, 1995
  (106,767 exercisable at a weighted average price of $8.67)   154,955     $8.66
Granted (weighted average fair value of $3.60)                  20,949      8.16
Canceled                                                        (7,165)     8.16
Outstanding at December 31, 1995
  (121,814 exercisable at a weighted average price of $8.64)   168,739      8.62
Granted (weighted average fair value of $3.29)                  11,576      7.45
Canceled                                                       (15,435)     8.16
Outstanding at December 31, 1996
  (139,171 exercisable at a weighted average price of $8.65)   164,880      8.58
Granted (weighted average fair value of $6.21)                  10,628     14.31
Exercised                                                      (37,553)     8.53
Canceled                                                        (2,203)     9.98
Outstanding at December 31, 1997                               135,752     $9.02

Additional information regarding options outstanding as of December 31, 1997 is 
as follows:

                        Options Outstanding           Options Exercisable

                             Weighted
                             Average
                            Remaining     Weighted                   Weighted
   Range of        Number  Contractual    Average       Number       Average
Exercise Prices Outstanding Life (Yrs) Exercise Price Exercisable Exercise Price
$ 6.80 -  $8.62    84,343      5.4         $8.16        69,019        $8.24
  9.07 -  11.43    38,448      2.5          9.23        36,348         9.10
 11.79 -  15.25    12,961      8.4         13.93         6,451        12.65
                                                                            
$ 6.80 - $15.25   135,752      4.9         $9.02       111,818        $8.77

At December 31, 1997, 48,775 options were available for future grants under the 
Plan.

Additional Stock Option Plan Information
The Company continues to account for its stock-based awards using the intrinsic 
value method in accordance with Accounting Principles Board No. 25, Accounting 
for Stock Issued to Employees and its related interpretations.  Accordingly, no 
compensation expense has been recognized in the financial statements for 
employee stock arrangements.
     Statement of Financial Accounting Standards No. 123, Accounting for Stock-
Based Compensation, (SFAS 123) requires the disclosure of pro forma net income 
and earnings per share had the Company adopted the fair value method as of the 
beginning of fiscal 1995.  Under SFAS 123, the fair value of stock-based awards 
to employees is calculated through the use of option pricing models, even though
such models were developed to estimate the fair value of freely tradable, fully 
transferable options without vesting restrictions, which significantly differ 
from the Company's stock option awards.  These models also require subjective 
assumptions, including future stock price volatility and expected time to 
exercise, which greatly affect the calculated values.  The Company's 
calculations were made using the Black-Scholes option pricing model with the 
following weighted average assumptions:  expected life, 36 months following full
vesting; stock volatility, 25% in 1997, 26% in 1996 and 26% in 1995; risk free 
interest rates, 6.5% in 1997, 1996 and 1995; and no dividends during the 
expected term.  The Company's calculations are based on a multiple option 
valuation approach and forfeitures are recognized as they occur.  If the 
computed fair values of the 1995 - 1997 awards had been amortized to expense 
over the vesting period of the awards, pro forma net income (loss) would have 
been ($1,508,000) ($1.51 per share) in 1995, $1,958,000 ($1.97 per share) in 
1996 and $1,329,000 ($1.26 per share) in 1997.  However, the impact of 
outstanding non-vested stock options granted prior to 1995 has been excluded 
from the pro forma calculation; accordingly, the 1995 - 1997 pro forma 
adjustments are not indicative of future period pro forma adjustments, when the 
calculation will apply to all applicable stock options.

9.     COMMITMENTS AND CONTINGENCIES
The Bank leases its premises under noncancelable operating leases expiring 
through June 30, 2014 with options to extend the leases for two additional five-
year terms.  Future minimum lease commitments are $582,000 in 1998, $598,000 in 
1999, $567,000 in 2000, $367,000 in 2001, $361,000 in 2002 and $3,028,000, 
thereafter.
     Rental expense for premises under operating leases included in occupancy 
expense was $506,000, $464,000 and $447,000 in 1997, 1996 and 1995, 
respectively.
     There are various legal actions pending against the Company arising from 
the normal course of business.  The Company is also named as defendant in 
various lawsuits in which damages are sought.  Management, upon the advice of 
legal counsel handling such actions, believes that the ultimate resolution of 
these actions will not have a material effect on the financial position or 
results of operations of the Company.
     In September 1992, Chino Valley Bank filed a lawsuit against Metro Commerce
alleging that Metro Commerce and its Chief Executive Officer, John Cavallucci, 
had engaged in unfair competition with Chino Valley Bank.  In June 1995, a jury 
rendered a verdict in favor of Chino Valley Bank and against Metro Commerce and 
Mr. Cavallucci in the amount of $795,000.  Subsequently during 1995 Metro 
Commerce established a legal contingency reserve of $2.8 million, based on the 
amount of the jury verdict, the legal costs expected to be incurred by Metro 
Commerce, and the possibility of an award of attorneys' fees to the plaintiff.  
In addition, Metro Commerce agreed to indemnify Mr. Cavallucci for the amount of
his personal liability to Chino Valley Bank, and Metro Commerce and Mr. 
Cavallucci reached an agreement with Metro Commerce's directors and officers 
liability insurance carrier pursuant to which the carrier agreed to pay $1.2 
million of the amounts awarded to Chino Valley Bank.  In February 1996, the 
trial court awarded Chino Valley Bank costs and attorneys' fees in the amount of
$1,327,438.  Subsequently, in March 1996 Metro Commerce and Mr. Cavallucci 
entered into a settlement agreement with Chino Valley Bank pursuant to which the
parties agreed to settle all claims upon the payment of $2,100,000 to Chino 
Valley Bank.  As a result of the settlement agreement with Chino Valley Bank and
the separate settlement with Metro Commerce's insurance carrier, Metro Commerce 
recovered and reversed approximately $1.8 million from the legal contingency 
reserve during the first quarter of 1996.  This recovery reflects the final 
settlement of this matter. 

10.     FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to various financial instruments with on-balance sheet and 
off-balance sheet risk in the normal course of business to meet the financing 
needs of its customers.  Financial instruments include commitments to extend 
credit, standby letters-of-credit and financial guarantees.  Those instruments 
involve, to varying degrees, elements of credit and interest rate risk in excess
of the amounts recognized in the balance sheet.  The contract amounts of those 
instruments reflect the extent of involvement the Bank has in particular classes
of financial instruments.
     The Bank's exposure to credit loss in the event of nonperformance by the 
other party to the financial instrument for commitments to extend credit and 
standby letters-of-credit and financial guarantees is represented by the 
contractual amount of those instruments.  The Bank uses the same credit policies
in making commitments and conditional obligations as it does for on-balance 
sheet instruments.  The Bank controls the credit risk of these transactions 
through credit approvals, credit limits and monitoring procedures.
     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.  
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee.  Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.  The Bank evaluates each customer's 
creditworthiness on a case-by-case basis.  The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's 
credit evaluation of the counterparty.  Collateral held varies, but may include 
marketable securities, accounts receivable, inventory, property, plant and 
equipment.
     Standby letters-of-credit and financial guarantees are written conditional 
commitments issued by the Bank to guarantee the performance of a customer to a 
third party.  Those guarantees are primarily issued to support public and 
private borrowing arrangements.  Most guarantees extend for less than five years
and expire in decreasing amounts.  The credit risk involved in issuing letters-
of-credit is essentially the same as that involved in extending loan facilities 
to customers.
     The following table summarizes these financial instruments and other 
commitments and contingent liabilities at December 31 (dollar amounts in 
thousands):

                                                                1997        1996
Financial instruments whose credit risk is represented
  by contract amounts:
  Commitments to extend credit - loans                       $21,417     $16,950
  Standby letters-of-credit and financial guarantees             800       1,143

Total                                                        $22,217     $18,093


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

                                            December 31, 1997
                                          Carrying     Estimated
                                            Amount    Fair Value
Financial assets:
  Cash and due from banks                   $6,557        $6,557
  Federal funds sold                         4,900         4,900
  Interest-bearing deposits with banks         286           286
  Available for sale securities             10,314        10,314
  Held to maturity securities               25,242        25,197
  Loans, net                                87,179        86,862
Financial liabilities:
  Noninterest-bearing deposits              29,151        29,151
  Interest-bearing deposits                 96,981        97,004
  Other borrowings                             750           750


                                            December 31, 1996
                                          Carrying     Estimated
                                            Amount    Fair Value
Financial assets:
  Cash and due from banks                   $9,609        $9,609
  Federal funds sold                           770           770
  Interest-bearing deposits with banks         384           384
  Available for sale securities              9,340         9,340
  Held to maturity securities               25,740        25,534
  Loans, net                                80,121        80,258
Financial liabilities:
  Noninterest-bearing deposits              26,266        26,266
  Interest-bearing deposits                 93,592        93,619
  Other borrowings                             447           447

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

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

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

Loans - The fair value of floating rate loans is deemed to approximate book 
value.  The fair value of all other performing loans is determined by 
discounting expected future cash flows using the current rates at which similar 
loans would be made to borrowers with similar credit ratings and for the same 
remaining maturities.
     In addition to the above, the allowance for credit losses is considered a 
reasonable adjustment for credit risk relating to the entire credit portfolio, 
including obligations to extent credit and other off-balance-sheet transactions.

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

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

Off-Balance-Sheet Financial Instruments - The Company has not estimated the fair
value of off-balance-sheet commitments to extend credit, standby letters of 
credit and financial guarantees.  Because of the uncertainty involved in 
attempting to assess the likelihood and timing of a commitment being drawn upon,
coupled with the lack of an established market and the wide diversity of fee 
structures, the Company does not believe it is practicable to provide a 
meaningful estimate of fair value.
     The fair value estimates presented herein are based on pertinent 
information available to management as of December 31, 1997.  Although 
management is not aware of any factors that would significantly affect the 
estimated fair value amounts, such amounts have not been comprehensively 
revalued for purposes of these financial statements since that date and, 
therefore, current estimates of fair value may differ significantly from the 
amounts presented herein.  Management does not intend to dispose of a 
significant portion of its financial instruments.


12.     REGULATORY MATTERS
The Company and Bank are subject to various regulations issued by Federal 
banking agencies, including minimum capital requirements.  Failure to meet 
minimum regulatory capital requirements could result in regulators requiring 
prompt corrective action to be taken which could have a material effect on the 
financial statements.  As of December 31, 1997, the Company and Bank exceeded 
the capital adequacy requirements for a well capitalized institution.
     Under capital adequacy guidelines and the regulatory framework for prompt 
corrective action, the Company and Bank must meet specific capital guidelines 
that involve quantitative measures of the Company's and Bank's assets, 
liabilities, and certain off-balance-sheet items as calculated under regulatory 
accounting practices.  The Company's and Bank's capital amounts and 
classifications are also subject to qualitative judgements by the regulators 
about components, risk weightings, and other factors. 
     Quantitative measures established by regulations to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios (set forth 
in the table below) of total and tier 1 capital ( (as defined in the 
regulations) to risk-weighted assets (as defined), and of  tier 1 capital (as 
defined) to average assets (as defined).
     As of December 31, 1997, the most recent notification from the Office of 
the Comptroller of the Currency categorized the Bank as well capitalized under 
the regulatory framework for prompt corrective action.  To be categorized as 
well capitalized the Bank must maintain minimum total risk-based, tier 1 risk-
based, and tier 1 leverage ratios as set forth in the table.  There are no 
conditions or events since that notification that management believes have 
changed the institutions's category.

The Company and Bank's actual capital amounts and ratios are also presented 
below (dollar amounts in thousands):

                                                For Capital      Required to be
1997                              Actual     Adequacy Purposes  Well Capitalized
                              Amount   Ratio   Amount  Ratio      Amount   Ratio
Total Capital
 (to risk weighted assets)
   Company                   $12,691   12.4%   $8,160   8.0%         n/a
   Bank                       12,072   11.8%    8,160   8.0%   $>=10,200 >=10.0%

Tier 1 Capital
 (to risk weighted assets)
   Company                    11,684   11.5%    4,080   4.0%         n/a
   Bank                       11,065   10.9%    4,080   4.0%     >=6,120  >=6.0%

Tier 1 Capital
 (to average assets)
   Company                    11,684    8.1%    5,795   4.0%         n/a
   Bank                       11,065    7.6%    5,795   4.0%     >=7,243  >=5.0%


                                                For Capital      Required to be
1996                              Actual     Adequacy Purposes  Well Capitalized
                              Amount   Ratio   Amount  Ratio      Amount   Ratio
Total Capital
 (to risk weighted assets)
   Company                   $10,936   11.7%   $7,481   8.0%         n/a
   Bank                       10,815   11.6%    7,477   8.0%    $>=9,346 >=10.0%

Tier 1 Capital
 (to risk weighted assets)
   Company                     9,992   10.7%    3,741   4.0%         n/a
   Bank                        9,871   10.6%    3,740   4.0%     >=5,608  >=6.0%

Tier 1 Capital
 (to average assets)
   Company                     9,992    7.6%    3,926   3.0%         n/a
   Bank                        9,871    7.6%    3,925   3.0%     >=6,541  >=5.0%


Management believes, as of December 31, 1997, that the Bank meets all capital 
requirements to which it is subject.
     The Bank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval.  At December 31, 1997, the 
Bank had available $1,714,029 for the payment of dividends.  The Bank paid 
$138,000 in dividends during 1997.
     The Bank is subject to certain restrictions under the Federal Reserve Act, 
including restrictions on the extension of credit to affiliates.  In particular,
the Company is prohibited from borrowing from the Bank unless the loans are 
secured by specified types of collateral.  Such secured loans and other advances
from the Bank are limited to 10% of the Bank's shareholders' equity on a per 
affiliate basis.  There were no such extensions of credit by the Bank in 1997 
and 1996.


13.     EMPLOYEE BENEFIT PLAN
In 1991 the Company approved a defined contribution plan covering all eligible 
salaried employees.  Employees may, up to prescribed limits, contribute to the 
plan.  The Company may also elect to make discretionary contributions to the 
plan based on the Company's earnings.  No contributions were made by the Company
in 1997 or 1996.
     In 1994 the Company established a Deferred Compensation Plan for 
executives.  Participation in the Plan is limited to a select group of 
management and other employees as determined by the Board of Directors.  Under 
the terms of the Plan, participants may defer a portion of their cash 
compensation and receive minimum 50% matching contributions from the Company, 
which vest over the employee's remaining years of employment to retirement.  The
Company has guaranteed participants a certain minimum return on their 
contributions and on the Bank's matching contributions.  Contributions made by 
the Company for the years ended December 31, 1997, 1996 and 1995 were $12,000,
$15,000 and $13,000, respectively.

14     EARNINGS PER SHARE
The following table reconciles the numerators and the denominators of the basic
and diluted per share computations in accordance with SFAS No. 128 (in 
thousands, except per share amounts):

Years Ended December 31,
                                                Income       Shares    Per Share
1997                                         (Numerator)  (Denominator)  Amount
  BASIC EPS
  Income available to common shareholders       $1,350        1,006       $1.34

  EFFECT of DILUTIVE SECURITIES
  Stock options                                                  46

  DILUTED EPS
  Income available to common shareholders
   plus assumed conversions                     $1,350        1,052       $1.28

1996
  BASIC EPS
  Income available to common shareholders       $1,971          990       $1.99

  EFFECT of DILUTIVE SECURITIES
  Stock options                                                   5

  DILUTED EPS
  Income available to common shareholders
   plus assumed conversions                     $1,971          995       $1.98

1995
  BASIC EPS
  Income available to common shareholders      ($1,498)         993      ($1.51)

  EFFECT of DILUTIVE SECURITIES
  Stock options

  DILUTED EPS
  Income available to common shareholders
   plus assumed conversions                    ($1,498)         993      ($1.51)

15.     PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
The condensed financial information for MCB Financial Corporation (parent 
company only) at December 31, 1997 and 1996, and the results of its operations 
and cash flows for the years then ended, is summarized as follows (dollar 
amounts in thousands):

FINANCIAL CONDITION:                             1997        1996

Assets:
    Cash and due from banks                   $   603     $    71
    Investment in the Bank                     11,348      10,065
    Other                                          17          50

Total                                         $11,968     $10,186

Liabilities and shareholders' equity:
  Other liabilities                           $     1     $     1
  Shareholders' equity:
    Common stock                               10,310       9,398
    Unrealized gain (loss)
     on investment securities available
      for sale - net                                1         (45)
    Retained earnings                           1,656         832

           Total shareholders' equity          11,967      10,185

Total                                         $11,968     $10,186


RESULTS OF OPERATIONS:                           1997        1996

Dividend income from Bank                      $  138      $   50
Income - interest from investments                 14           1
Expenses - general and administrative              62          52

Income (loss) before equity in net
 income of the Bank                                90          (1)
Equity in undistributed net income
 of the Bank                                    1,236       1,947

Income before income tax provision              1,326       1,946
Income tax benefit                                 24          25

Net income                                     $1,350      $1,971


CASH FLOWS:                                                      1997      1996

Cash flows from operating activities:
  Net income                                                   $1,350    $1,971
  Reconciliation to cash used in operating activities:
    (Increase) in equity in undistributed net income
       of Bank                                                 (1,375)   (1,997)
    Amortization                                                   14        14
    Increase in other assets                                       86        (4)
    Cash provided (used in) operating activities                   75       (16)

Cash flows from investing activities:
  Dividend received from Bank                                     138        50

    Cash provided by investing activities                         138        50

Cash flows from financing activities:
  Proceeds from the exercise of stock options                     321
  Cash dividends paid                                              (2)       (2)

   Cash provided (used in) financing activities                   319        (2)

Net increase in cash and equivalents                              532        32
Cash and equivalents:
  Beginning of period                                              71        39

  End of period                                                $  603    $   71



INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of MCB Financial Corporation:

We have audited the accompanying consolidated balance sheets of MCB Financial 
Corporation and subsidiary (the "Company") as of December 31, 1997 and 1996, and
the related consolidated statements of operations, changes in shareholders' 
equity, and cash flows for each of the three years in the period ended December 
31, 1997.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these 
consolidated 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, such consolidated financial statements present fairly, in all 
material respects, the financial position of MCB Financial Corporation and its 
subsidiary as of December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December 
31, 1997 in conformity with generally accepted accounting principles.



Deloitte & Touche LLP

San Francisco, California
January 31, 1998

EX-27

 

<ARTICLE> 9
<MULTIPLIER> 1,000
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-END>                               DEC-31-1997
<CASH>                                           6,557
<INT-BEARING-DEPOSITS>                             286
<FED-FUNDS-SOLD>                                 4,900
<TRADING-ASSETS>                                     0
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<LOANS>                                         88,186
<ALLOWANCE>                                      1,007
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<SHORT-TERM>                                       750
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<INTEREST-DEPOSIT>                               4,225
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<EXPENSE-OTHER>                                  5,673
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