<PAGE>
 
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      FOR THE QUARTER ENDED MARCH 31, 1998
                                        

                        COMMISSION FILE NUMBER: 0-11223

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



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


             606 BROADWAY
       SANTA MONICA, CALIFORNIA                                 90401
(Address of principal executive offices)                     (Zip Code)


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


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.  YES  X        NO     
                                        ---          ---


As of April 29, 1998, 1,676,495 shares of the Registrant's $0.008 par value
common stock were outstanding.

================================================================================
<PAGE>
 
                           PROFESSIONAL BANCORP, INC.
                                     Index


<TABLE>
<CAPTION>

                                                                                      PAGE
                                                                                      ----
<S>                                                                                   <C>
PART I.  FINANCIAL INFORMATION
 
         Item 1  Financial Statements
 
                 Consolidated Statements of Financial Condition as of
                 March 31, 1998 and December 31, 1997                                   3
 
                 Consolidated Statements of Operations for the three months
                 ended March 31, 1998 and 1997                                          4
 
                 Consolidated Statements of Cash Flows for the three months
                 ended March 31, 1998 and 1997                                          5
 
                 Notes to Consolidated Financial Statements                             6
 
         Item 2   Management's Discussion and Analysis of Financial Condition
                 and Results of Operations                                              7

PART II. OTHER INFORMATION

         Item 6  Exhibits and Reports on Form 8-K                                      18




SIGNATURES                                                                             19
</TABLE>

                                       2

<PAGE>
 
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements

                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                March 31,      December 31,
                                                                                  1998             1997     
                                                                              -------------    -------------
<S>                                                                           <C>              <C>           
Assets                                                                                                       
Cash and due from banks:                                                                                     
     Noninterest-bearing                                                      $  23,285,372    $  28,627,771 
     Interest-bearing                                                               334,261          111,899 
Federal funds sold                                                               38,200,000       25,600,000 
                                                                              -------------    -------------
Cash and cash equivalents                                                        61,819,633       54,339,670 
                                                                                                             
Securities available-for-sale (cost of $48,307,000 and                                                       
     $53,145,000 in 1998 and 1997, respectively)                                 48,195,956       52,696,180 
Securities held-to-maturity (fair value of $32,649,000                                                       
     and $35,147,000 in 1998 and 1997, respectively)                             32,540,334       35,099,572 
Loans (net of allowance for loan losses of $1,825,000                                                        
     and $1,802,000 in 1998 and 1997, respectively)                              98,910,061      103,900,082 
Premises and equipment, net                                                       1,520,862        1,547,771 
Deferred tax asset                                                                1,314,536        1,239,207 
Accrued interest receivable and other assets                                      4,814,605        5,005,079 
                                                                              -------------    -------------
                                                                              $ 249,115,987    $ 253,827,561 
                                                                              =============    =============
                                                                                                             
Liabilities and Shareholders' Equity                                                                         
Liabilities                                                                                                  
Deposits:                                                                                                    
     Demand, noninterest-bearing                                              $  98,404,876    $  97,746,304 
     Demand, interest-bearing                                                    12,522,060       14,961,400 
     Savings and money market                                                    76,885,648       89,226,025 
     Time deposits                                                               32,943,576       27,529,935 
                                                                              -------------    -------------
Total deposits                                                                  220,756,160      229,463,664 
                                                                                                             
Convertible notes                                                                 5,251,000        5,437,000 
Accrued interest payable and other liabilities                                    2,222,623        3,063,744 
                                                                              -------------    -------------
Total liabilities                                                               228,229,783      237,964,408 
                                                                              -------------    -------------
                                                                                                             
Commitments and contingent liabilities                                                                       
                                                                                                             
Shareholders' equity:                                                                                        
Common stock, $.008 par value; 12,500,000 shares                                                             
     authorized; 1,745,962 and 1,426,689  issued                                                             
     and 1,676,495 and 1,357,222 outstanding in 1998 and 1997, respectively          13,967           11,413 
Additional paid-in-capital                                                       17,177,238       12,659,774 
Retained earnings                                                                 4,297,361        3,993,026 
Treasury stock, at cost (69,467 and 69,467 shares in 1998 and 1997,
     respectively)                                                                 (537,251)        (537,251)
Unrealized loss on securities available-for-sale, net of taxes                      (65,111)        (263,809)
                                                                              -------------    -------------
Total shareholders' equity                                                       20,886,204       15,863,153 
                                                                              -------------    -------------
                                                                              $ 249,115,987    $ 253,827,561 
                                                                              =============    =============
</TABLE>
         See accompanying notes to consolidated financial statements.

                                      3

<PAGE>
 
                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                          March 31,
                                                  -----------------------
                                                     1998         1997
                                                  ----------   ----------
<S>                                               <C>          <C>
Interest income
Loans                                             $2,475,744   $2,262,394
Securities                                         1,285,175    1,491,641
Federal funds sold and securities purchased
     under agreements to resell                      246,920      260,444
Interest-bearing deposits in other banks               1,546        4,565
                                                  ----------   ----------
Total interest income                              4,009,385    4,019,044
                                                  ----------   ----------

Interest expense
Deposits                                             790,094      801,449
Convertible notes                                    108,189      119,361
Federal funds purchased and securities
     sold under agreements to repurchase               3,055         --
                                                  ----------   ----------
Total interest expense                               901,338      920,810
                                                  ----------   ----------
Net interest income                                3,108,047    3,098,234
Provision for loan losses                               --         60,000
                                                  ----------   ----------
Net interest income after provision
   for loan losses                                 3,108,047    3,038,234
                                                  ----------   ----------

Other operating income
Merchant discount                                     58,684       67,953
Mortgage banking fees                                 13,946       33,170
Service charges on deposits                          256,947      184,680
Other income                                         137,358      141,627
                                                  ----------   ----------
Total other operating income                         466,935      427,430
                                                  ----------   ----------

Other operating expenses
Salaries and employee benefits                     1,537,855    1,508,631
Occupancy                                            348,571      383,016
Furniture and equipment                              190,472      173,935
Meetings and business development                     32,075       33,234
Donations                                             36,936       15,280
Other promotion                                       67,938       72,253
Legal fees                                            92,346      116,169
Audit, accounting and examinations                    43,540       27,735
Professional services                                357,014      339,223
Strategic planning and other outside consulting       53,915         --
Office supplies                                       66,013       60,028
Telephone                                             68,667       75,837
Postage                                               41,002       34,967
Messenger service                                      9,218       30,165
FDIC assessment                                        6,153        6,211
Other assessments                                     43,181       52,357
Imprinted checks                                      12,743       28,655
Other expense                                        125,008      186,333
                                                  ----------   ----------
Total other operating expenses                     3,132,647    3,144,029
                                                  ----------   ----------

Earnings before taxes                                442,335      321,635
Provision for income taxes                           138,000      132,000
                                                  ----------   ----------
Net earnings                                      $  304,335   $  189,635
                                                  ==========   ==========

Earnings per share
    Basic                                         $     0.22   $     0.14
    Diluted                                       $     0.17   $     0.14

</TABLE>

         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE> 
<CAPTION>
                                                                  Three Months Ended March 31,
                                                                      1998            1997
                                                                  ------------    ------------
<S>                                                               <C>             <C>
Cash flows from operating activities:
   Net earnings                                                   $    304,335    $    189,635
   Adjustments to reconcile net earnings to net
    cash provided by operating activities:
     Depreciation and amortization                                     142,425         147,611
     Provision for loan losses                                            --            60,000
     Amortization of convertible note expense                           24,959          26,083
     Decrease (increase) in deferred tax asset                        (214,292)         20,691
     Decrease in accrued interest receivable and other assets          144,786       1,123,608
     Decrease in accrued interest payable and other liabilities       (280,737)        (79,231)
     Net amortization of premiums and discounts
        on securities held-to-maturity                                  77,409          54,841
     Net amortization of premiums and discounts
        on securities available-for-sale                                71,647          42,657
                                                                  ------------    ------------
   Net cash provided by operating activities                           270,532       1,585,895
                                                                  ------------    ------------
Cash flows from investing activities:
  Proceeds from:
    Maturities of securities held-to-maturity                        1,537,903       3,250,000
    Maturities of securities available-for-sale                      2,119,408         442,557
  Principal payments and maturities of:
    Mortgage-backed securities held-to-maturity                        943,926       1,265,680
    Mortgage-backed securities available-for-sale                    2,646,830       1,221,540
  Purchases of securities held-to-maturity                                --        (2,991,950)
  Net (increase) decrease in loans                                   4,990,021      (1,034,496)
  Purchase of bank premises and equipment, net                        (115,516)       (223,575)
                                                                  ------------    ------------
  Net cash provided (used) by investing activities                  12,122,572       1,929,756
                                                                  ------------    ------------
Cash flows from financing activities:
  Net decrease in demand deposits and savings accounts             (14,121,145)    (18,301,130)
  Net increase (decrease) in time deposits                           5,413,641      (5,626,927)
  Proceeds from exercise of stock options                            3,794,363          13,354
                                                                  ------------    ------------
Net cash used in financing activities                               (4,913,141)    (23,914,703)
                                                                  ------------    ------------
Net decrease in cash and cash equivalents                            7,479,963     (20,399,052)
Cash and cash equivalents, beginning of period                      54,339,670      66,339,978
                                                                  ------------    ------------
Cash and cash equivalents, end of period                          $ 61,819,633    $ 45,940,926
                                                                  ============    ============
Supplemental disclosure of cash flow information -
     Cash paid during the period for:
     Interest                                                     $  1,048,454    $  1,125,741
     Income taxes                                                 $      2,000    $       --
Supplemental disclosure of noncash items:
     Decrease (increase) in unrealized losses on securities
          available-for-sale, net of tax                          $    198,698    $    (44,899)
     Conversion of notes                                          $    165,271    $       --
     Tax benefit on stock options exercised                       $    560,384    $       --
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       5

<PAGE>
 
                   PROFESSIONAL BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        

NOTE 1 - BASIS OF PRESENTATION

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

     The financial position at March 31, 1998, and the results of operations for
the three months ended March 31, 1998 are not necessarily indicative of the
results of operations that may be expected for the year ending December 31,
1998. These unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles on a basis
consistent with the Company's audited financial statements, and these interim
financial statements should be read in conjunction with the Company's audited
financial statements and notes thereto included in the Company's Form 10-K for
the year ended December 31, 1997.

NOTE 2 - ADOPTION OF NEW ACCOUNTING STANDARDS
 
     As of December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128), and has
restated all prior period earnings per share data. SFAS No. 128 replaces primary
EPS with basic EPS and fully diluted EPS. Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted
from issuance of common stock that then shared in earnings.

     The Company adopted, effective January 1, 1998, Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS No. 130).
SFAS No. 130 requires companies to report comprehensive income and its
components in a financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in-
capital. Comprehensive income includes all changes in equity during a period
except those resulting from investments by stockholders and distributions to
stockholders. Comprehensive income, net of tax, was $503,033 and $144,736 for
the three months ended March 31, 1998 and 1997 respectively. The difference
between net income and comprehensive income was comprised of the change in the
unrealized gain or (loss) on securities available for sale, net of tax, of
$198,698 and $(44,899) for the three months ended March 31, 1998 and 1997,
respectively.

                                       6

<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

    Professional Bancorp, Inc. (the "Company"), holding company for First
Professional Bank, N.A. (the "Bank"), recorded net earnings of $304,000 or $0.22
per share for the quarter ended March 31, 1998, compared with net earnings of
$190,000 or $0.14 per share for the same period in 1997. The Company had total
assets of $249,116,000 at March 31, 1998, compared to $253,828,000 at December
31, 1997.

LOANS

     The following table sets forth the amount of loans outstanding by category
and the percentage of each category to the total loan portfolio.

<TABLE>
<CAPTION>
                                               March 31, 1998          December 31, 1997
                                            --------------------     --------------------     
(in thousands)                               Amount   % of Total      Amount   % of Total
                                            --------  ----------     --------  ----------     
<S>                                         <C>       <C>            <C>       <C>
Commercial                                  $ 81,772        81.1%    $ 86,243        81.5%
Real estate secured commercial                10,320        10.2       10,512         9.9
                                            --------    --------     --------    --------
                                              92,092        91.3       96,755        91.4
Equity lines of credit                         5,784         5.8        6,288         5.9
Other lines of credit                          1,649         1.6        1,524         1.4
Installment                                    1,297         1.3        1,253         1.2
Lease financing                                   35           -           37         0.1
                                            --------    --------     --------    --------
        Gross loans                          100,857       100.0%     105,857       100.0%
                                            ========                 ========
Less:                                                                
     Allowance for loan losses                 1,825                    1,802
     Deferred loan fees, net                     122                      155
                                            --------                 --------
        Net loans                           $ 98,910                 $103,900
                                            ========                 ========
</TABLE>

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

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

                                       7
<PAGE>
 
     The following table sets forth information about nonperforming assets
(which include nonaccrual loans, other real estate owned and other repossessed
assets), accruing loans 90 days or more past due, and certain ratios.


<TABLE>
<CAPTION>
                                                     March 31,    December 31,
(in thousands)                                         1998          1997
                                                     ---------    ------------
<S>                                                  <C>          <C>
Nonperforming loans                                      $ 577         $   877
Other real estate owned (OREO)                              -                -
Other repossessed assets                                   272             272
                                                     ---------    ------------
     Total nonperforming assets                          $ 849         $ 1,149
                                                     =========    ============
Accruing loans 90 days or more past due                  $ 484         $    17
                                                     =========    ============
Nonperforming loans to total loans(1)                     0.57%           0.83%
Nonperforming assets(1)                            
     to total loans                                       0.84%           1.09%
     to total loans, OREO and repossessed assets          0.84%           1.08%
     to total assets                                      0.34%           0.45%
</TABLE>

(1)  Nonperforming loans and nonperforming assets do not include accruing loans
     90 days or more past due.

     The total accrued interest on loans 90 days or more past due and still
accruing was approximately $1,400 at March 31, 1998, and $1,000 at December 31,
1997. Of the $484,000 in accruing loans over 90 days or more past due and still
accruing, $137,000 represents loans where the renewal was in process, credit
quality was not impaired or risk rated below pass. As a result of the Company's
practice to discourage "short-term" extensions, these loans are carried as "past
due" to ensure proper underwriting and administrative controls.

     The Company maintains the allowance for loan losses at a level considered
adequate by management to provide for potential loan losses. While the Company's
policy is to charge-off in the current period those loans for which a loss is
considered probable, there also exists the risk of future losses which cannot be
precisely quantified or attributed to particular loans. Reasonable estimates of
these future amounts are included in the allowance for loan losses.

                                       8
<PAGE>
 
     The following table provides a summary of the Company's allowance for loan
losses and charge-off and recovery activity during the three months ended March
31, 1998, December 31, 1997, and March 31, 1997:
<TABLE>
<CAPTION> 
                                                                                 Period Ending
                                                                      March 31,   December 31,   March 31,
                                                                        1998          1997         1997
                                                                      --------      --------      -------
<S>                                                                   <C>           <C>           <C>
Balance at beginning of period                                        $  1,802      $  2,253      $ 2,253
Provision for loan losses                                                   -            180           60
                                                                      --------      --------      -------
                                                                         1,802         2,433        2,313
                                                                      --------      --------      -------
Loan charge-offs                                                            50           882          147
Recoveries on loans previously charged-off                                 (73)         (251)         (76)
                                                                      --------      --------      -------
   Net charge-offs (recoveries)                                            (23)          631           71
                                                                      --------      --------      -------
Balance at end of period                                              $  1,825      $  1,802      $ 2,242
                                                                      ========      ========      =======
Loans outstanding at end of period                                    $100,857      $105,857      $94,106
Average loans outstanding during period                                102,640        97,197       92,263

Net charge-offs (recoveries) to average loans outstanding                -0.09%         0.65%        0.31%
Allowance for loan losses:
     to total loans                                                       1.81          1.70         2.38
     to nonperforming loans(1)                                          316.29        205.47       183.77
     to nonperforming assets(1)                                         214.96        156.83       150.27
</TABLE>

(1)  Nonperforming loans and nonperforming assets do not include accruing loans
     90 days or more past due.


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

     The Company had $907,000 in impaired loans as of March 31, 1998. The
carrying value of impaired loans for which there is a related allowance for loan
losses was $213,000, with the amount of specific allowance for loan losses
allocated to these loans of $80,000. There were $694,000 in impaired loans for
which there was a general allowance allocated consistent with the Company's
allowance for loan loss methodology. The average recorded investment in impaired
loans during the first three months of 1998 was approximately $1,053,000 and
income recorded utilizing the cash basis and accrual basis method of accounting
was $22,000. Impaired loans at March 31, 1998, included $577,000 of nonaccrual
loans.

     The Company had $1,355,000 in impaired loans as of March 31, 1997. The
carrying value of impaired loans for which there is a related allowance for loan
losses was $558,000, with the amount of specific allowance for loan losses
allocated to these loans of $314,000. There were $797,000 in impaired loans for
which there was a general allowance allocated consistent with the Company's
allowance for loan loss methodology. The average recorded investment in impaired
loans during the first quarter of 1997 was approximately $1,625,000 and income
recorded utilizing the cash basis and accrual basis method of accounting was
$12,000. Nonaccrual loans at March 31, 1997, included $907,000 of the impaired
loans.

                                       9
<PAGE>
 
INVESTMENT SECURITIES

     The following table sets forth the amortized cost and fair value of
securities available-for-sale as of March 31, 1998 and December 31, 1997:

<TABLE>
<CAPTION>
                                                                March 31, 1998
                                                --------------------------------------------
                                                              Gross        Gross 
                                                Amortized   Unrealized   Unrealized   Fair  
(in thousands)                                     Cost        Gain         Loss      Value  
                                                ---------   ----------   ----------  -------
<S>                                             <C>         <C>          <C>         <C>      
U.S. Government securities                      $      -    $       -    $       -   $    - 
U.S. Government agency and                                                                  
   mortgage-backed securities                      33,204           93          192   33,105 
Small Business Administration securities            1,147           15           -     1,162 
Collateralized mortgage obligations                13,956           -            27   13,929 
                                                ---------   ----------   ----------  -------
        Total                                   $  48,307   $      108   $      219  $48,196 
                                                =========   ==========   ==========  =======
</TABLE> 
<TABLE> 
<CAPTION> 
                                                              December 31, 1997        
                                                --------------------------------------------
                                                              Gross        Gross             
                                                Amortized   Unrealized   Unrealized   Fair  
(in thousands)                                     Cost        Gain         Loss      Value  
                                                ---------   ----------   ----------  -------
<S>                                             <C>         <C>          <C>         <C>      
U.S. Government securities                      $   2,003   $        1   $       -   $ 2,004  
U.S. Government agency and                                                                     
   mortgage-backed securities                      34,963           99          322   34,740  
Small Business Administration securities            1,281           11           -     1,292  
Collateralized mortgage obligations                14,898           -           238   14,660  
                                                ---------   ----------   ----------  -------
        Total                                   $  53,145   $      111   $      560  $52,696  
                                                =========   ==========   ==========  =======
</TABLE>

 

                                       10
<PAGE>
 
     The amortized cost and fair value of securities held-to-maturity as of
March 31, 1998, and December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                March 31, 1998
                                                --------------------------------------------
                                                              Gross        Gross 
                                                Amortized   Unrealized   Unrealized   Fair  
(in thousands)                                     Cost        Gain         Loss      Value  
                                                ---------   ----------   ----------  -------
<S>                                             <C>         <C>          <C>         <C>      
U.S. Government securities                      $   3,052   $       67   $       -   $ 3,119
U.S. Government agency securities                   2,500            1                 2,501
U.S. Government agency 
   mortgage-backed securities                      26,549           73           32   26,590
Federal Reserve Bank stock                            439           -            -       439
                                                ---------   ----------   ----------  -------
        Total                                   $  32,540   $      141   $       32  $32,649
                                                =========   ==========   ==========  =======
</TABLE> 
<TABLE> 
<CAPTION> 
                                                              December 31, 1997        
                                                --------------------------------------------
                                                              Gross        Gross             
                                                Amortized   Unrealized   Unrealized   Fair  
(in thousands)                                     Cost        Gain         Loss      Value  
                                                ---------   ----------   ----------  -------
<S>                                             <C>         <C>          <C>         <C>      
U.S. Government securities                      $   3,054   $       55   $       -   $ 3,109
U.S. Government agency securities                   2,750           -            10    2,740
U.S. Government agency          
   mortgage-backed securities                      28,857           72           70   28,859
Federal Reserve Bank stock                            439           -            -       439
                                                ---------   ----------   ----------  -------
        Total                                   $  35,100   $      127   $       80  $35,147 
                                                =========   ==========   ==========  =======
</TABLE>

     There were no sales of available-for-sale securities during the three
months ended March 31, 1998 and in the twelve months ended December 31, 1997.

DEPOSITS

     Total deposits at March 31, 1998 were $220,756,000, a decrease of
$8,708,000 or 3.8% from $229,464,000 at December 31, 1997. The Company attracts
deposits primarily from individuals and businesses related to the health care
services industry, as well as other professionals and professional services
firms. The Company has no brokered deposits and the Company's practice is to not
purchase brokered deposits.

     The following table sets forth the amount of deposits by category and the
percentage of each category to total deposits as of March 31, 1998 and December
31, 1997:

<TABLE>
<CAPTION>
                                               March 31, 1998          December 31, 1997
                                            --------------------     --------------------     
(in thousands)                               Amount   % of Total      Amount   % of Total
                                            --------  ----------     --------  ----------     
<S>                                         <C>       <C>            <C>       <C>
Demand, noninterest-bearing                 $ 98,405        44.6%    $ 97,746        42.6%
Demand, interest-bearing                      12,522         5.7       14,961         6.5
Savings deposits                              12,582         5.7       10,603         4.6
Money market deposits                         64,304        29.1       78,624        34.3
Time deposits under $100,000                   7,819         3.5        7,374         3.2
Time deposits of $100,000 and over            25,124        11.4       20,156         8.8
                                            --------  ----------     --------  ----------     
                                            $220,756       100.0%    $229,464       100.0%
                                            ========  ==========     ========  ==========     
</TABLE>

                                       11
<PAGE>
 
     Historically, deposit levels decrease substantially in the first and second
quarter when clients tend to make first and second quarter tax payments and
bonuses. In addition, increasing competition for operating cash deposits comes
from broker dealer products and accounts. In order to minimize the effects of
such "disintermediation" from the Company to such accounts, the Company is
currently offering to clientele such accounts.

CAPITAL

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

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

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

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

                                       12
<PAGE>
 
     The following table presents the capital ratios for the Company and the
Bank, compared with the standards for "well-capitalized" depository institutions
(which standards do not apply to bank holding companies) and the minimum
required capital ratios to be deemed "adequately capitalized" under applicable
federal regulations, as of March 31, 1998.
 
<TABLE>
<CAPTION>
                                                                       To Be Well
                                                                    Capitalized Under
                                                   For Capital      Prompt Corrective
                                Actual          Adequacy Purposes   Action Provisions
                          -----------------     -----------------   -----------------
(in thousands)             Amount    Ratio       Amount    Ratio     Amount    Ratio
                          -------    ------     -------    ------   -------    ------      
<S>                       <C>        <C>        <C>        <C>      <C>        <C>
Company
Leverage (1)              $20,951      8.87%    $ 9,453      4.00%  $11,816      5.00%
Tier 1 Risk-Based          20,951     15.34       5,463      4.00     8,194      6.00
Total Risk-Based           27,911     20.44      10,925      8.00    13,656     10.00

Bank
Leverage                  $20,967      8.94%    $ 9,380      4.00%  $11,725      5.00%
Tier 1 Risk-Based          20,967     15.42       5,437      4.00     8,156      6.00
Total Risk-Based           22,668     16.68      10,875      8.00    13,594     10.00
</TABLE>

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

     The Company and the Bank, at March 31, 1998, were considered "well-
capitalized" and exceeded all applicable minimum capital requirements. Capital
requirements of the federal banking regulators, however, could limit the
Company's future growth if the Company were to rely solely on the retention of
earnings to generate additional capital or rapid growth.

     During March 1998, the Company received approximately $3,490,000 in
additional capital due to the exercise of 276,515 in stock options.


LIQUIDITY

     The Bancorp's primary source of liquidity is dividends from the Bank.
Dividends from the Bank to the Bancorp are subject to certain regulatory
restrictions. Under federal banking law, dividends declared by the Bank in any
calendar year may not, without the approval of the OCC, exceed its net earnings,
as defined, for that year combined with its retained net earnings for the
proceeding two years. The Bancorp's annual operating expenses and interest 
obligations with respect to its convertible notes are approximately $750,000.

     The Bank's primary sources of liquidity are federal funds sold to other
banks and the investment securities portfolio. For the three months ended March
31, 1998, federal funds sold averaged $18,368,000 and compared to $20,182,000
for the same period in 1997. In addition, securities in the available-for-sale
portfolio can be sold in response to liquidity needs or used as collateral under
reverse repurchase agreements. Securities held-to-maturity are available for
liquidity needs primarily as collateral for reverse repurchase agreements. The
fair value of securities available-for-sale and securities held-to-maturity at
March 31, 1998, were $48,196,000 and $32,649,000, respectively.

     The Bank sells securities under agreements to repurchase. Securities sold
under repurchase agreements are recorded as short-term obligations. During the
first three months of 1998, the highest daily outstanding balance and the
average balance of securities sold under agreements to repurchase was $5,000,000
and $222,000, respectively; the average rate paid was 5.5%. At March 31, 1998,
there were no securities sold under agreements to repurchase.

                                       13
<PAGE>
 
RESULTS OF OPERATIONS

     The Company reported consolidated net earnings of $304,000 for the first
quarter of 1998, compared with net earnings of $190,000 for the first quarter of
1997. Basic and diluted earnings per share for the first quarter of 1998 were
$0.22 and $0.17, respectively, compared to $0.14 basic and diluted earnings per
share for the same period in 1997. Return on average equity for the first
quarter of 1998 and 1997, were 7.29% and 5.44%, respectively. Additionally,
return on average assets for the first quarter of 1998 and 1997, were 0.52% and
0.32%, respectively.

     The improvement in earnings during the first three months of 1998 is
largely the result of reduced provision for loan losses and improved noninterest
income relating to account analysis fees.

NET INTEREST INCOME

     The Company's earnings depend primarily on net interest income, which is
the difference between the interest and fees earned on loans and investments
less the interest paid on deposits, borrowings and convertible notes. For the
quarter ended March 31, 1998, net interest income increased $10,000 from
$3,098,000 for the quarter ended March 31, 1997, to $3,108,000, for the quarter
ended March 31, 1998. For the three months ended March 31, 1998 and 1997, the
net interest margin was 6.11% and 6.02%, respectively.

     The following tables present the distribution of average assets,
liabilities and shareholders' equity as well as the total dollar amount of
interest income from average interest-earning assets and resultant yields, and
the dollar amounts of interest expense and average interest-bearing liabilities,
expressed both in dollars and rates for the three months ended March 31, 1998
and 1997.

                                       14
<PAGE>
 
<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31,
                                                        -------------------------------------------------------------
                                                                     1998                            1997
                                                                     ----                            ----
                                                          Average   Yield/               Average    Yield/
(in thousands)                                            Balance    Rate   Interest     Balance     Rate   Interest
                                                        -----------------------------  ------------------------------
<S>                                                     <C>        <C>     <C>         <C>         <C>     <C>
Assets
Interest-earning assets:
   Securities                                            $ 85,079   6.13%    $ 1,285    $ 95,748    6.32%   $ 1,492
   Loans(1)                                               102,640   9.78       2,475      92,263    9.94      2,262
   Federal funds sold                                      18,368   5.45         247      20,182    5.23        260
   Interest-earning deposits - banks                          198   3.17           2         354    5.22          5
                                                         --------            -------    --------            -------
        Total interest-earning assets                     206,285   7.88       4,009     208,547    7.81      4,019
                                                         --------            -------    --------            -------
Deferred loan fees                                           (145)                          (137)           
Allowance for loan losses                                  (1,808)                        (2,214)           
Nonearning assets:                                                                                          
   Cash and due from banks                                 22,716                         22,131            
   Premises and equipment                                   1,549                          1,721            
   Other assets                                             6,566                          8,335            
                                                         --------                       --------         
        Total assets                                     $235,163                       $238,383            
                                                         ========                       ======== 
                                                                                                            
Liabilities and Shareholders' Equity                                                                        
Interest-bearing liabilities:                                                                               
   Interest-bearing demand deposits                      $ 13,630   0.93%      $  31    $ 13,225    0.74%     $  24
   Savings and money market deposits                       80,367   2.07         410      94,478    1.83        427
   Time deposits                                           30,445   4.64         348      30,173    4.72        351
   Convertible notes                                        5,375   8.16         108       5,678    8.50        119
   Repurchase agreements                                      222   5.58           3          -         -        -
                                                         --------            -------    --------            -------
        Total interest-bearing liabilities                130,039   2.81         901     143,554    2.60        921
                                                         --------            -------    --------            -------
                                                                                                            
Noninterest-bearing liabilities:                                                                            
   Noninterest-bearing demand deposits                     84,719                         77,610            
   Other liabilities                                        3,234                          3,283            
   Shareholders' equity                                    17,171                         13,936            
                                                         --------                       --------  
        Total liabilities and shareholders' equity       $235,163                       $238,383            
                                                         ========                       ======== 
                                                                                                            
Interest income as a percentage of average                                                                  
   earning assets                                                   7.88%                           7.81%   
Interest expense as a percentage of average                                                                 
   interest-bearing liabilities                                     2.81                            2.60    
Net interest margin and income                                      6.11     $ 3,108                6.02    $ 3,098
                                                                             =======                        =======
</TABLE>
(1)  Nonaccrual loans are included in average balances and rate calculations.

     The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
"volume change." It is also affected by changes in yields earned on interest-
earning assets and interest rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following table sets forth
changes in interest income and interest expense for each major category of
interest-earning assets and interest-bearing liabilities, and the amount of
change attributable to volume and rate changes for the three months ended March
31, 1998 and 1997. The changes due to both rate and volume have been allocated
to rate and volume in proportion to the relationship between their absolute
dollar amounts.

                                       15
<PAGE>
 
<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                  March 31, 1998 and 1997
                                                  -----------------------
(in thousands)                                    Volume   Rate    Total
                                                  ------  ------  -------
<S>                                               <C>     <C>     <C>
Increase (decrease) in interest income:
     Securities                                    $(162)  $ (44)  $(206)
     Loans                                           251     (38)    213
     Federal funds sold                              (24)     10     (14)
     Interest-bearing deposits - banks                (2)     (1)     (3)
                                                  ------  ------  ------
                                                      63     (73)    (10)
                                                  ------  ------  ------

Increase (decrease) in interest expense:
     Interest-bearing demand deposits                  1       7       8
     Savings and money market deposits               (68)     51     (17)
     Time deposits                                     3      (6)     (3)
     Convertible notes                                (6)     (5)    (11)
     Repurchase agreements                             3      -        3
                                                  ------  ------  ------
                                                     (67)     47     (20)
                                                  ------  ------  ------
Increase (decrease) in net interest income         $ 130   $(120)    $10
                                                  ======  ======  ======
</TABLE>

     Interest income represents interest earned on loans, investment securities
and federal funds sold. Interest income decreased a total of $10,000 from
$4,019,000 for the three months ended March 31, 1997 to $4,009,000 for the three
months ended March 31, 1998. The decrease in interest income was a result of a
decline of $73,000 due to a slight decrease in yield on securities and loans
offset by an increase of $63,000 due to a change in the mix of interest earning
assets. Overall average interest earning assets decreased $2,262,000 from
$208,547,000 for the three months ended March 31, 1997 to $206,285,000 for the
three months ended March 31, 1998; however, average loans which yield 9.78%
increased $10,377,000 to $102,640,000 for the quarter ended March 31, 1998 which
is offset by a decline in average securities which yield 6.13% of $10,669,000 to
$85,079,000 for the same period in 1998.

     Interest expense represents interest paid on deposits, Company borrowings
and convertible notes. For the first quarter of 1998, interest expense decreased
$20,000 to $901,000, as compared with $921,000 for the first quarter of 1997. A
decrease of $13,514,000 in average interest-bearing liabilities reduced interest
expense by approximately $66,000. Repurchase agreements averaged $222,222 during
the first quarter of 1998, while there were no repurchase agreements during the
first quarter of 1997. The decrease in deposits was centered primarily in
average savings and money market deposits which declined $14,111,000 from
$94,478,000 for the three months ended March 31, 1997 to $80,367,000 for the
three months ended March 31, 1998.
 
NONINTEREST INCOME

     For the three months ended March 31, 1998, noninterest income totaled
$467,000 compared with $427,000 for the same period of 1997. The primary
increase was in service charges on deposits which increased $72,000 to $257,000
for the third quarter of 1998 as the Company continues to generate fees for
services provided to customers.
 
NONINTEREST EXPENSE

     Noninterest expense for the first quarter of 1998, decreased $11,000 to
$3,133,000 from $3,144,000 for the first quarter of 1997.

                                       16
<PAGE>
 
     Salaries and other employee benefits increased approximately $29,000 to
$1,538,000 for the first quarter of 1998, compared with $1,509,000 for the first
quarter of 1997. This increase was largely due to returning the Company to full
staff level.

     Legal fees decreased $24,000 to $92,000 for the first quarter of 1998, from
$116,000 for the first quarter of 1997. The decrease in legal fees is due
primarily to nonrecurring legal expenses associated with loan collection efforts
as the quality of the loan portfolio has improved over the past year.

     Other professional services increased $18,000 to $357,000 for the first
quarter of 1998, compared with $339,000 for the comparable period in 1997. The
Company continues to utilize the services of outside professionals to augment
staffing and support service training.
 
INCOME TAXES

     For the three months ended March 31, 1998, the provision for income taxes
was $138,000 compared to $132,000 for the same period in 1997.

     The management of the Company is not aware of any trends, events,
uncertainties or recommendations by regulatory authorities that will have or
that are reasonably likely to have a material effect on the liquidity, capital
resources or operations of the Company.

                                       17
<PAGE>
 
                          PART II - OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               11 - Statement regarding computation of per share earnings

               27 - Financial Data Schedule

          (b)  Reports on Form 8-K: Reports on Form 8-K were filed on January 
               and March 1998 reporting on the following items:

               Item 5. Other Events -

               In January 1998, a Report on Form 8-K was filed pertaining to
               Professional Bancorp, Inc. ("Bancorp") and its wholly-owned
               subsidiary, First Professional Bank, N.A. (the "Bank"), have
               entered into a Settlement Agreement and Release with St. Paul
               Mercury Insurance Company ("St. Paul"), their Directors and
               Officers Liability insurance carrier.

               In March 1998, a Report on Form 8-K was filed pertaining to Joel
               W. Kovner, an option holder of Professional Bancorp, Inc.
               ("Bancorp") stock options. Mr. Kovner exercised all of his
               options to purchase 276,515 shares of common stock of Bancorp
               pursuant to Bancorp's 1990 and 1992 Stock Option Plans.

                                       18
<PAGE>
 
                                   SIGNATURES

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



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



Date:  May 11, 1998                 /s/ Julie P. Thompson
                                    --------------------------
                                    Julie P. Thompson
                                    Chairman of the Board


Date:  May 11, 1998                 /s/ Melissa Lanfre
                                    --------------------------
                                    Melissa Lanfre
                                    Chief Financial Officer and
                                    Senior Vice President
 

                                       19
<PAGE>
 
EXHIBIT 11 - EARNINGS PER SHARE

             Statement Regarding Computation of Per Share Earnings

<TABLE>
<CAPTION>

                                                      Three Months Ended
                                                        March 31, 1998
                                                  ---------------------------
Basic Earnings Per Share                             1998             1997
                                                  ----------       ----------
<S>                                               <C>              <C>
Computation for Statement of Operations:
   Net earnings per statement of
   operations used in basic earnings
   per share computation:

         Basic earnings                           $  304,335       $  189,635
                                                  ==========       ==========

      Weighted average number of shares
      outstanding                                  1,415,741        1,365,671
                                                  ==========       ==========

Basic earnings per share                          $     0.22       $     0.14
                                                  ==========       ==========
</TABLE>

                                       20
<PAGE>
 
Statement Regarding Computation of Per Share Earnings  - (Continued)

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                        March 31, 1998
                                                  ---------------------------
Diluted Earnings Per Share                           1998             1997
                                                  ----------       ----------
<S>                                               <C>              <C>
Computation for Statement of Operations:
   Net earnings per statement of
   operations used in diluted
   earnings per share computation:

         Basic earnings                           $  304,335       $  189,635

   Interest on convertible
   notes, net of tax effect                           63,832           70,423
                                                  ----------       ----------


         Basic earnings as adjusted               $  368,167       $  260,058
                                                  ==========       ==========

   Weighted average number of shares
   outstanding, as per diluted
   computation above                               1,676,495        1,366,903

   Net shares issuable from assumed exercise
   of warrants and options, as determined by
   the application of the Treasury
   Stock Method                                       55,300              (1)

   Weighted average shares issuable from
   assumed conversion of convertible notes           413,517          428,164
                                                  ----------       ----------

         Weighted average number of shares
         outstanding                               2,145,312        1,795,067
                                                  ==========       ==========


Diluted earnings per share                        $     0.17       $     0.14
                                                  ==========       ==========

</TABLE>
(1)  Anti-dilutive

                                       21