<PAGE>
                       U.S. SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549
                                     FORM 10-QSB


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

                      For Quarterly Period Ended March 31, 1997

                            Commission file number 2-76555

                           COMMERCE SECURITY BANCORP, INC.
                           -------------------------------
                (Exact name of small business issuer in its charter) 
                                           
                   DELAWARE                               33-0720548 
                   --------                               ----------
         (State or other jurisdiction of               (I.R.S. Employer or
          incorporation or organization)                Identification No.)


  7777 CENTER AVENUE, HUNTINGTON BEACH, CALIFORNIA          92647-3067
  ------------------------------------------------          ----------
      (Address of principal executive offices)              (Zip Code) 

                                   (714) 895-2929
                                   --------------
                             (Issuer's telephone number)


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  / /

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 

Common Stock, $.01 par value      9,697,430 shares outstanding on May 14, 1997 


<PAGE>

                           COMMERCE SECURITY BANCORP, INC.
                       U.S. SECURITIES AND EXCHANGE COMMISSION 
                                     FORM 10-QSB

                                        INDEX


                                                                     Page 

Part I - Financial Information

   Item 1. Financial Statements

    Condensed Consolidated Statements of Condition -  
    March 31, 1997 and December 31, 1996                                    3

    Condensed Consolidated Statements of Operations 
    For the three months ended March 31, 1997 and 1996                      5

    Condensed Consolidated Statements of Cash Flows - 
    For the three months ended March 31, 1997 and 1996                      6

    Notes to the Condensed Consolidated Financial Statements                7

  Item 2. Management's Discussion and Analysis or Plan of Operation        15

Part II - Other Information

  Item 1.   Legal Proceedings                                              21

  Item 2.   Changes in Securities                                          21

  Item 3.   Defaults Upon Senior Securities                                21

  Item 4.   Submission of Matters to a Vote of Security Holders            21

  Item 5.   Other Information                                              21

  Item 6.   Exhibits and Reports on Form 8-K                               21


                                      2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                    Condensed Consolidated Statements of Condition
                        March 31, 1997 and December 31, 1996 

                                                    March 31,   December 31,
                                                         1997           1996
                                                  (Unaudited)
                                                 -------------  ------------
ASSETS
Cash and due from banks                           $50,800,000   $ 32,522,000
Federal funds sold                                 21,400,000     13,700,000
Reverse repurchase agreements                       4,000,000        -      
                                                 -------------  -------------
   Total cash and cash equivalents                 76,200,000     46,222,000

Interest bearing deposits in other
   financial institutions                             235,000        338,000
Held-to-maturity investment securities at 
   amortized cost,  approximate fair value 
   March 31, 1997 $29,716,000                                 
   December 31, 1996 $19,910,000                   29,985,000     20,025,000
Available-for-sale investment securities           18,154,000     15,175,000

Mortgage loans held for sale                        3,970,000     10,837,000
Loans and leases                                  256,072,000    261,197,000
   Less allowance for loan loss                     5,250,000      5,156,000
                                                 -------------  ------------
      Loans, net                                  254,792,000    266,878,000

Loan and servicing sale receivable                 50,926,000     54,080,000
Premises and equipment, net                         3,717,000      3,911,000
Real estate acquired through foreclosure, net       3,249,000      3,635,000
Goodwill and other intangibles                     10,529,000     10,736,000
Accrued interest receivable and other assets       16,364,000     16,060,000
                                               ---------------  -------------
Total assets                                     $464,151,000   $437,060,000
                                                 -------------  -------------
                                                 -------------  -------------

              See notes to condensed consolidated financial statements.


                                       3

<PAGE>
                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Condition (Continued)
                         March 31, 1997 and December 31, 1996

                                                     March 31,    December 31,
                                                          1996            1996
                                                   (Unaudited)
                                                 -------------   ------------

LIABILITIES AND SHAREHOLDERS' EQUITY 
Deposits:
  Demand:
    Non-interest bearing                         $122,354,000     $126,885,000
    Interest bearing                               29,431,000       38,602,000
  Savings:
    Regular                                        92,563,000       42,190,000
    Money market                                   30,921,000       25,662,000
  Time:
    Under $100,000                                112,098,000      123,789,000
    $100,000 or more                               23,028,000       25,903,000
                                                 -------------   -------------
       Total deposits                             410,395,000      383,031,000

Due to related parties                              4,500,000        4,500,000
Accrued expenses and other liabilities              7,521,000        8,220,000
Mandatory Convertible Debentures                      537,000          537,000
                                                 -------------   -------------
         Total liabilities                        422,953,000      396,288,000

Shareholders' equity:
   Common stock, $.01 par value, 12,000,000 
     shares authorized   9,697,430 issued and 
     outstanding at March 31, 1997                     97,000           97,000
   Additional paid-in capital                      42,394,000       42,394,000
   Accumulated deficit                             (1,302,000)      (1,736,000)
   Unrealized gain on securities 
     available-for-sale                                 9,000           17,000
                                                 -------------   -------------
Total shareholders' equity                         41,198,000       40,772,000
                                                 -------------   -------------
Total liabilities and shareholders' equity       $464,151,000     $437,060,000
                                                 =============   =============

              See notes to condensed consolidated financial statements.


                                       4
<PAGE>

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Operations
                      Three months ended March 31, 1997 and 1996
                                     (Unaudited)
<TABLE>
<CAPTION>
                                                                Three Months Ended March 31,
                                                              --------------------------------
                                                                    1997           1996
                                                               -------------- --------------
<S>                                                            <C>              <C>
Interest Income:
    Interest and fees on loans                                 $   6,627,000    $  920,000 
    Income from lease financing receivables                        1,160,000         -     
    Interest on Federal funds sold                                   206,000        49,000 
    Interest on deposits with financial institutions                  11,000        11,000 
    Interest on investment securities                                581,000        86,000 
                                                               -------------  -------------
         Total interest income                                     8,585,000     1,066,000 
Interest Expense:
    Deposits                                                       3,156,000       292,000 
    Other borrowed funds                                              68,000        15,000 
                                                             --------------- --------------
         Total interest expense                                    3,224,000       307,000 
                                                             --------------- --------------
            Net interest income                                    5,361,000       759,000 

Provision for loan losses                                            407,000        35,000 
                                                             --------------- --------------
   Net interest income after
      provision for loan losses                                    4,954,000       724,000 

Non-interest income                                                3,167,000       162,000 
Non-interest expense                                               6,945,000       863,000 
                                                             --------------- --------------
Net income (loss) before taxes                                     1,176,000        23,000 
Income tax                                                           742,000         5,000 
                                                             --------------- --------------
Net income                                                          $434,000       $18,000 
                                                                   =========       ========

Income (loss) per common and common
      equivalent share                                                 $0.04       $  0.02
Average number of common shares and 
     common stock equivalents                                      9,697,430       895,467 

</TABLE>

                   See notes to consolidated financial statements.

                                        5

<PAGE>

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Cash Flows
                  For the Three Months Ended March 31, 1997 and 1996
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                                              For three months ended March 31, 
                                                                            --------------------------------------
                                                                                   1997               1996 
                                                                            ------------------   -----------------
<S>                                                                         <C>                   <C>
Operating Activities:
    Net income (loss)                                                            $434,000          $   18,000
    Adjustments to reconcile net loss to net
     cash used by operating activities:
       Provision for loan losses and real estate
         acquired through foreclosure                                             452,000              35,000 
       Gain on sale of real estate acquired through
         foreclosure                                                              (23,000)               -    
       Gain on sale of premises and equipment                                     (22,000)               -    
       Depreciation and amortization                                              492,000              35,000 
       Accretion/amortization related to securities, net                           50,000                -    
       Equity in loss of real estate joint venture                                153,000                -    
       Mortgage loans originated for sale                                    (155,924,000)               -    
       Proceeds from sales of loans and servicing                             161,344,000                -    
       Loss on the sale of loans and servicing                                  1,504,000                -    
       Decrease in loan servicing sale receivable                                 547,000                -      
       Decrease (increase) in other assets                                      2,682,000          (1,428,000)
       Increase (decrease) in other liabilities                                (1,011,000)              4,000 
                                                                            -------------         -----------
         Net cash used by operating activities                                 10,678,000          (1,336,000)
Investing Activities:
   Decrease (increase) in interest bearing deposits 
      with other financial institutions                                           118,000            (304,000)
   Purchases of investment securities                                         (15,000,000)         (2,500,000)
   Proceeds from sales and maturities of 
      investment securities                                                     2,000,000           3,657,000 
   Net decrease in loans                                                        4,799,000           1,773,000 
   Purchases of premises and equipment                                            (67,000)               -      
   Proceeds from the sale of premises and equipment                                12,000
   Proceeds from sale of real estate acquired                             
      through foreclosures                                                        980,000                -      
   Capital expenditures for other real estate owned                              (890,000)           (154,000)
   Purchase of Liberty National Bank, net of 
      cash received                                                                   -             7,283,000 
                                                                            -------------         -----------
            Net cash provided by investing activities                          (8,048,000)          9,755,000 
Financing Activities:
   Net increase in deposits                                                    27,348,000          16,875,000 
   Issuance of common stock                                                          -             13,400,000
                                                                            -------------         -----------
            Net cash provided by financing activities                          27,348,000          30,275,000 
                                                                            -------------         -----------
               Net Increase in cash and cash equivalents                       29,978,000          38,694,000 
Cash and cash equivalents at beginning of period                               46,222,000           5,940,000 
                                                                            -------------         -----------
Cash and cash equivalents at end of period                                    $76,200,000         $44,634,000 
                                                                            =============         ===========

</TABLE>

                   See notes to consolidated financial statements.

                                        6

<PAGE>

                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

    The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that effect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and reported amounts of revenue and expenses during the reporting 
period.  Actual results could differ from those estimates. The accompanying 
financial information for Commerce Security Bancorp, Inc. ("CSBI" or the 
"registrant") has been prepared in accordance with the Securities and Exchange 
Commission rules and regulations for quarterly reporting and therefore does not 
necessarily include all information and footnote disclosures normally included 
in financial statements prepared in accordance with generally accepted 
accounting principles. The interim financial data is unaudited; however, in the 
opinion of management, the interim data includes all adjustments, consisting 
only of normal recurring adjustments, necessary for a fair statement of the 
results for the interim periods.  The information contained in this report 
should be read in conjunction with the Annual Report of CSBI on Form 10-KSB for 
the year ended December 31, 1996. 

RISKS AND UNCERTAINTIES

    In the normal course of its business, the Company encounters two 
significant types of risk: economic and regulatory.  Economic risk is comprised 
of three components - interest rate risk, credit risk and market risk.  The 
Company is subject to interest rate risk to the degree that its 
interest-bearing liabilities mature and reprice at different speeds, or on a 
different basis, than its interest-bearing assets.  Credit risk is the risk of 
default on the Company's loan portfolio that results from the borrower's 
inability or unwillingness to make contractually required payments.  Market 
risk results from changes in the value of assets and liabilities which may 
impact, favorably or unfavorably, the realizability of those assets and 
liabilities.

    The Company is subject to the regulations of various governmental agencies. 
These regulations can and do change significantly from period to period.  The 
Company is also subject to periodic examinations by the regulatory agencies, 
which may subject it to changes in asset valuations, in amounts of required 
loss allowances and in operating restrictions resulting from the regulators' 
judgments based on information available to them at the time of their 
examination.

                                        7

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 1996 the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing 
of Financial Assets and Extinguishment of Liabilities" (FAS 125).  This 
statement provides consistent accounting and reporting standards for the 
transfers and servicing of financial assets and the extinguishment of 
liabilities.  The Company adopted FAS 125 effective January 1, 1997 and does 
not expect the adoption to have a material impact on its financial statements.

CASH AND CASH EQUIVALENTS

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

INVESTMENT SECURITIES

    The Company has classified its investment securities as held-to-maturity 
and available-for-sale. No trading portfolio is maintained.  Investment 
securities classified as held-to-maturity are carried at cost, adjusted for the 
amortization of premiums and the accretion of discounts. Premiums and discounts 
are amortized and accreted to operations using the straight line method, which 
management believes approximates the interest method. Management has the intent 
and ability to hold these assets as long-term investments until their expected 
maturities.  Under certain circumstances, including the significant 
deterioration of the issuer's credit worthiness or a significant change in 
tax-exempt status or statutory or regulatory requirements, securities 
classified as held-to-maturity may be sold or transferred to another 
classification.

    Investment securities classified as available-for-sale may be held for 
indefinite periods of time and may be sold to implement the Bank's 
asset/liability management strategies and in response to changes in interest 
rates and/or prepayment risk and similar factors.  These securities are 
recorded at estimated fair value.  Unrealized gains and losses are reported as 
a separate component of shareholders' equity, net of income taxes.

    Gains and losses on investment securities are generally determined on the 
specific identification method and are included in other income.

LOANS AND LEASES

    Loans are stated at principal amounts outstanding, net of unearned income, 
including discounts and fees.  Net deferred fees and costs are generally 
amortized into interest income over the life of the related loans using a 
method that approximates the level yield method.  

    Direct financing leases, which include estimated residual values of leased 
equipment, are carried net of unearned income.  Income from these leases is 
recognized on a basis which produces a level yield on the outstanding net 
investment in the lease.

                                        8

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

ALLOWANCE FOR ESTIMATED LOAN AND LEASE LOSSES

    A provision for estimated loan and lease losses is charged to expense when, 
in the opinion of management, such losses are expected to be incurred or are 
inherent in the portfolio.  Loans and leases are charged-off against the 
allowance for loan and lease losses when management believes that the 
collectibility of the principal is unlikely.  Management's estimates are used 
to determine the allowance that is considered adequate to absorb losses 
inherent in the existing loan and lease portfolio.  These estimates are 
inherently uncertain and their accuracy depends on the outcome of future 
events.  Management's estimates are based on previous loan loss experience, 
specific problem loans and leases, current economic conditions that may impact 
the borrower's ability to pay, volume, growth and composition of the loan 
portfolio, value of the collateral and other relevant factors.

NON-PERFORMING AND PAST DUE LOANS

    Included in the non-performing loan category are loans which have been 
categorized by management as nonaccrual because collection of interest is 
doubtful, and loans which have been restructured to provide a reduction in the 
interest rate or a deferral of interest or principal payments.

    When payment of principal or interest on a loan is delinquent for 90 days, 
or earlier in some cases, the loan is placed on nonaccrual status, unless the 
loan is in the process of collection and the underlying collateral fully 
supports the carrying value of the loan.  When a loan is placed on nonaccrual 
status, interest accrued during the period prior to the judgment of 
uncollectibility is charged to operations.  Generally, any payments received on 
nonaccrual loans are applied first to outstanding loan amounts and next to the 
recovery of charged-off loan amounts.  Any excess is treated as recovery of 
lost interest.

    Restructured loans are those loans on which concessions in terms have been 
granted because of a borrower's financial difficulty.  Interest is generally 
accrued on such loans in accordance with the new terms.

MORTGAGE BANKING ACTIVITIES

    The Company originates and sells residential mortgage loans to a variety of 
secondary market investors, including the Federal Home Loan Mortgage 
Corporation (FHLMC), the Federal National Mortgage Association (FNMA) and 
others.  The Company has an arrangement with the Government National Mortgage 
Association (GNMA) whereby loans originated by the Company are securitized by 
GNMA and sold to others.  Gains and losses on the sale of mortgage loans are 
recognized upon delivery based on the difference between the selling price and 
the carrying value of the related mortgage loans sold.  Deferred origination 
fees and expenses are recognized at the time of sale in the determination of 
the gain or loss.  The Company sells the servicing for such loans to either the 
purchaser of the loans or to a third party.  The Company recognizes the gain or 
loss on servicing sold when all risks and rewards of ownership have transferred.

                                        9

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

Mortgage loans held for sale are stated at the lower of cost or market as 
determined by the outstanding commitments from investors or current investor 
yield requirements calculated on an aggregate loan basis.  Valuation 
adjustments are charged against non-interest income.

    Forward commitments to sell, and put options on, mortgage-backed securities 
are used to reduce interest rate risk on a portion of loans held for sale and 
anticipated loan fundings.  The resulting gains and losses on forward 
commitments are deferred and included in the carrying values of loans held for 
sale.  Premiums on put options are capitalized and amortized over the option 
period.  Gains and losses on forward commitments and put options deferred 
against loans held for sale approximately offset equivalent amounts of 
unrecognized gains and losses on the related loans.  Forward commitments to 
sell and put options on mortgage-backed securities that hedge anticipated loan 
fundings are not reflected in the statement of financial condition.  Gains and 
losses on these instruments are not recognized until the actual sale of the 
loans held for sale.  Loans generally fund in 10 to 30 days from the date of 
commitment.

    In 1996, the Company sold its portfolio of loan servicing and no longer 
services mortgage loans for others.  Previously, the Company capitalized the 
cost of acquiring mortgage servicing rights through either purchase or 
origination of mortgage loans if it sold or securitized those loans, and 
retained the servicing.  The Company allocated the cost of the mortgage loans 
to the mortgage servicing rights and the loans (without the servicing rights) 
based on observable market prices.  Capitalized mortgage servicing rights were 
amortized in proportion to, and over the period of, estimated net servicing 
income.  Capitalized servicing rights were evaluated and measured for 
impairment on a quarterly basis.  In performing its impairment analysis, the 
Company stratified the servicing portfolio based on the relevant risk 
characteristics of the underlying loans, loan term and interest rate structure 
(fixed/adjustable). Valuation allowances, if any, were established for each 
risk stratum to carry the servicing rights at the lower of cost or market.

    Loan servicing income represented fees earned for servicing real estate and 
construction loan participations owned by investors, net of amortization 
expense.  The fees are generally calculated on the outstanding principal 
balances of the loans serviced and are recorded as income when collected.

PREMISES AND EQUIPMENT

    Premises and equipment are carried at cost less accumulated depreciation 
and amortization.  Depreciation on furniture, fixtures and equipment is 
computed using the straight-line method over the estimated useful lives, which 
range from two to fifteen years.  Leasehold improvements are amortized using 
the straight-line method over the estimated useful lives of the improvements or 
the remaining lease term, whichever is shorter.  Expenditures for betterments 
or major repairs are capitalized and those for ordinary repairs and maintenance 
are charged to operations as incurred.

                                       10

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

REAL ESTATE ACQUIRED THROUGH FORECLOSURE

    The Company records real estate acquired through foreclosure or "deed in 
lieu of" as the lesser of the outstanding loan amount or the fair value less 
estimated costs to sell, at the time of foreclosure.  Any resulting loss on 
foreclosure is charged to the valuation allowance for loan losses and a new 
basis is established in the property.  A valuation allowance is established 
to reflect declines in value subsequent to foreclosure, if any, below the new 
basis.  Required developmental costs associated with foreclosed property 
under construction are capitalized and considered in determining the fair 
value of the property.  Operating expenses of such properties, net of related 
income, and gains and losses on their disposition are included in other 
non-interest expenses.

INTANGIBLES ARISING FROM ACQUISITIONS

    The Company has paid amounts in excess of fair value for CSB's and LNB's 
core deposits and tangible assets.  Such amounts are being amortized by 
systematic charges to income over a period which is no greater that the 
estimated remaining life of the assets acquired or not to exceed the 
estimated average remaining life of the existing deposit base assumed.  The 
Company periodically reviews intangibles to assess recoverability and 
impairment is recognized in operations if permanent loss of value occurs.

CUSTOMER ACCOUNTS

    Customer accounts comprise primarily the Bank's savings and checking 
accounts.  Customer accounts vary as to terms, with the major differences 
being minimum balance required, maturity, interest rates and the provisions 
for payment of interest.  SDNB's and LNB's customer accounts are insured by 
the FDIC, through the BIF for up to an aggregate amount of $100,000 per 
customer. CSB's deposits are insured through the SAIF.

    Interest is accrued and paid either to the customer or added to the 
customer's account on a periodic basis.  On term accounts, the forfeiture of 
interest (because of withdrawal prior to maturity) is offset as of the date 
of withdrawal against interest expense.

FEDERAL AND STATE TAXES

    The Company provides for income taxes under the provisions of Statement 
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 
109). Under the liability method which is prescribed by FAS 109, a deferred 
tax asset and/or liability is computed for both the expected future impact of 
differences between the financial statement and tax bases of assets and 
liabilities, and for the expected future tax benefit to be derived from tax 
loss and tax credit carry forwards.  FAS 109 also requires the establishment 
of a valuation allowance, if necessary, to reflect the likelihood of 
realization of deferred tax assets.  The effect of tax rate changes will be 
reflected in income in the period such changes are enacted.


                                     11
<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

    Deferred income taxes are provided by applying the statutory tax rates in 
effect at the balance sheet date to temporary differences between the book 
basis and the tax basis of assets and liabilities. The resulting deferred tax 
assets and liabilities are adjusted to reflect changes in tax laws or rates.  

EARNINGS PER COMMON SHARE

    Earnings per share is computed by dividing net income by the weighted 
average number of common shares outstanding during the year and dilutive 
common stock equivalents by using the treasury stock method.  The weighted 
average number of common shares used to compute earnings per share were 
9,697,430 for the three months ended March 31, 1997 and 895,497 for the three 
months ended March 31, 1996. 

    The mandatory convertible debentures ("Debentures") are convertible into 
common stock of SDN Bancorp, Inc., a wholly owned subsidiary of CSBI, and are 
not dilutive to the earnings per share of CSBI.  Additionally, there were no 
exercisable stock options at March 31, 1997 or 1996.  Therefore, primary 
income per share and income per share assuming full dilution are the same for 
both periods.

NOTE 2 - ACQUISITIONS AND 1996 REORGANIZATION

    On March 31, 1996, the SDN completed its acquisition (the "Liberty 
Acquisition") of Liberty National Bank ("Liberty") for approximately $15.1 
million in cash, as contemplated by the October 26, 1995 Agreement and Plan 
of Merger by and among the registrant, Liberty, and Dartmouth Capital Group, 
L.P., a Delaware limited partnership (the "Partnership") and the  
registrant's controlling shareholder.  Liberty is headquartered in Huntington 
Beach, California and had total assets of approximately $149 million as of 
the Liberty Acquisition.

    As of March 27, 1996, the Partnership invested approximately $13.4 
million in SDN to fund the Liberty Acquisition.  In exchange for that 
investment, SDN issued a total of 3,392,405 additional shares of SDN common 
stock at a price per share of $3.95, SDN's book value per share as of 
December 31, 1995.  At the Partnership's direction, SDN issued 1,764,000 of 
those shares of common stock, in the aggregate, to certain limited partners 
of the Partnership (the "Direct Holders") and the remaining 1,628,405 shares 
of common stock directly to the Partnership. 

    As of September 1, 1996, CSBI completed the plan of reorganization (the 
"1996 Reorganization") contemplated by the Agreement and Plan of 
Reorganization dated April 23, 1996 (the "Agreement") between SDN and 
Commerce Security Bank, a California-chartered commercial bank ("CSB").  As 
part of the 1996 Reorganization, SDN became a subsidiary of CSBI, effective 
August 31, 1996, in a transaction in which SDN shareholders received shares 
of CSBI common stock in exchange for all of the outstanding shares of SDN 
common stock.  As of September 1, 1996, CSBI completed the acquisition of CSB 
(the "Commerce Acquisition") in which CSBI acquired all of the outstanding 
shares of CSB.  SDN and CSB remain wholly-owned subsidiaries of CSBI.  
Through SDN, CSBI controls Liberty and San Dieguito National Bank ("SDNB"), 
SDN's wholly-owned subsidiaries. 


                                     12

<PAGE>

NOTE 2 - ACQUISITIONS AND 1996 REORGANIZATION (CONTINUED):

    Prior to August 31, 1996, the Partnership invested approximately $14.5 
million in SDN to fund the Commerce Acquisition.  In exchange for that 
investment, SDN issued a total of 3,664,776 additional shares of SDN common 
stock at a price per share of $3.95 pursuant to a subscription agreement 
entered into in March 1996.  At the Partnership's direction, SDN issued 
1,080,000 of those shares of common stock, in the aggregate, to certain 
limited Direct Holders and the remaining 2,584,776 shares of common stock 
directly to the Partnership.  In addition, at the same time SDN issued a 
total of 81,800 shares of common stock to other accredited investors for an 
aggregate purchase price of approximately $424,000. 

    Holders of SDN common stock were issued one share of CSBI common stock 
for each share held in SDN.  A total of 4,327,606 shares of SDN common stock 
were outstanding at the time of the 1996 Reorganization.  Holders of CSB 
common stock were issued 1,527,540 shares of CSBI common stock and received 
cash of approximately $14.1 million.  An additional 58,212  shares of the 
Company's common stock and cash of approximately $346,000 were placed into 
escrow pending resolution of the SAIF recapitalization.  As a result of 
legislation that recapitalized the SAIF, passed on September 30, 1996, the 
stock and cash escrows were distributed, with approximately $96,000 disbursed 
in cash and 16,151 common shares distributed. A total of 161,356 shares were 
issued to other direct investors who invested in conjunction with the Merger 
and investment bankers involved in the Merger. 

    Both the Liberty Acquisition and Commerce Acquisition were accounted for 
using the purchase method of accounting in accordance with Accounting 
Principles Board Opinion No. 16, "Business Combinations".  Under this method 
of accounting, the purchase price was allocated to the assets acquired and 
deposits and liabilities assumed based on their fair values as of the 
acquisition date. The consolidated financial statements include the 
operations of Liberty and CSB from the date of acquisition.  Goodwill arising 
from the transactions totaled approximately $3.8 million in the Liberty 
Acquisition and $7.2 million in the Commerce Acquisition and is being 
amortized over twenty years on a straight line basis.

    The table on the following page sets forth selected unaudited pro forma 
combined financial information of the Company for the three months ended 
March 31, 1997 and 1996 and for the twelve months ended December 31, 1996.  
The pro forma operating data reflects the effect of the Liberty Acquisition 
and the Commerce Acquisition as if each was consummated at the beginning of 
each period presented.  The pro forma results are not necessarily indicative 
of the results that would have occurred had such acquisitions actually 
occurred as of such dates, nor are they necessarily indicative of the results 
of future operations.


                                     13

<PAGE>

NOTE 2 - ACQUISITIONS AND 1996 REORGANIZATION (CONTINUED):

<TABLE>
<CAPTION>

                                                                 Unaudited Pro Forma Combined for
                                                   ---------------------------------------------------------
                                                   Three Months Ended March 31, 
                                                 --------------------------------        Twelve Months Ended
                                                           1997           1996            December 31, 1996
                                                    --------------    -----------        -------------------
<S>                                                    <C>             <C>                  <C>
     Total interest income                             $8,585,000      $8,191,000             $32,616,000 
     Total interest expense                             3,224,000       3,439,000              13,707,000 
                                                   --------------  --------------           -------------
     Net interest income                                5,361,000       4,752,000              18,909,000 
     Provision for loan losses                            407,000         233,000               1,005,000
                                                   --------------  --------------           -------------
     Net interest income after provision 
       for loan and lease losses                        4,954,000       4,519,000              17,904,000 
     Non-interest income                                8,121,000       3,357,000              10,584,000 
     Non-interest expense                               6,945,000       7,901,000              34,882,000 
                                                   --------------  --------------           -------------
     Net income before taxes                            1,176,000         (25,000)             (6,394,000)
     Income tax                                           742,000          35,000              (4,221,000)
                                                   --------------  --------------           -------------
     Net income                                          $434,000      $  (60,000)           $ (2,173,000)
                                                        =========      ==========            ============
</TABLE>

     On December 24, 1996, the Company entered into an agreement with 
Eldorado Bancorp ("Eldorado") the holding company of Eldorado Bank, to 
acquire 100% of the outstanding stock of Eldorado for cash consideration of 
$23 per share.  The aggregate consideration payable to holders of Eldorado 
common stock, including consideration for outstanding options, will be 
approximately $89.6 million.  In connection with this acquisition, the 
Company issued two notes in the amounts of $200,000 and $4,300,000 to a 
director and the Partnership, respectively.  These funds were placed on 
deposit to be utilized for the acquisition of Eldorado.  At March 31, 1997, 
Eldorado had assets of approximately $406 million (unaudited). The 
acquisition will be accounted for using the purchase method.  Completion of 
the transaction is contingent upon the approval of shareholders and state and 
federal regulators.


                                       14



<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

     This information should be read in conjunction with the consolidated 
financial statements and the notes thereto of Commerce Security Bancorp, Inc. 
("CSBI" or the "registrant") included in Item 1 of this Quarterly Report and 
the audited consolidated financial statements and notes thereto and 
Management Discussion and Analysis of Financial Condition and Results of 
Operations for the year ended December 31, 1996 contained in the 1996 Annual 
Report of CSBI on Form 10-KSB.

     Except for the historical information contained herein, the following 
discussion contains forward looking statements that involve risks and 
uncertainties.  CSBI's actual results could differ materially from those 
discussed here.  Factors that could cause or contribute to such differences 
include, but are not specifically limited to, changes in regulatory climate, 
shifts in interest rate environment, change in economic conditions of various 
markets CSBI serves, as well as the other risks detailed in this section, and 
in the sections entitled Results of Operations and Liquidity and Capital 
Resources, and those discussed in CSBI's Form 10-KSB for the year ended 
December 31, 1996.

SUMMARY

     As a result of the 1996 Reorganization, described in the footnotes to 
the accompanying consolidated condensed financial statements, since September 
1, 1996, the registrant has owned 100% of CSB and SDN.  SDN owns 100% of San 
Dieguito National Bank ("SDNB") and, as of March 31, 1996, SDN completed the 
Liberty Acquisition as described in the footnotes to the accompanying 
consolidated condensed financial statements.  The Liberty Acquisition and 
Commerce Acquisition were accounted for using the purchase method of 
accounting for business combinations. Accordingly, the following discussion 
relates to the operating results of SDNB for the three months ended March 31, 
1997 and 1996, the operating results of Liberty and CSB for the three months 
ended March 31, 1997 and the combined financial condition of SDNB, Liberty 
and CSB (collectively the "Banks").

FINANCIAL CONDITION

     Total assets of CSBI at March 31, 1997 were $463.8 million compared to 
total assets of $437.1 million at December 31, 1996.  The increase in total 
assets since December 31, 1996 is attributable to an increase in cash and 
cash equivalents partially offset by a decrease in loans and leases and other 
assets.  Total cash and cash equivalents increased due to an increase in 
total deposits and due to a sale of lease financing receivables that offset 
an increase in total loans and leases.  Total earning assets of CSBI at March 
31, 1997 were $333.8 million compared to total earning assets of $321.3 
million at December 31, 1996. Earning assets decreased primarily due to the 
sale of leases during the quarter.

     Total loans and leases of CSBI at March 31, 1997 were $260.0 million, 
including $4.0 million of mortgage loans held for sale, compared to $282.9 
million at December 31, 1996.  CSB sold approximately $16.0 million in lease 
finance receivables that primarily accounts for this decrease. Additionally, 
at March 31, 1997 CSBI had $50.9 million in loan sale receivables 
attributable to the mortgage banking activities at CSB compared to $54.1 
million at December 31, 1996.


                                      15
<PAGE>

     The Banks hold loans and leases in their portfolio that at March 31, 
1997 represented 87.1% and 12.9% of total loans and leases, respectively.  
The four largest lending categories are: (i) commercial real estate loans; 
(ii) other loans secured by real estate; (iii) commercial loans and (iv) 
loans to individuals.  At March 31, 1997, these categories accounted for 
approximately 39.7%, 27.3%, 21.6% and 11.4% of total loans, respectively. 
Leases are made to finance small equipment for businesses. 

     Included among the Banks' portfolio of loans are SBA loans made by the 
Banks guaranteed by the United States Government to the extent of 75% to 90% 
of the principal and interest due on such loans.  Liberty and SDNB are active 
in originating this type of loan.  Liberty generally sells the government 
guaranteed portion of these loans to participants in the secondary market and 
retains servicing responsibilities and the unguaranteed portion of the loans 
while SDNB generally retains the entire loan for its own portfolio. 

     The government guaranteed portion of the SBA loans are sold at a 
premium, a portion of which is immediately recognized as income.  The 
remaining premium, representing estimated normal servicing fees or a yield 
adjustment on the portion of the SBA loan retained by the Banks, is deferred 
and recognized as income over the estimated life of the loan. Deferred SBA 
servicing fees for Liberty were approximately $1.5 million at March 31, 1997. 
The total SBA loan portfolio serviced by Liberty at March 31, 1997 was 
approximately $162.2 million and included in this amount was approximately  
$45.5 million representing the portion of the SBA loans retained by Liberty.  
The total SBA loan portfolio serviced by SDNB at March 31, 1997 was 
approximately $5.0 million and included in this amount was approximately  
$3.9 million representing the portion of the SBA loans retained by SDNB.

     Total investments of CSBI at March 31, 1997 were $73.8 million compared 
to $49.2 million at December 31, 1996.  Investment securities increased 
largely due to increased deposits and proceeds from the sale of leases.  The 
investment portfolio primarily consists of U.S. government and municipal 
securities, Federal funds sold, reverse repurchase agreements and 
certificates of deposits held at other depository institutions. U.S. 
government and municipal securities were $48.1 million, or 65.2% of the total 
portfolio, of which $18.1 million are categorized as held to maturity and 
$30.0 million are categorized as available for sale.  Federal funds sold, 
reverse repurchase agreements and certificates of deposit were $21.4 million, 
$4.0 million and $235,000, respectively, or 29.0%, 5.4% and .4% of the total 
portfolio, respectively.

     Total deposits were $410.4 million at March 31, 1997 compared to $383.0 
million at December 31, 1996. Increased savings deposits partially offset 
by decreased time deposits under $100,000 and interest bearing demand 
accounts accounted for this increase in total deposits.  This shift in 
deposits is concentrated largely at CSB where money desk deposits are being 
run off and being replaced by local core deposits.  Non-interest bearing 
demand accounts were $122.4 million, or 29.8% of total deposits, at March 31, 
1997.  Interest bearing deposits are comprised of interest bearing demand 
accounts, regular savings accounts, money market accounts, time deposits of 
under $100,000 and time deposits of $100,000 or more which were $29.4 
million, $92.6 million, $30.9 million, $112.1 million and $23.0 million, 
respectively, or 7.2%, 22.6%, 7.5%, 27.3% and 5.6% of total deposits, 
respectively.


                                      16

<PAGE>

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1997

     For the three months ended March 31, 1997, CSBI had net income of 
$434,000 compared to net income of $18,000 for the same period in 1996.  The 
improvement in 1996 earnings is partly attributable to the earnings of 
Liberty partially offset by a loss incurred by CSB whose results of 
operations are included in the CSBI results of operations for the three 
months ended March 31, 1997 but were not included for the same period in 
1996.  Compared to the prior year results, the improvements stem from a 
combination of increased net interest income of approximately $4.6 million 
and non-interest income of approximately $8.0 million,  partially offset by 
increased loan loss provision of $372,000, non-interest expense of 
approximately $6.1 million and provision for taxes of $737,000.

NET INTEREST INCOME AND NET INTEREST MARGIN

     Net interest income was approximately $5.4 million for the three months 
ended March 31, 1997, an increase of $4.6 million over the same period in 
1996. An increase in interest and fee income to $8.6 million for the three 
months ended March 31, 1997 from $1.1 million for the same period in 1996 was 
partially offset by increased interest expense of $3.2 million for the three 
months ended March 31, 1997 from $307,000 from the same period in 1996 
contributed to this earnings improvement.  

     Loans, the largest component of earning assets, increased to an average 
balance of $305.9 million for the three months ended March 31, 1997 from 
$38.3 million for the three months ended March 31, 1996, with an average 
yield of 10.2% and 9.7%, respectively.  Investments in securities and Federal 
funds sold rose to an average of $52.7 million for the three months ended 
March 31, 1997 from an average of $10.3  million for the three months ended 
March 31, 1996, with an average yield of 6.1% and 5.7%, respectively. The 
yield on earning assets increased to 9.6% for the three months ended March 
31, 1997 from 8.8% for the same period in 1996.  The increase in yield on 
earning assets can largely be attributed to a shift in the mix of loans as a 
percent of earning assets where the percent of average loans to average 
earning assets during the three months ended March 31, 1997 increased to 
85.3% from 78.7% for the same period in 1996. 

     Average interest-bearing deposits increased to $266.5 million for the 
three months ended March 31, 1997 from $38.3 million for the same period in 
1996. Additionally, the average rate paid on these deposits increased to 4.7% 
during the three months ended March 31, 1997 compared to 3.1% during the same 
period in 1996.  The average rate paid on interest-bearing liabilities was 
4.8% for the three months ended March 31, 1997 compared to 3.2% for the same 
period in 1996. This increase represents an overall increase in rates paid 
largely attributable to a change in the mix of interest bearing liabilities 
with a greater emphasis on time certificates of deposits that generally pay a 
higher rate of interest than savings accounts or other interest-bearing 
deposits.

     As a result of these forgoing factors, the average yield on earning 
assets decreased to 6.0% for the three months ended March 31, 1997 compared 
to 6.3% for the same period in 1996.


                                      17


<PAGE>

ALLOWANCE AND PROVISION FOR LOAN LOSSES

     The allowance for loan and lease losses represents the amounts which 
have been set aside for the specific purpose of absorbing losses which may 
occur in the Banks' loan portfolio.  The provision for loan and lease losses 
is an expense charged against operating income and added to the allowance for 
loan and lease losses.  Management of the Banks continue to carefully monitor 
the allowance for loan and lease losses in relation to the size of the Banks' 
loan portfolio and known risks or problem loans and leases. 

     The allowance for loan and lease losses at CSBI was approximately $5.3 
million at March 31, 1997 compared to approximately $5.2 million at December 
31, 1996.   During the three months ended March 31, 1997, the provision for 
loan and lease losses was $407,000,  loan and lease charge-offs were $345,000 
and recoveries were $32,000 which compares to a provision of $35,000,  loan 
and lease charge-offs of $12,000 and recoveries of $35,000 during the same 
period in 1996.  The allowance for loan and lease losses for CSBI represented 
2.1% of net loans, excluding those loans held for sale, at March 31, 1997 and 
1.9% at December 31, 1996.

NON-INTEREST INCOME

     Non-interest income for the three months ended March 31, 1997 was $3.2 
million compared to $162,000 for the same period in 1996.  Non-interest 
income from Liberty and CSB for the quarter of approximately $988,000 and 
$1,863,000, respectively,  is primarily responsible for this improvement in 
non-interest income that was not included in income for the same period in 
1996. The majority of the non-interest income at Liberty is derived from its 
SBA loan sale and servicing activity while CSB's non-interest income is 
largely derived from its mortgage banking activity and gain recognized on the 
sale of leases. Additionally, non-interest income at SDNB was $276,000 for 
the first three months ended March 31, 1997 compared to the $162,000 for the 
same period in 1996.  The increase at SDNB is largely attributable to gains 
recognized on the sale of SBA loans and gains on the sale of a note 
receivable.

NON-INTEREST EXPENSES

     Non-interest expense for the three months ended March 31, 1997 was 
approximately $6.9 million, an increase from $863,000 for the same period in 
1996.  Non-interest expense  at Liberty and CSB for the three months ended 
March 31, 1997 was approximately $1.6 million and $4.5 million, respectively, 
that was not included in income for the same period in 1996, and was 
partially offset by improvements in non-interest expense at SDNB.  Salaries 
and employee benefits increased to $3.0 million for the three months ended 
March 31, 1997 from $418,000 for the same period in 1996 of which $630,000 is 
attributable to Liberty and $1.9 million is attributable to CSB.  Occupancy 
and equipment increased to $1.1 million for the three months ended March 31, 
1997 from $204,000 for the same period in 1996 of which $295,000 is 
attributable to Liberty and $605,000 is attributable to CSB.  Other 
non-interest expenses increased to $2.8 million for three months ended March 
31, 1997 from $241,000 for the same period in 1996 of which $645,000 is 
attributable to Liberty and $2.0 million is attributable to CSB.


                                      18

<PAGE>

PROVISION FOR INCOME TAXES

     As a result of the earnings for the three months ended March 31, 1997, a 
$742,000 provision for income taxes was made compared to a provision of 
$5,000 made for the same period in 1996.

CAPITAL RESOURCES

     Current risk-based regulatory capital standards generally require banks 
and holding companies  to maintain a ratio of "core" or "Tier 1" capital 
(consisting principally of common equity) to risk-weighted assets of at least 
4%, a ratio of Tier 1 capital to adjusted total assets (leverage ratio) of at 
least 3% and a ratio of total capital (which includes Tier 1 capital plus 
certain forms of subordinated debt, a portion of the allowance for loan 
losses and preferred stock) to risk-weighted assets of at least 8%.  
Risk-weighted assets are calculated by multiplying the balance in each 
category of assets according to a risk factor which ranges from zero for cash 
assets and certain government obligations to 100% for some types of loans, 
and adding the products together.

     CSBI, Liberty and SDNB were well capitalized and CSB was adequately 
capitalized as of March 31, 1997 for federal regulatory purposes.  As of 
March 31, 1997,  CSBI had a combined leverage ratio of 7.3%, a Tier 1 
risk-weighted capital ratio of 9.2% and a total risk-weighted capital ratio 
of 10.7%.  The individual banks' leverage ratio, Tier 1 risk-weighted capital 
ratio, and total risk-weighted capital ratios are set forth in the following 
table:

                                                LIBERTY         CSB      SDNB
                                                -------        ----    ------
     Leverage ratio                                7.1%        4.9%      9.0%
     Tier 1 risk-weighted capital ratio            8.9%        7.1%     11.4%
     Total risk-weighted capital ratio            10.1%        8.4%     12.7%


LIQUIDITY AND INTEREST RATE SENSITIVITY

     The asset-liability management process determines the size and 
composition of the balance sheet and focuses on the management of liquidity 
and interest rate risk.  The purpose of liquidity and balance sheet 
management is to ensure that funds are available to meet customer needs, meet 
the financial commitments of the Banks, and to reduce the Banks' exposure to 
changing interest rates.  

     The Banks manage liquidity from both sides of the balance sheet through 
the coordination of the relative maturities of its assets and liabilities.  
The Banks enhance their liquidity through the ability to raise additional 
funds in money markets through Federal funds lines, repurchase agreements and 
selling of a specified portion of its securities (securities available for 
sale).  The Banks maintain a level of liquidity that is considered adequate 
to meet current needs.  Liquid assets include cash and due from banks, 
Federal funds sold, and securities available for sale.  At March 31, 1997, 
liquid assets totaled approximately $94.6 million, or 20.4% of total assets, 
which compares to $61.7 million, or 14.1% of total assets, at December 31, 
1996.


                                      19

<PAGE>

     At March 31, 1997 the Banks had net repriceable assets (a "positive 
gap") as measured at one year of approximately $11.0 million or 2.4% of total 
assets. The Banks had net repriceable assets (a "positive gap") as measured 
at a 90-day time horizon of approximately $41.8 million, or 9.0% of total 
assets.  With a positive gap, a bank would anticipate higher net yields over 
the near term in a rising rate environment and lower net yields in a 
declining rate environment. Conversely, with a negative gap, a bank would 
anticipate lower net yields over the near term in a rising rate environment 
and higher net yields in a declining rate environment. 

INFLATION

     The majority of the Company's assets and liabilities are monetary items 
held by the Banks, the dollar value of which is not affected by inflation.  
Only a small portion of total assets is in premises and equipment.  The lower 
inflation rate of recent years did not have the positive impact on the Banks 
that was felt in  many other industries.  The small fixed asset investment of 
the Company minimizes  any material misstatement of asset values and 
depreciation expenses which may  result from fluctuating market values due to 
inflation.  A higher inflation  rate, however, may increase operating 
expenses or have other adverse effects on borrowers of the Banks, making 
collection more difficult for the Banks.  Rates of interest paid or charged 
generally rise if the marketplace believes inflation rates will increase.


                                      20

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Not Applicable

ITEM 2.   CHANGES IN SECURITIES

Not Applicable

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

Not Applicable 

ITEM 5.   OTHER INFORMATION

Not Applicable 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    (a) Exhibits:
            None

    (b) Reports on Form 8-K:  
            None


                                      21

<PAGE>


                  COMMERCE SECURITY BANCORP, INC.  AND SUBSIDIARIES
                 U.S. SECURITIES AND EXCHANGE COMMISSION FORM 10-QSB


SIGNATURES

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

                                             COMMERCE SECURITY BANCORP, INC.



DATE: May 15, 1997       /s/ ROBERT P. KELLER
                         ------------------------------------------
                         Robert P. Keller                         
                         President and Chief Executive Officer

DATE: May 15, 1997       /s/ CURT A. CHRISTIANSSEN
                         ------------------------------------------
                         Curt A. Christianssen
                         Senior Vice President and Chief Financial Officer


                                      22