<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 September 30, 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.) 


    24012 Calle de la Plata,Suite 150, Laguna Hills, 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  18,347,397 shares outstanding on November 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 -                       3
       September 30, 1997 and December 31, 1996
       
       Condensed Consolidated Statements of Operations                        5
       For the nine months ended September 30, 1997 and 1996 
        
       Condensed Consolidated Statements of Operations                        6
       For the three months ended September 30, 1997 and 1996 
       
       Condensed Consolidated Statements of Cash Flows -                      7
       For the nine months ended September 30, 1997 and 1996 
       
       Notes to the Condensed Consolidated Financial Statements               9
       
    Item 2. Management's Discussion and Analysis or Plan of Operation        18

Part II - Other Information

    Item 1.   Legal Proceedings                                              26

    Item 2.   Changes in Securities                                          26

    Item 3.   Defaults Upon Senior Securities                                27

    Item 4.    Submission of Matters to a Vote of Security Holders           27

    Item 5.   Other Information                                              27

    Item 6. Exhibits and Reports on Form 8-K                                 27



                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                    Condensed Consolidated Statements of Condition
                      September 30, 1997 and December 31, 1996 
                                           
                                                September 30,   December 31,
                                                    1997           1996
                                                 (Unaudited)
                                                -------------   ------------
ASSETS
Cash and due from banks                         $  98,785,000   $ 32,522,000 
Federal funds sold                                 20,000,000     13,700,000 
                                                -------------   ------------
   Total cash and cash equivalents                118,785,000     46,222,000 
                                                                              
Held-to-maturity investment securities at              
   amortized cost,  approximate fair value              
   September 30, 1997 $21,346,000                        
   December 31, 1996 $19,910,000                   21,342,000     20,025,000 
Available-for-sale investment securities           81,416,000     15,513,000 
                                                                              
Mortgage loans held for sale                        9,839,000     10,837,000 
Loans and leases                                  504,753,000    261,197,000 
   Less allowance for loan loss                     9,249,000      5,156,000 
                                                -------------   ------------
      Loans, net                                  505,343,000    266,878,000 
                                                                              
Loan and servicing sale receivable                104,254,000     54,080,000 
Premises and equipment, net                        11,284,000      3,911,000 
Real estate acquired through foreclosure, net       3,433,000      3,635,000 
Goodwill and other intangibles                     69,308,000     10,736,000 
Accrued interest receivable and other assets       22,703,000     16,060,000 
                                                -------------   ------------
Total assets                                    $ 937,868,000   $437,060,000 
                                                -------------   ------------
                                                -------------   ------------
                                                                              
              See notes to condensed consolidated financial statements.



                                       3
<PAGE>

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Condition (Continued)
                       September 30, 1997 and December 31, 1996

<TABLE>
<CAPTION>
                                                            September 30,       December 31,
                                                                 1997               1996
                                                             (Unaudited)    
                                                           -------------      --------------
<S>                                                        <C>                <C>
LIABILITIES AND SHAREHOLDERS' EQUITY                                                      
Deposits:                                                                           
   Demand:                                                                      
      Non-interest bearing                                 $ 275,614,000      $ 126,885,000 
      Interest bearing                                        94,115,000         38,602,000 
   Savings:                                                                       
      Regular                                                140,952,000         42,190,000 
      Money market                                            98,032,000         25,662,000 
   Time:                                                                       
      Under $100,000                                         132,917,000        123,789,000 
      $100,000 or more                                        57,298,000         25,903,000 
                                                           -------------      -------------
         Total deposits                                      798,928,000        383,031,000 
                                                                                 
Federal funds purchased                                        2,416,000            -       
Due to related parties                                           -                4,500,000 
Accrued expenses and other liabilities                        11,315,000          8,220,000 
Guaranteed preferred beneficial interest in the Company's                                                             
 junior subordinated debentures                               27,657,000            -       
Mandatory Convertible Debentures                                 537,000            537,000 
                                                           -------------      -------------
         Total liabilities                                   840,853,000        396,288,000 
                                                                                  
Shareholders' equity:                                                             
   Preferred stock, $.01 par value, 1,500,000 shares                              
      authorized, 116,593 issued and outstanding at                                  
      September 30, 1997                                      11,659,000              -       
   Special common stock, $.01 par value, 9,651,600                                
      shares authorized, 4,825,718 issued and outstanding at                      
      September 30, 1997                                          48,000              -       
   Common stock, $.01 par value, 50,000,000                                          
      shares authorized, 13,945,861 issued and                                          
      outstanding at September 30, 1997                          139,000             97,000 
   Additional paid-in capital                                 85,532,000         42,394,000 
   Accumulated deficit                                          (516,000)        (1,736,000)
   Unrealized gain on securities available-for-sale              153,000             17,000 
                                                           -------------      -------------
Total shareholders' equity                                    97,015,000         40,772,000 
                                                           -------------      -------------
Total liabilities and shareholders' equity                 $ 937,868,000      $ 437,060,000 
                                                           -------------      -------------
                                                           -------------      -------------
</TABLE>


              See notes to condensed consolidated financial statements.



                                       4
<PAGE>


                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Operations
                    Nine months ended September 30, 1997 and 1996
                                     (Unaudited)
                                           
                                          Nine Months Ended September 30,
                                          -------------------------------
                                               1997               1996
                                          --------------      -----------
Interest Income:                                                           
   Interest and fees on loans               $ 28,990,000      $ 8,380,000 
   Income from lease financing receivables     3,110,000          382,000 
   Interest on Federal funds sold              1,124,000          556,000 
   Interest on investment securities           3,620,000        1,338,000 
                                            ------------      -----------
         Total interest income                36,844,000       10,656,000 
Interest Expense:                                                         
   Deposits                                   13,005,000        4,226,000 
   Other borrowed funds                        1,303,000           56,000 
                                            ------------      -----------
         Total interest expense               14,308,000        4,282,000 
                                            ------------      -----------
            Net interest income               22,536,000        6,374,000 
                                                                           
Provision for loan and lease losses            1,087,000          217,000 
                                            ------------      -----------
   Net interest income after                                               
      provision for loan losses               21,449,000        6,157,000 
                                                                           
Non-interest income                            8,440,000        2,506,000 
Non-interest expense                          26,031,000        7,986,000 
                                            ------------      -----------
Net income (loss) before taxes                 3,858,000          677,000 
Income tax                                     2,230,000          227,000 
                                            ------------      -----------
Net income                                  $  1,628,000      $   450,000 
                                            ------------      -----------
                                            ------------      -----------
                                                                           
Net income available to common              $  1,220,000      $   450,000
                                                                           
Primary income per common and common                                       
      equivalent share                      $      0.090      $     0.118
Fully diluted income per common and common                                 
      equivalent share                      $      0.085      $     0.118
                                                                           
                                                                           
                   See notes to consolidated financial statements.




                                       5
<PAGE>


                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Operations
                    Three months ended September 30, 1997 and 1996
                                     (Unaudited)
                                           
                                             Three Months Ended September 30, 
                                             --------------------------------
                                                   1997            1996
                                             --------------   ---------------
Interest Income:                                                          
   Interest and fees on loans                  $ 13,527,000     $ 4,231,000 
   Income from lease financing receivables          942,000         382,000 
   Interest on Federal funds sold                   410,000         339,000 
   Interest on investment securities              1,927,000         595,000 
                                               ------------     -----------
         Total interest income                   16,806,000       5,547,000 
Interest Expense:                                                            
   Deposits                                       5,631,000       2,203,000 
   Other borrowed funds                             922,000          25,000 
                                               ------------     -----------
         Total interest expense                   6,553,000       2,228,000 
                                               ------------     -----------
            Net interest income                  10,253,000       3,319,000 
                                                                   
Provision for loan and lease losses                 358,000          91,000 
                                               ------------     -----------
   Net interest income after                                               
      provision for loan losses                   9,895,000       3,228,000 
                                                                   
Non-interest income                               3,294,000       1,471,000 
Non-interest expense                             10,798,000       4,383,000 
                                               ------------     -----------
Net income (loss) before taxes                    2,391,000         316,000 
Income tax                                        1,318,000          89,000 
                                               ------------     -----------
Net income                                     $  1,073,000     $   227,000 
                                               ------------     -----------
                                               ------------     -----------
                                                                 
Net income available to common                 $    750,000     $   227,000
                                                                 
Income (loss) per common and common                                         
      equivalent share                         $      0.040     $     0.038
Fully diluted income per common and common                       
      equivalent share                         $      0.039     $     0.038


                   See notes to consolidated financial statements.




                                       6
<PAGE>

                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
                   Condensed Consolidated Statements of Cash Flows
                For the Nine Months Ended September 30, 1997 and 1996
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                               For nine months ended September 30,   
                                                               -----------------------------------
                                                                     1997                1996 
                                                               ---------------    ----------------
<S>                                                              <C>              <C>
OPERATING ACTIVITIES:                                                            
   Net income (loss)                                             $   1,628,000    $    450,000 
   Adjustments to reconcile net loss to net                                                            
      cash used by operating activities:                                                            
         Provision for loan losses and real estate                                                            
            acquired through foreclosure                             1,176,000         237,000 
         Loss (gain) on sale of real estate acquired                                                            
            through foreclosure                                         55,000         (70,000)
         Equity in loss of real estate joint venture                   250,000             -
         Loss on sale of premises and equipment                         15,000             -
         Loss on sale of securities                                      9,000             -
         Depreciation and amortization                               2,676,000         306,000 
         Accretion/amortization related to securities, net             246,000             -
         Mortgage loans originated for sale                       (627,993,000)    (68,025,000)
         Proceeds from sales of loans and servicing                634,061,000      79,225,000
         Gain on the sale of loans and servicing                    (5,013,000)            -
         Increase in loan servicing sale receivable                (46,009,000)            -
         Decrease (increase) in other assets                        (9,830,000)       (956,000)
         Increase (decrease) in other liabilities                     (360,000)      1,302,000 
                                                                 -------------    ------------
            Net cash provided by (used in) operating activities    (49,089,000)     12,469,000 
                                                                                    
INVESTING ACTIVITIES:                                                                
   Purchases of investment securities                              (17,016,000)    (27,936,000)
   Proceeds from sales and maturities of                                                             
      investment securities                                         49,724,000      39,303,000 
   Net increase in loans                                           (10,584,000)    (35,948,000)
   Purchases of premises and equipment                                (722,000)       (746,000)
   Proceeds from the sale of premises and equipment                     12,000          48,000 
   Proceeds from sale of real estate acquired                                                             
      through foreclosures                                           2,824,000       1,900,000 
   Capital expenditures for other real estate owned                 (3,064,000)     (1,322,000)
   Purchase of Liberty National Bank, net of cash received                 -         7,283,000 
   Purchase of Commerce Security Bank, net of cash received                -        52,758,000 
   Purchase of Eldorado Bancorp, net of cash received              (46,477,000)            -      
                                                                 -------------    ------------
            Net cash provided by (used in) investing activities    (25,303,000)     35,340,000 
</TABLE>


                   See notes to consolidated financial statements.


                                       7
<PAGE>


                   COMMERCE SECURITY BANCORP, INC. AND SUBSIDIARIES
             Condensed Consolidated Statements of Cash Flows (Continued)
                For the Nine Months Ended September 30, 1997 and 1996
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                     For nine months ended September 30,  
                                                     -----------------------------------
                                                            1997                1996 
                                                     ----------------     --------------
<S>                                                     <C>                <C>
FINANCING ACTIVITIES:
   Net increase (decrease) in deposits                     75,439,000       (18,769,000) 
   Decrease in other borrowings                            (6,120,000)              -      
   Repayment of notes payable to related parties           (4,500,000)              -      
   Issuance of capital securities                          27,657,000               -      
   Issuance of preferred stock                             11,659,000               -      
   Issuance of common stock                                43,228,000        35,133,000 
   Payment of preferred dividends                            (408,000)              -      
                                                        -------------      ------------
            Net cash provided by financing activities     146,955,000        16,364,000 
                                                        -------------      ------------
               Net Increase in cash and cash equivalents   72,563,000        64,173,000 
Cash and cash equivalents at beginning of period           46,222,000         5,940,000 
                                                        -------------      ------------
Cash and cash equivalents at end of period              $ 118,785,000      $ 70,113,000 
                                                        -------------      ------------
                                                        -------------      ------------
</TABLE>


                   See notes to consolidated financial statements.




                                       8
<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.


                                       9
<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.

                                       10
<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.

                                       11
<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.

                                       12
<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 Eldorado's, 
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.  Upon the merger of the four banks, all customer 
accounts are insured by the FDIC, through the BIF for up to an aggregate 
amount of $100,000 per customer.  SDNB's, LNB's and Eldorado's customer 
accounts were insured by the FDIC, through the BIF and CSB's deposits were 
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.

                                       13
<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 period and dilutive 
common stock equivalents by using the treasury stock method. 

    The Company has a total of 4,482,433 warrant shares outstanding at an 
exercise price of $4.81 and are deemed anti-dilutive to earnings per share at 
that price.  Lacking an active market for its shares, the Company assumed a 
weighted average per share price of $6.00 in computing the dilutive impact of 
the outstanding warrants. There were granted but no exercisable stock options 
at September 30, 1997 or December 31, 1996. The mandatory convertible 
debentures ("Debentures") are convertible into common stock of CSBI at the 
current market value at the time of conversion, and thus are not dilutive to 
the earnings per share of CSBI.  

    The weighted average number of common shares used to compute primary 
earnings per share were 13,553,112 and 3,804,268 for the nine months ended 
September 30, 1997 and September 30, 1996, respectively and 18,771,579 and 
6,054,203 for the three months ended September 30, 1997 and September 30, 
1996, respectively. The fully diluted average number of common shares used to 
compute fully diluted earnings per share were 14,442,128 and 3,804,268 for 
the nine months ended September 30, 1997 and September 30, 1996, respectively 
and 19,660,595 and 6,054,203 for the three months ended September 30, 1997 
and September 30, 1996, respectively.

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. 

                                       14
<PAGE>

NOTE 2 - ACQUISITIONS AND 1996 REORGANIZATION (CONTINUED):

    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. 

    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. 

    As of June 6, 1997, the registrant completed its merger (the "Merger") of 
Eldorado Bancorp ("Eldorado") as contemplated by the Agreement and Plan of 
Reorganization dated December 24, 1996 (the "Agreement").  Shareholders for 
Eldorado were paid $23.00 per share on 3,845,388 shares outstanding at June 
6, 1997.  Total consideration paid to holders of Eldorado stock and stock 
options (net of the tax benefit arising out of the stock options) was $90.3 
million.  

    In conjunction with the securities issued to fund the Eldorado Merger, 
existing shares of Common Stock were reclassified as Class B common stock. 
Additionally, the registrant issued  Class A common stock ("Senior Common" 
and together with the Class B common stock "Common Stock"), trust originated 
preferred stock, $1,000 par value ("Series A Capital Securities") and 
non-cumulative preferred stock, $100 par value ("Series B Preferred Stock" 
and together with the Senior Common, Series A Capital Securities "Senior 
Securities").

    As of June 6, 1997 Dartmouth Capital Group, L.P. (the "Partnership")
invested 

                                       15
<PAGE>

approximately $21.9 million in the registrant to fund the Eldorado Merger. 
Initially, $4.3 million of this investment was provided to the registrant in 
the form of a loan to fund an escrow account that would have been forfeited 
had the registrant failed to finance the Merger. These funds (including 
interest thereon) were to be converted to shares of Class B common stock upon 
the consummation of the Merger at $4.40 per share.   Additionally, the 
Partnership invested $7.9 million to be converted to shares of Class B common 
stock at $4.81 per share and $10.0 million to be converted to Senior 
Securities, and for which the Partnership received a 1% commitment fee based 
upon the total funding commitment made in conjunction with the Merger.

    In exchange for the $21.9 million Partnership investment, the registrant 
issued a total of 2,715,506 additional shares of Class B common stock, 
771,788 shares of Class A common stock, 4,423 shares of Series A Capital 
Securities and 18,647 shares of Series B Preferred Stock.  At the 
Partnership's direction the registrant issued 1,703,242 of the shares of 
Class B common stock, in the aggregate, to certain limited partners of the 
Partnership (the "Direct Holders") and the remaining 1,012,264 shares of 
Class B common stock directly to the Partnership.  On July 15, 1997, the 
Partnership sold its interest in the $10.0 million of Senior Securities.  
Giving effect to the issuance of those shares to fund the Eldorado Merger and 
the subsequent sale , the Partnership holds voting control of 32.55% of the 
Common Stock and the Direct Holders own, in the aggregate 31.50% of the 
Common Stock. 

    Excess capital of $13.0 million was redeemed from Eldorado as a funding 
component of the Merger.  Certain institutional investors and individuals 
provided the balance of the funding for the Merger of approximately $58.1 
million.  In exchange for this investment,  the registrant issued a total of 
1,520,129 additional shares of Class B common stock, 4,053,930 shares of 
Class A common stock (of which 422,850 were non-voting shares), 23,234 shares 
of Series A Capital Securities and 97,946 shares of Series B Preferred Stock. 
 There were a total of 18,758,783 shares of Common Stock outstanding after 
the Merger.

    Each of the Liberty Acquisition, Commerce Acquisition and the Eldorado 
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 and other intangibles arising from the transactions 
totaled approximately $3.8 million in the Liberty Acquisition, $7.2 million 
in the Commerce Acquisition and $50.0 million in the Eldorado Acquisition and 
are 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 nine months ended 
September 30, 1997 and 1996 and for the twelve months ended December 31, 
1996. The pro forma operating data reflects the effect of the Liberty 
Acquisition, Commerce Acquisition and the Eldorado 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.


                                       16


<PAGE>

NOTE 2 - ACQUISITIONS AND 1996 REORGANIZATION (CONTINUED):

<TABLE>
<CAPTION>

                                                         Unaudited Pro Forma Combined for     
                                          --------------------------------------------------------
                                          Nine months Ended        
                                            September 30,
                                          ----------------                      Twelve Months ended
                                                 1997                1996        December 31, 1996
                                          ----------------      -------------   -------------------
<S>                                       <C>                   <C>             <C>
    Total interest income                     $ 49,100,000       $ 46,568,000        $ 61,145,000 
    Total interest expense                      18,876,000         18,385,000          24,483,000 
                                          ----------------      -------------     ---------------
    Net interest income                         30,224,000         28,183,000          36,662,000 
    Provision for loan losses                    1,087,000            843,000           1,158,000 
                                          ----------------      -------------     ---------------
    Net interest income after provision                                             
      for loan and lease losses                 29,137,000         27,340,000          35,504,000 
                                                                                        
    Non-interest income                         10,203,000         10,259,000          14,956,000 
    Non-interest expense                        34,753,000         41,916,000          53,784,000 
                                          ----------------      -------------     ---------------
    Net income (loss)  before taxes              4,587,000         (4,316,000)         (3,324,000)
    Income tax (benefit)                         2,865,000           (945,000)         (1,968,000)
                                          ----------------      -------------     --------------- 
    Net income (loss)                         $  1,722,000       $ (3,371,000)       $ (1,356,000)
                                          ----------------      -------------     --------------- 
                                          ----------------      -------------     --------------- 

    Weighted average common shares
         outstanding                            18,758,763         18,758,763          18,758,763

    Net income (loss) per common share        $       0.09       $      (0.18)       $      (0.14) 

</TABLE>


    On June 30, 1997, the Company merged SDNB, Liberty and CSB into Eldorado
Bank and merged Eldorado Bancorp into itself (collectively the "Bank Mergers"). 
The resultant structure of the Company after the Bank Mergers is a single bank
holding company with Eldorado Bank being the only bank subsidiary of the
Company.



                                       17

<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, the Liberty, CSB and Eldorado 
Acquisitions (the "Acquisitions") and the Bank Mergers described in the 
footnotes to the accompanying consolidated condensed financial statements, as 
of September 30, 1997,  the registrant owns 100% of Eldorado Bank (the 
"Bank").  Each of the Acquisitions were accounted for using the purchase 
method of accounting for business combinations. Accordingly, the following 
discussion related to the operating results of the Bank only include results 
of operations subsequent to the date of acquisition.  In most of the 
Company's income and expense categories and net income, the increases in the 
amounts reported for the three and nine months ended compared to the same 
periods last year resulted from the Acquisitions.  The increases in 
substantially all of the categories of the Company's statement of condition 
between amounts reported at September 30, 1997 and December 31, 1996 resulted 
from the Eldorado Acquisition.  Other significant factors affecting the 
Company's results of operations and financial condition are described in the 
applicable sections below.

FINANCIAL CONDITION

    Total assets of CSBI at September 30, 1997 were $937.9 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 the assets acquired 
in the Eldorado Acquisition.  Eldorado had total assets of approximately $400 
million at June 6, 1997.   Total earning assets of CSBI at September 30, 1997 
were $741.6 million compared to total earning assets of $375.0 million at 
December 31, 1996. Earning assets increased primarily due to the acquisition 
of Eldorado that had total earning assets at June 6, 1997 of approximately $ 
334 million.

    Total loans and leases, net of unearned fees, of CSBI at September 30, 1997
were $514.6 million, including $9.8 million of mortgage loans held for sale,
compared to $272.0 million, including $10.8 million of mortgage loans held for
sale, at December 31, 1996.  Loans acquired in the Eldorado Acquisition are
attributable to this increase which were 

                                       18
<PAGE>

approximately $233 million at June 6, 1997. Additionally, at September 30, 
1997 CSBI had $104.3 million in loan sale receivables attributable to its 
mortgage banking activities compared to $54.1 million at December 31, 1996.

    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 September 30, 1997, these categories accounted 
for approximately 35.9%, 26.6%, 20.2% and 10.4% of total loans and leases, 
respectively. Leases are primarily made to finance small equipment for 
businesses and accounted for 6.8% of the total loan and lease portfolio.

    Included among the Banks' portfolio of loans are SBA 7a ("SBA") loans 
made by the Bank guaranteed by the United States Government to the extent of 
75% to 90% of the principal and interest due on such loans.  The Bank is 
active in originating this type of loan and 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. 
Historically, the guaranteed portion of the SBA loans have not always been 
sold and the Bank maintains in its portfolio both the guaranteed and 
unguaranteed portion of the loans.

    When the government guaranteed portion of the SBA loans are sold they 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.  The 
total SBA loan portfolio serviced by the Bank at September 30, 1997 was 
approximately $285.4 million and included in this amount was approximately 
$86.7 million representing the portion of the SBA loans retained by the Bank.

    Total investments of CSBI at September 30, 1997 were $122.8 million 
compared to $49.2 million at December 31, 1996.  Investment securities 
increased largely due to securities acquired in the Eldorado Acquisition 
which were approximately $101 million at June 6, 1997, partially offset by 
securities that have matured with the proceeds being used to fund lending 
activity.  The investment portfolio primarily consists of U.S. government and 
municipal securities, Federal funds sold, reverse repurchase agreements.  
U.S. government and municipal securities were $102.8 million, or 83.7% of the 
total portfolio, of which $21.3 million are categorized as held to maturity 
and $81.4 million are categorized as available for sale.  Federal funds sold 
and reverse repurchase agreements totaled $20.0 million, or 16.3% of the 
total portfolio. 

    Total deposits were $798.9 million at September 30, 1997 compared to 
$383.0 million at December 31, 1996.   This increase in deposits is largely 
attributable to those deposits acquired in the Eldorado Acquisition which 
were approximately $343 million on June 6, 1997.  Non-interest bearing demand 
accounts were $275.6 million, or 34.5% of total deposits, at September 30, 
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 $94.1 
million, $141.0 million, $98.0 million, $132.9 million and $57.3 million, 
respectively, or 11.8%, 17.6%, 12.3%, 16.6% and 7.2% of total deposits, 
respectively.

                                       19
<PAGE>

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997

    For the nine months ended September 30, 1997, CSBI had net income of 
$1,628,000 compared to net income of $450,000 for the same period in 1996.  
The improvement over 1996 earnings is attributable to the earnings from 
acquired operations during the period that were not included for the same 
period in 1996. Compared to the prior period results, the improvements stem 
from a combination of increased net interest income of approximately $16.2 
million and non-interest income of approximately $5.9 million,  partially 
offset by increased loan and lease loss provision of $870,000, non-interest 
expense of approximately $18.0 million and provision for taxes of $2.0 
million. 

NET INTEREST INCOME AND NET INTEREST MARGIN

    Net interest income was approximately $22.5 million for the nine months 
ended September 30, 1997, an increase of $16.2 million over the same period 
in 1996.  An increase in interest and fee income to $36.8 million for the 
nine months ended September 30, 1997 from $10.7 million for the same period 
in 1996, partially offset by increased interest expense of $14.3 million for 
the nine months ended September 30, 1997 from $4.3 million from the same 
period in 1996 contributed to this earnings improvement.  

    Loans and leases, the largest component of earning assets, increased to 
an average balance of $421.9 million for the nine months ended September 30, 
1997 from $138.8 million for the nine months ended September 30, 1996,  with 
an average yield of 10.1% and 8.4%, respectively.  The yield on loans and 
lease increased primarily due to a shift period to period in the mix of loans 
with a larger portion of the portfolio concentrated commercial and real 
estate loans that earn a higher rate of interest than single family 
residential mortgage loans. Investments in securities and Federal funds sold 
rose to an average of $108.3 million for the nine months ended September 30, 
1997 from an average of $60.4 million for the nine months ended September 30, 
1996,  with an average yield of 5.8% and 4.2%, respectively. The yield on 
earning assets increased to 9.3% for the nine months ended September 30, 1997 
from 7.1% for the same period in 1996.  The increase in yield on earning 
assets can largely be attributed to the higher yield earned on loans and 
leases described above.


    Average interest-bearing deposits increased to $387.9 million for the 
nine months ended September 30, 1997 from $161.1 million for the same period 
in 1996. Additionally, the average rate paid on these deposits increased to 
4.5% during the nine months ended September 30, 1997 compared to 3.5% during 
the same period in 1996.   The average rate paid on all interest-bearing 
liabilities was 4.7% for the nine months ended September 30, 1997 compared to 
3.5% for the same period in 1996.  This increase in interest cost represents 
an overall increase in rates paid but is largely attributable to a change in 
the mix of interest bearing liabilities with a greater emphasis on savings 
accounts that incorporate tiered interest rates that pay higher rates for 
accounts maintaining higher average balances.  These savings accounts 
increased to an average of $107.3 million for the nine months ended September 
30, 1997 from $27.0 million for the nine months ended September 30, 1996 and 
paid interest rates of 4.7% and 2.9%, respectively.

                                       20
<PAGE>

    As a result of these forgoing factors, the average yield on earning 
assets increased to 5.7% for the nine months ended September 30, 1997 
compared to 4.3% for the same period in 1996.

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 Bank's 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.  Bank management continues to carefully monitor the 
allowance for loan and lease losses in relation to the size of the Bank's 
loan and lease portfolio and known risks or problem loans and leases. 

    The allowance for loan and lease losses at CSBI was approximately $9.2 
million at September 30, 1997 compared to approximately $5.2 million at 
December 31, 1996.   During the nine months ended September 30, 1997, the 
provision for loan and lease losses was $1.1 million, loan and lease 
charge-offs were $1.3 million and recoveries were $255,000 which compares to 
a provision of $217,000, loan and lease charge-offs of $383,000 and 
recoveries of $161,000 during the same period in 1996.  The allowance for 
loan and lease losses for CSBI represented 1.8% of gross loans and leases, 
excluding those loans held for sale, at September 30, 1997 and 2.0% at 
December 31, 1996.

NON-INTEREST INCOME AND EXPENSES

    Non-interest expense net of non-interest income ("Net Non-interest 
Expense") increased to $17.6 million for the nine months ended September 30, 
1997 from $5.5 million for the same period in 1996.  Non-interest income and 
expenses have increased over the same period in the prior year primarily due 
to the generation of revenues from off-balance sheet activities such as SBA 
servicing, mortgage banking, leasing operations and the sales of loans and 
leases.  As a percentage of average assets, Net Non-interest Expense 
(annualized) has increased to 3.7% for the nine months ended September 30, 
1997 from 3.2% for the same period in 1996.

    Non-interest income for the nine months ended September 30, 1997 
increased to $8.4 million, or 1.8% of average assets, from $2.5 million or 
1.5% of average assets, for the same period in 1996.  Non-interest income 
sources of revenue that were in place during 1997 that were not a part of 
non-interest income for the same period in 1996, as described above, are 
primarily responsible for this improvement in non-interest income. 

    Non-interest expense for the nine months ended September 30, 1997 increased
to approximately $26.0 million, or 5.4% of average assets, from $8.0 million, or
4.7% of average assets, for the same period in 1996.   Salaries and employee
benefits increased to $11.1 million for the nine months ended September 30, 1997
from $3.6 million for the same period in 1996.  Occupancy and equipment
increased to $4.4 million for the nine months ended September 30, 1997 from $1.5
million for the same period in 1996.  Other non-interest expenses increased to
$10.5 million for nine months ended September 30, 1997 from $2.9 million for the
same period in 1996.

                                       21
<PAGE>

PROVISION FOR INCOME TAXES

    As a result of the earnings for the nine months ended September 30, 1997, 
the Company mad a $2.2 million provision for income taxes compared to a 
provision of $227,000 made for the same period in 1996.  

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997

    For the three months ended September 30, 1997, CSBI had net income of 
$1.1 million compared to net income of $227,000 for the same period in 1996.  
 The increase in net income is a result of increased net interest income by 
approximately $6.9 million and increased non-interest income by approximately 
$1.8 million partially offset by increased non-interest expense by 
approximately $6.4 million and increased provisions for loan and lease losses 
and taxes of $267,000 and $1.2 million, respectively,

NET INTEREST INCOME AND NET INTEREST MARGIN

    Net interest income increased to $6.8 million for the three months ended 
September 30, 1997, an increase of $4.0 million from $2.8 million for the 
same period in 1996.  An increase in interest and fee income to $11.3 million 
for the three months ended September 30, 1997 from $4.6 million for the same 
period in 1996, partially offset by increased interest expense of $4.4 
million for the three months ended September 30, 1997 from $1.7 million for 
the same period in 1996 contributed to this earnings improvement.  

    Loans, the largest component of earning assets, increased to an average 
balance of $580.4 million for the three months ended September 30, 1997 from 
$170.9 million for the three months ended September 30, 1996,  with an 
average yield of 9.9% and 10.7%, respectively. The yield on loans and lease 
decreased primarily due to a shift in the mix of loans with a larger portion 
of the portfolio concentrated in single family residential mortgage loans 
that earn a lower rate of interest than commercial loans. Investments in 
securities and Federal funds sold rose to an average of $158.4 million for 
the three months ended September 30, 1997 from an average of $66.7 million 
for the three months ended September 30, 1996,  with an average yield of 6.0% 
and 5.6%, respectively. The yield on earning assets decreased to 9.1% for the 
three months ended September 30, 1997 from 9.3% for the same period in 1996. 
The decrease in yield on earning assets can largely be attributed to the 
lower yield earned on loans and leases described above.

    Average interest-bearing deposits increased to $529.7 million for the 
three months ended September 30, 1997 from $187.7 million for the same period 
in 1996. Additionally, the average rate paid on these deposits was 4.2% 
during the three months ended September 30, 1997 and compared to 4.7% during 
the same period in 1996.   The average rate paid on all interest-bearing 
liabilities was 4.6% for the three months ended September 30, 1997 compared 
to 4.7% for the same period in 1996.  This decrease in interest cost reflects 
a change in the mix of deposit liabilities with an increase in lower cost 
deposits partially offset by an overall increase in rates paid on deposits.

                                       22
<PAGE>

    As a result of these forgoing factors, the average yield on earning assets
decreased to 5.6% for the three months ended September 30, 1997 compared to 6.2%
for the same period in 1996.

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 Bank's 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.  Bank management continues to carefully monitor the 
allowance for loan and lease losses in relation to the size of the Bank's 
loan and lease portfolio and known risks or problem loans and leases. 

    The allowance for loan and lease losses at CSBI was approximately $9.2 
million at September 30, 1997 compared to approximately $5.2 million at 
December 31, 1996.   During the three months ended September 30, 1997, the 
provision for loan and lease losses was $358,000,  loan and lease charge-offs 
were $495,000 and recoveries were $144,000 which compares to a provision of 
$91,000,  loan and lease charge-offs of $314,000 and recoveries of $70,000 
during the same period in 1996.  The allowance for loan and lease losses for 
CSBI represented 1.8% of gross loans and leases, excluding those loans held 
for sale, at September 30, 1997 and 2.0% at December 31, 1996.

NON-INTEREST INCOME AND EXPENSES

    Non-interest expense net of non-interest income ("Net Non-interest 
Expense") increased to $7.5 million for the three months ended September 30, 
1997 from $2.9 million for the same period in 1996.  Non-interest income and 
expense have increased over the same period in the prior year primarly due to 
the generation of revenues and associated expenses from off-balance sheet 
activities such as SBA servicing, mortgage banking, leasing operations and 
the sales of loans and leases.  As a percentage of average assets, Net 
Non-interest Expense (annualized) has decreased to 3.3% for the three months 
ended September 30, 1997 from 4.3% for the same period in 1996.

    Non-interest income for the three months ended September 30, 1997 
increased to $3.3 million, or 1.5% of average assets, from $1.4 million or 
2.1% of average assets, for the same period in 1996.  Non-interest income 
sources of revenue that were in place during 1997 that were not a part of 
non-interest income for the same period in 1996, as described above, are 
primarily responsible for this increase in non-interest income while lower 
spreads on mortgage banking activity during the current period primarily 
contributed to a decrease in non-interest income as a percent of average 
assets.

    Non-interest expense for the three months ended September 30, 1997
increased to approximately $10.8 million, or 4.8% of average assets, from $4.4
million, or 6.4% of average assets, for the same period in 1996.   Salaries and
employee benefits increased to $4.5 million for the three months ended September
30, 1997 from $1.9 million for the same period in 1996.  Occupancy and equipment
increased to $1.9 million for the three months ended September 30, 1997 from
$764,000 for the same period in 1996.  Other non-interest expenses increased to
$4.4 million for three months ended September 30, 1997 from $1.4 million for 

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<PAGE>

the same period in 1996.

PROVISION FOR INCOME TAXES

    As a result of the earnings for the three months ended September 30, 
1997, the Company made a $1.3 million provision for income taxes compared to 
a provision of $89,000 made for the same period in 1996.  

CAPITAL RESOURCES

    As of June 6, 1997, the registrant completed its merger (the "Merger") of 
Eldorado Bancorp ("Eldorado") as contemplated by the Agreement and Plan of 
Reorganization dated December 24, 1996 (the "Agreement").  Shareholders for 
Eldorado were paid $23.00 per share on 3,845,388 shares outstanding at June 
6, 1997.  Total consideration paid to holders of Eldorado stock and stock 
options (net of the tax benefit arising out of the stock options) was $90.3 
million.  

    In conjunction with the securities issued to fund the Eldorado Merger, 
existing shares of Common Stock were reclassified as Class B common stock. 
Additionally, the registrant issued  Class A common stock ("Senior Common" 
and together with the Class B common stock "Common Stock"), trust originated 
preferred stock, $1,000 par value ("Series A Capital Securities") and 
non-cumulative preferred stock, $100 par value ("Series B Preferred Stock" 
and together with the Senior Common, Series A Capital Securities "Senior 
Securities").

    As of June 6, 1997 Dartmouth Capital Group, L.P. (the "Partnership") 
invested approximately $21.9 million in the registrant to fund the Eldorado 
Merger. Initially, $4.3 million of this investment was provided to the 
registrant in the form of a loan to fund an escrow account that would have 
been forfeited had the registrant failed to finance the Merger. These funds 
(including interest thereon) were to be converted to shares of Class B common 
stock upon the consummation of the Merger at $4.40 per share.   Additionally, 
the Partnership invested $7.9 million to be converted to shares of Class B 
common stock at $4.81 per share and $10.0 million to be converted to Senior 
Securities, and for which the Partnership received a 1% commitment fee based 
upon the total funding commitment made in conjunction with the Merger.

    In exchange for the $21.9 million Partnership investment, the registrant 
issued a total of 2,715,506 additional shares of Class B common stock, 
771,788 shares of Class A common stock, 4,423 shares of Series A Capital 
Securities and 18,647 shares of Series B Preferred Stock.  At the 
Partnership's direction the registrant issued 1,703,242 of the shares of 
Class B common stock, in the aggregate, to certain limited partners of the 
Partnership (the "Direct Holders") and the remaining 1,012,264 shares of 
Class B common stock directly to the Partnership.  On July 15, 1997, the 
Partnership sold its interest in the $10.0 million of Senior Securities.  
Giving effect to the issuance of those shares to fund the Eldorado Merger and 
the subsequent sale , the Partnership holds voting control of 32.55% of the 
Common Stock and the Direct Holders own, in the aggregate 31.50% of the 
Common Stock. 

    Excess capital of $13.0 million was redeemed from Eldorado as a funding
component of the Merger.  Certain institutional investors and individuals
provided the balance of the 

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<PAGE>

funding for the Merger of approximately $58.1 million.  In exchange for this 
investment,  the registrant issued a total of 1,520,129 additional shares of 
Class B common stock, 4,053,930 shares of Class A common stock (of which 
422,850 were non-voting shares), 23,234 shares of Series A Capital Securities 
and 97,946 shares of Series B Preferred Stock.  There were a total of 
18,759,381 shares of Common Stock outstanding after the Merger.  An 
additional 12,198 shares were issued subsequent to the merger bringing the 
total shares outstanding to 18,771,579 at September 30, 1997.

    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 and the Bank were well capitalized September 30, 1997 for federal 
regulatory purposes.  As of September 30, 1997,  CSBI had a leverage ratio of 
6.6% a Tier 1 risk-weighted capital ratio of 9.0% and a total risk-weighted 
capital ratio of 10.4%.  As of September 30, 1997, the Bank had a leverage 
ratio of 6.0% a Tier 1 risk-weighted capital ratio of 8.8% and a total 
risk-weighted capital ratio of 10.0%.

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 Bank, and to reduce the Bank's exposure to 
changing interest rates.  

    The Bank  manages liquidity from both sides of the balance sheet through 
the coordination of the relative maturities of its assets and liabilities.  
The Bank enhances its 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 Bank maintains 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 September 30, 
1997, liquid assets totaled approximately $200.2 million, or 21.4% of total 
assets, which compares to $61.7 million, or 14.1% of total assets, at 
December 31, 1996. 

    At September 30, 1997 the Company had net repriceable liabilities (a " 
negative gap") as measured at one year of approximately $57.7 million or 6.2% 
of total assets.  The Company had negative gap as measured at a 90-day time 
horizon of approximately $35.2 million, or 3.8% 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 

                                       25
<PAGE>

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 Bank 
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 Bank, making 
collection more difficult for the Bank.  Rates of interest paid or charged 
generally rise if the marketplace believes inflation rates will increase.

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

    On July 25, 1997, in the plaintiff action of Thomas Ruemmler vs Commerce 
Security Bank, being tried by jury in the Court of San Joaquin County in 
California (the "Court"), the jury found in favor of the plaintiff awarding 
economic damages of $1.4 million, pain and suffering damages of $500,000 and 
punitive damages of $2.0 million.  The attorneys defending the Bank have 
filed motions with the Court for i) a new trial and ii) a new judgement 
notwithstanding the verdict.   The Court heard these motions on October 1, 
1997 and as a result issued a remittitur that orders a new trial unless the 
plaintiff will accept a reduced judgement of approximatley $2.1 million, 
being pain and suffering reduced to $150,000, punitive damages reduced to 
$500,000 with no change to the economic damages but awarding interest on that 
portion at 7% simple interest.  The plaintiff has accepted the remittitur but 
has also appealed to the 3rd District Court regarding the Court's action in 
issuing the remittitur.  In lieu of a final outcome on this case, the reduced 
damages in the remittitur were accrued and recorded as a purchase accounting 
adjustment related to the Commerce Acquisition.

    On September 15, 1997, the Company filed a complaint against certain 
officers and directors of Commerce Security Bank in Superior Court of the 
State of California for the County of Orange.  In its complaint the Company 
alleged a variety of claims in connection with the Commerce Acquisition.  
These claims were settled out of court on October 24, 1997, in which one 
party to the action tendered 424,182 shares of CSBI Class B Common Stock for 
cancellation.  The cancellation of these shares will be recorded as a 
purchase accounting adjustment related to the Commerce Acquisition.

ITEM 2.   CHANGES IN SECURITIES

Not Applicable


                                       26
<PAGE>

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:  

               June 6, 1997 - Announcement of acquisition of Eldorado Bancorp
                              (amended on July 11, 1997 and August 6, 1997)

               July 11, 1997 - Sale of Capital Securities By Certain Principal
                               Shareholders



                                       27
<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: November 14, 1997 /s/ Robert P. Keller
                        ------------------------------------------
                        Robert P. Keller                             
                        President and Chief Executive Officer 

DATE: November 14, 1997 /s/ Curt A. Christianssen
                        -----------------------------------------
                        Curt A. Christianssen
                        Senior Vice President and Chief Financial Officer






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