UNITED STATES
                        SECURITIES & EXCHANGE COMMISSION
                              WASHINGTON, DC 20552

                                   ---------

                                    FORM 10-Q

(Mark One)

[X]   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OF  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934


For the quarterly period ended:  MARCH 31, 1998
                                 --------------


                                       OR


[ ]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934


For the transition period from __________________ to ______________________

                        Commission File Number 000-29460
                                               ---------

                       COMMUNITY SAVINGS BANKSHARES, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             UNITED STATES                                   65-0780334
----------------------------------------        --------------------------------
    (STATE OR OTHER JURISDICTION OF                        (IRS EMPLOYER
    INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

          660 US Highway One
         North Palm Beach, FL                                  33408
----------------------------------------        --------------------------------
    (ADDRESS OF PRINCIPAL EXECUTIVE                          (ZIP CODE)
               OFFICES)


        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 881-2212
                                                           --------------

     Indicate  by check  whether  the  Registrant:  (1) has  filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]


     As of May 14, 1998, there were 5,100,120 shares of the Registrant's  common
stock outstanding.


<PAGE>


<TABLE>
<CAPTION>
                COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
                                TABLE OF CONTENTS
Part I. Financial Information                                                               PAGE
-----------------------------                                                               ----

<S>                                                                                           <C>                         
 Item 1.      Financial Statements
              Consolidated Statements of Financial Condition as of
              March 31, 1998 (Unaudited) and December 31, 1997                                2

              Consolidated Statements of Operations for the three months
              ended March 31, 1998 and 1997 (Unaudited)                                       3

              Consolidated Statements of Comprehensive Income for the three months
              ended March 31, 1998 and 1997 (Unaudited)                                       3

              Consolidated Statements of Changes in Shareholders' Equity for the
              three months ended March 31, 1998 (Unaudited) and
              for the year ended December 31, 1997                                            4

              Consolidated Statements of Cash Flows for the three months
              ended March 31, 1998 and 1997 (Unaudited)                                       5

              Notes to Consolidated Financial Statements (Unaudited)                          6

Item 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                      10

Item 3.       Quantitative and Qualitative Disclosures About Market Risk                     16

Part II. Other Information
--------------------------

Item 1.       Legal Proceedings                                                              16

Item 2.       Changes in Securities                                                          16

Item 3.       Default Upon Senior Securities                                                 17

Item 4.       Submission of Matters to a Vote of Security Holders                            17

Item 5.       Other Information                                                              17

Item 6.       Exhibits and Reports on Form 8-K                                               17

              Signature Page                                                                 18
</TABLE>


<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AT MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                                                    March 31,  December 31,
                                                                                      1998         1997
                                                                                   ---------    ---------
                                                                                         (Unaudited)
ASSETS                                                                                  (In thousands)
<S>                                                                                <C>          <C>      
  Cash and cash equivalents:
    Cash and amounts due from depository institutions                              $  16,541    $  12,333
    Interest-bearing deposits                                                         43,283       13,621
                                                                                   ---------    ---------
       Total cash and cash equivalents                                                59,824       25,954

  Securities available for sale                                                      111,704      142,269
  Investments - held to maturity                                                      21,363       21,388
  Mortgage-backed and related securities - held to maturity                           44,517       46,413
  Loans receivable, net of allowance for loan losses                                 490,166      451,709
  Accrued interest receivable                                                          2,736        3,162
  Office properties and equipment, net                                                20,592       20,206
  Real estate owned, net                                                                 929          592
  Federal Home Loan Bank stock - at cost                                               3,688        3,264
  Other assets                                                                         5,091        5,176
                                                                                   ---------    ---------
       Total assets                                                                $ 760,610    $ 720,133
                                                                                   =========    =========

LIABILITIES
  Deposits                                                                         $ 586,473    $ 550,708
  Mortgage-backed bond - net                                                          16,108       16,333
  Advances from Federal Home Loan Bank                                                61,218       57,341
  Employee Stock Ownership Plan borrowings                                                --        1,424
  Advances by borrowers for taxes and insurance                                        2,951          931
  Other liabilities                                                                    8,701        9,101
  Deferred income taxes                                                                2,994        3,036
                                                                                   ---------    ---------
       Total liabilities                                                             678,445      638,874
                                                                                   ---------    ---------

SHAREHOLDERS' EQUITY
  Preferred stock ($1 par value): 10,000,000 authorized shares, no shares issued          --           --
  Common stock ($1 par value): 20,000,000 authorized shares; 5,100,120 and
    5,094,920 shares outstanding at March 31, 1998 and December 31, 1997,              5,100        5,095
    respectively
  Additional paid in capital                                                          30,475       30,278
  Retained income - substantially restricted                                          48,593       47,887
  Common stock purchased by Employee Stock Ownership Plan                             (1,326)      (1,424)
  Common stock issued to Recognition and Retention Plan                                 (377)        (423)
  Unrealized decrease in market value of assets available
    for sale, net of income taxes                                                       (300)        (154)
                                                                                   ---------    ---------
       Total shareholders' equity                                                     82,165       81,259
                                                                                   ---------    ---------
       Total liabilities and shareholders' equity                                  $ 760,610    $ 720,133
                                                                                   =========    =========
</TABLE>

See notes to consolidated financial statements.

                                                     2

<PAGE>
COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                                           For the three months
                                                              ended March 31,
                                                             1998       1997
                                                            -------   -------
                                                               (Unaudited)
                                                              (In thousands)
Interest income:
  Real estate loans                                         $ 8,924   $ 7,688
  Consumer and commercial business loans                        446       407
  Investment securities and securities available for sale     2,644     2,371
  Mortgage-backed and related securities                        842       989
  Interest-earning deposits                                     502       565
                                                            -------   -------
     Total interest income                                   13,358    12,020
                                                            -------   -------

Interest expense:
  Deposits                                                    5,925     5,370
  Advances from Federal Home Loan Bank and other borrowings   1,374     1,078
                                                            -------   -------
     Total interest expense                                   7,299     6,448
                                                            -------   -------
Net interest income                                           6,059     5,572
Provision for loan losses                                       117        30
                                                            -------   -------
Net interest income after provision for loan losses           5,942     5,542
                                                            -------   -------

Other income:
 Servicing income and other fees                                 56        54
 NOW account and other customer fees                            822       778
 Miscellaneous                                                   56        59
                                                            -------   -------
     Total other income                                         934       891
                                                            -------   -------

Operating expense:
 Employee compensation and benefits                           2,361     2,131
 Occupancy and equipment                                      1,284     1,195
 Net loss on real estate owned                                   19         6
 Advertising and promotion                                      171       194
 Federal deposit insurance premium                               85        16
 Miscellaneous                                                1,043       751
                                                            -------   -------
     Total operating expense                                  4,963     4,293
                                                            -------   -------

Income before provision for  income taxes                     1,913     2,140
Provision for income taxes                                      681       789
                                                            -------   -------
Net income                                                  $ 1,232   $ 1,351
                                                            =======   =======
Basic earnings per share                                    $  0.25   $  0.27
                                                            =======   =======
Diluted earnings per share                                  $  0.24   $  0.27
                                                            =======   =======

COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
                                                         For the three months
                                                            ended March 31,
                                                            1998        1997
                                                           -------    -------
                                                              (Unaudited)
                                                             (In thousands)

<S>                                                        <C>        <C>    
Net income                                                 $ 1,232    $ 1,351
Other comprehensive income, net of tax:
   Change in unrealized  decrease in market 
   value of assets  available for sale                        (146)      (532)
                                                           -------    -------
Comprehensive income                                       $ 1,086    $   819
                                                           =======    =======
</TABLE>

See notes to consolidated financial statements.

                                       3
<PAGE>

COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE THREE MONTHS ENDED MARCH  31, 1998

<TABLE>
<CAPTION>
                                                                                              Unrealized
                                                                                               Increase
                                                                                            (Decrease) in
                                                           Retained     Employee Recognition Market Value
                                              Additional    Income-      Stock       and      of Assets
                                      Common    Paid In  Substantially Ownership  Retention Available for
                                      Stock     Capital   Restricted     Plan        Plan        Sale        Total
                                     ==============================================================================
                                                                  (In thousands)

<S>                                  <C>        <C>        <C>         <C>         <C>         <C>         <C>     
Balance - December 31, 1996          $  5,090   $ 29,920   $ 44,603    $ (1,818)   $   (608)   $ (1,068)   $ 76,119
Net income for the year ended
    December 31, 1997                      --         --      5,356          --          --          --       5,356
Stock options exercised                     5         45         --          --          --          --          50
Unrealized increase in market
value of assets available for sale
    (net of income taxes)                  --         --         --          --          --         914         914
Amortization of deferred
    compensation - Employee Stock
    Ownership Plan and Recognition
    and Retention Plan                     --        313         --         394         185          --         892
Dividends declared                         --         --     (2,072)         --          --          --      (2,072)
                                     ------------------------------------------------------------------------------
Balance - December 31, 1997             5,095     30,278     47,887      (1,424)       (423)       (154)     81,259

Net income for the three  months
    ended March 31, 1998                   --         --      1,232          --          --          --       1,232
Stock options exercised                     5         53         --          --          --          --          58
Unrealized increase in market
    value of assets available 
    for sale (net of income taxes)         --         --         --          --          --        (146)       (146)
Amortization of deferred
    compensation - Employee Stock
    Ownership Plan and Recognition
    and Retention Plan                     --        144         --          98          46          --         288
Dividends declared                         --         --       (526)         --          --          --        (526)
                                     ------------------------------------------------------------------------------
Balance-March 31, 1998 (unaudited)   $  5,100   $ 30,475   $ 48,593    $ (1,326)   $   (377)   $   (300)   $ 82,165
                                     ==============================================================================
</TABLE>

See notes to consolidated financial statements.

                                                         4
<PAGE>

COMMUNITY SAVINGS BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
                                                                               For the three months
                                                                                  ended March 31,
                                                                                 1998        1997
                                                                               --------    --------
                                                                                    (Unaudited)
                                                                                  (In thousands)
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
<S>                                                                            <C>         <C>     
 Net income                                                                    $  1,232    $  1,351
 Adjustments to reconcile net income to net cash provided by operating
   activities:
   Depreciation                                                                     369         329
   ESOP and Recognition and Retention Plan compensation expense                     288         180
   Accretion of discounts, amortization of premiums, and other deferred            (856)       (383)
     yield items
   Provision for loan losses                                                        117          30
   Provision for losses and net losses (gains) on sales of real estate owned          3          (2)
   Amortization of discount on mortgage-backed bond                                 121         123
   Net gain on sale of loans and other assets                                        --         (15)
 Decrease in accrued interest receivable                                            426         116
 Decrease (increase) in other assets                                                 85      (1,043)
 Decrease in loans available for sale                                                --          70
 (Decrease) increase in other liabilities                                          (400)      2,867
                                                                               --------    --------

      Net cash provided by operating activities                                   1,385       3,623
                                                                               --------    --------

CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
 Loan originations and principal payments on loans-net                          (20,420)     (6,077)
 Principal payments received on mortgage-backed and related securities
   and securities available for sale                                              5,955       2,709
 Principal payments received on investments-held to maturity                        419         501
 Purchases of
   Loans                                                                        (18,227)     (1,460)
   Securities available for sale                                                     --     (20,079)
   Federal Home Loan Bank stock                                                    (424)       (399)
   Office property and equipment                                                   (756)     (1,163)
 Proceeds from sales of:
   Office properties and equipment                                                   --          38
   Real estate acquired in settlement of loans                                      111         189
 Proceeds from calls or maturities of investments                                26,461       7,300
 Other investing                                                                    (58)       (119)
                                                                               --------    --------

          Net cash used for investing activities                                 (6,939)    (18,560)
                                                                               --------    --------

CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
 Net increase (decrease) in:
   NOW accounts, demand deposits, and savings accounts                           16,354      (8,490)
   Certificates of deposit                                                       19,411      15,804
 Advances from Federal Home Loan Bank                                             6,000          --
 Repayment of advances from Federal Home Loan Bank                               (2,123)     (1,588)
 Advances by borrowers for taxes and insurance                                    2,020       1,647
 ESOP loan                                                                       (1,424)        (98)
 Proceeds from exercise of stock options                                             58          --
 Payments made on mortgage-backed bond                                             (346)       (347)
 Dividends paid                                                                    (526)       (458)
                                                                               --------    --------

          Net cash provided by financing activities                              39,424      23,450
                                                                               --------    --------

NET  INCREASE IN CASH AND CASH EQUIVALENTS                                       33,870       8,513
CASH AND CASH EQUIVALENTS, beginning of period                                   25,954      42,442
                                                                               --------    --------
CASH AND CASH EQUIVALENTS, end of period                                       $ 59,824    $ 50,955
                                                                               ========    ========
</TABLE>

See notes to consolidated financial statements.

                                                  5
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION


      The unaudited  consolidated  interim  financial  statements  for Community
      Savings  Bankshares,  Inc.  ("Bankshares")  and its  subsidiary  Community
      Savings, F. A. (the  "Association"),  reflect all adjustments  (consisting
      only of normal  recurring  accruals)  which, in the opinion of management,
      are  necessary  to  present  fairly  Bankshares'   consolidated  financial
      condition and the  consolidated  results of operations  and cash flows for
      interim  periods.  The  results for  interim  periods are not  necessarily
      indicative  of trends or results  to be  expected  for the full year.  All
      weighted  interest  rates  are  presented  on  an  annualized  basis.  The
      unaudited  consolidated  interim financial  statements and notes should be
      read in conjunction with the audited consolidated financial statements and
      the notes thereto  included in Bankshares'  Annual Report to  Shareholders
      for the year  ended  December  31,  1997.  As the  Association  represents
      Bankshares'  sole investment on a consolidated  basis, the interim periods
      presented herein are comparable to prior year financial data.


2.    REORGANIZATION  TO A MID-TIER HOLDING COMPANY AND CONVERSION TO STOCK FORM
      OF OWNERSHIP

      On September 30, 1997, the Association  completed its reorganization  into
      the two-tier form of mutual  holding  company  ownership.  Pursuant to the
      reorganization,  the Association is now the wholly owned subsidiary of the
      federally chartered mid-tier stock holding company, Bankshares. Bankshares
      is the majority owned subsidiary of ComFed, M.H.C. ("ComFed"), a federally
      chartered mutual holding company.  ComFed,  Bankshares and the Association
      are chartered and regulated by the Office of Thrift Supervision ("OTS").

      The  reorganization  was accounted for in a manner similar to a pooling of
      interests and did not result in any  significant  accounting  adjustments.
      Bankshares' only significant asset is the common stock of the Association.
      Consequently,  the  majority  of  its  net  income  is  derived  from  the
      Association.


 3.   NEW ACCOUNTING PRONOUNCEMENTS

      In June 1997, the Financial  Accounting  Standards  Board ("FASB")  issued
      Statements  of  Financial   Accounting   Standards   No.  130   "Reporting
      Comprehensive  Income", which requires that an enterprise report, by major
      components and as a single total,  the change in its net assets during the
      period from nonowner sources,  and No. 131 "Disclosures  about Segments of
      an  Enterprise  and Related  Information",  which  establishes  annual and
      interim  reporting  standards for an enterprise's  operating  segments and
      related  disclosures about its products,  services,  geographic areas, and
      major customers. Adoption of these statements has not impacted Bankshares'
      consolidated financial position,  results of operations or cash flows, and
      any  effect is limited to the form and  content of its  disclosures.  Both
      statements were effective for the fiscal year beginning January 1, 1998.

                                       6
<PAGE>

4.    LOANS RECEIVABLE

      Loans receivable consists of the following:

<TABLE>
<CAPTION>
                                                                                  March 31,          December 31,
                                                                                     1998                1997
                                                                                  ----------          ----------
                                                                                         (In thousands)
<S>                                                                               <C>                 <C>       
      Real estate loans:
        Residential 1-4 family                                                    $  377,860          $  339,117
        Residential 1-4 family held for sale
          (at lower of cost or fair value)                                                --                  --
        Residential construction loans                                                35,298              32,828
        Non-residential construction loans                                                --               2,022
        Land loans                                                                    13,516              17,117
        Multi-family loans                                                             8,824               8,800
        Commercial                                                                    61,071              59,220
                                                                                  ----------          ----------
           Total real estate loans                                                   496,569             459,104
                                                                                  ----------          ----------

      Non-real estate loans:
        Consumer loans                                                                15,435              15,694
        Commercial business                                                            4,325               3,530
                                                                                  ----------          ----------
           Total non-real estate loans                                                19,760              19,224
                                                                                  ----------          ----------
           Total loans receivable                                                    516,329             478,328

      Less:
        Undisbursed loan proceeds                                                     24,114              24,163
        Unearned discount (premium) and
          net deferred loan fees (costs)                                                (643)               (206)
        Allowance for loan losses                                                      2,692               2,662
                                                                                  ----------          ----------
      Total loans receivable, net                                                 $  490,166          $  451,709
                                                                                  ==========          ==========
</TABLE>

      The  amount  of  loans  which  had  ceased  accruing  interest  aggregated
      approximately $1,067,000 and $1,379,000 at March 31, 1998 and December 31,
      1997,  respectively.  The amount of interest not accrued  related to these
      loans was approximately $59,000 and $86,000 at March 31, 1998 and December
      31, 1997, respectively.

                                       7
<PAGE>


      An analysis of the changes in the allowance for loan losses is as follows:

<TABLE>
<CAPTION>
                                                                                           For the three months
                                                                                              ended March 31,
                                                                                            1998          1997
                                                                                          --------      --------
                                                                                              (In thousands)

<S>                                                                                       <C>           <C>     
      Balance, beginning of period                                                        $  2,662      $  2,542
      Provision charged to income                                                              117            30
      Losses charged to allowance                                                              (87)           --
      Recoveries                                                                                --            --
                                                                                                --            --
                                                                                          --------      --------
      Balance, end of period                                                              $  2,692      $  2,572
                                                                                          ========      ========
</TABLE>

      The  Association  accounts for impaired loans in accordance  with SFAS No.
      114  "Accounting by Creditors for Impairment of a Loan" as amended by SFAS
      No.  118   "Accounting  by  Creditors  for  Impairment  of  a  Loan-Income
      Recognition  and  Disclosures".  There were no impaired loans at March 31,
      1998.


6.    REAL ESTATE OWNED


      Real estate owned consists of the following:
<TABLE>
<CAPTION>
                                                                                         March 31,    December 31,
                                                                                            1998          1997
                                                                                          --------      --------
                                                                                              (In thousands)

<S>                                                                                       <C>           <C>     
       Real estate owned                                                                  $    970      $    633
       Less allowance for loss                                                                  41            41
                                                                                          --------      --------
       Total real estate owned                                                            $    929      $    592
                                                                                          ========      ========
</TABLE>

       Changes in allowance for loss on real estate owned are as follows:
<TABLE>
<CAPTION>
                                                                                           For the three months
                                                                                              ended March 31,
                                                                                            1998          1997
                                                                                          --------      --------

<S>                                                                                       <C>           <C>     
       Balance, beginning of period                                                       $     41      $     92
       Provision charged to income                                                              --            --
       Losses charged to allowance                                                              --           (43)
                                                                                          --------      --------
       Balance, end of period                                                             $     41      $     49
                                                                                          ========      ========
</TABLE>

                                       8
<PAGE>

7.    DEPOSITS


      The  weighted-average  interest  rates on  deposits  at March 31, 1998 and
      December 31, 1997 were 4.22% and 4.21%, respectively. Deposit accounts, by
      type and range of rates at March 31, 1998 and December  31, 1997,  consist
      of the following:

<TABLE>
<CAPTION>
                                                                               March 31,            December 31,
                                                                                 1998                   1997
                                                                             ------------           ------------
                                                                                        (In thousands)
<S>                                                                               <C>                    <C>    
       ACCOUNT TYPE AND RATE
       ---------------------
       Non-interest-bearing checking accounts                                     $27,851                $24,715
       NOW, Super NOW and funds transfer accounts                                  75,252                 69,862
       Passbook and statement accounts                                             32,668                 30,221
       Money market accounts                                                       84,213                 78,832
                                                                             ------------           ------------
       Total non-certificate accounts                                             219,984                203,630
                                                                             ------------           ------------

       Certificates:
        3.00% or less                                                                 999                  1,436
        3.01% - 3.99%                                                                  11                     11
        4.00% - 4.99%                                                              43,985                 35,699
        5.00% - 5.99%                                                             273,311                262,029
        6.00% - 6.99%                                                              39,416                 39,186
        7.00% - 7.99%                                                               8,767                  8,717
                                                                             ------------           ------------
       Total certificates of deposit                                              366,489                347,078
                                                                             ------------           ------------

       Total deposits                                                        $    586,473           $    550,708
                                                                             ============           ============
</TABLE>

      Individual  deposits  greater than $100,000 at March 31, 1998 and December
      31,   1997   aggregated   approximately   $81,002,000   and   $87,257,000,
      respectively. Deposits in excess of $100,000 are not insured.


8.    CONTINGENCIES


      The Association has completed its  investigation of a previously  reported
      possible  employee  defalcation  which  apparently  had been occurring for
      several  years.  The  Association  maintains  insurance to cover  possible
      defalcation  losses with a claim  deductible of $200,000.  A liability for
      the amount of the deductible was established  during the fiscal year ended
      September 30, 1996.  The  insurance  company was notified of the potential
      claim and the  insurance  company  acknowledged  coverage.  The  insurance
      company  has  completed  its  due  diligence  related  to the  claim.  The
      Association and the insurance company are currently  negotiating the final
      settlement of the claim.  Management  does not believe that the claim will
      have any material  adverse effect on its financial  position or results of
      its operations.

                                       9
<PAGE>


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

                                     GENERAL

In the  following  discussion,  references to  "Bankshares"  relate to Community
Savings Bankshares, Inc. together with its subsidiary, Community Savings, F. A.(
the "Association").

                       COMMUNITY SAVINGS BANKSHARES, INC.

Bankshares is a federally  chartered mid-tier stock holding company organized in
August 1997. The only  significant  asset of Bankshares is its investment in its
wholly-owned  subsidiary,  the  Association.  Bankshares  is  majority  owned by
ComFed, M.H.C.  ("ComFed"),  a federally chartered mutual holding company. After
the close of business on  September  30,  1997,  Bankshares  acquired all of the
issued and  outstanding  common stock of the  Association in connection with the
Association's  reorganization  into the two-tier form of mutual holding  company
ownership.  At that  time,  each  share of the  Association's  common  stock was
converted into one share of Bankshares'  common stock. At March 31, 1998, ComFed
owned 2,620,144 shares of Bankshares' common stock with the remaining  2,479,976
shares owned by minority  shareholders.  The holding company  reorganization was
accounted for at historical cost in a manner similar to a pooling of interests.

                            COMMUNITY SAVINGS, F. A.

The  Association,  founded in 1955,  is a federally  chartered  savings and loan
association  headquartered  in North  Palm  Beach,  Florida.  The  Association's
deposits are  federally  insured by the Federal  Deposit  Insurance  Corporation
("FDIC")  through  the  Savings   Association   Insurance  Fund  ("SAIF").   The
Association has been a member of the Federal Home Loan Bank of Atlanta  ("FHLB")
since 1955.  The  Association  is regulated by the Office of Thrift  Supervision
("OTS"). On October 24, 1994, the Association  completed a reorganization into a
federally   chartered   mutual  holding   company,   ComFed.   As  part  of  the
reorganization,  the  Association  organized  a new  federally  chartered  stock
savings  association  and  transferred  substantially  all  of  its  assets  and
liabilities  to the stock savings  association in exchange for a majority of the
common stock of the stock savings association.

The Association is a community-oriented  financial institution engaged primarily
in the business of attracting  deposits  from the general  public and using such
funds, together with other borrowings,  to invest in various consumer-based real
estate  loans,  commercial  loans,   mortgage-backed   securities  ("MBS"),  and
investment   securities.   The   Association's   plan   is  to   operate   as  a
well-capitalized,   profitable  and  independent  institution.  The  Association
currently  exceeds  all  regulatory  capital  requirements.   The  Association's
profitability  is highly  dependent on its net interest  income.  The components
that determine net interest income are the amount of interest-earning assets and
interest-bearing  liabilities,  together  with the rates  earned or paid on such
interest  rate-sensitive  instruments.  The Association is sensitive to managing
interest rate risk exposure by better  matching  asset and liability  maturities
and rates.  This is  accomplished  while  considering the credit risk of certain
assets. The Association maintains asset quality by utilizing  comprehensive loan
underwriting   standards  and  collection   efforts  as  well  as  by  primarily
originating or purchasing secured or guaranteed assets.

                                       10
<PAGE>


                         LIQUIDITY AND CAPITAL RESOURCES

The Association  adjusts its liquidity  levels in order to meet funding needs of
deposit outflows,  payment of real estate taxes on mortgage loans,  repayment of
borrowings,  and loan  commitments.  The Association  also adjusts  liquidity as
appropriate  to meet its  asset and  liability  management  objectives.  A major
portion of the  Association's  liquidity  consists of cash and cash equivalents,
which are a product of its operating, investing, and financing activities.

The  Association  is  required to maintain  minimum  levels of liquid  assets as
defined by OTS  regulations.  This  requirement,  which varies from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term borrowings. The required ratio currently is 4.0%. The
Association's liquidity ratio averaged 13.5% during the three months ended March
31, 1998 while  liquidity  ratios averaged 14.2% for the year ended December 31,
1997.


The  Association's  primary  sources  of funds are  deposits,  amortization  and
prepayment  of loans and MBS,  maturities  of  investment  securities  and other
short-term  investments,  FHLB  advances,  and earnings and funds  provided from
operations.   While  scheduled  principal  repayments  on  loans  and  MBS,  and
maturities of securities are a relatively  predictable source of funds,  deposit
flows and loan  prepayments  are greatly  influenced by general  interest rates,
economic conditions, and competition. The Association manages the pricing of its
deposits to maintain a desired  deposit  balance.  In addition,  the Association
invests  funds in excess of its immediate  needs in short-term  interest-earning
deposits and other assets, which provide liquidity to meet lending requirements.
Short-term  interest-bearing deposits with the FHLB of Atlanta amounted to $43.0
million at March 31, 1998. Other assets qualifying for liquidity  outstanding at
March 31, 1998 amounted to $31.1 million. For additional  information about cash
flows from the operating, financing, and investing activities, see the unaudited
consolidated statements of cash flows included in the financial statements.


Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.   If  funds  are  required  beyond  the  ability  to  generate  them
internally, borrowing agreements exist with the FHLB which provide an additional
source of funds. FHLB advances totaled $61.2 million at March 31, 1998.

At March 31, 1998,  outstanding  loan commitments  totaled $20.5 million,  which
amount does not include the unfunded  portion of loans in process.  Certificates
of deposit  scheduled to mature in less than one year totaled  $284.8 million at
March  31,  1998.  Based  on  prior  experience,   management  believes  that  a
significant portion of such deposits will remain with the Association.


                                       11
<PAGE>


                               FINANCIAL CONDITION

                  MARCH 31, 1998 COMPARED TO DECEMBER 31, 1997
                  --------------------------------------------

The following  table  summarizes  certain  information  relating to  Bankshares'
financial condition at the dates indicated.

<TABLE>
<CAPTION>
                                                  March 31, December 31,  Increase
                                                    1998       1997      (Decrease)
                                                  --------   --------    ----------
                                                            (Unaudited)
                                                          (In thousands)
Assets:
<S>                                               <C>        <C>          <C>     
   Total assets                                   $760,610   $720,133     $ 40,477
   Cash and cash equivalents                        59,824     25,954       33,870

   Securities portfolio:
      Investments- held to maturity                 21,363     21,388          (25)
      Securities available for sale                111,704    142,269      (30,565)
      Mortgage-backed and related securities-
        held to maturity                            44,517     46,413       (1,896)
                                                  --------   --------     --------
   Total securities portfolio                      177,584    210,070      (32,486)

    Loans receivable, net                          490,166    451,709       38,457
    Real estate owned, net                             929        592          337

Liabilities and Shareholders' Equity:
  Total liabilities                                678,445    638,874       39,571
  Deposits                                         586,473    550,708       35,765
  Federal Home Loan Bank advances                   61,218     57,341        3,877
  Advances by borrowers for taxes and insurance      2,951        931        2,020
  Shareholders' equity                              82,165     81,259          906
</TABLE>


Total assets  increased  $40.5  million to $760.6  million at March 31, 1998, as
compared to $720.1  million at December 31, 1997 primarily due to an increase of
$38.5 million in the net loan portfolio to $490.2 million at March 31, 1998 from
$451.7  million at December 31, 1997,  and a $33.9 million  increase in cash and
cash  equivalents  to $59.8  million  at March 31,  1998 from  $26.0  million at
December  31,  1997,  partially  offset by a $32.5  million net  decrease in the
securities portfolio (which includes securities  available for sale,  investment
securities,  and MBS) to $177.6 million at March 31, 1998 from $210.1 million at
December 31, 1997. The increase in total assets was funded  primarily by a $35.8
million net increase in deposits to $586.5 million at March 31, 1998 from $550.7
million at December 31, 1997. In addition, FHLB advances increased $3.9 million,
totaling  $61.2  million and $57.3  million at March 31, 1998 and  December  31,
1997, respectively.


The securities  portfolio net decrease of $32.5 million primarily reflects calls
of $26.5 million of securities available for sale as well as scheduled principal
reductions and amortization of premiums and discounts amounting to $6.0 million.
As a result, cash and cash equivalents increased $33.9 million as the funds were
not immediately reinvested.

                                       12
<PAGE>


Loans  receivable  increased $38.5 million as a result of continued  emphasis on
expanded lending activities. Loan originations of $51.4 million and purchases of
$18.2 million  (consisting of one- to four-family  residential  properties) were
offset in part by repayments and other adjustments of $31.1 million.

Real  estate  owned  increased  $337,000 to  $929,000  at March 31,  1998,  from
$592,000 at December 31, 1997,  primarily due to foreclosures on six residential
properties  during the period,  partially offset by the sale of three foreclosed
residential properties.

Total  liabilities  increased $39.6 million to $678.4 million at March 31, 1998,
from $638.9  million at December 31,  1997.  Total  deposits  increased by $35.8
million to $586.5  million at March 31, 1998 from $550.7 million at December 31,
1997. The increase in deposits  primarily  reflected  increased  retail deposits
resulting from special  promotions of odd-term  certificates and growth of newer
branch  offices as well as  continued  efforts to  competitively  price  deposit
accounts to enhance the Association's market share during the period.

Total equity increased to $82.2 million at March 31, 1998, from $81.3 million at
December 31, 1997,  reflecting  net income for the three months of $1.2 million,
the receipt of proceeds totaling $58,000 from the exercise of stock options, and
the  stock  benefit  plans  accrual  totaling  $288,000,  offset  in part by the
declaration  of  dividends  totaling  $526,000  and a net decrease in the market
value of assets available for sale of $146,000. For further information, see the
unaudited  consolidated  statements  of changes in  shareholders'  equity in the
accompanying consolidated financial statements.

The  Association  is  required  to report  capital  ratios  unconsolidated  with
Bankshares.  The  Association's  actual capital  amounts and ratios at March 31,
1998 are as follows:

<TABLE>
<CAPTION>
                                                                                                  To be Considered
                                                                                                         Well
                                                                                  For                Capitalized
                                                                                Capital               for Prompt
                                                                                Adequacy                Action
                                                          Actual                Purposes              Provisions
                                                          ------                --------              ----------
                                                     Ratio     Amount       Ratio     Amount       Ratio     Amount
                                                     -----     ------       -----     ------       -----     ------
                                                                       (Dollars in thousands)
<S>                                                  <C>       <C>           <C>      <C>          <C>       <C>    
As of March 31, 1998.
Total capital (to Risk-weighted Assets)               18.3%    $74,953        8.0%    $32,834       10.0%    $41,042
Core (Tier 1) Capital
 (to Adjusted Tangible-Assets)                         9.5      72,261        4.0      30,436        5.0      38,046
Tangible Capital (to Tangible Assets)                  9.5      72,261        1.5      11,414        N/A         N/A
Core (Tier 1) Capital
 (to Risk-weighted Assets)                            17.6      72,261        4.0      16,417        6.0      24,625
</TABLE>

As  of  March  31,  1998,   tangible  assets,   adjusted  tangible  assets,  and
risk-weighted   assets  were  $760,910,000,   $760,910,000,   and  $410,419,000,
respectively

                                       13
<PAGE>


                                  ASSET QUALITY

Loans  90  days  past  due are  generally  placed  on  non-accrual  status.  The
Association ceases to accrue interest on a loan once it is placed on non-accrual
status and interest  accrued but unpaid at such time is charged against interest
income. Additionally,  any loan where it appears evident prior to being past due
90  days  that  the  collection  of  interest  is in  doubt  is also  placed  on
non-accrual  status.  Real estate  owned is carried at the lower of cost or fair
value,  less cost to dispose.  Management  regularly reviews assets to determine
proper  valuation.  There were no restructured  loans within the meaning of SFAS
No. 15 at March 31, 1998 or December 31, 1997.

The following table sets forth  information  regarding the delinquent  loans and
foreclosed real estate at the dates indicated:

                                                 March 31, December 31,
                                                   1998       1997
                                                  ------     ------
                                                    (In thousands)

Non-performing loans:
Residential real estate loans:

  Loans 60 to 89 days delinquent                  $  370     $  492
  Loans more than 90 days delinquent                 920      1,344
                                                  ------     ------
    Total                                          1,290      1,836
                                                  ------     ------

Commercial and multi-family real estate loans:
  Loans 60 to 89 days delinquent                      --         --
  Loans more than 90 days delinquent                  48         --
                                                  ------     ------
    Total                                             48         --
                                                  ------     ------

Consumer and commercial business loans:
  Loans 60 to 89 days delinquent                       4         31
  Loans more than 90 days delinquent                  --         --
                                                  ------     ------
    Total                                              4         31
                                                  ------     ------

Land
  Loans 60 to 89 days delinquent                     850         35
  Loans more than 90 days delinquent                  99         --
                                                  ------     ------
    Total                                            949         35
                                                  ------     ------
Total non-performing loans                         2,291      1,902

Real estate owned net of related allowance           929        592
Loans to facilitate sale of real estate owned        154        217
                                                  ------     ------
Total non-performing assets and
  loans to facilitate sale of real estate owned   $3,374     $2,711
                                                  ======     ======

                                       14
<PAGE>


                              RESULTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

                                     GENERAL

Net income for the quarter ended March 31, 1998 was $1.2  million,  or $0.25 per
share,  a $119,000  decrease  from $1.4  million,  or $0.27 per  share,  for the
quarter  ended March 31,  1997.  The  decrease in net income was  primarily  the
result of increases in operating  expense of $670,000 and the provision for loan
losses of $87,000,  offset in part by the combination of a $400,000  increase in
net interest income and a $108,000 decrease in the provision for income taxes.

                               NET INTEREST INCOME

Net interest  income  increased to $6.1 million for the quarter  ended March 31,
1998 from $5.6  million for the same period in 1997  primarily  as a result of a
$63.5 million increase in average  interest-earning assets to $694.6 million for
the three months ended March 31, 1998 from $631.1 million for the same period in
the prior year, reflecting the increase in the loan portfolio, and cash and cash
equivalents. In addition, the average yield on interest-earning assets increased
to 7.69% for the three  months  ended  March  31,  1998 from  7.62% for the 1997
period,  primarily as a result of increased  average  yield earned on investment
securities  and consumer and other loans,  which was offset in part by decreased
average yields on real estate loans and MBS. The increase in interest income was
partially  offset  by a  $63.3  million  increase  in  average  interest-bearing
liabilities  to $641.8  million for the three  months  ended March 31, 1998 from
$578.5 million for the same period in 1997,  primarily  reflecting the growth of
the  Association's  deposit  portfolio.  The average  yield on  interest-bearing
liabilities  increased  to 4.55% for the three  months ended March 31, 1998 from
4.46%  for the 1997  period,  primarily  as a result of the  increased  weighted
average  cost of deposits  to 4.18 % for the  quarter  ended March 31, 1998 from
4.09% for the same period in 1997. The increased  cost of deposits  reflects the
5.6% increase in total  certificates  of deposit which have a higher cost to the
Association  as  compared  to a 8.0%  increase in lower  costing  core  deposits
(consisting  of checking,  NOW,  statement,  passbook,  and money market deposit
accounts).

                            PROVISION FOR LOAN LOSSES

The  Association  maintains an  allowance  for loan losses based upon a periodic
evaluation  of known and inherent  risks in the loan  portfolio,  past loan loss
experience,  adverse  situations  that may  affect  borrowers'  ability to repay
loans,  the estimated  value of the underlying loan  collateral,  the nature and
volume of its loan  activities,  and current as well as expected future economic
conditions.  Loan loss  provisions are based upon  management's  estimate of the
fair  value  of the  collateral  and  the  actual  loss  experience,  as well as
guidelines  applied by the OTS and the FDIC.  The  provision for loan losses was
$117,000 for the quarter  ended March 31,  1998,  as compared to $30,000 for the
quarter ended March 31, 1997 primarily due to $87,000 in specific write-downs on
certain  non-performing loans recognized during the three months ended March 31,
1998. The allowance for loan losses as a percentage of net loans  receivable was
0.55% and 0.65% at March 31, 1998 and 1997, respectively.


                                       15
<PAGE>


                                  OTHER INCOME

Other income consists of servicing income and fee income,  service charges, gain
or loss on the sale of securities  available  for sale and other  assets.  Other
income increased  $43,000 to $934,000 for the quarter ended March 31, 1998, from
$891,000  for the same  period  in 1997,  primarily  as a  result  of a  $44,000
increase in NOW account and other customer fees to $822,000 for the three months
ended March 31, 1998 from $778,000 for the same period in 1997.

                                OPERATING EXPENSE


Operating expense increased  $670,000 to $5.0 million for the three month period
ended  March 31, 1998 from $4.3  million  for the same period in 1997.  Employee
compensation and benefits  increased $230,000 during the quarter ended March 31,
1998 as a result of  increased  staffing due to branch  office  openings and the
expanded loan  production  program.  In addition,  other increases of $89,000 in
occupancy and  equipment  costs (also  relating to the branch office  openings),
$69,000 in FDIC  premiums,  and  $292,000 in  miscellaneous  operating  expense,
primarily as a result of  increased  loan  expense  occurred  during the quarter
ended March 31, 1998 as compared to the same quarter in 1997.


                           PROVISION FOR INCOME TAXES

The provision for income taxes was $681,000 for the three months ended March 31,
1998 as compared to $789,000 for the same period in 1997 reflecting the decrease
in net income.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of Bankshares' asset and liability  management policies as well
as the  potential  impact of  interest  rate  changes  upon the market  value of
Bankshares' portfolio equity, see "Management's Discussion and Analysis - Market
Risk  Analysis" and -"Market Value of Portfolio  Equity" in  Bankshares'  Annual
Report to Shareholders.  There has been no material change in Bankshares'  asset
and liability position or the market value of Bankshares' portfolio equity since
December 31, 1997.


                           PART II. OTHER INFORMATION
                           --------------------------

ITEM 1.  LEGAL PROCEEDINGS

         There are  various  claims  and  lawsuits  in which  Bankshares  or the
         Association are periodically  involved  incidental to its business.  In
         the opinion of  management,  no material  loss is expected  from any of
         such pending claims or lawsuits.

ITEM 2.  CHANGES IN SECURITIES

         Not applicable.

                                       16
<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.


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


         Bankshares  held its Annual Meeting of  Shareholders on April 22, 1998.
         Of the 5,100,120  shares  eligible to vote,  4,741,340  shareholders or
         93.0%,  including  2,620,144  shares  owned by ComFed,  M. H. C.,  were
         represented in person or by proxy at the meeting.

         The votes cast produced the following results:

<TABLE>
<CAPTION>
                      Election of Directors for
                     a three year term expiring                                            Number Of Votes
                               in 2000                                                  For            Withheld
                 ------------------------------------                                   ---            --------
<S>                                                            <C>                   <C>                <C>   
                 Forest C. Beaty, Jr.                                                4,698,690          42,650
                 Frederick A. Teed                                                   4,695,982          45,358

                                                                               Number of Votes
                                                         -----------------------------------------------------------
                                                                  For                Withheld           Abstain
                                                                  ---                --------           -------
                 Ratification of Crowe, Chizek
                 and Company LLP as
                 independent auditors for
                 fiscal year 1998                              4,717,229                 8,478          15,633
</TABLE>

ITEM 5.  OTHER INFORMATION.

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      EXHIBITS.

         None during the reporting period.

(b)      CURRENT REPORTS ON FORM 8-K.

         Form 8-K Current Report filed April 3, 1998.
         "Changes in Registrant's Certifying Accountant".


                                       17
<PAGE>


                                   SIGNATURES
                                   ----------

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




                                     COMMUNITY SAVINGS BANKSHARES, INC.




                                     /s/ JAMES B. PITTARD, JR.
                                     -----------------------------------------
Date:         May 14, 1998               James B. Pittard, Jr.
                                         President and Chief Executive Officer


Date:         May 14, 1998           /s/ LARRY J. BAKER
                                     -----------------------------------------
                                         Larry J. Baker
                                         Senior Vice President and Treasurer


                                       18