EXHIBIT 99.1

C: Simone Lagomarsino;Hawthorne Financial Corporation;President & CEO

C: David Rosenthal;Hawthorne Financial Corporation;EVP & CFO

P: Mike McMahon;Sandler O'Neill & Partners;Analyst

P: Richard Eckert;Roth Capital Partners;Analyst

P: Gary Townsend;Friedman, Billings, Ramsey;Analyst

P: Don Worthington;Hoefer & Arnett;Analyst

P: Operator;;

+++ presentation

Operator: Good day ladies and gentlemen and welcome to your Q3, 2003, Hawthorne
Financial earnings conference call. My name is Jean and I'll be your conference
coordinator today. At this time all lines are in a listen-only mode. After our
presentation we will open the call to questions. Should you require operator
assistance on this call, key star zero on your tone dial phone and we'll be
happy to assist you. Now I'd like to turn the call over to your host Ms. Simone
Lagomarsino. Ma'am you may proceed.

Thank you Jean. Good morning to those of you here on the west coast and good
afternoon to those of you on the east coast. Thank you for joining the Hawthorne
Financial Corporation 3rd Quarter 2003 Conference Call. My name is Simone
Lagomarsino and I'm the President and Chief Executive Officer of Hawthorne
Financial Corporation and Hawthorne Savings and with me is David Rosenthal, our
Executive Vice President and Chief Financial Officer.


Hopefully, everyone has had an opportunity to review our press release
highlighting our 3rd quarter results. Before we begin reviewing the quarterly
results, I should mention that comments made during this call may contain
forward-looking statements based on plans, expectations, events or trends.
Actual results could differ materially from those discussed on this call. The
speakers on this call claim the protection of the safe harbor provisions
contained in the Securities Litigation Reform Act of 1995. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
For a more complete discussion of the risks and uncertainties that may cause
actual results to differ materially from expected results, we encourage you to
refer to today's earnings release, the Company's Annual Report on Form 10K for
2002 and our other SEC Filings. If you have not yet received a copy of today's
earnings release, you may do so now by visiting our website at
www.hawthornesavings.com, click on Investor Relations, then News.

This morning I'll be covering a few points from our earnings release, and then
I'll briefly discuss the Southern California economy, after which I'll be happy
to respond to any questions.

First, some highlights from our quarter. This morning we reported net income for
the quarter of $7.2 million, a 28% increase compared to the $5.6 million of net
income recorded in the same quarter for 2002, and a 4% increase over the prior
quarter. This solid performance resulted in diluted earnings per share for the
quarter of 57 cents,


representing an increase of 24% compared to the 46 cents earned in the 3rd
quarter of 2002, and 4% over the 2nd quarter of 2003.

On September 25th, we announced a 50% stock dividend, which in effect is a three
for two stock split. All of our earnings per share numbers in our 3rd quarter
earnings release have been adjusted for this stock dividend, in accordance with
generally accepted accounting principles. Had we not adjusted the earnings per
share for the 3rd quarter for this stock dividend, our earnings per share would
have been 86 cents for the 3rd quarter. The stock dividend will be issued to
shareholders of record on October 6th and distributed on or about October 27th.

On a year-to-date basis, net income was $20.8 million; an increase of 24%
compared with the net income of $16.8 million for the nine months ended
September 30, 2002. Earnings per share for the first nine months of 2003 totaled
$1.66, compared to $1.45 for the same period in 2002, reflecting a 15% increase.
Again, these earnings per share numbers are adjusted for the 50% stock dividend.

During the first nine months of 2003 our team of talented employees continued to
focus on our core business, and the results reflect those efforts. Loan
originations reached record levels, totaling $773 million, a 46% increase over
the prior year. Noninterest bearing checking account balances grew 20% on an
annualized basis, and transaction accounts grew by 8% annualized. Transaction
accounts represent 39% of total deposits, which is consistent with year-end
levels. Deposit fee income is up about 29% year-to-


date compared to the same period last year, and deposit fee income increased 19%
in the 3rd quarter, compared to the 2nd quarter, largely due to the courtesy
overdraft program that was introduced in April this year. We are extremely
pleased with the initial success of this program.

Throughout 2003, we've continued to work to increase the value of our franchise
by growing and cross-selling our deposit base. Our success in this regard is
probably best exhibited by the significant increase in our cross-sell ratio. At
December 31, 2002 our cross-sell ratio was 2.44 products per household. As of
September 30, 2003 that ratio had grown to 2.71 products per household,
reflecting an annualized increase of 15%. I feel this improvement in the
cross-sell ratio is quite an accomplishment considering that we have over 40,000
households.

I would like to update you with regard to the progress that we've made in the
branches we acquired from First Fidelity just over a year ago. Total checking
account balances have doubled in the last year, and we've increased the number
of checking accounts by 129%, while during the same period we've lowered the
overall cost of funds in these branches by 89 basis points. The success in these
branches is in large part due to our high standards for extreme service and our
strong commitment to the communities that we serve.

Our strong operating results for the 3rd quarter and 1st nine months of 2003 are
reflected in our solid performance ratios. Return on average assets for the 3rd
quarter was 1.12%,


reflecting an improvement from the 1.08% achieved in the 2nd quarter of 2003 and
1.06% for the same period a year earlier. Return on average equity for the 3rd
quarter of 2003 was 16.51%, and 16.43% year-to-date, well within our target
range of 15 to 20%.

I'd like to now discuss our lending operations. Our loan originations remained
at record levels as we originated $288 million in new loans during the 3rd
quarter, an increase of 16% compared to the 2nd quarter. Loan originations for
the nine months ending September 30, 2003, were $773 million, compared to $528
million for the same period a year earlier, reflecting a 46% annualized
increase. Loan originations for the quarter were comprised of 45% single-family
residential loans, 33% income producing property loans, the vast majority of
which were multifamily properties, and 22% were loans for construction and land
acquisition.

As a result of the interest rate environment that we've been operating in, we've
seen a significant increase in our prepayments. During the 3rd quarter, our
prepayment speeds increased to 44%, up from 38% in the 2nd quarter. The good
news however is that prepayments appear to have peaked in the month of August.
In September the volume of prepayments was 10% less than the dollar amount of
loans that prepaid in August, and the volume of prepayments for October to date
are approximately 14% less than what they were at this time in September.
Accordingly, it appears that we are beginning to see a significant slow down in
prepayments, and we reiterate our guidance that we expect net growth in our
portfolio from year end 2002 to year end 2003 of between zero and 5%. We remain
very confident in the expertise and capabilities of our loan origination group,


and our goal is that this seasoned team will continue to originate loans of
approximately $100 million, per month, well into 2004. With this level of loan
originations, and assuming prepayments slow to between 25 and 30%, we expect net
loan growth during 2004 of between 10 and 20%.

Another reason that we are optimistic about loan growth in 2004 is that
indications are that we are moving into the time in the cycle when variable rate
lending will be the choice of the consumers. We are very proud that we have
performed extremely well in what, up until recently, has been a fixed-rate
environment. One of the primary reasons for our success is that we have aligned
ourselves with organizations that are directly associated with the sale of real
estate. As a result, a significant amount of our business, particularly in the
single family residential lending division, has been for the purchase of homes
rather than the refinancing of home loans. During the 3rd quarter, loans for the
purchase of homes comprised 66% of our new loan originations, and year-to-date,
loans for the purchase of homes comprised 62% of our new single family lending
business.

I would now like to elaborate further on the retail branch network. During the
3rd quarter of 2003, our noninterest bearing checking accounts grew at an
annualized rate of 6%, and on a year-to-date basis noninterest bearing checking
accounts have grown at an annualized rate of approximately 20%. Total
transaction accounts have grown by 8% annualized, and total deposits have grown
6% annualized through September 2003.


The bank's branching strategy continues to be based around providing convenience
and access to our core customers in specifically targeted areas where the
demographics meet our criteria. Rather than develop a large branch network
throughout the four Southern California counties, our branching strategy entails
selecting specific targeted markets within the counties, such as the South Bay
region of Los Angeles County, North San Diego County and the Irvine Corridor in
Orange County. Our goal is to become "the community bank" in these markets and
to grow our market share to rank us within the top five in each of these
regions. This is similar to what we have done in the South Bay, where we are
currently ranked fifth in market share out of 47 institutions.

As of June of 2002, the most recent FDIC information available, we are currently
ranked 15th in North San Diego County out of 29 institutions, and 10th in the
Irvine Corridor out of 37 institutions. It is clear that we have some work to do
in order to build our deposits in these markets so that we rank in the top five,
which is why our De Novo branches will be opened in these two markets in the
foreseeable future. Our goal is to improve these rankings year over year, and we
will be reporting these statistics as they become available.

We continue our active involvement in the communities in our key target markets
where we participate in numerous community events. Our commitment to making a
difference in our communities is evidenced by the many financial literacy
programs that we have developed, including programs for elementary, junior high
and high schools.


Additionally, we conduct financial elder abuse programs, first time homebuyer
seminars, and programs targeting people who have historically under utilized
banking services.

In fact, in a news release published yesterday, October 22, 2003, the Board of
Directors of the California Reinvestment Committee announced that Hawthorne
Savings is the recipient of the Community Reinvestment Excellence Award in the
Community Lending category. This award was for our Section 8 home ownership
program. The CRC is a statewide coalition of more than 200 nonprofit
organizations and public agencies. This specific award was recognition of
Hawthorne's innovative products and programs that have had a significant impact
on California's underserved communities during 2002. We certainly appreciate
this recognition, but more importantly, we are proud that we are able to make a
difference in our community.

We strongly believe that our visibility and commitment to the communities that
we serve, and our extreme service standards are key components to our success in
building our loyal base of core deposit customers, which of course equates to
improved franchise value for our shareholders.

We continue to be focused on cost containment and efficiency, and as a result
we've adopted a branch expansion strategy wherein we will typically only open
one or two branches in any 12-month period. We have already opened two branches
so far this calendar year, and we anticipate opening one or two branches in the
3rd or 4th quarter of 2004.


Another area in which we've enjoyed considerable success is the increase in
noninterest revenue. During the 3rd quarter of 2003, noninterest revenue totaled
$2.6 million, which is a 47% increase over the same period in 2002.
Year-to-date, noninterest revenue totaled $6.2 million, a 48% increase compared
to the same period in 2002. The primary reason for the significant increase in
noninterest revenue is the increase in prepayment fees. Additionally, deposit
fee income is up 36% in the 3rd quarter of 2003 compared to the same period in
2002, and 29% year-to-date compared to the same period a year earlier. This is
primarily the result of the courtesy overdraft program that was introduced to
our customers in April of 2003. Other fee income totaled $349,000 in the 3rd
quarter, reflecting a 68% increase from the same period the prior year. For the
year-to-date, other noninterest income was $1.15 million, compared to $322,000
the prior year. The two primary reasons for the significant increases in other
noninterest income during the most recent quarter, and year-to-date in 2003, are
the income from Bank Owned Life Insurance that was purchased in April of 2003
and the commissions from our Bank's investment sales program. Our current
guidance for noninterest revenue for 2003 is that it will increase by
approximately 25% over noninterest revenue in 2002, and for 2004 we are
projecting that it will be relatively in line with noninterest revenue in 2003.
However, the composition in 2004 will be significantly different. During 2003
approximately 40 to 45% of the noninterest revenue will result from loan
prepayment fees. However, prepayment fee income is expected to be only about 25%
of total noninterest revenue in 2004. Several factors are expected to contribute
to the difference. Most notably we anticipate an increase in deposit fee income
because we will have an entire year of the


courtesy overdraft program. Additionally, income from Bank Owned Life Insurance
is projected to increase in 2004 because we will have an entire year of this
earning stream as well.

We will now turn our discussion to an analysis of the net interest income and
net interest margin. Net interest income for the 3rd quarter of 2003 was $19.6
million, reflecting a 12% increase compared to the 3rd quarter of 2002. Net
interest income earned in the nine months ended September 30, 2003 was $60.9
million, reflecting an increase of 18% compared to the same period in 2002. The
resulting net interest margin was 3.13% for the quarter and 3.25% year-to-date.
We provided a lot of detail in the press release about the net interest margin
and I won't repeat that detail here. However, I do want to reiterate a few
points that we made in the press release which are related to net interest
margin guidance for 2003 and 2004. We anticipate that the net interest margin
for 2003 will be in the range of 3.18 to 3.23%, which is slightly lower than the
low end of our previous guidance. Bottom line, the loans that have prepaid
during the course of 2003 have had a higher yield than the new loans that we are
originating, resulting in reduction in our yield on earning assets. And although
we've significantly reduced our cost of funds, the yield on earning assets has
decreased to a greater extent, which has resulted in compression of the net
interest margin. Further, we provided new guidance that the net interest margin
for 2004 will be further compressed to a range of 3.05 to 3.15%.

We have undertaken two significant initiatives that we believe will assist in
maintaining the net interest margin in the range that I just indicated. First,
we are in the process of


negotiating with the Federal Home Loan Bank to restructure about $130 million of
advances. These advances currently have an average rate of 4.02% and an average
maturity of 15.5 months, and it is our intention to restructure and extend the
maturity of these advances to approximately 60 months. Assuming we are
successful in negotiating this transaction, our cost of funds on the $130
million will be lowered by 119 basis points, having a four basis point positive
impact on our net interest margin in 2004, and improving our net interest income
by $1.5 million in 2004. Additionally, we are in the process of analyzing an
interest rate swap for our $9 million fixed rate, trust preferred securities,
which bear a rate of 10.18%. Based on our analysis, if we were to accomplish
this swap at current rate levels, it would save us approximately $300,000 in
interest expense per year. The earnings impact from these initiatives is
factored into the previously announced guidance, and we anticipate having these
initiatives completed by year-end.

With the recent volatile interest rate environment, it probably makes sense to
spend a few minutes talking about our securities portfolio. As of September 30,
2003, our investment portfolio totaled $365 million representing about 14% of
total assets, which is within our previously announced range of between 10 and
15%. The average coupon in the portfolio is 4.43%. As of September 30, the
effective duration is 2.63, and the average life is 4.2 years. In terms of
extension risk, if interest rates moved up 300 basis points, the average life
would extend to only 5.8 years. At quarter end, the unrealized loss on the
portfolio was $3.4 million and the accounting yield for the quarter was 3.0%. As
you can see, we are somewhat prudent in our investment practices. We are not
trying to hit a home run


with this portfolio, we are merely striving for an incremental return on our
excess liquidity.

In terms of the bank's interest rate risk, the current exposure places us in the
minimal risk category as defined by the OTS, and we intend to manage the Company
so that we retain this classification.

Turning now to our improvements in operating efficiency. Noninterest expense
during the 3rd quarter of 2003 was $10.3 million, $100,000 less than the same
period in the prior year. This is truly extraordinary when you consider that the
acquisition was completed in August of 2002, so in the 3rd quarter of 2002,
there were 57 days of the lower preacquisition expenses and only 35 days of the
combined expenses, and there were only $300,000 of one time charges relating to
the acquisition in the 3rd quarter of 2002. This truly demonstrates the
efficiencies that we've achieved in the past year.

Through September 30, 2003, noninterest expense was approximately 18.5% more
than the prior year. This increase on a year-to-date basis is primarily the
result of the acquisition of First Fidelity, which increased earning assets by
approximately 35%.

We continue to work to become more efficient, and we've achieved a reduction in
the ratio of G&A to average assets to 1.64% for the nine months of 2003,
compared with 1.82% during the same period in 2002. We anticipate general and
administrative expense


to increase by less than 10% in 2004, compared to 2003, primarily as a result of
employee-related expenses.

Most notably, and like everyone else, we anticipate increased expenses in
workers' compensation as well as for medical insurance for our employees.
Additionally, we expect G&A to increase due to having a full year of employee
and other operating expenses associated with our two newest branches as well as
the impact of two additional branches that we intend to open in the 3rd or 4th
quarter of 2004.

We remain diligent about expense control. However, we will be slightly off of
our efficiency ratio guidance for 2003, primarily because of the compression in
the net interest margin. As a result, our expectation is that the efficiency
ratio will be slightly over 46% for all of 2003, and will improve slightly, but
not significantly in 2004, again primarily resulting from the continued
anticipation of the compression of the net interest margin. We reiterate our
guidance for the ratio of G&A to average assets to be 1.6% for 2003, and our
goal is to improve this ratio further in 2004.

I would like to briefly mention that our tax rate for the current quarter was
39%, which resulted in a year-to-date tax rate of 40% compared to 41% in the
prior year. We anticipate that the tax rate for 2004 will be in the range of
between 40 and 41%.

Now a few remarks regarding asset quality. In addition to the positive results
that we've already discussed, our asset quality remains at historically strong
levels and in fact


continues to be better than our peer group. Nonaccrual loans at the end of
September 2003 were $6.7 million, or 26 basis points of total assets. During the
quarter, we sold the REO that we had acquired during the 2nd quarter and had no
REO on the books at the end of the 3rd quarter. Classified assets decreased 29%
from $18.6 million at the end of the 2nd quarter for 2003, to $13.2 million at
the end of the 3rd quarter 2003. Delinquent loans totaled $12.7 million, down
slightly from 2nd quarter results, and in line with year-end 2002 figures.
Charge offs for the quarter were $326,000, or approximately six basis points of
loans receivable. Year-to-date charge offs have been $694,000, or approximately
four basis points of loans receivable annualized. Assuming asset quality remains
at current levels, factoring in the anticipated loan growth, and also based on
the current economic indicators, we expect that the provision for credit losses
for the fourth quarter of 2003 will be consistent with the 3rd quarter
provisions, or approximately $50,000.

We should probably mention that during the 3rd quarter, in accordance with SEC
standards, we reclassified $1.3 million in reserves for $131.6 million of
unfunded loan commitments from the allowance for credit losses to other
liabilities.

Before I discuss the California economy, I want to emphasize something that we
noted in today's press release, which is that we make our strategic decisions
based on long term objectives keyed to the best interests of our shareholders.
Our acquisition strategy is consistent with that philosophy. Following our
acquisition of First Fidelity, we elected to pause until we were confident that
the acquisition was successful by all measurements


before we began looking for any other possible acquisitions. I'm sure, based on
all of the reports that I've provided to you over the past year, you will agree
that the acquisition has been a huge success. There are so many factors that
validate this success, including the increased volume of loan originations, the
increase in checking accounts in the acquired branches, and the improved asset
quality.

We are now truly one Company with one culture. Further, our turnover ratio for
the Company as a whole has been reduced significantly. It is now below 20%, down
from a 35% per-year average in the mid to late 1990s, then to 27% in 2001, and
24% in 2002. This is another reflection that our team has settled in and is
working well together. Accordingly, we are now considering potential acquisition
opportunities. We should note that we will only do an acquisition if it meets
our strategic objectives and provides significant accretion to earnings per
share. We provided guidance in our press release that absent doing an
acquisition in 2004, we anticipate growth in earnings per share of between 7 and
12%.

Now we'll talk about the California economy, and then open it up for questions.

Statewide, the August unemployment rate of 6.6% was down from the December 2002
revised 6.9%. UCLA forecasts the unemployment rate to decrease slightly to 6.4%
in 2004 and 6.2% in 2005. Southern California continues to lead the way for the
state. Two of our markets, Orange County and Ventura County have added jobs over
the past three


months. The employment focus for our main target market, Los Angeles County,
continues to be relatively optimistic despite losing jobs in the past three
months.

The residential real estate market has remained strong in California. Median
home prices continue to rise in Los Angeles County. In fact, the 12 trailing
months reflect an increase of 25% as of September 2003. A similar trend has
occurred throughout the state where median prices have risen 21% as of August
2003. The continued imbalance between supply and demand suggests that the
housing market should remain strong for the foreseeable future. This is further
evidenced by the historically low inventory of homes currently available for
sale. In August, there was 1.7 months of unsold inventory in Los Angeles County,
meaning it would take that long to sell the homes listed for sale at the current
sales rates. This ratio stood at 2.5 months a year ago.

In terms of commercial real estate, this market has remained relatively
unchanged. In Los Angeles County, industrial vacancy has decreased from 2.9% in
June to 2.5% in September, with the vacancy rate in San Diego County down as
well to 7.5% in September from 7.7% in June. Orange County has experienced an
increase in the vacancy rate in industrial properties from 5% in June to 5.4% in
September. Average apartment rents in Southern California continue to increase
due to the increase in the population and the fact that new housing starts are
not keeping pace. The vacancy rates in the multifamily market remain stable for
the same reasons. Los Angeles County experienced a 3.8% increase in average
rents from June to September. San Diego and Orange counties both experienced a
3.3% increase in the most recent quarter. The office market continues


to be the weakest real estate market locally. In the last three months, Los
Angeles County's vacancy rates remained unchanged at 14.7% as of September 2003.
However, our other two markets have shown signs of improvements with Orange
County's vacancy improving to 14.7% from 15.6% in June, and San Diego's vacancy
rate improving from 11.9% in June to 11.8% as of the end of September.

Before we open the call to questions, I should briefly comment about the recent
election here in California. I'll be sure to stay away from discussing any of my
own political views, but I think it is safe to say that the perception of the
business community in general is that the outcome of the recent recall election
in California is positive. It is clearly too soon to point to any specific
accomplishments, but the general feeling seems to be optimistic.

In conclusion, we are pleased with our 3rd quarter results, and we are focused
on providing a solid performance now and in the future, with our primary goal
being to build value for our shareholders. Thank you for taking the time to join
us on the conference call today. Jean, we are now ready to open the call for
questions.

+++ q-and-a

Operator: Thank you. If you have a question or comment key star then one on your
tone dial phone. If you want to withdraw your question, key star 2. Once again,
key star 1


for questions. We'll pause for just a moment. Please stand by - and your first
question today comes from Mike McMahon from Sandler O'Neill & Partners.

Mike McMahon: Hi Simone and David. Two questions. On the acquisition front, the
First Fidelity acquisition has been fantastic as we see in your numbers. I think
part of it has to do with the purchase price that you acquired the Company for
and I'm just wondering as you look out at other opportunities which I'm sure are
landing or your desk daily, what are the chances of finding something as
attractive as that? I'm sure you've seen the prices paid for some of the deals
in California here lately, as well. I mean, I guess what I'm getting at is, how
likely is it that you're going to find something out there that would be as
attractive as First Fidelity? So whatever you want to say is great.

Simone Lagomarsino: Sure. Certainly, from -- I mean, at seven times earnings,
the acquisition of First Fidelity -- seven times trailing earnings, the
acquisition of First Fidelity was, you know, a huge success for us. Not,
however, not just because of the pricing but because of the efficiencies we've
been able to achieve since then. Certainly, we've held back from looking at
additional acquisitions as I mentioned earlier, so that we could make sure that
we really absorbed First Fidelity and did it right, made sure we learned
anything that we could change in the next time. But also we have held back
because the multiple of our stock has not been in line with our peer group and
certainly it's not as valuable a currency and so we actually now, today, are
trading in line with our peer group in terms of our multiple and that does give
us an opportunity to use our stock as a currency in an acquisition. And I don't
know if that is helpful to you, Mike.


Mike McMahon: Well, in general, are you looking for deals to be accretive for
the first year, or at least not lose money the first year or --

Simone Lagomarsino: We absolutely would only do a deal if it's accretive in the
first 12 months to EPS.

Mike McMahon: Okay. And it looks -- can you comment on your buy-back? The share
count went up in the current quarter. And you had a -- I don't know, a modest
additional increase in your buy-back allotment announced earlier this month. Are
you still pursuing buy-backs, is that still attractive to you?

Simone Lagomarsino: Yes, it is. In the 3rd quarter we repurchased about just
under 33,000 shares. And when we get calls, we absolutely are looking at
repurchasing shares.

Mike McMahon: Okay, very good, thank you.

Operator: And your next question comes from Richard Eckert of Roth Capital
Partners.

Richard Eckert: Hi Simone. Hi David.

Simone Lagomarsino: Hi Richard.


Richard Eckert: I have a couple of questions, one real quick. In your press
release you indicated that you anticipate net loan portfolio growth of between
15 and 20%. On the call you said 10 and 20%. Which is the more precise guidance?

Simone Lagomarsino: 15 to 20% is really what we've been talking about here
internally.

Richard Eckert: Okay. And can I take the increase in share count this past
quarter to be the exercise of warrants or --

Simone Lagomarsino: The increase in share count is a result of the stock
dividend. Under generally accepted accounting rules, we had to report this 3rd
quarter as though the stock dividend happened prior to the end of the quarter.
So --

David Rosenthal: For all periods.

Simone Lagomarsino: Actually it's in all periods.

Richard Eckert: I don't mean the -- the increase in total shares, but I mean
even if I had, you know, adjusted it for, you know, pre-split, it would have
been 8.4 million shares as opposed to just over 8 million shares in the prior
quarter. I'm not making sense, am I?

Simone Lagomarsino: I'm looking -- we had 8,368,000 prior to adjusting for the
split, it was 8,329,000 in the 2nd quarter.


Richard Eckert: Yeah, but then when you factor in buy-backs, should have
declined some.

Simone Lagomarsino: We, in July, had the exercise of some stock options from
some of our employees, which is --

Richard Eckert: All right, I don't need the precise number.

Simone Lagomarsino: Yeah, I would say, Rich, that that's probably the reason, is
in July we had the exercise of some stock options from some of our employees.

Richard Eckert: Okay, thank you very much.

Simone Lagomarsino: You're welcome.

Operator: And your next question comes from Gary Townsend of Friedman Billings.
Please proceed.

Gary Townsend: Ramsey. How are you Simone and David?

Simone Lagomarsino: Doing great thanks, how are you Gary?


Gary Townsend: Good, thank you. Could you -- I was intrigued by your discussion
of possible acquisitions and I was hoping that you could go into more depth with
respect to the strategies that you see as the ones that you want to pursue.
Would you go out of market, would you look for other ancillary products, or
exactly how are you defining that?

Simone Lagomarsino: That's a great question. We are currently very focused on
looking for acquisitions that keep us in the four coastal counties of Southern
California, which would be San Diego, Orange County, LA County and Ventura
County so we don't want to go outside of that geographic region. We would want
institutions that are either in our current target markets which are the three I
mentioned, North San Diego County, the Irvine Corridor or the South Bay region.

But if there are institutions that have developed significant market share in
another market in those four counties to the point where we could use our same
type of strategy of building to being the top five in market share in that
region we would consider that. We are only really focused right now on real
estate lenders, because that is our expertise. We would not consider at this
point a commercial bank. We believe that there is a tremendous opportunity in
Southern California to continue to have the thrift model that we operate in
because of the significant consolidation that's transpired here in the last five
to ten years. We believe that there is a void in the market for thrifts that are
focused on the consumer in the household so we really excel at extreme service
for those consumers and we would want to continue to find institutions that
would fit that model.


When we talk about, you know, we said it needed to fit strategically and
financially, we would not be looking for a significantly troubled institution.

We would want an institution that's healthy that fits the other parameters that
I just outlined. And again, we would really only look for an institution and do
an acquisition if it allowed us significant improvement in our earnings per
share.

Gary Townsend: And I remember our first meeting, Simone, I hope you do too, but
in it we discussed that almost every organization maybe all the organizations
that you had worked for at one point had eventually been acquired. What's the
view now with respect to Hawthorne's being acquired?

Simone Lagomarsino: Well, Gary, we focus every day on the long-term existence of
Hawthorne Savings in large part because we believe that's in the best interests
of the shareholders. And we make decisions for the long term because that's the
right thing to do. Obviously, as successful as the bank has become and with our
terrific team of employees, if another institution looked at us and decided that
we would be beneficial to their strategic goals, and they offered a price that
was in line with what our board and shareholders felt that was what the Company
was worth, certainly the board and shareholders would make the decision that,
you know, is the right decision.

Gary Townsend: Fair enough. Thanks very much.


Simone Lagomarsino: Thank you Gary.

Operator: And your next question comes from Mike McMahon of Sandler O'Neill and
Partners.

Mike McMahon: I heard your comments about your expected loan growth and prepays
going down which are good. I am wondering if you can give us some indication of
where your pipeline is, perhaps at quarter-end, or what the trends are there. Is
that building?

Simone Lagomarsino: Yes, we have fairly strong pipelines in our income property
area, and construction, both are very strong. Residential has dropped off just
slightly, but still, very strong. We had a very strong September in our
residential lending group. So at this point, I mean Southern California
continues to be a very vibrant economy and real estate continues to be a big
part of what's driving that. So we continue to have strong robust pipeline.

Mike McMahon: And were those numbers up from, say, August, or about comparable
to August, at the end of August?

Simone Lagomarsino: I actually don't have that information here, Mike, and I
apologize for that.

Mike McMahon: That's all right.


Simone Lagomarsino: But we do see right now that our pipelines are strong, and
we foresee the ability to originate about $100 million a month in loans into
the 2004.

Mike McMahon: Very good. Thank you.

Simone Lagomarsino: Thank you Mike.

Operator: And your next question comes from Don Worthington of Hoefer and
Arnett.

Don Worthington: Good morning Simone and David. One question for you in terms of
you mentioned in the release you have a significant amount of deposits maturing
in the fourth quarter, I guess out of the Fidelity acquisition, and the
opportunity that's there to lower the cost of funds. Is that a function of just
renewing those CDs at lower rates or rolling them off and replacing them with
more transaction accounts or some combination of the two?

Simone Lagomarsino: A combination of both. We continue to really work on growing
transaction accounts and that's where our marketing dollars have been, are in
marketing for checking account, and money market accounts. When we look at the
opportunity to lower rates, our current rates for just a six-month CD are
actually almost 100 basis points less than the average cost of those maturing
CDs. And that's where we think if those do roll with us and we're in line with
the market so they will have a difficult time going


elsewhere and getting a lot more than our current rate sheet suggests. So that's
where we believe that there is still opportunity to lower our cost of funds.

Don Worthington: Okay. Thank you.

Simone Lagomarsino: Thank you.

Operator: There seem to be no questions at this time.

Simone Lagomarsino: Okay. Then on behalf of the employees, management and the
board of directors of Hawthorne Financial Corporation I want to thank our
shareholders for your continued support. And this concludes our 3rd quarter 2003
conference call. Thank you.

Operator: Ladies and gentlemen, thank you for your participation. You may now
disconnect.