Definitive Proxy Statement

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12

You are cordially invited to attend a special meeting of stockholders of Hawthorne Financial Corporation to be held at 11:00 a.m., Pacific time, on Tuesday, May 25, 2004 at Hawthorne Financial’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California. At the special meeting, you will be asked to consider and vote upon, among other things, a proposal to approve and adopt an agreement and plan of merger, dated as of January 27, 2004, providing for the acquisition of Hawthorne Financial by Commercial Capital Bancorp, Inc. The acquisition will be accomplished by means of a merger of Hawthorne Financial with and into CCBI Acquisition Corp., a wholly owned subsidiary of Commercial Capital Bancorp, Inc.

Following the merger, Hawthorne Financial’s subsidiary bank, Hawthorne Savings, F.S.B. will be merged in a separate merger with and into Commercial Capital’s subsidiary bank, Commercial Capital Bank, F.S.B.

If the merger agreement is approved and the merger is subsequently completed, each outstanding share of Hawthorne Financial common stock will be converted into the right to receive 1.9333 shares of Commercial Capital common stock, subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest. This represents a value of $39.25 per share based on Commercial Capital’s closing share price of $20.30 on April 12, 2004, the last practicable trading date before the printing of this joint proxy statement/prospectus, as reported on the Nasdaq National Market, where shares of Commercial Capital common stock are listed under the symbol “CCBI.” Based on the 1.9333 exchange ratio, and the number of outstanding shares of Hawthorne Financial common stock on December 31, 2003, former Hawthorne Financial stockholders will own approximately 43.8% of the outstanding Commercial Capital common stock following the merger.

The merger cannot be completed unless the stockholders of Hawthorne Financial approve and adopt the merger agreement, the stockholders of Commercial Capital approve the issuance of Commercial Capital common stock in the merger and required regulatory approvals are received.

In addition, you will be asked to consider and vote upon a proposal to grant discretionary authority to adjourn the special meeting to solicit additional proxies in favor of approving and adopting the merger agreement.

Based on our reasons for the merger described in the accompanying document, our board of directors has approved the merger agreement and believes that the merger is advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders. Accordingly, our board of directors unanimously recommends that Hawthorne Financial stockholders vote “FOR” approval and adoption of the merger agreement.

The accompanying document gives you detailed information about the special meeting, the merger and related matters. We urge you to read this entire document carefully, including the considerations discussed under “ Risk Factors,” beginning on page 19, and the annexes thereto, which include the merger agreement.

Also, we have included with this document a copy of Hawthorne Financial’s Annual Report on Form 10-K/A for the year ended December 31, 2003, which contains important information about Hawthorne Financial that you should review along with this joint proxy statement/prospectus.

Your vote is very important. Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card.

We deeply appreciate your continuing loyalty and support, and we look forward to seeing you at the special meeting.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of Commercial Capital common stock to be issued in the merger or determined if this document is accurate or adequate. Any representation to the contrary is a criminal offense. Shares of Commercial Capital common stock are not savings accounts, deposits or other obligations of any bank or savings association and are not insured by any federal or state governmental agency.

This joint proxy statement/prospectus is dated April 15, 2004 and was first mailed

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Hawthorne Financial Corporation will be held at Hawthorne Financial’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California on Tuesday, May 25, 2004 at 11:00 a.m. Pacific time, for the following purposes, all of which are more completely set forth in the accompanying joint proxy statement/prospectus:

The Board of Directors has fixed April 2, 2004 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting. Only those stockholders of record at the close of business on that date will be entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting.

YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT THE SPECIAL MEETING.

This document incorporates important business and financial information about Commercial Capital and Hawthorne Financial from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document but not otherwise accompanying this document by requesting them in writing or by telephone from Commercial Capital or Hawthorne Financial as follows:

You will not be charged for any of these documents that you request. If you would like to request documents, please do so by May 12, 2004 in order to receive them before Commercial Capital’s annual meeting of stockholders and by May 20, 2004 in order to receive them before Hawthorne Financial’s special meeting of stockholders.

For additional information regarding where you can find information about Commercial Capital and Hawthorne Financial, please see “Where You Can Find More Information” beginning on page 102.

If you are a Commercial Capital stockholder, you will keep your shares of Commercial Capital common stock, which will remain outstanding and unchanged as a result of the merger.

The merger agreement must be approved and adopted at Hawthorne Financial’s special meeting by the holders of a majority of the shares of Hawthorne Financial common stock outstanding and entitled to vote.

The issuance of Commercial Capital common stock pursuant to the terms of the merger agreement must be approved by the holders of a majority of the shares of Commercial Capital common stock present in person or by proxy at the Commercial Capital annual meeting and entitled to vote.

If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions you receive from your broker, bank or other nominee to change your vote.

This summary highlights selected information from this document and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should read carefully this entire document, including the merger agreement and the other documents to which we have referred you. See “Where You Can Find More Information” beginning on page 102. Page references are included in this summary to direct you to a more complete description of the topics.

Throughout this document, “Hawthorne Financial” refers to Hawthorne Financial Corporation, “Hawthorne Savings” refers to Hawthorne Savings, F.S.B., Hawthorne Financial’s banking subsidiary, “Commercial Capital” refers to Commercial Capital Bancorp, Inc., “Acquisition Corp” refers to CCBI Acquisition Corp., a wholly owned subsidiary of Commercial Capital, and “Commercial Capital Bank” refers to Commercial Capital Bank, FSB, Commercial Capital’s banking subsidiary. Also, we refer to the merger between Hawthorne Financial and Acquisition Corp. as the “merger,” and the agreement and plan of merger, dated as of January 27, 2004, among Commercial Capital, Acquisition Corp. and Hawthorne Financial as the “merger agreement.”

Commercial Capital and Commercial Capital Bank. Commercial Capital is a diversified financial services holding company incorporated under the laws of the State of Nevada in 1999 and the parent company of Commercial Capital Bank, a federally chartered savings bank with four full service banking offices located in Irvine, Rancho Santa Margarita, Riverside and La Jolla, California, and loan origination offices located in Sacramento, Corte Madera (Marin County), Oakland, Burlingame, Woodland Hills, Encino, Los Angeles, Irvine and La Jolla, California. Other subsidiaries of Commercial Capital include Commercial Capital Mortgage, Inc. (“CCM”), a commercial mortgage banking company which was previously named Financial Institutional Partners Mortgage Corporation, ComCap Financial Services Inc., a registered broker dealer (“ComCap”) and Commercial Capital Asset Management, Inc. (“CCAM”), an asset management firm. Commercial Capital had total consolidated assets of approximately $1.72 billion, total consolidated deposits of approximately $645.6 million and total consolidated stockholders’ equity of approximately $102.0 million at December 31, 2003. Commercial Capital’s principal executive offices are located at One Venture, 3^rd Floor, Irvine, California 92618 and its telephone number is (949) 585-7500.

Hawthorne Financial and Hawthorne Savings. Hawthorne Financial, a Delaware corporation organized in 1959, is a savings and loan holding company that owns 100% of the stock of Hawthorne Savings. Hawthorne Savings is a federally chartered savings bank with 15 full service banking offices located in the coastal counties of Southern California, from Westlake Village at the western edge of Los Angeles to Mission Bay in San Diego. Hawthorne Financial had total consolidated assets of approximately $2.67 billion, total consolidated deposits of approximately $1.72 billion and total consolidated stockholders’ equity of approximately $185.3 million as of December 31, 2003. Hawthorne Financial’s executive offices are located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California 90245 and its telephone number is (310) 725-5631.

A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. Please read the entire merger agreement. It is the legal document that governs the merger. We are proposing a merger whereby Hawthorne Financial will merge with and into Acquisition Corp. with Acquisition Corp. as the surviving entity. Simultaneously with or as soon as practicable after the merger, Acquisition Corp. shall be merged with and into Commercial Capital with Commercial Capital as the surviving entity. In addition, as soon as practicable after the merger between Acquisition Corp. and Commercial Capital, Hawthorne Savings shall be merged with and into Commercial Capital Bank with Commercial Capital Bank as the surviving entity. We expect to complete the merger in the second quarter of 2004.

Hawthorne Financial Stockholders will receive 1.9333 Shares of Commercial Capital Common Stock for each Share of Hawthorne Financial Common Stock Exchanged Pursuant to the Merger (Page 50)

If the merger of Hawthorne Financial with and into Acquisition Corp. is completed, each outstanding share of Hawthorne Financial common stock will be converted into the right to receive 1.9333 shares of Commercial Capital common stock, subject to a possible adjustment as described in “The Merger—Termination of the Merger Agreement” beginning on page 58.

Commercial Capital will not issue fractional shares. Instead, Hawthorne Financial stockholders who receive Commercial Capital common stock will receive the value of any fractional share interest in cash, based on the closing sales price of a share of Commercial Capital common stock on the business day preceding the effective time of the merger.

Procedures for the Exchange of Hawthorne Financial Common Stock Certificates (Page 50)

Hawthorne Financial stockholders will need to surrender their Hawthorne Financial common stock certificates to receive Commercial Capital common stock after the consummation of the merger, but they should not send in any certificates now. Within five business days after the effective time of the merger, Commercial Capital’s designated exchange agent will send to Hawthorne Financial stockholders a letter of transmittal and instructions for surrendering certificates representing shares of Hawthorne Financial common stock in exchange for Commercial Capital common stock. The letter of transmittal should be completed and returned to the designated exchange agent along with the stock certificates representing shares of Hawthorne Financial common stock. After the letter of transmittal has been received and processed, Hawthorne Financial stockholders will be sent the Commercial Capital common stock to which they are entitled together with cash in lieu of any fractional share interest.

Shares of each of Commercial Capital common stock and Hawthorne Financial common stock currently trade on the Nasdaq National Market under the symbols “CCBI” and “HTHR,” respectively. On January 27, 2004, the last trading day preceding public announcement of the proposed merger, the closing share price of Commercial Capital common stock was $19.61, as adjusted for Commercial Capital’s 4-for-3 stock split effected on February 20, 2004, and the closing share price of Hawthorne Financial common stock was $30.26. On April 12, 2004, the last practicable trading date before the printing of this joint proxy statement/prospectus, the closing share price of Commercial Capital common stock was $20.30 and the closing share price of Hawthorne Financial common stock was $38.90.

The market value of 1.9333 shares of Commercial Capital common stock would have been $37.92 based on Commercial Capital’s January 27, 2004 closing share price. The market value of 1.9333 shares of Commercial Capital common stock would have been $39.25 based on Commercial Capital’s April 12, 2004 closing share price.

Because the consideration to be provided to stockholders of Hawthorne Financial in connection with the merger is based on a fixed number of shares of Commercial Capital common stock and because the market value of the shares of Commercial Capital common stock to be received by Hawthorne Financial stockholders in the merger will change, stockholders of Hawthorne Financial are not assured of receiving a specific market value of Commercial Capital common stock, and thus a specific market value for their shares of Hawthorne Financial common stock, at the effective time of the merger. Commercial Capital cannot assure you that its stock price will continue to trade at or above the prices shown above. You should obtain current stock price quotations for shares of Commercial Capital common stock from a newspaper, via the Internet or by calling your broker.

Neither Commercial Capital nor Hawthorne Financial currently pays cash dividends to their respective stockholders. Commercial Capital does not currently intend to pay a cash dividend to its stockholders in the near future.

The Merger will generally be Tax-Free for Hawthorne Financial Stockholders (Page 68)

Commercial Capital and Hawthorne Financial have received an opinion of counsel to the effect that, based on certain facts, representations and assumptions, the merger will be treated as a “reorganization” for federal income tax purposes and, accordingly, Hawthorne Financial stockholders generally will not recognize any gain or loss on the conversion of shares of Hawthorne Financial common stock into shares of Commercial Capital common stock. However, Hawthorne Financial stockholders will be taxed on the cash they receive instead of any fractional share of Commercial Capital common stock that they would otherwise be entitled to receive. The parties’ obligation to complete the merger is conditioned on their receipt of the same opinion, dated as of the effective time, regarding the federal income tax treatment of the merger to them and to the Hawthorne Financial stockholders.

Tax matters are complicated, and the tax consequences of the merger may vary among stockholders. In addition, Hawthorne Financial stockholders may be subject to state, local or foreign tax laws that are not discussed herein. Hawthorne Financial stockholders should therefore consult with their own tax advisors for a full understanding of the tax consequences to them of the merger.

Hawthorne Financial Stockholders Will Own Approximately 43.8% of Commercial Capital Common Stock Following the Merger (Page 58)

Based on the 1.9333 exchange ratio and the outstanding shares of Commercial Capital and Hawthorne Financial at December 31, 2003, Commercial Capital will issue a maximum of approximately 23.3 million shares of Commercial Capital common stock to Hawthorne Financial stockholders in the merger (including unvested options that will vest and be exercised immediately prior to the closing of the merger). Based on that number and the number of outstanding shares of Commercial Capital common stock on December 31, 2003, former Hawthorne Financial stockholders will own approximately 43.8% of the outstanding Commercial Capital common stock following the merger.

Opinion of Commercial Capital Financial Advisor: Credit Suisse First Boston LLC, Commercial Capital’s financial advisor in connection with the merger, has delivered its written opinion to the board of directors of Commercial Capital that, as of January 27, 2004, and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio was fair to Commercial Capital, from a financial point of view. We have attached as Annex B to this document the full text of the written opinion of Credit Suisse First Boston, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with its opinion. Credit Suisse First Boston provided its opinion for the information and assistance of the board of directors of Commercial Capital in connection with its consideration of the transaction. The Credit Suisse First Boston opinion is not a recommendation as to how any Commercial Capital stockholder should vote or act on any matter relating to the merger. We encourage you to read the opinion in its entirety. Pursuant to an engagement letter between Commercial Capital and Credit Suisse First Boston, Commercial Capital agreed to pay Credit Suisse First Boston a fee, the substantial portion of which is payable upon completion of the merger.

Opinion of Hawthorne Financial’s Financial Advisor: In connection with the proposed merger, Hawthorne Financial’s financial advisor, Sandler O’Neill & Partners, L.P., delivered to the Hawthorne Financial board of

directors on January 27, 2004, the date on which the Hawthorne Financial board of directors approved the merger agreement, its oral opinion, subsequently confirmed in writing, that, as of such date, the exchange ratio was fair to Hawthorne Financial’s stockholders from a financial point of view. We have attached as Annex C to this document the full text of the written opinion of Sandler O’Neill which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with its opinion. Sandler O’Neill’s opinion is directed to the Hawthorne Financial board of directors and does not constitute a recommendation to any stockholder as to any matters relating to the merger. Pursuant to an engagement letter between Hawthorne Financial and Sandler O’Neill, Hawthorne Financial agreed to pay Sandler O’Neill a fee, the substantial portion of which is payable upon completion of the merger.

Recommendation of the Boards of Directors of Commercial Capital and Hawthorne Financial (Pages 31 and 32)

To Commercial Capital Stockholders: Based on Commercial Capital’s reasons for the merger described herein, the Commercial Capital board of directors believes that the merger is fair to Commercial Capital stockholders and in their best interests. Accordingly, the Commercial Capital board of directors unanimously recommends that Commercial Capital stockholders vote “FOR” approval of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement.

To Hawthorne Financial Stockholders: Based on Hawthorne Financial’s reasons for the merger described herein, the Hawthorne Financial board of directors has approved the merger agreement and believes that the merger is advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders. Accordingly, the Hawthorne Financial board of directors unanimously recommends that Hawthorne Financial stockholders vote “FOR” approval and adoption of the merger agreement.

Annual Meeting of Commercial Capital. The Commercial Capital annual meeting will be held at 9:00 a.m., Pacific time, on Monday, May 17, 2004, at the Doubletree Hotel, located at 90 Pacifica, Irvine, California. At the annual meeting, Commercial Capital stockholders will be asked to:

Special Meeting of Hawthorne Financial. The Hawthorne Financial special meeting will be held at 11:00 a.m., Pacific time, on Tuesday, May 25, 2004 at Hawthorne Financial’s headquarters, located at 2381

Rosecrans Avenue, 2^nd Floor, El Segundo, California. At the special meeting, Hawthorne Financial stockholders will be asked to:

Record Dates and Voting Rights for the Commercial Capital Annual Meeting and the Hawthorne Financial Special Meeting (Page 22)

Commercial Capital Annual Meeting. Commercial Capital stockholders are entitled to vote at the annual meeting if they owned shares of Commercial Capital common stock as of the close of business on March 25, 2004. Commercial Capital stockholders will have one vote at the annual meeting for each share of Commercial Capital common stock that they owned on that date.

Stockholders of record may vote by mail or by attending the annual meeting and voting in person. Each proxy returned to Commercial Capital (and not revoked) by a holder of Commercial Capital common stock will be voted in accordance with the instructions indicated thereon. If no instructions are indicated, such shares will be voted in favor of the proposal.

Hawthorne Financial Special Meeting. Hawthorne Financial stockholders are entitled to vote at the special meeting if they owned shares of Hawthorne Financial common stock as of the close of business on April 2, 2004. Hawthorne Financial stockholders will have one vote at the special meeting for each share of Hawthorne Financial common stock that they owned on that date.

Stockholders of record may vote by mail or by attending the special meeting and voting in person. Each proxy returned to Hawthorne Financial (and not revoked) by a holder of Hawthorne Financial common stock will be voted in accordance with the instructions indicated thereon. If no instructions are indicated, such shares will be voted in favor of the proposal.

The Issuance of Commercial Capital Common Stock and the Completion of the Merger Requires the Requisite Approval by the Commercial Capital Stockholders at their Annual Meeting and the Hawthorne Financial Stockholders at their Special Meeting (Page 23)

Directors and Executive Officers of Commercial Capital Own Shares Which May Be Voted at the Commercial Capital Annual Meeting (Page 70)

As of the Commercial Capital record date, the directors and executive officers of Commercial Capital beneficially owned approximately 26.40% of the outstanding shares of Commercial Capital common stock entitled to vote at the Commercial Capital annual meeting. Six of the directors of Commercial Capital, holding approximately 24.62% of the outstanding shares of Commercial Capital common stock entitled to vote at the annual meeting, have entered into shareholder agreements with Hawthorne Financial pursuant to which they have agreed to vote all of their shares in favor of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement.

Directors and Executive Officers of Hawthorne Financial Own Shares Which May Be Voted at the Hawthorne Financial Special Meeting (Page 70)

As of the Hawthorne Financial record date, the directors and executive officers of Hawthorne Financial beneficially owned approximately 7.20% of the outstanding shares of Hawthorne Financial common stock entitled to vote at the Hawthorne Financial special meeting. The directors of Hawthorne Financial, holding approximately 7.18% of the outstanding shares of Hawthorne Financial common stock entitled to vote at the special meeting, have entered into shareholder agreements with Commercial Capital pursuant to which they have agreed to vote all of their shares of Hawthorne Financial common stock in favor of approval and adoption of the merger agreement.

Commercial Capital and Hawthorne Financial Must Meet Several Conditions to Complete the Merger (Page 52)

Completion of the merger depends on meeting a number of conditions, including the following:

Unless prohibited by law, either Commercial Capital or Hawthorne Financial could elect to waive a condition that has not been satisfied and complete the merger anyway. The parties cannot be certain whether or when any of the conditions to the merger will be satisfied, or waived where permissible, or that the merger will be completed.

Commercial Capital and Hawthorne Financial Must Obtain Regulatory Approvals to Complete the Merger (Page 53)

To complete the merger, the parties need the prior approval from the Office of Thrift Supervision. The U.S. Department of Justice is able to provide input into the approval process of federal banking agencies and will have between 15 and 30 days following any approval of the Office of Thrift Supervision to challenge the approval on antitrust grounds. Commercial Capital and Hawthorne Financial have filed all necessary applications with the Office of Thrift Supervision. Commercial Capital and Hawthorne Financial cannot predict, however, whether the required regulatory approvals will be obtained or whether such approvals will not impose conditions or

requirements which, individually or in the aggregate, would so materially reduce the economic or business benefits of the transactions contemplated by the merger agreement to Commercial Capital that had such condition or requirement been known, Commercial Capital, in its reasonable judgment, would not have entered into the merger agreement. If any such condition or requirement is imposed, Commercial Capital may elect not to consummate the merger. See “The Merger—Conditions to the Merger” beginning on page 52.

Commercial Capital and Hawthorne Financial may Terminate the Merger Agreement (Page 58)

Commercial Capital and Hawthorne Financial can mutually agree at any time to terminate the merger agreement before completing the merger, even if the stockholders of Commercial Capital and Hawthorne Financial have already voted to approve it.

Commercial Capital also may terminate the merger agreement if a third party commences a tender offer or exchange offer for 15% or more of the outstanding Hawthorne Financial common stock and the board of directors of Hawthorne Financial recommends that Hawthorne Financial stockholders tender their shares in the offer or otherwise fails to recommend that they reject the offer within a specified period.

Hawthorne Financial also may terminate the merger agreement at any time prior to its special meeting in connection with the exercise of its fiduciary termination right in order to accept a financially superior proposal.

Hawthorne Financial also may terminate the merger agreement at any time during the five-day period commencing on the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods, if:

Commercial Capital’s “average closing sales price” will be the average of the closing sales price per share of Commercial Capital common stock on the Nasdaq National Market for a period of 20 consecutive trading days ending on the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods.

The “index ratio” will be calculated by dividing the peer group index by 1.00.

The “peer group index” will be the sum of the products derived by multiplying the corresponding weighting factor of each peer group member by the quotient obtained by dividing such peer group member’s average closing common stock price for a period of 20 consecutive trading days ending on the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods, by such peer group member’s closing common stock price on the January 27, 2004, the date the merger agreement was executed. See “The Merger—Termination of the Merger Agreement” beginning on page 58 for the peer members, their corresponding weighting factors and for examples of the operation and effect of the provisions of the merger agreement dealing with a decline in the market price of Commercial Capital’s common stock.

In the event of such a termination, Commercial Capital could voluntarily elect to issue more shares of Commercial Capital common stock pursuant to a formula set forth in the merger agreement. Commercial Capital is not required to issue more shares, however, and it is possible under these circumstances that the Hawthorne Financial board of directors could conclude that proceeding with the merger at the lower price, rather than exercising Hawthorne Financial’s right to terminate the merger agreement, would still be in the best interests of Hawthorne Financial and its stockholders.

The merger agreement provides that in the event the merger agreement is terminated under specified circumstances, Commercial Capital or Hawthorne Financial may be required to pay a termination fee of $18.0 million to the other party. In addition, if the merger agreement is terminated by either Commercial Capital or Hawthorne Financial due to a breach of a representation, warranty, covenant or undertaking, the party committing the breach shall pay a termination fee of $4.0 million to the other party.

Commercial Capital and Hawthorne Financial may Amend and Extend the Merger Agreement (Page 58)

The parties may amend the merger agreement at any time before the merger is completed, and may agree to extend the time within which any action required by the merger agreement is to take place. No amendment may be made after the Hawthorne Financial special meeting which by law would require the further approval by the stockholders of Hawthorne Financial.

Board of Directors of Commercial Capital and Commercial Capital Bank after the Merger (Page 64)

Commercial Capital has agreed that after the merger, its board of directors will consist of nine directors with three of the directors designated by Hawthorne Financial. Hawthorne Financial has designated Timothy R. Chrisman, Gary W. Brummett and Anthony W. Liberati. Commercial Capital has agreed to appoint the Hawthorne Financial designees to the Commercial Capital board of directors immediately after the effective time of the merger and, subject to the fiduciary duties of the Commercial Capital board of directors, to include the Hawthorne Financial designees on the list of nominees for director at Commercial Capital’s 2005 annual meeting of stockholders. The merger agreement also provides that upon consummation of the merger of Hawthorne Savings with and into Commercial Capital Bank, the Hawthorne Financial designees will also be appointed to Commercial Capital Bank’s board of directors.

Directors and Executive Officers of Hawthorne Financial Have Interests in the Merger that Are in Addition to or Different From the Interests of the Hawthorne Financial Stockholders (Page 65)

The directors and executive officers of Hawthorne Financial have interests in the merger that are different from, or are in addition to, the interests of Hawthorne Financial stockholders. These interests include the potential for positions as directors or executive officers of Commercial Capital after the merger and the right to continued indemnification and insurance coverage by Commercial Capital for acts or omissions occurring prior to the merger. As a consequence of the proposed change in control of Hawthorne Financial contemplated by the

merger agreement, the executive officers of Hawthorne Financial will be entitled to severance payments and accelerated vesting of options to purchase Hawthorne Financial common stock in the event the merger is consummated.

Upon consummation of the merger, Commercial Capital will be obligated to pay severance payments of $2,020,516, $616,000, $593,899, $719,290 and $171,000 to Simone Lagomarsino, Eileen Lyon, David Rosenthal, Chuck Stoneburg and Jolene Wryn, respectively, and provide them with healthcare and other benefit continuation and with prorated bonus and long-term incentive compensation plan payments.

At the Hawthorne Financial record date, Simone Lagomarsino, Eileen Lyon, David Rosenthal, Chuck Stoneburg and Jolene Wryn held options to acquire 40,500, 12,000, 55,500, 22,500 and 7,500 shares, respectively, of Hawthorne Financial common stock at prices ranging from $13.241 to $24.869 per share that would not be exercisable at or before consummation of the merger in the absence of the merger. Such individuals will be permitted to exercise such options immediately prior to consummation of the merger, and each share of Hawthorne Financial common stock acquired upon any such exercise will be converted into the right to receive 1.9333 shares of Commercial Capital common stock in the merger.

Commercial Capital may be obligated to pay the executive officers additional tax gross up payments to cover their excess parachute payment excise taxes under Section 4999 of the Internal Revenue Code and their taxes on the amounts used to pay such taxes. At present, Hawthorne Financial and Commercial Capital believe that the aggregate amount of tax gross-ups for executive officers will be approximately $1,661,503.

Commercial Capital will also be obligated for a period of five years following the consummation of the merger to provide Hawthorne Financial directors and their families with all benefits under welfare plans, practices, policies and programs that were provided by Hawthorne Financial to the directors and their families at any time during the 120-day period immediately preceding the consummation of the merger.

The board of directors of Hawthorne Financial was aware of the foregoing interests and considered them, among other matters, in approving the merger agreement and the merger.

Commercial Capital and Hawthorne Financial are Prohibited from Soliciting Other Offers (Page 56)

Commercial Capital and Hawthorne Financial have agreed that, while the merger is pending, they will not initiate or, subject to some limited exceptions, engage in discussions with any third party regarding extraordinary transactions such as a merger, business combination or sale of a material amount of assets or capital stock.

Commercial Capital will use the purchase method of accounting to account for the merger.

Stockholders of Commercial Capital and Hawthorne Financial Have Different Rights (Page 89)

Commercial Capital is a Nevada corporation subject to the provisions of the General Corporation Law of Nevada, and Hawthorne Financial is a Delaware corporation subject to the provisions of the Delaware General Corporation Law. Upon consummation of the merger, stockholders of Hawthorne Financial who receive shares of Commercial Capital common stock in exchange for their shares of Hawthorne Financial common stock will become stockholders of Commercial Capital and their rights as stockholders of Commercial Capital will be governed by Commercial Capital’s articles of incorporation and bylaws and the General Corporation Law of Nevada. The rights of stockholders of Commercial Capital differ in certain respects from the rights of stockholders of Hawthorne Financial.

The Shares of Commercial Capital Common Stock to be Issued in the Merger will be listed on Nasdaq (Page 70)

Pursuant to the merger agreement, the shares of Commercial Capital common stock issued in connection with the merger will be listed on the Nasdaq National Market.

Hawthorne Financial and Commercial Capital stockholders do not have Dissenters’ Rights (Page 71)

The holders of Hawthorne Financial common stock and Commercial Capital common stock do not have rights under Delaware and Nevada law, the jurisdiction of incorporation of Hawthorne Financial and Commercial Capital, respectively, to dissent from the merger and obtain the fair value of their shares.

Contact for Hawthorne Financial stockholders regarding questions and requests

If Hawthorne Financial stockholders have more questions about the merger or how to submit their proxy, or if they need additional copies of the joint proxy statement/prospectus or the enclosed proxy card, they should call Hawthorne Financial’s proxy solicitor, Mellon Investor Services, toll free at 1-866-894-3618.

Contact for Commercial Capital stockholders regarding questions and requests

If Commercial Capital stockholders have more questions about the merger or how to submit their proxy, or if they need additional copies of the joint proxy statement/prospectus or the enclosed proxy card, they should call Mr. Stephen H. Gordon, Chairman and Chief Executive Officer of Commercial Capital, at (949) 585-7500.

Commercial Capital derived the following information as of and for the fiscal years ended December 31, 1999 through December 31, 2003 from its historical audited financial statements for those years. This information is only a summary and you should read it in conjunction with Commercial Capital’s consolidated financial statements and the related notes contained in Commercial Capital’s periodic reports filed with the Securities and Exchange Commission that have been incorporated by reference into this document. See “Where You Can Find More Information” on page 102.

Hawthorne Financial derived the following information as of and for the fiscal years ended December 31, 1999 through December 31, 2003 from its historical audited financial statements for those years. This information is only a summary and you should read it in conjunction with Hawthorne Financial’s consolidated financial statements and the related notes contained in Hawthorne Financial’s periodic reports filed with the Securities and Exchange Commission that has been incorporated by reference into this document. See “Where You Can Find More Information” on page 102.

Selected Unaudited Pro Forma Condensed Combined Consolidated Financial Information

The following table presents certain unaudited pro forma condensed combined consolidated financial information for Commercial Capital and Hawthorne Financial after giving effect to the merger and after giving effect to the pro forma adjustments discussed in the notes to the unaudited pro forma condensed combined consolidated financial statements included herein. The unaudited pro forma condensed combined consolidated statement of financial condition as of December 31, 2003 is presented as if the merger occurred as of that date. The unaudited pro forma condensed combined consolidated statement of operations for the year ended December 31, 2003 is presented as if the merger occurred at January 1, 2003. The pro forma data in the tables assume that the merger is accounted for using the purchase method of accounting. The information in the following tables is based on, and should be read together with, the pro forma information that appears elsewhere in this document and the historical information we have presented in prior filings with the Securities and Exchange Commission. See “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements” on page 72 and “Where You Can Find More Information” on page 102. The pro forma financial information is not necessarily indicative of results that actually would have occurred had the merger been completed on the dates indicated or that may be obtained in the future.

We have summarized below the per share information of Commercial Capital and Hawthorne Financial as separate corporations and on a pro forma consolidated and pro forma equivalent basis. You can use this table to understand how the merger would have affected Commercial Capital’s earnings, dividends and book value, all on a per share basis, if the merger had taken effect on the first day of the period described below. We have derived the unaudited pro forma consolidated per share information from the unaudited pro forma condensed combined consolidated financial statements presented elsewhere in this joint proxy statement/prospectus. The first item listed in each category gives you historical information relating to Commercial Capital and the second item gives you historical information about Hawthorne Financial. The information set forth below is only a summary and you should read it in conjunction with the historical financial statements and related notes of Commercial Capital and Hawthorne Financial incorporated by reference into this joint proxy statement/prospectus. The pro forma financial information is not necessarily indicative of results that actually would have occurred had the merger been completed on the dates indicated or that may be achieved in the future.

Prior to deciding whether or not to approve the transaction, you should be aware of and consider the following risks and uncertainties that are applicable to the merger, in addition to the other information contained in or incorporated by reference into this document, including the matters addressed under the caption “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 20. Commercial Capital has included in its Form 10-K for the year ended December 31, 2003 additional risk factors which address the business in which it is engaged. For a discussion of these risk factors, please refer to “Where You Can Find More Information” beginning on page 102.

The value of the merger consideration will vary with fluctuations in Commercial Capital’s stock price

Each share of Hawthorne Financial common stock owned by Hawthorne Financial stockholders will be converted into the right to receive Commercial Capital common stock. Because the consideration to be provided to stockholders of Hawthorne Financial in connection with the merger is based on a fixed number of shares and because the market value of those shares may change, stockholders of Hawthorne Financial are not assured of receiving a specific market value of Commercial Capital common stock, and thus a specific market value for their shares of Hawthorne Financial common stock. Any change in the price of Commercial Capital common stock will affect the value Hawthorne Financial stockholders will receive in the merger. Changes in the price of Commercial Capital common stock may result from a variety of factors, including general market and economic conditions, changes in the business, operations or prospects of Commercial Capital and regulatory considerations. Accordingly, at the time of the Hawthorne Financial special meeting, Hawthorne Financial stockholders will not know the exact value of the stock consideration to be received when the merger is completed.

In addition, there will be a time period between the completion of the merger and the time at which former Hawthorne Financial stockholders actually receive certificates evidencing Commercial Capital common stock. Until stock certificates are received, Hawthorne Financial stockholders will not be able to sell their shares of Commercial Capital in the open market and, thus, will not be able to avoid losses resulting from any decline in the trading price of Commercial Capital common stock during this period.

Commercial Capital may fail to realize the anticipated benefits of the merger

The success of the merger will depend on, among other things, Commercial Capital’s ability to realize anticipated cost savings and to combine the businesses of Commercial Capital Bank and Hawthorne Savings in a manner that does not materially disrupt the existing customer relationships of Hawthorne Savings or result in decreased revenues resulting from any loss of customers and that permits growth opportunities to occur. If Commercial Capital is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

The market price of shares of Commercial Capital common stock may be affected by factors which are different from those affecting shares of Hawthorne Financial common stock

Some of Commercial Capital’s current businesses and markets differ from those of Hawthorne Financial and, accordingly, the results of operations of Commercial Capital after the merger may be affected by factors different from those currently affecting the results of operations of Hawthorne Financial. For a discussion of the businesses of Commercial Capital and Hawthorne Financial and of certain factors to consider in connection with those businesses, see “Information About Hawthorne Financial,” beginning on page 81, “Information About Commercial Capital,” beginning on page 81 and the documents incorporated by reference into this document and referred to under “Where You Can Find More Information” beginning on page 102.

This document and the documents incorporated herein by reference contain forward-looking statements by Commercial Capital and Hawthorne Financial within the meaning of the federal securities laws. These forward-looking statements include information about the financial condition, results of operations and businesses of Commercial Capital and Hawthorne Financial and the financial condition, results of operations and business of Commercial Capital upon completion of the merger including the restructuring charges expected to be incurred in connection with the merger. This document also includes forward-looking statements about the consummation and anticipated timing of the merger, the exchange ratio and the tax-free nature of the merger. In addition, any of the words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “projects,” “predicts” and similar expressions indicate forward-looking statements. These forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

Management of Commercial Capital and Hawthorne Financial each believes that the forward-looking statements about their respective company are reasonable; however, you should not place undue reliance on them. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and stockholder values of Commercial Capital following completion of the merger may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond Commercial Capital’s and Hawthorne Financial’s ability to control or predict.

At the Commercial Capital annual meeting, Commercial Capital stockholders will be asked to consider and vote upon:

At the Hawthorne Financial special meeting, stockholders will be asked to consider and vote upon:

At this time, the Commercial Capital and Hawthorne Financial boards of directors are unaware of any matters, other than set forth above, that may be presented for action at their respective stockholder meetings. If other matters are properly presented, however, the persons named as proxies will vote in accordance with their judgment with respect to such matters.

Additional information with respect to the election of Commercial Capital directors, the ratification of the selection of Commercial Capital’s independent auditors, the proposal to approve an amendment to the articles of incorporation to increase the authorized shares of common stock, the proposal to approve an executive

performance-based compensation policy and the proposal to approve a long-term stock-based incentive plan is set forth herein in the section entitled “Other Matters to be Considered at the Commercial Capital Annual Meeting,” which is included in the joint proxy statement/prospectus to be delivered to Commercial Capital stockholders.

Commercial Capital. The close of business on March 25, 2004 has been fixed by the Commercial Capital board of directors as the record date for the determination of holders of Commercial Capital common stock entitled to notice of, and to vote at, the annual meeting and any adjournment or postponement of the annual meeting. At the close of business on the record date, there were 30,090,472 shares of Commercial Capital common stock outstanding and entitled to vote held by approximately 42 holders of record. Each share of Commercial Capital common stock entitles the holder to one vote at the annual meeting on all matters properly presented at the meeting.

Hawthorne Financial. The close of business on April 2, 2004 has been fixed by the Hawthorne Financial board of directors as the record date for the determination of holders of Hawthorne Financial common stock entitled to notice of, and to vote at, the special meeting and any adjournment or postponement of the special meeting. At the close of business on the record date, there were 11,799,221 shares of Hawthorne Financial common stock outstanding and entitled to vote at the special meeting held by approximately 404 holders of record. Each share of Hawthorne Financial common stock entitles the holder to one vote at the special meeting on all matters properly presented at the meeting.

Commercial Capital and Hawthorne Financial stockholders of record may vote by mail or by attending their Company’s stockholder meeting and voting in person. If you choose to vote by mail, simply mark the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided.

If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote at your company’s stockholder meeting, you must bring a letter from the broker, bank or other nominee confirming that you are the beneficial owner of the shares.

Any Commercial Capital and Hawthorne Financial stockholder executing a proxy may revoke it at any time before it is voted by:

Attendance at the applicable stockholder meeting will not, in and of itself, constitute revocation of a proxy.

Each proxy returned (and not revoked) will be voted in accordance with the instructions indicated thereon. If no instructions are indicated, your shares will be voted in favor of the proposal.

Commercial Capital. A quorum, consisting of the holders of a majority of the shares of Commercial Capital common stock entitled to vote, must be present in person or by proxy before any action may be taken at the annual meeting. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum.

The affirmative vote of the holders of a majority of the shares of Commercial Capital common stock present in person or by proxy at the Commercial Capital annual meeting and entitled to vote is necessary to approve the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement. The failure to vote, either by proxy or in person, will have no effect on the outcome of the vote regarding the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement. However, abstentions will have the same effect as a vote against the approval of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement.

The affirmative vote of the holders of a majority of the shares of Commercial Capital common stock present in person or by proxy at the Commercial Capital annual meeting is required to approve the proposal to grant discretionary authority to adjourn the annual meeting if necessary to permit further solicitation of proxies on the proposal to approve the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement. The failure to vote, either by proxy or in person, will have no effect on the outcome of the voting on the adjournment proposal. However, abstentions will have the same effect as a vote against the adjournment proposal.

“Broker non-votes,” if any, that are submitted by brokers or nominees in connection with the Commercial Capital annual meeting, will not be counted as votes “for” or “against” the proposal to issue Commercial Capital common stock pursuant to the terms of the merger agreement, but will be treated as present for quorum purposes. However, “broker non-votes” will have the same effect as a vote against the adjournment proposal. “Broker non-votes” are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the person entitled to vote those shares and the broker or nominee does not have discretionary voting power under applicable rules.

As of the close of business on the record date for the annual meeting, Hawthorne Financial did not beneficially own any shares of Commercial Capital Common Stock.

Hawthorne Financial. A quorum, consisting of the holders of a majority of the outstanding shares of Hawthorne Financial common stock entitled to vote, must be present in person or by proxy before any action may be taken at the special meeting. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum.

The affirmative vote of the holders of a majority of the shares of Hawthorne Financial common stock outstanding and entitled to vote is necessary to approve and adopt the merger agreement. Therefore, the

failure to vote, either by proxy or in person, will have the same effect as a vote against the approval and adoption of the merger agreement. Abstentions will also have the same effect as a vote against the approval and adoption of the merger agreement.

The affirmative vote of the holders of a majority of the shares of Hawthorne Financial common stock present in person or by proxy at the special meeting and entitled to vote is required to grant discretionary authority to approve the proposal to adjourn the special meeting if necessary to permit further solicitation of proxies on the proposal to approve and adopt the merger agreement . The failure to vote, either by proxy or in person, will have no effect on the outcome of the voting on the adjournment proposal. However, abstentions will have the same effect as a vote against the adjournment proposal.

Brokers cannot vote the shares that they hold beneficially either for or against the approval and adoption of the merger agreement without specific instructions from the person who beneficially owns the shares. Therefore, if your shares are held by a broker and you do not give your broker instructions on how to vote your shares, this will have the same effect as voting against the approval and adoption of the merger agreement.

In addition, brokers also may not vote on any proposal to adjourn the special meeting to solicit additional proxies in favor of the approval and adoption of the merger agreement. Nevertheless, shares held by a broker for which you do not give your broker instructions on how to vote will have no effect on the outcome of the voting on the adjournment proposal.

As of the Hawthorne Financial record date, the directors and executive officers of Hawthorne Financial beneficially owned approximately 7.20% of the outstanding shares of Hawthorne Financial common stock entitled to vote at the special meeting. The directors of Hawthorne Financial, holding approximately 7.18% of the outstanding shares of Hawthorne Financial common stock entitled to vote at the special meeting, have entered into shareholder agreements with Commercial Capital pursuant to which they have agreed to vote all of their shares of Hawthorne Financial common stock in favor of approval and adoption of the merger agreement. See “Beneficial Ownership of Principal Stockholders and Management of Commercial Capital and Hawthorne Financial” beginning on page 83 and “The Merger—Shareholder Agreements” on page 70.

As of the close of business on the record date for the special meeting, Commercial Capital did not beneficially own any shares of Hawthorne Financial common stock.

Commercial Capital and Hawthorne Financial will each pay for the costs of mailing this joint proxy statement/prospectus to their respective stockholders, as well as all other costs incurred by it in connection with the solicitation of proxies from its stockholders on behalf of its board of directors, except that Commercial Capital and Hawthorne Financial will share equally the cost of printing this joint proxy statement/prospectus and the filing fees paid to the Securities and Exchange Commission. In addition to solicitation by mail, the directors, officers and employees of Commercial Capital and Hawthorne Financial and their subsidiaries may solicit proxies from their respective stockholders in person or by telephone, telegram, facsimile or other electronic methods without compensation other than reimbursement for their actual expenses.

Arrangements also will be made with custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and Commercial Capital and Hawthorne Financial will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith.

Hawthorne Financial has retained Mellon Investor Services, a professional proxy solicitation firm, to assist it in the solicitation of proxies. The fee payable to such firm in connection with the merger is $7,500, plus reimbursement for reasonable out-of-pocket expenses.

Participants in the Hawthorne Financial Employee Stock Ownership/401(k) Plan

If you hold shares of Hawthorne Financial common stock through the Hawthorne Financial Employee Stock Ownership/401(k) Plan (“401(k) Plan/ESOP”), you will have received with this joint proxy statement/prospectus a proxy card that reflects all of the shares of Hawthorne Financial common stock that you own through the 401(k) Plan/ESOP. Under the terms of the 401(k) Plan/ESOP, Capital Bank and Trust, the trustee of the 401(k) Plan/ESOP, votes all shares of Hawthorne Financial common stock held by the 401(k) Plan/ESOP. However, each participant in the 401(k) Plan/ESOP may direct the trustee regarding how to vote the shares of Hawthorne Financial common stock allocated to his or her 401(k) Plan/ESOP account. The proxy card instructs the trustee to vote these shares in accordance with the voting instructions noted on the proxy card.

If a participant’s proxy card is properly completed, signed and returned, the trustee will vote the shares allocated to his or her 401(k) Plan/ESOP account in accordance with the participant’s direction. Pursuant to the terms of the 401(k) Plan/ESOP:

Actuarial Consultants, Inc. has been specially designated as the servicer for the 401(k) Plan/ESOP and will report the voting results to the 401(k) Plan/ESOP trustee. The servicer must have ample time to tabulate votes and to deliver to the trustee the aggregate votes on behalf of the participants of the 401(k)/ESOP Plan. THEREFORE, A PARTICIPANT’S PROXY CARD SHOULD BE RECEIVED BY THE SERVICER NO LATER THAN TUESDAY, MAY 18, 2004.

A participant may change his or her voting instructions by executing and delivering to the servicer a duly executed proxy card or written instruction no later than Tuesday, May 18, 2004 at the following address:

Under the terms of the 401(k) Plan/ESOP, only the trustee can vote the shares held under the 401(k) Plan/ESOP, even if a participant attends the special meeting in person.

Hawthorne Financial has instructed the servicer and the trustee to keep voting directions confidential and not to reveal participants’ voting instructions, except for aggregate voting totals for participants, which may be revealed to Hawthorne Financial.

If you hold shares of Hawthorne Financial common stock through the Hawthorne Financial Employee Stock Purchase Plan (“ESPP”), you will have received with this joint proxy statement/prospectus a proxy card that reflects all of the shares of Hawthorne Financial common stock that you own through the ESPP. Under the terms of the ESPP, Hawthorne Savings, the administrator of the ESPP, votes all shares of Hawthorne Financial common stock held by the ESPP. However, each participant in the ESPP may direct the administrator regarding how to vote the shares of Hawthorne Financial common stock allocated to his or her ESPP account. The proxy card instructs the administrator to vote these shares in accordance with the voting instructions noted on the proxy card.

If the proxy card is properly completed, signed and returned by a participant, the administrator will vote the shares allocated to his or her account under the ESPP in accordance with the directions noted on the proxy card.

If a participant’s proxy card: (1) is signed and returned without a voting direction, (2) is returned unsigned, or (3) is not returned at all, the administrator will not vote the shares of Hawthorne Financial common stock allocated to his or her account in the ESPP.

If a participant directs the administrator to abstain from voting, the administrator will abstain from voting such shares, and the shares will not be voted.

Actuarial Consultants, Inc. has been specially designated as the servicer for the ESPP and will report the voting results to the ESPP administrator. The servicer must have ample time to tabulate votes and to deliver to the administrator the aggregate votes on behalf of the participants of the ESPP. THEREFORE, A PARTICIPANT’S PROXY CARD SHOULD BE RECEIVED BY THE SERVICER NO LATER THAN TUESDAY, MAY 18, 2004.

Under the terms of the ESPP, only the administrator can vote the shares held under the ESPP, even if a participant attends the special meeting in person.

Hawthorne Financial has instructed the servicer to keep voting directions confidential and not to reveal participants’ voting instructions, except for aggregate voting totals for participants, which may be revealed to Hawthorne Financial.

Recommendations of the Commercial Capital and Hawthorne Financial Boards of Directors

Commercial Capital. The Commercial Capital board of directors has unanimously approved the merger agreement and the transactions contemplated by the merger agreement. Based on Commercial Capital’s reasons for the merger described in this document, the Commercial Capital board of directors believes that the merger is in the best interests of Commercial Capital stockholders. Accordingly, the Commercial Capital board of directors unanimously recommends that Commercial Capital stockholders vote “FOR” approval of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement. See “The Merger—Commercial Capital’s Reasons for the Merger” beginning on page 31.

Hawthorne Financial. The Hawthorne Financial board of directors has unanimously approved the merger agreement and the transactions contemplated by the merger agreement. Based on Hawthorne Financial’s reasons for the merger described in this document, the Hawthorne Financial board of directors has approved the merger agreement and believes that the merger is advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders. Accordingly, the Hawthorne Financial board of directors unanimously recommends that Hawthorne Financial stockholders vote “FOR” approval and adoption of the merger agreement. See “The Merger—Hawthorne Financial’s Reasons for the Merger” beginning on page 32.

Contact for Hawthorne Financial stockholders regarding questions and requests

Contact for Commercial Capital stockholders regarding questions and requests

The following information describes the material aspects of the merger agreement and the merger. This description does not purport to be complete and is qualified in its entirety by reference to the annexes to this document, including the merger agreement. Stockholders of Commercial Capital and Hawthorne Financial are urged to carefully read the annexes in their entirety.

Under the terms and conditions set forth in the merger agreement, Hawthorne Financial will be merged with and into Acquisition Corp. At the effective time of the merger, each share of common stock of Hawthorne Financial, par value $0.01 per share, outstanding immediately before the effective time of the merger (except for shares held in treasury) will, by virtue of the merger and without any action on the part of a Hawthorne Financial stockholder, be converted into the right to receive 1.9333 shares of Commercial Capital common stock, subject to possible adjustment under certain circumstances, plus cash in lieu of any fractional share interest.

If, between the date of the merger agreement and the effective time of the merger, the shares of Commercial Capital common stock are changed into a different number or class of shares by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or a stock dividend thereon is declared with a record date within this period, the 1.9333 exchange ratio will be adjusted accordingly. The exchange ratio also could be subject to possible adjustment under the termination provisions of the merger agreement, as discussed under “—Termination of the Merger Agreement” beginning on page 58.

From time to time, the board of directors of Hawthorne Financial has considered various strategic alternatives to enhance and to maximize stockholder value. These strategic alternatives have included continuing as an independent institution, establishing or acquiring additional branch offices and other small banks and entering into a strategic merger with a similarly-sized or larger institution. The Hawthorne Financial board has also sought to enhance stockholder value through its share repurchase programs.

The Hawthorne Financial board has also observed the considerable consolidation in the financial institutions industry occurring in recent years. As a result, the Hawthorne Financial board has monitored and explored expansion and acquisition opportunities for several years and has also considered from time to time that the sale of Hawthorne Financial might at some point be in the best interest of its stockholders.

In addition, as part of its effort to enhance stockholder value, the Hawthorne Financial board of directors, at past annual strategic planning sessions, had discussed exploring strategic alternatives, and had also authorized Hawthorne Financial management to explore strategic alternatives. As a result, Hawthorne Financial’s management has been conferring with Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) on various strategic alternatives. Sandler O’Neill is an investment banking firm which has previously advised Hawthorne Financial on a variety of competitive and financial matters and from time to time had advised the Hawthorne Financial board on the market pricing for acquisitions of companies comparable to Hawthorne Financial and of periodic exploratory contacts received from potential merger and acquisition partners or their representatives in connection with a possible acquisition of Hawthorne Financial. Sandler O’Neill was subsequently formally engaged with respect to the proposed merger with Commercial Capital.

On October 24, 2003, Stephen H. Gordon, chairman and chief executive officer of Commercial Capital, contacted Timothy R. Chrisman, Hawthorne Financial’s chairman, and Sandler O’Neill, and stated his belief that a combination of Hawthorne Financial and Commercial Capital would be advantageous to both companies’ stockholders. Mr. Gordon was aware that Hawthorne Financial had publicly disclosed in its third quarter 2003 earnings release that it was actively seeking the opportunity to acquire other financial institutions that would provide significant earnings accretion to its earnings per share. Mr. Chrisman responded that Commercial Capital should provide a written expression of interest to Hawthorne Financial’s board of directors.

On November 4, 2003, Mr. Chrisman had a meeting with Mr. Gordon to further discuss a potential combination of the two institutions. Mr. Gordon and Mr. Chrisman discussed the operations and businesses of both Hawthorne Financial and Commercial Capital. Mr. Gordon reiterated Commercial Capital’s interest in acquiring Hawthorne Financial. On November 18, 2003, Hawthorne Financial’s board of directors held a meeting, at which Mr. Chrisman informed the board of Commercial Capital’s potential interest in acquiring Hawthorne Financial, but that specifics regarding terms and pricing had not yet been discussed.

In a letter dated November 20, 2003 to Mr. Chrisman, Mr. Gordon indicated Commercial Capital’s interest in acquiring Hawthorne Financial in a stock-for-stock merger. The letter did not contain pricing terms, but suggested that further analysis and due diligence of Hawthorne Financial by Commercial Capital would be necessary in order for Commercial Capital to provide pricing and other terms in connection with a potential acquisition of Hawthorne Financial. On November 21, 2003, Mr. Chrisman and Ms. Simone Lagomarsino, Hawthorne Financial’s president and chief executive officer, agreed, subject to negotiation and execution of a confidentiality agreement, to provide Commercial Capital with confidential information in order for it to conduct its required due diligence. On November 26, 2003, Hawthorne Financial and Commercial Capital Bancorp executed a confidentiality agreement, and on the same date, Ms. Lagomarsino provided certain confidential information about Hawthorne Financial to Commercial Capital.

In a letter dated December 3, 2003, Commercial Capital formally expressed its preliminary interest in acquiring Hawthorne in a stock-for-stock merger, whereby Hawthorne Financial stockholders would receive 1.50 shares of Commercial Capital stock (with an implied value of $32.25 per share based upon Commercial Capital’s closing stock price as of December 3, 2003) for each share of Hawthorne Financial common stock owned by them, subject to a satisfactory due diligence review of Hawthorne Financial and the negotiation of a definitive agreement. The letter requested a response from the Hawthorne Financial board within 24 hours or the offer would be deemed to have expired.

On December 4, 2003, at a previously scheduled telephonic credit committee meeting, Hawthorne Financial’s board discussed Commercial Capital’s proposal. The Hawthorne Financial board of directors believed that before it could entertain a proposal from Commercial Capital, it would be necessary for it to analyze Commercial Capital’s business plan and stock valuation. At the same meeting, Hawthorne Financial’s board discussed the fact that Hawthorne Financial’s management would be presenting Hawthorne Financial’s 2004 strategic plan at the December 18, 2003 board meeting, and that this presentation would provide a basis for determining whether remaining independent or merging with Commercial Capital would be in the Hawthorne Financial stockholders’ best interests. The Hawthorne Financial board determined that it would consider Commercial Capital’s proposal at its December 18th meeting and authorized Hawthorne Financial management to obtain additional information about Commercial Capital’s business plan. The Hawthorne Financial board also discussed whether Hawthorne Financial should seek offers from another institution and concluded that Hawthorne Financial was not actively seeking a buyer. However, the Hawthorne Financial board did authorize Sandler O’Neill to contact one identified institution in order to see if it had interest in acquiring Hawthorne Financial for a premium similar to that proposed by Commercial Capital.

Sandler O’Neill informed Mr. Gordon of the Hawthorne Financial board’s decision and Mr. Gordon accordingly withdrew the proposal set forth in Commercial Capital’s December 3, 2003 letter. Mr. Gordon advised Sandler O’Neill that Commercial Capital remained interested in discussing an acquisition with Hawthorne Financial and agreed to provide Hawthorne Financial’s board of directors with additional information to enable them to review a possible transaction. On December 10, 2003, Hawthorne Financial and Commercial Capital Bancorp executed a second confidentiality agreement and Commercial Capital provided certain confidential information to the Hawthorne Financial board.

On December 18, 2003, the Hawthorne Financial board of directors held a meeting at which management presented an analysis of Hawthorne Financial’s 2003 performance relative to its 2003 strategic plan and the Hawthorne Financial board approved management’s strategic plan for 2004. Thereafter, during the same

meeting, the Hawthorne Financial board met with representatives of Sandler O’Neill to consider a combination with Commercial Capital based on the terms outlined in the December 3 letter. Sandler O’Neill discussed its analysis of Hawthorne Financial as a stand-alone company based on the proposed 2004 budget and a potential combination with Commercial Capital. Sandler O’Neill reported to the Hawthorne Financial board that the identified acquiror had indicated it would not be able to respond for an indefinite period of time. After the presentations, there was a consensus among the members of the Hawthorne Financial board that Hawthorne Financial should continue to proceed with the discussion of a possible merger with Commercial Capital. The Hawthorne Financial board authorized Sandler O’Neill to contact representatives of Credit Suisse First Boston, Commercial Capital’s independent financial advisor, to arrange a meeting of Mr. Gordon and the Hawthorne Financial board.

On January 15, 2004, Hawthorne Financial’s board of directors, its legal representatives and Sandler O’Neill held a meeting to obtain and consider more information about Commercial Capital. Mr. Chrisman reported that since the December 3 preliminary proposal, Commercial Capital’s stock price had increased significantly, and, therefore, the exchange ratio of 1.50 now represented a more substantial premium of approximately 30% over the market price of Hawthorne Financial common stock.

On the same day, the Hawthorne Financial board met with representatives of senior management of Commercial Capital and representatives of Credit Suisse First Boston. During this meeting, Commercial Capital’s management team responded to questions presented by Hawthorne Financial’s board of directors and discussed Commercial Capital’s strategic plan and intentions with respect to the integration of the two companies if a merger were to be consummated. Following the meeting with Commercial Capital’s management team, Hawthorne Financial’s board of directors met with Sandler O’Neill to review the combination proposal. At the conclusion of the meeting, Hawthorne Financial’s board of directors authorized Sandler O’Neill to seek an offer from Commercial Capital with respect to a merger of the two companies.

On January 16, 2004, Sandler O’Neill contacted Mr. Gordon and Credit Suisse First Boston to discuss the pricing and terms of a transaction between Hawthorne Financial and Commercial Capital. On January 17, 2004, the Hawthorne Financial board of directors held a meeting via telephonic conference call. During the call, Sandler O’Neill reported that Commercial Capital had indicated that it was willing to offer an exchange ratio of 1.40 shares of Commercial Capital common stock (with an implied value of $34.50 per share based on Commercial Capital’s closing stock price as of January 16, 2003) for each share of Hawthorne Financial common stock and was prepared to increase the size of the Commercial Capital board from seven to nine and provide Hawthorne Financial with the opportunity to select three persons to serve as directors of the combined company. Despite the increased implied value per share, the Hawthorne Financial board indicated its unwillingness to accept the lower exchange ratio of 1.40.

Subsequent to this meeting, Sandler O’Neill discussed alternatives with Mr. Gordon, who indicated that the Commercial Capital board of directors might be willing to offer an increased exchange ratio of 1.45, with an implied value per share of $36.05. The Hawthorne Financial board then considered a transaction using a 1.45 exchange ratio. The Hawthorne Financial board noted that when the 1.50 exchange offer was made, the value to the Hawthorne Financial stockholders was $32.25 per share. Even though the exchange ratio now being proposed was lower, the implied value per share to the Hawthorne Financial stockholders was significantly higher, at approximately $36.05 per share. The Hawthorne Financial board then unanimously agreed to proceed with the due diligence process and to negotiate a definitive agreement for the proposed merger with Commercial Capital.

From January 18, 2004 to January 23, 2004, Commercial Capital and Hawthorne Financial conducted a due diligence review of each other. From January 18, 2004 to January 27, 2004, management of both Hawthorne Financial and Commercial Capital and their respective legal representatives and investment bankers negotiated the merger agreement and related documents.

On January 25, 2004, Hawthorne Financial’s legal representatives reviewed with the Hawthorne Financial board the status of the merger negotiations with, and due diligence review of, Commercial Capital. The

Hawthorne Financial board also discussed the structure of the Commercial Capital board and the independence of the proposed Hawthorne Financial director nominees. The Hawthorne Financial board unanimously concluded that it was very important that the board of directors of the combined company after the merger be independent and that at least six of the nine directors be independent. To ensure the independence of the Hawthorne Financial designees, the Hawthorne Financial board asked the three proposed nominees for director, Mr. Chrisman, Mr. Anthony Liberati and Mr. Gary Brummett, to agree not to take any action that would cause them not to be independent. Each of the proposed nominees agreed, and the Hawthorne Financial board unanimously voted to propose Messrs. Chrisman, Liberati and Brummett to serve as the representatives of the Hawthorne Financial stockholders on the Commercial Capital board of directors after the merger.

On January 27, 2004, Hawthorne Financial’s board held a regularly scheduled meeting at which its legal representatives and Sandler O’Neill participated. During this meeting, Sandler O’Neill delivered its oral opinion, subsequently confirmed in writing, that, as of such date and based upon and subject to the matters stated in the opinion, the exchange ratio of 1.9333 shares of Commercial Capital common stock (which has been adjusted to reflect Commercial Capital’s 4:3 stock split effected in February 2004) to be received by Hawthorne Financial stockholders for each outstanding share of Hawthorne Financial common stock owned was fair to such stockholders from a financial point of view. Legal counsel then reviewed in detail with the board the terms of the merger agreement and the ancillary agreements.

Based upon the Hawthorne Financial board’s review and discussion of the merger agreement, the opinion of Sandler O’Neill and other relevant factors (described below in “—Hawthorne Financial’s Reasons for the Merger”), the Hawthorne Financial board, by unanimous vote of all directors, authorized and approved the execution of the merger agreement with Commercial Capital.

On January 25, 2004, Commercial Capital’s board of directors held a special meeting at which its legal representatives and representatives of Credit Suisse First Boston participated. Legal counsel reviewed in detail with the Commercial Capital board the terms of the merger agreement and the ancillary agreements. The meeting was then adjourned until January 27, 2004, to coincide with Hawthorne Financial’s regularly scheduled board meeting. At the re-convened meeting at which Commercial Capital’s legal representatives and representatives of Credit Suisse First Boston participated, representatives of Credit Suisse First Boston delivered its oral opinion, subsequently confirmed in writing, that, as of such date and based upon and subject to the matters stated in the opinion, the exchange ratio of 1.9333 shares of Commercial Capital common stock (which has been adjusted to reflect Commercial Capital’s 4:3 stock split effected in February 2004) to be issued to Hawthorne Financial stockholders for each outstanding share of Hawthorne Financial common stock owned was fair to Commercial Capital from a financial point of view.

Based upon Commercial Capital’s board’s review and discussion of the merger agreement, the opinion of Credit Suisse First Boston and other relevant factors (described below in “—Commercial Capital’s Reasons for the Merger”), Commercial Capital’s board, by unanimous vote of all directors, authorized and approved the execution of the merger agreement with Hawthorne Financial.

On January 27, 2004, Commercial Capital and Hawthorne Financial executed a definitive merger agreement. A joint press release was issued that afternoon by Commercial Capital and Hawthorne Financial announcing the proposed merger.

Commercial Capital’s board of directors, at its meeting held on January 27, 2004, considered the merger agreement and determined it to be fair, and in the best interests of Commercial Capital and its stockholders, clients and employees. In reaching its determination, the Commercial Capital board of directors consulted with

Commercial Capital management, as well as its financial and legal advisors regarding the financial fairness of the exchange ratio and the terms of the merger agreement, and considered a number of factors. Listed below are the material factors that Commercial Capital’s board of directors considered in their decision. Commercial Capital’s board of directors did not assign any specific or relative weight to the factors listed below.

The Commercial Capital board of directors believes that the merger is in the best interests of Commercial Capital and its stockholders. Accordingly, the Commercial Capital board of directors has unanimously approved the merger agreement and unanimously recommends that Commercial Capital stockholders vote “FOR” approval of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement.

The Hawthorne Financial board of directors believes that the merger is advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders. Accordingly, the Hawthorne Financial board of directors has unanimously approved the merger agreement and unanimously recommends that Hawthorne Financial stockholders vote “FOR” approval and adoption of the merger agreement.

In the course of reaching its determination, the Hawthorne Financial board of directors consulted with legal counsel with respect to their legal and fiduciary duties and the terms of the merger agreement. The board also consulted with their financial advisor with respect to the financial aspects of the transaction and the fairness of the exchange ratio from a financial point of view.

The following discussion of the information and factors considered by the board is not intended to be exhaustive, but does include the material factors considered. In reaching its determination that the merger is

advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders, the Hawthorne Financial board considered the following:

In addition to taking into account the foregoing factors, Hawthorne Financial’s board also considered the following potentially negative factors in reaching its decision to approve the merger agreement:

The foregoing discussion of the information and factors considered by the Hawthorne Financial board includes the primary material factors that the board considered. In view of the variety of factors considered in connection with its evaluation of the merger, the board did not find it practicable to, and did not, quantify or otherwise assign relative or specific weight or values to any of these factors, although individual directors may have given different weights to different factors. The board considered all of the factors as a whole and considered the factors in their totality to be favorable to, and to support the decision to approve, the merger agreement and the merger and to recommend their approval to the Hawthorne Financial stockholders.

The Hawthorne Financial board of directors has approved the merger agreement and believes that the merger is advisable and fair to, and in the best interests of, Hawthorne Financial and its stockholders. Accordingly, the Hawthorne Financial board of directors unanimously recommends that Hawthorne Financial stockholders vote “FOR” approval and adoption of the merger agreement.

Commercial Capital retained Credit Suisse First Boston to act as its financial advisor in connection with the merger. In connection with Credit Suisse First Boston’s engagement, Commercial Capital requested that Credit Suisse First Boston evaluate the fairness of the exchange ratio set forth in the merger agreement to Commercial Capital, from a financial point of view. On January 27, 2004, the Commercial Capital board of directors met to review the proposed merger and the terms of the merger agreement. During this meeting, Credit Suisse First Boston reviewed with the board of directors certain financial analyses and rendered its oral opinion to the Commercial Capital board of directors, subsequently confirmed in writing, that, as of January 27, 2004, and based upon and subject to the various considerations set forth in the Credit Suisse First Boston opinion, the exchange ratio was fair to Commercial Capital, from a financial point of view.

The full text of the Credit Suisse First Boston opinion, which sets forth, among other things, assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Credit Suisse First Boston in rendering its opinion, is attached as Annex B to this joint proxy statement/prospectus and is incorporated by reference in its entirety. Commercial Capital stockholders are urged to, and should, read the Credit Suisse First Boston opinion carefully and in its entirety. The Credit Suisse First Boston opinion addresses only the fairness of the exchange ratio to Commercial Capital, from a financial point of view, as of the date of the Credit Suisse First Boston opinion, and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matter relating to the merger. The summary of the Credit Suisse First Boston opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the Credit Suisse First Boston opinion.

In connection with its review, Credit Suisse First Boston did not assume any responsibility for independent verification of any of the foregoing information and relied on such information being complete and accurate in all material respects. With respect to the financial forecasts that Credit Suisse First Boston reviewed, Credit Suisse First Boston was advised by the managements of Commercial Capital and Hawthorne Financial, and Credit Suisse First Boston assumed, that such forecasts (and adjustments thereto) had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements of Commercial Capital and Hawthorne Financial as to the future financial performance of Commercial Capital and Hawthorne Financial, respectively. In addition, Credit Suisse First Boston also relied, without independent verification, upon the views of Commercial Capital’s management relating to the synergistic values and operating cost savings (including the amount, timing and achievability thereof) anticipated to result from the combination of the operations of Commercial Capital and Hawthorne Financial.

Credit Suisse First Boston assumed, with the consent of Commercial Capital, that the merger will be treated as a tax-free reorganization for federal income tax purposes. Credit Suisse First Boston also assumed, with Commercial Capital’s consent, that in the course of obtaining any necessary regulatory and third party approvals and consents for the merger, no modification, delay, limitation, restriction or condition will be imposed that will have an adverse effect on Commercial Capital or Hawthorne Financial or the contemplated benefits of the merger, and that the merger will be consummated in accordance with the terms of the merger agreement, without waiver, amendment or modification of any material terms, conditions or agreements contained in the merger agreement. In addition, Credit Suisse First Boston was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Commercial Capital or Hawthorne Financial, nor was Credit Suisse First Boston furnished with any such evaluations or appraisals. The Credit Suisse First Boston opinion is necessarily based upon information made available to it as of the date of its opinion, and upon financial, economic, market and other conditions as they existed and could be evaluated on the date of the Credit Suisse First Boston opinion. Credit Suisse First Boston did not express any opinion as to what the actual value of Commercial Capital common stock will be when issued to holders of Hawthorne Financial common stock pursuant to the merger or the prices at which such Commercial Capital common stock will trade at any time. The Credit Suisse First Boston opinion does not address the relative merits of the merger as compared to other business strategies that might be available to Commercial Capital, nor does it address the underlying business decision of Commercial Capital to proceed with the merger.

In preparing its opinion, Credit Suisse First Boston performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Credit Suisse First Boston believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors, could create a misleading view of the processes underlying the Credit Suisse First Boston opinion. No company or transaction used in the analyses performed by Credit Suisse First Boston as a comparison is identical to Commercial Capital, Hawthorne Financial or the contemplated merger. In addition, Credit Suisse First Boston may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described below should not be taken to be Credit Suisse First Boston’s view of the actual value of Commercial Capital or Hawthorne Financial. The analyses performed by Credit Suisse First Boston are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the value of businesses or assets do not purport to be appraisals or to necessarily reflect the prices at which businesses or assets may actually be sold. The analyses performed were prepared solely as part of Credit Suisse First Boston’s

analysis of the fairness of the exchange ratio to Commercial Capital, from a financial point of view, and were provided to the board of directors of Commercial Capital in connection with the delivery of the Credit Suisse First Boston opinion.

The following is a summary of material financial analyses performed by Credit Suisse First Boston in connection with the preparation of its opinion, and reviewed with the Commercial Capital board of directors at a meeting of the Commercial Capital board of directors held on January 27, 2004. Certain of the following summaries of financial analyses that were performed by Credit Suisse First Boston include information presented in tabular format. In order to understand fully the material financial analyses that were performed by Credit Suisse First Boston, the tables should be read together with the text of each summary. The tables alone do not constitute a complete description of the material financial analyses. All per share information for Commercial Capital presented below gives effect to its 4:3 stock split which was effected on February 20, 2004.

Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Credit Suisse First Boston calculated certain implied equity values per share of Commercial Capital and Hawthorne Financial based on financial forecasts for Commercial Capital that were provided by Commercial Capital’s management and financial forecasts for Hawthorne Financial that were derived from First Call mean estimates. First Call is a recognized data service that monitors and publishes compilations of earnings estimates by selected research analysts regarding companies of interest to institutional investors. The discounted cash flow analysis was based on various operating assumptions discussed with and approved by Commercial Capital’s management, including assumptions relating to, among other items, tangible common leverage, cost of funds, effective tax rate and asset and earnings growth. Credit Suisse First Boston’s analysis used discount rates ranging from 10.0% to 14.0% and terminal price to earnings multiples of 12.0x to 16.0x for Commercial Capital and used discount rates ranging from 9.0% to 12.0% and terminal price to earnings multiples of 10.0x to 14.0x for Hawthorne Financial. The following table summarizes the results of this analysis:

As illustrated by the tables, Credit Suisse First Boston derived an implied range of values per share of Commercial Capital common stock of $19.30 to $30.66 and an implied range of values per share of Hawthorne Financial common stock of $29.37 to $45.14. These ranges implied a range of exchange ratios of 0.958x to 2.339x.

Discounted Cash Flow with Cost Savings Analysis. Using a discounted cash flow analysis, Credit Suisse First Boston calculated certain implied equity values per share of Hawthorne Financial based on financial forecasts for Hawthorne Financial that were derived from First Call mean estimates. The model takes into account the estimated cost savings resulting from the acquisition which were discussed with Commercial Capital’s management, with 25% of such cost savings phased in during the third quarter of 2004, 50% in the fourth quarter of 2004 and 100% thereafter. The discounted cash flow with cost savings analysis was based on various operating assumptions discussed with and approved by Commercial Capital’s management, including assumptions relating to, among other items, tangible common leverage, cost of funds, effective tax rate and asset and earnings growth. Credit Suisse First Boston’s analysis used discount rates ranging from 9.0% to 12.0% and terminal price to earnings multiples of 10.0x to 14.0x. The following table summarizes the results of this analysis:

As illustrated by the table, Credit Suisse First Boston derived an implied range of values per share of Hawthorne Financial common stock, with cost savings, of $34.39 to $52.79. This range, together with the range of values per share of Commercial Capital common stock implied by the discounted cash flow analysis described in “Discounted Cash Flow Analysis” above, implied a range of exchange ratios of 1.122x to 2.735x.

Comparable Company Trading Analysis. Credit Suisse First Boston reviewed and compared certain financial and stock market information of Commercial Capital and Hawthorne Financial to the publicly available corresponding data for the following publicly traded commercial banking organizations that Credit Suisse First Boston determined were comparable to Commercial Capital and Hawthorne Financial:

Such information included, among other things, the values of several financial metrics for the companies in each peer group, including prices per share as a multiple of estimated earnings per share for calendar years 2004 and 2005 and market value as a multiple of book value and tangible book value. The multiples were calculated using publicly available financial information and publicly available forecasts provided by First Call for calendar years 2004 and 2005 and closing stock prices as of January 23, 2004. The following table summarizes the results of this analysis and provides a calculation of the implied price per Commercial Capital share based on the estimated earnings per share of Commercial Capital for calendar years 2004 and 2005 derived from Commercial

Capital’s management forecasts and the book value and tangible book value of Commercial Capital per share as of December 31, 2003 multiplied by the corresponding values for its peer group. The following table also summarizes the results of this analysis and provides a calculation of the implied price per Hawthorne Financial share based on the estimated earnings per share of Hawthorne Financial for calendar years 2004 and 2005 derived from First Call mean estimates and the book value and tangible book value of Hawthorne Financial per share as of December 31, 2003 multiplied by the corresponding values for its peer group. The following tables summarize the results of this analysis.

Based on this analysis, Credit Suisse First Boston derived an implied range of values per share of Hawthorne Financial common stock of $24.95 to $32.91 and an implied range of values per share of Commercial Capital common stock of $15.65 to $20.74. These ranges implied a range of exchange ratios of 1.203x to 2.103x.

No company utilized as a comparison in the comparable company trading analysis is identical to Commercial Capital or Hawthorne Financial. Mathematical analysis, such as determining the average or the median, is not in itself a meaningful method of using comparable company trading data.

Contribution Analysis. Credit Suisse First Boston performed a contribution analysis in which it analyzed historical and estimated future financial information of Commercial Capital and Hawthorne Financial and the pro forma combined company. The analysis was based on the relative contributions of each party to outstanding shares of common stock, loans, deposits, assets, common equity, tangible common equity as of December 31, 2003 and net income for the years ended December 31, 2002 and 2003 and estimated net income for the years 2004 and 2005. The estimated net income of Commercial Capital was based on Commercial Capital’s management forecasts and estimates of net income for Hawthorne Financial were based on both Hawthorne Financial’s management forecasts and First Call mean estimates. The following table summarizes the results of this analysis:

Credit Suisse First Boston noted that the contribution analysis for estimated net income in 2004 and 2005 implies a range of exchange ratios of 1.579x to 2.153x and that the historical earnings contributions for the years ended December 31, 2002 and 2003 and balance sheet contributions as of December 31, 2003 imply a range of exchange ratios of 3.407x to 6.513x.

Historical Exchange Ratio Analysis. Credit Suisse First Boston calculated the average ratio of Commercial Capital’s closing share price to Hawthorne Financial’s closing share price for each day during various periods ended January 23, 2004. The following table summarizes the results of this analysis:

Credit Suisse First Boston noted that the historical exchange ratio analysis implied a range of exchange ratios of 1.464x to 4.924x and implied an average exchange ratio of 2.955x.

Precedent US Thrift M&A Transactions Analysis. Credit Suisse First Boston reviewed certain publicly announced transactions in which public companies in the commercial banking industry were acquired. These included 13 transactions with transaction values greater than $200,000,000 announced during 2003.

Credit Suisse First Boston reviewed various multiples of announced transaction value to the target companies’ (i) latest twelve months, or LTM, earnings per share, or EPS, calculated in accordance with accounting principles generally accepted in the United States of America, (ii) estimated forward one-year EPS from SNL Financial calculated in accordance with accounting principles generally accepted in the United States of America, (iii) book value and (iv) tangible book value. In addition, Credit Suisse First Boston reviewed the premium to the target companies’ core deposits implied by the announced transaction values. This premium was determined by subtracting a target company’s tangible equity from the applicable announced transaction value and dividing that result by the target company’s total core deposits. Credit Suisse First Boston then computed median multiples and core deposit premiums for these transactions. These multiples and premiums were applied to Hawthorne Financial’s publicly disclosed financial information as of and for the twelve months ended December 31, 2003 and to Hawthorne Financial’s forward one year EPS based on financial forecasts for Hawthorne Financial that were derived from First Call mean estimates.

As illustrated in the following table, Credit Suisse First Boston derived an implied range of values per share of Hawthorne Financial common stock of $26.16 to $43.21 based upon median multiples for the precedent transactions and an implied range of exchange ratios of 1.351x to 2.231x.

Credit Suisse First Boston’s opinion and presentation to the Commercial Capital board of directors was one of many factors taken into consideration by the Commercial Capital board of directors in making its determination to engage in the merger. Consequently, the analyses described above should not be viewed as determinative of the opinion of the Commercial Capital board of directors or the management of Commercial Capital with respect to the value of Hawthorne Financial or whether the Commercial Capital board of directors would have been willing to agree to a different exchange ratio.

The Commercial Capital board of directors retained Credit Suisse First Boston to act as its financial advisor in connection with the merger. Credit Suisse First Boston was selected by the Commercial Capital board of directors based on Credit Suisse First Boston’s qualifications, expertise and reputation. Credit Suisse First Boston is an internationally recognized investment banking and advisory firm. Credit Suisse First Boston, as part of its investment banking business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Credit Suisse First Boston and its affiliates have in the past provided financial and investment banking services to Commercial Capital unrelated to the merger and may in the future provide certain investment banking and financial services to Commercial Capital and its affiliates for which it would expect to receive compensation. In the ordinary course of its business, Credit Suisse First Boston and its affiliates may actively trade the debt and equity securities of both Commercial Capital and Hawthorne Financial for Credit Suisse First Boston’s and its affiliates’ own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

Pursuant to an engagement letter dated as of November 20, 2003, Commercial Capital engaged Credit Suisse First Boston to provide financial advisory services to the Commercial Capital board of directors in connection with the merger, including, among other things, rendering its opinion. Pursuant to the terms of the engagement letter, Commercial Capital has agreed to pay Credit Suisse First Boston a customary fee in connection therewith, a significant portion of which is contingent upon the consummation of the merger. In addition, Commercial Capital has agreed to reimburse Credit Suisse First Boston for its out-of-pocket expenses, including attorney’s fees, incurred in connection with its engagement and to indemnify Credit Suisse First Boston and certain related persons against certain liabilities and expenses arising out of or in conjunction with its rendering of services under its engagement, including liabilities arising under the federal securities laws.

By letter dated January 20, 2004, Hawthorne Financial retained Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) to act as its financial advisor in connection with a possible business combination with another financial institution. Sandler O’Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Sandler O’Neill acted as financial advisor to Hawthorne Financial in connection with the proposed merger and participated in certain of the negotiations leading to the merger agreement. At the January 27, 2004 meeting at which Hawthorne Financial’s board considered and approved the merger agreement, Sandler O’Neill delivered to the board its oral opinion, subsequently confirmed in writing, that, as of such date, the exchange ratio was fair to Hawthorne Financial’s shareholders from a financial point of view. The full text of Sandler O’Neill’s opinion is attached as Annex C to this joint proxy statement/prospectus. Sandler O’Neill’s January 27, 2004 opinion was provided prior to Commercial Capital’s announcement of a 4:3 stock split, and certain calculations in that opinion (notably the calculation of the exchange ratio), therefore, do not reflect the stock split. As noted below, where applicable, the calculations included in this section have been adjusted to give effect to Commercial Capital’s stock split. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. We urge Hawthorne Financial shareholders to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to the Hawthorne Financial board and is directed only to the fairness of the exchange ratio to Hawthorne Financial shareholders from a financial point of view. It does not address the underlying business decision

of Hawthorne Financial to engage in the merger or any other aspect of the merger and is not a recommendation to any Hawthorne Financial shareholder as to how such shareholder should vote at the special meeting with respect to the merger or any other matter.

In connection with rendering its opinion, Sandler O’Neill reviewed and considered, among other things:

Sandler O’Neill also discussed with certain members of senior management of Hawthorne Financial the business, financial condition, results of operations and prospects of Hawthorne Financial and held similar discussions with certain members of senior management of Commercial Capital regarding the business, financial condition, results of operations and prospects of Commercial Capital. In connection with its engagement, at the request of Hawthorne Financial’s board of directors, Sandler O’Neill made inquiry of another financial institution regarding its interest in a possible transaction; however, Sandler O’Neill was not asked to, and did not, solicit indications of interest in a potential transaction from other third parties. The Hawthorne Financial board of directors did not otherwise limit the investigations made or the procedures followed by Sandler O’Neill in giving its opinion.

In performing its reviews and analyses and in rendering its opinions, Sandler O’Neill assumed and relied upon the accuracy and completeness of all the financial information, analyses and other information that was publicly available or otherwise furnished to, reviewed by or discussed with it and further relied on the assurances of senior management of Hawthorne Financial and Commercial Capital that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. Sandler O’Neill was not asked to and did not independently verify the accuracy or completeness of any of such information and they did not assume any responsibility or liability for its accuracy or completeness. Sandler O’Neill did not make an independent

evaluation or appraisal of the assets, the collateral securing assets or the liabilities, contingent or otherwise, of Hawthorne Financial or Commercial Capital or any of their respective subsidiaries, or the collectibility of any such assets, nor was it furnished with any such evaluations or appraisals. Sandler O’Neill is not an expert in the evaluation of allowances for loan losses and it did not make an independent evaluation of the adequacy of the allowance for loan losses of Hawthorne Financial or Commercial Capital, nor did it review any individual credit files relating to Hawthorne Financial or Commercial Capital. With Hawthorne Financial’s consent, Sandler O’Neill assumed that the respective allowances for loan losses for both Hawthorne Financial and Commercial Capital were adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. In addition, Sandler O’Neill did not conduct any physical inspection of the properties or facilities of Hawthorne Financial or Commercial Capital.

Sandler O’Neill’s opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of the opinion. Sandler O’Neill assumed, in all respects material to its analysis, that all of the representations and warranties contained in the merger agreement and all related agreements are true and correct, that each party to such agreements will perform all of the covenants required to be performed by such party under such agreements and that the conditions precedent in the merger agreement are not waived. Sandler O’Neill also assumed, with Hawthorne Financial’s consent, that there had been no material change in Hawthorne Financial’s and Commercial Capital’s assets, financial condition, results of operations, business or prospects since the date of the last financial statements made available to them, that Hawthorne Financial and Commercial Capital will remain as going concerns for all periods relevant to its analyses, and that the merger will qualify as a tax-free reorganization for federal income tax purposes. With Hawthorne Financial’s consent, Sandler O’Neill relied upon the advice Hawthorne Financial received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement.

In rendering its January 27, 2004 opinion, Sandler O’Neill performed a variety of financial analyses. The following is a summary of the material analyses performed by Sandler O’Neill, but is not a complete description of all the analyses underlying Sandler O’Neill’s opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. All per share information for Commercial Capital presented below gives effect to its 4:3 stock split which was effected on February 20, 2004. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to Hawthorne Financial or Commercial Capital and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Hawthorne Financial or Commercial Capital and the companies to which they are being compared.

The earnings projections used and relied upon by Sandler O’Neill for Hawthorne Financial and Commercial Capital in its analyses were based upon internal financial projections for the respective companies prepared and furnished by the managements of Hawthorne Financial and Commercial Capital. With respect to such financial projections and all of Commercial Capital’s projections of transaction costs, purchase accounting adjustments and expected cost savings relating to the merger, the managements of the respective institutions confirmed to Sandler O’Neill that they reflected the best currently available estimates and judgments of such managements of the future financial performance of Hawthorne Financial and Commercial Capital, respectively, and Sandler O’Neill assumed for purposes of its analyses that such performances would be achieved. Sandler O’Neill expressed no opinion as to such financial projections or the assumptions on which they were based.

In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Hawthorne Financial, Commercial Capital and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the Hawthorne Financial board at the board’s January 27^th meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of Hawthorne Financial’s common stock or Commercial Capital’s common stock or the prices at which Hawthorne Financial’s or Commercial Capital’s common stock may be sold at any time.

Summary of Proposal. Sandler O’Neill reviewed the financial terms of the proposed transaction. Based upon the closing price of Commercial Capital’s common stock on January 27, 2004 of $19.61 and the exchange ratio of 1.9333, Sandler O’Neill calculated an implied transaction value of $37.92 per share. Based upon financial information for Hawthorne Financial for the twelve months ended December 31, 2003, Sandler O’Neill calculated the following ratios:

For purposes of Sandler O’Neill’s analyses, earnings per share were based on fully diluted earnings per share. The aggregate transaction value was approximately $487 million, based upon 11.7 million shares of Hawthorne Financial common stock outstanding and including the intrinsic value of options to purchase an aggregate of 0.9 million shares with a weighted average strike price of $13.68 and warrants to purchase 0.5 million shares with a strike price of $1.419. Sandler O’Neill noted that the transaction value represented a 25.3% premium over the January 27, 2004 closing price of Hawthorne Financial’s common stock.

Stock Trading History. Sandler O’Neill reviewed the history of the reported trading prices and volume of Hawthorne Financial’s common stock and Commercial Capital’s common stock and the relationship between the movements in the prices of Hawthorne Financial’s common stock and Commercial Capital’s common stock, respectively, to movements in certain stock indices, including the Standard & Poor’s 500 Index, the Nasdaq Bank Index, the Standard & Poor’s Bank Index and the median performance of a composite peer group of publicly traded savings institutions selected by Sandler O’Neill. During the one year period ended January 23, 2004, Hawthorne Financial’s common stock outperformed each of the indices to which it was compared. During the approximately thirteen month period commencing with the completion of Commercial Capital’s initial public offering and ending January 23, 2004, Commercial Capital’s common stock outperformed each of the indices to which it was compared.

Hawthorne Financial’s and Commercial Capital’s One-Year Stock Performance

Comparable Company Analysis. Sandler O’Neill used publicly available information to compare selected financial and market trading information for Hawthorne Financial, Commercial Capital and two groups of financial institutions selected by Sandler O’Neill. The first group, or Peer Group, consisted of the following publicly traded savings institutions with total assets between $1 billion and $8 billion:

Sandler O’Neill also compared Hawthorne Financial and Commercial Capital to a group of publicly traded savings institutions that had a return on average equity (based on last twelve months’ earnings) greater than 15% and a price-to-tangible book value greater than 200%. This High Performing Group was comprised of the following institutions:

The analysis compared publicly available financial information for Hawthorne Financial and Commercial Capital and the median data for each group as of and for each of the years ended December 31, 1998 through 2003 (or, in cases where the December data was not yet available, the 12 months ended September 30, 2003).

The table below sets forth the comparative data as of and for the twelve months ended December 31, 2003, with pricing data as of January 27, 2004.

Analysis of Selected Merger Transactions. Sandler O’Neill reviewed 37 merger transactions announced nationwide from January 1, 2003 through January 23, 2004 involving savings institutions as acquired institutions with transaction values greater than $15 million. Sandler O’Neill also reviewed five merger transactions announced during the same period involving savings institutions in West Coast states (California, Oregon and Washington) with transaction values greater than $15 million. Sandler O’Neill reviewed the multiples of transaction price at announcement to last twelve months’ earnings per share, transaction price at announcement to estimated current year earnings per share, transaction price to book value per share, transaction price to tangible book value per share, tangible book premium to core deposits and premium to market price and computed high, low, mean and median multiples and premiums for the transactions. The median multiples were applied to Hawthorne Financial’s financial information as of and for the twelve months ended December 31, 2003. As illustrated in the following table, Sandler O’Neill derived an imputed range of values per share of Hawthorne Financial’s common stock of $26.90 to $44.14 based upon the median multiples for nationwide savings institution transactions and $22.63 to $38.30 based upon the median multiples for West Coast savings institution transactions. The implied transaction value of the merger as calculated by Sandler O’Neill was $37.92 per share.

Discounted Dividend Stream and Terminal Value Analysis. Sandler O’Neill performed an analysis that estimated the future stream of after-tax dividend flows of Hawthorne Financial through December 31, 2007 under various circumstances, assuming Hawthorne Financial’s projected dividend stream and that Hawthorne Financial performed in accordance with the earnings projections reviewed with management. For periods after 2005, Sandler O’Neill assumed an annual earnings per share growth rate of approximately 11%. To approximate the terminal value of Hawthorne Financial common stock at December 31, 2007, Sandler O’Neill applied price/earnings multiples ranging from 10x to 20x and multiples of tangible book value ranging from 100% to 350%. The dividend income streams and terminal values were then discounted to present values using different discount rates ranging from 9% to 15% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Hawthorne Financial common stock. As illustrated in the following tables, this analysis indicated an imputed range of values per share of Hawthorne Financial common stock of $20.38 to $50.51 when applying the price/earnings multiples and $14.87 to $64.49 when applying multiples of tangible book value. The implied transaction value of the merger as calculated by Sandler O’Neill was $37.92 per share.

Sandler O’Neill performed a similar analysis that estimated the future stream of after-tax dividend flows of Commercial Capital through December 31, 2006 under various circumstances, assuming Commercial Capital’s projected dividend stream and that Commercial Capital performed in accordance with the earnings projections reviewed with management. For periods after 2005, Sandler O’Neill assumed an annual earnings per share growth rate of approximately 25%. To approximate the terminal value of Commercial Capital common stock at December 31, 2006, Sandler O’Neill applied price/earnings multiples ranging from 10x to 20x and multiples of tangible book value ranging from 200% to 700%. The dividend income streams and terminal values were then discounted to present values using different discount rates ranging from 9% to 15% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Commercial Capital common stock. As illustrated in the following table, this analysis indicated an imputed range of values per share of Commercial Capital common stock of $13.15 to $30.89 when applying the price/earnings multiples and $10.55 to $43.38 when applying multiples of tangible book value.

In connection with its analyses, Sandler O’Neill considered and discussed with the Hawthorne Financial Board how the present value analyses would be affected by changes in the underlying assumptions, including variations with respect to net income, growth rate of earnings per share and dividend payout ratio. Sandler O’Neill noted that the discounted dividend stream and terminal value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Contribution Analysis. Sandler O’Neill reviewed the relative contributions to be made by Hawthorne Financial and Commercial Capital to the combined institution based on financial information of both companies as of or for the year ended December 31, 2003. The percentage of pro forma shares owned was determined using the exchange ratio of 1.9333. This analysis indicated that the implied contributions to the combined entity were as follows:

Pro Forma Merger Analysis. Sandler O’Neill analyzed certain potential pro forma effects of the merger, assuming the following: (1) the merger closes in the second quarter of 2004, (2) 100% of the Hawthorne Financial shares are exchanged for Commercial Capital common stock at an exchange ratio of 1.9333, (3) earnings per share projections for Hawthorne Financial and Commercial Capital are consistent with internal projections as discussed with management of both companies for 2004 and 2005, and (4) purchase accounting adjustments, charges and transaction costs associated with the merger and cost savings determined by the senior management of Commercial Capital. The analysis indicated that for the year ending December 31, 2005, the merger would be approximately 7% accretive to Commercial Capital’s projected earnings per share and approximately 14% accretive to Hawthorne Financial’s earnings per share. The analysis also indicated that at June 30, 2004 (the assumed closing date for the transaction), the merger would be approximately 32% accretive to Commercial Capital’s tangible book value per share and approximately 38% dilutive to Hawthorne Financial’s tangible book value per share.

In connection with its analyses, Sandler O’Neill considered and discussed with the Hawthorne Financial Board how the pro forma analyses would be affected by changes in the underlying assumptions, including variations with respect to the growth rate of earnings per share of each company. Sandler O’Neill noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

Hawthorne Financial has agreed to pay Sandler O’Neill a customary transaction fee in connection with the merger, a significant portion of which is contingent upon consummation of the merger, and has also paid Sandler O’Neill for rendering its opinion. Hawthorne Financial has also agreed to reimburse certain of Sandler O’Neill’s reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify Sandler O’Neill and its affiliates and their respective partners, directors, officers, employees, agents, and controlling persons against certain expenses and liabilities, including liabilities under securities laws.

Sandler O’Neill has in the past provided other investment banking services to Hawthorne Financial and received compensation for such services. Sandler O’Neill has also in the past provided certain investment banking services to Commercial Capital, including managing Commercial Capital’s initial public offering completed in December 2002, and received compensation for such services, and they may provide, and receive compensation for, such services in the future, including during the period prior to the closing of the merger. In the ordinary course of its business as a broker-dealer, Sandler O’Neill may purchase securities from and sell securities to Hawthorne Financial and Commercial Capital and their respective affiliates and may actively trade the debt and/or equity securities of Hawthorne Financial and Commercial Capital and their respective affiliates for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

Structure. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A. Please read the entire merger agreement. It is the legal document that governs the merger. We are proposing a merger whereby Hawthorne Financial will merge with and into Acquisition Corp. with Acquisition Corp. as the surviving entity. Simultaneously with, or as soon as practicable after, this merger, Acquisition Corp. shall be merged with and into Commercial Capital with Commercial Capital as the surviving entity. In addition, as soon as practicable after the merger between Acquisition Corp. and Commercial Capital, Hawthorne Savings shall be merged with and into Commercial Capital Bank with Commercial Capital Bank as the surviving entity.

Merger Consideration. The merger agreement provides that each share of Hawthorne Financial common stock outstanding immediately prior to the effective time of the merger shall be converted into, and shall be cancelled in exchange for, the right to receive 1.9333 shares of Commercial Capital common stock (subject to possible adjustment in certain circumstances).

Hawthorne Financial stockholders should not return their Hawthorne Financial stock certificates with the enclosed proxy, and stock certificates should not be forwarded to Commercial Capital, Hawthorne Financial or any other party until Hawthorne Financial stockholders have received the letter of transmittal, which will be sent to them after we complete the merger.

Fractional Shares. Commercial Capital will not issue any fractional shares of its common stock in the merger. Instead, a Hawthorne Financial stockholder who would have otherwise received a fraction of a share of Commercial Capital common stock will receive an amount in cash, without interest, determined by multiplying the fractional share interest to which such stockholder would otherwise be entitled by the closing price of a share of Commercial Capital common stock on the Nasdaq National Market on the business day preceding the closing of the merger, rounded to the nearest whole cent.

Treasury Shares. Upon consummation of the merger, any shares of Hawthorne Financial common stock that are owned by Hawthorne Financial as treasury stock will be canceled and retired and no merger consideration will be given with respect to those shares.

Procedures for the Exchange of Hawthorne Financial Common Stock Certificates

Within five business days after the completion of the merger, the exchange agent, selected by Commercial Capital and reasonably acceptable to Hawthorne Financial, will mail to each holder of record of shares of Hawthorne Financial common stock a letter of transmittal and instructions for surrendering certificates representing shares of Hawthorne Financial common stock in exchange for Commercial Capital common stock. Upon surrender of a stock certificate of Hawthorne Financial common stock for exchange and cancellation to the exchange agent, together with a duly executed letter of transmittal, the holder of such certificate will be entitled to receive the merger consideration and the certificate for Hawthorne Financial common stock so surrendered will be canceled. No interest will be paid or accrued on any cash that is provided in lieu of fractional shares.

No stock certificates representing fractional shares of Commercial Capital common stock will be issued upon the surrender for exchange of Hawthorne Financial stock certificates. In lieu of the issuance of any such fractional share, Commercial Capital will pay to each former stockholder of Hawthorne Financial who otherwise would be entitled to receive a fractional share of Commercial Capital common stock an amount in cash determined by multiplying the fraction of a share of Commercial Capital common stock which such holder would otherwise be entitled to receive pursuant to the merger agreement by the closing price of a share of Commercial Capital common stock on the Nasdaq National Market on the business day preceding the effective time of the merger, as reported in The Wall Street Journal (or if not reported therein, as reported in another authoritative source) rounded to the nearest whole cent.

After completion of the merger, no transfers of Hawthorne Financial common stock issued and outstanding immediately prior to the completion of the merger will be allowed. Hawthorne Financial stock certificates that are presented for transfer after the completion of the merger will be canceled and exchanged for Commercial Capital stock certificates, plus cash in lieu of any fractional share interest as described above.

Commercial Capital will only issue a Commercial Capital stock certificate in a name other than the name in which a surrendered Hawthorne Financial stock certificate is registered if you present the exchange agent with all documents required to show and effect the unrecorded transfer of ownership of the shares of Hawthorne Financial common stock formerly represented by such Hawthorne Financial stock certificate, and show that you paid any applicable stock transfer taxes.

If your Hawthorne Financial stock certificate has been lost, stolen or destroyed, you may be required to deliver an affidavit and a lost certificate bond as a condition to receiving any Commercial Capital stock certificate to which you may be entitled.

Stock Options. At the effective time of the merger, each option to purchase Hawthorne Financial common stock granted under Hawthorne Financial’s stock option plan, which is then vested and exercisable without regard to the merger, will cease to represent a right to acquire shares of Hawthorne Financial common stock and will be converted automatically into an option to purchase shares of Commercial Capital common stock, and Commercial Capital will assume each such Hawthorne Financial stock option, in accordance with the terms of the Hawthorne Financial stock option plan and stock option agreement by which it is evidenced, except that from and after the effective time of the merger:

At the effective time of the merger, each option to purchase Hawthorne Financial common stock granted under Hawthorne Financial’s stock option plans, which is not vested and exercisable except as a result of the merger will not be assumed by Commercial Capital or otherwise continued in effect following the effective time. Therefore, in accordance with the terms of Hawthorne Financial’s stock option plans and the applicable stock option agreements, each such option will become fully vested and exercisable immediately prior to the effective time of the merger and either will be exercised or will terminate at the effective time.

Warrants. At the effective time of the merger, each warrant to purchase shares of Hawthorne Financial common stock which is outstanding and unexercised immediately prior thereto will cease to represent a right to acquire shares of Hawthorne Financial common stock and will be converted automatically into a warrant to purchase shares of Commercial Capital common stock, and Commercial Capital will assume each Hawthorne Financial warrant, in accordance with the terms of the applicable warrant agreement by which it is evidenced, except that from and after the effective time of the merger:

Pursuant to the merger agreement, Commercial Capital agreed to register under the Securities Act of 1933, as amended, (the “Securities Act”) the shares of Commercial Capital common stock issuable upon exercise of stock options and warrants as described above within ten business days after consummation of the merger.

Completion of the merger is subject to the satisfaction of certain conditions set forth in the merger agreement, or the waiver of such conditions by the party entitled to do so, at or before the closing date of the merger. Each of the parties’ obligation to consummate the merger under the merger agreement is subject to the following conditions:

In addition to the foregoing conditions, the obligation of Commercial Capital to consummate the merger under the merger agreement is subject to the following conditions, which may be waived by Commercial Capital:

In addition to the other conditions set forth above, the obligation of Hawthorne Financial to consummate the merger under the merger agreement is subject to the following conditions, which may be waived by Hawthorne Financial:

Under the terms of the merger agreement, a material adverse effect on either Commercial Capital or Hawthorne Financial is defined to mean any effect that (i) is material and adverse to the financial position, results of operations or business of such entity and its subsidiaries taken as a whole or (ii) would materially impair the ability of such entity and its subsidiaries to perform their respective obligations under the merger agreement or otherwise materially impede the consummation of the merger. However, under the terms of the merger agreement, none of the following would be deemed to constitute a material adverse effect on any entity:

Consummation of the transactions contemplated by the merger agreement is subject to receipt of prior regulatory approval of the Office of Thrift Supervision (“OTS”). The parties have agreed to use their reasonable best efforts to obtain all regulatory approvals necessary to consummate the transactions contemplated by the merger agreement.

Office of Thrift Supervision. Pursuant to the merger agreement, Hawthorne Financial will merge with and into Acquisition Corp. to be immediately followed by the merger of Acquisition Corp. with and into Commercial Capital. In addition, the parties currently intend to merge Hawthorne Savings with and into Commercial Capital Bank. The foregoing mergers are subject to the prior approval of the OTS under the Home Owners’ Loan Act and the Bank Merger Act. Commercial Capital and Commercial Capital Bank have filed all required applications with the OTS to obtain prior approval for the mergers. In reviewing applications under the Home Owners’ Loan Act and the Bank Merger Act, the OTS considers:

Under the Community Reinvestment Act of 1977, as amended, the OTS must also take into account the record of performance of each of the merging banks in meeting the credit needs of the entire community, including low and moderate income neighborhoods served by each institution. The regulations of the OTS also require the publication of notice and the opportunity for public comments relating to the application for approval. The OTS may hold formal or informal meetings, if deemed appropriate, to consider these comments. Any such comments or meetings could prolong the period during which the application is subject to review by the OTS.

Any transaction approved by the OTS may not be completed until 30 days after the date of the OTS approval, during which time the U.S. Department of Justice may challenge such transaction on antitrust grounds. With the concurrence of the OTS and the U. S. Department of Justice, the OTS may reduce the waiting period to no less than 15 days after its approval.

Other Regulatory Approvals. Commercial Capital is not aware of any other regulatory approvals that would be required for completion of the merger except as described above. If any other approvals are required, it is presently contemplated that those approvals would be sought. There can be no assurance that any other approvals, if required, will be obtained.

The merger cannot proceed in the absence of the applicable regulatory approvals described above. There can be no assurance that all requisite approvals will be obtained, that such approvals will be received on a timely basis or that such approvals will not impose conditions or requirements which, individually or in the aggregate, would so materially reduce the economic or business benefits of the transactions contemplated by the merger agreement to Commercial Capital that had such condition or requirement been known, Commercial Capital, in its reasonable judgment, would not have entered into the merger agreement. If any such condition or requirement is imposed, Commercial Capital may elect not to consummate the merger. See “ —Conditions to the Merger” beginning on page 52.

The approval of any regulatory application merely implies the satisfaction of regulatory criteria for approval, which do not include review of the merger from the standpoint of the adequacy of the consideration to be received by Hawthorne Financial stockholders. Further, regulatory approvals do not constitute an endorsement or recommendation of the merger by the regulatory agency.

The merger agreement contains certain covenants of the parties regarding the conduct of their respective businesses pending consummation of the merger. These covenants, which are contained in Article IV of the merger agreement included as Annex A hereto, are briefly described below.

Pending consummation of the merger, Hawthorne Financial may not, and will cause each of its subsidiaries not to, among other things, take the following actions without the prior written consent of Commercial Capital:

The merger agreement also provides that pending consummation of the merger, Commercial Capital may not, and will cause each of its subsidiaries not to, take the following actions without the prior written consent of Hawthorne Financial:

Covenant of the Boards of Directors of Commercial Capital and Hawthorne Financial to Hold Stockholder Meetings and Recommend the Merger Agreement

Pursuant to the merger agreement, the Commercial Capital board of directors is required to call a meeting of its stockholders and recommend that its stockholders approve the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement at all times prior to and during its meeting of stockholders at which such issuance is to be considered by them.

In addition, pursuant to the merger agreement, the Hawthorne Financial board of directors is required to call a meeting of its stockholders and recommend that its stockholders approve and adopt the merger agreement at all times prior to and during its meeting of stockholders at which the merger agreement is to be considered by them.

Notwithstanding the foregoing, nothing in the merger agreement prevents the Commercial Capital board of directors or the Hawthorne Financial board of directors from withholding, withdrawing, amending or modifying their respective recommendation if it determines, after consultation with its outside counsel, that the failure to take such action would breach or would reasonably be expected to result in a breach of the directors’ fiduciary duties to their respective stockholders under applicable law.

Each of Commercial Capital and Hawthorne Financial has agreed that it will, and will direct and use its reasonable best efforts to cause its affiliates, directors, officers, employees, agents and representatives to, immediately cease any discussions or negotiations with any other party that may be ongoing with respect to an acquisition proposal (as defined below), and to use its reasonable best efforts to enforce any confidentiality or similar agreement relating to any acquisition proposal, including by requiring other parties to promptly return or destroy any confidential information previously furnished.

In addition, neither party may, nor may it authorize or permit any of its or its subsidiaries’ directors, officers or employees, or any investment banker, financial advisor, attorney, accountant or other representative to:

(1) initiate, solicit, encourage, or take any other action designed to facilitate or that is likely to result in, any inquiries or the making of any proposal or offer that constitutes, or is reasonably likely to lead to, an acquisition proposal from a third party;

(2) provide any confidential information or data to any person relating to an acquisition proposal;

(3) participate in any discussions or negotiations concerning any acquisition proposal;

(4) except in the limited circumstances when Hawthorne Financial may terminate the merger agreement in order to accept a superior proposal from another bidder, approve or recommend, propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement related to an acquisition proposal; or

(5) make any statement, recommendation or solicitation in support of any acquisition proposal;

unless, prior to the date of its respective stockholder meeting, a party’s board of directors determines in good faith, after consulting with its outside legal and financial advisors, that the failure to do so would breach or would be reasonably expected to result in a breach of its fiduciary duties under applicable law, then such party may respond to an unsolicited acquisition proposal that its board believed in good faith constituted a superior proposal.

Each party also agreed to notify the other party immediately if any such inquiries, proposals or offers are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, it or any of its representatives.

The term “acquisition proposal” is defined in the merger agreement as any inquiry, proposal or offer, filing of any regulatory application or notice, or disclosure of an intention to do any of the foregoing from any person relating to (a) the direct or indirect acquisition or purchase of a business that constitutes a substantial portion of net revenues, net income or assets of a party, (b) the direct or indirect acquisition of 10% or more of the voting power of a party, (c) a tender or exchange offer that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of a party or (d) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving either party other than the transactions contemplated by the merger agreement.

The term “superior proposal” is defined in the merger agreement as a bona fide written proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for consideration of cash and/or securities, more than 50% of the combined voting power of a party’s common stock then outstanding, or all or substantially all of a party’s consolidated assets, which, after taking into account all legal, financial, regulatory and other aspects of the proposal and the person making the proposal, its board of directors concludes in good faith (a) would be more favorable to its stockholders, from a financial point of view, than the merger, (b) is reasonably capable of being consummated on its terms and (c) is fully financed or capable of being fully financed.

Commercial Capital and Hawthorne Financial have each agreed to use their reasonable best efforts in good faith to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper, desirable, or advisable under applicable laws to permit consummation of the merger as promptly as practicable and otherwise to enable consummation of the merger.

The merger agreement contains additional mutual covenants, including covenants relating to (i) the filing of a registration statement to register the shares of Commercial Capital common stock to be issued in the merger of which this joint proxy statement/prospectus is a part, (ii) cooperation regarding press releases and other public statements with respect to the merger, (iii) cooperation regarding access to the other party’s books, records, properties and personnel, (iv) the modification of certain Hawthorne Financial’s policies and practices so as to

be applied on a consistent basis with that of Commercial Capital, (v) the notification by one party to the other of any fact, event or circumstance that is reasonably likely to result in a material adverse effect with respect to it or would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement, (vi) matters relating to Section 16 under the Securities and Exchange Act of 1934, as amended (“Exchange Act”) (vii) the removal of any condition, restriction or requirement imposed in connection with the regulatory approvals required to consummate the merger, (viii) the delivery by Hawthorne Financial to Commercial Capital of estoppel letters from all tenants of real estate owned by Hawthorne Financial and all landlords with respect to real estate leased by Hawthorne Financial, and (ix) the assumption by Commercial Capital of Hawthorne Financial’s indenture obligations in connection with the trust preferred securities.

Pursuant to the merger agreement, Commercial Capital and Hawthorne Financial made certain customary representations and warranties relating to their respective companies, subsidiaries, businesses and matters related to the merger. For detailed information concerning these representations and warranties, reference is made to Article V of the merger agreement included as Annex A hereto. Such representations and warranties generally must remain accurate through the completion of the merger unless the fact or facts that caused a breach of a representation and warranty has not had or is not reasonably likely to have a material adverse effect on the party making the representation and warranty. See “—Conditions to the Merger” beginning on page 52.

The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware, unless a different date and time is specified as the effective time in such document. The certificate of merger will be filed only after the satisfaction or waiver of all conditions to the merger set forth in the merger agreement on (i) a date selected by Commercial Capital after such satisfaction or waiver, which is no later than five business days after such satisfaction or waiver or (ii) such other date as Commercial Capital and Hawthorne Financial may mutually agree upon, provided that in either case, such date shall be no less than 10 days following the special meeting of Hawthorne Financial stockholders.

A closing will take place immediately prior to the effective time of the merger or on such other date as Commercial Capital and Hawthorne Financial may mutually agree upon.

To the extent permitted under applicable law, the merger agreement may be amended at any time by written agreement of the parties whether before or after the approval of the stockholders of Hawthorne Financial, except that after stockholders of Hawthorne Financial have approved the merger agreement no amendment which by law requires further approval by the stockholders of Hawthorne Financial may be made without obtaining such approval.

The “index ratio” will be calculated by dividing the peer group index by 1.00.

The “peer group index” will be the sum of the products derived by multiplying the corresponding weighting factor of each peer group member by the quotient obtained by dividing such peer group member’s average closing common stock price for a period of 20 consecutive trading days ending on the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods, by such peer group member’s closing common stock price on the January 27, 2004, the date the merger agreement was executed. Below are the peer members and their corresponding weighting factor:

If each condition in (1) and (2) under the last bullet point on page 59 occurs, Hawthorne Financial has the right to terminate the merger agreement without any action by Hawthorne Financial stockholders. If necessary, this decision will be made by the Hawthorne Financial board of directors in light of the circumstances existing at that time. There can be no assurance that the Hawthorne Financial board of directors will exercise its right to terminate the merger agreement if such conditions occurred. If Hawthorne Financial elected not to exercise its right to terminate the merger agreement, the exchange ratio would remain 1.9333 and the dollar value of the consideration which the stockholders of Hawthorne Financial would receive for each share of Hawthorne Financial common stock would be the value of 1.9333 shares of Commercial Capital common stock at the effective time of the merger.

If Hawthorne Financial elects to exercise its right to terminate the merger agreement pursuant to the last bullet point on page 59, it must give written notice to Commercial Capital. During the five-day period after receipt of such notice, Commercial Capital has the option to increase the consideration payable to Hawthorne Financial stockholders by adjusting the exchange ratio to equal the lesser of (i) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the product of the $19.61, 0.80, and the exchange ratio (as then in effect) and the denominator of which is Commercial Capital’s average closing sales price, and (ii) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the (A) difference between the index ratio and (B) 0.20, multiplied by the product of (1) the exchange ratio (as then in effect) and (2) $19.61, and the denominator of which is Commercial Capital’s average closing sales price.

Commercial Capital is under no obligation to adjust the exchange ratio and there can be no assurance that Commercial Capital will elect to adjust the exchange ratio if Hawthorne Financial were to exercise its option to terminate the merger agreement. Any such decision would be made by Commercial Capital in light of the circumstances existing at the time Commercial Capital has the opportunity to make such an election. If Commercial Capital elects to adjust the exchange ratio within the five-day period, it must give Hawthorne

Financial prompt notice of that election and the adjusted exchange ratio, in which case Hawthorne Financial will not have any right to terminate the merger agreement as a result of the circumstances described above.

The operation of the conditions permitting Hawthorne Financial to terminate the merger agreement based on a decrease in the market price of Commercial Capital common stock reflects the parties’ agreement that stockholders of Hawthorne Financial would assume the risk of a modest decline in value of Commercial Capital common stock (up to a 20.0% decline from the starting price of $19.61 per share) under any circumstances and that Hawthorne Financial’s stockholders would not assume the risk of a more significant decline in value of Commercial Capital common stock unless the percentage decline in the value of Commercial Capital common stock for the period of 20 consecutive trading days ending on the date all regulatory approvals for the merger have been obtained, without regard to any requisite waiting periods, represents a decline that is more than 20.0% greater than the percentage decrease, if any, in an index value of specified publicly-traded banking stocks during such period. The premise of this agreement is that declines in value of Commercial Capital common stock which are comparable to the declines in the value of an index of publicly-traded banking stocks is indicative of a broad-based change in market and economic conditions affecting publicly-traded banking stocks in general, including Commercial Capital and Hawthorne Financial rather than factors which are specifically attributable to the value of Commercial Capital common stock.

The operation and effect of the provisions of the merger agreement dealing with a decline in the market price of Commercial Capital common stock may be illustrated by the following three scenarios:

(1) Commercial Capital’s average closing sales price is below $19.61 but is not less than $15.69. Under such circumstances Commercial Capital’s average closing sales price would not be less than 80.0% of $19.61. As a result, there would be no adjustment to the 1.9333 exchange ratio and Hawthorne Financial would be obligated to consummate the merger regardless of the change in the index value (assuming all other conditions to Hawthorne Financial’s obligations were satisfied or waived).

(2) Commercial Capital’s average closing sales price declines to less than $15.69 and the index value also declines but the percentage decline in the price of Commercial Capital common stock is not more than 20.0% greater than the percentage decline in the index value. Under such circumstances there would be no adjustment to the 1.9333 exchange ratio and Hawthorne Financial would be obligated to consummate the merger (assuming all other conditions to Hawthorne Financial’s obligations were satisfied or waived).

(3) Commercial Capital’s average closing sales price declines to less than $15.69 and the percentage decline in the price of Commercial Capital common stock is more than 20.0% greater than the percentage decline in the index value. Under such circumstances, Hawthorne Financial would have the right but not the obligation to terminate the merger agreement unless Commercial Capital elected to increase the exchange ratio equal to the lesser of (i) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the product of the $19.61, 0.80, and the exchange ratio (as then in effect) and the denominator of which is Commercial Capital’s average closing sales price, and (ii) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the (A) difference between the index ratio and (B) 0.20, multiplied by the product of (1) the exchange ratio (as then in effect) and (2) $19.61, and the denominator of which is Commercial Capital’s average closing sales price.

Hawthorne Financial stockholders should be aware that whether Hawthorne Financial can terminate the merger agreement and receive a subsequent increase, if any, in the exchange ratio paid by Commercial Capital, will be based on Commercial Capital’s average closing sales price defined above as the average of the closing sale prices of the Commercial Capital common stock on the Nasdaq National Market for a period of 20 consecutive trading days ending on the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods. Accordingly, because the market price of the Commercial Capital common stock will fluctuate and possibly decline between the date the last required regulatory approval for the merger is obtained, without regard to any required waiting periods, and the effective time of the merger, as well as on the date certificates representing shares of Commercial Capital common stock are delivered in exchange for

shares of Hawthorne Financial common stock following consummation of the merger, the value of Commercial Capital common stock actually received by holders of Hawthorne Financial common stock may be more or less than (i) Commercial Capital’s average closing sales price and (ii) the value of Commercial Capital common stock at the effective time of the merger resulting from the exchange ratio or any possible adjustment to the exchange ratio as illustrated above.

In the event of termination, the merger agreement will become null and void, except that certain provisions thereof relating to expenses and confidentiality will survive any such termination and any such termination will not relieve any breaching party from liability for any willful breach of any covenant, undertaking, representation or warranty giving rise to such termination.

The merger agreement provides that Hawthorne Financial must pay Commercial Capital an $18.0 million termination fee under the circumstances and in the manner described below:

and in each of (1), (2) or (3) above, an “acquisition proposal” (as defined under “— No Solicitation” on page 56) shall have been publicly announced or otherwise communicated or made known to the senior management or the board of directors of Hawthorne Financial (or any person shall have publicly announced, communicated or made known an intention, whether or not conditional, to make an acquisition proposal) at any time after the date of the merger agreement and prior to the time that stockholders of Hawthorne Financial vote on the merger agreement or the date of termination of the merger agreement, as applicable, and within 15 months after such termination, Hawthorne Financial enters into an agreement with respect to a “control transaction” (defined below) or consummates a “control transaction” which is the subject of an acquisition proposal, then Hawthorne Financial shall pay to Commercial Capital the termination fee on the date of execution of such agreement or consummation of a “control transaction” which is the subject of an acquisition proposal, as applicable, provided that if the date of execution of such agreement is after 9 months but within 15 months after such termination of the merger agreement, the termination fee shall be payable by Hawthorne Financial to Commercial Capital only upon consummation of a “control transaction” which is the subject of an acquisition proposal, regardless whether such consummation occurs within 15 months after termination of the merger agreement. “Control transaction” is defined in the merger agreement to mean the acquisition by purchase, merger, consolidation, sale, transfer or otherwise in one transaction or any related series of transactions of a majority of the voting power of the outstanding securities of Hawthorne Financial or Hawthorne Savings or substantially all of the assets of Hawthorne Financial or Hawthorne Savings.

In addition, the merger agreement provides that Commercial Capital must pay Hawthorne Financial an $18.0 million termination fee under the circumstances and in the manner described below:

and in each of (1), (2) or (3) above, an “acquisition proposal” (as defined under “—No Solicitation” on page 56) shall have been publicly announced or otherwise communicated or made known to the senior management or the board of directors of Commercial Capital (or any person shall have publicly announced, communicated or made known an intention, whether or not conditional, to make an acquisition proposal) at any time after the date of the merger agreement and prior to the time that stockholders of Commercial Capital vote on the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement or the date of termination of the merger agreement, as applicable, and within 15 months after such termination, Commercial Capital enters into an agreement with respect to a control transaction or consummates a control transaction which is the subject of an acquisition proposal, then Commercial Capital shall pay to Hawthorne Financial the termination fee on the date of execution of such agreement or consummation of a control transaction which is the subject of an acquisition proposal, as applicable, provided that if the date of execution of such agreement is after 9 months but within 15 months after such termination of the merger agreement, the termination fee shall be payable by Commercial Capital to Hawthorne Financial only upon consummation of a control transaction which is the subject of an acquisition proposal, regardless whether such consummation occurs within 15 months after termination of the merger agreement.

Any termination fee that becomes payable pursuant to the merger agreement shall be paid by wire transfer of immediately available funds to an account designated by the receiving party.

If either party fails to timely pay the termination fee to the other party, the party required to make such payment will be obligated to pay the costs and expenses incurred by the other party to collect such payment, together with interest.

If the merger agreement is terminated by either Commercial Capital or Hawthorne Financial due to a breach of a representation, warranty, covenant or undertaking, the party committing such breach shall pay a termination fee of $4.0 million to the other party, without prejudice to the rights of Commercial Capital or Hawthorne Financial to receive the $18.0 million termination fee set forth above. Under no circumstances, however, shall Commercial Capital or Hawthorne Financial be able to collect more than $18.0 million as a termination fee.

Board of Directors of Commercial Capital and Commercial Capital Bank after the Merger

Commercial Capital has agreed that after the merger its board of directors will consist of nine directors. Three of the directors will be designated by Hawthorne Financial. Hawthorne Financial has designated Timothy R. Chrisman, Gary W. Brummett and Anthony W. Liberati. Commercial Capital has agreed to appoint the Hawthorne Financial designees to the Commercial Capital board of directors immediately after the effective time of the merger and, subject to the fiduciary duties of the Commercial Capital board of directors, to include the Hawthorne Financial designees on the list of nominees for director at Commercial Capital’s 2005 annual meeting of stockholders.

Currently, Commercial Capital’s board of directors consists of two classes. The articles of incorporation of Commercial Capital require that if the board consists of nine or more directors, the board shall be divided into three classes. The merger agreement provides that Commercial Capital shall re-classify its board of directors into three classes at its 2005 annual meeting of stockholders and, subject to the fiduciary duties of the Commercial Capital board of directors, undertake to have one of each of the Hawthorne Financial designees in each of such classes.

The merger agreement also provides that upon consummation of the merger of Hawthorne Savings with and into Commercial Capital Bank, the three Hawthorne Financial designees discussed above will be appointed to Commercial Capital Bank’s board of directors.

Commercial Capital also agreed, subject to the fiduciary duties of its board of directors, that if one of the Hawthorne Financial designees dies or becomes incapacitated prior to the closing of the merger, the remaining Hawthorne Financial designees will recommend to the Commercial Capital board of directors a person to serve as successor, provided that person is reasonably acceptable to the Commercial Capital board of directors.

In December 1995, Hawthorne Financial sold “investment units” in a private placement offering. Pursuant to an agreement entered into in connection with the offering, Fort Pitt Fund, L.P. is entitled to recommend one person for nomination by the Hawthorne Financial board of directors for election as a director until such time as it no longer owns 220,000 shares of Hawthorne Financial common stock. In connection with this right, Fort Pitt Fund has recommended Harry F. Radcliffe, its general partner, as its nominee. Simultaneously with the execution of the merger agreement, Fort Pitt Fund executed a termination agreement with Hawthorne Financial and Hawthorne Savings whereby Fort Pitt Fund, L.P. agreed that its right to nominate a director would terminate concurrently with the consummation of the merger.

In consideration of the termination agreement, Commercial Capital agreed, subject to the fiduciary duties of its board of directors, that if, during the term prior to the 2005 annual meeting or the term immediately following the 2005 annual meeting, any one of the Hawthorne Financial designees vacates his seat on the Commercial Capital board of directors for any reason, to appoint Harry Radcliffe to replace the vacating director, provided that at the time of the appointment, Mr. Radcliffe (or a member of his immediate family or a family trust) owns at least 133,333 shares of Commercial Capital common stock (as adjusted to give effect to Commercial Capital’s 4:3 stock split effected in February 2004). In addition, if there is a vacancy on its board of directors during the first initial term or the longest term that any of the Hawthorne Financial designees is elected to at the Commercial Capital 2005 annual meeting of stockholders, Commercial Capital agreed to consider Mr. Radcliffe to fill the vacancy, so long as Mr. Radcliffe, or a member of his immediate family or family trust, continues to own at least 133,333 shares of Commercial Capital common stock (as adjusted to give effect to Commercial Capital’s 4:3 stock split effected in February 2004).

Commercial Capital also agreed that for a period of one year from the consummation of the merger, it would not take any action which would cause any of the Hawthorne Financial designees to fail to be an “independent” director for purposes of the Exchange Act, the regulations promulgated thereunder and the rules of the Nasdaq National Market. In addition, Commercial Capital agreed that from the closing of the merger until its 2005 annual meeting, the number of directors on its board who are “independent” for purposes of the Exchange Act, the regulations promulgated thereunder and the rules of the Nasdaq National Market will not be less than two-thirds of its entire board.

Interests of Certain Hawthorne Financial Directors and Executive Officers in the Merger

When considering the recommendation of the Hawthorne Financial board of directors with respect to approving and adopting the merger agreement, Hawthorne Financial stockholders should be aware that the directors and executive officers of Hawthorne Financial have interests in the merger as individuals which are in addition to, or different from, their interests as stockholders. The Hawthorne Financial board of directors was aware of these factors and considered them, among other matters, in approving the merger agreement and the merger. These interests are described below.

Stock Options and Warrants. The merger agreement provides that at the effective time of the merger, each outstanding and unexercised option to purchase shares of Hawthorne Financial common stock granted pursuant to the Hawthorne Financial stock option plan that is vested and exercisable without regard to the merger will cease to represent the right to acquire shares of Hawthorne Financial common stock and will be converted into and become a right to acquire shares of Commercial Capital common stock, with the same terms as previously in effect, except that the number of shares subject to such converted options and the exercise price will be adjusted to reflect the exchange ratio. All such currently outstanding options that are presently unvested and not yet exercisable shall become fully vested and exercisable immediately prior to the consummation of the merger and must then be exercised or will terminate at the effective time of the merger. See “—Assumption or Termination of Hawthorne Financial Stock Options and Warrants” on page 51. At the record date, the executive officers of Hawthorne Financial held unvested stock options, which will fully vest and either be exercised immediately prior to the merger or will terminate, to purchase an aggregate of 138,000 shares of Hawthorne Financial common stock, including options to purchase 40,500, 12,000, 55,500, 22,500, and 7,500 shares held by Simone Lagomarsino, Eileen Lyon, David Rosenthal, Chuck Stoneburg and Jolene Wryn, respectively, at prices ranging from $13.241 to $24.869 per share.

The merger agreement also provides that at the effective time of the merger, each outstanding warrant will cease to represent the right to acquire shares of Hawthorne Financial common stock and will be converted into and become warrants to acquire shares of Commercial Capital common stock based on the exchange ratio. See “—Assumption of Hawthorne Financial Stock Options and Warrants.” At the record date, one director of Hawthorne Financial held warrants to purchase an aggregate of 9,516 shares of Hawthorne Financial common stock.

Severance Agreements. As a consequence of the proposed change in control of Hawthorne Financial contemplated by the merger agreement, executive officers of Hawthorne Financial will be entitled to severance payments in the event the merger is consummated. Upon consummation of the merger, Commercial Capital will be obligated to pay severance payments of $2,020,516, $616,000, $593,899, $719,290 and $171,000 to Simone Lagomarsino, Eileen Lyon, David Rosenthal, Chuck Stoneburg and Jolene Wryn, respectively, and provide them with healthcare and other benefit continuation and with prorated bonus and long-term incentive compensation plan payments. Commercial Capital may be obligated to pay the executive officers additional tax gross up payments to cover their excess parachute payment excise taxes under Section 4999 of the Internal Revenue Code and their taxes on the amounts used to pay such taxes. At present, Hawthorne Financial and Commercial Capital believe that the aggregate amount of tax gross-ups for executive officers will be approximately $1,661,503.

Board and Management Positions. Effective upon consummation of the merger, Commercial Capital’s board of directors will be expanded to a total of nine directors. Timothy R. Chrisman, Chairman of Hawthorne Financial, Anthony Liberati, director of Hawthorne Financial, and Gary W. Brummett, director of Hawthorne Financial, will be appointed to serve as directors of Commercial Capital after the merger. See “—Board of Directors of Commercial Capital and Commercial Capital Bank after the Merger” on page 64.

Director Benefit Continuation Agreements. As a consequence of the proposed change in control of Hawthorne Financial contemplated by the merger agreement, Commercial Capital will be obligated, for a period of five years following the consummation of the merger, to provide Hawthorne Financial directors and their

families with all benefits under welfare plans, practices, policies and programs that were provided by Hawthorne Financial to the directors and their families at any time during the 120-day period immediately preceding the consummation of the merger. Such benefits may include medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs.

Indemnification and Directors’ and Officers’ Insurance. Hawthorne Financial’s directors and officers are entitled to continuing indemnification against certain liabilities by virtue of provisions contained in Hawthorne Financial’s certificate of incorporation and bylaws and the merger agreement. Pursuant to the merger agreement, Commercial Capital agreed for a period of six years to indemnify and hold harmless each present and former director, officer and employee of Hawthorne Financial or any of its subsidiaries, as applicable, determined as of the effective time of the merger against any costs or expenses, including reasonable attorneys’ fees, judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the effective time of the merger, whether asserted or claimed prior to, at, or after the effective time of the merger, arising in whole or in part out of or pertaining to the fact that he or she was a director, officer, employee, fiduciary or agent of Hawthorne Financial or any of its subsidiaries or is or was serving at the request of Hawthorne Financial or any of its subsidiaries as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation matters related to the negotiation, execution and performance of the merger agreement or the consummation of any of the transactions contemplated by the merger agreement, to the fullest extent to which such indemnified parties would be entitled under the certificate of incorporation and bylaws of Hawthorne Financial or equivalent documents of any Hawthorne Financial subsidiary, as applicable, or any agreement, arrangement or understanding disclosed by Hawthorne Financial to Commercial Capital pursuant to the merger agreement, in each case as in effect on the date of the merger agreement.

Pursuant to the merger agreement, Commercial Capital agreed to purchase an extended reporting period endorsement under Hawthorne Financial’s existing directors’ and officers’ liability insurance policy for Hawthorne Financial’s directors and officers or a substitute policy which shall provide such directors and officers with coverage following the effective time of the merger for an additional six years of not less than the existing coverage under, and have other terms no materially less favorable on the whole to the insured persons than the directors’ and officers’ liability insurance coverage presently maintained by Hawthorne Financial, provided that Commercial Capital will not be required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by Hawthorne Financial for such insurance (the “Insurance Amount”), and further provided that if Commercial Capital is unable to maintain or obtain the insurance specified above as a result of the preceding provision, Commercial Capital shall use its reasonable best efforts to obtain the most advantageous coverage as is available for the Insurance Amount with respect to acts or omissions occurring prior to the effective time of the merger by such directors and officers in their capacities as such.

Other than as set forth above, no director or executive officer of Hawthorne Financial has any direct or indirect material interest in the merger, except insofar as ownership of Hawthorne Financial common stock might be deemed such an interest.

The merger agreement contains certain agreements of the parties with respect to various employee matters, which are briefly described below.

As soon as administratively practicable after the effective time of the merger, Commercial Capital will take all reasonable action so that employees of Hawthorne Financial and its subsidiaries will be entitled to participate in the Commercial Capital employee benefit plans of general applicability to the same extent as similarly-situated employees of Commercial Capital and its subsidiaries. However, Commercial Capital is not required to make any stock option or other grants to employees of Hawthorne Financial under any discretionary equity compensation

plan. For purposes of determining eligibility to participate in, the vesting of benefits and for all other purposes, other than for accrual of pension benefits, under the Commercial Capital employee benefit plans, Commercial Capital will recognize years of service with Hawthorne Financial and its subsidiaries to the same extent as such service was credited for such purpose by Hawthorne Financial. The treatment of Hawthorne Financial stock options held by its employees immediately prior to the merger is described above under “—Assumption or Termination of Hawthorne Financial Stock Options and Warrants on page 51.

When employees and current and former directors of Hawthorne Financial or any of its subsidiaries become eligible to participate in a medical, dental or health plan of Commercial Capital, Commercial Capital will cause each such plan to:

Hawthorne Financial has also adopted a severance pay plan, effective January 27, 2004, the purpose of which is to mitigate financial hardship to those Hawthorne Financial and Hawthorne Savings’ employees who are laid off in connection with the merger, and to provide incentive for such employees to remain employed until an actual termination of employment occurs.

To be eligible for severance benefits, employees must meet certain criteria, including that they be an employee of Hawthorne Financial or Hawthorne Savings at any time between January 27, 2004 and the effective time of the merger, they cannot have an individual change in control agreement, they must remain employed from the date they are notified that their employment will be terminated until the separation date designated by Hawthorne Financial and/or Commercial Capital, and they must sign a specified release of claims.

Employees will not be entitled to benefits under the severance plan if they voluntarily terminate their employment, accept other employment with Commercial Capital or any of its subsidiaries and are not terminated within six months after the commencement of employment other than for cause. An employee who is offered employment by Commercial Capital or any of its subsidiaries at the same initial wage or salary as his current employment with Hawthorne Financial but declines such offer would not be eligible for severance benefits under the plan unless the employee would be required to increase his commute by more than 25 miles.

Eligible employees will be entitled to a lump sum payment based on a formula that specifies a number of weeks at their average base pay for each year of service. The number of weeks of pay per year of service varies depending on the level of the employee’s position with Hawthorne Financial or Hawthorne Savings with certain minimum amounts at each level.

The shares of Commercial Capital common stock to be issued pursuant to the merger will be registered under the Securities Act. These shares will be freely transferable under the Securities Act, except for shares issued to any Hawthorne Financial stockholder who may be deemed to be an affiliate of Commercial Capital at or after the effective time of the merger for purposes of Rule 144 promulgated under the Securities Act or an

affiliate of Hawthorne Financial at the time of its special meeting for purposes of Rule 145 promulgated under the Securities Act. Affiliates include persons who control, are controlled by or are under common control with Hawthorne Financial or Commercial Capital, as the case may be, and generally consist of executive officers, directors and 10% stockholders.

Rule 145 will restrict the sale of Commercial Capital common stock received in the merger by affiliates of Hawthorne Financial and certain of their family members and related interests. Generally speaking, during the year following the effective time of the merger, those persons who are affiliates of Hawthorne Financial at the time of its special meeting, provided they are not affiliates of Commercial Capital at or following the effective time of the merger, may publicly resell any Commercial Capital common stock received by them in the merger, subject to certain limitations as to, among other things, the amount of Commercial Capital common stock sold by them in any three-month period and the manner of sale. After the one-year period, such affiliates may resell their shares without such restrictions so long as there is adequate current public information with respect to Commercial Capital as required by Rule 144.

Persons who are affiliates of Commercial Capital after the effective time of the merger may publicly resell the shares of Commercial Capital common stock received by them in the merger subject to similar limitations and subject to certain filing requirements specified in Rule 144 and in a manner consistent with Commercial Capital’s insider trading policy. At the present time, it is anticipated that only three affiliates of Hawthorne Financial will become affiliates of Commercial Capital after the merger, Messrs. Chrisman, Liberati and Brummett, who will become directors of Commercial Capital.

The ability of affiliates to resell shares of Commercial Capital common stock received in the merger under Rules 144 or 145 as summarized herein generally will be subject to Commercial Capital having satisfied its reporting requirements under the Exchange Act for specified periods prior to the time of sale. Affiliates also would be permitted to resell Commercial Capital common stock received in the merger pursuant to an effective registration statement under the Securities Act or another available exemption from the Securities Act registration requirements. Neither the registration statement of which this joint proxy statement/prospectus is a part nor this joint proxy statement/prospectus cover any resales of Commercial Capital common stock received by persons who may be deemed to be affiliates of Commercial Capital or Hawthorne Financial in the merger.

Hawthorne Financial has agreed in the merger agreement to use its reasonable best efforts to cause each person who may be deemed to be an affiliate of it for purposes of Rule 145 to deliver to Commercial Capital a letter agreement intended to ensure compliance with the Securities Act.

General. The following is a description of the material federal income tax consequences of the merger to the stockholders of Hawthorne Financial, which is based upon the opinion of Patton Boggs LLP, legal counsel to Commercial Capital. The federal income tax laws are complex and the tax consequences of the merger may vary depending upon each stockholder’s individual circumstances or tax status. Accordingly, this summary is not a complete description of all of the consequences of the merger and, in particular, may not address federal income tax considerations that may affect the treatment of stockholders subject to special treatment under United States federal income tax law (including, for example, foreign persons, financial institutions, dealers in securities, traders in securities who elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt entities, holders who acquired their shares of Hawthorne Financial common stock pursuant to the exercise of an employee stock option or right or otherwise as compensation and holders who hold Hawthorne Financial common stock as part of a “hedge,” “straddle” or “conversion transaction”). In addition, no opinion is expressed with respect to the tax consequences of the merger under applicable foreign, state or local laws or under any federal tax laws other than those pertaining to the income tax. This description is based on laws, regulations, rulings and judicial decisions as in effect on the date of this joint proxy statement/prospectus, without

consideration of the particular facts or circumstances of any holder of Hawthorne Financial common stock. These authorities are all subject to change and any such change may be made with retroactive effect. No assurance can be given that, after any such change, this description would not be different.

Consequently, each stockholder of Hawthorne Financial is urged to consult his or her own tax advisor concerning the specific federal and any foreign, state and local income tax and other tax consequences of the merger applicable to such stockholder.

The Merger. Commercial Capital and Hawthorne Financial have received an opinion from Patton Boggs LLP which is based on facts, representations and assumptions that were provided by Hawthorne Financial and Commercial Capital and that are consistent with the state of facts that Hawthorne Financial and Commercial Capital believe will be existing as of the effective time of the merger. On the basis of such facts, representations and assumptions, Patton Boggs LLP has opined that for federal income tax purposes, the merger, when consummated in accordance with the terms of the merger agreement, will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code and, accordingly:

For federal income tax purposes, cash received by a holder of Hawthorne Financial common stock in lieu of a fractional share interest in Commercial Capital common stock will be treated as received in redemption of the fractional share interest, and gain or loss will be recognized for federal income tax purposes measured by the difference between the amount of cash received and the portion of the basis of the share of Hawthorne Financial common stock allocable to such fractional share interest. Such gain or loss should be long-term capital gain or loss if such share of Hawthorne Financial common stock is held as a capital asset and has been held for more than one year at the effective time of the merger.

Closing Opinion. It is a condition precedent to the obligations of Commercial Capital and Hawthorne Financial to effect the merger that they receive an opinion from Patton Boggs LLP, dated as of the effective time of the merger, with respect to the federal income tax consequences of the merger described under the subheading “—The Merger” above. Such opinion will be based upon facts existing at the effective time of the merger, and in rendering such opinion counsel will require and rely upon facts, representations and assumptions that will be provided by Commercial Capital, Hawthorne Financial and others. If facts, assumed facts, or applicable law change after the date of this joint proxy statement/prospectus and before the effective time of the merger, Patton Boggs LLP may not be able to deliver such opinion. The opinion of Patton Boggs LLP binds neither the Internal

Revenue Service nor the courts. Either could adopt a contrary position. Neither Commercial Capital nor Hawthorne Financial intends to seek or obtain a ruling from the Internal Revenue Service as to the federal income tax consequences of the merger.

The merger will be accounted for under the purchase method of accounting under accounting principles generally accepted in the United States of America. Under this method, Hawthorne Financial’s assets and liabilities as of the date of the merger will be recorded at their respective fair values and added to those of Commercial Capital. Any difference between the purchase price for Hawthorne Financial and the fair value of the identifiable net assets acquired (including core deposit intangibles) will be recorded as goodwill. In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” issued in July 2001, the goodwill resulting from the merger will not be amortized to expense, but instead will be reviewed for impairment at least annually and to the extent goodwill is impaired, its carrying value will be written down to its implied fair value and a charge will be made to earnings. Core deposit and other intangibles with definite useful lives recorded by Commercial Capital in connection with the merger will be amortized to expense in accordance with such rules. The financial statements of Commercial Capital issued after the merger will reflect the results attributable to the acquired operations of Hawthorne Financial beginning on the date of completion of the merger.

The merger agreement provides that each of Hawthorne Financial and Commercial Capital will bear and pay all costs and expenses incurred by it in connection with the transactions contemplated by the merger agreement, including fees and expenses of its own financial consultants, accountants and counsel, except that expenses of printing this document and the filing fees to be paid to the Securities and Exchange Commission in connection with the registration statement of which this joint proxy statement/prospectus is a part will be shared equally between Commercial Capital and Hawthorne Financial.

Commercial Capital has agreed to use its reasonable best efforts to list on the Nasdaq National Market, prior to the completion of the merger, the shares of Commercial Capital common stock to be issued in the merger.

In connection with the execution of the merger agreement, six directors of Commercial Capital and all of the directors of Hawthorne Financial entered into shareholder agreements with the other company pursuant to which each such director agreed that at any meeting of the applicable stockholders, or in connection with any written consent of the stockholders, the director shall:

Pursuant to the shareholder agreement, each director also agreed not to sell, transfer, or otherwise dispose of any of the shares of common stock owned by him, or any securities convertible into or exercisable or exchangeable for shares of common stock, prior to the meeting at which stockholders will consider the merger agreement unless the purchaser of such shares, or any such convertible securities, agrees in writing to be bound by the terms and conditions of the shareholder agreement.

The shareholder agreements will remain in effect until the earlier of the effective time of the merger or the termination of the merger agreement in accordance with its terms.

In accordance with Section 262 of the Delaware General Corporation Law, appraisal rights are not available to holders of any class of shares of a Delaware corporation such as Hawthorne Financial that, at the record date for determining stockholders entitled to vote on a plan of merger or consolidation, was listed on a national securities exchange or designated as a Nasdaq Stock Market national market system security, provided that such holders are not required by the terms of the plan of merger or consolidation to accept for such shares anything other than, among other things, shares of stock in the acquiring corporation which are so listed, plus cash in lieu of any fractional share interests. Because the shares of Hawthorne Financial common stock and Commercial Capital common stock are listed on the Nasdaq Stock Market’s National Market, Hawthorne Financial stockholders have no dissenters’ rights of appraisal in connection with the merger. In addition, Nevada law does not provide the Commercial Capital stockholders with dissenters’ rights in connection with the vote on the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement.

The following pro forma information presents financial data as of and for the year ended December 31, 2003 for Commercial Capital after giving effect to the completion of the proposed mergers of Hawthorne Financial into Commercial Capital and of Hawthorne Savings into Commercial Capital Bank.

The pro forma financial data give effect to the mergers under the purchase accounting method in accordance with accounting principles generally accepted in the United States of America. The unaudited pro forma condensed combined consolidated financial statements combine the historical consolidated financial statements of Commercial Capital and Hawthorne Financial, giving effect to the mergers as if they had been effective on December 31, 2003, with respect to the unaudited pro forma condensed combined consolidated statement of financial condition, and as of January 1, 2003, with respect to the unaudited pro forma condensed combined consolidated statements of operations.

The information for the year ended December 31, 2003 is derived from the consolidated financial statements of Commercial Capital and Hawthorne Financial incorporated by reference in this joint proxy statement/prospectus. The unaudited pro forma condensed combined consolidated financial statements of Commercial Capital as of and for the year ended December 31, 2003 should be read in conjunction with the historical financial statements, and related notes thereto, that have been incorporated by reference into this joint proxy statement/prospectus.

Commercial Capital expects to incur reorganization and restructuring expenses in connection with the proposed mergers. The effect of the estimated merger, reorganization and restructuring costs expected to be incurred by Commercial Capital in connection with the proposed mergers have been reflected in the unaudited pro forma condensed combined consolidated statement of financial condition. The pro forma financial information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not attempt to predict or suggest future results. The pro forma financial information also does not attempt to show how the combined company would actually have performed had the companies been combined throughout the periods presented. Commercial Capital has included in the pro forma condensed combined consolidated financial statements all the adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of results of the historical periods.

Given the information regarding the proposed mergers, the actual consolidated financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein because, among other reasons:

PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2003

On January 27, 2004, Commercial Capital announced that it had executed a definitive merger agreement, whereby Hawthorne Financial will merge into Commercial Capital and, in connection therewith, Hawthorne Savings, a wholly owned subsidiary of Hawthorne Financial, will merge into Commercial Capital Bank, a wholly owned subsidiary of Commercial Capital. It is expected that the mergers will close in the second quarter of 2004. Therefore, Commercial Capital’s historical financial statements as of and for the year ended December 31, 2003 do not include the financial position and results of Hawthorne Financial and its subsidiaries.

The unaudited pro forma condensed combined consolidated statement of operations for the year ended December 31, 2003 is presented as if the mergers occurred at January 1, 2003. The unaudited pro forma combined condensed consolidated statement of financial condition as of December 31, 2003 is presented as if the mergers occurred as of that date. This information is not intended to reflect the actual results that would have been achieved had the mergers actually occurred at those dates.

Certain historical data of Hawthorne Financial have been reclassified on a pro forma basis to conform to Commercial Capital’s classifications.

The merger agreement provides that each share of Hawthorne Financial common stock will be exchanged for 1.9333 shares of Commercial Capital common stock. In addition, vested options and warrants to purchase Hawthorne Financial common stock outstanding on the merger date will be assumed by Commercial Capital and the estimated fair value of these options and warrants are included in the pro forma purchase price. Pursuant to Hawthorne Financial’s stock option plan, all unvested options will vest just prior to the effective time of the merger and will expire immediately following the effective time of the merger. As a result, the purchase price calculation assumes that 334,880 unvested options will vest and be exercised for common stock of Hawthorne Financial just prior to the effective time of the merger.

Based on a share price of $18.80 for Commercial Capital common stock, the average closing price from two business days before through two business days after January 27, 2004, as adjusted for Commercial Capital’s 4:3 stock split effected on February 20, 2004, the estimated total consideration to be paid in connection with the Hawthorne Financial acquisition is $471.9 million and is calculated as follows:

The purchase price of Hawthorne Financial has been allocated as follows (In thousands):

In allocating the purchase price, the following adjustments were made to Hawthorne Financial’s historical amounts:

The purchase price adjustments are subject to further refinement, including the determination of a core deposit intangible and its life for amortization purposes. For pro forma presentation purposes only, Commercial Capital has included an estimated core deposit intangible calculated as approximately 3% of transaction deposits (money market accounts, savings accounts and NOW accounts). In accordance with Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill and intangible assets with indefinite lives are not amortized for acquisitions initiated after June 30, 2001; therefore, no goodwill amortization is presented in the pro forma financial statements. However, the core deposit intangible will be amortized over its estimated useful life of 10 years and recorded as a charge to operations.

The table below reflects Commercial Capital’s current estimate, for purposes of the pro forma presentation, of its aggregate estimated merger costs of $17.3 million ($14.9 million, net of taxes, computed using the combined federal and state tax rate of 42% for tax-deductible expenses only) incurred or to be incurred in connection with the merger. These costs do not include estimated merger costs of $5.7 million incurred or to

be incurred by Hawthorne Financial and restructuring charges of $1.0 million to be incurred by Commercial Capital in connection with the termination of certain of its contracts in connection with the integration of the two companies. The costs recorded in the pro forma presentation are primarily comprised of incurred or anticipated cash charges, including the following (In thousands):

Commercial Capital’s cost estimates are forward-looking. While the costs represent Commercial Capital’s current estimate of merger costs that will be incurred, the ultimate level and timing of recognition of these costs will be based on the final integration in connection with consummation of the mergers. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs.

Summarized below are the pro forma adjustments necessary to reflect the merger based on the purchase method of accounting:

In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, or FIN 46R, which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January 2003. Commercial Capital will be required to apply FIN 46R to variable interests in variable interest entities, or VIEs, created after December 31, 2003. For variable interest in VIEs created before January 1, 2004, the Interpretation will be applied beginning on January 1, 2004. For any VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the assets, liabilities and noncontrolling interests of the VIE initially would be measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the date FIN 46R first applies may be used to measure the assets, liabilities and noncontrolling interest of the VIE.

Commercial Capital has evaluated the impact of applying FIN 46R to existing VIEs in which it has variable interests and the effect on the Pro Forma Combined Condensed Consolidated Statement of Financial Condition as of December 31, 2003 would represent an increase of approximately $3.2 million to both assets and liabilities.

Shares of Commercial Capital common stock are traded on the Nasdaq National Market under the symbol “CCBI” and shares of Hawthorne Financial common stock are traded on the Nasdaq National Market under the symbol “HTHR.”

As of March 25, 2004, the record date for the Commercial Capital annual meeting, there were 30,090,472 shares of Commercial Capital common stock outstanding, which were held by approximately 42 holders of record. As of April 2, 2004, the record date for the Hawthorne Financial special meeting, there were 11,799,221 shares of Hawthorne Financial common stock outstanding, which were held by approximately 404 holders of record. Such numbers of stockholders do not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms and others.

The following table sets forth during the periods indicated the high and low sales prices of Commercial Capital common stock and Hawthorne Financial common stock as reported on the Nasdaq National Market and the dividends declared per share of Commercial Capital common stock and Hawthorne Financial common stock. Commercial Capital common stock began trading on the Nasdaq National Market on December 18, 2002.

The following table shows the closing price per share of the Commercial Capital common stock and Hawthorne Financial common stock on (i) January 27, 2004, the last trading day preceding public announcement of the merger agreement, and (ii) April 12, 2004, the last full trading day for which closing prices were available at the time of the printing of this joint proxy statement/prospectus. The historical prices are as reported on the Nasdaq National Market.

The following table also includes the equivalent price per share of Hawthorne Financial common stock on those dates. The equivalent per share price reflects the value of Commercial Capital common stock which would be received by Hawthorne Financial stockholders who receive shares of Commercial Capital common stock in the merger based on an exchange ratio of 1.9333 shares of Commercial Capital common stock for each share of Hawthorne Financial common stock.

Hawthorne Financial stockholders are advised to obtain current market quotations for the Commercial Capital common stock. Because the consideration to be provided to stockholders of Hawthorne Financial in connection with the merger is based on a fixed number of shares of Commercial Capital common stock and the market price of Commercial Capital common stock will probably fluctuate, stockholders of Hawthorne Financial are not assured of receiving a specific market value of Commercial Capital common stock, and thus a specific market value for their shares of Hawthorne Financial common stock, at the effective time of the merger. The market price of Commercial Capital common stock at the effective time of the merger or at the time stockholders of Hawthorne Financial receive certificates evidencing such shares following the consummation of the merger may be higher or lower than the market price at the time the merger agreement was executed, at the date of mailing of this document or at the time of the special meeting.

Commercial Capital, a Nevada corporation, is a multifaceted financial services holding company that provides a variety of lending and deposit products and services to middle market commercial businesses, income property real estate investors and professionals. Commercial Capital is one of the largest independent banking organizations headquartered in Orange County, California and, based on the percentage growth in Commercial Capital’s assets on a quarterly basis over the past 36 months, Commercial Capital has been the fastest growing banking organization in California according to Federal Deposit Insurance Corporation data. Commercial Capital is recognized as one of the leading originators of multi-family residential real estate loans in California, where the market for multi-family residential loans is highly fragmented. According to DataQuick, which measures originations in California, Commercial Capital ranked third in the state in originations of such loans for the year ended December 31, 2003, with an aggregate of 2.87% of total originations. Commercial Capital conducts its operations through Commercial Capital Bank, a federally chartered savings bank, CCM, a commercial mortgage banking company, and ComCap. During the third quarter of 2003, Commercial Capital formed CCAM, which will provide asset management services to investment funds to be made available to accredited investors. To date, CCAM has not conducted any business. At December 31, 2003, Commercial Capital had consolidated total assets of $1.72 billion, net loans held for investment of $1.05 billion, total deposits of $645.6 million and stockholders’ equity of $102.0 million.

Commercial Capital’s principal executive offices are located at One Venture, 3^rd Floor, Irvine, California 92618. Commercial Capital’s telephone number is (949) 585-7500.

Hawthorne Financial is a savings and loan holding company incorporated under the laws of the State of Delaware and the parent company of Hawthorne Savings, a federally chartered savings bank. Hawthorne Financial had total consolidated assets of approximately $2.67 billion, total consolidated deposits of approximately $1.72 billion and total stockholders’ equity of approximately $185.3 million as of December 31, 2003.

Hawthorne Financial’s only operating segment is Hawthorne Savings, which is headquartered in El Segundo, California. Hawthorne Savings currently operates 15 full service branches in the coastal counties of Southern California, from Westlake Village at the western edge of Los Angeles County to Mission Bay in San Diego County. Hawthorne Savings specializes in real estate secured loans within the markets it serves, including: 1) permanent loans collateralized by single family residential property, 2) permanent loans secured by multi-family residential and commercial real estate and 3) loans for the construction of multi-family residential, commercial and individual single family residential properties and the acquisition and development of land for the construction of such projects. Hawthorne Savings funds its loans predominantly with retail deposits generated through its fifteen full service retail offices and FHLB advances.

Hawthorne Financial currently does not engage in any commercial activities pursuant to its authority as a unitary savings and loan holding company “grandfathered” under the Gramm-Leach-Blilely Act of 1999 (“GLBA”), which prohibits such activities by non-grandfathered thrift holding companies. Hawthorne Financial’s grandfathered status will terminate upon its acquisition by Commercial Capital, which is not grandfathered under GLBA.

Hawthorne Financial’s executive offices are located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California 90245. Hawthorne Financial’s telephone number is (310) 725-5631.

Hawthorne Financial Directors to Serve on the Board of Directors of Commercial Capital

Timothy R. Chrisman has been the president and owner of Chrisman & Company, Inc., an executive search firm specializing in the placement of senior executives in the financial services industry, for more than the past five years. Mr. Chrisman has been chairman of the board of Hawthorne Financial and Hawthorne Savings since February 1996. Mr. Chrisman is also chairman of MCSi, Inc., a publicly traded computer peripherals and audio visual supply corporation and a member of the board of directors of the Federal Home Loan Bank of San Francisco.

Gary W. Brummett is the managing partner of Peak View Advisors, LLC, formerly known as Brummett Consulting Group, a consulting firm serving the financial services industry, since February 1997. Prior to that, he had been executive vice president and chief operating officer of Cal Fed Bancorp and a member of the board of directors of California Federal Bank, where he was employed since April 1985. From 1980 to 1985, Mr. Brummett was employed at KPMG LLP as a certified public accountant. Mr. Brummett served as Hawthorne Financial’s interim chief executive officer from November 17, 1999 to December 7, 1999.

Anthony W. Liberati was the chairman of the board of directors of MCSi Inc. from May 1996 until his retirement in February 2000. Mr. Liberati retired in 1995 from the Edward J. DeBartolo Corporation, Youngstown, Ohio where he was the chief operating officer. Prior to his appointment as chief operating officer, he was the DeBartolo Corporation’s chief financial officer. Mr. Liberati is a former member of the board of directors of DeBartolo Realty Corporation, Youngstown, Ohio, a real estate investment trust.

Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management of Commercial Capital

The following table sets forth certain information as to the common stock beneficially owned by (i) each person or entity, including any “group” as that term is used in Section 13(d)(3) of the Exchange Act, who or which was known to Commercial Capital to be the beneficial owner of more than 5% of the issued and outstanding common stock, (ii) the directors of Commercial Capital, (iii) each executive officer of Commercial Capital listed in the Summary Compensation Table, and (iv) all directors and executive officers of Commercial Capital as a group. All shares have been adjusted to reflect the 3-for-2 stock split and the 4-for-3 stock split effected by Commercial Capital in September 2003 and February 2004, respectively.

Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management of Hawthorne Financial

The following table sets forth as of March 1, 2004 certain information regarding the ownership of Hawthorne Financial’s common stock by (i) each person known by Hawthorne Financial to be the beneficial owner of more than 5% of the outstanding shares of its common stock, (ii) the Hawthorne Financial executive officers named below (the “Named Executive Officers”), and (iii) all of Hawthorne Financial’s executive officers and directors as a group. Except as may be indicated in the footnotes to the table and subject to applicable community property laws, each of such persons has the sole voting and investment power with respect to the shares owned. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this Rule, certain shares may be deemed to be beneficially owned by more than one person (such as where persons share voting power or investment power). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which information is provided; in computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.

The following table sets forth certain information regarding the ownership of Hawthorne Financial common stock by the board of directors of Hawthorne Financial.

Commercial Capital is authorized to issue up to 100,000,000 shares of common stock and up to 100,000,000 shares of preferred stock. At the Commercial Capital annual meeting, stockholders will consider and vote upon a proposal to increase the authorized common stock to 200,000,000 shares. See “Other Matters to be Considered at the Commercial Capital Annual Meeting—Approval of the Amendment to the Articles of Incorporation to Increase the Authorized Common Stock.” The capital stock of Commercial Capital does not represent or constitute a deposit account and is not insured by the FDIC.

The following description of the Commercial Capital’s capital stock does not purport to be complete and is qualified in all respects by reference to Commercial Capital’s articles of incorporation and bylaws and the General Corporation Law of Nevada.

Each share of Commercial Capital common stock is entitled to one vote on all matters submitted to a vote at any meeting of stockholders. Holders of Commercial Capital common stock are entitled to receive dividends as may be declared by the Commercial Capital board of directors out of funds legally available therefor and, upon liquidation, to receive pro rata all assets, if any, of Commercial Capital available for distribution after the payment of creditors. Holders of Commercial Capital common stock have no preemptive rights to subscribe for any additional securities of any class that Commercial Capital may issue, nor any conversion, redemption or sinking fund rights. Holders of Commercial Capital common stock do not have the right to cumulate votes in the election of directors. The rights and privileges of holders of Commercial Capital common stock are subject to any preferences that the Commercial Capital board of directors may set for any series of Commercial Capital preferred stock that Commercial Capital may issue in the future.

Under Commercial Capital’s articles of incorporation, Commercial Capital may issue shares of Commercial Capital preferred stock in one or more series, as may be determined by the Commercial Capital’s board of directors. The Commercial Capital board of directors may fix the number of shares to be included in each series and the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof, and may increase or decrease the number of shares of any series without any further vote or action by the stockholders. Any Commercial Capital preferred stock issued will rank senior to Commercial Capital common stock with respect to the payment of dividends or amounts paid upon liquidation, dissolution or winding up of Commercial Capital, or both. In addition, any shares of Commercial Capital preferred stock may have class or series voting rights. Under certain circumstances, the issuance of shares of Commercial Capital preferred stock, or merely the existing authorization of the Commercial Capital board of directors to issue shares of Commercial Capital preferred stock, may tend to discourage or impede a merger or other change in control of Commercial Capital. The number of shares of preferred stock to be issued, its par or face value, voting powers, designations, preferences, interest rate, limitations, restrictions and relative rights would be determined from time to time by resolution of the board of directors of Commercial Capital. No shares of preferred stock are currently outstanding.

The transfer agent and registrar for Commercial Capital common stock is Registrar and Transfer Company, Cranford, New Jersey.

When the merger becomes effective, stockholders of Hawthorne Financial will receive shares of Commercial Capital common stock in exchange for their shares of Hawthorne Financial common stock and become stockholders of Commercial Capital. The following is a summary of material differences between the rights of holders of Commercial Capital common stock and holders of Hawthorne Financial common stock.

The following summary does not purport to be a complete statement of the provisions affecting, and differences between, the rights of holders of Commercial Capital common stock and holders of Hawthorne Financial common stock. This summary is intended to provide a general overview of the differences in stockholders’ rights under applicable law and the governing corporate instruments of Commercial Capital and Hawthorne Financial, and other known material differences. Commercial Capital is a Nevada corporation incorporated under the laws of Nevada and the Nevada General Corporation Law (“NGCL”), and Hawthorne Financial is a Delaware corporation incorporated under the laws of Delaware and the Delaware General Corporation Law (“DGCL”).

Commercial Capital. Commercial Capital’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.001 per share and 100,000,000 shares of preferred stock, par value $0.001 per share. Commercial Capital’s articles of incorporation authorize Commercial Capital’s board of directors to issue shares of Commercial Capital preferred stock in one or more series and to fix the designation, powers, preferences, and rights of the shares of Commercial Capital preferred stock in each series. As of the Commercial Capital voting record date, there were 30,090,472 shares of Commercial Capital common stock outstanding. No shares of Commercial Capital preferred stock were issued and outstanding as of that date.

Hawthorne Financial. Hawthorne Financial’s authorized capital stock consists of 20,000,000 shares of Hawthorne Financial common stock, par value $0.01 per share and 10,000,000 shares of Hawthorne Financial preferred stock, par value $0.01 per share. Hawthorne Financial’s certificate of incorporation authorizes Hawthorne Financial’s board of directors to issue shares of Hawthorne Financial’s preferred stock in one or more series and to fix the designation, powers, preferences, and rights of the shares of Hawthorne Financial preferred stock in each series. As of the Hawthorne Financial voting record date, there were 11,799,221 shares of Hawthorne Financial common stock outstanding. No shares of Hawthorne Financial preferred stock were issued and outstanding as of that date.

Commercial Capital. Under the articles of incorporation of Commercial Capital and the NGCL, Commercial Capital may issue shares of Commercial Capital’s capital stock and rights or options for the purchase of shares of capital stock of Commercial Capital on such terms and for such consideration as may be determined by the Commercial Capital board of directors. Commercial Capital’s articles of incorporation and bylaws do not require stockholder approval of any such actions. However, the NGCL requires stockholder approval for certain issuances of shares in connection with acquisitions. Commercial Capital is also subject to the requirements of the Nasdaq Stock Market, which generally require corporations, such as Commercial Capital, with securities which are traded on the Nasdaq National Market, to obtain stockholder approval of certain issuances of common stock and most stock compensation plans for directors, officers and key employees. Holders of Commercial Capital’s capital stock do not have preemptive rights with respect to any shares of Commercial Capital’s capital stock which may be issued.

Hawthorne Financial. Under the certificate of incorporation of Hawthorne Financial and the DGCL, Hawthorne Financial may issue shares of Hawthorne Financial capital stock and rights or options for the purchase of shares of capital stock of Hawthorne Financial on such terms and for such consideration as may be determined by the Hawthorne Financial board of directors. Hawthorne Financial’s certificate of incorporation

and bylaws do not require stockholder approval of any such actions. However, the DGCL requires stockholder approval for certain issuances of shares in connection with acquisitions. Hawthorne Financial is also subject to the requirements of the Nasdaq Stock Market, which generally require corporations, such as Hawthorne Financial, with securities which are traded on the Nasdaq National Market, to obtain stockholder approval of certain issuances of common stock and most stock compensation plans for directors, officers and key employees. Holders of Hawthorne Financial common stock do not have preemptive rights with respect to any shares of Hawthorne Financial common stock that may be issued.

Commercial Capital. Each holder of Commercial Capital common stock is entitled to one vote for each share held of record. Stockholders of Commercial Capital are not permitted to cumulate their votes with respect to the election of directors.

Hawthorne Financial. Each holder of Hawthorne Financial common stock is entitled to one vote for each share held of record except that holders of Hawthorne Financial common stock have the right to cumulate votes in an election of directors. Cumulative voting entitles each stockholder to cast a number of votes in the election of directors equal to the number of shares of common stock held by the stockholder multiplied by the number of directors to be elected, and to distribute such votes among one or more of the nominees to be elected.

Commercial Capital. Commercial Capital’s bylaws provide for a board of directors having not less than five nor more than 15 members. Currently, Commercial Capital’s board of directors consists of seven directors. Commercial Capital’s board of directors is currently divided into two classes, with directors serving staggered two-year terms. If the merger is completed, the board will be increased to nine directors and divided into three classes, with directors serving staggered three-year terms commencing at Commercial Capital’s 2005 annual meeting of stockholders.

Hawthorne Financial. Hawthorne Financial’s bylaws provide that the number of directors comprising the Hawthorne Financial board of directors shall be determined from time to time by a resolution adopted by the Hawthorne Financial board of directors or by the affirmative vote of the holders of not less than a majority of the total voting power of all outstanding shares of voting stock of Hawthorne Financial. Currently, Hawthorne Financial’s board of directors consists of seven directors. Hawthorne Financial does not have a classified board of directors.

Commercial Capital. Under Nevada law, Commercial Capital directors may be removed with or without cause by an affirmative vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote.

Hawthorne Financial. Hawthorne Financial’s certificate of incorporation provides that any director may be removed with or without cause by the holders of a majority of the shares then entitled to vote at any meeting of the stockholders. Because Hawthorne Financial’s certificate of incorporation also allows for cumulative voting, the provision allowing removal without cause is superseded by the cumulative voting limitations on removal under Delaware law, and accordingly, if less than the entire Hawthorne Financial board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire Hawthorne Financial board of directors.

Commercial Capital. Under Commercial Capital’s bylaws, any vacancy occurring on the board of directors may be filled by a vote of two-thirds of the directors then in office, whether or not a quorum. Each director so chosen shall hold office for a term expiring at the stockholders’ meeting at which the term of the class to which the director has been chosen expires and when the director’s successor is elected and qualified.

Hawthorne Financial. Hawthorne Financial’s certificate of incorporation provides that a vacancy caused by the removal of a director shall be filled at any meeting of the stockholders by the vote of a majority of the outstanding stock of Hawthorne Financial entitled to vote (subject to the limitations on removal under Delaware law in the case of cumulative voting). Vacancies that are not the result of the removal of a director, including the resignation of a director or those resulting from an increase in the size of the board of directors, may be filled by a majority of the directors then in office, even though that number may be less than a quorum.

Commercial Capital. Commercial Capital’s articles of incorporation and bylaws provide that directors and officers shall be indemnified by the corporation, to the fullest extent permitted by Nevada law, from and against any and all expenses and liabilities permitted by Nevada law. Under Nevada law, a corporation may indemnify a director or officer if (i) he or she is not liable pursuant to Section 78.138 of the NGCL for breaching fiduciary duties as an officer or director or where breach of duties involved intentional misconduct, fraud or a knowing violation of law, or (ii) acted in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

The indemnification provided for in Commercial Capital’s articles of incorporation, consistent with Nevada law, is not exclusive of any other rights to which those indemnified may be entitled under any bylaws, agreement, vote of stockholders or disinterested directors or otherwise, and applies to such party both as to action in his or her official capacity and as to action in another capacity while holding such office. Moreover, the indemnification Commercial Capital provides continues as to a person who has ceased to be a director or officer and inures to the benefit of the heirs, executors and administrators of such a person. However, under Nevada law, indemnification generally may not be made to, or on behalf of, any director or officer if it is established that such person’s acts or omissions involved intentional misconduct, fraud or knowing violation of the law and were material to the cause of action.

Commercial Capital’s bylaws also provide that it will pay, in advance, for expenses incurred in defending any civil or criminal action or proceeding for which indemnification is required or permitted upon receipt of an undertaking by, or on behalf of, the indemnified party to repay such amount in the event that it is ultimately determined that the indemnified party is not entitled to indemnification.

Hawthorne Financial. Hawthorne Financial’s certificate of incorporation provides that officers and directors shall be indemnified and held harmless by the corporation to the fullest extent permissible under Delaware law. Under Delaware law, a corporation generally may indemnify directors and officers: (i) for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation, and (ii) with respect to any criminal proceeding, to the extent that they had no reasonable cause to believe that their conduct was unlawful.

In addition, Delaware law provides that a corporation may advance to a director or an officer expenses incurred in defending any action upon receipt of an undertaking by the director or officer to repay the amount advanced if it is ultimately determined that he or she is not entitled to indemnification.

Commercial Capital. Commercial Capital’s articles of incorporation provide that no director or officer shall be liable for monetary damages for breach of fiduciary duty, provided that the liability of a director or officer shall not be eliminated or limited for:

Hawthorne Financial. Under Delaware law, a corporation may include in its certificate of incorporation a provision that would, subject to the limitations described below, eliminate or limit directors’ liability for monetary damages for breaches of their fiduciary duty of care; provided that the provision may not eliminate or limit a director’s monetary liability for:

Hawthorne Financial’s certificate of incorporation provides for the elimination of personal monetary liability of directors to the fullest extent permissible under Delaware law.

Commercial Capital. Nevada law prohibits a corporation from making any distributions to stockholders, including the payment of cash dividends, if such distribution would render it unable to pay its debts as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. Commercial Capital is not subject to any other express regulatory restrictions on payments of dividends and other distributions. The ability of Commercial Capital to pay distributions to the holders of its common stock will depend, however, to a large extent upon the amount of dividends Commercial Capital Bank which is subject to restrictions imposed by bank regulatory authorities, and Commercial Capital’s other subsidiaries, pays to Commercial Capital. There can be no assurances that dividends will be paid in the future. The declaration, payment and amount of any such future dividends would depend on business conditions, operating results, capital, reserve requirements and the consideration of other relevant factors by the board of directors of Commercial Capital.

Hawthorne Financial. Under Delaware law, a corporation may pay dividends out of surplus or, in the event that no surplus exists, out of its net profits for the fiscal year in which the dividend is declared or its net profits for the preceding fiscal year, subject to certain limitations for the benefit of certain preference shares. The Hawthorne Financial bylaws provide that the Hawthorne Financial board of directors may declare dividends at any regular or special meeting, in accordance with applicable law.

Commercial Capital. Under Nevada law, a board of directors must adopt a resolution setting forth the proposed amendment to the articles of incorporation and either call a special meeting of stockholders or direct that the proposed amendment be considered at the next annual meeting. Under Nevada law, amendments to a

public corporation’s articles of incorporation must generally be approved by stockholders holding shares entitling them to exercise at least a majority of the voting power unless another proportion is specified (i) in the articles of incorporation, (ii) as may be required in the case of a vote by classes or series, or (iii) by other provisions of Nevada law. Commercial Capital’s articles of incorporation require approval by the affirmative vote of not less than two-thirds of the outstanding shares of capital stock entitled to vote generally in an election of directors cast at a meeting of stockholders to amend certain provisions of the articles of incorporation relating to the classified board of directors, combinations with certain interested stockholders, amending the bylaws and amending the articles of incorporation.

Under Nevada law, a corporation’s board of directors can amend or repeal the bylaws, or adopt new bylaws, unless the stockholders, in amending or repealing a particular bylaw, provide expressly that the board of directors may not amend or repeal that bylaw. Nevada law provides that a corporation’s articles of incorporation may grant authority to amend the bylaws with the board of directors exclusively. Commercial Capital’s articles of incorporation authorize Commercial Capital’s board of directors to amend its bylaws by vote of a majority of the board of directors at a meeting. The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of the holders of not less than two-thirds of the votes cast by stockholders of Commercial Capital at a meetings of stockholders.

Hawthorne Financial. Under Delaware law, an amendment to the certificate of incorporation of a corporation requires the approval of the corporation’s board of directors and the approval of holders of a majority of the outstanding stock entitled to vote upon the proposed amendment, unless a higher vote is required by the corporation’s certificate of incorporation. Hawthorne Financial’s certificate of incorporation does not require a higher vote to amend the certificate of incorporation.

Under Delaware law, the power to adopt, amend or repeal bylaws is vested in the stockholders entitled to vote unless the certificate of incorporation confers the power to adopt, amend or repeal bylaws upon the directors as well. The Hawthorne Financial certificate of incorporation provides that the Hawthorne Financial bylaws may be made, amended, altered, changed, added to or repealed by the Hawthorne Financial board of directors without any action on the part of the Hawthorne Financial stockholders.

Commercial Capital. In accordance with Nevada law, Commercial Capital’s bylaws provide that a written notice of the time, date and place of the meeting must be given to each stockholder entitled to vote at the meeting not less than 10 days nor more than 60 days prior to the meeting. In addition, the notice must specify the matters the board intends to present to the stockholders, the names of nominees for director, and the general nature of a proposal relating to transactions with interested directors, amendments to the articles of incorporation, reorganization, voluntary dissolution or distributions in dissolution other than in accordance with the rights of outstanding preferred stock.

Hawthorne Financial. Hawthorne Financial’s bylaws provide that written notice of the date, time, place and purposes of the meeting of stockholders must be delivered not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting.

Commercial Capital. Under Nevada law, a special meeting of the stockholders may be called by a corporation’s board of directors, two directors or the president unless otherwise provided in the articles of incorporation. The articles of incorporation of Commercial Capital do not provide authority to call special meetings of stockholders to any other person.

Hawthorne Financial. Under Delaware law, a special meeting of the stockholders may be called by the board of directors or such other persons as may be authorized by the certificate of incorporation or bylaws. Hawthorne Financial’s bylaws provide that special meetings of the Hawthorne Financial stockholders for any purpose(s), may be called by the chairman of the board of directors, if any, or the president, upon written request of a majority of the board of directors, or upon written request of stockholders owning a majority of the voting power of the entire capital stock of the corporation issued and outstanding and entitled to vote.

Commercial Capital. Commercial Capital’s bylaws provide that the presence, in person or by proxy, of the persons entitled to vote a majority of the voting shares at any meeting constitutes a quorum for the transaction of business.

Hawthorne Financial. Hawthorne Financial’s bylaws provide that the holders of a majority of the common stock issued and outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum at all meetings of stockholders for the transaction of business, except as provided by law.

Commercial Capital. Commercial Capital’s bylaws provide that a proposal by stockholders for submission to a vote of stockholders at an annual meeting must be made in writing and delivered or mailed and received by the secretary of Commercial Capital not later than 120 days prior to the anniversary date of the mailing of proxy materials for the immediately preceding annual meeting. Each such notice must set forth information concerning the proposal, the proposing stockholder and the information specified in Commercial Capital’s bylaws. Commercial Capital’s bylaws provide that stockholders of Commercial Capital may nominate one or more persons for election as director only if such nominations are made in writing and delivered or mailed to the secretary of Commercial Capital not later than 120 days prior to the anniversary date of the mailing of proxy materials for the immediately preceding annual meeting of stockholders. Each such notice must set forth information concerning the nominee, the nominating stockholder and the other information specified in Commercial Capital’s bylaws.

In accordance with Rule 14a-8 under the Exchange Act, stockholder proposals intended to be included in the proxy statement and presented at a regularly scheduled annual meeting must be received by Commercial Capital at least 120 days before the anniversary of the date that the previous year’s proxy statement was first mailed to stockholders. As provided in the Exchange Act rules, if the annual meeting date has been changed by more than 30 days from the date of the prior year’s meeting, or for special meetings, the proposal must be submitted within a reasonable time before Commercial Capital begins to print and mail its proxy materials.

Hawthorne Financial. Neither Hawthorne Financial’s certificate of incorporation nor Bylaws set forth procedures for the nomination of directors or for the submission of proposals to be considered at any meeting of stockholders.

Commercial Capital. Under Nevada law, unless otherwise provided in the articles of incorporation or bylaws, action by the stockholders of a public company may be taken without a meeting only if written consents approving the action are signed by stockholders holding at least a majority (or such higher proportion as would be required if a meeting were held) of the voting power of the Company. Commercial Capital’s articles of incorporation and bylaws do not contain any provisions relating to stockholder action without a meeting.

Hawthorne Financial. Under the DGCL, unless otherwise stated in the certificate of incorporation, any action which may be taken at an annual or special meeting of stockholders may be taken without a meeting, if a

consent in writing is signed by the holders of the outstanding stock having the minimum number of votes necessary to authorize the action at a meeting of stockholders. Hawthorne Financial’s bylaws provide that action may be taken without a meeting provided that all stockholders who would have been entitled to vote upon the matter if such meeting were held consent in writing to the proposed action.

Commercial Capital. Commercial Capital’s bylaws provide that any stockholder has the right to inspect the accounting books and records, the record of stockholders, and minutes of proceedings of the stockholders, the board of directors and committees of the board of directors of Commercial Capital and any subsidiary upon written demand, during usual business hours and for a purpose reasonably related to the person’s interest as a stockholder.

Hawthorne Financial. Under the DGCL, any stockholder has the right to inspect the corporation’s stockledger, stockholder list, and other books and records for a purpose reasonably related to the person’s interest as a stockholder.

Commercial Capital. Under the NGCL, the following must be approved by stockholders holding a majority of the voting power of the company: (i) merger, (ii) a share exchange, and (iii) sale of all, or substantially all, of a corporation’s assets, other than in the ordinary course of business. A corporation may provide for higher voting requirements for these fundamental actions.

Hawthorne Financial. The DGCL generally requires the approval of the holders of at least a majority of the outstanding common stock for mergers and consolidations in a corporation that is a participating corporation and for sales of all or substantially all of a corporation’s assets.

Commercial Capital. The NGCL generally provides that a “resident domestic corporation” shall not engage in any “business combination” with an “interested stockholder” for a period of three years following the date that such stockholder became an interested stockholder unless prior to such date the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder. After three years, a “resident domestic corporation” is only authorized to engage in a combination which was either authorized by the board prior to the three years, authorized by a majority of disinterested stockholders or meets various fair price criteria.

For purposes of this statute, a “resident domestic corporation” is a domestic corporation that has 200 or more stockholders of record. An “interested stockholder” generally means any person that (i) is the beneficial owner, either directly or indirectly, of 10% or more of the voting power of the outstanding voting stock of the corporation or (ii) is an affiliate or associate of the corporation and was the beneficial owner, either directly or indirectly, of 10% or more of the voting power of the outstanding stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder. For purposes of this statute, an affiliate and associate of an interested stockholder is likewise considered to be an interested stockholder. The term “business combination” is broadly defined to include a wide variety of transactions, including mergers, consolidations, sales of 5% or more of a corporation’s assets and various other transactions that may benefit an interested stockholder.

In addition to Nevada law, Commercial Capital’s articles of incorporation include a requirement that specified business combinations with a related person be approved by an affirmative vote of at least two-thirds of the outstanding shares entitled to vote, unless a majority vote of directors who are not affiliated with such related

person and were incumbent prior to the time such person became a related person, approve the business combination. Commercial Capital’s articles of incorporation define “business combination” to include the following: (a) a merger or consolidation with a related person; (b) a merger or consolidation of a related person with or into Commercial Capital or any of its subsidiaries; (c) the issuance of Commercial Capital securities or those of any of its subsidiaries, to a related person other than stock options; (d) acquisition by Commercial Capital or its subsidiaries of any security of a related person; (e) any reclassification or recapitalization of Commercial Capital’s common stock, or (f) any agreement, contract or other arrangement providing for any of the foregoing transactions. A “related person” is defined in the articles of incorporation as any individual, corporation, partnership or other person or entity which, together with its affiliates, is the beneficial owner of ten percent (10%) of Commercial Capital’s capital stock.

The NGCL also prohibits an acquirer, under certain circumstances, from voting shares of a target corporation’s stock after crossing certain threshold ownership percentages, unless the acquirer obtains the approval of the target corporation’s stockholders. The relevant threshold ownership percentages of the voting power of the corporation in the election of directors are: one-fifth or more but less than one-third, one-third or more but less than a majority, and a majority or more. Once an acquirer crosses one of these thresholds, those shares acquired in an offer or acquisition and those shares acquired within the preceding ninety days become control shares and such control shares are deprived of the right to vote until disinterested stockholders restore the right. This provision will not apply if the articles of incorporation or bylaws of the target corporation in effect on the tenth day following the acquisition of a controlling interest provides that this provision does not apply.

The NGCL also provides that, unless otherwise provided in the corporation’s articles or bylaws in effect on the tenth day following the acquisition of a controlling interest, in the event control shares are accorded full voting rights and the acquirer has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights for the control shares may dissent, in accordance with the Nevada statutory procedures dealing with dissenters’ rights, and obtain payment of the fair value of their shares.

Hawthorne Financial. The DGCL generally provides that a Delaware corporation shall not engage in any “business combination” with an “interested stockholder” for a period of three years following the date that such stockholder became an interested stockholder unless (i) prior to such date the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; or (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for this purpose, shares owned by persons who are directors and also officers and shares owned by employee stock ownership plans in which employee participants do not have the right to determine confidentially whether the shares held subject to the plan will be tendered in a tender offer or exchange offer; or (iii) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66²/3% of the outstanding voting stock which is not owned by the interested stockholder or (iv) the transaction is one of certain business combinations that are proposed after the corporation had received other acquisition proposals and that are approved or not opposed by a majority of certain continuing members of the board of directors, as specified in the DGCL.

An “interested stockholder” generally means any person that (i) is the owner of 15% or more of the outstanding voting stock of the corporation or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such a person. The term “business combination” is broadly defined to include a wide variety of transactions, including mergers, consolidations, sales of 10% or more of a corporation’s assets and various other transactions that may benefit an interested stockholder.

Commercial Capital. Upon liquidation, dissolution or winding up, after distribution in full of any preferential amounts to be distributed to holders of the corporation’s preferred stock, if any, and after payment or provision for payment of the debts and other liabilities of the corporation, holders of Commercial Capital common stock are entitled to receive all of the remaining assets of the corporation available for distribution to stockholders ratably in proportion to the number of shares of Commercial Capital common stock held by them.

Hawthorne Financial. Upon liquidation, dissolution or winding-up, after distribution in full of any preferential amounts to be distributed to holders of the corporation’s preferred stock, if any, and after payment or provision for payment of the debts and other liabilities of the corporation, holders of Hawthorne Financial common stock are entitled to receive all of the remaining assets of the corporation available for distribution to stockholders ratably in proportion to the number of shares of Hawthorne Financial common stock held by them.

Commercial Capital. Under Nevada law, a dissenting stockholder is entitled to obtain payment of the fair value of his or her shares only in connection with some mergers involving that corporation. There is no right of dissent if stockholders of the surviving corporation are not required to approve the plan of merger under Nevada law. In addition, unless the corporation’s articles of incorporation provide otherwise, dissenters’ rights are not available if the corporation’s stock is either:

except that dissenters’ rights will be available if the plan of merger requires stockholders to exchange for their shares anything other than:

Hawthorne Financial. Under the DGCL, dissenters’ rights of appraisal are available to a stockholder of a corporation only in connection with some mergers or consolidations involving that corporation. Appraisal rights are not available under the Delaware General Corporation Law if the corporation’s stock is either:

except that appraisal rights will be available if the merger or consolidation requires stockholders to exchange their stock for anything other than:

Additionally, no appraisal rights are available if the corporation is the surviving corporation and no vote of its stockholders is required for the merger.

Under both Delaware and Nevada law, every corporation may create and issue rights entitling the holders of such rights to purchase from the corporation shares of its capital stock of any class or classes, subject to provisions in its charter documents. The price and terms of such shares must be stated in the charter documents or in a resolution adopted by the board of directors for the creation or issuance of such rights. Neither Commercial Capital nor Hawthorne Financial has a stockholder rights plan.

Granting of Discretionary Authority to Adjourn the Commercial Capital Annual Meeting

General. If, at the Commercial Capital annual meeting on May 17, 2004, the number of shares of Commercial Capital common stock, present in person or by proxy, is insufficient to constitute a quorum or, the number of shares of Commercial Capital common stock voting in favor of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement is insufficient to approve such issuance under applicable law, Commercial Capital’s management intends to move to adjourn the annual meeting in order to enable the Commercial Capital board of directors to solicit additional proxies. In that event, Commercial Capital will ask its stockholders to vote upon the adjournment proposal and not the proposal relating to the issuance of Commercial Capital common stock pursuant to the merger agreement.

In the adjournment proposal, Commercial Capital is asking its stockholders to grant discretionary authority to the holder of any proxy solicited by the Commercial Capital board of directors so that such holder can vote in favor of the proposal to adjourn the annual meeting to solicit additional proxies. If the stockholders of Commercial Capital approve the adjournment proposal, Commercial Capital could adjourn the annual meeting, and any adjourned session of the annual meeting, and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously voted. Among other things, approval of the adjournment proposal could mean that, even if Commercial Capital had received proxies representing a sufficient number of votes against the issuance of Commercial Capital common stock pursuant to the merger agreement to defeat the proposal, Commercial Capital could adjourn the annual meeting without a vote on the proposal and seek to convince the holders of those shares to change their votes to votes in favor of the issuance of Commercial Capital common stock pursuant to the merger agreement.

If the annual meeting is adjourned, no notice of the adjourned meeting is required to be given to stockholders, other than an announcement at the annual meeting of the place, date and time to which the meeting is adjourned.

Vote Required. Pursuant to Commercial Capital’s bylaws, the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Commercial Capital common stock present in person or by proxy at the annual meeting. Abstentions will have the same affect as a vote against the adjournment proposal. Under rules of the NYSE, the proposal to adjourn the annual meeting is considered a “non discretionary” item upon which brokerage firms may not vote in their discretion on behalf of their clients if such clients have not furnished voting instructions. Broker “non-votes” will have the same affect as a vote against the adjournment proposal.

No proxy that is specifically marked “AGAINST” approval of the issuance of Commercial Capital common stock pursuant to the merger agreement will be voted in favor of the adjournment proposal, unless it is specifically marked “FOR” granting the discretionary authority to adjourn the annual meeting.

Recommendation of the Commercial Capital Board of Directors. The Commercial Capital board of directors believes that if the number of shares of Commercial Capital common stock present in person or by proxy at the annual meeting and voting in favor of the issuance of Commercial Capital common stock pursuant to the terms of the merger agreement is insufficient to approve such issuance, it is in the best interests of the stockholders of Commercial Capital to enable the board to continue to seek to obtain a sufficient number of additional votes in favor of the issuance of Commercial Capital common stock. Therefore, the Commercial Capital board of directors recommends that you vote “FOR” the proposal to grant discretionary authority to adjourn the Commercial Capital annual meeting for the purpose of soliciting additional proxies.

Granting of Discretionary Authority to Adjourn the Hawthorne Financial Special Meeting

General. If, at the Hawthorne Financial special meeting on Tuesday, May 25, 2004, the number of shares of Hawthorne Financial common stock, present in person or by proxy, is insufficient to constitute a quorum or, the

number of shares of Hawthorne Financial common stock voting in favor of approval and adoption of the merger agreement is insufficient to approve and adopt the merger agreement under Delaware law, Hawthorne Financial’s management intends to move to adjourn the special meeting in order to enable the Hawthorne Financial board of directors to solicit additional proxies. In that event, Hawthorne Financial will ask its stockholders to vote only upon the adjournment proposal and not on the proposal relating to the approval and adoption of the merger agreement.

In this proposal, Hawthorne Financial is asking you to grant discretionary authority to the holder of any proxy solicited by the Hawthorne Financial board of directors so that the holder can vote in favor of the proposal to adjourn the special meeting to solicit additional proxies. If the stockholders of Hawthorne Financial approve the adjournment proposal, Hawthorne Financial could adjourn the special meeting, and any adjourned session of the special meeting, and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously voted. Among other things, approval of the adjournment proposal could mean that, even if Hawthorne Financial had received proxies representing a sufficient number of votes against approval and adoption of the merger agreement to defeat the merger agreement proposal, Hawthorne Financial could adjourn the special meeting without a vote on the merger agreement proposal and seek to convince the holders of those shares to changes their votes to votes in favor of the approval and adoption of the merger agreement.

If the special meeting is adjourned, no notice of the adjourned meeting is required to be given to stockholders, other than an announcement at the special meeting of the place, date and time to which the meeting is adjourned.

Vote Required. Pursuant to Hawthorne Financial’s bylaws, the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Hawthorne Financial common stock present in person or by proxy and entitled to vote. Abstentions will have the same effect as a vote against the adjournment proposal.

Brokers may not vote on the adjournment proposal without specific instructions from the person who beneficially owns the shares. However, shares held by a broker for which you do not give your broker instructions on how to vote will have no effect on the outcome of the vote on the adjournment proposal.

No proxy that is specifically marked “AGAINST” approval and adoption of the merger agreement will be voted in favor of the adjournment proposal, unless it is specifically marked “FOR” granting the discretionary authority to adjourn the special meeting.

Recommendation of the Hawthorne Financial Board of Directors. The board of directors believes that if the number of shares of Hawthorne Financial common stock present in person or by proxy at the special meeting and voting in favor of approval and adoption of the merger agreement is insufficient to approve and adopt the merger agreement, it is in the best interests of the stockholders of Hawthorne Financial to enable the board to continue to seek to obtain a sufficient number of additional votes in favor of approval and adoption of the merger agreement. Therefore, the Hawthorne Financial board of directors recommends that you vote “FOR” the proposal to grant discretionary authority to adjourn the Hawthorne Financial special meeting for the purpose of soliciting additional proxies.

The validity of the shares of Commercial Capital common stock to be issued in the merger will be passed upon for Commercial Capital by Patton Boggs LLP, Washington, D.C. Patton Boggs LLP, Washington, DC will also deliver an opinion to Commercial Capital and Hawthorne Financial as to certain federal income tax consequences of the merger.

The consolidated financial statements of Commercial Capital Bancorp, Inc. and subsidiaries incorporated in this joint proxy statement/prospectus by reference from Commercial Capital’s Annual Report on Form 10-K for the year ended December 31, 2003, have been audited by KPMG LLP, independent auditors, as stated in their report, which contains an explanatory paragraph that states that Commercial Capital changed its accounting for goodwill and other intangible assets in 2002, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements incorporated in this joint proxy statement/prospectus by reference from Hawthorne Financial Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

Commercial Capital has filed a registration statement on Form S-4 with the Securities and Exchange Commission, or the Commission, under the Securities Act that registers the distribution to Hawthorne Financial stockholders of the shares of Commercial Capital common stock to be issued in the merger. This joint proxy statement/prospectus is a part of that registration statement. The registration statement, including the attached exhibits and schedules, contains additional relevant information about Commercial Capital and Commercial Capital’s capital stock. The rules and regulations of the Commission allow us to omit certain information included in the registration statement from this document.

Each of Commercial Capital and Hawthorne Financial files annual, quarterly and current reports, proxy statements and other information with the Commission, under the Exchange Act. You may read and copy any reports, proxy statements or other information filed by Commercial Capital and Hawthorne Financial at the Commission’s public reference room in Washington, D.C., which is located at the following address: Public Reference Room, Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.

You can request copies of these documents, upon payment of a duplicating fee, by writing to the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the Commission’s public reference rooms. Commercial Capital’s and Hawthorne Financial’s Commission filings are also available to the public from document retrieval services and at the Commission’s Internet website (http://www.sec.gov).

You should also be able to inspect reports, proxy statements and other information about Commercial Capital and Hawthorne Financial at the offices of the Nasdaq National Market, 33 Whitehall Street, New York, New York, 10004.

The Commission allows Commercial Capital and Hawthorne Financial to “incorporate by reference” into this document, which means that Commercial Capital and Hawthorne Financial can disclose important information to you by referring you to another document filed separately with the Commission. The information incorporated by reference is considered to be part of this document, except for any information superseded by information that is included directly in this joint proxy statement/prospectus or contained in later filed documents incorporated by reference in this document.

Each of Commercial Capital and Hawthorne Financial incorporates by reference the respective documents filed by them with the Commission listed below and any future filings made by it with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the date of each company’s stockholder meeting. These documents contain important information about Commercial Capital and Hawthorne Financial and their respective financial condition that is not included or delivered with this document.

Commercial Capital has supplied all of the information contained or incorporated by reference herein relating to Commercial Capital, and Hawthorne Financial has supplied all of the information contained or incorporated by reference herein relating to Hawthorne Financial.

You may request a copy of documents incorporated by reference in this document but not otherwise accompanying this document, at no cost, by writing or telephoning the appropriate company at the following addresses:

To obtain timely delivery, you should request desired information no later than five business days prior to the date of the stockholder meeting, or by May 12, 2004, with respect to Commercial Capital’s annual meeting of stockholders and by May 20, 2004 with respect to Hawthorne Financial’s special meeting of stockholders.

You should rely only on the information contained or incorporated by reference in this document. Commercial Capital and Hawthorne Financial have not authorized anyone else to provide you with information that is different from that which is contained in this document. Moreover, neither Commercial Capital nor Hawthorne Financial is making an offer to sell or soliciting an offer to buy any securities other than Commercial Capital common stock to be issued by Commercial Capital in the merger, and neither Commercial Capital nor Hawthorne Financial is making an offer of such securities in any state where the offer is not permitted. The information contained in this document speaks only as of its date unless the information specifically indicates that another date applies.

Commercial Capital. Any proposal which a stockholder wishes to have included in the proxy materials of Commercial Capital relating to the next annual meeting of stockholders of Commercial Capital, which currently is scheduled to be held in April 2005, must be received at the principal executive offices of Commercial Capital, One Venture, 3rd Floor, Irvine, California 92618, Attention: Richard A. Sanchez, Executive Vice President, Chief Administrative Officer and Corporate Secretary, no later than December 16, 2004.

In connection with Commercial Capital’s next annual meeting, stockholder proposals which are not submitted for inclusion in Commercial Capital’s proxy materials pursuant to Rule 14a-8 under the Exchange Act may be brought before an annual meeting pursuant to Section 2.12 of Commercial Capital’s bylaws, which provides that business at an annual meeting of stockholders must be properly brought before the meeting (a) by or at the direction of the board of directors, or (b) otherwise by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of Commercial Capital. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of Commercial Capital not later than 120 days prior to the anniversary date of the mailing of proxy materials by Commercial Capital in connection with the immediately preceding annual meeting of stockholders of Commercial Capital, or not later than December 16, 2004 in connection with the next annual meeting of stockholders of Commercial Capital. Such stockholder’s notice is required to set forth as to each matter the stockholder proposes to bring before an annual meeting certain information specified in the bylaws.

Hawthorne Financial. Hawthorne Financial will hold a 2004 annual meeting of stockholders only if the merger is not completed. All stockholder proposals intended to be presented for consideration at the 2004 annual meeting of stockholders must have been received by Hawthorne Financial no later than December 11, 2003 for inclusion in Hawthorne Financial’s proxy statement and form of proxy relating to the 2004 annual meeting. Any stockholder proposal submitted on or after December 11, 2003 shall be considered untimely and will not be included in Hawthorne Financial’s proxy statement and form of proxy.

Commission rules also establish a different deadline for submission of stockholder proposals that are not intended to be included in Hawthorne Financial’s proxy statement with respect to discretionary voting. The deadline with respect to discretionary voting for the year 2004 annual meeting was February 25, 2004 (45 calendar days before the anniversary of the mailing date of the 2003 annual meeting proxy statement). If a stockholder gives notice of such a proposal after February 25, 2004, the proxy holders will be allowed to use their discretionary voting authority to vote against the stockholder proposal when and if the proposal is raised at the Hawthorne Financial’s year 2004 annual meeting.

AGREEMENT AND PLAN OF MERGER, dated as of January 27, 2004 (this “Agreement”), among Commercial Capital Bancorp, Inc. (“Parent”), CCBI Acquisition Corp. (“Acquisition Sub”) and Hawthorne Financial Corporation (“Hawthorne”).

A. Hawthorne. Hawthorne is a Delaware corporation, having its principal place of business in El Segundo, California.

B. Parent. Parent is a Nevada corporation, having its principal place of business in Irvine, California.

C. Acquisition Sub. Acquisition Sub is a Delaware corporation and a wholly owned subsidiary of Parent.

D. Intention of the Parties. It is the intention of the parties to this Agreement that the Merger provided for herein be treated as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement constitutes a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-1(c).

E. Board Action. The respective Boards of Directors of Parent, Acquisition Sub and Hawthorne have determined that it is in the best interests of their respective companies and their stockholders to consummate the Merger provided for herein.

F. Hawthorne Shareholder Agreements. As a material inducement to Parent to enter into this Agreement, and simultaneously with the execution of this Agreement, each Hawthorne Shareholder (as defined herein) is entering into an agreement, in the form of Annex A hereto (collectively, the “Hawthorne Shareholder Agreements”) pursuant to which they have agreed, among other things, to vote their shares of Hawthorne Common Stock (as defined herein) in favor of this Agreement.

G. Parent Shareholder Agreements. As a material inducement to Hawthorne to enter into this Agreement, and simultaneously with the execution of this Agreement, each Parent Shareholder (as defined herein) is entering into an agreement, in the form of Annex B hereto (collectively, the “Parent Shareholder Agreements’) pursuant to which they have agreed, among other things, to vote their shares of Parent Common Stock (as defined herein) in favor of the issuance of Parent Common Stock pursuant to this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein the parties agree as follows:

1.01 Certain Definitions. The following terms are used in this Agreement with the meanings set forth below:

“Acquisition Sub” has the meaning set forth in the preamble to this Agreement.

“Acquisition Sub Merger Agreement” means the Agreement of Merger, dated as of the date hereof, by and between Acquisition Sub and Hawthorne, the form of which is attached as Annex C hereto.

“Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 9.02.

“Bank Regulatory Authority” means the OTS or any other state or federal bank regulatory agency charged with the supervision or regulation of Hawthorne, Hawthorne Bank, Parent or Parent Bank or the insurance of the deposits of Hawthorne Bank or Parent Bank.

“Bank Merger Agreement” means the Agreement of Merger dated as of the date hereof by and between Parent Bank and Hawthorne Bank, the form of which is attached hereto as Annex D.

“Business Day” means Monday through Friday of each week, except a legal holiday recognized as such by the U. S. Government or any day on which banking institutions in the State of California are authorized or obligated to close.

“Certificate” means any certificate which immediately prior to the Effective Time represented shares of Hawthorne Common Stock.

“Closing” and “Closing Date” have the meanings set forth in Section 2.02(b).

“Community Reinvestment Act” means the Community Reinvestment Act of 1977, as amended.

“Control Transaction” has the meaning set forth in Section 8.02(c)(ii) with respect to Hawthorne and Section 8.02(d)(ii) with respect to Parent.

“Determination Date” means the date on which the last required Bank Regulatory Authority approval is obtained with respect to the Transaction, without regard to a requisite waiting period.

“Equal Credit Opportunity Act” means the Equal Credit Opportunity Act, as amended.

“Equity Investment” means (i) an Equity Security; and (ii) an ownership interest in any company or other entity, any membership interest that includes a voting right in any company or other entity, any interest in real estate; and any investment or transaction which in substance falls into any of these categories even though it may be structured as some other form of investment or transaction.

“Equity Security” means any stock (other than adjustable-rate preferred stock, money market (auction rate) preferred stock or other instrument determined by the OTS to have the character of debt securities), certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, or voting-trust certificate; any security convertible into such a security; any security carrying any warrant or right to subscribe to or purchase any such security; and any certificate of interest or participation in, temporary or interim certificate for, or receipt for any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Exchange Ratio” has the meaning set forth in Section 3.01(a), subject to adjustment pursuant to Sections 3.06 and 8.01(k), and shall be rounded to the nearest one-ten-thousandth.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

“GAAP” means generally accepted accounting principles and practices as in effect from time to time in the United States.

“Governmental Authority” means any federal, state or local court, administrative agency or commission or other governmental authority or instrumentality.

“Hawthorne Bank” means Hawthorne Savings, FSB, a federally chartered savings bank and wholly owned subsidiary of Hawthorne.

“Hawthorne Certificate” means the Certificate of Incorporation of Hawthorne, as amended.

“Hawthorne Common Stock” means the common stock, $0.01 par value per share, of Hawthorne.

“Hawthorne Group” means any “affiliated group” (as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(b) of the Code) that includes Hawthorne and its Subsidiaries or any predecessor of or any successor to Hawthorne (or to another such predecessor or successor).

“Hawthorne Insiders” means those officers and directors of Hawthorne who are subject to the reporting requirements of Section 16(a) of the Exchange Act and who are listed in the Section 16 Information.

“Hawthorne Options” means the options to acquire Hawthorne Common Stock issued under the Hawthorne Stock Option Plan.

“Hawthorne Preferred Stock” means the preferred stock, $0.01 par value per share, of Hawthorne.

“Hawthorne Regulatory Authorities” has the meaning set forth in Section 5.03(i).

“Hawthorne Shareholder Agreement” has the meaning set forth in the recitals to this Agreement.

“Hawthorne Stock Option Plan” means the Hawthorne 2001 Stock Incentive Plan.

“Hawthorne Warrants” means the warrants issued by Hawthorne to acquire Hawthorne Common Stock.

“Indemnified Parties” and “Indemnifying Party” have the meanings set forth in Section 6.11(a).

“Liens” means any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance.

“Material Adverse Effect” means, with respect to Parent or Hawthorne any effect that (i) is material and adverse to the financial position, results of operations or business of Parent and its Subsidiaries taken as a whole or Hawthorne and its Subsidiaries taken as a whole, as the case may be, or (ii) would materially impair the ability of any of Parent and its Subsidiaries or Hawthorne and its Subsidiaries to perform their respective obligations under this Agreement or the Bank Merger Agreement or otherwise materially impede the consummation of the Transaction; provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability or interpretations thereof by Governmental Authorities, (b) changes in GAAP or regulatory accounting requirements applicable to banks, federal savings institutions and their holding companies generally, (c) changes in general economic conditions affecting banks and their holding companies generally, (d) any modifications or changes to valuation policies and practices, or expenses or costs incurred, in connection with the Transaction or restructuring charges taken in connection with the Transaction, in each case in accordance with GAAP, and (e) with respect to Hawthorne, the effects of any action or omission taken with the prior consent of Parent or as otherwise contemplated by the Agreement.

“Merger Consideration” means the number of whole shares of Parent Common Stock, plus cash in lieu of any fractional share interest, into which shares of Hawthorne Common Stock shall be converted pursuant to the provisions of Article III.

“Nasdaq” means The Nasdaq Stock Market, Inc.’s National Market or such other securities exchange on which the Parent Common Stock may be listed.

“National Labor Relations Act” means the National Labor Relations Act, as amended.

“Parent Articles” means the Articles of Incorporation of Parent, as amended.

“Parent Bank” means Commercial Capital Bank, FSB, a federally chartered savings bank and wholly owned subsidiary of Parent.

“Parent Closing Average” means the average of the last sales price per share for Parent Common Stock on the Nasdaq (as reported in the Wall Street Journal, or if not reported therein, another authorized source) for the twenty consecutive Nasdaq trading day period ending on the Determination Date, rounded to the nearest whole cent, subject to adjustment pursuant to Section 3.06.

“Parent Common Stock” means the common stock, $0.001 par value per share, of Parent.

“Parent Preferred Stock” means the preferred stock, $0.001 par value per share, of Parent.

“Parent Regulatory Authorities” has the meaning set forth in Section 5.04(k)(i).

“Parent Shareholder Agreement” has the meaning set forth in the recitals to this Agreement.

“Peer Group” means the 15 publicly traded companies listed below next to its Weighting Factor:

“Peer Group Index on the Determination Date,” means the index of the Peer Group, calculated as follows: the sum of the products derived by multiplying the corresponding Weighting Factor by the quotient

calculated by dividing each of the Peer Group member’s average closing common stock price for the 20 trading days prior to the Determination Date over the Peer Group member’s closing common stock price on the date of this Agreement. If any member of the Peer Group should stop trading on Nasdaq or the New York Stock Exchange or become the subject of an offer for more than 25% of its shares of common stock, such Peer Group member shall be removed from the Peer Group with its Weighting Factor distributed pro rata based upon the weighting distribution of the remaining Peer Group members. The calculation of the Peer Group Index on the Determination Date shall be adjusted for any stock split and stock dividend, combination, reclassification, exchange of shares, recapitalization or similar transaction made with respect to the common stock of any such Peer Group member.

“Person” means any individual, bank, corporation, partnership, association, joint-stock company, business trust, limited liability company or unincorporated organization.

“Previously Disclosed” by a party shall mean information set forth in a section of its Disclosure Schedule corresponding to the section of this Agreement where such term is used.

“Registration Rights Agreement” has the meaning set forth in Section 3.08(c).

“Rights” means, with respect to any Person, warrants, options, rights, convertible securities and other arrangements or commitments that obligate the Person to issue or dispose of any of its capital stock or other ownership interests.

“Savings Association Insurance Fund” means the Savings Association Insurance Fund maintained by the FDIC.

“Section 16 Information” means information accurate in all respects regarding the Hawthorne Insiders, the number of shares of Hawthorne Common Stock held by each such Hawthorne Insider and the number and description of the Hawthorne Options and Hawthorne Warrant held by each such Hawthorne Insider.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“Securities Documents” has the meaning set forth in Sections 5.03(g)(i) and 5.04(g)(i) in the case of Hawthorne and Parent, respectively.

“Starting Price” means $26.15, subject to adjustment pursuant to Section 3.06 and rounded to the nearest whole cent.

“Subsidiary” and “Significant Subsidiary” have the meanings ascribed to those terms in Rule l-02 of Regulation S-X of the SEC.

“Tax” and “Taxes” mean all federal, state, local or foreign income, gross income, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, custom duties, unemployment or other taxes of any kind whatsoever, together with any interest, additions or penalties thereto and any interest in respect of such interest and penalties.

“Tax Returns” means any return, declaration or other report (including elections, declarations, schedules, estimates and information returns) with respect to any Taxes.

“Transaction” means the Merger and any other transactions contemplated by this Agreement.

“Treasury Stock” means shares of Hawthorne Common Stock held by Hawthorne or any of its Subsidiaries or by Parent or any of its Subsidiaries, other than in a fiduciary (including custodial or agency) capacity or as a result of debts previously contracted in good faith.

“Voting Debt” means any bonds, debentures, notes or other indebtedness that provides for the right to vote on matters with respect to which Parent’s stockholders have the right to vote upon.

“Weighting Factor” means, for each member of the Peer Group, the corresponding percentage signified for said Peer Group member in the definition of Peer Group

(a) The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Hawthorne shall merge with and into Acquisition Sub in accordance with the applicable provisions of the DGCL (the “Merger”), the separate corporate existence of Hawthorne shall cease and Acquisition Sub shall survive and continue to exist as a corporation incorporated under the DGCL (Acquisition Sub, as the surviving corporation in the Merger, sometimes being referred to herein as the “Surviving Corporation”). Simultaneously with or as soon as practicable after the Merger, the Surviving Corporation shall be merged with and into Parent (the “Acquisition Sub Merger”) in accordance with the Agreement of Merger, the form of which is attached hereto as Annex C.

(b) Name. The name of the Surviving Corporation shall be “CCBI Acquisition Corp.”

(c) Certificate of Incorporation and Bylaws. The certificate of incorporation and bylaws of Acquisition Sub immediately after the Merger shall be the certificate of incorporation and the bylaws of Acquisition Sub as in effect immediately prior to the Merger.

(d) Directors and Executive Officers of the Surviving Corporation. The directors of the Surviving Corporation immediately after the Merger shall be the directors of Acquisition Sub immediately prior to the Merger. The executive officers of the Surviving Corporation immediately after the Merger shall be the executive officers of Acquisition Sub immediately prior to the Merger, each of whom shall serve until such time as their successors shall be duly elected and qualified.

(e) Authorized Capital Stock. The authorized capital stock of the Surviving Corporation upon consummation of the Merger shall be as set forth in the Acquisition Sub certificate of incorporation immediately prior to the Merger.

(f) Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in Sections 259 through 261 of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Hawthorne shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of Hawthorne shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

(g) Additional Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider that any further assignments or assurances in law or any other acts are necessary or desirable to (i) vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Hawthorne acquired or to be acquired by the Surviving

Corporation as a result of, or in connection with, the Merger, or (ii) otherwise carry out the purposes of this Agreement, Hawthorne, and its proper officers and directors, shall be deemed to have granted to the Surviving Corporation an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Corporation and otherwise to carry out the purposes of this Agreement, and the proper officers and directors of the Surviving Corporation are fully authorized in the name of the Surviving Corporation or otherwise to take any and all such action.

(a) Subject to the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the consummation of the Merger, but subject to the fulfillment or waiver of those conditions), the parties shall cause a certificate of merger relating to the Merger (the “Certificate of Merger”) to be filed with the Secretary of State of the State of Delaware pursuant to the DGCL on (i) a date selected by Parent and Acquisition Sub after such satisfaction or waiver which is no later than five Business Days after such satisfaction or waiver, or (ii) such other date to which the parties may mutually agree in writing, provided that in either case, such date shall be no less than ten days following the Hawthorne Meeting. The Merger provided for herein shall become effective upon such filings or on such date as may be specified therein. The date of such filings or such later effective date is herein called the “Effective Date.” The “Effective Time” of the Merger shall be the time of such filings or as set forth in such filings.

(b) A closing (the “Closing”) shall take place immediately prior to the Effective Time at 8:00 a.m., Pacific Time, at the principal offices of Parent in Irvine, California, or at such other place, at such other time, or on such other date as the parties may mutually agree upon (such date, the “Closing Date”). At the Closing, there shall be delivered to Parent and Hawthorne the opinions, certificates and other documents required to be delivered under Article VII hereof.

3.01 Conversion of Shares. Subject to the provisions of this Agreement, at the Effective Time, automatically by virtue of the Merger and without any action on the part of any Person:

(a) Outstanding Hawthorne Common Stock. Each share of Hawthorne Common Stock, excluding Treasury Stock, issued and outstanding immediately prior to the Effective Time shall become and be converted into 1.45 shares of Parent Common Stock (the “Exchange Ratio”).

(b) Outstanding Parent Common Stock. Each share of Parent Common Stock that is issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall be unaffected by the Merger.

(c) Outstanding Acquisition Sub Common Stock. Each share of Acquisition Sub Common Stock that is issued and outstanding prior to the Effective Time shall remain issued and outstanding and shall be unaffected by the Merger.

(d) Treasury Stock. Each share of Hawthorne Common Stock held as Treasury Stock immediately prior to the Effective Time shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefor.

3.02 Deposit of Parent Common Stock. At or prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with an agent, duly appointed by Parent and reasonably acceptable to Hawthorne (the “Exchange Agent”), for the benefit of the holders of Certificates, for exchange in accordance with this Article III, certificates

representing the shares of Parent Common Stock and cash in lieu of any fractional shares to be issued pursuant to Sections 3.01(a) and 3.05 in the Merger in exchange for outstanding shares of Hawthorne Common Stock.

(a) At or after the Effective Time, each holder of a Certificate or Certificates, upon surrender of the same to the Exchange Agent, shall be entitled to receive in exchange therefor a certificate or certificates representing the number of whole shares of Parent Common Stock into which the shares of Hawthorne Common Stock theretofore represented by the Certificate or Certificates so surrendered shall have been converted as provided in Section 3.01(a) hereof and cash in lieu of fractional shares as provided in Section 3.05 hereof. As promptly as practicable after the Effective Time, but in no event later than five Business Days after the Effective Time, the Exchange Agent shall mail to each holder of record of an outstanding Certificate which is to be exchanged for Parent Common Stock as provided in Section 3.01(a) hereof, a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to such Certificate shall pass, only upon delivery of such Certificate to the Exchange Agent) advising such holder of the terms of the exchange effected by the Merger and of the procedure for surrendering to the Exchange Agent such Certificate in exchange for a certificate or certificates evidencing Parent Common Stock or cash in lieu of any fractional share interest. Notwithstanding anything in this Agreement to the contrary, Certificates surrendered for exchange by any Hawthorne Affiliate shall not be exchanged for certificates representing shares of Parent Common Stock in accordance with the terms of this Agreement until Parent has received an Affiliate Letter from such person as specified in Section 6.07.

(b) No holder of a Certificate shall be entitled to receive any dividends in respect of the Parent Common Stock into which such shares shall have been converted by virtue of the Merger until the Certificate representing such shares is surrendered in exchange for a certificate or certificates representing shares of Parent Common Stock. In the event that dividends are declared and paid by Parent in respect of Parent Common Stock after the Effective Time but prior to any holder’s surrender of Certificates, dividends payable to such holder in respect of shares of Parent Common Stock not then issued shall accrue (without interest). Any such dividends shall be paid (without interest) upon surrender of the Certificates. Parent shall be entitled, after the Effective Time, to treat Certificates as evidencing ownership of the number of whole shares of Parent Common Stock into which the shares of Hawthorne Common Stock represented by such Certificates shall have been converted pursuant to this Agreement, notwithstanding the failure on the part of the holder thereof to surrender such Certificates.

(c) The Exchange Agent and Parent, as the case may be, shall not be obligated to deliver a certificate or certificates representing shares of Parent Common Stock to which a holder of Hawthorne Common Stock would otherwise be entitled as a result of the Merger until such holder surrenders the Certificate or Certificates representing the shares of Hawthorne Common Stock for exchange as provided in this Section 3.03, or, in default thereof, an appropriate affidavit of loss and indemnity agreement and/or a bond in an amount as may be reasonably required in each case by Parent. If any certificates evidencing shares of Parent Common Stock are to be issued in a name other than that in which the Certificate evidencing Hawthorne Common Stock surrendered in exchange therefore is registered, it shall be a condition of the issuance thereof that the Certificate so surrendered shall be properly endorsed or accompanied by an executed form of assignment separate from the Certificate and otherwise in proper form for transfer and that the person requesting such exchange pay to the Exchange Agent any transfer or other tax required by reason of the issuance of a certificate for shares of Parent Common Stock in any name other than that of the registered holder of the Certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

3.04 Rights as Shareholders; Stock Transfers. At the Effective Time, holders of Hawthorne Common Stock shall cease to be, and shall have no rights as, stockholders of Hawthorne other than to receive the consideration provided under this Article III. After the Effective Time, there shall be no transfers on the stock transfer books of Hawthorne or the Surviving Corporation of shares of Hawthorne Common Stock.

3.05 No Fractional Shares. Notwithstanding any other provision of this Agreement, neither certificates nor scrip for fractional shares of Parent Common Stock shall be issued in the Merger. Each holder of Hawthorne Common Stock who otherwise would have been entitled to a fraction of a share of Parent Common Stock (after taking into account all Certificates delivered by such holder) shall receive in lieu thereof cash (without interest) in an amount determined by multiplying the fractional share interest to which such holder would otherwise be entitled by the closing price of a share of Parent Common Stock on Nasdaq on the business day preceding the Effective Time (as reported in The Wall Street Journal, or if not reported therein, in another authoritative source), rounded to the nearest whole cent. No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share.

3.06 Anti-Dilution Provisions. If, between the date hereof and the Effective Time, the shares of Parent Common Stock shall be changed into a different number or class of shares by reason of any reclassification, recapitalization, reorganization, split-up, combination, exchange of shares or readjustment, or similar transaction with respect to Parent Common Stock, or a stock dividend thereon shall be declared with a record date or ex dividend or distribution date within said period, the Exchange Ratio, the Starting Price and the Parent Closing Average shall be adjusted accordingly. Notwithstanding anything to the contrary stated herein, Parent and Hawthorne agree that the Exchange Ratio shall be adjusted to 1.9333 and the Starting Price shall be adjusted to $19.61 when the four for three stock split of Parent Common Stock declared on January 23, 2004 is effected, subject to further adjustment as provided in this Section 3.06.

3.07 Withholding Rights. Parent (through the Exchange Agent, if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Hawthorne Common Stock such amounts as Parent is required under the Code or any state, local or foreign tax law or regulation thereunder to deduct and withhold with respect to the making of such payment. Any amounts so withheld shall be treated for all purposes of this Agreement as having been paid to the holder of Hawthorne Common Stock in respect of which such deduction and withholding was made by Parent.

(a) At the Effective Time, each vested Hawthorne Option which is then outstanding, and which is then vested and exercisable without regard to the Merger, shall cease to represent a right to acquire shares of Hawthorne Common Stock and shall be converted automatically into an option to purchase shares of Parent Common Stock, and Parent shall assume each such Hawthorne Option, in accordance with the terms of the Hawthorne Stock Option Plan and stock option or other agreement by which it is evidenced, except that from and after the Effective Time, (i) Parent and the Compensation Committee of its Board of Directors shall be substituted for Hawthorne and the committee of the Board of Directors of Hawthorne (including, if applicable, the entire Board of Directors of Hawthorne) administering such Hawthorne Stock Option Plan, (ii) each Hawthorne Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (iii) the number of shares of Parent Common Stock subject to such Hawthorne Option shall be equal to the number of shares of Hawthorne Common Stock subject to such Hawthorne Option immediately prior to the Effective Time multiplied by the Exchange Ratio, provided that any fractional shares of Parent Common Stock resulting from such multiplication shall be rounded down to the nearest share, and (iv) the per share exercise price under each such Hawthorne Option shall be adjusted by dividing the per share exercise price under each such Hawthorne Option by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. Notwithstanding clauses (iii) and (iv) of the preceding sentence, each Hawthorne Option which is an “incentive stock option” shall be adjusted as required by Section 424 of the Code, and the regulations promulgated thereunder, so as not to constitute a modification, extension or renewal of the option within the meaning of Section 424(h) of the Code. Each Hawthorne Option which is outstanding immediately prior to the Effective Time but which is not vested and exercisable except as a result of the Merger shall not be assumed by Parent or otherwise continued in effect following the Effective Time, and, therefore, in accordance with the terms of the Hawthorne Stock Option Plan and stock option or other agreement by which it is evidenced, each such Hawthorne Option shall become fully vested and

exercisable immediately prior to the Effective Time and shall terminate and cease to be outstanding at the Effective Time. Parent and Hawthorne agree to take all necessary steps to effect the foregoing provisions of this Section 3.08(a). As of the Effective Time, Parent shall issue to each holder of an outstanding Hawthorne Option which has been assumed by Parent a document evidencing the conversion and assumption of the Hawthorne Option by Parent pursuant to this Section 3.08(a).

(b) At the Effective Time, each Hawthorne Warrant which is then outstanding, whether or not vested or exercisable, shall cease to represent a right to acquire shares of Hawthorne Common Stock and shall be converted automatically into a warrant to purchase shares of Parent Common Stock, and Parent shall assume each Hawthorne Warrant, in accordance with the terms of the Hawthorne Warrant or other agreement by which it is evidenced, except that from and after the Effective Time, (i) each Hawthorne Warrant assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to such Hawthorne Warrant shall be equal to the number of shares of Hawthorne Common Stock subject to such Hawthorne Warrant immediately prior to the Effective Time multiplied by the Exchange Ratio, provided that any fractional shares of Parent Common Stock resulting from such multiplication shall be rounded down to the nearest share, and (iii) the per share exercise price under each such Hawthorne Warrant shall be adjusted by dividing the per share exercise price under each such Hawthorne Warrant by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. Parent and Hawthorne agree to take all necessary steps to effect the foregoing provisions of this Section 3.08(b), including without limitation the mailing by Parent by first class, U.S. mail, postage prepaid, to each holder of a Hawthorne Warrant of a written instrument setting forth Parent’s agreement to assume such Hawthorne Warrants.

(c) Within ten Business Days after the Effective Time, Parent shall file a registration statement on Form S-3 (or any successor or other appropriate form) with respect to the shares of Parent Common Stock subject to the Hawthorne Warrants referred to in paragraph (b) of this Section 3.08, and a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), with respect to the shares of Parent Common Stock subject to the Hawthorne Options referred to in Section 3.08(a), and in each case shall use its reasonable efforts to maintain the current status of the prospectus or prospectuses contained therein for so long as such options remain outstanding in the case of a Form S-8 or, in the case of a Form S-3, until the shares subject to such Hawthorne Options or the Hawthorne Warrants may be sold without a further holding period under Rule 144 under the Securities Act. Notwithstanding the foregoing, Parent acknowledges and agrees that at the Effective Time, it will be bound by and assume all obligations of Hawthorne under the Registration Rights Agreement dated as of December 12, 1995 by and among Hawthorne and each of the Investors (as such term is defined in such Registration Rights Agreement) (the “Registration Rights Agreement”).

3.09 Bank Merger. As soon as practicable after the execution of this Agreement, Hawthorne and Parent shall cause Hawthorne Bank and Parent Bank to enter into the Bank Merger Agreement, the form of which is attached hereto as Annex D, which provides for the merger of Hawthorne Bank with and into Parent Bank (the “Bank Merger”), in accordance with applicable laws and regulations and the terms of the Bank Merger Agreement and as soon as practicable after consummation of the Merger and the Acquisition Sub Merger. The Bank Merger Agreement provides that the directors of Parent Bank upon consummation of the Bank Merger shall be the directors of Parent Bank immediately prior to the Bank Merger, plus the three Hawthorne Designees.

4.01 Forbearances of Hawthorne. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement or as Previously Disclosed, without the prior written consent of Parent, not to be unreasonably withheld, Hawthorne will not, and will cause each of its Subsidiaries not to:

(a) Ordinary Course. Conduct its business other than in the ordinary and usual course consistent with past practice or fail to use reasonable best efforts to preserve its business organization, keep available the present services of its employees and preserve for itself and Parent the goodwill of the customers of Hawthorne and its Subsidiaries and others with whom business relations exist.

(b) Capital Stock. Other than pursuant to Rights set forth on Schedule 4.01(b) of Hawthorne’s Disclosure Schedule and outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of stock or any Rights or (ii) permit any additional shares of stock to become subject to grants of employee or director stock options or other Rights.

(c) Dividends; Etc. (i) Make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of Hawthorne capital stock, other than dividends from wholly owned Subsidiaries to Hawthorne or another wholly owned Subsidiary of Hawthorne or as set forth on Schedule 4.01(c) of Hawthorne’s Disclosure Schedule or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.

(d) Compensation; Employment Agreements; Etc. Enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of Hawthorne or its Subsidiaries or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), except (i) for normal individual increases in compensation to employees in the ordinary course of business consistent with past practice, provided that no such increase shall result in an annual adjustment of more than 3%, (ii) for other changes that are required by applicable law, (iii) to satisfy contractual obligations existing as of the date hereof and set forth in Schedule 4.01(d) of Hawthorne’s Disclosure Schedule, (iv) for retention bonuses which will not exceed $600,000 in the aggregate and which will be disclosed in writing to Parent and as to which Parent shall not have objected to such payments within two Business Days of written receipt of such written notice, (v) severance payments pursuant to the Hawthorne Financial Corporation and Hawthorne Savings, F.S.B. Severance Plan which has been Previously Disclosed, which severance payments will be disclosed in writing to Parent, or (vi) for grants of awards to newly-hired employees consistent with past practice, which consent shall be deemed to have been received with respect to increases in compensation to the extent Hawthorne has provided written notice hereunder, which Parent has not objected to within two Business Days of receipt of such written notice.

(e) Hiring. Hire any person as an employee of Hawthorne or any of its Subsidiaries or promote any employee, except (i) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.01(e) of Hawthorne’s Disclosure Schedule and (ii) persons hired to fill any vacancies arising after the date hereof and whose employment is terminable at the will of Hawthorne or a Subsidiary of Hawthorne, as applicable, other than any vice president, senior vice president, executive vice president, or any other senior officer of Hawthorne or any of its Subsidiaries or any other person to be hired who would have a base salary, including any guaranteed bonus or any similar bonus, considered on an annual basis of more than $75,000, which consent shall be deemed to have been received to the extent Hawthorne has provided written notice hereunder, which Parent has not objected to within two Business Days of receipt of such written notice.

(f) Benefit Plans. Enter into, establish, adopt or amend, or make any contributions to (except (i) as may be required by applicable law or (ii) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.01(f) of Hawthorne’s Disclosure Schedule), any pension, retirement, stock option, stock

purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, officer or employee of Hawthorne or its Subsidiaries or take any action to accelerate the vesting or exercisability of stock options, restricted stock or other compensation or benefits payable thereunder.

(g) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary course of business consistent with past practice and in a transaction that, together with all other such transactions, is not material to Hawthorne and its Subsidiaries taken as a whole.

(h) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits or properties of any other entity.

(i) Capital Expenditures. Make any capital expenditures other than those identified on Schedule 4.01(i) of Hawthorne’s Disclosure Schedule and other than capital expenditures in the ordinary course of business consistent with past practice in amounts not exceeding $15,000 individually or $50,000 in the aggregate.

(j) Governing Documents. Amend the Hawthorne Certificate or the Hawthorne Bylaws or the articles of incorporation or bylaws (or equivalent documents) of any Subsidiary of Hawthorne.

(k) Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by changes in laws or regulations or GAAP.

(l) Contracts. Except in the ordinary course of business consistent with past practice or as otherwise permitted under this Section 4.01, enter into or terminate any Material Contract or amend or modify in any material respect any of its existing Material Contracts.

(m) Claims. Enter into any settlement or similar agreement with respect to any action, suit, proceeding, order or investigation to which Hawthorne or any of its Subsidiaries is or becomes a party after the date of this Agreement, which settlement, agreement or action involves payment by Hawthorne or any of its Subsidiaries of an amount which exceeds $50,000 and/or would impose any material restriction on the business of Hawthorne or any of its Subsidiaries or create precedent for claims that are reasonably likely to be material to Hawthorne and its Subsidiaries taken as a whole.

(n) Banking Operations. Enter into any new material line of business; change its material lending, investment, underwriting, risk and asset liability management and other material banking and operating policies, except as required by applicable law, regulation or policies imposed by any Governmental Authority; or file any application or make any contract with respect to branching or site location or branching or site relocation.

(p) Indebtedness. Incur any indebtedness for borrowed money (other than deposits, federal funds purchased, cash management accounts, Federal Home Loan Bank borrowings that mature within one year and securities sold under agreements to repurchase that mature within 90 days, in each case in the ordinary course of business consistent with past practice) or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person, other than in the ordinary course of business consistent with past practice.

(q) Investment Securities. Acquire (other than by way of foreclosures or acquisitions in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary course of business consistent with past practice) any debt security or Equity Investment other than federal funds or United States Government securities or United States Government agency securities, in each case with a term of one (1) year or less.

(r) Loans. Make, renew or otherwise modify any loan, loan commitment, letter of credit or other extension of credit (collectively, “Loans”) other than in the ordinary course of business consistent with past practice, provided that Hawthorne Bank shall not make, renew or otherwise modify (i) any Loan (other than a permanent Loan secured by an owner-occupied 1-4 single-family residence) with a principal balance in excess of $5.0 million, (ii) any permanent Loan secured by an owner-occupied 1-4 single-family residence with a principal balance in excess of $3.0 million, or (iii) any Loan in excess of $1.0 million to the extent the Loan contains terms that involve an exception to Hawthorne’s Credit Policy Manual without Parent’s written consent, which consent shall be deemed to have been received to the extent Hawthorne has provided written notice hereunder, which Parent has not objected to within two Business Days of receipt of such written notice.

(s) Investments in Real Estate. Make any investment or commitment to invest in real estate or in any real estate development project (other than by way of foreclosure or acquisitions in a bona fide fiduciary capacity or in satisfaction of a debt previously contracted in good faith, in each case in the ordinary course of business consistent with past practice).

(t) Adverse Actions. (i) Take any action that would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (ii) take any action that is intended or is reasonably likely to result in (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VII not being satisfied or (z) a material violation of any provision of this Agreement or the Bank Merger Agreement, in either case, except as may be required by applicable law or regulation.

(u) Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.

4.02 Forbearances of Parent. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement or as Previously Disclosed, without the prior written consent of Hawthorne, not to be unreasonably withheld, Parent will not, and will cause each of its Subsidiaries not to:

(a) Ordinary Course. Conduct its business other than in the ordinary and usual course consistent with past practice or fail to use reasonable best efforts to preserve its business organization, keep available the present services of its employees and preserve the goodwill of the customers of Parent and its Subsidiaries and others with whom business relations exist.

(b) Cash Dividends. (i) Make, declare, pay or set aside for payment any cash dividend or cash distribution on or in respect of any shares of Parent capital stock, (ii) directly or indirectly reclassify, purchase or otherwise acquire, any shares of its capital stock or (iii) effect any reorganization, recapitalization or similar transaction with respect to Parent Common Stock.

(c) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary course of business consistent with past practice and in a transaction that, together with all other such transactions, is not material to Parent and its Subsidiaries taken as a whole.

(d) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits or properties of any other entity.

(e) Governing Documents. Amend the Parent Articles or Parent Bylaws or the articles of incorporation or bylaws (or equivalent documents) of any Subsidiary of Parent.

(f) Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by changes in laws or regulations or GAAP.

(g) Capital Stock. Other than pursuant to Parent Benefit Plans (whether or not such Parent Benefit Plans were in existence as of the date of this Agreement or were created thereafter) or Rights which were issued before or Rights which were issued pursuant to Parent Benefit Plans after the date of this Agreement, issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of stock or Voting Debt.

(h) Banking Operations. Change its material lending, investment, underwriting, risk and asset liability management and other material banking and operating policies, except as required by applicable law, regulation or policies imposed by any Governmental Authority.

(j) Adverse Actions. (i) Take any action that would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (ii) take any action that is intended or is reasonably likely to result in (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VII not being satisfied or (z) a material violation of any provision of this Agreement or the Bank Merger Agreement, except as may be required by applicable law or regulation.

(k) Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.

5.01 Disclosure Schedules. On or prior to the date hereof, Parent has delivered to Hawthorne a schedule and Hawthorne has delivered to Parent a schedule (respectively, its “Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 5.03, 5.04 or 5.05 or to one or more of its covenants contained in Article IV; provided, however, that (a) no such item is required to be set forth in a Disclosure Schedule as an exception to a representation or warranty or as an exception to a covenant in Article IV if its absence would not be reasonably likely to result in the related representation or warranty being deemed untrue or incorrect under the standard established by Section 5.02 and (b) the mere inclusion of an item in a Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a party that such item represents a material exception or fact, event or circumstance or that, absent such inclusion in the Disclosure Schedule, such item is or would be reasonably likely to result in a Material Adverse Effect.

5.02 Standard. No representation or warranty of Hawthorne, Parent or Acquisition Sub contained in Sections 5.03, 5.04 or 5.05, respectively, shall be deemed untrue or incorrect, and no party hereto shall be deemed to have breached a representation or warranty, as a consequence of the existence of any fact, event or circumstance unless such fact, circumstance or event, individually or taken together with all other facts, events or circumstances inconsistent with any representation or warranty contained in Sections 5.03, 5.04 or 5.05, has had or is reasonably likely to have a Material Adverse Effect on the party making such representation or warranty.

5.03 Representations and Warranties of Hawthorne. Subject to Sections 5.01 and 5.02, Hawthorne hereby represents and warrants to Parent:

(a) Organization, Standing and Authority. Hawthorne is duly organized, validly existing and in good standing under the laws of the State of Delaware. Hawthorne is duly qualified to do business and is in good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its

business requires it to be so qualified. Hawthorne has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as now conducted.

(b) Hawthorne Capital Stock. The authorized capital stock of Hawthorne consists solely of 20,000,000 shares of Hawthorne Common Stock, of which 11,742,611 shares are issued and outstanding as of the date hereof, and 10,000,000 shares of Hawthorne Preferred Stock, of which no shares are issued and outstanding as of the date hereof. As of the date hereof, 2,108,616 shares of Hawthorne Common Stock were held in treasury by Hawthorne or otherwise directly or indirectly owned by Hawthorne. The outstanding shares of Hawthorne Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, and none of the outstanding shares of Hawthorne Common Stock have been issued in violation of the preemptive rights of any Person. Section 5.03(b) of Hawthorne’s Disclosure Schedule sets forth for each Hawthorne Option and Hawthorne Warrant, as applicable, the name of the grantee, the date of the grant, the type of grant, the status of the option grant as qualified or non-qualified under Section 422 of the Code (with respect to the Hawthorne Options), the number of shares of Hawthorne Common Stock subject to each Hawthorne Option or Hawthorne Warrant, the number of shares of Hawthorne Common Stock subject to Hawthorne Options and Hawthorne Warrants that are currently exercisable and the exercise price per share. Except as set forth in the preceding sentence, there are no shares of Hawthorne Common Stock reserved for issuance, Hawthorne does not have any Rights issued or outstanding with respect to Hawthorne Common Stock and Hawthorne does not have any commitment to authorize, issue or sell any Hawthorne Common Stock or Rights.

(i) (A) Hawthorne has Previously Disclosed a list of all of its Subsidiaries together with the jurisdiction of organization of each such Subsidiary, (B) except as set forth on Schedule 5.03(c) of Hawthorne’s Disclosure Schedule, Hawthorne owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries, (C) no equity securities of any of its Subsidiaries are or may become required to be issued (other than to Hawthorne) by reason of any Right or otherwise, (D) there are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Hawthorne or any of its wholly owned Subsidiaries), (E) there are no contracts, commitments, understandings, or arrangements relating to Hawthorne’s rights to vote or to dispose of such securities and (F) all the equity securities of Hawthorne’s Subsidiaries held by Hawthorne or its Subsidiaries are fully paid and nonassessable and are owned by Hawthorne or its Subsidiaries free and clear of any Liens.

(ii) Except for securities and other interests held in a fiduciary capacity and beneficially owned by third parties or taken in consideration of debts previously contracted, ownership interests in Hawthorne’s Subsidiaries and stock in the Federal Home Loan Bank of San Francisco, Hawthorne does not own beneficially, directly or indirectly, any equity securities or similar interests of any Person or any interest in a partnership or joint venture of any kind.

(iii) Each of Hawthorne’s Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified.

(iv) The deposit accounts of Hawthorne Bank are insured by the Savings Association Insurance Fund, in the manner and to the maximum extent provided by applicable law, and Hawthorne Bank has paid all deposit insurance premiums and assessments required by applicable laws and regulations.

(d) Corporate Power. Each of Hawthorne and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets; and Hawthorne

has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transaction, subject to receipt of all necessary approvals of Governmental Authorities and the approval of Hawthorne’s stockholders of this Agreement.

(e) Corporate Authority. Subject to the approval of this Agreement by the holders of the outstanding Hawthorne Common Stock, this Agreement and the Transaction have been authorized by all necessary corporate action of Hawthorne and the Hawthorne Board on or prior to the date hereof. Hawthorne has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Parent, this Agreement is a valid and legally binding obligation of Hawthorne, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(i) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Hawthorne or any of its Subsidiaries in connection with the execution, delivery or performance by Hawthorne and Hawthorne Bank of this Agreement and the Bank Merger Agreement, respectively, or to consummate the Transaction, except as Previously Disclosed and except for (A) filings of applications or notices with, and approvals or waivers by, the OTS, (B) filings with the SEC and state securities authorities, as applicable, in connection with the submission of this Agreement for the approval of the respective holders of Hawthorne Common Stock and Parent Common Stock and the issuance of Parent Common Stock in the Merger, (C) the filing of a Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL with respect to the Merger and (D) the approval of this Agreement by the holders of the outstanding shares of Hawthorne Common Stock. As of the date hereof, Hawthorne is not aware of any reason why the approvals set forth above and referred to in Section 7.01(b) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).

(ii) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the preceding paragraph and the expiration of related waiting periods, the execution, delivery and performance of this Agreement and the Bank Merger Agreement by Hawthorne and Hawthorne Bank, respectively, and the consummation of the Transaction do not and will not (A) except as Previously Disclosed, constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Hawthorne or any of its Subsidiaries or to which Hawthorne or any of its Subsidiaries or any of their respective properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Hawthorne Articles, the Hawthorne Bylaws or similar governing documents of Hawthorne’s Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

(i) Hawthorne’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2002, December 31, 2001 and December 31, 2000 and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it subsequent to December 31, 2000 with the SEC (collectively, Hawthorne’s “Securities Documents”), as of the date filed or to be filed and as amended prior to the date hereof, (A) complied or will comply in all material respects as to form with the applicable regulations of the SEC as the case may be and (B) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were

made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date; and each of the consolidated statements of financial condition contained in any such Securities Documents (including the related notes and schedules thereto) fairly presents, or will fairly present, the consolidated financial position of Hawthorne and its Subsidiaries as of its date, and each of the consolidated statements of income, stockholders’ equity and cash flows or equivalent statements in such Securities Documents (including any related notes and schedules thereto) fairly presents, or will fairly present, the consolidated results of operations, changes in stockholders’ equity and changes in cash flows, as the case may be, of Hawthorne and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein.

(ii) Except as Previously Disclosed, since September 30, 2003, neither Hawthorne nor any of its Subsidiaries has incurred any liability other than in the ordinary course of business consistent with past practice (excluding the incurrence of expenses related to this Agreement and the Transaction).

(iii) (A) Since September 30, 2003, (A) Hawthorne and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice (excluding the incurrence of expenses related to this Agreement and the Transaction), (B) except as Previously Disclosed, neither Hawthorne nor any of its Subsidiaries has taken nor permitted or entered into any contract with respect to, or otherwise agreed or committed to do or take, any of the actions set forth in Sections 4.01(d), (f), (g), (h), (j), (k) and (n) hereof between September 30, 2003 and the date hereof, (C) except as Previously Disclosed, neither Hawthorne nor any of its Subsidiaries has taken or permitted or entered into any contract with respect to, or otherwise agreed or committed to do or take, any of the action set forth in Sections 4.01(e), (i), (l), (m), (p), (q) and (r) between January 1, 2004 and the date hereof and (D) since September 30, 2003, no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of this Section 5.03 or otherwise), is reasonably likely to have a Material Adverse Effect with respect to Hawthorne.

(iv) No agreement pursuant to which any loans or other assets have been or shall be sold by Hawthorne or its Subsidiaries entitled the buyer of such loans or other assets, unless there is material breach of a representation or covenant by Hawthorne or its Subsidiaries, to cause Hawthorne or its Subsidiaries to repurchase such loan or other asset or the buyer to pursue any other form of recourse against Hawthorne or its Subsidiaries. Except as disclosed in Hawthorne’s Securities Documents filed prior to the date hereof or as Previously Disclosed, since December 31, 2000, no cash, stock or other dividend or any other distribution with respect to the capital stock of Hawthorne or any of its Subsidiaries has been declared, set aside or paid. Except as disclosed in Hawthorne’s Securities Documents filed prior to the date hereof or as Previously Disclosed, no shares of capital stock of Hawthorne have been purchased, redeemed or otherwise acquired, directly or indirectly, by Hawthorne since September 30, 2003, and no agreements have been made to do the foregoing.

(v) Hawthorne maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning Hawthorne and its Subsidiaries is made known on a timely basis to the individuals responsible for the preparation of Hawthorne’s Securities Documents and other public disclosure documents. The Chief Executive Officer and the Chief Financial Officer of Hawthorne have signed, and Hawthorne has furnished to the SEC, all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. § 1350; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Hawthorne nor any of its officers has received notice from any Governmental Authorities questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

(h) Litigation. No litigation, claim or other proceeding before any court or governmental agency is pending against Hawthorne or any of its Subsidiaries and, to Hawthorne’s knowledge, no such litigation,

claim or other proceeding has been threatened and there are no facts which could reasonably give rise to such litigation, claim or other proceeding. Neither Hawthorne nor any of its Subsidiaries is a party to any order, judgment or decree that has or could reasonably be expected to have a Material Adverse Effect with respect to Hawthorne.

(i) Neither Hawthorne nor any of its Subsidiaries nor any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any Bank Regulatory Authority or any federal or state governmental agency or authority charged with the supervision or regulation of issuers of securities or the supervision or regulation of it (collectively, the “Hawthorne Regulatory Authorities”). Hawthorne and its Subsidiaries have paid all assessments made or imposed by any Hawthorne Regulatory Authority.

(ii) Neither Hawthorne nor any of its Subsidiaries has been advised by, nor does it have any knowledge of facts which could give rise to an advisory notice by, any Hawthorne Regulatory Authority that such Hawthorne Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission.

(i) is in material compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, Sections 23A and 23B of the Federal Reserve Act and OTS regulations pursuant thereto, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices;

(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Hawthorne’s knowledge, no suspension or cancellation of any of them is threatened; and

(iii) has received, since December 31, 2000, no notification or communication from any Governmental Authority (A) asserting that Hawthorne or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization (nor, to Hawthorne’s knowledge, do any grounds for any of the foregoing exist).

(i) Except for documents listed as exhibits to Hawthorne’s Securities Documents or as Previously Disclosed, neither Hawthorne nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) (i) with respect to the employment of any of its directors, officers, employees or consultants, (ii) which would entitle any present or former director, officer, employee or agent of Hawthorne or any of its Subsidiaries to indemnification from Hawthorne or any of its Subsidiaries, (iii) which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC), (iv) which is a consulting agreement (including data processing, software programming and licensing contracts) not terminable on 60 days or less notice and involving the payment of more than $50,000 per annum or (v) which

materially restricts the conduct of any business by Hawthorne or by any of its Subsidiaries (collectively, “Material Contracts”). Hawthorne has Previously Disclosed and made available to Parent true and correct copies of each such Material Contract.

(ii) Neither Hawthorne nor any of its Subsidiaries is in material default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business, or operations may be bound or affected, or under which it or its respective assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as provided in this Agreement, no power of attorney or similar authorization given directly or indirectly by Hawthorne or any of its Subsidiaries is currently outstanding.

(l) No Brokers. No action has been taken by Hawthorne or any of its Subsidiaries that would give rise to any valid claim against any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the Transaction, excluding a Previously Disclosed fee to be paid to Sandler O’Neill & Partners, L.P.

(i) All benefit and compensation plans, contracts, policies or arrangements covering current or former employees of Hawthorne and its Subsidiaries (the “Employees”) and current or former directors of Hawthorne and its Subsidiaries including, but not limited to, “employee benefit plans” within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the “Benefit Plans”), have been Previously Disclosed to Parent. True and complete copies of (A) all Benefit Plans including, but not limited to, any trust instruments and insurance contracts forming a part of any Benefit Plans and all amendments thereto; (B) the most recent annual report (Form 5500), together with all schedules, as required, filed with the Internal Revenue Service (“IRS”) or Department of Labor (the “DOL”), as applicable, and any financial statements and opinions required by Section 103(e)(3) of ERISA with respect to each Benefit Plan; (C) for each Benefit Plan which is a “top-hat” plan, a copy of filings with the DOL; (D) the most recent determination letter issued by the IRS for each Benefit Plan that is intended to be “qualified” under Section 401(a) of the Code; (E) the most recent summary plan description and any summary of material modifications, as required, for each Benefit Plan; (F) the most recent actuarial report, if any relating to each Benefit Plan; (G) the most recent actuarial valuation, study or estimate of any retiree medical and life insurance benefits plan or supplemental retirement benefits plan; and (H) the most recent summary annual report for each Benefit Plan required to provide summary annual reports by Section 104 of ERISA, have been provided or made available to Parent.

(ii) Each Benefit Plan has been administered to date in all material respects in accordance with the applicable provisions of ERISA, the Code and applicable law and with the terms and provisions of all documents, contracts or agreements pursuant to which such Benefit Plan is maintained. Each Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service, and Hawthorne is not aware of any circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of such Pension Plan under Section 401(a) of the Code. Neither Hawthorne nor any of its Subsidiaries has received any correspondence or written or verbal notice from the IRS, DOL, any other governmental agency, any participant in or beneficiary of, a Benefit Plan, or any agent representing any of the foregoing that brings into question the qualification of any such Benefit Plan. There is no material pending or, to Hawthorne’s knowledge, threatened litigation relating to the Benefit Plans. Neither Hawthorne nor any of its Subsidiaries has engaged in a transaction with respect to any Benefit Plan or Pension Plan that, assuming the taxable period of such transaction expired as of the date hereof, could subject Hawthorne or any of its Subsidiaries to a tax or penalty imposed by either Section 4975

of the Code or Section 502(i) of ERISA in an amount which would be material. There are no matters pending before the IRS, DOL or other governmental agency with respect to any Benefit Plan.

(iii) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by Hawthorne or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them or the single-employer plan of any entity which is considered one employer with Hawthorne under Section 4001 of ERISA or Section 414 of the Code (an “ERISA Affiliate”). Neither Hawthorne nor any of its Subsidiaries has incurred, and neither expects to incur, any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA (regardless of whether based on contributions of an ERISA Affiliate). No notice of a “reportable event,” within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the l2-month period ending on the date hereof or will be required to be filed in connection with the Transaction.

(iv) All contributions required to be made under the terms of any Benefit Plan have been timely made or have been reflected on the financial statements of Hawthorne included in Hawthorne’s Securities Documents. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding waiver. Except as Previously Disclosed, neither Hawthorne nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(v) Except as Previously Disclosed, neither Hawthorne nor any of its Subsidiaries has any obligations for retiree health and life benefits under any Benefit Plan, other than coverage as may be required under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the continuation of coverage provisions of the laws of any state or locality. Hawthorne or any of its Subsidiaries may amend or terminate any such Benefit Plan in accordance with and to the extent permitted by their terms at any time without incurring any liability thereunder. No event or condition exists with respect to a Benefit Plan that could subject Hawthorne to a material tax under Section 4980B of the Code.

(vi) None of the execution of this Agreement, shareholder approval of this Agreement or consummation of the Transaction will except as Previously Disclosed, (A) entitle any employees of Hawthorne or any of its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (B) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Benefit Plans, (C) result in any breach or violation of, or a default under, any of the Benefit Plans or (D) result in any payment that would be a “parachute payment” to a “disqualified individual” as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future.

(vii) All required reports and descriptions (including but not limited to Form 5500 annual reports and required attachments, Forms 1099-R, summary annual reports, Forms PBGC-1 and summary plan descriptions) have been filed or distributed appropriately with respect to each Benefit Plan. All required tax filings with respect to each Benefit Plan have been made, and any taxes due in connection with such filings have been paid.

(n) Labor Matters. Neither Hawthorne nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Hawthorne or any of its Subsidiaries the subject of a proceeding asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Hawthorne or any of its Subsidiaries to bargain with any labor organization as to wages or

conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to Hawthorne’s knowledge, threatened, nor is Hawthorne or any of its Subsidiaries aware of any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity.

(i) Hawthorne and its Subsidiaries are in compliance with applicable Environmental Laws; (ii) except as Previously Disclosed, to Hawthorne’s knowledge, no real property (including buildings or other structures) currently or formerly owned or operated by Hawthorne or any of its Subsidiaries, or any property in which Hawthorne or any of its Subsidiaries has held a security interest, Lien or a fiduciary or management role (“Hawthorne Loan Property”), has been contaminated with, or has had any release of, any Hazardous Substance except in compliance with Environmental Laws; (iii) neither Hawthorne nor any of its Subsidiaries could be deemed the owner or operator of, nor has it participated in the management regarding Hazardous Substances of, any Hawthorne Loan Property which has been contaminated with, or has had any release of, any Hazardous Substance; (iv) neither Hawthorne nor any of its Subsidiaries has any liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither Hawthorne nor any of its Subsidiaries has received any notice, demand letter, claim or request for information alleging any violation of, or liability under, any Environmental Law; (vi) neither Hawthorne nor any of its Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Authority or any third party relating to any Environmental Law; (vii) except as Previously Disclosed, to Hawthorne’s knowledge, there are no circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations, dry-cleaning, or automotive services) involving Hawthorne or any of its Subsidiaries, any currently or formerly owned or operated property, or any Hawthorne Loan Property, that could reasonably be expected to result in any claims, liability or investigations against Hawthorne or any of its Subsidiaries, result in any restrictions on the ownership, use, or transfer of any property pursuant to any Environmental Law, or adversely affect the value of any Hawthorne Loan Property; and (viii) Hawthorne has Previously Disclosed and made available to Parent copies of all environmental reports or studies, sampling data, correspondence and filings in its possession or reasonably available to it relating to Hawthorne, its Subsidiaries and any currently owned or operated property.

As used herein, the term “Environmental Laws” means any federal, state or local law, regulation, order, decree, permit, authorization, opinion or agency requirement relating to: (A) the protection or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) wetlands, indoor air, pollution, contamination or any injury or threat of injury to persons or property in connection with any Hazardous Substance; and the term “Hazardous Substance” means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law, (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon or (C) any other substance which is the subject of regulatory action by any Governmental Authority in connection with any Environmental Law.

(i) (A) All Tax Returns that are required to be filed on or before the Effective Date (taking into account any extensions of time within which to file which have not expired) by or with respect to the Hawthorne Group, including Hawthorne and its Subsidiaries, have been or will be timely filed on or before the Effective Date, (B) all such Tax Returns are or will be true and complete in all material respects, (C) all Taxes shown to be due on the Tax Returns referred to in clause (A) have been or will be timely paid in full, (D) the Tax Returns referred to in clause (A) have not been examined by the IRS

or the appropriate Tax authority, the Hawthorne Group has not extended the statute of limitations for any such Tax Returns and the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (E) all deficiencies asserted or assessments made as a result of examinations conducted by any taxing authority have been paid in full, (F) no issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in clause (A) are currently pending and (G) no member of the Hawthorne Group has extended any statutes of limitation with respect to any Taxes of Hawthorne.

(ii) Hawthorne has made available to Parent true and correct copies of the United States federal income Tax Returns filed by Hawthorne for each of the three most recent fiscal years for which such returns have been filed.

(iii) Neither Hawthorne nor any of its Subsidiaries has any liability with respect to income, franchise or similar Taxes that accrued on or before the end of the most recent period covered by Hawthorne’s Securities Documents filed prior to the date hereof in excess of the amounts accrued or subject to a reserve with respect thereto that are reflected in the financial statements included in Hawthorne’s Securities Documents filed on or prior to the date hereof.

(iv) Neither Hawthorne nor any of its Subsidiaries is a party to any Tax allocation or sharing agreement, is or has been a member of an affiliated group filing consolidated or combined Tax Returns (other than a group the common parent of which is or was Hawthorne) or otherwise has any liability for the Taxes of any Person (other than a member of the Hawthorne Group).

(v) No closing agreements, private letter rulings, technical advice memoranda or similar agreements or rulings have been entered into or issued by any taxing authority with respect to Hawthorne and its Subsidiaries.

(vi) Neither Hawthorne nor any of its Subsidiaries maintains any compensation plans, programs or arrangements the payments under which would not reasonably be expected to be deductible as a result of the limitations under Section 162(m) of the Code and the regulations issued thereunder.

(vii) As of the date hereof, Hawthorne has no reason to believe that any conditions exist that might prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

(viii) (A) No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the Transaction and (B) all Taxes that Hawthorne or any of its Subsidiaries is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required by applicable law, have been paid to the proper Governmental Authority or other Person.

(q) Risk Management Instruments. Neither Hawthorne nor any of its Subsidiaries is a party or has agreed to enter into an exchange traded or over-the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on Hawthorne’s consolidated statement of financial condition and is a derivatives contract (including various combinations thereof) (each, a “Derivatives Contract”) nor does Hawthorne or any of its Subsidiaries own securities that (i) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (ii) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes.

(i) Each Loan on the books and records of Hawthorne and its Subsidiaries was made and has been serviced in all material respects in accordance with their customary lending standards in the ordinary course of business, is evidenced in all material respects by appropriate and sufficient documentation and, to the knowledge of Hawthorne, constitutes the legal, valid and binding obligation of the obligor

named therein, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor’s rights or by general equity principles.

(ii) Hawthorne has Previously Disclosed as to Hawthorne and each Hawthorne Subsidiary as of the latest practicable date prior to the date of this Agreement: (A) any written or, to Hawthorne’s knowledge, oral Loan under the terms of which the obligor is 60 or more days delinquent in payment of principal or interest, or to Hawthorne’s knowledge, in default of any other material provision thereof; (B) each Loan which has been classified as “substandard,” “doubtful,” “loss” or “special mention” (or words of similar import) by Hawthorne, a Hawthorne Subsidiary or an applicable regulatory authority (it being understood that no representation is being made that the OTS would agree with the loan classifications established by Hawthorne or any of the Hawthorne Subsidiaries); (C) a listing of the OREO acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof; and (D) each Loan with any director, executive officer or five percent or greater shareholder of Hawthorne or a Hawthorne Subsidiary, or to the knowledge of Hawthorne, any Person controlling, controlled by or under common control with any of the foregoing.

(s) Properties. All real and personal property owned by Hawthorne or a Subsidiary of Hawthorne or presently used by any of them in their respective business is in an adequate condition (ordinary wear and tear excepted) and is sufficient to carry on its business in the ordinary course of business consistent with its past practices. Hawthorne has good and marketable title free and clear of all Liens to all of the material properties and assets, real and personal, reflected on the consolidated statement of financial condition of Hawthorne as of September 30, 2003 included in Hawthorne’s Securities Documents or acquired after such date, other than properties sold by Hawthorne in the ordinary course of business, except (i) Liens for current taxes and assessments not yet due or payable (ii) pledges to secure deposits and other Liens incurred in the ordinary course of its banking business, (iii) such imperfections of title, easements and encumbrances, if any, as are not material in character, amount or extent and (iv) as reflected on the consolidated statement of financial condition of Hawthorne as of September 30, 2003 included in Hawthorne’s Securities Documents. Except as Previously Disclosed, all real and personal property which is material to Hawthorne’s business on a consolidated basis and leased or licensed by Hawthorne or a Subsidiary of Hawthorne is held pursuant to leases or licenses which are valid and enforceable in accordance with their respective terms and such leases will not terminate or lapse prior to the Effective Time.

(t) Intellectual Property. Hawthorne and each Subsidiary of Hawthorne owns or possesses valid and binding licenses and other rights to use without payment of any material amount all material patents, copyrights, trade secrets, trade names, service marks and trademarks used in its businesses, all of which have been Previously Disclosed by Hawthorne, and none of Hawthorne or any of its Subsidiaries has received any notice of conflict with respect thereto that asserts the right of others. Hawthorne and each of its Subsidiaries have performed in all material respects all the obligations required to be performed by them and are not in default under any contract, agreement, arrangement or commitment relating to any of the foregoing.

(u) Fiduciary Accounts. Hawthorne and each of its Subsidiaries has properly administered all accounts for which it acts as a fiduciary, including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable laws and regulations. Neither Hawthorne nor any of its Subsidiaries, nor any of their respective directors, officers or employees, has committed any breach of trust with respect to any fiduciary account and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.

(v) Books and Records. The books and records of Hawthorne and its Subsidiaries have been fully, properly and accurately maintained in material compliance with applicable legal and accounting requirements, and such books and records accurately reflect in all material respects all dealings and transactions in respect of the business, assets, liabilities and affairs of Hawthorne.

(w) Insurance. Hawthorne has Previously Disclosed all of the material insurance policies, binders, or bonds currently maintained by Hawthorne and its Subsidiaries (“Insurance Policies”). Hawthorne and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Hawthorne reasonably has determined to be prudent in accordance with industry practices. All the Insurance Policies are in full force and effect; Hawthorne and its Subsidiaries are not in material default thereunder; and all claims thereunder have been filed in due and timely fashion.

(x) Allowance For Loan Losses. Hawthorne’s allowance for loan losses is in compliance with Hawthorne’s methodology at the time of the representation for determining the adequacy of its allowance for loan losses as well as the standards established by applicable Governmental Authorities and the Financial Accounting Standards Board and is adequate under all such standards.

(i) The affirmative vote of the holders of a majority of the issued and outstanding shares of Hawthorne Common Stock is necessary to approve this Agreement and the Merger on behalf of Hawthorne. No other vote of the stockholders of Hawthorne is required by law, the Hawthorne Certificate, the Hawthorne Bylaws or otherwise to approve this Agreement and the Merger.

(ii) Based on the representation and warranty of Parent contained in Section 5.04(m), no “control share acquisition,” “business combination moratorium,” “fair price” or other form of antitakeover statute or regulation is applicable to this Agreement or the Transaction, including without limitation, Section 203 of the DGCL.

(z) Fairness Opinion. The Hawthorne Board has received the written opinion of Sandler O’Neill & Partners, L.P. to the effect that as of the date hereof the Exchange Ratio is fair to the holders of Hawthorne Common Stock from a financial point of view.

(i) All offers and sales of Hawthorne Common Stock by Hawthorne were at all relevant times exempt from or complied with the registration requirements of the Securities Act.

(ii) Neither Hawthorne, none of Hawthorne’s Subsidiaries nor, to Hawthorne’s knowledge, (a) any director or executive officer of Hawthorne, (b) any person related to any such director or officer by blood, marriage or adoption and residing in the same household and (c) any person who has been knowingly provided material nonpublic information by any one or more of these persons, has purchased or sold, or caused to be purchased or sold, any shares of Hawthorne Common Stock or other securities issued by Hawthorne (i) during any period when Hawthorne or such person was in possession of material nonpublic information or (ii) in violation of any applicable provision of the Exchange Act or the rules and regulations of the SEC thereunder.

(bb) Registration Obligation. Except for the Registration Rights Agreement, neither Hawthorne nor Hawthorne’s Subsidiaries is under any obligation, contingent or otherwise, to register any of their respective securities under the Securities Act.

(cc) No Agreements on Directorships. Except as Previously Disclosed, neither Hawthorne, any Subsidiary of Hawthorne nor any Hawthorne Affiliate has entered into any agreement which obligates Hawthorne or Hawthorne Bank to elect any individual to serve on the Hawthorne Board or the Hawthorne Bank Board, and as of the date hereof, there are no obligations or commitments on the part of Hawthorne, Hawthorne Bank or any Hawthorne Affiliate to elect any individual to serve on the Hawthorne Board or the Hawthorne Bank Board.

(dd) Disclosure. The representations and warranties contained in this Section 5.03, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 5.03 not misleading.

5.04 Representations and Warranties of Parent. Subject to Sections 5.01 and 5.02, Parent hereby represents and warrants to Hawthorne as follows:

(a) Organization, Standing and Authority. Parent is duly organized, validly existing and in good standing under the laws of the State of Nevada. Parent is duly qualified to do business and is in good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Parent has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted.

(i) As of the date hereof, the authorized capital stock of Parent consists solely of 100,000,000 shares of Parent Common Stock, of which 22,472,279 shares were issued and outstanding as of the date hereof, and 100,000,000 shares of Parent Preferred Stock, of which no shares were issued and outstanding as of the date hereof. The outstanding shares of Parent Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, and none of the shares of Parent Common Stock have been issued in violation of the preemptive rights of any Person. As of the date hereof, there are no Rights authorized, issued or outstanding with respect to the capital stock of Parent, except for shares of Parent Common Stock issuable pursuant to the Parent Benefits Plans and by virtue of this Agreement.

(ii) The shares of Parent Common Stock to be issued in exchange for shares of Hawthorne Common Stock in the Merger, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and the issuance thereof is not subject to any preemptive right.

(i) Each of Parent’s Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified. Parent Bank is duly licensed by the OTS and its deposits are insured by the SAIF in the manner and to the maximum extent provided by law.

(ii) As of the date hereof, (A) except as set forth in Schedule 5.04(c) of Parent’s Disclosure Schedule, Parent owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries, (B) no equity securities of any of Parent’s Subsidiaries are or may become required to be issued (other than to Parent) by reason of any Right or otherwise, (C) there are no contracts, commitments, understandings or arrangements by which Parent’s Subsidiaries are or may be bound to sell or otherwise transfer any of its equity securities (other than to Parent or any of its wholly owned Subsidiaries) and (D) there are no contracts, commitments, understandings, or arrangements relating to Parent’s right to vote or to dispose of such securities.

(d) Corporate Power. Each of Parent and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets. Parent has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transaction, subject to the receipt of all necessary approvals of Governmental Authorities and the approval of Parent’s stockholders of this Agreement.

(e) Corporate Authority. Subject to approval of the issuance of Parent Common Stock in the Merger by a majority of the votes cast at the Parent Meeting, this Agreement and the Transaction have been authorized by all necessary corporate action of Parent and the Parent Board. This Agreement has been duly executed and delivered by Parent and, assuming due authorization, execution and delivery by Hawthorne, this

Agreement is a valid and legally binding agreement of Parent enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(i) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Parent or any of its Subsidiaries in connection with the execution, delivery or performance by Parent and Parent Bank of this Agreement and the Bank Merger Agreement, respectively, or to consummate the Transaction, except as Previously Disclosed, and except for (A) filings of applications or notices with and approvals or waivers by the OTS, (B) filings with the SEC and state securities authorities, as applicable, in connection with the submission of this Agreement for the approval of the respective holders of Hawthorne Common Stock and Parent Common Stock and the issuance of Parent Common Stock in the Merger, (C) the approval of the listing on Nasdaq of the Parent Common Stock to be issued in the Merger, (D) the filing of a Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL with respect to the Merger and Articles of Merger with the Secretary of State of the State of Nevada pursuant to the NGCL with respect to the Acquisition Sub Merger (“Articles of Merger”) and (E) the approval of the issuance of Parent Common Stock in the Merger by the holders of the outstanding shares of Parent Common Stock. As of the date hereof, Parent is not aware of any reason why the approvals set forth above and referred to in Section 7.01(b) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).

(ii) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the preceding paragraph and expiration of the related waiting periods, the execution, delivery and performance of this Agreement and the Bank Merger Agreement by Parent and Parent Bank, respectively, and the consummation of the Transaction do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Parent or of any of its Subsidiaries or to which Parent or any of its Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the articles of incorporation or bylaws (or similar governing documents) of Parent or any of its Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

(i) Parent’s Annual Report on Form 10-K for the year ended December 31, 2002 and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it subsequent to December 31, 2002 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the form filed or to be filed (collectively, Parent’s “Securities Documents”) with the SEC, as of the date filed or to be filed, (A) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be and (B) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date; and each of the consolidated statements of financial condition contained in or incorporated by reference into any such Securities Document (including the related notes and schedules thereto) fairly presents, or will fairly present, the consolidated financial position of Parent and its Subsidiaries as of its date, and each of the consolidated

statements of operations, stockholders’ equity and comprehensive income and cash flows or equivalent statements in such Securities Documents (including any related notes and schedules thereto) fairly presents, or will fairly present, the consolidated results of operations, changes in stockholders’ equity and cash flows, as the case may be, of Parent and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein.

(ii) Except as Previously Disclosed, since September 30, 2003, neither Parent nor any of its Subsidiaries has incurred any liability other than in the ordinary course of business consistent with past practice (excluding the incurrence of expenses related to this Agreement and the Transaction)

(iii) Since September 30, 2003, (A) Parent and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice (excluding the incurrence of expenses related to this Agreement and the Transaction), (B) except as Previously Disclosed, neither Parent nor any of its Subsidiaries has taken nor permitted any of the actions set forth in Section 4.02 hereof between September 30, 2003 and the date hereof and (C) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of this Section 5.04 or otherwise), is reasonably likely to have a Material Adverse Effect with respect to Parent.

(iv) Parent maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning Parent and its Subsidiaries is made known on a timely basis to the individuals responsible for the preparation of Parent’s Securities Documents and other public disclosure documents. The Chief Executive Officer and the Chief Financial Officer of Parent have signed, and Parent has furnished to the SEC, all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. § 1350; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Parent nor any of its officers has received notice from any Governmental Authorities questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

(h) Litigation. No litigation, claim or other proceeding before any court or governmental agency is pending against Parent or its Subsidiaries and, to Parent’s knowledge, no such litigation, claim or other proceeding has been threatened and there are no facts which could reasonably give rise to such litigation, claim or other proceeding. Neither Parent nor any of its Subsidiaries is a party to any order, judgment or decree that has or could reasonably be expected to have a Material Adverse Effect with respect to Parent.

(i) Neither Parent nor any of its Subsidiaries nor any of any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions or issuers of securities or engaged in the insurance of deposits or the supervision or regulation of it (collectively, the “Parent Regulatory Authorities”). Parent and its Subsidiaries have paid all assessments made or imposed by any Parent Regulatory Authority.

(ii) Neither Parent nor any its Subsidiaries has been advised by, and does not have any knowledge of facts which could give rise to an advisory notice by, any Parent Regulatory Authority that such Parent Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission.

(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Parent’s knowledge, no suspension or cancellation of any of them is threatened; and

(iii) has received, since December 31, 2000, no notification or communication from any Governmental Authority (A) asserting that Parent or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization (nor, to Parent’s knowledge, do any grounds for any of the foregoing exist).

(k) No Brokers. No action has been taken by Parent or its Subsidiaries that would give rise to any valid claim against any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the Transaction, except a fee to be paid to Credit Suisse First Boston LLC.

(l) Tax Matters. As of the date hereof, Parent does not have any reason to believe that any conditions exist that might prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

(m) Risk Management Instruments. Neither Parent nor any of its Subsidiaries is a party or has agreed to enter into any Derivatives Contract that is not included on Parent’s consolidated statement of financial condition nor does Parent or any of its Subsidiaries own securities that (i) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (ii) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes.

(n) Ownership of Hawthorne Common Stock. None of Parent or any of its Subsidiaries, or to Parent’s knowledge, any of its other affiliates or associates (as such terms are defined under the Exchange Act), owns beneficially or of record, directly or indirectly, or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of Hawthorne Common Stock (other than shares held in a fiduciary capacity that are beneficially owned by third parties or as a result of debts previously contracted).

(o) Required Vote. The affirmative vote of the holders of a majority of the votes cast at the Parent Meeting is necessary to approve the issuance of the Parent Common Stock in the Merger on behalf of Parent. No other vote of the stockholders of Parent is required by law, the Parent Articles, the Parent Bylaws or otherwise to approve this Agreement and the Merger.

(p) Fairness Opinion. The Parent Board has received the written opinion of Credit Suisse First Boston LLC to the effect that as of the date hereof the Exchange Ratio to be paid by Parent is fair from a financial point of view to Parent.

(q) Disclosure. The representations and warranties contained in this Section 5.04, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 5.04 not misleading.

5.05 Representations and Warranties of Acquisition Sub. Subject to Sections 5.01 and 5.02, Acquisition Sub hereby represents and warrants to Hawthorne:

(a) Organization, Standing and Authority. Acquisition Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware. Acquisition Sub is a wholly owned Subsidiary of Parent.

(b) Corporate Power. Acquisition Sub has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Acquisition Sub Merger Agreement and to consummate the Merger and the Acquisition Sub Merger, subject to receipt of all necessary approvals of Governmental Authorities.

(c) Corporate Authority. This Agreement, the Merger, the Acquisition Sub Merger Agreement and the Acquisition Sub Merger have been authorized by all necessary corporate action of Acquisition Sub and the Board of Directors of Acquisition Sub on or prior to the date hereof. Acquisition Sub has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Hawthorne, this Agreement is a valid and legally binding obligation of Acquisition Sub, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(d) No Business Activities. Acquisition Sub has not conducted any activities or operations other than in connection with the organization of Acquisition Sub, the negotiation and execution of this Agreement and the consummation of the Transaction. Acquisition Sub has no Subsidiaries.

6.01 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of Hawthorne, Parent and Acquisition Sub agrees to use its reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Transaction as promptly as practicable and otherwise to enable consummation of the Transaction, including the satisfaction of the conditions set forth in Article VII hereof, and shall cooperate fully with the other party hereto to that end.

(a) Hawthorne agrees to take, in accordance with applicable law and the Hawthorne Certificate and the Hawthorne Bylaws, all action necessary to convene as soon as reasonably practicable an annual or special meeting of its stockholders to consider and vote upon the approval of this Agreement and any other matters required to be approved by Hawthorne’s stockholders for consummation of the Transaction (including any adjournment or postponement, the “Hawthorne Meeting”). Except for the election of directors or other matters determined reasonably necessary by Hawthorne, no other matters shall be submitted for the approval of the Hawthorne stockholders at the Hawthorne Meeting. The Hawthorne Board shall at all times prior to and during such meeting recommend such approval and shall take all reasonable lawful action to solicit such approval by its stockholders; provided that nothing in this Agreement shall prevent the Hawthorne Board from withholding, withdrawing, amending or modifying its recommendation if the Hawthorne Board determines, after consultation with its outside counsel, that the failure to take such action would breach or would reasonably be expected to result in a breach of their fiduciary duties to the Hawthorne stockholders under applicable law.

(b) Parent agrees to take, in accordance with applicable law and the Parent Articles and Bylaws, all action necessary to convene as soon as reasonably practicable a meeting of its shareholders to consider and

vote upon the approval of the issuance of the Parent Common Stock in the Merger and any other matters required to be approved by Parent’s stockholders for consummation of the Transaction (including any adjournment or postponement, the “Parent Meeting”). The Parent Board shall at all times prior to and during such meeting recommend such approval and shall take all reasonable lawful action to solicit such approval by its stockholders; provided that nothing in this Agreement shall prevent the Parent Board from withholding, withdrawing, amending or modifying its recommendation if the Parent Board determines, after consultation with its outside counsel, that the failure to take such action would breach or would reasonably be expected to result in a breach of their fiduciary duties to the Parent stockholders under applicable law.

(a) Parent agrees to prepare a registration statement on Form S-4 or other applicable form (the “Registration Statement”) to be filed by Parent with the SEC in connection with the issuance of Parent Common Stock in the Merger (including the joint proxy statement and prospectus and other proxy solicitation materials of Hawthorne and Parent constituting a part thereof (the “Proxy Statement”) and all related documents). Hawthorne shall prepare and furnish such information relating to it and its directors, officers and stockholders as may be reasonably required in connection with the above referenced documents based on its knowledge of and access to the information required for said documents, and Hawthorne, and its legal, financial and accounting advisors, shall have the right to review in advance such Registration Statement prior to its filing. Hawthorne agrees to cooperate with Parent and Parent’s counsel and accountants in requesting and obtaining appropriate opinions, consents and letters from its financial advisor and independent auditor in connection with the Registration Statement and the Proxy Statement. Provided that Hawthorne has cooperated as described above, Parent agrees to file, or cause to be filed, the Registration Statement and the Proxy Statement with the SEC as promptly as reasonably practicable. Each of Hawthorne and Parent agrees to use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable after the filing thereof. Parent also agrees to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated by this Agreement. After the Registration Statement is declared effective under the Securities Act, Hawthorne and Parent shall promptly mail at their respective expense the Proxy Statement to their respective stockholders.

(b) Each of Hawthorne and Parent agrees that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in (i) the Registration Statement shall, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) the Proxy Statement and any amendment or supplement thereto shall, at the date(s) of mailing to Hawthorne’s and Parent’s respective stockholders and at the time(s) of the Hawthorne Meeting and the Parent Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Each of Hawthorne and Parent further agrees that if such party shall become aware prior to the Effective Date of any information furnished by such party that would cause any of the statements in the Registration Statement or the Proxy Statement to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, to promptly inform the other parties thereof and to take the necessary steps to correct the Registration Statement or the Proxy Statement.

(c) Parent agrees to advise Hawthorne, promptly after Parent receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of Parent Common Stock for offering or sale in any jurisdiction, of the initiation or, to the extent Parent is aware thereof, threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information.

(a) Each of Parent and Hawthorne and their respective Subsidiaries shall cooperate and use their respective reasonable best efforts to prepare all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary to consummate the Transaction; and any initial filings with Governmental Authorities shall be made by Parent as soon as reasonably practicable after the execution hereof. Each of Parent and Hawthorne shall have the right to review in advance, and to the extent practicable each shall consult with the other, in each case subject to applicable laws relating to the exchange of information, with respect to all written information submitted to any third party or any Governmental Authority in connection with the Transaction. In exercising the foregoing right, each of such parties agrees to act reasonably and as promptly as practicable. Each party hereto agrees that it shall consult with the other party with respect to the obtaining of all permits, consents, approvals, waivers and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the Transaction, and each party shall keep the other parties apprised of the status of material matters relating to completion of the Transaction.

(b) Each party agrees, upon request, to furnish the other parties with all information concerning itself, its Subsidiaries (if applicable), directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other parties or any of their respective Subsidiaries to any third party or Governmental Authority.

6.05 Press Releases. Hawthorne and Parent shall consult with each other before issuing any press release with respect to the Transaction or this Agreement and shall not issue any such press release or make any such public statements without the prior consent of the other party, which shall not be unreasonably withheld; provided, however, that a party may, without the prior consent of the other party (but after such consultation, to the extent practicable under the circumstances), issue such press release or make such public statements as may upon the advice of outside counsel be required by law or the rules or regulations of Nasdaq. Hawthorne and Parent shall cooperate to develop all public announcement materials and make appropriate management available at presentations related to the Transaction as reasonably requested by the other party.

(a) Hawthorne agrees that upon reasonable notice and subject to applicable laws relating to the exchange of information, it shall afford Parent and Parent’s officers, employees, counsel, accountants and other authorized representatives such access during normal business hours throughout the period prior to the Effective Time to the books, records (including, without limitation, Tax Returns and work papers of independent auditors), properties and personnel of Hawthorne and to such other information relating to Hawthorne as Parent may reasonably request and, during such period, it shall furnish promptly to Parent all information concerning the business, properties and personnel of Hawthorne as Parent may reasonably request.

(b) Parent agrees that upon reasonable notice and subject to applicable laws relating to the exchange of information, it shall afford Hawthorne and Hawthorne’s officers, employees, counsel, accountants and other authorized representatives such access during normal business hours throughout the period prior to the Effective Time to the books, records (including without limitation, Tax Returns and work papers of independent auditors), properties and personnel of Parent and to such other information relating to Parent as Hawthorne may reasonably request and, during such period, it shall furnish promptly to Hawthorne all information concerning the business, properties and personnel of Parent and its Subsidiaries as Hawthorne may reasonably request.

(c) All information furnished to either party by the other party pursuant to this Section 6.06 shall be subject to, and such receiving party shall hold all such information in confidence in accordance with the provisions of the respective Confidentiality Agreements, dated as of December 11, 2003 and November 26, 2003 between Parent and Hawthorne (each, a “Confidentiality Agreement”).

6.07 Affiliates. Hawthorne shall use its reasonable best efforts to identify those persons who may be deemed to be “affiliates” of Hawthorne within the meaning of Rule 145 promulgated by the SEC under the Securities Act (the “Hawthorne Affiliates”) and to cause each person so identified to deliver to Parent as soon as practicable, and in any event prior to the date of Hawthorne Meeting, a written agreement to comply with the requirements of Rule 145 under the Securities Act in connection with the sale or other transfer of Parent Common Stock received in the Merger, which agreement shall be in the form attached hereto as Annex D (the “Affiliate Letter”).

(a) Each of Hawthorne and Parent agree that it shall, and shall direct and use its reasonable best efforts to cause its affiliates, directors, officers, employees, agents and representatives (including without limitation any investment banker, financial advisor, attorney, accountant or other representative retained by it) to, immediately cease any discussions or negotiations with any other parties that may be ongoing with respect to the possibility or consideration of any Acquisition Proposal (as defined below), and will use its reasonable best efforts to enforce any confidentiality or similar agreement relating to any Acquisition Proposal, including by requesting the other party to promptly return or destroy any confidential information previously furnished by such party thereunder. From the date of this Agreement through the Effective Time, each of Hawthorne and Parent shall not, nor shall it authorize or permit any of its directors, officers or employees (and those of any Hawthorne Subsidiary or Parent Subsidiary) or any investment banker, financial advisor, attorney, accountant or other representative retained by it (or any Subsidiary) to, directly or indirectly through another person, (i) solicit, initiate or encourage (including by way of furnishing information or assistance), or take any other action designed to facilitate or that is likely to result in, any inquiries or the making of any proposal or offer that constitutes, or is reasonably likely to lead to, any Acquisition Proposal, (ii) provide any confidential information or data to any person relating to any Acquisition Proposal, (iii) participate in any discussions or negotiations regarding any Acquisition Proposal, (iv) except in accordance with Section 8.01(j) in the case of Hawthorne, approve or recommend, propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement related to any Acquisition Proposal or propose to do any of the foregoing, or (v) make or authorize any statement, recommendation or solicitation in support of any Acquisition Proposal; provided, however, that prior to the date of the Hawthorne Meeting or the Parent Meeting, as may be applicable, if a party’s Board of Directors determines in good faith, after consulting with its outside legal and financial advisors, that the failure to do so would breach, or would reasonably be expected to result in a breach of, its Board’s fiduciary duties under applicable law, such party may, in response to a bona fide, written Acquisition Proposal not solicited in violation of this Section 6.08(a) that its Board of Directors believes in good faith constitutes a Superior Proposal (as defined below), subject to providing 48 hour prior written notice of its decision to take such action to the other party and identifying the person making the proposal and all the material terms and conditions of such proposal and compliance with Section 6.08(b), following delivery of such notice (1) furnish information with respect to itself and its Subsidiaries to any person making such a Superior Proposal pursuant to a customary confidentiality agreement (as determined by such party after consultation with its outside counsel) on terms no more favorable to such person than the terms contained in any such agreement between Hawthorne and Parent, and (2) participate in discussions or negotiations regarding such a Superior Proposal. For purposes of this Agreement, the term “Acquisition Proposal” means any inquiry, proposal or offer, filing of any regulatory application or notice (whether in draft or final form) or disclosure of an intention to do any of the foregoing from any person relating to any (w) direct or indirect acquisition or purchase of a business that constitutes a substantial portion of the net revenues, net income or assets of Hawthorne or Parent, as the case may be, (x) direct or indirect acquisition or purchase of any class of equity securities representing 10% or more of the voting power of Hawthorne or Parent, as the case may be, (y) tender offer or exchange offer that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of Hawthorne or Parent, as the case may be, or (z) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Hawthorne or Parent, as the case may be, other than the transactions

contemplated by this Agreement. For purposes of this Agreement, the term “Superior Proposal” means any bona fide written proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of Hawthorne Common Stock or the Parent Common Stock, as the case may be, then outstanding or all or substantially all of Hawthorne’s or Parent’s, as the case may be, consolidated assets, which after taking into account all legal, financial, regulatory and other aspects of the proposal and the person making the proposal (including any break-up fees, expense reimbursement provisions and conditions to consummation) (i) on terms which the Board of Directors of Hawthorne or Parent, as the case may be, determines in its good faith judgment to be more favorable from a financial point of view to its stockholders than the Merger, (ii) that constitutes a transaction that, in such Board of Directors’ good faith judgment, is reasonably likely to be consummated on the terms set forth, and (iii) for which financing, to the extent required, is then committed or which, in the good faith judgment of the Board of Directors of Hawthorne or Parent, as the case may be, is reasonably likely to be obtained by such third party.

(b) In addition to the obligations of Hawthorne and Parent, as the case may be, set forth in Section 6.08(a), each party shall promptly (within 24 hours) advise the other orally and in writing of its receipt of any Acquisition Proposal (or any inquiry which could lead to an Acquisition Proposal) and keep the other informed, on a current basis, of the continuing status thereof and shall contemporaneously provide to the other all materials provided to or made available to any third party pursuant to this Section 6.08 which were not previously provided to the other.

(c) Notwithstanding anything herein to the contrary, each of Hawthorne and Parent and its respective Board of Directors shall be permitted to comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act of 1934; provided, however, that compliance with such Rules will in no way limit or modify the effect that any action pursuant to such Rules would otherwise have under this Agreement.

6.09 Certain Policies. Prior to the Effective Date, each of Hawthorne and its Subsidiaries shall, consistent with GAAP, the rules and regulations of the SEC and applicable banking laws and regulations, modify or change its loan, OREO, accrual, reserve, tax, litigation and real estate valuation policies and practices (including loan classifications and levels of reserves) so as to be applied on a basis that is consistent with that of Parent; provided, however, that no such modifications or changes need be made prior to the satisfaction of the conditions set forth in Section 7.01(b); and further provided that in any event, no accrual or reserve made by Hawthorne or any of its Subsidiaries pursuant to this Section 6.09 shall constitute or be deemed to be a breach, violation of or failure to satisfy any representation, warranty, covenant, agreement, condition or other provision of this Agreement or otherwise be considered in determining whether any such breach, violation or failure to satisfy shall have occurred. The recording of any such adjustments shall not be deemed to imply any misstatement of previously furnished financial statements or information and shall not be construed as concurrence of Hawthorne or its management with any such adjustments.

6.10 Nasdaq Listing. Parent agrees to use its reasonable best efforts to list, prior to the Effective Date, on the Nasdaq the shares of Parent Common Stock to be issued in connection with the Merger.

(a) From and after the Effective Time through the sixth anniversary of the Effective Time, Parent (the “Indemnifying Party”) shall indemnify and hold harmless each present and former director, officer and employee of Hawthorne or a Hawthorne Subsidiary, as applicable, determined as of the Effective Time (the “Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective

Time, arising in whole or in part out of or pertaining to the fact that he or she was a director, officer, employee, fiduciary or agent of Hawthorne or any Hawthorne Subsidiary or is or was serving at the request of Hawthorne or any of the Hawthorne Subsidiaries as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise, including without limitation matters related to the negotiation, execution and performance of this Agreement or consummation of the Transaction, to the fullest extent which such Indemnified Parties would be entitled under the Hawthorne Certificate and the Hawthorne Bylaws or equivalent documents of any Hawthorne Subsidiary, as applicable, or any agreement, arrangement or understanding which has been Previously Disclosed by Hawthorne pursuant to this Section, in each case as in effect on the date hereof.

(b) Any Indemnified Party wishing to claim indemnification under this Section 6.11, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Indemnifying Party, but the failure to so notify shall not relieve the Indemnifying Party of any liability it may have to such Indemnified Party if such failure does not actually prejudice the Indemnifying Party. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) the Indemnifying Party shall have the right to assume the defense thereof and the Indemnifying Party shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if the Indemnifying Party elects not to assume such defense or counsel for the Indemnified Parties advises that there are issues which raise conflicts of interest between the Indemnifying Party and the Indemnified Parties, the Indemnified Parties may retain counsel which is reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements therefor are received, the reasonable fees and expenses of such counsel for the Indemnified Parties (which may not exceed one firm in any jurisdiction), (ii) the Indemnified Parties will cooperate in the defense of any such matter, (iii) the Indemnifying Party shall not be liable for any settlement effected without its prior written consent which shall not be unreasonably withheld and (iv) the Indemnifying Party shall have no obligation hereunder in the event that a federal or state banking agency or a court of competent jurisdiction shall determine that indemnification of an Indemnified Party in the manner contemplated hereby is prohibited by applicable laws and regulations.

(c) Prior to the Effective Time, Parent shall cause the persons serving as directors and officers of Hawthorne immediately prior to the Effective Time to be covered by the directors’ and officers’ liability insurance policy maintained by Hawthorne for a period of six years after the Effective Time (provided that Parent may substitute therefore policies of at least the same coverage and amounts containing terms and conditions which are not materially less advantageous than such policy or single premium tail coverage with policy limits equal to Hawthorne’s existing coverage limits) with respect to acts or omissions occurring prior to the Effective Time which were committed by such directors and officers in their capacities as such, provided that in no event shall Parent be required to expend for any one year an amount in excess of 200% of the annual premium currently paid by Hawthorne for such insurance (the “Insurance Amount”), and further provided that if Parent is unable to maintain or obtain the insurance called for by this Section 6.11(c) as a result of the preceding provision, Parent shall use its reasonable best efforts to obtain the most advantageous coverage as is available for the Insurance Amount.

(d) The provisions of this Section 6.11 are intended to be for the benefit of and shall be enforceable by each of the Indemnified Parties and his or her heirs.

(a) As soon as administratively practicable after the Effective Time, Parent shall take all reasonable action so that employees of Hawthorne and its Subsidiaries shall be entitled to participate in each employee benefit plan, program or arrangement of Parent of general applicability (the “Parent Benefit Plans”) to the same extent as similarly-situated employees of Parent and its Subsidiaries (it being understood that inclusion of the employees of Hawthorne and its Subsidiaries in the Parent Benefit Plans may occur at different times

with respect to different plans), provided that coverage shall be continued under corresponding Benefit Plans of Hawthorne and its Subsidiaries until such employees are permitted to participate in the Parent Benefit Plans and provided further, however, that nothing contained herein shall require Parent or any of its Subsidiaries to make any grants to any former employee of Hawthorne under any discretionary equity compensation plan of Parent. Parent shall cause each Parent Benefit Plan in which employees of Hawthorne and its Subsidiaries are eligible to participate to recognize, for purposes of determining eligibility to participate in, the vesting of benefits and for all other purposes (but not for accrual of pension benefits) under the Parent Benefit Plans, the service of such employees with Hawthorne and its Subsidiaries to the same extent as such service was credited for such purpose by Hawthorne, provided, however, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits. Except for the commitment to continue those Benefit Plans of Hawthorne and its Subsidiaries that correspond to Parent Benefit Plans until employees of Hawthorne and its Subsidiaries are included in such Parent Benefit Plans, nothing herein shall limit the ability of Parent to amend or terminate any of Hawthorne’s Benefit Plans in accordance with and to the extent permitted by their terms at any time permitted by such terms.

(b) At and following the Effective Time, Parent shall honor, and the Surviving Corporation shall continue to be obligated to perform, in accordance with their terms, all benefit obligations to, and contractual rights of, current and former employees of Hawthorne and its Subsidiaries and current and former directors of Hawthorne and its Subsidiaries existing as of the Effective Date, as well as all employment, severance, deferred compensation, split dollar, supplemental retirement or “change-in-control” agreements, plans or policies of Hawthorne which are Previously Disclosed. The severance or termination payments which are payable pursuant to such agreements, plans or policies of Hawthorne (which have been quantified in reasonable detail) have been Previously Disclosed.

(c) At such time as employees and current and former directors of Hawthorne and its Subsidiaries become eligible to participate in a medical, dental or health plan of Parent or its Subsidiaries, Parent shall cause each such plan to (i) waive any preexisting condition limitations to the extent such conditions covered under the applicable medical, health or dental plans of Parent, (ii) provide full credit under such plans for any deductibles, co-payment and out-of-pocket expenses incurred by the employees and directors and their beneficiaries during the portion of the calendar year prior to such participation and (iii) waive any waiting period limitation or evidence of insurability requirement which would otherwise be applicable to such employee or director on or after the Effective Time to the extent such employee or director had satisfied any similar limitation or requirement under an analogous Benefit Plan prior to the Effective Time.

6.13 Parent Board. (a) Parent agrees to take all action necessary to appoint or elect, effective as of the Effective Time, Timothy R. Chrisman, Gary W. Brummett and Anthony W. Liberati (the “Hawthorne Designees”) as directors of Parent. Such persons shall serve until the first annual meeting of stockholders of Parent following the Effective Time and until his successor is elected and qualified. Subject to the fiduciary duties of the Parent Board, Parent shall include the Hawthorne Designees on the list of nominees for director presented by the Parent Board and for which the Parent Board shall solicit proxies at the first annual meeting of stockholders of Parent following the Effective Time (the “Parent 2005 Annual Meeting”). At the Parent 2005 Annual Meeting, Parent shall re-classify the Parent Board into three classes and, subject to the fiduciary duties of the Parent Board, Parent undertakes to have one of each of the Hawthorne Designees represented in each of such classes. Subject to the fiduciary duties of the Parent Board, Parent agrees that to the extent that one or more of the Hawthorne Designees dies or becomes incapacitated prior to the Effective Time, the remaining Hawthorne Designees may recommend to the Parent Board a person to serve as successor, and provided that such person is reasonably acceptable to the Parent Board, such person shall be appointed to fill the vacancy so created. If, during the initial term prior to the Parent 2005 Annual Meeting or the term immediately following the Parent 2005 Annual Meeting, any one of the Hawthorne Designees vacates the seat they have been elected to for any reason, Parent agrees, subject to the fiduciary duties of the Parent Board, to appoint Harry Radcliffe to replace that director, provided that at the time of such appointment, Mr. Radcliffe or a member of his immediate family or a family trust owns at least 100,000 shares of Parent Common Stock, subject to adjustment as a result of any

stock dividend, stock split, reclassification, recapitalization, reorganization, split-up, combination, exchange of shares or similar transaction with respect to the Parent Common Stock following the Effective Time. Additionally, if during the first initial term or the longest term that any of the Hawthorne Designees is elected to at the Parent 2005 Annual Meeting, there is a vacancy that occurs on the Parent Board, Parent agrees to consider Harry Radcliffe to fill the vacancy, so long as he as a member of his immediate family or a family trust continues to own at such time at least 100,000 shares of Parent Common Stock, subject to adjustment as a result of any stock dividend, stock split, reclassification, recapitalization, reorganization, split-up, combination, exchange of shares or similar transaction with respect to the Parent Common Stock following the Effective Time, provided that nothing herein shall obligate Parent to appoint Mr. Radcliffe to the Parent Board under such circumstances. In connection with Parent’s 2004 Annual Meeting of Stockholders, Parent shall take appropriate steps to reduce the size of the Parent Board by one member such that as of the Effective Time, taking into consideration the Hawthorne Designees, the Parent Board shall consist of nine members.

(b) Parent agrees that for a period of one year from the Effective Time, it shall take no action which would cause any of the Hawthorne Designees to fail to be an “independent” director for purposes of the Exchange Act, the regulations promulgated thereunder and the Marketplace Rules of the Nasdaq Stock Market (“Nasdaq Rules”). In addition, Parent agrees that from the Effective Time until the Parent 2005 Annual Meeting, the number of directors on the Parent Board who are “independent” for purposes of the Exchange Act, the regulations promulgated thereunder and the Nasdaq Rules shall not be less than two-thirds of the entire Parent Board.

6.14 Notification of Certain Matters. Each of Hawthorne and Parent shall give prompt notice to the other of any fact, event or circumstance known to it that (i) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in any Material Adverse Effect with respect to it or (ii) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein.

6.15 Regulatory Conditions. In the event of the imposition of any conditions, restrictions or requirements in connection with the regulatory approvals required by Section 7.01(b) which Parent determines would materially reduce the benefits of the Transaction as provided in Section 7.01(b), Parent and Acquisition Sub shall use their commercially reasonable efforts to obtain the removal of any such condition, restriction or requirement.

6.16 Estoppel Letters. Hawthorne shall use its commercially reasonable efforts to obtain and deliver to Parent at the Closing with respect to all real estate (i) owned by Hawthorne or its Subsidiaries, an estoppel letter dated as of the Closing in the form of Annex F from all tenants and (ii) leased by Hawthorne or its Subsidiaries, an estoppel letter dated as of the Closing in the form of Annex G from all lessors.

6.17 Exemption From Liability Under Section 16(b). Assuming that Hawthorne delivers to Parent the Section 16 Information not less than five Business Days in advance of the Effective Time, the Board of Directors of Parent, or a committee of Non-Employee Directors thereof (as such term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in any event prior to the Effective Time adopt a resolution providing that the receipt by the Hawthorne Insiders of Parent Common Stock in exchange for shares of Hawthorne Common Stock, and of options and warrants to purchase Parent Common Stock upon conversion of Hawthorne Options and Hawthorne Warrants, in each case pursuant to the transactions contemplated hereby and to the extent such securities are listed in the Section 16 Information provided by Hawthorne to Parent prior to the Effective Time, are intended to be exempt from liability pursuant to Section 16(b) under the Exchange Act such that any such receipt shall be so exempt.

6.18 Assumption of Indenture Obligation. Following the Acquisition Sub Merger, Parent shall execute such supplemental indentures and provide such documents including without limitation legal opinions, as are reasonably required upon a merger or consolidation of Hawthorne under the indentures, trust agreements, guarantee agreements and other agreements entered into by Hawthorne or any of its Subsidiaries in connection with the issuance of debentures and capital securities by Hawthorne and HFC Capital Trust I, HFC Capital Trust II, HFC Capital Trust III, and HFC Capital Trust IV.

7.01 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each of the parties hereto to consummate the Merger is subject to the fulfillment or, to the extent permitted by applicable law, written waiver by the parties hereto prior to the Closing Date of each of the following conditions:

(a) Shareholder Approval. This Agreement and the Merger shall have been duly approved by the requisite vote of the holders of outstanding shares of Hawthorne Common Stock and the holders of shares of Parent Common Stock shall have duly approved the issuance of the shares of Parent Common Stock in the Merger.

(b) Regulatory Approvals. All regulatory approvals required to consummate the Transaction shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain any conditions, restrictions or requirements which the Parent Board reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the Transaction to such a degree that Parent would not have entered into this Agreement had such conditions, restrictions or requirements been known at the date hereof.

(c) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the Transaction.

(d) Registration Statement. The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated by the SEC and not withdrawn.

(e) Listing. The shares of Parent Common Stock to be issued in the Merger shall have been approved for listing on the Nasdaq.

(f) Tax Opinion. Each of Parent and Hawthorne shall have received the written opinion of Patton Boggs LLP, dated as of the Effective Date (which shall be based on such written representations from Parent, Hawthorne and others as such counsel shall reasonably request as to factual matters) to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code and to the effect that (i) except for cash received in lieu of fractional share interests, holders of Hawthorne Common Stock who receive Parent Common Stock in the Merger will not recognize gain or loss for federal income tax purposes, (ii) the basis of such Parent Common Stock will equal the basis of the Hawthorne Common Stock for which it is exchanged, reduced by any amount allocable to a fractional share interest for which cash is received, (iii) the holding period of such Parent Common Stock will include the holding period of the Hawthorne Common Stock for which it is exchanged, assuming that such stock is a capital asset in the hands of the holder thereof at the Effective Time, and (iv) the holders of Hawthorne Warrants shall not recognize gain or loss as a result of their exchange of Hawthorne Warrants for warrants to acquire Parent Common Stock

7.02 Conditions to Obligation of Hawthorne. The obligation of Hawthorne to consummate the Merger is also subject to the fulfillment or written waiver by Hawthorne prior to the Closing Date of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of Parent and Acquisition Sub set forth in this Agreement, subject in all cases to the standard set forth in Section 5.02, shall be true and correct as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and Hawthorne shall have received

a certificate, dated the Effective Date, signed on behalf of Parent by the Chief Executive Officer and the Chief Financial Officer of Parent to such effect.

(b) Performance of Obligations of Parent. Parent and Acquisition Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Hawthorne shall have received a certificate, dated the Effective Date, signed on behalf of Parent by the Chief Executive Officer and the Chief Financial Officer of Parent to such effect.

(c) Other Actions. Parent shall have furnished Hawthorne with such certificates of its respective officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 7.01 and 7.02 as Hawthorne may reasonably request.

7.03 Conditions to Obligation of Parent. The obligation of Parent to consummate the Merger is also subject to the fulfillment or written waiver by Parent prior to the Closing Date of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of Hawthorne set forth in this Agreement, subject in all cases to the standard set forth in Section 5.02, shall be true and correct as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and Parent shall have received a certificate, dated the Effective Date, signed on behalf of Hawthorne by the Chief Executive Officer and the Chief Financial Officer of Hawthorne to such effect.

(b) Performance of Obligations of Hawthorne. Hawthorne shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Parent shall have received a certificate, dated the Effective Date, signed on behalf of Hawthorne by the Chief Executive Officer and the Chief Financial Officer of Hawthorne to such effect.

(c) Other Actions. Hawthorne shall have furnished Parent with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 7.01 and 7.03 as Parent may reasonably request.

8.01 Termination. This Agreement may be terminated, and the Transaction may be abandoned:

(a) Mutual Consent. At any time prior to the Effective Time, by the mutual consent in writing of Parent and Hawthorne if the Board of Directors of each so determines by vote of a majority of the members of its entire Board.

(b) Breach. At any time prior to the Effective Time, provided that the terminating party (or if Parent is the terminating party, Acquisition Sub) is not then in material breach of any representation, warranty, covenant or agreement contained therein (subject in all cases to the standard set forth in Section 5.2), by Parent or Hawthorne, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event of: (i) a breach by Parent or Acquisition Sub, on the one hand, or Hawthorne, on the other hand, as the case may be, of any representation or warranty contained herein (subject to the standard set forth in Section 5.02), which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach; or (ii) a breach by Parent or Acquisition Sub, on the one hand, or Hawthorne, on the other hand, as the case may be, of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach, which breach (whether under (i) or (ii)) would be reasonably expected, individually or in the aggregate with other breaches, to result in a Material Adverse Effect with respect to Parent or Hawthorne, as the case may be.

(c) Delay. At any time prior to the Effective Time, by Parent or Hawthorne, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event that the Merger is not consummated by October 27, 2004, except to the extent that the failure of the Merger then to be consummated by such date shall be due to (i) the failure of the party seeking to terminate pursuant to this Section 8.01(c) to perform or observe the covenants and agreements of such party or Acquisition Sub, in the case of Parent, set forth in this Agreement or (ii) the failure of any of the Hawthorne Shareholders (if Hawthorne is the party seeking to terminate) or any of the Parent Shareholders (if Parent is the party seeking to terminate) to perform or observe their respective covenants and agreements under the relevant Hawthorne Shareholder Agreement or Parent Shareholder Agreement.

(d) No Regulatory Approval. By Parent or Hawthorne, if its Board of Directors so determines by a vote of a majority of the members of its entire Board, in the event the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied by final nonappealable action of such Governmental Authority or an application therefor shall have been permanently withdrawn at the request of a Governmental Authority, provided, however, that no party shall have the right to terminate this Agreement pursuant to this Section 8.01(d) if such denial shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants of such party (or Acquisition Sub, in the case of Parent) set forth herein.

(e) No Hawthorne Stockholder Approval. By either Parent or Hawthorne, if any approval of the stockholders of Hawthorne contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the required vote at the Hawthorne Meeting or at any adjournment or postponement thereof.

(f) No Parent Stockholder Approval. By either Parent or Hawthorne, if any approval of the stockholders of Parent contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the required vote at the Parent Meeting or at any adjournment or postponement thereof.

(g) Hawthorne Failure to Recommend. At any time prior to Hawthorne Meeting, by Parent if (i) Hawthorne shall have breached Section 6.08 in any respect materially adverse to Parent, (ii) the Hawthorne Board shall have failed to make its recommendation referred to in Section 6.02(a), withdrawn such recommendation or modified or changed such recommendation in a manner adverse in any respect to the interests of Parent or (iii) Hawthorne shall have materially breached its obligations under Section 6.02(a) by failing to call, give notice of, convene and hold the Hawthorne Meeting in accordance with Section 6.02(a).

(h) Parent Failure to Recommend. At any time prior to Parent Meeting, by Hawthorne if (i) Parent shall have breached Section 6.08 in any respect materially adverse to Hawthorne, (ii) the Parent Board shall have failed to make its recommendation referred to in Section 6.02(b), withdrawn such recommendation or modified or changed such recommendation in a manner adverse in any respect to the interests of Hawthorne or (iii) Parent shall have materially breached its obligations under Section 6.02(b) by failing to call, give notice of, convene and hold the Parent Meeting in accordance with Section 6.02(b).

(i) Certain Tender or Exchange Offers. By Parent if a tender offer or exchange offer for 15% or more of the outstanding shares of Hawthorne Common Stock is commenced (other than by Parent or a Subsidiary thereof), and the Hawthorne Board recommends that the stockholders of Hawthorne tender their shares in such tender or exchange offer or otherwise fails to recommend that such stockholders reject such tender offer or exchange offer within the ten-Business Day period specified in Rule 14e-2(a) under the Exchange Act.

(j) Superior Proposal. At any time prior to the Hawthorne Meeting, by Hawthorne in order to concurrently enter into an acquisition agreement or similar agreement (each, an “Acquisition Agreement”) with respect to a Superior Proposal which has been received and considered by Hawthorne and the Hawthorne Board in compliance with Section 6.08 hereof, provided, however, that this Agreement may be terminated by Hawthorne pursuant to this Section 8.01(j) only after the fifth Business Day following Hawthorne’s provision of written notice to Parent advising Parent that the Hawthorne Board is prepared to accept a Superior Proposal, and only if, during such five-Business Day period, Parent does not, in its sole discretion, make an offer to Hawthorne that the Hawthorne Board determines in good faith, after consultation with its financial and legal advisors, is at least as favorable as the Superior Proposal.

(k) Possible Adjustment. By Hawthorne, if the Hawthorne Board so determines by the vote of a majority of all of its members, at any time during the five-day period commencing with the Determination Date, if both the following conditions are satisfied:

(i) The Parent Closing Average shall be less than 80.0% of the Starting Price; and

(ii) (x) the number obtained by dividing the Parent Closing Average by the Starting Price (such number being referred to herein as the “Parent Ratio”) shall be less than (y) the number obtained by dividing the Peer Group Index on the Determination Date by the Peer Group Starting Index (such number being referred to herein as the “Index Ratio”) by more than 0.20; subject, however, to the following three sentences. If Hawthorne elects to exercise its termination right pursuant to the immediately preceding sentence, it shall give written notice to Parent (provided that such notice of election to terminate may be withdrawn at any time within the aforementioned five-day period). During the five-day period commencing with its receipt of such notice, Parent shall have the option of increasing the consideration to be received by the holders of Hawthorne Common Stock hereunder by adjusting the Exchange Ratio to equal the lesser of (i) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the product of the Starting Price, 0.80, and the Exchange Ratio (as then in effect) and the denominator of which is the Parent Closing Average, and (ii) a number equal to a quotient (rounded to the nearest one ten-thousandth), the numerator of which is the (A) difference between the Index Ratio and (B) 0.20, multiplied by the product of (1) the Exchange Ratio (as then in effect) and (2) the Starting Price, and the denominator of which is the Parent Closing Average. If Parent makes an election contemplated by the preceding sentence within such five-day period, it shall give prompt written notice to Hawthorne of such election and the revised Exchange Ratio, whereupon no termination shall have occurred pursuant to this Section 8.01(k) and this Agreement shall remain in effect in accordance with its terms (except as the Exchange Ratio shall have been so modified), and any references in this Agreement to “Exchange Ratio” shall thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this Section 8.01(k).

(a) In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VIII, no party to this Agreement shall have any liability or further obligation to any other party hereunder except as set forth in this Section 8.02 and Section 9.01.

(b) If this Agreement is terminated by either Parent or Hawthorne pursuant to a breach as provided in Section 8.01(b), the breaching party shall promptly pay to the non-breaching party $4.0 million, without prejudice to any other rights or remedies as may be available to Parent under Section 8.02(c) below or Hawthorne under Section 8.02(d) below.

(c) The parties hereto agree that Hawthorne shall pay Parent the sum of $18.0 million (the “Hawthorne Termination Fee”) if this Agreement is terminated as follows:

(i) if this Agreement is terminated by Parent pursuant to Section 8.01(g) or (i) or by Hawthorne pursuant to Section 8.01(j), in either of which case payment shall be made to Parent on the second Business Day following the termination of this Agreement; or

(ii) if (x) this Agreement is terminated by (A) Parent pursuant to Section 8.01(b), (B) by either Parent or Hawthorne pursuant to Section 8.01(c) and at the time of such termination no vote of the Hawthorne stockholders contemplated by this Agreement at the Hawthorne Meeting shall have occurred, or (C) by either Parent or Hawthorne pursuant to Section 8.01(e), and in the case of any termination pursuant to clause (A), (B) or (C), an Acquisition Proposal shall have been publicly announced or otherwise communicated or made known to the senior management of Hawthorne or the Hawthorne Board (or any Person shall have publicly announced, communicated or made known an intention, whether or not conditional, to make an Acquisition Proposal) at any time after the date of this Agreement and prior to the taking of the vote of the stockholders of Hawthorne contemplated by this

Agreement at the Hawthorne Meeting, in the case of clause (C), or the date of termination, in the case of clause (A) or (B), and (y) within 15 months after such termination Hawthorne enters into an agreement with respect to a Control Transaction (as defined below) or consummates a Control Transaction which is the subject of an Acquisition Proposal, then Hawthorne shall pay to Parent the Hawthorne Termination Fee on the date of execution of such agreement or consummation of a Control Transaction which is the subject of an Acquisition Proposal, provided that if the date of execution of such agreement is after 9 months but within 15 months after such termination of this Agreement, the Hawthorne Termination Fee shall be payable by Hawthorne to Parent only upon consummation of a Control Transaction which is the subject of an Acquisition Proposal, regardless whether such consummation occurs within 15 months after termination of this Agreement. As used in this Section 8.02(c)(ii), a “Control Transaction” means the acquisition by purchase, merger, consolidation, sale, transfer or otherwise, in one transaction or any related series of transactions of a majority of the voting power of the outstanding securities of Hawthorne or Hawthorne Bank or substantially all of the assets of Hawthorne or Hawthorne Bank.

Any payment previously made to Parent pursuant to Section 8.02(b) shall be credited against any amount due under 8.02(c)(i) and any payment previously made to Parent pursuant to Section 8.02(b) or 8.02(c)(i) shall be credited against any amount due under this Section 8.02(c)(ii), such that in no event will the amount payable to Parent pursuant to Sections 8.02(b) and (c) exceed $18.0 million. Any amount that becomes payable pursuant to this Section 8.02(c) shall be paid by wire transfer of immediately available funds to an account designated by Parent.

(d) The parties hereto agree that Parent shall pay Hawthorne the sum of $18.0 million (the “Parent Termination Fee”) if this Agreement is terminated as follows:

(i) If this Agreement is terminated by Hawthorne pursuant to Section 8.01(h), payment shall be made to Parent on the second Business Day following the termination of this Agreement; or

(ii) If (x) this Agreement is terminated by (A) Hawthorne pursuant to Section 8.01(b), (B) by either Parent or Hawthorne pursuant to Section 8.01(c) and at the time of such termination no vote of the Parent stockholders contemplated by this Agreement at the Parent Meeting shall have occurred, or (C) by either Parent or Hawthorne pursuant to Section 8.01(f), and in the case of any termination pursuant to clause (A), (B) or (C), an Acquisition Proposal shall have been publicly announced or otherwise communicated or made known to the senior management of Parent or the Parent Board (or any Person shall have publicly announced, communicated or made known an intention, whether or not conditional, to make an Acquisition Proposal) at any time after the date of this Agreement and prior to the taking of the vote of the stockholders of Parent contemplated by this Agreement at the Parent Meeting, in the case of clause (C), or the date of termination, in the case of clause (A) or (B), and (y) within 15 months after such termination Parent enters into an agreement with respect to a Control Transaction (as defined below) or consummates a Control Transaction which is the subject of an Acquisition Proposal, then Parent shall pay to Hawthorne the Parent Termination Fee on the date of execution of such agreement or consummation of a Control Transaction which is the subject of an Acquisition Proposal, provided that if the date of execution of such agreement is after 9 months but within 15 months after such termination of this Agreement, the Parent Termination Fee shall be payable by Parent to Hawthorne only upon consummation of a Control Transaction which is the subject of an Acquisition Proposal, regardless whether such consummation occurs within 15 months after termination of this Agreement. As used in this Section 8.02(d)(ii), a “Control Transaction” means the acquisition by purchase, merger, consolidation, sale, transfer or otherwise, in one transaction or any related series of transactions of a majority of the voting power of the outstanding securities of Parent or Parent Bank or substantially all of the assets of Parent or Parent Bank.

Any payment previously made to Hawthorne to Section 8.02(b) shall be credited against any amount due under 8.02(d)(i) and any payment previously made to Hawthorne pursuant to Section 8.02(b) or 8.02(d)(i) shall be credited against any amount due under this Section 8.02(d)(ii), such that in no event will the amount payable to

Hawthorne pursuant to Sections 8.02(b) and (c) exceed $18.0 million. Any amount that becomes payable pursuant to this Section 8.02(d) shall be paid by wire transfer of immediately available funds to an account designated by Hawthorne.

(e) Hawthorne and Parent agree that the agreements contained in paragraphs (c) and (d) of this Section 8.02 are an integral part of the transactions contemplated by this Agreement, that without such agreements Parent and Hawthorne would not have entered into this Agreement and that such amounts do not constitute a penalty or liquidated damages in the event of a breach of this Agreement by Hawthorne or Parent. If either party fails to pay the other party the amounts due under paragraphs (c) and (d) above within the time periods specified therein, the party requested to make such payment shall pay the costs and expenses (including reasonable legal fees and expenses) incurred by the other party in connection with any action in which Parent prevails, including the filing of any lawsuit, taken to collect payment of such amounts, together with interest on the amount of any such unpaid amounts at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid until the date of actual payment.

9.01 Survival. No representations, warranties, agreements and covenants contained in this Agreement shall survive the Effective Time (other than agreements or covenants contained herein that by their express terms are to be performed in whole or in part after the Effective Time) or the termination of this Agreement if this Agreement is terminated prior to the Effective Time (other than Sections 6.06(c), 8.02 and, excepting Section 9.12 hereof, this Article IX, which shall survive any such termination). Notwithstanding anything in the foregoing to the contrary, no representations, warranties, agreements and covenants contained in this Agreement shall be deemed to be terminated or extinguished so as to deprive a party hereto or any of its affiliates of any defense at law or in equity which otherwise would be available against the claims of any Person, including without limitation any shareholder or former shareholder.

9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this Agreement may be (i) waived, by the party benefited by the provision or (ii) amended or modified at any time, by an agreement in writing among the parties hereto executed in the same manner as this Agreement, except that after the Hawthorne Meeting no amendment shall be made which by law requires further approval by the stockholders of Hawthorne without obtaining such approval.

9.03 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original.

9.04 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Nevada applicable to contracts made and to be performed entirely within such State.

9.05 Expenses. Each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, including fees and expenses of its own financial consultants, accountants and counsel, except that expenses of printing the Proxy Statement and the registration fee to be paid to the SEC in connection with the Registration Statement shall be shared equally between Hawthorne and Parent, and provided further that nothing contained herein shall limit either party’s rights to recover any liabilities or damages arising out of the other party’s willful breach of any provision of this Agreement.

9.06 Notices. All notices, requests and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or certified

mail (return receipt requested) to such party at its address set forth below or such other address as such party may specify by notice to the parties hereto.

9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement, the Acquisition Sub Merger Agreement, the Bank Merger Agreement, the Shareholder Agreements and the Confidentiality Agreements represent the entire understanding of the parties hereto and thereto with reference to the Transaction, and this Agreement, the Acquisition Sub Merger Agreement, the Bank Merger Agreement, the Shareholder Agreements and the Confidentiality Agreements supersede any and all other oral or written agreements heretofore made. Except for the Indemnified Parties’ right to enforce Parent’s obligation under Section 6.11, which are expressly intended to be for the irrevocable benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives, nothing in this Agreement, expressed or implied, is intended to confer upon any Person, other than the parties hereto or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

9.08 Severability. Except to the extent that application of this Section 9.08 would have a Material Adverse Effect on Hawthorne or Parent, any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of

this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.

9.09 Enforcement of the Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In the event attorneys’ fees or other costs are incurred to secure performance of any of the obligations herein provided for, or to establish damages for the breach thereof, or to obtain any other appropriate relief, whether by way of prosecution or defense, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs incurred therein.

9.10 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” Whenever the words “as of the date hereof” are used in this Agreement, they shall be deemed to mean the day and year first above written (January 27, 2004).

9.11 Assignment. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

9.12 Alternative Structure. Notwithstanding any provision of this Agreement to the contrary, Parent may at any time modify the structure of the acquisition of Hawthorne set forth herein, subject to the prior written consent of Hawthorne, which consent shall not be unreasonably withheld or delayed, provided that (i) the Merger Consideration to be paid to the holders of Hawthorne Common Stock is not thereby changed in kind or reduced in amount as a result of such modification, (ii) such modification will not adversely affect the tax treatment to Hawthorne’s stockholders as a result of receiving the Merger Consideration and (iii) such modification will not materially delay or jeopardize receipt of any required approvals of Governmental Authorities.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.


COMMERCIAL CAPITAL BANCORP, INC.

By:		/s/ STEPHEN H. GORDON
Name:		Stephen H. Gordon
Title:		Chairman and Chief Executive Officer


CCBI ACQUISITION CORP.

By:		/s/ STEPHEN H. GORDON
Name:		Stephen H. Gordon
Title:		Chief Executive Officer


HAWTHORNE FINANCIAL CORPORATION

By:		/s/ SIMONE LAGOMARSINO
Name:		Simone Lagomarsino
Title:		President and Chief Executive Officer

You have asked us to advise you with respect to the fairness, from a financial point of view, to Commercial Capital Bancorp, Inc. (the “Acquiror”) of the Exchange Ratio (as defined below) set forth in the Agreement and Plan of Merger, dated as of January 27, 2004 (the “Merger Agreement”), by and between Hawthorne Financial Corporation (the “Company”) and the Acquiror. The Merger Agreement provides for, among other things, the merger (the “Merger”) of the Company with and into the Acquiror, pursuant to which each outstanding share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the effective time of the Merger will be converted into 1.45 shares (the “Exchange Ratio”) of common stock, par value $0.001 per share, of the Acquiror (“Acquiror Common Stock”).

In arriving at our opinion, we have reviewed the Merger Agreement, as well as certain publicly available business and financial information relating to the Company and the Acquiror. We have also reviewed certain other information relating to the Company and the Acquiror, including financial forecasts, provided to or discussed with us by the Company and the Acquiror, and have met with the managements of the Company and the Acquiror to discuss the business and prospects of the Company and the Acquiror, respectively. We have also considered certain financial and stock market data of the Company and the Acquiror, and we have compared that data with similar data for other publicly held companies in businesses we deemed similar to those of the Company and the Acquiror and we have considered, to the extent publicly available, the financial terms of certain other business combinations and other transactions which have recently been effected or announced. We have also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which we deemed relevant.

In connection with our review, we have not assumed any responsibility for independent verification of any of the foregoing information and have relied on such information being complete and accurate in all material respects. With respect to the financial forecasts that we have reviewed, we have been advised by the managements of the Company and the Acquiror, and we have assumed, that such financial forecasts (and adjustments thereto) have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements of the Company and the Acquiror as to the future financial performance of the Company and the Acquiror, respectively. In addition, we have also relied, without independent verification, upon the views of the management of the Acquiror relating to the synergistic values and operating cost savings (including the amount, timing and achievability thereof) anticipated to result from the combination of the operations of the Company and the Acquiror. We have assumed, with your consent, that the Merger will be treated as a tax-free reorganization for federal income tax purposes. We also have assumed, with your consent, that in the course of obtaining any necessary regulatory and third party approvals and consents for the Merger, no modification, delay, limitation, restriction or condition will be imposed that will have an adverse effect on the Company or the Acquiror or the contemplated benefits of the Merger, and that the Merger will be consummated in accordance

with the terms of the Merger Agreement, without waiver, amendment or modification of any material terms, conditions or agreements therein. In addition, we have not been requested to make, and have not made, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or the Acquiror, nor have we been furnished with any such evaluations or appraisals. Our opinion is necessarily based upon information made available to us as of the date hereof and upon financial, economic, market and other conditions as they exist and can be evaluated on the date hereof. We are not expressing any opinion as to what the actual value of Acquiror Common Stock will be when issued to holders of Company Common Stock pursuant to the Merger or the prices at which such Acquiror Common Stock will trade at any time. Our opinion does not address the relative merits of the Merger as compared to other business strategies that might be available to the Acquiror, nor does it address the underlying business decision of the Acquiror to proceed with the Merger.

We have acted as financial advisor of the Acquiror in connection with the Merger and will receive a fee for our services, a significant portion of which is contingent upon the consummation of the Merger. We and our affiliates have in the past provided financial and investment banking services to the Acquiror unrelated to the Merger and we may in the future provide certain investment banking and financial services to the Acquiror and its affiliates for which we would expect to receive compensation. In the ordinary course of our business, we and our affiliates may actively trade the debt and equity securities of both the Company and the Acquiror for our and our affiliates’ own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

It is understood that this letter is for the information of the Board of Directors of the Acquiror in connection with its consideration of the Merger and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matter relating to the Merger.

Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio is fair to the Acquiror, from a financial point of view.


Very truly yours,

/s/ CREDIT SUISSE FIRST BOSTON LLC
CREDIT SUISSE FIRST BOSTON LLC

Hawthorne Financial Corporation (“Hawthorne”), Commercial Capital Bancorp, Inc. (“Commercial Capital”) and CCBI Acquisition Corp., a wholly-owned subsidiary of Commercial Capital (“CCBIAC”), have entered into an Agreement and Plan of Merger, dated as of January 27, 2004 (the “Agreement”), pursuant to which Hawthorne will be acquired by Commercial Capital through the merger of Hawthorne with and into CCBIAC (the “Merger”). Under the terms of the Agreement, upon consummation of the Merger, each share of Hawthorne common stock, par value $.01 per share, issued and outstanding immediately prior to the Merger (the “Hawthorne Shares”), other than certain shares specified in the Agreement, will be converted into the right to receive 1.45 shares (the “Exchange Ratio”) of common stock, par value $.001 per share, of Commercial Capital. The terms and conditions of the Merger are more fully set forth in the Agreement. You have requested our opinion as to the fairness, from a financial point of view, of the Exchange Ratio to the holders of Hawthorne Shares.

Sandler O’Neill & Partners, L.P., as part of its investment banking business, is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. In connection with this opinion, we have reviewed, among other things: (i) the Agreement; (ii) certain publicly available financial statements and other historical financial information of Hawthorne that we deemed relevant; (iii) certain publicly available financial statements and other historical financial information of Commercial Capital that we deemed relevant; (iv) internal financial projections for Hawthorne for the years ending December 31, 2004 and 2005 prepared by and reviewed with management of Hawthorne; (v) internal financial projections for Commercial Capital for the years ending December 31, 2004 and 2005 prepared by and reviewed with management of Commercial Capital and earnings per share estimates for Commercial Capital for the years ending December 31, 2004 and 2005 published by I/B/E/S; (vi) the pro forma financial impact of the Merger on Commercial Capital, based on assumptions relating to transaction expenses, purchase accounting adjustments and cost savings determined by the senior management of Commercial Capital; (vii) the relative contributions of assets, liabilities, equity and earnings of Hawthorne and Commercial Capital to the resulting institution; (viii) the publicly reported historical price and trading activity for Hawthorne’s and Commercial Capital’s common stock, including a comparison of certain financial and stock market information for Hawthorne and Commercial Capital with similar publicly available information for certain other companies the securities of which are publicly traded; (ix) the financial terms of certain recent business combinations in the savings institution industry, to the extent publicly available; (x) the current market environment generally and the banking environment in particular; and (xi) such other information, financial studies, analyses and investigations and financial, economic and market criteria as we considered relevant. We also discussed with certain members of senior management of Hawthorne the business, financial condition, results of operations and prospects of Hawthorne and held similar discussions with certain members of senior management of Commercial Capital regarding the business, financial condition, results of operations and prospects of Commercial Capital. In connection with our engagement, at the request of Hawthorne, we did make

inquiry of another financial institution regarding their interest in a potential transaction; however, we were not asked to, and did not, solicit indications of interest in a potential transaction from other third parties.

In performing our review, we have relied upon the accuracy and completeness of all of the financial and other information that was available to us from public sources, that was provided to us by Hawthorne or Commercial Capital or their respective representatives or that was otherwise reviewed by us and have assumed such accuracy and completeness for purposes of rendering this opinion. We have further relied on the assurances of management of Hawthorne and Commercial Capital that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. We have not been asked to and have not undertaken an independent verification of any of such information and we do not assume any responsibility or liability for the accuracy or completeness thereof. We did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Hawthorne or Commercial Capital or any of their subsidiaries, or the collectibility of any such assets, nor have we been furnished with any such evaluations or appraisals. We did not make an independent evaluation of the adequacy of the allowance for loan losses of Hawthorne or Commercial Capital nor have we reviewed any individual credit files relating to Hawthorne or Commercial Capital. We have assumed, with your consent, that the respective allowances for loan losses for both Hawthorne and Commercial Capital are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. With respect to the internal financial projections for Hawthorne and Commercial Capital and all projections of transaction costs, purchase accounting adjustments and expected cost savings prepared by and/or reviewed with the managements of Hawthorne and Commercial Capital and used by Sandler O’Neill in its analyses, the managements of Hawthorne and Commercial Capital confirmed to us that they reflected the best currently available estimates and judgments of the respective managements of the respective future financial performances of Hawthorne and Commercial Capital and we assumed that such performances would be achieved. We express no opinion as to such financial projections or the assumptions on which they are based. We have also assumed that there has been no material change in Hawthorne’s or Commercial Capital’s assets, financial condition, results of operations, business or prospects since the date of the most recent financial statements made available to us. We have assumed in all respects material to our analysis that Hawthorne and Commercial Capital will remain as going concerns for all periods relevant to our analyses, that all of the representations and warranties contained in the Agreement and all related agreements are true and correct, that each party to such agreements will perform all of the covenants required to be performed by such party under such agreements, that the conditions precedent in the Agreement are not waived and that the Merger will qualify as a tax-free reorganization for federal income tax purposes. Finally, with your consent, we have relied upon the advice Hawthorne has received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the Merger and the other transactions contemplated by the Agreement.

Our opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof could materially affect this opinion. We have not undertaken to update, revise, reaffirm or withdraw this opinion or otherwise comment upon events occurring after the date hereof. We are expressing no opinion herein as to what the value of Commercial Capital’s common stock will be when issued to Hawthorne’s shareholders pursuant to the Agreement or the prices at which Hawthorne’s or Commercial Capital’s common stock may trade at any time.

We have acted as Hawthorne’s financial advisor in connection with the Merger and will receive a fee for our services, a substantial portion of which is contingent upon consummation of the Merger. We will also receive a fee for rendering this opinion. Hawthorne has also agreed to indemnify us against certain liabilities arising out of our engagement. As you are aware, we have provided certain other investment banking services to Hawthorne in

the past and have received compensation for such services. In addition, as we have previously advised you, we have in the past provided certain investment banking services to Commercial Capital, including managing Commercial Capital’s initial public offering completed in December 2002, and have received compensation for such services, and we may provide, and receive compensation for, such services in the future, including during the period prior to the closing of the Merger. In the ordinary course of our business as a broker-dealer, we may purchase securities from and sell securities to Hawthorne and Commercial Capital and their affiliates. We may also actively trade the debt and/or equity securities of Hawthorne and Commercial Capital and their affiliates for our own account and for the accounts of our customers and, accordingly, may at any time hold a long or short position in such securities.

Our opinion is directed to the Board of Directors of Hawthorne in connection with its consideration of the Merger and does not constitute a recommendation to any shareholder of Hawthorne as to how such shareholder should vote at any meeting of shareholders called to consider and vote upon the Merger. Our opinion is directed only to the fairness of the Exchange Ratio to Hawthorne shareholders from a financial point of view and does not address the underlying business decision of Hawthorne to engage in the Merger, the relative merits of the Merger as compared to any other alternative transactions or business strategies that might exist for Hawthorne or the effect of any other transaction in which Hawthorne might engage. Our opinion is not to be quoted or referred to, in whole or in part, in a registration statement, prospectus, proxy statement or in any other document, nor shall this opinion be used for any other purposes, without Sandler O’Neill’s prior written consent; provided, however, that we hereby consent to the inclusion of this opinion as an appendix to the Joint Proxy Statement/Prospectus of Hawthorne and Commercial Capital relating to the Merger and to the references to this opinion therein.

Based upon and subject to the foregoing, it is our opinion, as of the date hereof, that the Exchange Ratio is fair to the holders of Hawthorne Shares from a financial point of view.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE

The undersigned stockholder(s) of Hawthorne Financial Corporation, a Delaware corporation (the “Company”), hereby appoints Timothy R. Chrisman and Simone Lagomarsino, and each of them, with full power to act alone, the true and lawful attorneys-in-fact and proxies of the undersigned, with full powers of substitution, and hereby authorize(s) them and each of them, to represent the undersigned and to vote all shares of common stock of the Company that the undersigned is entitled to vote at the Special Meeting of Stockholders of the Company to be held on Tuesday, May 25, 2004, at 11:00 a.m. Pacific Time, at the Company’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California, and at any and all adjournments thereof, as set forth on the reverse side.

PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE PREPAID ENVELOPE PROVIDED

NOTE: Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee, or guardian, please give your full title. If shares are held jointly, each holder may sign but only one signature is required.

To the participants in the Hawthorne Financial Corporation Employee Stock Ownership/401(k) Plan (the “401(k) Plan/ESOP”):

A special meeting of the stockholders of Hawthorne Financial Corporation will be held at 11:00 a.m., Pacific time, on Tuesday, May 25, 2004 at Hawthorne Financial’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California, for the following purposes, all of which are more completely set forth in the accompanying joint proxy statement/prospectus:

Voting Directions. Because shares of Hawthorne Financial common stock are credited to your account under the 401(k) Plan/ESOP, you have the right to direct Actuarial Consultants, Inc. (the “Servicer”), who has been appointed to report to the trustee of the 401(k) Plan/ESOP, Capital Bank and Trust (the “Trustee”), how to vote the shares credited to your account at the special meeting of stockholders on the proposals.

How to Direct the Vote of Shares Credited to You Under the 401(k) Plan/ESOP. The Trustee is the owner of record of the shares of Hawthorne Financial common stock held for your account in the 401(k) Plan/ESOP. As such, the Trustee is the only one who can vote your shares, but the Trustee will vote the shares credited to your account in accordance with your instructions, if you provide them timely.

You may use the enclosed Proxy Card to convey to the Servicer your voting instructions. To vote shares of Hawthorne Financial common stock credited to your account under the 401(k) Plan/ESOP, please instruct the Servicer by completing, executing and returning the attached Proxy Card to the address indicated below. Please return your Proxy Card in the enclosed envelope that has the BLUE STICKER in the lower right hand corner. The Servicer will tabulate the votes in accordance with your instructions and provide the aggregate vote totals to the Trustee.

A joint proxy statement/prospectus describing the proposals to be voted upon at the special meeting has been delivered to you with this Notice. You should review the joint proxy statement/prospectus before completing your Proxy Card.

Please note that this request for voting instructions is separate from any proxy request you may receive with respect to any other holdings you may have in Hawthorne Financial common stock outside of the 401(k) Plan/ESOP.

If the Proxy Card is properly completed, signed and returned, the Trustee will vote the shares allocated to your account under the 401(k) Plan/ESOP in accordance with your direction. Please note the following:

Confidentiality of Vote. Your voting decision with respect to the Hawthorne Financial common stock credited to your account under the 401(k) Plan/ESOP will be kept confidential and will not be provided to Hawthorne Financial Corporation, Hawthorne Savings, F.S.B., Commercial Capital Bancorp or Commercial Capital Bank. Actuarial Consultants, Inc., the Servicer, will tabulate the votes and is responsible for ensuring compliance with these confidentiality procedures. Your Proxy Card should be returned to:

The Proxy Card must be delivered to Actuarial Consultants, Inc., the Servicer for the 401(k) Plan/ESOP, which has been specially designated to report the voting results to the 401(k) Plan/ESOP Trustee. Voting can only be done by the Trustee, which is the record owner of all shares of Hawthorne Financial common stock held by the 401(k) Plan/ESOP.

The Servicer must have ample time to tabulate votes and to deliver to the Trustee the aggregate votes on behalf of the participants of the 401(k) Plan/ESOP on or before the date of the special stockholder meeting. The special stockholder meeting will take place on May 25, 2004, at 11:00 a.m. Pacific time. THEREFORE, YOUR PROXY CARD SHOULD BE RECEIVED BY THE SERVICER NO LATER THAN TUESDAY, MAY 18, 2004. You may change your voting instructions by executing and delivering to the Servicer a duly executed Proxy Card or written instruction no later than Tuesday, May 18, 2004.

(Return this Proxy Card in the enclosed envelope that has the BLUE STICKER in the lower right hand corner)

The undersigned does hereby direct Actuarial Consultants, Inc., the Servicer, to deliver the tabulated aggregate votes to Capital Bank and Trust, the Trustee of the Hawthorne Financial Corporation Employee Stock Ownership/401(k) Plan (the “401(k) Plan/ESOP”), to vote in person or by proxy all of the shares of Hawthorne Financial Corporation common stock credited to the account of the undersigned under the 401(k) Plan/ESOP at the special meeting of stockholders of Hawthorne Financial Corporation to be held at held at 11:00 a.m., Pacific time, on Tuesday, May 25, 2004 at Hawthorne Financial’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California and at any and all adjournments thereof, as set forth on the reverse side.

If any other business is presented at the special meeting, the Trustee of the 401(k) Plan/ESOP, in its best judgment, will vote on such matters.

PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD TO THE FOLLOWING ADDRESS NO LATER THAN TUESDAY, MAY 18, 2004:

If the Proxy Card is properly completed, signed and returned, the shares allocated to your account under the 401(k) Plan/ESOP will be voted in accordance with your direction on the proposals. Please note the following:

To the participants in the Hawthorne Financial Corporation Employee Stock Purchase Plan (the “ESPP”):

Voting Directions. Because shares of Hawthorne Financial common stock are credited to your account under the ESPP, you have the right to direct Actuarial Consultants, Inc. (the “Servicer”), who has been appointed to report to the administrator of the ESPP, Hawthorne Savings, F.S.B. (the “Administrator”), how to vote the shares credited to your account at the special meeting of stockholders on the proposals.

How to Direct the Vote of Shares Credited to You Under the ESPP. The Administrator is the only one who can vote the shares of Hawthorne Financial common stock held for your account in the ESPP. The Administrator will vote the shares credited to your account in accordance with your instructions, if you provide them timely.

You may use the enclosed Proxy Card to convey to the Servicer your voting instructions. To vote shares of Hawthorne Financial common stock credited to your account under the ESPP, please instruct the Servicer by completing, executing and returning the attached Proxy Card to the address indicated below. Please return your Proxy Card in the enclosed envelope that has the GREEN STICKER in the lower right hand corner. The Servicer will tabulate the votes in accordance with your instructions and provide the aggregate vote totals to the Administrator.

If the Proxy Card is properly completed, signed and returned, the Administrator will vote the shares allocated to your account under the ESPP in accordance with your direction.

Please note that if your Proxy Card: (1) is signed and returned without a voting direction, (2) is returned unsigned, or (3) is not returned at all, the Administrator will not vote the shares of Hawthorne Financial Corporation common stock allocated to your account in the ESPP. If the Administrator does not vote the shares of Hawthorne Financial Corporation common stock allocated to your account in the ESPP, it will have the same effect as a vote against the approval and adoption of the merger agreement, but will have no effect on the outcome of the voting on the adjournment proposal.

If you direct the Administrator to abstain from voting, the Administrator will abstain from voting such shares, and the shares will not be voted. An abstention from voting will have the same effect as a vote against the approval and adoption of the merger agreement and a vote against the adjournment proposal.

Participants may revoke their voting instructions by executing and delivering to Actuarial Consultants, Inc., the Servicer, a revised duly executed Proxy Card or written instruction no later than Tuesday, May 18, 2004.

Confidentiality of Vote. Your voting decision with respect to the Hawthorne Financial common stock credited to your account under the ESPP will be kept confidential and will not be provided to Hawthorne Financial Corporation, Hawthorne Savings, F.S.B., Commercial Capital Bancorp or Commercial Capital Bank. Actuarial Consultants, Inc., the Servicer, will tabulate the votes and is responsible for ensuring compliance with these confidentiality procedures. Your Proxy Card should be returned to:

The Proxy Card must be delivered to Actuarial Consultants, Inc., the Servicer for the ESPP, which has been specially designated to report the voting results to the ESPP Administrator. Voting can only be done by the Administrator.

The Servicer must have ample time to tabulate votes and to deliver to the Administrator the aggregate votes on behalf of the participants of the ESPP on or before the date of the special stockholder meeting. The special stockholder meeting will take place on May 25, 2004, at 11:00 a.m. Pacific time. THEREFORE, YOUR PROXY CARD SHOULD BE RECEIVED BY THE SERVICER NO LATER THAN TUESDAY, MAY 18, 2004. You may change your voting instructions by executing and delivering to the Servicer a duly executed Proxy Card or written instruction no later than Tuesday May 18, 2004.

(Return this Proxy Card in the enclosed envelope that has the GREEN STICKER in the lower right hand corner)

The undersigned does hereby direct Actuarial Consultants, Inc., the Servicer, to deliver the tabulated aggregate votes to Hawthorne Savings, F.S.B., the Administrator of the Hawthorne Financial Corporation Employee Stock Purchase Plan (the “ESPP”), to vote in person or by proxy all of the shares of Hawthorne Financial Corporation common stock credited to the account of the undersigned under the ESPP at the special meeting of stockholders of Hawthorne Financial Corporation to be held at held at 11:00 a.m., Pacific time, on Tuesday, May 25, 2004 at Hawthorne Financial’s headquarters, located at 2381 Rosecrans Avenue, 2^nd Floor, El Segundo, California and at any and all adjournments thereof, as set forth on the reverse side.

If any other business is presented at the special meeting, the Administrator of the ESPP, in its best judgment, will vote on such matters.

PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD TO THE FOLLOWING ADDRESS NO LATER THAN TUESDAY, MAY 18, 2004:

If the Proxy Card is properly completed, signed and returned, the Administrator will vote the shares allocated to your account under the ESPP in accordance with your direction.

If you direct the Administrator to abstain from voting, the Administrator will abstain from voting such shares, and the shares will not be voted.



ANNEX A	Agreement and Plan of Merger, dated as of January 27, 2004, among Commercial Capital Bancorp, Inc., CCBI Acquisition Corp. and Hawthorne Financial Corporation	A-1
ANNEX B	Opinion of Credit Suisse First Boston LLC	B-1
ANNEX C	Opinion of Sandler O’Neill & Partners, L.P.	C-1


	At or For the Year Ended December 31,
	2003(1)		2002(1)		2001(1)		2000(1)			1999(1)
	(Dollars in Thousands, Except Per Share Data)
Financial Condition Data:
Total assets	$	1,723,139	$	849,469	$	423,691	$	181,507		$	29,931
Loans held for investment, net of allowance for loan losses		1,047,632		469,186		188,797		81,100			—
Loans held for sale		14,893		18,338		52,379		32,106			28,125
Securities(2)		560,729		310,074		119,685		38,628			—
Goodwill		13,035		13,035		13,014		13,950			—
Deposits		645,596		312,279		118,339		60,428			—
Securities sold under agreements to repurchase		74,475		110,993		78,752		14,535			—
Federal Home Loan Bank advances		822,519		289,139		128,690		47,095			—
Trust Preferred Securities		52,500		35,000		15,000		—			—
Warehouse lines of credit		13,794		16,866		52,389		31,967			26,376
Total stockholders’ equity		102,042		77,603		26,802		24,753			2,457
Statement of Operations Data:
Interest income	$	66,174	$	38,567	$	15,879	$	3,234		$	1,406
Interest expense		24,940		17,649		9,248		3,229			1,275

Net interest income		41,234		20,918		6,631		5			131
Provision for loan losses		1,286		1,609		686		—			—

Net interest income after provision for loan losses		39,948		19,309		5,945		5			131
Noninterest income		9,169		7,615		4,942		2,375			3,500
Noninterest expenses(3)		15,446		10,531		7,507		3,642			4,732

Income (loss) before income tax expense (benefit)		33,671		16,393		3,380		(1,262	)		(1,101	)
Income tax expense (benefit)		13,242		6,683		1,716		(740	)		2

Income (loss) before minority interest and change in accounting principle		20,429		9,710		1,664		(522	)		(1,103	)
Income allocated to minority interest		—		—		108		—			—

Income (loss) before change in accounting principle		20,429		9,710		1,556		(522	)		(1,103	)
Cumulative effect of change in accounting principle		—		—		—		—			(156	)

Net income (loss)	$	20,429	$	9,710	$	1,556	$	(522	)	$	(1,259	)


	At or For the Year Ended December 31,
	2003(1)			2002(1)			2001(1)			2000(1)			1999(1)
	(Dollars in Thousands, Except Per Share Data)
Per Share Data(4):
Earnings (loss) per share—Basic	$	0.70		$	0.53		$	0.09		$	(0.06	)	$	(0.14	)
Earnings (loss) per share—Diluted		0.66			0.50			0.09			(0.06	)		(0.14	)
Weighted average shares outstanding—Basic		29,329,289			18,231,368			17,361,952			9,186,868			8,902,428
Weighted average shares outstanding—Diluted		31,111,208			19,457,836			18,007,712			9,186,868			8,902,428
Common shares outstanding at the end of year		29,956,372			27,957,716			17,691,528			17,093,732			8,973,614
Book value per share	$	3.41		$	2.78		$	1.51		$	1.45		$	0.27
Tangible book value per share		2.97			2.31			0.78			0.63			0.27
Operating Data(5):
Performance Ratios and Other Data:
Loan originations	$	1,109,502		$	760,745		$	494,897		$	314,948		$	315,337
Return on average assets		1.57	%		1.50	%		0.66	%		(1.06	)%		(5.06	)%
Return on average stockholders’ equity		22.69			27.69			5.98			(18.82	)		(39.82	)
Equity to assets at end of year		5.92			9.14			6.33			13.64			8.21
Interest rate spread(6)		3.20			3.29			2.56			(0.35	)		(0.40	)
Net interest margin(6)		3.29			3.38			3.06			0.01			0.68
Efficiency ratio(7)		28.06			33.74			58.40			153.03			130.32
General and administrative expenses to average assets(8)		1.09			1.49			2.88			7.43			19.02
Allowance for loan losses to total loans held for investment at end of year		0.37			0.58			0.58			0.52			—
Nonperforming assets	$	129		$	—		$	—		$	—		$	—
Net charge-offs during the year		60			—			—			—			—
Bank Regulatory Capital Ratios:
Tier I risk-based capital		13.47	%		19.43	%		14.09	%		12.16	%		N/A
Total risk-based capital		13.87			20.03			14.73			12.72			N/A
Tier I leverage capital		7.97			11.97			7.89			6.85			N/A


	At or For the Year Ended December 31,
	2003			2002			2001			2000			1999
	(Dollars in Thousands, Except Per Share Data)
Financial Condition Data:
Total assets	$	2,674,003		$	2,494,970		$	1,856,197		$	1,753,395		$	1,581,153
Cash and cash equivalents		17,829			21,849			98,583			99,919			86,722
Investment securities		381,287			267,596			—			—			—
Loans receivable, net		2,154,114			2,114,255			1,709,283			1,608,067			1,444,968
Real estate owned, net		—			—			1,312			2,859			5,587
Deposits		1,722,564			1,662,810			1,199,645			1,214,856			1,086,635
Senior notes		—			—			25,778			39,358			40,000
Capital securities		51,000			51,000			14,000			—			—
FHLB advances		697,155			600,190			484,000			384,000			349,000
Stockholders’ equity		185,274			163,066			120,449			104,161			92,304
Allowance for credit losses		33,538			35,309			30,602			29,450			24,285
Consolidated Statements of Income:
Interest revenue	$	140,479		$	137,194		$	147,686		$	148,988		$	132,747
Interest cost		(59,859	)		(64,087	)		(85,670	)		(88,682	)		(73,626	)

Net interest income		80,620			73,107			62,016			60,306			59,121
Provision for credit losses		(500	)		(870	)		(3,400	)		(6,000	)		(12,000	)

Net interest income after provision for credit losses		80,120			72,237			58,616			54,306			47,121
Noninterest revenue		8,656			6,387			5,630			8,094			7,820
(Loss)/income from real estate operations, net		(51	)		71			205			(924	)		324
Noninterest expense		(42,354	)		(40,612	)		(35,348	)		(36,524	)		(37,035	)

Income before income taxes		46,371			38,083			29,103			24,952			18,230
Income tax provision		(17,863	)		(15,384	)		(12,270	)		(10,668	)		(8,030	)

Net income	$	28,508		$	22,699		$	16,833		$	14,284		$	10,200

Per Share Data(1):
Basic earnings per share	$	2.47		$	2.37		$	2.12		$	1.79		$	1.29
Diluted earnings per share		2.28			1.92			1.48			1.29			0.89
Tangible book value per share(2)		13.75			12.52			14.98			13.42			11.55
Asset quality (at period end):
Nonaccrual loans	$	8,885		$	7,675		$	20,666		$	31,601		$	44,031
Real estate owned, net		—			—			1,312			2,859			5,587

	$	8,885		$	7,675		$	21,978		$	34,460		$	49,618

Net charge-offs	$	878		$	3,352		$	2,248		$	835		$	4,826



Commercial Capital Bancorp, Inc. One Venture, 3rd Floor Irvine, California 92618 Attention: Corporate Secretary (949) 585-7500				Hawthorne Financial Corporation 2381 Rosecrans Avenue, 2nd Floor El Segundo, California 90245 Attention: Corporate Secretary (310) 725-1878


		Page
REFERENCES TO ADDITIONAL INFORMATION
QUESTIONS AND ANSWERS ABOUT THE MERGER		1
SUMMARY		3
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA		13
COMPARATIVE PER SHARE DATA (UNAUDITED)		18
RISK FACTORS		19
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS		20
THE STOCKHOLDER MEETINGS		21
Time, Date and Place		21
Matters to be Considered		21
Shares Outstanding and Entitled to Vote; Record Date		22
How to Vote Your Shares		22
Votes Required		23
Solicitation of Proxies		24
Participants in the Hawthorne Financial Employee Stock Ownership/401(k) Plan		25
Participants in the Hawthorne Financial Employee Stock Purchase Plan		26
Recommendation of the Commercial Capital and the Hawthorne Financial Boards of Directors		26
Contact for Hawthorne Financial stockholders regarding questions and requests		27
Contact for Commercial Capital stockholders regarding questions and requests		27
THE MERGER		28
General		28
Background of the Merger		28
Commercial Capital’s Reasons for the Merger		31
Hawthorne Financial’s Reasons for the Merger		32
Opinion of Commercial Capital’s Financial Advisor		34
Opinion of Hawthorne Financial’s Financial Advisor		41
Structure of the Merger and Merger Consideration		49
Procedures for Exchange of Hawthorne Financial Common Stock Certificates		50
Assumption or Termination of Hawthorne Financial Stock Options and Warrants		51
Conditions to the Merger		52
Regulatory Approvals		53
Business Pending the Merger		55
Covenant of the Boards of Directors of Commercial Capital and Hawthorne Financial to Hold Stockholder Meetings and Recommend the Merger Agreement		56
No Solicitation		56
Reasonable Best Efforts Covenant		57
Certain Other Covenants		57
Representations and Warranties of the Parties		58
Effective Time of the Merger		58
Amendment of the Merger Agreement		58
Termination of the Merger Agreement		58
Termination Fees		62
Board of Directors of Commercial Capital and Commercial Capital Bank after the Merger		64
Interests of Certain Hawthorne Financial Directors and Executive Officers in the Merger		65
Certain Employee Matters		66
Resale of Commercial Capital Common Stock		67
Material Federal Income Tax Consequences		68
Accounting Treatment of the Merger		70
Expenses of the Merger		70


		Page
Listing of the Shares of Commercial Capital Common Stock		70
Shareholder Agreements		70
No Dissenters’ Rights		71
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS		72
MARKET FOR COMMON STOCK AND DIVIDENDS		79
INFORMATION ABOUT COMMERCIAL CAPITAL		81
INFORMATION ABOUT HAWTHORNE FINANCIAL		81
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF COMMERCIAL CAPITAL AND HAWTHORNE FINANCIAL		83
DESCRIPTION OF COMMERCIAL CAPITAL’S CAPITAL STOCK		88
Commercial Capital Common Stock		88
Commercial Capital Preferred Stock		88
Transfer Agent		88
COMPARISON OF THE RIGHTS OF STOCKHOLDERS		89
Authorized Capital Stock		89
Issuance of Capital Stock		89
Voting Rights		90
Number and Election of Directors		90
Removal of Directors		90
Vacancies of Directors		91
Indemnification and Directors and Officers		91
Limitation of Liability of Directors		92
Dividends and Other Distributions		92
Amendments to Certificate or Articles of Incorporation and Bylaws		92
Notice of Stockholder Meetings		93
Special Meetings of Stockholders		93
Quorum for Meeting of Stockholders		94
Stockholder Nominations and Stockholder Proposals		94
Stockholder Action Without a Meeting		94
Stockholder Inspection Rights		95
Stockholder Approval of Mergers, Share Exchanges and Sales of Assets		95
Interested Stockholder Statutes		95
Liquidation Rights		97
Appraisal or Dissenters’ Rights		97
Rights Plan		98
ADJOURNMENT OF THE STOCKHOLDER MEETINGS		99
LEGAL OPINION		101
EXPERTS		101
WHERE YOU CAN FIND MORE INFORMATION		102
STOCKHOLDER PROPOSALS		104


	At December 31, 2003
	(In thousands) (unaudited)
Pro Forma Consolidated Balance Sheet:
Total assets	$	4,740,607
Loans receivable, net of allowance for loan losses		3,201,746
Securities available-for-sale		942,016
Deposits		2,371,160
Federal Home Loan Bank advances		1,554,274
Trust preferred securities		105,400
Repurchase agreements		74,475
Goodwill		341,802
Total stockholders’ equity		573,934


	For the Year Ended December 31, 2003
	(In thousands except per share data) (unaudited)
Pro Forma Consolidated Statement of Operations:
Net interest income after provision for loan losses	$	129,388
Net income		53,090
Earnings per common share:
Basic		1.01
Diluted		0.95
Cash dividends declared per common share		—


	At of For the Year Ended December 31, 2003
Basic Earnings Per Share(1):
Commercial Capital	$	0.70
Hawthorne Financial		2.47
Commercial Capital Pro Forma		1.01
Hawthorne Financial Pro Forma Equivalent		1.95
Diluted Earnings Per Share(1):
Commercial Capital		0.66
Hawthorne Financial		2.28
Commercial Capital Pro Forma		0.95
Hawthorne Financial Pro Forma Equivalent		1.84
Cash Dividends Declared Per Share
Commercial Capital		—
Hawthorne Financial		—
Commercial Capital Pro Forma		—
Hawthorne Financial Pro Forma Equivalent		—
Book Value per Share at Period End(2):
Stated:
Commercial Capital		3.41
Hawthorne Financial		15.80
Commercial Capital Pro Forma		10.77
Hawthorne Financial Pro Forma Equivalent		20.82
Tangible:
Commercial Capital		2.97
Hawthorne Financial		13.75
Commercial Capital Pro Forma		3.95
Hawthorne Financial Pro Forma Equivalent		7.64


	Terminal P/E Multiples
Discount Rate	12.0x		14.0x		16.0x
10.0%	$	23.21	$	26.93	$	30.66
12.0		21.15		24.56		27.95
14.0		19.30		22.41		25.52


	Terminal P/E Multiples
Discount Rate	10.0x		12.0x		14.0x
9.0%	$	33.36	$	39.25	$	45.14
10.0		31.96		37.58		43.21
11.0		30.63		36.01		41.38
12.0		29.37		34.51		39.65


	Forward Terminal Multiples
Discount Rate	10.0x		12.0x		14.0x
9.0%	$	39.12	$	45.96	$	52.79
10.0		37.46		43.99		50.52
11.0		35.88		42.13		48.37
12.0		34.39		40.36		46.32


	Stock Market Price as a Multiple of:
	2004E EPS			2005E EPS			Book Value			Tangible Book Value
Peer Group Multiples for Hawthorne Financial
Low		10.4	x		9.0	x		1.56	x		1.56	x
Median		13.6			12.3			1.87			1.94
High		16.0			14.7			2.30			2.80
Implied Valuation
Low	$	25.23		$	24.18		$	23.01		$	20.03
Median		32.91			32.83			27.58			24.95
High		38.92			39.27			34.01			35.97


	Percentage Contribution of Commercial Capital		Percentage Contribution of Hawthorne Financial		Implied Exchange Ratio
Shares	55.8	%	44.2	%	1.933	x
Loans	32.5		67.5		5.075
Deposits	27.3		72.7		6.513
Assets	39.2		60.8		3.788
Common Equity	35.5		64.5		4.432
Tangible Common Equity	35.6		64.4		4.425
Net Income
2002	30.0		70.0		5.707
2003	41.7		58.3		3.407
2004 First Call Estimated	53.1		46.9		2.153
2005 First Call Estimated	60.7		39.3		1.579
2005 Management Estimated	58.9		41.1		1.704
2005 First Call Estimated with Cost Savings	56.0		44.0		1.921
2005 Management Estimated with Cost Savings	54.4		45.6		2.047


	Average Stock Price				Average Exchange Ratio
	Commercial Capital		Hawthorne Financial		Average Exchange Ratio
January 23, 2004	$	19.37	$	30.65	1.582	x
5 days		19.60		29.91	1.526
20 days		17.65		28.87	1.636
6 months		13.49		26.68	1.978
1 year		9.90		23.83	2.407
Since Commercial Capital Initial Public Offering (December 18, 2002)		9.38		23.39	2.494


Acquiror		Target
Provident Financial Services		First Sentinel Bancorp Inc.
Hibernia Corp.		Coastal Bancorp Inc.
Independence Comm. Bank Corp.		Staten Island Bancorp Inc.
Webster Financial Corp.		FirstFed America Bancorp Inc.
Texas Regional Bancshares Inc.		Southeast Texas Bancshares Inc.
FleetBoston Financial Corp.		Progress Financial Corp.
First Niagara Financial Group		Troy Financial Group
New Haven Savings Bank		Connecticut Bancshares Inc.
New York Community Bancorp		Roslyn Bancorp Inc.
Sovereign Bancorp Inc.		First Essex Bancorp Inc.
MAF Bancorp Inc.		St. Francis Capital Corp.
Arvest Bank Group Inc.		Superior Financial Corp.
Royal Bank of Scotland Group		Port Financial Corp.


	Precedent U.S. Thrift Transactions
	LTM EPS			One Year Forward EPS			Book Value			Tangible Book Value			Core Deposit Premium
Median		18.5	x		17.8	x		2.25	x		2.66	x		23.2	%
Implied Hawthorne Financial Value	$	42.09		$	43.21		$	33.16		$	34.20		$	26.16
Implied Exchange Ratio		2.173	x		2.231	x		1.712	x		1.765	x		1.351	x


Transaction Ratios
Transaction value/Last 12 months’ earnings per share	16.6	x
Transaction value/Estimated 2004 earnings per share(1)	15.3
Transaction value/Tangible book value per share	275.8	%
Transaction value/Stated book value per share	240.0
Tangible book premium/Core deposits(2)	21.7


	Beginning Index Value January 23, 2003		Ending Index Value January 23, 2004
Hawthorne Financial	100.0	%	157.8	%
Savings Institution peer group	100.0		147.9
Nasdaq Bank Index	100.0		130.9
S&P Bank Index	100.0		124.3
S&P 500 Index	100.0		128.7

	Beginning Index Value December 18, 2002		Ending Index Value January 23, 2004
Commercial Capital	100.0	%	484.1	%
Savings Institution peer group	100.0		146.6
Nasdaq Bank Index	100.0		133.1
S&P Bank Index	100.0		127.5
S&P 500 Index	100.0		128.1


Washington Federal Inc.		FirstFed Financial Corp.
Sterling Financial Corp.		PFF Bancorp Inc.
Quaker City Bancorp Inc.		ITLA Capital Corp.
Provident Financial Holdings, Inc.


Anchor BanCorp Wisconsin		First Federal Capital Corp.
Dime Community Bancshares Inc.		TrustCo Bank Corp NY
Flushing Financial Corp.		OceanFirst Financial Corp.
Quaker City Bancorp Inc.		Coastal Financial Corp.
NASB Financial Inc.


	Hawthorne Financial			Commercial Capital			Peer Group			High Performing Group
Total assets (in thousands)	$	2,674,003		$	1,723,139		$	3,460,419		$	1,849,097
Tangible equity/tangible assets		6.09	%		5.20	%		9.03	%		7.49	%
Intangible assets/total equity		12.92			12.77			1.74			2.57
Net loans/total assets		80.56			60.80			78.85			76.62
Gross loans/total deposits		127.00			162.88			119.07			110.68
Total borrowings/total assets		24.84			52.86			23.19			22.53
Non-performing assets/total assets		0.42			0.01			0.40			0.17
Loan loss reserve/gross loans		1.53			0.37			1.02			0.78
Net interest margin		3.21			3.29			3.48			3.54
Non-interest income/average assets		0.34			0.71			0.69			0.95
Non-interest expense/average assets		1.65			1.19			2.23			1.93
Efficiency ratio		47.44			30.65			42.38			44.82
Return on average assets		1.11			1.57			1.41			1.41
Return on average equity		16.62			22.69			15.53			16.58
Price/tangible book value per share		220.01			646.26			203.92			268.77
Price/LTM earnings per share		13.27	x		29.72	x		13.49	x		14.70	x
Dividend payout ratio		—			—			5.80			24.16
Dividend yield		—			—			0.43			1.58


	Nationwide				West Coast
	Median Multiple		Implied Value		Median Multiple		Implied Value
Transaction price/LTM EPS	19.36	x	$	44.14	16.46	x	$	37.53
Transaction price/Estimated 2004 EPS (1)	17.78			43.21	15.76			38.30
Transaction price/Book value	180.69	%		28.57	155.39	%		24.55
Transaction price/Tangible book value	195.59			26.90	164.50			22.63
Tangible book premium/Core deposits (2)	17.75			36.66	10.98			27.92
Premium to market (3)	22.41			37.04	22.85			37.17


Discount Rate	10x		12x		14x		16x		18x		20x
9.0%	$	25.25	$	30.30	$	35.36	$	40.41	$	45.46	$	50.51
11.0		23.48		28.18		32.88		37.57		42.27		46.96
13.0		21.86		26.24		30.61		34.98		39.35		43.73
15.0		20.38		24.46		28.53		32.61		36.69		40.76


Discount Rate	100%		150%		200%		250%		300%		350%
9.0%	$	18.43	$	27.64	$	36.85	$	46.06	$	55.28	$	64.49
11.0		17.13		25.70		34.27		42.83		51.40		59.97
13.0		15.95		23.93		31.90		39.88		47.86		55.83
15.0		14.87		22.31		29.74		37.18		44.61		52.05


	Hawthorne		Commercial Capital
Net loans	67.3	%	32.7	%
Total assets	60.8		39.2
Deposits	72.7		27.3
Borrowings	42.6		57.4
Tangible equity	64.4		35.6
Total equity	64.5		35.5
Last twelve months’ net income	58.3		41.7
Estimated 2004 net income	47.7		52.3
Market capitalization (1)	37.7		62.3
Pro forma ownership	43.6		56.4


	Commercial Capital				Hawthorne
	Stand-alone		Pro Forma		Stand-alone		Pro Forma
2005 earnings per share	$	1.61	$	1.72	$	2.91	$	3.33
June 30, 2004 tangible book value per share	$	3.47	$	4.56	$	14.15	$	8.82


Name	Ticker	Weighting Factor
Dime Community Bancshares, Inc.	DCOM	5.556	%
Flushing Financial Corporation	FFIC	5.556
Independence Community Bank Corp.	ICBC	8.333
New York Community Bancorp, Inc.	NYB	8.333
East West Bancorp, Inc.	EWBC	8.333
Quaker City Bancorp, Inc.	QCBC	5.556
FirstFed Financial Corp.	FED	5.556
UCBH Holdings, Inc.	UCBH	8.333
PFF Bancorp, Inc.	PFB	5.556
City National Corporation	CYN	8.333
First Community Bancorp	FCBP	5.556
ITLA Capital Corporation	ITLA	5.556
Provident Financial Holdings, Inc.	PROV	5.556
Washington Federal, Inc.	WFSL	8.333
Sterling Financial Corporation	STSA	5.556


	COMMERCIAL CAPITAL			HAWTHORNE FINANCIAL			PRO FORMA ADJUSTMENTS				PRO FORMA COMBINED
	(Dollars in Thousands)
Assets
Cash and cash equivalents	$	4,066		$	17,829		$	6,665		A	$	28,560
Securities available-for-sale		560,729			381,287			—				942,016
Federal Home Loan Bank stock, at cost		41,517			38,189			—				79,706
Loans, net of unamortized deferred loan fees and costs		1,051,574			2,187,652			—				3,239,226
Less: Allowance for loan losses		(3,942	)		(33,538	)		—				(37,480	)

Loans, net of allowance for loan losses		1,047,632			2,154,114			—				3,201,746
Loans held-for-sale		14,893			—			—				14,893
Premises and equipment, net		1,534			5,295			—				6,829
Accrued interest receivable		6,827			9,859			—				16,686
Goodwill		13,035			22,970			305,797		B		341,802
Other intangible assets		—			976			20,618		C		21,594
Bank-owned life insurance		17,925			26,406							44,331
Other assets		14,981			17,078			10,385		D		42,444

Total assets	$	1,723,139		$	2,674,003		$	343,465			$	4,740,607


Liabilities and stockholders’ equity
Deposits
Non-interest-bearing demand	$	12,125		$	51,670			—			$	63,795
Interest-bearing:
Money market accounts		372,273			506,182			—				878,455
Savings accounts		2,700			75,374			—				78,074
NOW accounts		942			86,579			—				87,521
Certificate accounts		257,556			1,002,759			3,000		E		1,263,315

Total deposits		645,596			1,722,564			3,000				2,371,160
Securities sold under agreements to repurchase		74,475			—			—				74,475
Advances from Federal Home Loan Bank		822,519			697,155			34,600		F		1,554,274
Warehouse line of credit		13,794			—			—				13,794
Trust preferred securities		52,500			51,000			1,900		G		105,400
Accrued interest payable and other liabilities		12,213			18,010			17,347		H		47,570

Total liabilities		1,621,097			2,488,729			56,847				4,166,673

Stockholders’ equity
Common stock		30			138			(138	)	I		53
								23		J
Treasury stock, at cost		—			(31,871	)		31,871		I		—
Additional paid-in capital		72,960			84,360			(84,360	)	I		544,829
								471,869		J
Retained earnings		30,413			133,597			(133,597	)	I		30,413
Accumulated other comprehensive loss		(1,361	)		(950	)		950		I		(1,361	)

Total stockholders’ equity		102,042			185,274			286,618				573,934

Total liabilities and stockholders’ equity	$	1,723,139		$	2,674,003		$	343,465			$	4,740,607


	COMMERCIAL CAPITAL		HAWTHORNE FINANCIAL		PRO FORMA ADJUSTMENTS				PRO FORMA COMBINED
	(Dollars in Thousands)
Interest income on:
Loans	$	43,878	$	127,424	$	—			$	171,302
Securities		21,005		11,510		—				32,515
FHLB stock, federal funds sold and other		1,291		1,545		—				2,836

Total interest income		66,174		140,479		—				206,653

Interest expense on:
Deposits		10,099		35,552		(1,920	)	E		43,731
Advances from Federal Home Loan Bank		10,975		21,286		(7,000	)	F		25,261
Warehouse line of credit		882		—		—				882
Trust preferred securities		1,876		3,021		(400	)	G		4,497
Securities sold under agreements to repurchase		1,108		—		—				1,108

Total interest expense		24,940		59,859		(9,320	)			75,479

Net interest income		41,234		80,620		9,320				131,174
Provision for loan losses		1,286		500		—				1,786

Net interest income after provision for loan losses		39,948		80,120		9,320				129,388

Noninterest income
Gain on sale of loans		2,168		95		—				2,263
Mortgage banking fees		740		—		—				740
Banking and servicing fees		1,351		6,953		—				8,304
Other		1,095		1,455		—				2,550
Gain on sale of securities		3,815		102		—				3,917

		9,169		8,605		—				17,774

Noninterest expenses
Compensation and benefits		8,682		22,923		—				31,605
Occupancy and equipment		1,350		5,337		—				6,687
Professional		806		2,110		—				2,916
Data processing		393		2,041		—				2,434
Loss on early extinguishment of debt		1,301		—		—				1,301
Other		2,914		9,943		2,159		C		15,016

		15,446		42,354		2,159				59,959

Income before income tax expense		33,671		46,371		7,161				87,203
Income tax expense		13,242		17,863		3,008		K		34,113

Net income	$	20,429	$	28,508	$	4,153			$	53,090
Basic earnings per share	$	0.70							$	1.01
Diluted earnings per share		0.66								0.95
Basic average common shares outstanding		29,329,289				23,324,163		L		52,653,452
Diluted average common shares outstanding		31,111,208				24,800,090		L		55,911,298


	Purchase Price
	(In Thousands)
Stock consideration	$	438,553
Stock option consideration		14,724
Warrant consideration		18,615

Total stock consideration	$	471,892


Cash and cash equivalents	$	24,494
Securities available-for-sale		381,287
Federal Home Loan Bank stock, at cost		38,189
Loans, net of allowance for loan losses		2,154,114
Premises and equipment, net		5,295
Accrued interest receivable		9,859
Goodwill		328,767
Core deposit intangible		21,594
Other assets		53,869
Deposits		(1,725,564	)
Advances from the Federal Home Loan Bank		(731,755	)
Trust preferred securities		(52,900	)
Other liabilities		(35,357	)

Total purchase price	$	471,892


Merger-related compensation and services	$	9,177
Professional services		7,000
Facilities termination and other expenses		1,170

Total acquisition costs		17,347
Tax benefit of acquisition costs		(2,455	)

Estimated transaction costs, net of tax	$	14,892