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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2004

OR

Commission File No.: 000-50126

COMMERCIAL CAPITAL BANCORP, INC.

(Name of Registrant as Specified in its charter)

Issuer’s telephone number, including area code: (949) 585-7500

Securities registered under Section 12(b) of the Exchange Act:

NOT APPLICABLE

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK (PAR VALUE $0.001 PER SHARE)

(Title of Class)

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x  No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x  No  ¨

The aggregate value of the Common Stock of the registrant held by non-affiliates at June 30, 2004 was approximately $788.0 million based on the last closing sales price on a share of Common Stock of $17.37 as of June 30, 2004.

Number of shares of common stock outstanding as of February 28, 2005: 55,743,493(1)

DOCUMENTS INCORPORATED BY REFERENCE

The registrant hereby incorporates portions of its definitive proxy statement for the Annual Meeting of Stockholders for 2004 in Part III.

PART I

Cautionary Statement Regarding Forward-Looking Statements

A number of the disclosures in this Form 10-K, including any statements preceded by, followed by or which include the words “may,” “could,” “should,” “will,” “would,” “hope,” “might,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “assume” or similar expressions constitute forward-looking statements.

These forward-looking statements, implicitly and explicitly, include the assumptions underlying the statements and other information with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, financial condition, results of operations, future performance and business, including our expectations and estimates with respect to our revenues, expenses, earnings, return on equity, return on assets, efficiency ratio, asset quality and other financial data and capital and performance ratios.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, these statements involve risks and uncertainties that are subject to change based on various important factors (some of which are beyond our control). The following factors, among others, could cause our financial performance to differ materially from our goals, plans, objectives, intentions, expectations and other forward-looking statements:

If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Form 10-K. Therefore, we caution you not to place undue reliance on our forward-looking information and statements.

We do not intend to update our forward-looking information and statements, whether written or oral, to reflect change. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

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General

Commercial Capital Bancorp, Inc., a Nevada corporation, is a diversified 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, related real estate service companies and professionals through its wholly owned subsidiaries, Commercial Capital Bank, FSB (the “Bank”), a federally charted savings bank, Commercial Capital Mortgage (“CCM”), a commercial mortgage banking company, and ComCap Financial Service, Inc. (“ComCap”), a registered broker dealer. Commercial Capital Bancorp, Inc. and subsidiaries (the “Company”) is one of the largest independent banking organizations headquartered in Orange County, California and, based on the percentage growth in our assets on a quarterly basis over the past 36 months, we have been the fastest growing savings organization in California according to Federal Deposit Insurance Corporation (“FDIC”) data. We are 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, we ranked third in the state in originations of such loans for the year ended December 31, 2004, with an aggregate of 3.49% of total originations. At December 31, 2004, we had consolidated total assets of $5.02 billion, net loans held for investment of $3.91 billion, total deposits of $2.26 billion and stockholders’ equity of $625.2 million.

Our primary operations are conducted through the Bank, which operates banking offices in Westlake Village (Ventura County), Tarzana, Malibu, Beverly Hills, Baldwin Hills, Westchester, Hawthorne, Manhattan Beach, Gardena, Hermosa Beach, Torrance, Redondo Beach (Los Angeles County), Orange, Irvine, Rancho Santa Margarita (Orange County), Riverside (Riverside County), La Jolla, Del Mar and San Diego (San Diego County), and lending offices, in Corte Madera, Burlingame, Oakland, Encino, Glendale, West Los Angeles, El Segundo, Irvine, Riverside, and San Diego, California. The banking office located in Malibu, California, was opened in June 2004 and the banking office in Beverly Hills, California was opened in October 2004.

In June 2004, we completed the acquisition of Hawthorne Financial (“Hawthorne”), the parent of Hawthorne Savings headquartered in El Segundo, California. Hawthorne Savings was merged into the Bank effective June 4, 2004. We issued 23,484,930 shares of our common stock for Hawthorne’s outstanding shares, issued 1,009,850 options for Hawthorne’s outstanding options and issued 949,319 warrants for Hawthorne’s outstanding warrants in connection with the acquisition transaction. At the time of the acquisition, Hawthorne had $2.75 billion in assets, $2.26 billion in loans and $1.75 billion in deposits. The acquisition added 15 retail branches and one loan office located throughout the coastal communities in the Southern California area, greatly enhancing the Bank’s retail franchise. The acquisition also brought additional lending activities that both compliment our established multi-family lending business and enhance our loan product set. In addition to the multi-family and commercial real estate lending, lending activities related to single family residential and construction and land loans were added as a result of the acquisition. The single family residential lending activities are primarily focused on estate or super jumbo loans. Construction and land lending activities primarily encompass single family and multi-family construction and land loans with the intent to convert into a construction loan. See “Lending Activities” for further discussion. See “Notes to the Consolidated Financial Statements–Note 2: Business Combinations” for further discussion of the terms and accounting for the Hawthorne transaction.

Though the acquisition of Hawthorne significantly contributed to the growth in our retail franchise, we continue to look at developing our retail franchise through de novo branching. We have already announced our plans for two new retail branches. In March 2005, we opened a banking office in San Mateo, California, which is our first in Northern California. By mid-2005, we plan to open a banking office located in Newport Coast, California.

Recent Developments

On February 17, 2005, we completed the acquisition of TIMCOR Exchange Corporation (“TIMCOR”) in an all stock transaction with a fixed value of approximately $29.0 million, representing 1,362,520 shares of the

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Company’s common stock. We delivered 681,260 shares of stock to the TIMCOR shareholder, and placed into escrow the same number of shares, which will be distributed in full on the one-year anniversary of the transaction closing date, subject to certain contingencies. Currently, the distribution of 340,630 escrow shares is contingent upon there being no material changes or amendments to Section 1031 of the Internal Revenue Code of 1986 (the “Code”) prior to their distribution that would eliminate the benefits associated with offering 1031-exchange services. Currently, no such changes or amendments to Section 1031 of the Code have occurred. The escrow shares are also available initially to satisfy claims to the extent that any arise pursuant to the acquisition agreement.

TIMCOR operates as a wholly owned subsidiary of the Company. TIMCOR is a leading “qualified intermediary”, which facilitates tax-deferred real estate exchanges pursuant to Section 1031 of the Code. In February 2004, the companies announced they had entered into a strategic alliance whereby TIMCOR would promote and refer its clients to the Bank, as a strategic provider of banking, deposit, and lending products and services and the Bank would promote and refer TIMCOR’s 1031-exchange services to its income-property real estate investor clients. As part of that alliance, TIMCOR agreed to maintain a minimum of $50 million in deposits at the Bank. At December 31, 2004, TIMCOR had over $390 million in exchange balances, $151.6 million of which was on deposit at the Bank. TIMCOR’s total assets exceeded $400 million as of December 31, 2004 and included $59.0 million of single family loans acquired from the Bank during 2004.

Risk Factors

We rely, in part, on external financing to fund our operations and the unavailability of such funds in the future could adversely impact our growth strategy and prospects.    The Bank relies on deposits, advances from the Federal Home Loan Bank (“FHLB”) of San Francisco and other borrowings to fund its operations. The Bank has also historically relied on certificates of deposit. While the Bank has reduced its reliance on certificates of deposit and has been successful in promoting its transaction deposit products (money market, savings and checking), jumbo deposits nevertheless constituted a significant portion of total deposits at December 31, 2004. Jumbo deposits tend to be a more volatile source of funding. Although management has historically been able to replace such deposits on maturity if desired, no assurance can be given that the Bank would be able to replace such funds at any given point in time were its financial condition or market conditions to change. Furthermore, no assurance can be given that we will be able to continue to issue junior subordinated debentures, thereby depriving the Bank of one source of capital.

Although we consider such sources of funds adequate for our current capital needs, we may seek additional debt or equity capital in the future to achieve our long-term business objectives. The sale of equity or convertible debt securities in the future may be dilutive to our stockholders, and debt refinancing arrangements may require us to pledge some of our assets and enter into covenants that would restrict our ability to incur further indebtedness. There can be no assurance that additional financing sources, if sought, would be available to us or, if available, would be on terms favorable to us. If additional financing sources are unavailable or are not available on reasonable terms, our growth strategy and future prospects could be adversely impacted.

Our business is subject to interest rate risk and variations in market interest rates may negatively affect our financial performance.    We are unable to predict fluctuations of market interest rates, which are affected by many factors, including:

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Changes in the interest rate environment may reduce our profits. We expect that the Bank will continue to realize income from the differential or “spread” between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits, borrowings and other interest-bearing liabilities. Net interest spreads are affected by the difference between the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities. In addition, an increase in the general level of interest rates may adversely affect the ability of some borrowers to pay the interest on and principal of their obligations, especially borrowers with loans subject to negative amortization. Negative amortization involves a greater risk during a period of rising interest rates because the loan principal may increase above the amount originally advanced, which could increase the risk of default. Accordingly, changes in levels of market interest rates could materially and adversely affect the Bank’s net interest spread, asset quality, levels of prepayments and cash flows as well as the market value of its securities portfolio and overall profitability.

We may have difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations.    We have grown substantially during the last couple of years. The acquisition of Hawthorne significantly contributed to the increase in our assets from $1.72 billion at December 31, 2003 to $5.02 billion at December 31, 2004. We expect to continue to experience significant growth in the amount of our assets, the level of our deposits, the number of our clients and the scale of our operations. Our future profitability will depend in part on our continued ability to grow and we can give no assurance that we will be able to sustain our historical growth rate or even be able to grow organically or through acquisition.

In past years, we have incurred substantial expenses to build our management team and personnel, develop our delivery systems and establish our infrastructure to support our future loan growth. Our future success will depend on the ability of our officers and key employees to continue to implement and improve our operational, financial and management controls, reporting systems and procedures, and manage a growing number of client relationships. We may not be able to successfully implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. Thus, we cannot give assurances that our growth strategy will not place a strain on our administrative and operational infrastructure.

In addition, we intend to grow our deposits and expand our retail banking franchise. In the Hawthorne acquisition, we added 15 additional branch offices. Further expansion will require additional capital expenditures and we may not be successful expanding our franchise or in attracting or retaining the personnel it requires. Furthermore, various factors such as economic conditions, regulatory and legislative considerations and competition may impede or limit our growth. If we are unable to expand our business as we anticipate, we may be unable to realize any benefit from the investments made to support future growth. Alternatively, if we are unable to manage future expansion in our operations, we may have to incur additional expenditures beyond current projections to support such growth.

The Bank’s ability to pay dividends is subject to regulatory limitations which, to the extent we require such dividends in the future, may affect our ability to service our debt and pay dividends.    We are a separate legal entity from our subsidiaries and do not have significant operations of our own. The availability of dividends from the Bank is limited by various statutes and regulations. It is possible, depending upon the financial condition of the Bank and other factors, that the Office of Thrift Supervision (“OTS”), the Bank’s primary regulator, could assert that payment of dividends or other payments by the Bank are an unsafe or unsound practice. In the event the Bank is unable to pay dividends to us, we may not be able to service our debt, pay our obligations as they become due, or pay dividends on our common stock. Consequently, the inability to receive dividends from the Bank could adversely affect our financial condition, results of operations and prospects.

Our allowance for loan losses may not be adequate to cover actual losses.    Like all financial institutions, we maintain an allowance for loan losses to provide for loan defaults and non-performance. Our allowance for loan losses may not be adequate to cover actual loan losses, and future provisions for loan losses could materially

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and adversely affect our operating results. Our allowance for loan losses is based on our historical loss experience, as well as an evaluation of the risks associated with our loans held for investment. To date, we have experienced negligible losses. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, that may be beyond our control, and these losses may exceed current estimates. Federal regulatory agencies, as an integral part of their examination process, review our loans and allowance for loan losses. While we believe that our allowance for loan losses is adequate to cover current losses, we cannot provide assurance that we will not need to increase our allowance for loan losses or that regulators will not require us to increase this allowance. Either of these occurrences could materially and adversely affect our earnings and profitability.

Our business is subject to various lending and other economic risks that could adversely impact our results of operations and financial condition.

Changes in economic conditions, particularly an economic slowdown in California, could hurt our business.    Our business is directly affected by political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in governmental monetary and fiscal policies and inflation, all of which are beyond our control. A deterioration in economic conditions, in particular an economic slowdown within California, could result in the following consequences, any of which could hurt our business materially:

A downturn in the California real estate market could hurt our business.    Our business activities and credit exposure are concentrated in California. A downturn in the California real estate market could hurt our business because the vast majority of our loans are secured by real estate located within California. If there is a significant decline in real estate values, especially in California, the collateral for our loans will provide less security. As a result, our ability to recover on defaulted loans by selling the underlying real estate would be diminished, and we would be more likely to suffer losses on defaulted loans. Real estate values in California could be affected by, among other things, earthquakes and other natural disasters particular to California.

We may suffer losses in our loan portfolio despite our underwriting practices. We seek to mitigate the risks inherent in our loan portfolio by adhering to specific underwriting practices. These practices include analysis of a borrower’s prior credit history, financial statements, tax returns and cash flow projections, valuation of collateral based on reports of independent appraisers and verification of liquid assets. Although we believe that our underwriting criteria are appropriate for the various kinds of loans we make, we may incur losses on loans that meet our underwriting criteria, and these losses may exceed the amounts set aside as reserves in our allowance for loan losses.

Two of our executive officers own a significant amount of our common stock and may make decisions that are not in the best interests of all stockholders.    As of December 31, 2004, two of our senior executive officers, Stephen H. Gordon and David S. DePillo, owned approximately 11.7% of our outstanding common stock. In addition, over the years, these senior executive officers have been granted options to acquire shares of our common stock, which when vested and exercised will increase their ownership of shares of our common stock. Assuming the full exercise of all outstanding options, Messrs. Gordon and DePillo would own in the aggregate approximately 16.0% of our outstanding common stock. As a result, these individuals, acting together, will have the ability to significantly influence the election and removal of our board of directors, as well as the outcome of any other matters to be decided by a vote of stockholders. In addition, this concentration of

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ownership may delay or prevent a change in control of our company, even when a change in control may be perceived by some in the best interests of our stockholders.

We are subject to extensive regulation which could adversely affect us.    Our operations are subject to extensive regulation by federal, state and local governmental authorities and are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. We believe that we are in substantial compliance in all material respects with applicable federal, state and local laws, rules and regulations. Because our business is highly regulated, the laws, rules and regulations applicable to us are subject to regular modification and change. There can be no assurance that there will be no laws, rules or regulations adopted in the future, which could make compliance more difficult or expensive, or otherwise adversely affect our business, financial condition or prospects.

We face strong competition from other financial institutions, financial service companies and other organizations offering services similar to those offered by us, which could hurt our business.    We conduct our business operations primarily in California. Increased competition within California may result in reduced loan originations and deposits. Ultimately, we may not be able to compete successfully against current and future competitors. Many competitors offer the types of loans and banking services that we offer. These competitors include other savings associations, national banks, regional banks and other community banks. We also face competition from many other types of financial institutions, including finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. In particular, our competitors include national banks and major financial companies whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous banking locations and mount extensive promotional and advertising campaigns.

Additionally, banks and other financial institutions with larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the credit needs of larger clients. These institutions, particularly to the extent they are more diversified than we are, may be able to offer the same loan products and services that we offer at more competitive rates and prices. If we are unable to attract and retain banking clients, we may be unable to continue our loan and deposit growth and our business, financial condition and prospects may be negatively affected.

Market Area Overview and Competition

Retail Franchise

We have a multifaceted strategy to grow deposits by cross selling existing relationships, transitioning and growing existing banking offices, expanding into new markets, further developing the Bank’s Financial Services Group, and opportunistically through acquisitions. The Bank faces direct competition from a significant number of financial institutions operating in its markets, many with a statewide, regional or national presence. These companies typically compete with one another based upon price, convenience and service.

The Bank believes that it differentiates itself by offering competitively priced, high yielding deposit products, providing a higher level of personal service, and offering relationship banking services to its client base, which include income-property real estate investors, middle market commercial businesses, and high net worth individuals, families and professionals. The Bank’s deposit gathering activities are concentrated in the communities surrounding its banking offices, the majority of which are located in the coastal counties of Southern California.

On June 4, 2004, we completed the acquisition of Hawthorne and merged its bank subsidiary, Hawthorne Savings, into the Bank. The Hawthorne acquisition brought 15 banking offices, including 9 offices located in Los Angeles County where the Bank does the majority of its lending and where the majority of its borrowers reside, which brought to 21 our total banking offices. These additional banking offices provide a greater opportunity to

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cross sell deposit products to the Bank’s existing relationship borrower client. The Bank continues to develop and promote new deposit products that encourage depositors to move their household or operating accounts to the Bank.

Prior to the acquisition of Hawthorne, the Bank had successfully transitioned its deposit mix to approximately 65% transaction accounts (i.e., savings, money market and demand deposit accounts) and 35% time deposits. Hawthorne, with a significantly larger amount of deposits at the time of acquisition, had roughly 60% time deposits and 40% transaction accounts. After the acquisition, we had $1.2 billion of transaction accounts as of June 30, 2004, which equaled 50% of total deposits. Since the acquisition, the Bank has taken proactive steps to transition the combined deposit mix to a greater percentage of transaction accounts by not paying higher rates for short term time deposits and encouraging depositors with maturing time deposits to open one of the Bank’s high yielding money market accounts. At December 31, 2004, transaction accounts equaled 55% of total deposits. Additionally, the Bank began offering business deposit products and services at the former Hawthorne banking offices, including ACH services, online cash management, and courier services. The addition of business products and services provides the Bank with the opportunity to expand on its relationships with existing clients as well as to leverage the strong community bank reputation with prospective business clients.

During 2004, the Bank opened new banking offices in Malibu and Beverly Hills, California and announced plans to open branches in San Mateo, California in early 2005 and Newport Coast, California in mid-2005. The Bank opened the San Mateo branch in March 2005. The San Mateo branch is the first of the Bank’s Northern California expansion, which will be focused on the Greater Bay Area, and the Sacramento Valley Region, both of which are areas with significant existing borrower relationships. The Bank intends to add banking offices in selected Southern California markets in an effort to fill out its current footprint, including the Inland Empire, which is one of the fastest growing regions of the country. These areas have a high concentration of the clients that the Bank desires to serve.

Since its formation in the fall of 2003, the Bank’s Financial Services Group has focused on gathering deposits from Section 1031 exchange accommodators, property management companies, title and escrow companies, insurance companies, professional service providers, and the principals who own those businesses. These depository clients are many of those same types of businesses or fiduciaries that the Bank already conducts business with through its lending franchise. The Bank believes the Financial Services Group will grow deposits through its natural maturation over time, as well as with the addition of key personnel with significant books of business.

With the acquisition of Hawthorne having been successfully announced, closed and completed in 2004, we will continue to look opportunistically at acquisitions that would further enhance our deposit franchise and shareholder value.

Lending Franchise

Our lending activities are focused on income property originations, primarily multi-family residential and, to a lesser extent, small to mid-sized commercial real estate properties throughout California. With the acquisition of Hawthorne, we now compete in the single family residential and construction lending arenas as well, primarily in the coastal areas of Southern California.

The California multi-family residential lending market has performed extremely well since the recession of the early 1990’s. Consistent occupancy and stable rental rates have both contributed to property appreciation in most markets within California. The majority of the multi-family residential market consists of small-to medium-size multi-family projects, generally below 50 units in size, that are financed with loan amounts at or below $2.0 million. The characteristics of these loans are very similar to those of one-to-four unit residential loans with monthly payment requirements and 30-year amortization. During the prior recession, multi-family loans made by members of our management, who were then employed by another financial institution, experienced a lower

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percentage of delinquencies and charge-offs as compared to one-to-four family residential loans. In addition, the peak delinquencies occurred at approximately four years from origination, which was consistent with the timing of peak delinquencies on the other institution’s one-to-four family residential loan portfolios. Based on management’s experience in the industry prior to the recession of the early 1990’s, there was not a significant level of delinquencies or charge-offs associated with lending on multi-family residential properties in California. Notwithstanding the foregoing, multi-family lending entails different risks when compared to single family residential lending because multi-family loans typically involve large loan balances and payment on such loans is partially dependent on the successful operation of the property. Specifically, problems with respect to the operation of a multi-family property could adversely affect the value of such property, particularly if the cash flow from such property’s operations is not sufficient to cover the applicable debt service and the underlying property has to be sold in order to satisfy the debt obligation. In such a scenario, the price received in a foreclosure sale could be less than the carrying value of the loan.

According to the National Multi Housing Council, the total market value of multi-family residential real estate in the United States at 2000 is estimated to be over $1.3 trillion, which consists of 16.1 million apartment units. The total market value of multi-family residential real estate in California is estimated to amount to approximately $311 billion, consisting of 2.44 million apartment units, or 15% of the total U.S. market. As of 2000, six of the top ten U.S. multi-family housing markets were located in California, consisting of the metropolitan areas of Los Angeles, San Francisco, San Diego, San Jose, Oakland and Orange County, which together accounted for nearly $290 billion, or 22%, of the total U.S. market value.

We continue to originate single family residential, construction and land loans in addition to our income property loans. The Bank’s single family residential lending is focused on estate lending, or super jumbo loans, which is typical of the markets surrounding our banking offices. These loans have similar average balances and lower loan to values than our multi-family and commercial real estate loans. The Bank also originates single family residential conforming loans through its community lending group. The Bank also offers construction loans for multi-family, commercial real estate, owner-occupied single family residential and for-sale residential projects.

The demand for housing within California, particularly multi-family housing, is very strong. According to the California Department of Housing and Community Development during 1990, it was estimated that there was a shortage of 660,000 housing units within California and, according to the California Senate Office of Research, during the period of 1990 through 1997, the growth in California’s population outpaced the growth in California housing units by 50%. Research from the California Department of Housing and Community Development indicates that through 2020, in order to meet housing demand in California, 220,000 housing units will need to be built each year. By comparison, according to the California Department of Housing and Community Development, for the period 1990 through 1997, an average of 91,000 housing units, including 27,000 multi-family units, were constructed in California per year. During the 1990s, production of multi-family housing only accounted for approximately 25% of all new units constructed, a decrease of 70% from the 1980s. Since 2000, development of multi-family housing has increased very slightly to 28% of all new units constructed according to the California Department of Housing and Community Development. The U.S. Census Bureau states that in the year of 2003, construction commenced on approximately 45,953 multi-family units in California.

Research from DataQuick indicates that during 2004, over 33,000 multi-family loans secured by properties located within California were originated. These loans had an aggregate principal balance of $26.58 billion and an average loan size of $789,000. This represented a 1.0% increase from the $26.34 billion of such loans originated during 2003 and a 46.5% increase from the $18.15 billion of such loans originated during 2002. During the year ended December 31, 2004, the largest two originators of multi-family residential loans within California were responsible for approximately 20.6% of such originations. The remainder of the market was highly fragmented, with over 1,000 institutions responsible for the remaining 79.4% of total originations.

Based upon quarterly thrift financial reports which are required to be submitted by all savings institutions regulated by the OTS, multi-family residential loans have out-performed other loan categories in recent periods

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from an asset quality perspective. As of December 31, 2004, the latest date as of which information is available, the level of non-current (i.e., non-accrual loans and loans 90 days or more overdue but still accruing interest) multi-family residential loans as a percentage of total multi-family residential loans was 0.13%, as compared to 0.69% for construction and land loans, 0.79% for commercial real estate loans, 0.52% for single family mortgage loans, 1.11% for commercial business loans and 0.89% for consumer loans. Based on an analysis of the geographic regions of the country prepared by the OTS as of such date, the ratio of non-current multi-family residential loans to total multi-family residential loans was even lower, amounting to 0.03% for the western region, where we conduct our business operations.

Lending Activities

General.    We focus primarily on the origination of adjustable rate multi-family residential and commercial real estate loans. As a result of the Hawthorne acquisition, our lending activities were expanded to include types of single family real estate, construction and land loans.

Loan Originations.    We had core loan originations of $1.69 billion during the year ended December 31, 2004 and $959.2 million during the year ended December 31, 2003, which comprised 91.3% and 86.5%, respectively of total loan originations. Total loan originations were $1.85 billion and $1.11 billion for the years ended December 31, 2004 and 2003, respectively. We define core loan originations as total loan originations net of loans funded through our strategic alliances with Greystone Servicing Corporation, a Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, and our other broker and conduit channels.

The following table sets forth our total loan originations for the periods indicated.

We concentrate our lending activities on the origination of adjustable rate multi-family residential loans, which are secured by rental apartment buildings located primarily in California. We emphasize the origination of

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multi-family residential loans in the $500,000 to $5.0 million range, typically focusing on buildings with 16 to 100 units. For the year ended December 31, 2004, our average loan size was $1.7 million for multi-family residential loans. We originated $1.14 billion in multi-family residential loans during the year ended December 31, 2004, which amounted to 68.1% of total core real estate loan originations during such year, compared to $884.9 million in multi-family residential loans during the year ended December 31, 2003, which amounted to 93.3% of total core real estate originations during such year.

We also originate commercial real estate loans, which are generally secured by mixed-use, shopping/retail centers, office buildings and multi-tenant industrial properties located primarily in California. We emphasize the origination of commercial real estate loans in the $500,000 to $5.0 million range, with an average loan size of $2.4 million for the year ended December 31, 2004. We originated $119.7 million in commercial real estate loans during the year ended December 31, 2004, which amounted to 7.1% of total core real estate originations during such year, compared to $62.8 million in commercial real estate loans during the year ended December 31, 2003, which amounted to 6.6% of total core real estate originations during such year.

We originate multi-family residential loans for terms of up to 30 years, which are generally fully amortizing, and commercial real estate loans for terms of up to 10 years based upon a 25 to 30-year loan amortization schedule. Such loans are primarily adjustable rate loans with an interest rate which adjusts primarily based upon a variety of constant maturity treasury (“CMT”) or London InterBank Offer Rate (“LIBOR”)-based indices, the most predominately used index being the 12 month moving average of the one year CMT (“12MAT”). However, we also offer loans that have fixed interest rates for an initial period up to seven years and adjust thereafter based on a spread determined at origination over the applicable index for the remaining loan term. Our multi-family residential and commercial real estate loans generally have interest rate floors, payment caps and limited prepayment protection. As part of the criteria for underwriting such loans, we generally establish a maximum loan-to-value ratio of 75% for both multi-family and commercial real estate loans and require a minimum debt coverage ratio of 1.15 to 1 or greater for multi-family loans and 1.25 to 1 or greater for commercial real estate loans. For the year ended December 31, 2004, our multi-family residential core loan originations had an average loan-to-value ratio of 68.00% and an average debt coverage ratio of 1.27 to 1, while the commercial real estate core loan originations for such period had an average loan-to-value ratio of 64.57% and an average debt coverage ratio of 1.45 to 1.

The table below provides additional comparative statistical information for our core loan originations for our primary loan segments:

(Footnotes continued on following page)

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We also offer, through our relationship with Greystone Servicing Corporation and other conduit programs, multi-family residential and commercial real estate loans to borrowers who desire longer term, fixed rate financing. This consists of a fixed rate loan that is eventually securitized through a major commercial mortgage-backed securities issuer. We are not obligated to provide a specific amount of loans to our conduit partners. We also offer, through our brokered program, multi-family residential and commercial real estate loans which, because of size or other factors, are not consistent with our loan program. Conduit loans and brokered loans are not funded in our name and are not reflected on our balance sheet, but rather are funded in the originator’s name pursuant to the originator’s loan documentation. We do not aggregate the product for securitizations. We are paid a fee by the relevant originator for those transactions. We originated $160.3 million in conduit and brokered loans during the year ended December 31, 2004, which amounted to 8.7% of total originations during such period, compared to $150.3 million and $72.0 million in conduit and brokered loans during the years ended December 31, 2003 and 2002, respectively, which amounted to 13.5% and 9.5% of total originations during such years, respectively. During the years ended December 31, 2004, 2003 and 2002, we received $566,000, $740,000 and $439,000 of net fees, respectively, with respect to conduit and brokered loans.

With the acquisition of Hawthorne, our lending focus in 2004 was expanded to include single family residential lending and construction lending. Our single family residential lending area is organized into estate lending, single family residential loans over $500,000, home equity lines of credit (“HELOCs”), and loans originated for sale to government sponsored entities, such as Freddie Mac and Fannie Mae, and affordable housing lending groups. Prior to the Hawthorne acquisition, we only originated single family residential loans on a case-by-case basis as an accommodation to our banking clients. In 2004, all single family loan originations were first trust deed loans predominately secured by properties located in the coastal communities of Southern California. We originate single family residential loans primarily through independent mortgage brokers and pay these brokers a fee generally ranging from 0.5% to 1.0% of the loan amount in connection with the loan funding. We offer primarily adjustable rate mortgage loan products, with interest rates that adjust monthly or semi-annually, after an initial introductory period of 1 month, 3 years, or 5 years, based primarily upon a variety of CMT or LIBOR-based indices, the most predominately used index being the 12MAT. These adjustable rate products generally provide for floors and overall caps on the increase or decrease in interest rates at an adjustment date and over the term of the loan. As part of the criteria for underwriting such loans, we generally establish a maximum loan-to-value ratio of 65% to 80%. HELOCs are secured by owner occupied single family residential properties. Our HELOC product is adjustable and indexed to the Wall Street Journal prime rate. The loan term includes a draw period of 10 years and repayment period of 20 years. For the year ended December 31, 2004, our single family residential loan originations comprised 17.7% of total core real estate loan originations and had an average loan-to-value ratio of 64.36%.

Our construction lending platform, which was acquired in the Hawthorne acquisition, concentrates on the origination of attached and detached housing projects located in established areas, small-to medium-sized multi-family projects, owner occupied custom homes and, to a lesser extent, commercial-industrial construction projects. Additionally, we provide short-term land loans on properties scheduled to begin construction within a twelve-month period. Loan rates are typically indexed to the Wall Street Journal prime rate. Construction and land loans originated in 2004 were associated with projects and properties located in California. As part of the criteria for underwriting such loans, we generally establish a maximum loan-to-value ratio of 75% to 80%. In addition, we will evaluate many other factors affecting the level of credit risk associated with this type of lending, which may include the borrower’s cash investment in the transaction in relation to the total project cost, the level of borrower development experience and financial capacity, the overall quality and marketability of the project, and current and future economic conditions. For the year ended December 31, 2004, our construction and land loan originations comprised 7.1% of total core real estate loan originations and had an average loan-to-value ratio of 61.88%.

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At December 31, 2004, our loan origination activities were conducted out of 10 offices in California. See “Properties” in Item 2 hereof. Loan applications are attributable to direct marketing efforts by our loan originators, mortgage brokers, referrals from real estate brokers and developers, existing clients, walk-in clients and, to a lesser extent, advertising. At December 31, 2004, we employed 17 loan originators who are compensated strictly on a commission basis and 10 loan originators who receive an annual salary plus bonus.

Loan Origination Procedures and Underwriting Criteria.    Our lending activities are subject to specified non-discriminatory underwriting standards and loan origination and purchase procedures approved by the Bank’s board of directors. The Bank’s loan officers perform full due diligence and underwrite all loan applications received by the Bank. No single officer has loan approval authority and thus all loan applications must be approved by the president/chief operating officer or executive vice president/chief lending officer. Any loan or combination of loans to one borrower in excess of $10 million must be approved by the Bank’s Directors’ Loan Committee, which consists of at least three outside directors and the president. The Directors’ Loan Committee has approval authority up to the Bank’s lending limit for either individual loans or total loan relationships.

Our loan processing guidelines for income property loans require that the preparation of all letters of interest, completion and processing of loan applications, underwriting and preparation of the necessary loan documentation be performed directly by us. We do not accept loan broker packages for processing income property loans and rely solely on our own origination process. Loan applications are examined for compliance with our underwriting and processing criteria and, if all requirements are met, we issue a commitment letter to the prospective borrower. For single family residential lending, our loan processing guidelines do allow for the receipt of broker packages. We maintain an approved broker listing and review loan documents provided by approved brokers to ensure compliance with standard documentation requirements.

All loan originations must be underwritten in accordance with our underwriting criteria, which are prepared based on the relevant guidelines set forth by applicable regulatory authorities. Our underwriting personnel make their underwriting decisions independent of the loan origination personnel. For income property loans, our primary underwriting criteria includes the property’s loan-to-value ratio and debt coverage ratio. In originating loans, we base our underwriting decisions on qualitative and quantitative evaluations of both the borrower and the property. The emphasis is placed on the cash flow generated by the property as the primary source of repayment. The property’s underwriting criteria are adjusted based upon the type of transaction, for example, whether the loan is for a purchase or a refinancing, as well as the overall quality of the property. For single family loans, our underwriting criteria emphasizes evaluating the credit worthiness of the borrower. Borrower qualifications include minimum liquidity requirements, the borrower’s recurring cash flow and debt ratios, credit history (including Fair, Isaac and Co., or FICO, credit scores) and may include background searches such as public record checks. Additionally, for income property and construction lending, we consider the borrower’s experience in owning or managing similar properties and our lending experience with the borrower. We also rely on qualitative factors such as the stability of the property and its sub-market, the quality of the property’s physical improvements, the property’s functional utility, the stability of rents and vacancies, and overall operations of the property and market. Other underwriting requirements include obtaining the necessary title and hazard insurance and property appraisals. For income property and construction/land loans an environmental review is also performed as part of the underwriting process.

We maintain an appraisal department, which is responsible for managing the appraisal process for all real property secured as collateral. We contract directly with external independent appraisers included on our approved appraiser list. The list of approved appraisers is evaluated annually and approved by our board of directors. All appraisers are required to submit a qualification statement, references, copies of recent appraisal reports and licensing information. All appraisal reports completed and submitted by approved appraisers are reviewed in-house to ensure the reports are adequate and conform to Bank and regulatory requirements.

Loan Sales.    Loans are sold by the Bank in the secondary market on an individual basis, through bulk sales or through securitization. Loans sold are typically comprised of single family residential loans and sold pursuant

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to the terms of a mortgage loan purchase agreement or through master agreements with certain agency investors. Individual loan sales are transacted with the FHLB of San Francisco, Freddie Mac or Fannie Mae and these loans are designated “held-for-sale” at origination. We generally retain servicing on loans sold individually to agency related investors and may retain servicing obligations on other loan pool sales or securitizations. Loans sold to the FHLB of San Francisco are pursuant to the Bank’s participation in the FHLB’s Mortgage Partnership Finance (“MPF”) program, an agreement acquired in the Hawthorne acquisition. Under the MPF program, the Bank has committed to sell (best efforts) $7 million in qualifying single family residential loans over the period April 2003 to April 2005. Loans are sold servicing retained and the Bank must record a recourse obligation as a portion of the credit risk associated with the loans sold is also retained. As of December 31, 2004, the Bank had remaining capacity to sell $4.7 million in loans and had recorded recourse obligations of $36,000 as a component of “Other Liabilities” in our Consolidated Statement of Financial Condition. The Bank also maintains a master agreement with Freddie Mac under which we have committed to sell (best efforts) up to $5 million in qualifying single family residential loans during the period August 1, 2004 through July 31, 2005. Under this program, the Bank primarily sells loans originated under its community lending program which is designed to provide funding in low to moderate income areas of Southern California. Loans are sold servicing retained with no recourse obligations recorded. As of December 31, 2004, the Bank’s remaining capacity to sell to Freddie Mac was $1.7 million. The Bank is also an approved Fannie Mae seller/servicer and, though a master agreement is not in place, sells single family residential loans to Fannie Mae on a periodic basis.

Prior to 2004, the majority of loan sales were conducted by CCM as part of its mortgage banking activities. CCM’s loan sales were conducted on an individual, loan-by-loan basis only. Loans were sold without recourse and servicing released. Effective April 1, 2003, we realigned our lending operations by moving the origination, underwriting and processing functions, as well as the related personnel, from CCM to the Bank, (herein after referred to as the “Realignment”). As a result of the Realignment, we retain a larger percentage of our loan originations at the Bank to support balance sheet growth. The Bank’s loan sales during 2004 facilitated a remix of the Bank’s loan portfolio subsequent to the acquisition of the Hawthorne loan portfolio. The Bank has no loans designated as held-for-sale at December 31, 2004, although CCM had one loan designated as held-for-sale at that date.

The price at which we sell our loans is determined based upon market factors. Gain or loss is recognized to the extent that the selling prices differ from the carrying value of the loans sold based on the estimated relative fair values of the assets sold and any retained interests, less any liabilities incurred. The assets obtained upon sale are generally mortgage servicing rights (“MSRs”) if we retain servicing obligations associated with the loans sold. For the year ended December 31, 2004, we sold a total of $182.1 million of loans, including $4.0 million of loans sold under agency investor agreements, for a gain of $4.0 million and recorded MSRs with a remaining value of $433,000 as of December 31, 2004. This compares to $153.7 million and $387.3 million of loans sold during the years ended December 31, 2003 and 2002 for gains of $2.2 million and $4.6 million, respectively. No MSRs were recorded for the years ended December 31, 2003 and 2002.

Loans Held for Investment

General.    At December 31, 2004, net loans held for investment amounted to $3.91 billion, which represented 77.9% of our $5.02 billion of total assets at that date. Approximately 71.2% of loans held for investment at December 31, 2004 are multi-family residential or commercial real estate loans, as compared to 99.2% at December 31, 2003. Further, approximately 99.3% of loans are either secured by properties located in California or made to clients residing in California. As of the Hawthorne acquisition date, we acquired approximately $2.26 billion in net loans held for investment, before purchase accounting adjustments. The addition of the Hawthorne loan portfolio enhanced our current income property loan portfolio as well as added single family residential, construction and land loans to our portfolio.

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The following table sets forth the composition of our loans held for investment by type of loan at the dates indicated.

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The following table sets forth information at December 31, 2004 regarding the dollar amount of loans maturing in our loans held for investment portfolio based on the contractual terms to maturity or scheduled amortization. The table does not give effect to potential prepayments. Loans with no stated schedule of repayments or maturity are reported as due in one year or less.

Scheduled contractual amortization of loans does not reflect the expected life of our loans held for investment. The average life of our loans is substantially less than their contractual terms because of prepayments and due-on-sale clauses, which give us, as the lender, the right to declare such loan immediately due and payable in the event, among other things, that the borrower sells the real property subject to the mortgage and any portion of the loan is still outstanding. The average life of mortgage loans tends to increase when mortgage loan rates available in the market are higher than rates on existing mortgage loans and, conversely, decrease when rates on existing mortgage loans are higher than mortgage loan rates available in the market due to refinancing of loans at available lower rates. During periods of decreasing mortgage rates, the weighted average yield on loans decreases as higher-yielding loans are repaid or refinanced at lower rates.

The following table sets forth the dollar amount of total loans held for investment due more than one year from December 31, 2004, as shown in the preceding table, which have fixed interest rates or floating or adjustable interest rates.

Multi-Family Residential and Commercial Real Estate Loans.    The Bank has focused its lending activities on real estate loans secured by multi-family and commercial properties. The Bank has generally targeted higher quality, smaller multi-family residential and commercial real estate loans with principal balances ranging

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between $500,000 and $5.0 million, with an average balance of $1.1 million for multi-family residential loans and $1.2 million for commercial real estate loans, at December 31, 2004. At December 31, 2004, the Bank had an aggregate of $2.40 billion in multi-family residential loans, comprising 60.6% of total loans held for investment, and $420.0 million in commercial real estate loans, comprising 10.6% of total loans held for investment. Total undisbursed commitments amounted to $6.8 million and $3.1 million for multi-family and commercial real estate loans, respectively, at December 31, 2004.

Single Family Residential Loans.    The single family residential loan portfolio increased significantly after the acquisition of Hawthorne in June 2004. Our single family residential lending area is organized into estate lending, single family residential loans over $500,000, and loans originated for sale to agencies such as Freddie Mac and Fannie Mae, and affordable housing lending groups. In addition, we offer HELOCs secured by owner occupied single family residential properties. Our HELOC product is adjustable and indexed to the Wall Street Journal prime rate. The loan term includes a draw period of 10 years and repayment period of 20 years. Prior to the Hawthorne acquisition, we only originated single family residential loans on a case-by-case basis as an accommodation to our banking clients. In 2004, all single family loan originations were first trust deed loans predominately secured by properties located in the coastal counties of Southern California. At December 31, 2004 we held $841.8 million of single family residential loans, comprising 21.3% of total loans held for investment. Total undisbursed commitments on HELOCs were $3.4 million at December 31, 2004.

Construction and Land Loans.    The construction and land loan portfolio was also acquired in the Hawthorne transaction. We have focused our lending activities in this loan segment on the origination of attached and detached housing projects located in established areas, small-to medium-sized multi-family projects, owner occupied custom homes and to a lesser extent commercial-industrial construction projects all located in California. Additionally, we provide short-term land loans on properties in California scheduled to begin construction within a twelve-month period. At December 31, 2004 we held $225.1 million of construction loans, comprising 5.7% of total loans held for investment and $56.3 million of land loans, comprising 1.4% of total loans held for investment. Total undisbursed commitments amounted to $128.7 million at December 31, 2004.

Commercial Business Loans.    The Bank also originates a limited amount of commercial business loans including acquisition lines, working capital lines of credit, inventory and accounts receivable loans, and equipment financing and term loans. Loan terms may vary from one to five years. The interest rates on such loans are generally variable and are indexed to the Wall Street Journal prime rate, plus a margin. At December 31, 2004, the Bank had an aggregate of $15.0 million of commercial business loans outstanding, or 0.40% of total loans held for investment. Total undisbursed commitments amounted to $6.0 million at December 31, 2004.

Consumer Loans.    At December 31, 2004, the Bank had an aggregate of $1.4 million of consumer loans, which accounts for less than one percent of our total loans held for investment. Total undisbursed commitments amounted to $2.9 million as of December 31, 2004. Although the Bank is authorized to make loans for a wide variety of personal or consumer purposes, for the years ended December 31, 2004 and 2003, consumer loan originations were solely done on a case-by-case basis as an accommodation to our clients.

Loans-to-One Borrower Limitations.    A savings institution generally may not make loans to any one borrower or related entities if such loans would exceed 15% of its unimpaired capital and surplus, although loans in an amount equal to an additional 10% of unimpaired capital and surplus may be made to a borrower if the loans are fully secured by readily marketable securities. At December 31, 2004, the Bank’s regulatory limit on loans-to-one borrower was $61.4 million and its five largest loans or groups of loans to one borrower, including related entities, were $38.1 million, $36.6 million, $32.3 million, $30.6 million and $28.6 million. All of these five largest loans or loan concentrations were secured by multi-family residential properties located in California, except for one relationship which also had a commercial real estate loan located in California and one relationship with a business line of credit. All loans associated with these loan concentrations were originated during the last five years and were performing in accordance with their terms at December 31, 2004. See “Regulation—Regulation of Commercial Capital Bank—Loans-to-One Borrower Limitations.”

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Asset Quality

General.    The Bank’s Internal Asset Review Committee, consisting of the Bank’s president and chief operating officer, chief financial officer, chief administrative officer, director of internal asset review and loan servicing manager, monitors the credit quality of the Bank’s assets, reviews classified and other identified loans and determines the proper level of allowances to allocate against the Bank’s loan portfolio, in each case subject to guidelines approved by the Bank’s board of directors.

Loan Delinquencies.    When a borrower fails to make a required payment on a loan, the Bank attempts to cure the deficiency by contacting the borrower and seeking payment. Contact is generally made following the fifteenth day after a payment is due, at which time a late payment fee is assessed. In most cases, deficiencies are cured promptly. If a delinquency extends beyond 15 days, the loan and payment history are reviewed and efforts are made to collect the loan. While the Bank generally prefers to work with borrowers to resolve such problems, if a payment becomes 45 days delinquent, the Bank will institute foreclosure or other proceedings, as necessary, to minimize any potential loss. As of December 31, 2004, loans with one or more payments past due totaled $3.1 million and were comprised of one land loan with a net principal balance of $2.6 million and several single family residential and consumer loans with a net principal balance of $496,000.

Non-Performing Assets.    At December 31, 2004, we had nonperforming assets with an outstanding net principal balance of $6.6 million. Impaired loans, which include nonperforming assets of $6.6 million and troubled debt restructurings (“TDRs”) of $451,000, totaled $7.0 million as of December 31, 2004. Our nonperforming assets at December 31, 2004 primarily consisted of $3.8 million of single family residential loans and the $2.6 million land loan. TDRs at December 31, 2004 were comprised of three loans, the most significant being a $336,000 commercial real estate loan. At December 31, 2003, we had one nonperforming loan with an outstanding balance of $129,000 which was a TDR and considered impaired. The increase in nonperforming assets and impaired loans at December 31, 2004 as compared to December 31, 2003 is due to the Hawthorne acquisition. We did not have any nonperforming assets or TDRs at December 31, 2002, 2001 or 2000. Nonperforming assets are defined as nonperforming loans and real estate acquired by foreclosure or deed-in-lieu thereof. Nonperforming loans are defined as non-accrual loans and loans 90 days or more past due but still accruing interest, to the extent applicable. A loan is considered to be impaired if management determines the recovery of the Bank’s gross investment in the loan is not probable. TDRs are defined as loans which the Bank has agreed to modify by accepting below market terms either by granting interest rate concessions or by deferring principal and/or interest payments. We place loans on non-accrual status when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. When any such loan is placed on non-accrual status, previously accrued but unpaid interest will be deducted from interest income. As a matter of policy, we will not accrue interest on loans past due 90 days or more. If non-accrual loans were current during the years ended December 31, 2004 and 2003, we would have recognized additional interest income of $241,000 and $21,000. Nonperforming assets represented 0.13% of total assets at December 31, 2004. We recognized no interest income for the years ended December 31, 2004 and 2003 related to loans on non-accrual status as of the end of the year.

Classified Assets.    Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. The Bank has established three classifications for potential problem assets: “substandard,” “doubtful” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The Bank has established another category, designated “special mention,” for assets which do not currently expose the Bank to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets

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classified as special mention, substandard or doubtful result in the Bank establishing higher levels of general allowances for loan losses. If an asset or portion thereof is classified loss, the Bank must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. At December 31, 2004, the Bank had $27.7 million in loans classified special mention and $19.6 million classified as substandard. At December 31, 2003, the Bank had one loan classified as substandard with a total outstanding principal balance of $129,000 and one loan designated as special mention with a total outstanding principal balance of $1.2 million. This increase was primarily the result of the loan portfolio acquired from Hawthorne. None of the classified loans have specific valuation allowances.

Allowance for Loan Losses.    Like all financial institutions, we maintain an allowance for estimated loan losses based on a number of quantitative and qualitative factors. Quantitative factors used to assess the adequacy of the allowance for loan losses are established based upon management’s assessment of the credit risk in the portfolio, historical loan loss experience and our loan underwriting policies as well as management’s judgment and experience. Provisions for loan losses are provided on both a specific and general basis. Specific and general valuation allowances are increased by provisions charged to expense and decreased by charge-offs of loans, net of recoveries. Specific allowances are provided for impaired loans for which the expected loss is measurable. General valuation allowances are provided based on a formula which incorporates the factors discussed above. The Bank periodically reviews the assumptions and formula by which additions are made to the specific and general valuation allowances for losses in an effort to refine such allowances in light of the current status of the factors described above.

The following table sets forth the activity in our allowance for loan losses for the years indicated.

The increase in the allowance for loan losses as a percent of total loans held for investment in 2004 is entirely due to the allowance balance acquired in the Hawthorne transaction in June 2004. Net recoveries during the year ended 2004 were primarily attributable to consumer loans. As of the date of acquisition, management determined the allowance acquired was sufficient to cover estimated losses in the loan portfolio acquired. Since the acquisition of Hawthorne, we have incorporated the acquired loans into the allowance methodology used by the Bank and evaluate the allowance on an ongoing basis based on the total loan portfolio. Based on our quarterly comprehensive asset quality reviews, we determined a provision for loan losses was not required for the year ended December 31, 2004.

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The following table sets forth information concerning the allocation of our allowance for loan losses, which is maintained on our loans held for investment portfolio, by loan category at the dates indicated.

The allowance for loan losses reflects management’s judgment of the level of allowance adequate to absorb estimated credit losses in our loans held for investment portfolio. The board of directors of the Bank approved a policy formulated by management for a systematic analysis of the adequacy of the allowance. The major elements of the policy require: (1) a quarterly analysis of allowance amounts performed by management; (2) approval by the Bank’s board of directors of the quarterly analysis; and (3) allocation of the allowance into general and specific valuation allowance categories.

Our internal asset review system and loss allowance methodology are designed to provide for timely identification of problem assets and recognition of losses. The overall adequacy of the allowance for loan losses is reviewed by the Bank’s Internal Asset Review Committee on a quarterly basis and submitted to the board of directors for approval. The Internal Asset Review Committee’s responsibilities consist of risk management, as well as problem loan management, which include ensuring proper risk grading of all loans and analysis of specific valuation allowances for all classified loans. Our current monitoring process includes a process of segmenting the loan portfolio into pools of loans that share similar credit characteristics. The loan portfolio is currently segmented into the following pools of loans: (1) single family residential loans; (2) consumer loans; (3) multi-family loans with a principal balance less than $1 million; and (4) commercial and industrial real estate loans with a principal balance less than $750,000. These specific pools of loans are analyzed for purposes of calculating the general valuation allowance in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5. In addition, certain loans are identified for review on an individual basis for determination of impairment and calculation of specific valuation allowances in accordance with SFAS No. 114. Unique loan categories or loan types that are initially excluded from the homogenous loan pools and reviewed individually for impairment include: (1) multi-family loans with a principal balance greater than $1 million; (2) commercial and industrial real estate loans with a principal balance greater than $750,000; (3) construction income property loans; (4) construction single family residential loans; (5) land loans; and (6) commercial business loans and lines of credit. If management determines impairment, as defined by SFAS No. 114, does not exist then the loans reviewed individually are included in the loan pools used to calculate the general valuation allowance.

The general valuation allowance is derived by analyzing the historical loss experience and asset quality within each homogeneous loan portfolio segment, along with assessing qualitative environmental factors, and correlating it with the delinquency and classification status for each portfolio segment. We utilize a loan grading system with five classification categories, including assets classified as Pass which is divided into four risk grade levels, based upon credit risk characteristics and we categorize each loan asset by risk grade allowing for a more consistent review of similar loan assets. A loss factor is applied to each risk graded loan segment.

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Loss factors for each risk graded loan segment are based on historical actual loss rates experienced by the Bank as compared to peer institutions, national and regional averages published by the OTS, adjusted for loan portfolio seasoning and other qualitative environmental factors. Given that we have experienced minimal losses in our own portfolio over the past five years, we utilize peer group statistics, including OTS data on a nationwide and local basis, to validate the loss factors applied to our various loan segments. In addition, we consider the following qualitative environmental elements in determining the loss factors used in calculating the general valuation allowance: the levels of and trends in past due, non-accrual and impaired loans; the trend in volume and terms of loans; the effects of changes in credit concentrations; the effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures and practices; the experience, ability and depth of management and other relevant staff; national and local economic trends and conditions; and industry conditions.

We also review loans individually for purposes of determining specific valuation allowances and impairment as defined in SFAS No. 114. Loans are reviewed individually on an annual basis. In addition classified assets are reviewed at the time the loan is classified and on a regular basis (at least every 90 days) thereafter. This evaluation of individual loans is documented in the internal asset review report relating to the specific loan. We complete an impairment analysis with each internal asset review report, typically on a quarterly basis, for all classified loans secured by real estate. Any deficiencies outlined by the impairment analysis are accounted for in the specific valuation allowance for the loan. A loan is determined to be impaired if management determines the recovery of the Bank’s gross investment is not probable. A specific valuation allowance is applied if the amount of loss can be reasonably determined. To determine impairment under SFAS No. 114, management assesses the current operating statements requested from the borrower (although they are not always received from the borrower), the property’s current and past performance, the borrower’s ability (defined as capacity, willingness and rationale) to repay, and the overall condition and estimated value of the collateral. If a loan is deemed impaired, a specific valuation allowance is applied equal to the amount the Bank’s total investment in the carrying value of the loan exceeds the fair value of the collateral. The fair value of impaired loans is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.

Our overall asset quality remained sound, as supported by our internal risk rating process. The multi-family and commercial real estate loan portfolios are more seasoned and are closely monitored by a comprehensive asset quality review and asset classification process. However, with the acquisition of Hawthorne, our loan portfolio was more diversified in 2004 as compared to prior years. Single family residential loans as a percent of total loans increased to 21.3% in 2004 from 0.3% in 2003. In addition, as of December 31, 2004, construction and land loans comprise 7.1% of total loans. Given this change in credit concentration of the loan portfolio, the allowance was reassessed. The most significant changes in the credit concentrations of the loan portfolio from December 31, 2003 to December 31, 2004 occurred in the single family and multi-family portfolios, resulting in an increase in the allocation of allowance to single family loans from 0.2% to 25.8% of the total allowance, respectively, while the allowance allocated to the multi-family loan segment decreased from 76.1% to 42.1% of the total allowance, respectively.

The allowance requirement for any loan segment could be different in the future as the quantitative and qualitative factors change. Consequently, provision levels may also be influenced by changes in the quantitative and qualitative factors quarter over quarter. In addition, various regulatory agencies, as an integral part of their examination process, periodically review our valuation allowance. These agencies may require increases to the allowance based on their judgments of the information available to them at the time of their examination.

Investment Activities

We hold securities at the Bank and Commercial Capital Bancorp. At December 31, 2004, our consolidated securities portfolio amounted to $491.3 million, $1.9 million of which was held at Commercial Capital Bancorp and

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$489.4 million of which was held at the Bank. We acquire securities for liquidity purposes and to further deploy our equity, and thereby enhance our return on equity. These securities generally provide a high degree of cash flow.

The Bank’s securities portfolio is managed in accordance with policies set by the Bank’s Asset/Liability Committee (“ALCO”). Specific day-to-day transactions affecting the securities portfolio are managed by the Bank’s chief executive officer and treasurer in accordance with its Investment Policy. The Bank’s Treasury Committee periodically reviews the securities portfolio and related transactions. These securities activities are also reviewed quarterly or more often, as needed, by the Bank’s ALCO. The Bank’s securities position is reported to the Bank’s board of directors each month and a summary of the Bank’s ALCO meetings is reported to the Bank’s board of directors at least quarterly.

The Investment Policy, which addresses strategies, types and levels of allowable investments and which is reviewed and approved annually by the Bank’s board of directors, authorizes the Bank to invest in a variety of highly liquid, investment grade fixed-income, U.S. government and agency securities and other investment securities, subject to various limitations. The Investment Policy limits the amount the Bank can invest in various types of securities, places limits on average lives and durations of the Bank’s securities, limits the securities dealers that the Bank can conduct business with, and requires approval from a member of the Bank’s executive committee with respect to any investment other than U.S. government and U.S. government agency securities (including mortgage-backed securities) and municipal obligations. In addition, the Bank’s treasurer is prohibited from buying or selling any one security that is $5.0 million or greater without the approval of a member of the Bank’s executive committee, and is prohibited from buying or selling any one security that is $25.0 million or greater without approval from two members of the Bank’s executive committee.

Although our policies permit us to invest in any investment grade securities, as of December 31, 2004, all of our investments have consisted of AAA-rated mortgage-backed securities that are insured or guaranteed by U.S. government agencies or government-sponsored enterprises. At December 31, 2004, our consolidated securities portfolio consisted of $491.3 million of mortgage-backed securities and are all classified as available-for-sale.

Mortgage-backed securities, which are known as mortgage participation certificates or pass-through certificates, represent a participation interest in a pool of single family or multi-family mortgages, which are passed from the mortgage originators, through intermediaries (generally U.S. government agencies and government sponsored enterprises) that pool and repackage the participation interests in the form of securities, to investors such as us. Such U.S. government agencies and government sponsored enterprises, which guarantee the payment of principal and interest to investors, are primarily Freddie Mac, Fannie Mae and Ginnie Mae. Of our total consolidated investment in mortgage-backed securities at December 31, 2004, $272.8 million consisted of Fannie Mae pass-through certificates, $216.9 million consisted of Freddie Mac pass-through certificates and $1.6 million consisted of Ginnie Mae pass-through certificates.

The following table sets forth additional information regarding the duration of our mortgage-backed securities available-for-sale as of December 31, 2004:

At December 31, 2004, all of our securities with original terms to maturity of 30 years are seasoned hybrid adjustable-rate securities with an original fixed rate of interest for a term of 5 or 7 years, adjusting to a current

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market rate index, either one-year CMT or one-year LIBOR, plus a margin thereafter. The rates on the seasoned 20-year and seasoned 15-year securities remain fixed to maturity.

Mortgage-backed securities typically are issued with stated principal amounts, and are backed by pools of mortgages that have loans with interest rates that are within a range and have varying maturities. The characteristics of the underlying pool of mortgages, such as fixed-rate or adjustable-rate, contractual scheduled amortization, as well as prepayment risk, are passed on to the certificate holder. The average life of a mortgage-backed pass-through security thus approximates the average life of the underlying pool of mortgages.

The following table sets forth the activity in our consolidated securities portfolio for the years indicated.

The securities acquired in the Hawthorne acquisition, $331.1 million, were subsequently sold by us, in conjunction with the prepayment of an equal amount of Hawthorne’s FHLB advance portfolio, to unwind an unfavorable wholesale leverage position. In addition, we securitized $27.0 million of Hawthorne’s single family residential loans, transferred the mortgage-backed securities into the securities portfolio and subsequently sold them.

Sources of Funds

General.    The Bank’s primary sources of funds for use in its lending and investing activities consist of: deposits; advances from the FHLB of San Francisco; reverse repurchase agreements; federal funds purchased; and sales of, maturities and principal and interest payments on loans and securities. CCM’s primary sources of funds for use in its lending activities consist of its warehouse line of credit. Commercial Capital Bancorp’s primary sources of funds for use in its investing activities consist of sales of, maturities and principal repayments on securities. In addition, proceeds raised from sales of common stock and the issuance of junior subordinated debentures to unconsolidated trust subsidiaries have been downstreamed primarily into the Bank or used by the Commercial Capital Bancorp for its stock buyback program. We closely monitor rates and terms of competing sources of funds and utilize those sources we believe to be the most cost effective and consistent with our asset and liability management policies.

Deposits.    The Bank offers a variety of deposit products and services at competitive interest rates. The Bank utilizes traditional marketing methods to attract new clients and deposits, including various forms of advertising. The Bank also utilizes the services of deposit brokers to attract certain jumbo certificates of deposit. Some of the Bank’s jumbo certificates of deposit and other deposits are also obtained through the posting of deposit rates on national computerized bulletin boards at no cost to the Bank and through the Internet. However, with the acquisition of Hawthorne in June 2004, the Bank has continued its focus towards growth in transaction accounts.

The Bank attempts to price its deposit products in order to promote deposit growth and satisfy the Bank’s liquidity requirements and offers a variety of deposit products in order to satisfy its clients’ needs. The Bank’s

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current deposit products include consumer and business checking, savings, and money market deposit accounts; fixed-rate, fixed-maturity retail certificates of deposit ranging in terms from 30 days to five years; individual retirement accounts; and certificates of deposit consisting of jumbo (generally greater than or equal to $100,000) certificates, brokered certificates and public deposits.

As of December 31, 2004, we had $1.03 billion of certificates of deposit, consisting of $487.9 million of jumbo certificates and $93.2 million of brokered certificates. Our focus during the last three years has been the growth in transaction deposit accounts. Prior to the acquisition of Hawthorne, the Bank had successfully transitioned its deposit mix to approximately 65% of transaction accounts. Hawthorne, with a larger deposit base at the time of acquisition, had a smaller percentage of transaction accounts. At December 31, 2004, our transaction accounts totaled $1.23 billion, or 54.5% of total deposits. Business deposits accounted for 29.3% of total transaction accounts at December 31, 2004. Included in business deposits is approximately $151.6 million, or 6.7% of total deposits, from TIMCOR. On February 17, 2005, we acquired TIMCOR. See “Business—Recent Developments”. At December 31, 2004, the Bank had four deposits from the State of California that amounted to $295.0 million in the aggregate, which totaled 13.1% of total deposits and are scheduled to mature between January 31, 2005 and March 31, 2005. However, all deposits from the State of California that have matured have also been renewed for similar terms.

The Bank operates banking offices located in Westlake Village (Ventura County), Tarzana, Malibu, Beverly Hills, Baldwin Hills, Westchester, Hawthorne, Manhattan Beach, Gardena, Hermosa Beach, Torrance, Redondo Beach (Los Angeles County), Orange, Irvine, Rancho Santa Margarita (Orange County), Riverside (Riverside County), La Jolla, Del Mar and San Diego (San Diego County). The Bank will opportunistically consider further de novo branch expansion if and when management believes that such expansion will enhance our franchise, including in Northern California where the Bank has a lending presence. In March 2005, we opened a banking office in San Mateo, California, which is our first in Northern California. By mid-2005, we plan to open a banking office located in Newport Coast, California.

In 2004, we continued to execute a significant shift in our deposit strategy, moving away from the wholesale deposit and other borrowing sources predominately used in prior years and concentrating on the expansion of our traditional retail franchise through both acquisition and de novo branches. Our retail product set has expanded to include a wider array of business and consumer checking, savings and certificate of deposit products in addition to our money market products. Since December 31, 2001, the Bank has increased its emphasis on attracting retail deposits from both business and retail relationships located throughout Orange, San Diego, Riverside and Los Angeles counties in California. In 2004, the fifteen banking offices acquired in the Hawthorne transaction contributed a deposit base totaling $1.75 billion in total deposits, before purchase accounting adjustments, which was comprised of $746.6 million in transaction accounts and $1.01 billion in certificates of deposit. In addition, we grew our retail franchise organically through opening new banking offices located in Malibu and Beverly Hills, California.

We are focused on gathering deposits from borrower client relationships developed through our multi-family and commercial lending activities. We have been successful in attracting deposits from those businesses involved in our lending activities. These businesses include property management companies, community associations, title and escrow companies, law firms and other middle-market businesses. During the fourth quarter of 2003, the Bank formed the Financial Services Group, a new business deposit division within Relationship Banking, to focus on attracting deposits from these real estate related and middle market businesses. As of December 31, 2004, the Financial Services Group attracted $70.8 million of deposits which were predominantly transaction accounts.

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The following table shows the distribution of and other information relating to our deposits by type as of the dates indicated.

The following table sets forth the maturities of our certificates of deposit having principal amounts of $100,000 or more at December 31, 2004.

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The following table sets forth, by various interest rate categories, our certificates of deposit at the dates indicated.

The following table sets forth the amount and remaining maturities of our certificates of deposit at December 31, 2004.