Hawthorne Financial is the parent company of Hawthorne Savings. First Fidelity Bancorp is the parent of First Fidelity Investment and Loan. First Fidelity is a privately-owned real estate secured lender with $500 million in loan assets secured primarily by Southern California real estate, and approximately $413 million in deposits generated from its four branches. Hawthorne is a real estate secured lender with $1.8 billion in assets, and $1.2 billion in deposits generated from its nine branches in Southern California.

Hawthorne anticipates that the transaction will close in the third quarter of 2002, and that it will be accretive to its GAAP and cash earnings per share in 2002, excluding one-time charges attributable to the merger. Hawthorne expects to achieve pre-tax cost savings of approximately $1.3 million, which represents 11% of estimated total non-interest expense of First Fidelity, in the first full year of combined operations.

During the past two years, Hawthorne has been increasing its presence in Orange and San Diego counties by lending in this region. Currently, 25% or $500 million, of Hawthorne's loan portfolio is secured by real estate in these two counties.