UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark one)

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

For the quarterly period ended                  March 31, 2002
                               -------------------------------------------------

                                       or

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

For the transition period from         N/A            to           N/A
                               --------------------        ---------------------

Commission File Number:                       000-24915
                        --------------------------------------------------------

                           Golden State Holdings Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         Delaware                                              95-4669792
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
of incorporation or organization)

        135 Main Street, San Francisco, CA                    94105
-------------------------------------------------- -----------------------------
(Address of principal executive offices)                    (Zip Code)

                                  415-904-1100
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.   X  Yes     No
                                           ---     ---
     The number of shares  outstanding  of  registrant's  $1.00 par value common
stock, as of the close of business on April 30, 2002: 1,000 shares.

     Registrant meets the conditions set forth in General  Instruction H (1) (a)
and (b) of Form 10-Q and is  therefore  filing  this Form with  certain  reduced
disclosures, as permitted by General Instruction H (2).


                                     Page 1
<PAGE>

                           GOLDEN STATE HOLDINGS INC.
                     FIRST QUARTER 2002 REPORT ON FORM 10-Q
                                TABLE OF CONTENTS

                                                                           PAGE
PART I.     FINANCIAL INFORMATION

   Item 1.  Consolidated Financial Statements

            Unaudited Consolidated Balance Sheets
            March 31, 2002 and December 31, 2001.............................3

            Unaudited Consolidated Statements of Income
            Three Months Ended March 31, 2002 and 2001.......................4

            Unaudited Consolidated Statements of Comprehensive Income
            Three Months Ended March 31, 2002 and 2001.......................5

            Unaudited Consolidated Statement of Stockholder's Equity
            Three Months Ended March 31, 2002................................6

            Unaudited Consolidated Statements of Cash Flows
            Three Months Ended March 31, 2002 and 2001.......................7

            Notes to Unaudited Consolidated Financial Statements.............9

   Item 2.  Management's Narrative Analysis of
            Results of Operations...........................................26

            Critical Accounting Policies....................................26

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......*


PART II.    OTHER INFORMATION

   Item 1.  Legal Proceedings...............................................36

   Item 2.  Changes in Securities............................................*

   Item 3.  Defaults Upon Senior Securities..................................*

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

   Item 5.  Other Information...............................................37

   Item 6.  Exhibits and Reports on Form 8-K................................37

   Glossary of Defined Terms................................................38

   Signatures...............................................................40

   *     Item 3 of Part I and  Items 2, 3 and 4 of Part II are not  included  as
         per conditions  met by Registrant  set forth  in General  Instruction H
         (1) (a) and (b) of Form 10-Q.

         Golden  State  Holdings  Inc. is a  wholly owned  subsidiary  of Golden
         State Bancorp Inc. For more information, refer to  Golden State Bancorp
         Inc.'s  Quarterly  Report on Form 10-Q  for the quarterly  period ended
         March 31, 2002.


                                     Page 2
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001
                                   (Unaudited)
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                             ASSETS                                          MARCH 31, 2002      DECEMBER 31, 2001
                             ------                                          --------------      -----------------
<S>                                                                            <C>                  <C>
    Cash and due from banks                                                    $   830,520          $   709,139
    Interest-bearing deposits in other banks                                           100                  103
    Short-term investment securities                                                80,555               95,929
                                                                               -----------          -----------
         Cash and cash equivalents                                                 911,175              805,171

    Securities available for sale, at fair value                                   118,551              116,054
    Securities held to maturity                                                     29,228               30,602
    Mortgage-backed securities available for sale, at fair value                 5,808,176            7,057,903
    Mortgage-backed securities held to maturity                                  1,302,260            1,385,113
    Loans held for sale, net                                                     2,198,878            2,608,365
    Loans receivable, net                                                       38,703,762           39,335,623
    Investment in FHLB System                                                    1,368,217            1,446,607
    Premises and equipment, net                                                    273,748              276,411
    Foreclosed real estate, net                                                     16,074               18,564
    Accrued interest receivable                                                    280,906              288,308
    Goodwill (net of accumulated amortization of $286,470
         at both March 31, 2002 and December 31, 2001)                             590,420              590,420
    Other intangible assets (net of accumulated amortization of $20,708
         at March 31, 2002 and $19,541 at December 31, 2001)                        49,256               50,423
    MSRs (net of valuation allowance of $180,452 at March 31, 2002 and
         $153,345 at December 31, 2001)                                          1,778,651            1,623,947
    Derivative assets                                                              194,303              349,026
    Other assets                                                                   493,183              536,281
                                                                               -----------          -----------
         Total assets                                                          $54,116,788          $56,518,818
                                                                               ===========          ===========

         LIABILITIES, MINORITY INTEREST AND STOCKHOLDER'S EQUITY
         -------------------------------------------------------
    Deposits                                                                   $24,907,610          $25,146,827
    Securities sold under agreements to repurchase                               2,160,196            2,363,945
    Borrowings                                                                  22,539,615           24,444,541
    Derivative liabilities                                                         155,538              250,711
    Other liabilities                                                            1,169,420            1,188,005
                                                                               -----------          -----------
         Total liabilities                                                     $50,932,379           53,394,029
                                                                               -----------          -----------

    Commitments and contingencies                                                       --                   --

    Minority interest                                                              500,000              500,000

    Stockholder's equity
         Common stock, $1.00 par value, 1,000 shares authorized,
             issued and outstanding                                                      1                    1
         Additional paid-in capital                                              1,572,609            1,569,894
         Accumulated other comprehensive loss, net                                 (51,825)             (63,327)
         Retained earnings (substantially restricted)                            1,163,624            1,118,221
                                                                               -----------          -----------
         Total stockholder's equity                                              2,684,409            2,624,789
                                                                               -----------          -----------
             Total liabilities, minority interest and stockholder's equity     $54,116,788          $56,518,818
                                                                               ===========          ===========

    See accompanying notes to unaudited consolidated financial statements.
</TABLE>


                                     Page 3
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED MARCH 31,
                                                                                             ----------------------------
                                                                                                2002              2001
                                                                                             ----------        ----------
<S>                                                                                           <C>              <C>
Interest income:
     Loans receivable                                                                         $649,159         $  777,790
     Mortgage-backed securities available for sale                                              92,566            180,983
     Mortgage-backed securities held to maturity                                                21,417             37,411
     Loans held for sale                                                                        41,805             20,127
     Securities available for sale                                                               1,630             10,780
     Securities held to maturity                                                                   147              8,501
     Interest-bearing deposits in other banks                                                      125                419
     Dividends on FHLB stock                                                                    20,839             23,046
                                                                                              --------         ----------
         Total interest income                                                                 827,688          1,059,057
                                                                                              --------         ----------

Interest expense:
     Deposits                                                                                  135,142            240,837
     Securities sold under agreements to repurchase                                             21,350             67,945
     Borrowings                                                                                302,810            439,803
     Other                                                                                         705                 --
                                                                                              --------         ----------
         Total interest expense                                                                460,007            748,585
                                                                                              --------         ----------
         Net interest income                                                                   367,681            310,472
Provision for loan losses                                                                           --                 --
                                                                                              --------         ----------
         Net interest income after provision for loan losses                                   367,681            310,472
                                                                                              --------         ----------

Noninterest income:
     Loan servicing fees, net                                                                   (8,815)           (26,652)
     Customer banking fees and service charges                                                  58,148             51,261
     Gain on sale, settlement and transfer of loans, net                                        34,619              4,924
     (Loss) gain on sale of assets, net                                                         (1,886)               439
     Gain on non-monetary exchange of Star Systems common stock                                     --             20,671
     Other income                                                                                6,228              8,588
                                                                                              --------         ----------
         Total noninterest income                                                               88,294             59,231
                                                                                              --------         ----------

Noninterest expense:
     Compensation and employee benefits                                                        124,784            117,735
     Occupancy and equipment                                                                    40,235             37,850
     Professional fees                                                                           7,326              4,848
     Loan expense                                                                                4,156              4,202
     Foreclosed real estate operations, net                                                       (832)              (398)
     Amortization of goodwill and other intangible assets                                        1,167             14,940
     Other expense                                                                              55,702             51,961
                                                                                              --------         ----------
         Total noninterest expense                                                             232,538            231,138
                                                                                              --------         ----------

Income before income taxes and minority interest                                               223,437            138,565
Income tax expense                                                                              91,287             36,183
Minority interest                                                                                6,747              6,747
                                                                                              --------         ----------
         Net income                                                                           $125,403         $   95,635
                                                                                              ========         ==========

See accompanying notes to unaudited consolidated financial statements.
</TABLE>


                                     Page 4
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                          --------------------------------
                                                                                2002             2001
                                                                             ----------       ----------
<S>                                                                           <C>              <C>
    Net income                                                                $125,403         $ 95,635

    Other comprehensive income, net of tax:
        Unrealized holding (loss) gain on securities available for sale:
           Unrealized holding (loss) gain arising during the period            (23,722)          99,215
           Less: reclassification adjustment for gain included
               in net income                                                      (767)             (82)
                                                                              --------         --------
                                                                               (24,489)          99,133
        Amortization of market adjustment for securities
           transferred from available-for-sale to held-to-maturity                  --            1,477

        Transition adjustment upon adoption of SFAS No. 133                         --          (44,647)

        Change in fair value of  derivatives  used for cash flow hedges,
           net of applicable taxes of $24,858 in 2002 and
           $25,689 in 2001                                                      35,991          (37,197)
                                                                              --------         --------

    Other comprehensive income                                                  11,502           18,766
                                                                              --------         --------

    Comprehensive income                                                      $136,905         $114,401
                                                                              ========         ========

    See accompanying notes to unaudited consolidated financial statements.
</TABLE>


                                     Page 5
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                        THREE MONTHS ENDED MARCH 31, 2002
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                   Additional    Accumulated Other Comprehensive (Loss) Income, Net
                                                         Common      Paid-in    ----------------------------------------------------
                                                          Stock      Capital        Securities        Derivatives           Total
                                                          -----      -------        ----------        -----------           -----
<S>                                                        <C>     <C>               <C>               <C>                <C>
Balance at December 31, 2001                               $1      $1,569,894        $ 56,052          $(119,379)         $(63,327)

Net income                                                 --              --              --                 --                --
Change in net unrealized holding gain
    on securities available for sale                       --              --         (24,489)                --           (24,489)
Change in net unrealized holding loss
    on derivatives                                         --              --              --             35,991            35,991
Dividends to parent                                        --              --              --                 --                --
Impact of Golden State restricted
    common stock                                           --           2,159              --                 --                --
Tax benefit on exercise of stock options                   --             556              --                 --                --
                                                           --      ----------        --------          ---------          --------

Balance at March 31, 2002                                  $1      $1,572,609        $ 31,563          $ (83,388)         $(51,825)
                                                           ==      ==========        ========          =========          ========


                                                                                                                        (Continued)
</TABLE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                        THREE MONTHS ENDED MARCH 31, 2002
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                            Retained
                                                            Earnings           Total
                                                         (Substantially     Stockholder's
                                                           Restricted)         Equity
                                                         ----------          ------
<S>                                                      <C>               <C>
Balance at December 31, 2001                             $1,118,221        $2,624,789

Net income                                                  125,403           125,403
Change in net unrealized holding gain
    on securities available for sale                             --           (24,489)
Change in net unrealized holding loss
    on derivatives                                               --            35,991
Dividends to parent                                         (80,000)          (80,000)
Impact of Golden State restricted
    common stock                                                 --             2,159
Tax benefit on exercise of stock options                         --               556
                                                         ----------        ----------


Balance at March 31, 2002                                $1,163,624        $2,684,409
                                                         ==========        ==========


See accompanying notes to unaudited consolidated financial statements.
</TABLE>



                                     Page 6
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                      ------------------------------
                                                                                          2002              2001
                                                                                          ----              ----
<S>                                                                                   <C>                <C>
  Cash flows from operating activities:
  Net income                                                                          $   125,403        $    95,635
  Adjustments to reconcile net income to net cash provided by (used in)
     operating activities:
     Amortization of goodwill and other intangible assets                                   1,167             14,940
     Amortization of purchase accounting premiums and discounts, net                        3,668              1,546
     Accretion of discount on borrowings                                                      226                285
     Amortization of MSRs                                                                 114,325             58,415
     Loss (gain) on sale of assets, net                                                     1,886               (439)
     Gain on sale of foreclosed real estate, net                                           (1,179)              (855)
     Loss on sale, settlement and transfer of loans, net                                  117,924             32,766
     Capitalization of originated MSRs                                                   (152,543)           (37,690)
     Depreciation and amortization of premises and equipment                               13,341             12,562
     Amortization of deferred debt issuance costs                                           1,491              1,836
     FHLB stock dividends                                                                 (20,839)           (23,046)
     Purchases and originations of loans held for sale                                 (6,461,450)        (2,289,629)
     Net proceeds from the sale of loans held for sale                                  6,719,741          1,420,877
     Net gain on derivatives used to hedge MSRs                                           (19,280)            (2,405)
     Provision for loss on MSRs                                                            27,107             77,000
     Decrease in other assets                                                              64,207            294,716
     Decrease in accrued interest receivable                                                7,402              8,617
     (Decrease) increase in other liabilities                                             (55,135)           216,444
     Amortization of deferred compensation expense-Golden State
         restricted common stock                                                              430                479
     Gain on non-monetary exchange of Star Systems common stock                                --            (20,671)
     Reduction in net accrued tax liability                                                    --            (25,805)
     Minority interest                                                                      6,747              6,747
                                                                                      -----------        -----------
         Net cash provided by (used in) operating activities                              494,639           (157,675)
                                                                                      -----------        -----------


                                                                                                          (Continued)

  See accompanying notes to unaudited consolidated financial statements.
</TABLE>


                                     Page 7
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                     --------------------------------
                                                                                          2002               2001
                                                                                          ----               ----
<S>                                                                                  <C>                 <C>
  Cash flows from investing activities:

       Purchases of securities available for sale                                    $    (25,539)       $       (155)
       Proceeds from maturities of securities available for sale                           23,170             269,891
       Purchases of securities held to maturity                                              (995)             (1,386)
       Principal payments and proceeds from maturities
          of securities held to maturity                                                    2,369              26,353
       Purchases of mortgage-backed securities available for sale                         (43,644)            (41,198)
       Principal payments on mortgage-backed securities available for sale              1,220,752             441,524
       Proceeds from sales of mortgage-backed securities available for sale                29,268                  --
       Principal payments on mortgage-backed securities held to maturity                   82,852             104,849
       Proceeds from sales of loans                                                        31,901               5,487
       Loan originations and principal collections, net                                 2,035,111             177,330
       Purchases of loans receivable                                                   (1,402,470)         (1,486,453)
       Purchases of FHLB stock                                                            (21,775)                 --
       Redemption of FHLB stock                                                           100,165                  --
       Purchases of premises and equipment                                                (11,238)            (12,364)
       Proceeds from disposal of premises and equipment                                     4,236               2,546
       Proceeds from sales of foreclosed real estate                                        9,390               7,211
       Purchases of MSRs                                                                  (91,816)            (62,709)
       Hedge receipts (payments)                                                           19,942             (10,005)
       Purchases of derivatives                                                          (416,887)           (121,967)
       Proceeds from sales and settlements of derivatives                                 475,008             133,712
                                                                                     ------------        ------------
          Net cash provided by (used in) investing activities                           2,019,800            (567,334)
                                                                                     ------------        ------------

  Cash flows from financing activities:

       Net (decrease) increase in deposits                                               (239,093)          1,013,110
       Proceeds from additional borrowings                                             30,601,848          24,400,121
       Principal payments on borrowings                                               (32,481,000)        (24,048,510)
       Principal payment of FN Holdings Notes                                                (250)                 --
       Net decrease in securities sold under agreements to repurchase                    (203,749)           (450,864)
       Dividends on common stock                                                          (80,000)            (50,000)
       Dividends paid to minority stockholders of subsidiary, net of taxes                 (6,747)             (6,747)
         Tax benefit on exercise of stock options                                             556                 386
                                                                                     ------------        ------------

          Net cash (used in) provided by financing activities                          (2,408,435)            857,496
                                                                                     ------------        ------------

  Net change in cash and cash equivalents                                                 106,004             132,487
  Cash and cash equivalents at beginning of period                                        805,171             783,074
                                                                                     ------------        ------------
  Cash and cash equivalents at end of period                                         $    911,175        $    915,561
                                                                                     ============        ============


  See accompanying notes to unaudited consolidated financial statements.
</TABLE>


                                     Page 8
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(1)  BASIS OF PRESENTATION

     These  financial  statements  are  in  accordance  with  GAAP  for  interim
financial  information  and Regulation  S-X,  Article 10. They are unaudited and
exclude some of the disclosures for complete  financial  statements.  Management
believes it has made all adjustments  necessary so that the financial statements
are presented fairly. The results of operations for the three months ended March
31, 2002 may not indicate future results. Certain prior period amounts have been
reclassified to conform to current presentation.

     These financial  statements should be read with the consolidated  financial
statements of GS Holdings  included in the Company's  Annual Report on Form 10-K
for the year ended December 31, 2001. A glossary of defined terms begins on page
38 of this  document.  All  terms  used  but not  defined  in the  glossary  are
clarified in the Company's Annual Report on Form 10-K.

     GS  Holdings,  a wholly  owned  subsidiary  of Golden  State,  is a holding
company whose only significant asset is all of the common and preferred stock of
the Bank.  Activities for the consolidated  entity are primarily  carried out by
the Bank and its subsidiaries.

     These unaudited  consolidated  financial statements include the accounts of
GS Holdings, the Bank and the Bank's wholly owned subsidiaries.  All significant
intercompany balances and transactions have been eliminated in consolidation.

     Minority  interest  represents  amounts  attributable to the REIT Preferred
Stock of  California  Federal  Preferred  Capital  Corporation,  a wholly  owned
subsidiary of the Bank.

     As GS Holdings'  common stock is wholly owned by Golden State,  EPS data is
not presented.

(2)  RECLASSIFICATION OF SECURITIES

     On January 1, 2001, the Company reclassified $1.1 billion and $85.0 million
carrying  value of  mortgage-backed  securities  and U.S.  government and agency
securities,  respectively,  from securities held to maturity to their respective
available-for-sale  portfolios,  as permitted upon the adoption of SFAS No. 133.
The net unrealized loss related to these securities of $30.4 million,  which was
recorded in OCI upon their initial transfer to the held-to-maturity portfolio in
April 2000, was reclassified from accumulated other  comprehensive loss, and the
securities were subsequently marked to market, in accordance with SFAS No. 115.


                                     Page 9
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(3)  CASH, CASH EQUIVALENTS, AND STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                           Quarter Ended March 31,
                                                                                           -----------------------
                                                                                             2002           2001
                                                                                             ----           ----
                                                                                                (in thousands)
<S>                                                                                        <C>          <C>
Cash paid for:
    Interest                                                                               $459,517     $  814,456
    Income taxes, net                                                                         3,541            767

    Transfer of loans to foreclosed real estate                                               5,710          5,816
    Loans made to facilitate the sale of real estate                                             --            168
    Reclassification of loans from loans held for sale to loans receivable                       --          4,863
    Reclassification of loans receivable to loans held for sale                              22,542         17,133
    Impact of restricted common stock                                                         2,159          2,117
    Reclassification of mortgage-backed securities from the held-to-maturity
       portfolio to the available-for-sale portfolio upon the adoption of SFAS No. 133           --      1,067,933
    Reclassification of securities from the held-to-maturity portfolio to the
       available-for-sale portfolio upon the adoption of SFAS No. 133                            --         84,984
    Reclassification of derivative assets ($173.6 million) and derivative liabilities
        ($8.8 million) related to MSRs at fair value upon the adoption of SFAS No. 133           --        164,767
    Transfer of loans receivable to claims receivable                                        63,898         48,514
</TABLE>

(4)  REDEMPTION OF FN HOLDINGS NOTES

     On January 2, 2002,  GS  Holdings  redeemed  the  remaining  $250  thousand
principal of the FN Holdings 10 5/8% Senior Notes for a redemption price of $263
thousand,  including accrued  interest.  The premium paid in connection with the
redemption was not material.


                                    Page 10
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(5)  SEGMENT REPORTING

     The Company derives most of its revenues from interest income, and interest
expense is the most significant  expense.  Therefore,  net interest income after
provision  for loan losses is presented  for each  segment.  Because the Company
also evaluates  performance based on noninterest income and noninterest  expense
goals, these measures of segment profit and loss are also presented. The Company
does not allocate income taxes to the segments.

<TABLE>
<CAPTION>
                                                                           Three Months Ended March 31,
                                                                    -------------------------------------------
                                                                     Community       Mortgage
                                                                      Banking         Banking          TOTAL
                                                                      -------         -------          -----
                                                                                   (in thousands)
<S>                                                                 <C>             <C>             <C>
      Net interest income after provision for loan losses: (a)
      2002                                                          $   347,922     $   45,387      $   393,309
      2001                                                              332,030          8,027          340,057

      Noninterest income: (b)
      2002                                                          $    75,590     $   22,338      $    97,928
      2001                                                               83,259        (15,540)          67,719

      Noninterest expense: (c)
      2002                                                          $   190,283     $   43,415      $   233,698
      2001                                                              194,394         37,904          232,298

      Pre-tax contribution:
      2002                                                          $   233,229     $   24,310      $   257,539
      2001                                                              220,895        (45,417)         175,478

      Segment assets at period end: (d)
      2002                                                          $53,923,236     $5,667,673 (e)  $59,590,909
      2001                                                           61,723,458      5,126,172 (e)   66,849,630
</TABLE>
      -----------------
      (a)  Includes  $25.6  million and $29.6 million for the three months ended
           March 31, 2002 and 2001, respectively, in earnings credit provided to
           FNMC by the Bank,  primarily  for  custodial  bank  account  balances
           generated by FNMC.  Also includes $39.9 million and $58.2 million for
           the three  months  ended  March 31, 2002 and 2001,  respectively,  in
           interest income and expense on intercompany loans.

      (b)  Includes $9.6  million and  $8.5 million  for the  three months ended
           March 31,  2002 and  2001, respectively,  in  intercompany  servicing
           fees.

      (c)  Includes $1.2  million for  each of  the three months ended March 31,
           2002 and 2001 in intercompany noninterest expense.

      (d)  Includes   $5.4   billion  and  $5.0   billion  for  2002  and  2001,
           respectively,  in intercompany borrowings and $47.1 million and $44.3
           million for 2002 and 2001,  respectively,  in  intercompany  deposits
           maintained with the Bank.

      (e)  Includes  $1.9  billion   and   $1.5  billion  for   2002  and  2001,
           respectively, in MSRs and the related hedge.


                                    Page 11
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     The  following  reconciles  the  above  table to the  amounts  shown on the
consolidated financial statements (in thousands):

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                     --------------------------------
                                                                                        2002                2001
                                                                                        ----                ----
<S>                                                                                  <C>                 <C>
      Net interest income after provision for loan losses:
      Total net interest income for reportable segments                              $   393,309         $   340,057
      Elimination of intersegment net interest income                                    (25,628)            (29,585)
                                                                                     -----------         -----------
      Total                                                                          $   367,681         $   310,472
                                                                                     ===========         ===========

      Noninterest income:
      Total noninterest income for reportable segments                               $    97,928         $    67,719
      Elimination of intersegment servicing fees                                          (9,634)             (8,488)
                                                                                     -----------         -----------
      Total                                                                          $    88,294         $    59,231
                                                                                     ===========         ===========

      Noninterest expense:
      Total noninterest expense for reportable segments                              $   233,698         $   232,298
      Elimination of intersegment expense                                                 (1,160)             (1,160)
                                                                                     -----------         -----------
      Total                                                                          $   232,538         $   231,138
                                                                                     ===========         ===========

      Pre-tax contribution:
      Total contributions for reportable segments                                    $   257,539         $   175,478
      Elimination of intersegment contributions                                          (34,102)            (36,913)
                                                                                     -----------         -----------
      Total                                                                          $   223,437         $   138,565
                                                                                     ===========         ===========

      Total assets at period end:
      Total assets for reportable segments                                           $59,590,909         $66,849,630
      Elimination of intersegment borrowings                                          (5,427,017)         (5,040,038)
      Elimination of intersegment deposits                                               (47,104)            (44,313)
                                                                                     -----------         -----------
      Total                                                                          $54,116,788         $61,765,279
                                                                                     ===========         ===========
</TABLE>


                                    Page 12
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(6)  LOANS RECEIVABLE, NET

     Loans receivable, net, included the following (in thousands):

<TABLE>
<CAPTION>
                                                                           March 31, 2002     December 31, 2001
                                                                           --------------     -----------------
<S>                                                                          <C>                 <C>
     Real estate loans:
            1-4 unit residential                                             $28,666,029         $29,546,035
            Multi-family residential                                           4,307,206           4,130,287
            Commercial real estate                                             2,311,530           2,354,919
            Land                                                                  13,415              14,055
            Construction                                                           1,659               2,495
                                                                             -----------         -----------
               Total real estate loans                                        35,299,839          36,047,791
                                                                             -----------         -----------

            Equity-line                                                          700,712             639,297
            Other consumer loans                                                 252,677             283,434
            Auto loans, net (a)                                                1,968,605           1,917,591
            Commercial loans                                                     720,016             693,114
                                                                             -----------         -----------
               Total consumer and other loans                                  3,642,010           3,533,436
                                                                             -----------         -----------
               Total loans receivable                                         38,941,849          39,581,227
                                                                             -----------         -----------

            Deferred loan fees, costs, discounts and premiums, net               237,737             243,120
            Allowance for loan losses                                           (482,884)           (497,298)
            Purchase accounting adjustments, net                                   7,060               8,574
                                                                             -----------         -----------
               Total loans receivable, net                                   $38,703,762         $39,335,623
                                                                             ===========         ===========
</TABLE>
     -----------
     (a)  $813.2 million, or  41% and $766.0 million, or 40% of this  portfolio,
          represents prime product  as of  March 31, 2002 and December 31, 2001,
          respectively.

(7)  INTANGIBLE ASSETS

     Upon  adopting  SFAS No. 142,  management  reviewed  the  records  from the
Company's various  acquisitions.  At March 31, 2002, the Company's  goodwill and
other intangible assets totalled $639.7 million. Of this amount,  $590.4 million
represents  goodwill  that is no longer  being  amortized  as of January 1, 2002
pursuant  to  SFAS  No.  142.  The  remaining  $49.3  million  represents  other
intangible assets that continue to be amortized.  In addition,  the Company held
MSR balances in the amount of $1,778.7 million at March 31, 2002.

     The following table provides details on intangible assets including MSRs:

<TABLE>
<CAPTION>
                                           As of March 31, 2002                      As of December 31, 2001
                                 ----------------------------------------    ----------------------------------------
                                    Gross                         Net         Gross                          Net
                                  Carrying     Accumulated     Carrying       Carrying     Accumulated     Carrying
                                    Value      Amortization      Value         Value      Amortization       Value
                                    -----      ------------      -----         -----      ------------       -----
                                                                 (dollars in thousands)
<S>                              <C>           <C>            <C>            <C>           <C>            <C>
Amortizable intangible assets:
    Unidentifiable intangibles   $   64,451    $   (16,106)   $   48,345     $   64,451    $   (15,030)   $   49,421
    Core deposit intangibles          5,513         (4,602)          911          5,513         (4,511)        1,002
                                 ----------    -----------    ----------     ----------    -----------    ----------
       Other intangible assets       69,964        (20,708)       49,256         69,964        (19,541)       50,423
    MSRs                          2,997,674 (a) (1,219,023)    1,778,651 (a)  2,728,643 (a) (1,104,696)    1,623,947 (a)
    Goodwill                             --             --            --        876,890       (286,470)      590,420
                                -----------    -----------    ----------     ----------    -----------    ----------
       Total amortizable
          intangible assets     $3,067,638     $(1,239,731)   $1,827,907     $3,675,497    $(1,410,707)   $2,264,790
                                ==========     ===========    ==========     ==========    ===========    ==========
Unamortizable goodwill          $  876,890     $  (286,470)   $  590,420     $       --    $        --    $       --
                                ==========     ===========    ==========     ==========    ===========    ==========

                                                                                                         (Continued)
</TABLE>


                                    Page 13
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


------------
(a)  After  deducting  $180.5  million  and  $153.3  million  for the  valuation
     allowance at March 31, 2002 and December 31, 2001, respectively.

     As of March 31,  2002,  all of the  Company's  goodwill,  totalling  $590.4
million, is included in the community-banking  reporting segment.  There were no
changes in the balance of goodwill  from  December  31, 2001 to March 31,  2002.
Intangible acquisitions during the period were as follows:

<TABLE>
<CAPTION>
                                                                 Three Months Ended March 31,
                                            --------------------------------------------------------------------------
                                                          2002                                    2001
                                            ----------------------------------     -----------------------------------
                                              Gross             Weighted             Gross             Weighted
                                            Carrying            Average            Carrying            Average
                                              Value        Maturity (in years)       Value         Maturity (in years)
                                              -----        -------------------       -----         -------------------
                                                                    (dollars in thousands)

<S>                                         <C>                   <C>              <C>                   <C>
MSRs originated and purchased
     during the period                      $244,354              7.1              $100,519              6.8
</TABLE>

     During the first quarter of 2002, the Company reviewed the expected present
value of future cash flows for all reporting  units with  recorded  goodwill and
determined that the carrying value of the goodwill was not impaired.  Actual and
estimated future amortization expense is as follows:

<TABLE>
<CAPTION>
                                               Unidentifiable  Core Deposit
                                                 Intangibles    Intangibles       MSRs       Goodwill       Total
                                                 -----------    -----------       ----       --------       -----
                                                                           (in thousands)
<S>                                                 <C>            <C>          <C>          <C>          <C>
Amortization expense:
    Three months ended March 31, 2002               $1,076         $  91        $114,325     $     --     $115,492
    Three months ended March 31, 2001                1,076            91          58,415       13,773       73,355

Estimated amortization expense:
    Nine months ending December 31, 2002             3,228           273         235,940           --      239,441
    Year ending December 31,
         2003                                        4,304           364         223,675           --      228,343
         2004                                        4,304           364         193,157           --      197,825
         2005                                        4,304           364         165,147           --      169,815
         2006                                        4,304           364         140,066           --      144,734
         2007                                        4,304           364         119,080           --      123,748
</TABLE>

     The impact of the adoption of SFAS No. 142 on earnings was as follows:

<TABLE>
<CAPTION>
                                                                      For the Three Months Ended March 31,
                                                                      ------------------------------------
                                                                        2002                        2001
                                                                        ----                        ----
                                                                                  (in thousands)
<S>                                                                   <C>                         <C>
Reported net income                                                   $125,403                    $ 95,635
Add back goodwill amortization, net of tax                                  --                      13,713
                                                                      --------                    --------
Adjusted net income                                                   $125,403                    $109,348
                                                                      ========                    ========
</TABLE>


                                    Page 14
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(8)  DEPOSITS

     A summary of the carrying value of deposits follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                   March 31, 2002      December 31, 2001
                                                                   --------------      -----------------
<S>                                                                  <C>                  <C>
     Transaction Accounts:
        Non-interest checking                                        $ 2,189,140          $ 2,013,162
        Interest-bearing checking                                      2,275,830            2,139,674
                                                                     -----------          -----------
           Subtotal checking                                           4,464,970            4,152,836

        Money market                                                   4,808,135            4,614,223
        Passbook savings                                               3,150,328            3,055,766
                                                                     -----------          -----------
           Total transaction accounts                                 12,423,433           11,822,825

     Certificates of deposit                                          10,312,058           10,618,260
                                                                     -----------          -----------
           Total customer deposits                                    22,735,491           22,441,085

     Custodial accounts                                                2,007,448            2,512,684
     Accrued interest payable                                             39,411               46,184
     Purchase accounting                                                     221                  329
                                                                     -----------          -----------
           Total retail deposits                                      24,782,571           25,000,282

     Brokered Deposits                                                   125,039              146,545
                                                                     -----------          -----------
           Total deposits                                            $24,907,610          $25,146,827
                                                                     ===========          ===========

     Checking deposits (including custodials) as a %
        of retail deposits                                                  26.1%                26.7%
     Transaction accounts (including custodials) as a %
        of retail deposits                                                  58.2%                57.3%

     Checking deposits as a % of customer deposits
        (excluding custodials)                                              19.6%                18.5%
     Transaction accounts as a % of customer deposits
        (excluding custodials)                                              54.6%                52.7%
</TABLE>

(9)  ACCRUED TERMINATION AND FACILITIES COSTS

     In  connection  with the Golden  State  Acquisition,  the Company  recorded
liabilities resulting from:

     o  branch consolidations due to duplicate facilities and

     o  employee severance  and termination benefits  due to a planned reduction
        in force.

     The merger and  integration  plan relating to the Golden State  Acquisition
was in place on September 11, 1998.  Certain of these costs were included in the
allocation of purchase price and others were recognized in net income.

     The table below  summarizes  the  activity in the  liability  for the costs
related to the plan (in thousands):

<TABLE>
<CAPTION>
                                                                         Severance and
                                                         Branch           Termination
                                                     Consolidations        Benefits            Total
                                                     --------------        --------            -----
<S>                                                     <C>                 <C>               <C>
      Balance at December 31, 2001                      $14,208             $12,500           $26,708
          Charges to liability account                     (763)                 --              (763)
                                                        -------             -------           -------
      Balance at March 31, 2002                         $13,445             $12,500           $25,945
                                                        =======             =======           =======
</TABLE>


                                    Page 15
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(10) INCOME TAXES

     During the three  months  ended March 31,  2002,  GS Holdings  recorded net
income tax expense of $91.3 million.

     During the three  months  ended March 31,  2001,  GS Holdings  recorded net
income tax expense of $36.2  million,  which included a net tax benefit of $25.8
million. In prior years, an accrued liability was established for the purpose of
satisfying  assessments  that may result from issues  arising during audits with
various state taxing  authorities.  As a result of the completion and settlement
of audits in various  state  taxing  jurisdictions,  additional  guidance on the
deductibility  of covered  asset  losses,  and the  then-current  assessment  of
exposure for tax  strategies  employed for prior years,  management  reduced its
accrued  state  tax  liability  by $39.7  million.  The  Company  also  recorded
additional  Federal tax expense of $13.9  million  due to the  reduction  of the
state tax expense.

(11) STOCKHOLDER'S EQUITY

     At March 31,  2002,  there were 1,000  shares of GS Holdings  common  stock
issued and outstanding.

     Dividends  on common stock during the three months ended March 31, 2002 and
2001 totalled $80.0 million and $50.0 million, respectively.

(12) EXECUTIVE AND STOCK COMPENSATION

     In the first  quarter of 2002 and 2001,  Golden State granted to certain of
the Company's  employees  non-qualified  stock options equivalent to 884,000 and
851,000  shares,  respectively,  of common stock at a weighted  average price of
$27.69 and $25.67 per share,  respectively,  under the Stock Plan.  These shares
generally  vest over three years in one-third  increments on the  anniversary of
the grant date. The options generally expire 10 years from the date of grant. No
compensation  cost was  recognized by the Company for these stock options during
the three months ended March 31, 2002,  in accordance  with the intrinsic  value
accounting  methodology  prescribed in APB Opinion No. 25, whereby  compensation
expense to employees is determined based upon the excess,  if any, of the market
price of the Company's  common stock at the  measurement  date over the exercise
price of the award.

     During  the  three  months  ended  March 31,  2002,  107,766  options  were
exercised and 32,680 options were  cancelled or expired under all plans.  During
the three months ended March 31, 2001,  63,516 options were exercised and 17,245
options were cancelled or expired under all plans.

     At March 31, 2002 and 2001,  options to acquire an  equivalent of 5,459,153
and 4,441,638 shares and 845,416 and 1,011,416  LTWTMs,  respectively,  remained
outstanding under all plans.

     On January 22, 2002 and 2001,  the Golden  State  awarded to certain of the
Company's employees 112,760 and 99,108 shares, respectively, of restricted stock
under the Golden State Bancorp Inc.  Omnibus Stock Plan. The market value on the
date of the award was $27.65 and  $26.38 per share,  respectively.  At March 31,
2002 and 2001, a total of 160,056 and 236,730 restricted  shares,  respectively,
were  outstanding.  These  shares  generally  vest  over two  years in  one-half
increments  on the  anniversary  of the grant  date,  based  upon the  continued
service of the employee.  During the three months ended March 31, 2002,  152,299
and 2,770 restricted shares were vested and cancelled,  respectively. During the
three  months ended March 31, 2001,  109,134  restricted  shares were vested and
none was  cancelled.  The  compensation  expense based on the stock price on the
date  of  these  awards  was  recognized   over  the  vesting  period  for  each
service-period   tranche  of  the  award  on  a  straight   line  basis  with  a
corresponding increase to additional paid-in capital. In addition,  dividends on
restricted  stock are  recorded as  compensation  expense  with a  corresponding
increase to additional paid-in capital.  During the three months ended March 31,
2002 and 2001,  $0.4 million and $0.5  million,  respectively,  in  compensation
expense was recognized related to such awards. These restricted shares have full
voting and dividend rights.


                                    Page 16
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(13) COMMITMENTS, CONTINGENCIES AND OTHER OFF-BALANCE SHEET ACTIVITIES

     CREDIT RELATED FINANCIAL INSTRUMENTS

     The  Company  is a party  to  credit  related  financial  instruments  with
off-balance  sheet risk in the normal  course of business to meet the  financing
needs of its  customers.  These  financial  instruments  include  commitments to
extend credit,  standby letters of credit and commercial letters of credit. Such
commitments  involve,  to varying degrees,  elements of credit and interest rate
risk in excess of the amount recognized in the consolidated balance sheets.

     The Company's  exposure to credit loss is  represented  by the  contractual
amount of these commitments. The Company uses the same credit policies in making
commitments as it does for on-balance sheet instruments.

     Listed below are unfunded  financial  instruments  whose  contract  amounts
represent credit risk (in thousands):

<TABLE>
<CAPTION>
                                                                    Contract Amounts at
                                                          ---------------------------------------
                                                          March 31, 2002        Decenber 31, 2001
                                                          --------------        -----------------
              COMMITMENTS TO EXTEND CREDIT
<S>                                                         <C>                     <C>
      Unutilized consumer lines                             $1,571,855              $1,146,625
      Unutilized commercial lines of credit                    291,005                 263,682
      Commercial and standby letters of credit                  29,746                  24,953
</TABLE>

     The  contracts  for the  Company's  commitments  to extend credit expire as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                  March 31, 2002
                                   ----------------------------------------------------------------------------------
                                                              Contract Amount Expiring in
                                   ----------------------------------------------------------------------------------


COMMITMENTS TO EXTEND CREDIT          TOTAL     LESS THAN 1 YEAR  1 - 3 YEARS    4 - 5 YEARS      MORE THAN 5 YEARS
----------------------------          -----     ----------------  -----------    -----------      -----------------
<S>                                <C>              <C>             <C>            <C>               <C>
Unutilized consumer lines          $1,571,855       $506,602        $14,081        $11,358           $1,039,814
Unutilized commercial
     lines of credit                  291,005        195,569         72,374          6,889               16,173
Commercial and standby
     letters of credit                 29,746         29,627            119             --                   --
</TABLE>

     The fair value of  commitments  to extend  credit were not  significant  at
either March 31, 2002 or December 31, 2001.

     Unutilized consumer lines of credit are commitments to extend credit. These
lines are either  secured or  nonsecured  and may be cancelled by the Company if
certain  conditions  of the contract are not met.  Many  consumer line of credit
customers  are not  expected to fully draw down their total lines of credit and,
therefore,  the total  contractual  amount of these  lines does not  necessarily
represent future cash requirements.

     Unutilized commitments under commercial lines of credit are commitments for
possible  future  extensions  of credit to  existing  customers.  These lines of
credit are  uncollateralized,  usually do not contain a specified  maturity date
and may not be drawn upon to the total extent to which the Company is committed.

     Commercial and standby letters of credit are conditional commitments issued
by the Company to  guarantee  the  performance  of a customer to a third  party.
Those  letters of credit are  primarily  issued to  support  public and  private
borrowing  arrangements.  All  letters of credit  issued have  expiration  dates
within three  years.  The credit risk  involved in issuing  letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Company generally holds collateral supporting those commitments in an amount
deemed to be necessary.


                                    Page 17
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     OFF-BALANCE SHEET COMMITMENTS TO ORIGINATE, PURCHASE AND SELL LOANS

     The  following is a summary of the  Company's  pipeline of loans in process
and mandatory  forward  commitments to sell loans that have not been recorded in
the Company's  balance sheet as they do not meet the  definition of a derivative
financial  instrument.  These amounts exclude commitments to extend credit which
are summarized above. For more information on derivative  instruments,  see note
14.

<TABLE>
<CAPTION>
                                                                    Contract Amounts at
                                                          ---------------------------------------
                                                          March 31, 2002        December 31, 2001
                                                          --------------        -----------------
                                                                      (in thousands)
<S>                                                         <C>                     <C>
      Commitments to originate loans                        $3,679,558              $3,937,422
      Commitments to purchase loans                          1,317,670               3,791,436
      Mandatory commitments to sell loans                      541,286                 679,182
</TABLE>

     The Company's  pipeline of loans in process includes loan  applications for
both portfolio and  non-portfolio  loans in various stages of processing that do
not meet the definition of a derivative financial instrument. Until all required
documentation  is  provided  and  underwritten,  there is no credit  risk to the
Company.  There is no interest rate risk until a rate  commitment is extended by
the Company to a borrower.  Some of these  commitments will ultimately be denied
by the Company or declined by the borrower and therefore the commitment  amounts
do not necessarily  represent  future cash  requirements.  On a daily basis, the
Company  determines  what  percentage  of the  rate-locked  pipeline of loans in
process  to hedge.  Both the  anticipated  percentage  of the  pipeline  that is
expected to fund and the inherent risk position of the portfolio are  considered
in making this determination.

     Mandatory and optional delivery forward  commitments to sell loans are used
by the Company to hedge its interest  rate  exposure  from the time a loan has a
committed rate to the time the loan is sold. These  instruments  involve varying
degrees of credit and interest rate risk.  Credit risk on these  instruments  is
controlled through credit approvals,  limits and monitoring  procedures.  To the
extent that  counterparties  are not able to fulfill  forward  commitments,  the
Company  is at risk for any  fluctuations  in the market  value of the  mortgage
loans and locked pipeline.

     OFF-BALANCE SHEET EMBEDDED DERIVATIVE OPTIONS

     The Company also has  off-balance  sheet embedded  options in borrowings as
shown in the table below (in thousands):

<TABLE>
<CAPTION>
                                                March 31, 2002                            December 31, 2001
                                      -------------------------------------     --------------------------------------
           Instruments                Notional Amount   Estimated Fair Value    Notional Amount   Estimated Fair Value
           -----------                ---------------   --------------------    ---------------   --------------------
<S>                                     <C>                   <C>                  <C>                  <C>
     Interest rate caps                 $2,000,000            $68,695              $2,000,000           $52,163
     Interest rate swaptions             1,250,000              9,741               1,250,000             9,448
</TABLE>

     The off-balance  sheet embedded options in borrowings at March 31, 2002 are
scheduled to expire as shown in the table below (in thousands):

<TABLE>
<CAPTION>
                                                           Contract Amount Expiring in:
                                 ---------------------------------------------------------------------------------
                                  Nine Months Ending
INSTRUMENTS                       December 31, 2002          2003            2004            2005          Total
-----------                       -----------------          ----            ----            ----          -----
<S>                                      <C>               <C>             <C>            <C>            <C>
Interest rate caps                       $--               $400,000        $350,000       $1,250,000     $2,000,000
Interest rate swaptions                   --                150,000              --        1,100,000      1,250,000
</TABLE>


                                    Page 18
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     COMMITMENTS AND CONTINGENCIES

     At March 31,  2002,  the Bank had pledged,  as  collateral,  securities  as
detailed below (in thousands):

<TABLE>
<CAPTION>
                                                                   Mortgage-backed    Mortgage-backed      Commercial
                                                  Securities         Securities          Securities           Paper
                                              Available for Sale  Available for Sale  Held to Maturity     Investments
                                              ------------------  ------------------  ----------------     -----------
<S>                                                 <C>               <C>                 <C>                <C>
  Provide credit enhancements for certain
      bond-financed real estate projects
      originated by Old FNB                         $25,446           $   11,409          $  7,219           $    --

  Pledged securities for principal and
      interest on Bank loan securitization               --              182,320             7,077                --

  Guarantee credit enhancements on
      multi-family bond issues and loans
      securitized by FNMA and FHLMC                   1,031              122,257            26,345                --

  Guarantee credit enhancements on
      loans transferred as part of
      securitization transactions by the Bank            --                   --                --            28,946

  Guarantee state and local agency
      deposits, and certain deposits with the
      Federal Reserve Bank                            2,683              312,126            37,386                --

  Cover the margin on interest rate swap
      agreements                                         --              142,338            55,511                --

  Secure various other obligations                       --            2,799,843           770,078                --
</TABLE>

     At March 31, 2002,  $25.0  billion in  residential  loans,  $3.7 billion in
multifamily loans and  $1.6 billion in commercial real estate loans were pledged
as collateral for FHLB advances.

     At March 31, 2002, loans receivable included  approximately $5.0 billion of
loans that had the potential to experience negative amortization.


                                    Page 19
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(14) ON-BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     INTEREST  RATE  RISK  MANAGEMENT - RISK   MANAGEMENT  POLICIES - CASH  FLOW
     HEDGING INSTRUMENTS AND FAIR VALUE HEDGING INSTRUMENTS

     The  Company  monitors  the  sensitivity  of its NPV and net  income  under
various  interest rate scenarios and manages this risk.  Quarterly,  the Company
simulates  the NPV and net income  expected  to be earned  over the next  twelve
months.  Market  interest  rates are projected at various levels to estimate the
impact on  interest-earning  assets,  interest-bearing  liabilities and mortgage
prepayment speeds (which affect the MSR asset).  The Company may use derivatives
to  reduce  the  volatility  of NPV and net  income  within  certain  ranges  of
projected  changes in interest rates. The Company evaluates the effectiveness of
a  derivative  by  measuring  the cost of such an  agreement  in relation to the
reduction in NPV and net income  volatility  within an assumed range of interest
rates.

     INTEREST  RATE RISK  MANAGEMENT - CASH FLOW HEDGING  INSTRUMENTS  - BALANCE
     SHEET HEDGES

     OBJECTIVES AND CONTEXT

     The Company uses  variable-rate debt including FHLB advances and Repos as a
source of funds for lending and investment activities and other general business
purposes. Interest payments on this debt may change if interest rates change. If
interest rates increase,  interest expense  increases.  Conversely,  if interest
rates decrease, interest expense decreases.

     Management  hedges a  significant  portion  of its  variable-rate  interest
payments to limit the effect of changing interest rates.

     STRATEGIES

     Management  enters  into  derivative   instruments   agreements  to  manage
fluctuations in cash flows resulting from interest rate risk. These  instruments
include interest rate swaps.

     The interest rate swaps change the variable-rate  cash flow exposure on the
short-term  FHLB  advances and Repos to  fixed-rate  cash flows by entering into
receive-variable,  pay-fixed interest rate swaps. Under the interest rate swaps,
the Company  receives  variable  interest rate payments and makes fixed interest
rate payments, thereby creating fixed-rate FHLB advances and Repos.

     RESULTS

     Hedges of FHLB advances and Repos were 100% effective for the quarter ended
March 31, 2002. The Company hedges the entire amount of the change in fair value
of the  liabilities  with the  entire  amount of the change in fair value of the
derivative instruments.

     Fair value  changes in interest rate swap hedging  instruments  relating to
cash flows  associated  with FHLB advances and Repos are reported in OCI.  These
amounts are then reclassified into interest expense as a yield adjustment in the
same period in which the related interest on the FHLB advances and Repos affects
earnings.  The net amount of OCI  reclassified  into interest expense during the
first   quarter  of  2002  and  2001,   was  $41.9  million  and  $5.5  million,
respectively.

     As of March  31,  2002 and  2001,  approximately  $55.2  million  and $36.7
million  of losses  reported  in OCI  related  to the  interest  rate swaps were
expected to be reclassified  into interest  expense as a yield adjustment of the
hedged FHLB  advances and Repos during the twelve month period  ending March 31,
2003 and 2002, respectively.


                                    Page 20
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     INTEREST RATE RISK  MANAGEMENT - FAIR VALUE HEDGING  INSTRUMENTS - MORTGAGE
     SERVICING RIGHTS HEDGES

     OBJECTIVES AND CONTEXT

     The Company  purchases and originates MSRs as a source of fee income.  MSRs
expose the Company to the  variability of their fair value due to changes in the
level of prepayments and other  variables.  The carrying value of MSRs are first
adjusted by the calculated change in the fair value of the MSRs being hedged and
are then recorded at the lesser of their amortized cost or fair value.

     Management limits the variability in the fair value of a portion of its MSR
asset by  hedging  the  change  in fair  value  of the  servicing  rights  asset
associated  with  fixed-rate,  non-prepayment  penalty  loans  for  which it has
recorded  MSRs.  The  Company  determines  appropriate  coverage  levels,  given
anticipated or existing interest rate levels and other market considerations, as
well as the relationship of change in this asset to other assets of the Company.

     STRATEGIES

     The Company utilizes  interest rate swaps, PO swaps,  interest rate floors,
and swaptions to hedge the change in value of the mortgage  servicing  portfolio
due to expected prepayment risk assumption changes.  Although the Company hedges
the change in value of its MSRs,  its hedge  coverage ratio does not equal 100%.
The Company keeps hedge  coverage  ratios at acceptable  risk levels,  which may
vary depending on current and expected interest rate movement.

     Interest  rate swap  agreements  are  contracts  to exchange  quarterly  or
semi-annual floating rate payments for fixed-rate payments.  The notional amount
of the  contracts,  on which the  payments  are based,  are not  exchanged.  The
primary  risks  associated  with  interest  rate  swaps are the  ability  of the
counterparties  to meet the terms of the contract and the possibility  that swap
rates may not move in an inverse  manner or in an amount equal to mortgage  rate
movements.

     PO swap agreements simulate the ownership of a PO strip, the value of which
is affected  directly by prepayment rates themselves in an inverse manner to the
servicing  rights,  which act in a manner similar to IO strips.  Under a PO swap
agreement,  the counterparty to the transaction  purchases a PO strip and places
the PO strip in a trust. The contracts  executed prior to December 31, 1998 call
for the Company to pay floating interest to the counterparty based on:

     (a)  an index tied to one month LIBOR and

     (b)  the amortized notional balance of the swap.

     The  contracts  call for the Company to receive cash from the  counterparty
based on the cash  flows  received  from the PO  strip.  For PO swap  agreements
executed  after December 31, 1998, the agreement also requires the PO swap to be
marked to market  value.  A decrease in the market value of the PO swap requires
the Company to increase the amount paid to the  counterparty  and an increase in
the market  value  requires  the  counterparty  to  increase  its payment to the
Company. The amounts to be paid and to be received are then netted together each
month.  The  nature of this  instrument  results  in  increased  cash  flows and
positive  changes in the value of the PO swap during a declining  interest  rate
environment.  This  positive  change  in the  value  of the PO  swap  is  highly
correlated to prepayment  activity.  PO swap agreements present yield curve risk
to the extent that short term interest  rates (which impact the cash amount that
the Company pays on the PO swap to the counterparty)  rise while long term rates
(which drive  prepayment  rates) stay the same. A third type of risk  associated
with PO swaps is the  ability  of the  counterparties  to meet the  terms of the
contract.


                                    Page 21
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     Interest rate floors are interest rate protection  instruments that involve
payment  from  the  seller  to  the  buyer  of an  interest  differential.  This
differential is the difference between a long-term rate (E.G.,  10-year Constant
Maturity  Swaps in 2002 and 2001) and an  agreed-upon  rate,  the  strike  rate,
applied to a notional  principal amount. By purchasing a floor, the Company will
be paid the differential on a monthly basis by a counterparty,  when the current
long-term rate falls below the strike level of the agreement.  The fair value of
interest rate floor agreements is included in derivative  assets or liabilities.
Interest  rate  floors  are  subject to basis risk  because  of  differences  in
movements  of mortgage  and LIBOR  rates,  market  volatility  and the impact of
changes in the yield curve. In addition, a credit risk associated with purchased
interest rate floor agreements is the ability of the  counterparties to meet the
terms of the contract.

     A swaption is an  over-the-counter  option that provides the right, but not
the obligation,  to enter into an interest rate swap agreement at  predetermined
terms at a  specified  time in the future.  Swaptions  are subject to basis risk
because  of  differences  in  movements  of  mortgage  and LIBOR  rates,  market
volatility  and the impact of changes in the yield curve.  In  addition,  credit
risk associated with swaptions is the ability of the  counterparties to meet the
terms of the contract.

     RESULTS

     Risk management results related to the hedging of MSRs are summarized below
and are  included in the caption  entitled  "Loan  servicing  fees,  net" in the
accompanying  consolidated statements of income (in thousands).  The net gain or
loss represents the ineffectiveness of the hedges.

<TABLE>
<CAPTION>
                                                                   Three Months Ended March 31,
                                                                   ----------------------------
                                                                      2002              2001
                                                                      ----              ----
<S>                                                                 <C>               <C>
       (Loss) gain on designated derivative contracts               $(32,497)         $ 33,597
       Increase (decrease) in value of designated MSRs                51,777           (31,192)
                                                                    --------          --------
       Net gain on derivatives used to hedge MSRs                   $ 19,280          $  2,405
                                                                    ========          ========
</TABLE>

     INTEREST RATE RISK MANAGEMENT - FAIR VALUE HEDGING  INSTRUMENTS - WAREHOUSE
     LOANS

     OBJECTIVES AND CONTEXT

     The Company,  as part of its  traditional  real estate lending  activities,
originates  fixed-rate  1-4 unit  residential  loans  for sale in the  secondary
market.  At the time of  origination,  management  identifies  loans it plans to
sell.  These  warehoused loans have been classified as loans held for sale, net,
in the consolidated balance sheet and are carried at fair market value, less the
values  associated  with  servicing (for those loans which are hedged) or at the
lower of  aggregate  amortized  cost or fair market value (for those loans which
are not hedged). These loans expose the Company to the variability of their fair
value due to changes in interest rates. If interest rates increase, the value of
the loans decreases.  Conversely,  if interest rates decrease,  the value of the
loans increases.

     Management  limits the variability of a major portion of the change in fair
value of its loans held for sale by hedging  substantially all of its warehoused
loans held for sale to third parties.

     STRATEGIES

     Management  employs  forward loan sale hedging  techniques  to minimize the
interest rate and pricing risks associated with the origination and sale of such
warehoused loans.

     The  forward  loan sales lock in the price for the sale of either  specific
loans held for sale or a generic group of loans held for sale.


                                    Page 22
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     RESULTS

     Risk  management  results  related to the  hedging of  warehouse  loans are
summarized  below  and are  included  in the  caption  entitled  "Gain  on sale,
settlement  and  transfer  of  loans,  net"  in  the  accompanying  consolidated
statements of income (in thousands):

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31,
                                                                                ----------------------------
                                                                                    2002           2001
                                                                                    ----           ----
<S>                                                                               <C>            <C>
Transition adjustment upon adoption of SFAS No. 133                               $     --       $ 3,834
Unrealized loss on designated forward loan sale commitments recognized             (13,518)       (1,680)
Increase in value of warehouse loans                                                18,710         1,405
                                                                                  --------       -------
Net hedge ineffectiveness                                                         $  5,192       $ 3,559
                                                                                  ========       =======
</TABLE>

     DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS

     PURPOSE - INTEREST RATE LOCK COMMITMENTS AND FORWARD LOAN SALE COMMITMENTS

     The Company enters into rate lock commitments to extend credit to borrowers
for generally a 30-day period for the origination and/or purchase of loans. Some
of these rate lock commitments  will ultimately  expire without being completed.
To the extent  that a loan is  ultimately  granted and the  borrower  ultimately
accepts the terms of the loan, these rate lock commitments expose the Company to
variability  in their fair value due to changes in interest  rates.  If interest
rates increase, the value of these rate lock commitments decreases.  Conversely,
if interest rates decrease, the value of these rate lock commitments increases.

     To mitigate the effect of this interest rate risk,  the Company enters into
offsetting  derivative contracts,  primarily forward loan sale commitments.  The
forward loan sale commitments lock in an interest rate and price for the sale of
loans  similar  to  the  specific  rate  lock  loan  commitments  classified  as
derivatives.   Both  the  rate  lock  commitments  and  the  forward  loan  sale
commitments are undesignated  derivatives,  and accordingly are marked to market
through earnings.

     Risk  management  results related to the  undesignated  hedging of interest
rate lock  commitments  with  undesignated  forward  loan sale  commitments  are
summarized  below  and are  included  in the  caption  entitled  "Gain  on sale,
settlement and transfer of loans, net" in the consolidated  statements of income
(in thousands):

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31,
                                                                                ----------------------------
                                                                                    2002           2001
                                                                                    ----           ----
<S>                                                                               <C>            <C>
Transition adjustment upon adoption of SFAS No. 133                               $    --        $(2,785)
Unrealized loss on undesignated forward loan sale commitments                      (1,760)          (976)
     recognized to income
Gain on undesignated interest rate loan commitments recognized to income            5,439            113
                                                                                  -------        -------
Net gain (loss) on derivatives                                                    $ 3,679        $(3,648)
                                                                                  =======        =======
</TABLE>


                                    Page 23
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


     NOTIONAL AMOUNTS OF DERIVATIVES

     Information  pertaining to the notional amounts of the Company's derivative
financial  instruments  utilized  in both MSR and  balance  sheet  hedging is as
follows  (in  thousands).   The  fair  values  of  these  derivative   financial
instruments were recorded in the Company's balance sheet in accordance with SFAS
No. 133.

<TABLE>
<CAPTION>
                                                            March 31, 2002                     December 31, 2001
                                                    ------------------------------       ------------------------------
                                                    Notional                             Notional
                                                     Amount        Credit Risk (1)        Amount        Credit Risk (1)
                                                     ------        ---------------        ------        ---------------
<S>                                                <C>                 <C>              <C>                  <C>
  Interest rate swaps -  borrowings                $ 4,639,670         $     --         $ 4,089,670          $     --
  Interest rate swaps hedging MSRs                     440,000               --           2,462,000             7,561
  PO swaps                                             337,669               --             378,928             6,411
  Interest rate floors                               1,153,000           25,179           3,054,000            78,917
  Interest rate swaptions                            4,547,000          144,781           4,111,000           183,641
  Forward loan sale commitments                      3,266,024           21,601           3,980,863            36,879
  Interest rate lock commitments                     1,574,124               --           1,870,852                --
  Other                                                 25,000               --                  --                --
                                                   -----------         --------          -----------         --------
              Total                                $15,982,487         $191,561          $19,947,313         $313,409
                                                   ===========         ========          ===========         ========
</TABLE>
-------------
  (1)  Credit  risk  represents  the  amount  of  unrealized  gain  included  in
       derivative  assets  which is  subject to  counterparty  credit  risk.  It
       reflects the effect of master  netting  agreements  and  excludes  $109.3
       million and $95.2 million cash  collateral  held by the Bank at March 31,
       2002 and December 31, 2001, respectively.

       Derivative financial instruments used for other-than-trading  purposes at
March 31, 2002 are scheduled to mature as follows (in thousands):

<TABLE>
<CAPTION>
                                                                 Notional Amounts
                           -----------------------------------------------------------------------------------------
                           Nine Months Ending
                            December 31, 2002     2003         2004        2005        2006     Thereafter     Total
                            -----------------     ----         ----        ----        ----     ----------     -----
<S>                            <C>             <C>          <C>         <C>          <C>        <C>
  Interest rate swaps -
     borrowings                $  400,000      $  715,000   $2,004,670  $  650,000   $800,000   $   70,000   $ 4,639,670
  Interest rate swaps
     hedging MSRs                      --              --           --          --         --      440,000       440,000
  PO swaps                         99,656          31,983       87,910          --         --      118,120       337,669
  Interest rate floors                 --              --           --          --    177,000      976,000     1,153,000
  Interest rate swaptions              --       2,574,000    1,562,000     411,000         --           --     4,547,000
  Forward loan sale
     commitments                3,266,024              --           --          --         --           --     3,266,024
  Interest rate lock
     commitments                1,574,124              --           --          --         --           --     1,574,124
  Other                            25,000              --           --          --         --           --        25,000
                               ----------      ----------   ----------  ----------   --------   ----------   -----------
        Total                  $5,364,804      $3,320,983   $3,654,580  $1,061,000   $977,000   $1,604,120   $15,982,487
                               ==========      ==========   ==========  ==========   ========   ==========   ===========
</TABLE>


                                    Page 24
<PAGE>

                   GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(15) RECENT ACCOUNTING PRONOUNCEMENTS

     GOODWILL AND OTHER INTANGIBLE ASSETS

     On  January  1,  2002,  the  Company  adopted  SFAS No.  142.  SFAS No. 142
supersedes APB Opinion No. 17 and establishes new accounting  standards for both
identifiable  and  unidentifiable  intangible  assets  acquired  in  a  business
combination,  including  goodwill,  but does not  address  internally  developed
intangible assets. It requires  recognition of goodwill as an asset but does not
permit  amortization  of goodwill as previously  required by APB Opinion No. 17.
Instead, goodwill is tested for impairment at a level referred to as a reporting
unit. A reporting  unit is the same level as, or one level  below,  an operating
segment (as that term is used in SFAS No. 131).

     Goodwill is tested for  impairment  annually and on an interim  basis if an
event or  circumstance  occurs  between  annual tests that might reduce the fair
value of a reporting unit below its carrying  value. An example of such an event
or circumstance may include an adverse change in the business climate or market,
a legal factor,  an action by regulators,  an introduction of competition,  or a
loss of key  personnel.  Goodwill  would  also be tested  for  impairment  on an
interim basis when:

     (a)  a  more-likely-than-not  expectation exists that a reporting unit or a
          significant portion  of a  reporting unit  will be  sold or  otherwise
          disposed of,

     (b)  a significant  asset  group  within a  reporting unit  is  tested  for
          recoverability under SFAS No. 121, or

     (c)  a  subsidiary  of  that  reporting  unit  has  recognized  a  goodwill
          impairment loss.

     The fair value of each reporting unit would not have to be recomputed every
year if the  components of the reporting unit had not changed since the previous
fair value  computation,  the previous  fair value amount  exceeded the carrying
amount of the reporting  unit by a substantial  margin,  and no evidence  exists
indicating  that the current fair value of the  reporting  unit may be less than
its current carrying amount.

     Goodwill is tested for impairment using a two-step approach. The first step
is a comparison  of the fair value of a reporting  unit to its carrying  amount,
including goodwill.  If the fair value of the reporting unit is greater than its
carrying  amount,  goodwill is not  considered  impaired  and no further work is
required.  If the fair  value of the  reporting  unit is less than its  carrying
amount,  the second step of the  impairment  test must be performed.  The second
step of the  impairment  test is a  comparison  of the  implied  fair  value  of
goodwill to its carrying  amount.  If the implied fair value of goodwill is less
than its carrying amount, goodwill is considered impaired and an impairment loss
recognized.  The  impairment  loss would be  measured as the amount by which the
carrying amount of goodwill exceeds its implied fair value.

     Acquired  intangible  assets other than goodwill are  amortized  over their
useful  economic lives and reviewed for  impairment in accordance  with SFAS No.
144.

     The impact of the adoption of SFAS No. 142 increases GAAP earnings by $13.7
million per quarter in 2002.

     ACCOUNTING BY CERTAIN ENTITIES  (INCLUDING ENTITIES WITH TRADE RECEIVABLES)
     THAT LEND TO OR FINANCE THE ACTIVITIES OF OTHERS

     In December  2001,  the AICPA issued SOP 01-6.  SOP 01-6 is  effective  for
annual and interim financial  statements issued for fiscal years beginning after
December 15, 2001. SOP 01-6 reconciles the specialized  accounting and financial
reporting  guidance  established in the existing Banks and Savings  Institutions
Guide, Audits of Credit Unions Guide, and Audits of Finance Companies Guide. The
SOP  eliminates  differences  in accounting  and  disclosure  established by the
respective  guides and carries  forward  accounting  guidance  for  transactions
determined to be unique to certain financial institutions.  The adoption of this
pronouncement  has  not  had a  material  impact  on the  Company's  results  of
operations or financial condition.


                                    Page 25
<PAGE>

ITEM 2.  MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

     FORWARD-LOOKING  STATEMENTS. THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING
STATEMENTS,  WITHIN THE MEANING OF THE PRIVATE SECURITIES  LITIGATION REFORM ACT
OF  1995,  THAT  PERTAIN  TO  OUR  FUTURE  OPERATING  RESULTS.   WORDS  SUCH  AS
"ANTICIPATE,"  "BELIEVE,"  "EXPECT," "INTEND" AND OTHER SIMILAR  EXPRESSIONS ARE
INTENDED  TO  IDENTIFY  THESE  STATEMENTS.  FORWARD-LOOKING  STATEMENTS  ARE NOT
HISTORICAL FACTS AND ARE INHERENTLY  SUBJECT TO SIGNIFICANT  BUSINESS,  ECONOMIC
AND COMPETITIVE  UNCERTAINTIES AND  CONTINGENCIES,  MANY OF WHICH ARE BEYOND OUR
CONTROL.   OUR  ACTUAL  RESULTS  COULD  DIFFER  MATERIALLY  FROM  THOSE  IN  THE
FORWARD-LOOKING  STATEMENTS DUE TO SUCH FACTORS AS (I) PORTFOLIO CONCENTRATIONS;
(II) INTEREST RATE CHANGES,  INCLUDING CHANGES IN SHORT-TERM INTEREST RATES, THE
SHAPE OF THE YIELD CURVE AND THE  TREASURY-EURODOLLAR  SPREAD;  (III) CHANGES IN
ASSET  PREPAYMENT  SPEEDS;  (IV)  CHANGES  IN  OUR  COMPETITIVE  AND  REGULATORY
ENVIRONMENTS;  AND  (V)  CHANGES  IN  THE  AVAILABILITY  OF NET  OPERATING  LOSS
CARRYOVERS AND DEFERRED TAX LIABILITIES.  SEE "BUSINESS--FACTORS THAT MAY AFFECT
FUTURE  RESULTS" IN THE COMPANY'S  ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001 FOR A DISCUSSION OF THESE FACTORS IN GREATER DETAIL. WE ASSUME
NO OBLIGATION TO UPDATE ANY OF OUR FORWARD-LOOKING STATEMENTS.

CRITICAL ACCOUNTING POLICIES

     In preparing its consolidated financial statements, the Company is required
to make  judgments  and estimates  that may have a  significant  impact upon its
financial results.  The Company's valuation of its MSRs and its determination of
the  adequacy  of its  allowance  for loan  losses are  particularly  subject to
management's judgment and estimates. The Company's accounting policies for these
two areas are discussed at length in notes 2(m) and 2(e) of the Company's  Notes
to  Consolidated  Financial  Statements  included in the  Company's  2001 Annual
Report on Form 10-K.

OVERVIEW

     GS Holdings,  formerly FN Holdings,  a wholly  owned  subsidiary  of Golden
State,  is a holding company whose only  significant  asset is all of the common
and preferred stock of the Bank.

     The  Company,   headquartered  in  San  Francisco,   California,   provides
diversified  financial  services to consumers and small businesses in California
and Nevada, primarily:

     (a)  retail  branches  that  provide   deposit  products  such  as  demand,
          transaction  and  savings  accounts,  and investment  products such as
          mutual funds, annuities and insurance; and

     (b)  mortgage banking activities,  including originating and purchasing 1-4
          unit  residential  loans  for sale or retention,  servicing  loans for
          itself  and  others  and,  to  a  lesser  extent,  originating  and/or
          purchasing  commercial real estate,  commercial and consumer loans for
          investment.

     The Company's revenues are derived from:

     (a)  interest earned on loans and securities;

     (b)  gains on  sales of  loans  and  other investments,  fees  received  in
          connection with loan servicing and securities brokerage; and

     (c)  other customer service transactions.

     Expenses  primarily  consist of interest on customer  deposit  accounts and
borrowings,  and general and administrative  expenses including compensation and
benefits,   occupancy  and  equipment,   professional  fees  and  other  general
administrative expenses.


                                    Page 26
<PAGE>

     NET INCOME

     GS Holdings  reported  net income for the three months ended March 31, 2002
of  $125.4  million,   compared  with  net  income  of  $95.6  million  for  the
corresponding  period in 2001.  The Bank's  efficiency  ratio was 47.61% for the
three months ended March 31, 2002,  compared to 52.93% for the comparable period
in 2001.

     The Company adopted SFAS No. 142 effective  January 1, 2002, which requires
that goodwill no longer be  amortized.  The effect of the adoption was to reduce
goodwill amortization by $13.8 million for the three months ended March 31, 2002
compared to the same period a year ago.  Excluding the effect of the adoption of
SFAS No. 142,  net income for the three  months  ended March 31, 2001 was $109.3
million.

     FINANCIAL CONDITION

     During the three  months ended March 31,  2002,  consolidated  total assets
decreased to $54.1 billion from $56.5 billion and total liabilities decreased to
$50.9  billion  from  $53.4  billion  at  December  31,  2001.   Mortgage-backed
securities,  loans  receivable  and loans held for sale  declined  $1.3 billion,
$631.9 million and $409.5 million, respectively,  during the three month period,
while  securities  increased $1.1 million during the same period.  This shift in
loans and mortgage-backed securities is primarily due to high repayment rates in
light of the declining  interest rate  environment.  Deposits  decreased  $239.2
million  during the three months ended March 31,  2002,  including  decreases of
$505.2 million in custodial accounts, $306.2 million in CDs and $21.5 million in
Brokered Deposits,  offset by a $600.6 million increase in transaction accounts.
Total borrowings, including securities sold under agreements to repurchase, FHLB
advances and other  borrowings,  declined  $2.1 billion  during the three months
ended March 31, 2002.

     During  the  three  months  ended  March  31,  2002,  stockholder's  equity
increased $59.6 million to $2.7 billion. The increase in stockholder's equity is
principally  the result of $125.4 million in net income for the period and $36.0
million in net unrealized  gains,  after tax, on derivatives.  These amounts are
partially offset by $80.0 million of common stock dividends and $24.5 million in
net unrealized losses, after tax, on securities available for sale.

     GS Holdings' non-performing assets, consisting of non-performing loans, net
of purchase accounting adjustments, foreclosed real estate, net, and repossessed
assets,  decreased  to $117.2  million at March 31,  2002  compared  with $124.1
million at December 31, 2001. Total non-performing assets as a percentage of the
Bank's total assets was 0.22% at both March 31, 2002 and December 31, 2001.


                                    Page 27
<PAGE>

RESULTS OF OPERATIONS

     THREE MONTHS ENDED MARCH 31, 2002 VERSUS THREE MONTHS ENDED MARCH 31, 2001

     The  following  table  shows the  Company's  consolidated  average  balance
sheets,  with the  related  interest  income,  interest  expense and the average
interest rates for the periods  presented.  Average balances are calculated on a
daily basis.

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31, 2002
                                                                 ---------------------------------------
                                                                 Average                         Average
                                                                 Balance        Interest           Rate
                                                                 -------        --------           ----
                                                                           (dollars in millions)
ASSETS
<S>                                                              <C>              <C>             <C>
Interest-earning assets (1):
     Securities and interest-bearing deposits in banks (2)       $   262          $  2             2.91%
     Mortgage-backed securities available for sale                 6,109            93             6.06
     Mortgage-backed securities held to maturity                   1,329            21             6.45
     Loans held for sale, net                                      2,698            42             6.20
     Loans receivable, net:
         Residential                                              29,014           448             6.18
         Commercial real estate                                    6,469           116             7.21
         Consumer                                                    945            15             6.30
         Automobile                                                1,939            60            12.56
         Commercial banking                                          701            10             5.72
                                                                 -------          ----
     Loans receivable, net                                        39,068           649             6.66
     FHLB stock                                                    1,390            21             6.08
                                                                 -------          ----
         Total interest-earning assets                            50,856           828             6.52%
                                                                                  ----
Noninterest-earning assets                                         4,259
                                                                 -------
         Total assets                                            $55,115
                                                                 =======

LIABILITIES, MINORITY INTEREST
AND STOCKHOLDER'S EQUITY

Interest-bearing liabilities:
     Deposits                                                    $24,811          $135             2.21%
     Securities sold under agreements to repurchase (3)            2,235            21             3.82
     Borrowings (3)                                               23,620           303             5.17
     Other                                                           161             1             1.75
                                                                 -------          ----
         Total interest-bearing liabilities                       50,827           460             3.65%
                                                                                  ----
Noninterest-bearing liabilities                                    1,176
Minority interest                                                    495
Stockholder's equity                                               2,617
                                                                 -------
         Total liabilities, minority interest
             and stockholder's equity                            $55,115
                                                                 =======
Net interest income                                                               $368
                                                                                  ====
Interest rate spread (4)                                                                           2.87%
                                                                                                  =====
Net interest margin                                                                                2.87%
                                                                                                  =====

Return on average assets                                                                           0.91%
                                                                                                  =====
Return on average common equity                                                                   19.17%
                                                                                                  =====
Return on tangible common equity                                                                  25.61%
                                                                                                  =====
Average equity to average assets                                                                   4.75%
                                                                                                  =====
</TABLE>


                                    Page 28
<PAGE>

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31, 2001
                                                                             ---------------------------------------
                                                                             Average                         Average
                                                                             Balance          Interest         Rate
                                                                             -------          --------         ----
                                                                                       (dollars in millions)
ASSETS
<S>                                                                          <C>               <C>            <C>
Interest-earning assets (1):
     Securities and interest-bearing deposits in banks (2)                   $ 1,294           $   20          6.09%
     Mortgage-backed securities available for sale                            10,769              181          6.72
     Mortgage-backed securities held to maturity                               1,740               37          8.60
     Loans held for sale, net                                                  1,136               20          7.09
     Loans receivable, net:
         Residential                                                          31,645              570          7.20
         Commercial real estate                                                6,033              128          8.51
         Consumer                                                                860               22          9.95
         Automobile                                                            1,637               46         11.40
         Commercial banking                                                      550               12          9.18
                                                                             -------           ------
     Loans receivable, net                                                    40,725              778          7.65
     FHLB stock                                                                1,379               23          6.78
                                                                             -------           ------
         Total interest-earning assets                                        57,043            1,059          7.44%
                                                                                               ------
Noninterest-earning assets                                                     3,463
                                                                             -------
         Total assets                                                        $60,506
                                                                             =======

LIABILITIES, MINORITY INTEREST
AND STOCKHOLDER'S EQUITY

Interest-bearing liabilities:
     Deposits                                                                $23,656           $  241          4.13%
     Securities sold under agreements to repurchase (3)                        4,166               68          6.52
     Borrowings (3)                                                           28,812              440          6.16
                                                                             -------           ------
         Total interest-bearing liabilities                                   56,634              749          5.34%
                                                                                               ------
Noninterest-bearing liabilities                                                1,101
Minority interest                                                                495
Stockholder's equity                                                           2,276
                                                                             -------
         Total liabilities, minority interest
              and stockholder's equity                                       $60,506
                                                                             =======
Net interest income                                                                            $  310
                                                                                               ======
Interest rate spread (4)                                                                                       2.10%
                                                                                                              =====
Net interest margin                                                                                            2.14%
                                                                                                              =====

Return on average assets                                                                                       0.63%
                                                                                                              =====
Return on average common equity                                                                               16.81%
                                                                                                              =====
Return on tangible common equity                                                                              27.77%
                                                                                                              =====
Average equity to average assets                                                                               3.76%
                                                                                                              =====
</TABLE>
----------------
(1)  Non-performing assets are included  in the average balances for the periods
     indicated.

(2)  Includes interest-bearing deposits  in other banks and securities purchased
     under agreements to resell.

(3)  Interest and average rate include the impact of interest rate swaps.

(4)  Interest rate spread represents the difference between the average rates of
     total interest-earning assets and total interest-bearing liabilities.


                                    Page 29
<PAGE>

     The following table shows the changes in interest income and expense due to
changes in rate and volume.  For each  category of  interest-earning  assets and
interest-bearing liabilities, information is provided on changes attributable to
volume (change in average  outstanding  balance multiplied by the prior period's
rate) and rate (change in average interest rate multiplied by the prior period's
volume).  Changes  attributable  to both  volume  and rate have  been  allocated
proportionately.

<TABLE>
<CAPTION>
                                                                Three Months Ended March 31, 2002 vs. 2001
                                                                        Increase (Decrease) Due to
                                                              ----------------------------------------------
                                                                   Volume           Rate            Net
                                                                   ------           ----            ---
INTEREST INCOME:                                                                (in millions)
<S>                                                                <C>             <C>             <C>
     Securities and interest-bearing deposits in banks             $  (9)          $  (9)          $ (18)
     Mortgage-backed securities available for sale                   (72)            (16)            (88)
     Mortgage-backed securities held to maturity                      (8)             (8)            (16)
     Loans held for sale, net                                         24              (2)             22
     Loans receivable, net                                           (17)           (112)           (129)
     FHLB stock                                                       --              (2)             (2)
                                                                   -----           -----           -----
          Total                                                      (82)           (149)           (231)
                                                                   -----           -----           -----

INTEREST EXPENSE:

     Deposits                                                        362            (468)           (106)
     Securities sold under agreements to repurchase                  (26)            (21)            (47)
     Borrowings                                                      (69)            (68)           (137)
     Other                                                             1              --               1
                                                                   -----           -----           -----
          Total                                                      268            (557)           (289)
                                                                   -----           -----           -----
                 Change in net interest income                     $(350)          $ 408           $  58
                                                                   =====           =====           =====
</TABLE>

     INTEREST  INCOME.  Total  interest  income was $827.7 million for the three
months ended March 31, 2002, a decrease of $231.4  million from the three months
ended March 31, 2001. Total  interest-earning  assets for the three months ended
March 31,  2002  averaged  $50.9  billion,  compared  to $57.0  billion  for the
corresponding  period  in 2001.  The  decrease  in  interest-earning  assets  is
primarily a result of a decline in mortgage-backed  securities,  principally due
to management's  decision to sharply reduce purchases,  and net loan run off, as
well as decreased securities volume. These decreases were partially offset by an
increase in loans held for sale due to heightened borrower  refinancing activity
in the declining interest rate environment.  The yield on total interest-earning
assets  during the three  months  ended March 31, 2002  decreased  to 6.52% from
7.44% for the three months ended March 31, 2001,  primarily due to the repricing
of loans and  mortgage-backed  securities  available for sale at lower rates. At
March 31, 2002, 12% of the Company's  portfolio loans were tied to COFI indices,
13% to  Treasury-based  indices and 48% were  "hybrid" ARMs - fixed for three to
ten years and then adjusting annually. Twenty-three percent of the portfolio was
fixed. The remaining 4% of the portfolio was in other adjustable-rate products.

     GS Holdings  earned $649.2 million of interest  income on loans  receivable
for the three months ended March 31, 2002, a decrease of $128.6 million from the
three months ended March 31, 2001. The average  balance of loans  receivable was
$39.1  billion for three months ended March 31, 2002,  compared to $40.7 billion
for the same period in 2001.  The  weighted  average  yield on loans  receivable
decreased  to 6.66% for the three months ended March 31, 2002 from 7.65% for the
three months ended March 31, 2001. The decrease in the average balance  reflects
the  sharp run off of  residential  loans  during a period  of high  refinancing
activity.  The decrease in the weighted  average yield reflects the repricing of
variable-rate  loans,  a decrease in the prime rate on commercial  banking loans
and  comparatively  lower  market  interest  rates during the three months ended
March 31, 2002, partially offset by a higher yield on auto loans purchased after
July 1,  2001,  which  are  recorded  on a  gross-coupon  basis,  rather  than a
credit-adjusted  yield basis.  The impact of this change on net interest  income
during the three months ended March 31, 2002 was to increase  interest income by
$8.8 million.


                                    Page 30
<PAGE>

     Loan production is detailed in the table below (in thousands):

<TABLE>
<CAPTION>
                                                            For the Quarter Ended March 31,
                                                            -------------------------------
                                                                2002               2001
                                                                ----               ----
<S>                                                          <C>                <C>
           Loans funded:
               Residential real estate loans:
                  Adjustable-rate                            $1,929,931         $1,600,331
                  Fixed-rate                                  6,295,662          2,491,377
                                                             ----------         ----------
                     Total residential real estate loans      8,225,593          4,091,708
               Commercial real estate loans                     440,572            331,380
               Commercial loans                                 295,885            226,243
               Consumer nonmortgage loans                       236,817            178,274
               Auto loans (a)                                   280,503            325,428
                                                             ----------         ----------
                     Total loans funded                      $9,479,370         $5,153,033
                                                             ==========         ==========

               Residential real estate loans purchased       $1,127,607         $1,165,495
                                                             ==========         ==========
</TABLE>

     ------------
     (a)  Approximately 50% and 46% of this volume was in prime product; 50% and
          54% in sub-prime product for the three months ended March 31, 2002 and
          2001, respectively.

     GS Holdings  earned $41.8 million of interest income on loans held for sale
for the three months ended March 31, 2002, an increase of $21.7 million from the
three months ended March 31,  2001.  The average  balance of loans held for sale
was $2.7 billion for the three months ended March 31, 2002,  an increase of $1.6
billion from the comparable  period in 2001,  primarily  attributed to increased
originations of residential  fixed-rate loans as a result of heightened borrower
refinancing  activity in the  declining  interest rate  environment.  Fixed-rate
production  for sale totalled  $6.2 billion  during the three months ended March
31,  2002,  an  increase  of 173% over the $2.3  billion  originated  during the
comparable  period in 2001.  The weighted  average  yield on loans held for sale
decreased  to 6.20% for the three months ended March 31, 2002 from 7.09% for the
three months ended March 31, 2001,  primarily due to declining  market  interest
rates.

     Interest income on mortgage-backed  securities available for sale was $92.6
million for the three months  ended March 31, 2002, a decrease of $88.4  million
from the three  months  ended  March 31,  2001.  The average  portfolio  balance
decreased  $4.7  billion,  to $6.1  billion for the three months ended March 31,
2002  compared to the same period in 2001.  The weighted  average yield on these
assets  decreased  from 6.72% for the three months ended March 31, 2001 to 6.06%
for the three  months  ended  March 31,  2002.  The  decrease  in the  volume is
primarily  attributed  to  management's  decision to sharply  reduce  purchases,
coupled  with high  repayments  and  sales of  mortgage-backed  securities.  The
decrease in the weighted  average  yield  primarily  reflects  the  repricing of
variable-rate securities at lower rates.

     Interest  income on  mortgage-backed  securities held to maturity was $21.4
million for the three months  ended March 31, 2002, a decrease of $16.0  million
from the three  months  ended  March 31,  2001.  The average  portfolio  balance
decreased  $0.4  billion,  to $1.3  billion for the three months ended March 31,
2002  compared  to the same period in 2001,  primarily  due to  repayments.  The
weighted  average yields for the three months ended March 31, 2002 and 2001 were
6.45% and 8.60%,  respectively.  The decrease in the weighted  average  yield is
primarily  the result of the  repricing  of  variable-rate  securities  at lower
rates.

     Interest income on securities and interest-bearing  deposits in other banks
was $1.9  million for the three months ended March 31, 2002, a decrease of $17.8
million  from the three  months  ended March 31,  2001.  The  average  portfolio
balance was $0.3  billion and $1.3  billion for the three months ended March 31,
2002 and 2001, respectively.  The decrease in the volume is primarily attributed
to payments and  maturities of securities.  The lower weighted  average yield of
2.91% for the three months ended March 31, 2002  compared to 6.09% for the three
months ended March 31, 2001 reflects the repricing of securities at lower rates.


                                    Page 31
<PAGE>

     Dividends on FHLB stock were $20.8 million for the three months ended March
31, 2002, a decrease of $2.2 million from the three months ended March 31, 2001.
The average  balance  outstanding  was $1.4 billion for each of the three months
ended  March 31,  2002 and 2001.  The  weighted  average  dividend on FHLB stock
declined to 6.08% for the three  months  ended March 31, 2002 from 6.78% for the
three months ended March 31, 2001.

     INTEREST  EXPENSE.  Total interest expense was $460.0 million for the three
months ended March 31, 2002, a decrease of $288.6  million from the three months
ended March 31, 2001. The decrease is primarily due to declining market interest
rates and a reduction in  borrowings  under FHLB  advances and  securities  sold
under agreements to repurchase, partially offset by additional deposits.

     Interest  expense on  deposits,  including  Brokered  Deposits,  was $135.1
million for the three months ended March 31, 2002, a decrease of $105.7  million
from the three  months  ended March 31,  2001.  The average  balance of deposits
outstanding  increased  from $23.7  billion for the three months ended March 31,
2001 to $24.8 billion for the three months ended March 31, 2002. The increase in
the average balance is primarily attributed to increases in the average balances
of money market accounts,  custodial accounts, retail customer checking accounts
and savings account balances,  partially offset by a decline in CDs. The overall
weighted average cost of deposits  decreased to 2.21% for the three months ended
March 31, 2002 from 4.13% for the three months  ended March 31, 2001,  primarily
due to declining market interest rates and a shift in the mix of deposits,  with
higher  average  balances of lower rate money  market,  custodial,  checking and
savings  accounts,  and a lower  average  balance of higher  rate CDs during the
first quarter of 2002.

     Interest expense on securities sold under agreements to repurchase totalled
$21.4  million for the three  months  ended March 31,  2002, a decrease of $46.6
million from the three months ended March 31, 2001. The average  balance of such
borrowings  for the three  months ended March 31, 2002 and 2001 was $2.2 billion
and $4.2 billion, respectively. The decrease in the average balance is primarily
the  result  of  maturities.   The  weighted  average  interest  rate  on  these
instruments  decreased  to 3.82% for the three  months ended March 31, 2002 from
6.52% for the three months ended March 31, 2001,  primarily due to maturities of
higher  fixed-rate  borrowings and the repricing of variable-rate  borrowings at
lower rates.

     Interest expense on borrowings totalled $302.8 million for the three months
ended March 31, 2002,  a decrease of $137.0  million from the three months ended
March 31, 2001. The average balance outstanding for the three months ended March
31,  2002 and 2001 was  $23.6  billion  and  $28.8  billion,  respectively.  The
weighted average interest rate on these  instruments  decreased to 5.17% for the
three  months  ended March 31, 2002 from 6.16% for the three  months ended March
31,  2001.  The  decrease  in the  average  volume is  primarily  the  result of
maturities,  while the decrease in the weighted average rate is primarily due to
declining market interest rates.

     NET INTEREST  INCOME.  Net interest income was $367.7 million for the three
months ended March 31, 2002,  an increase of $57.2 million from the three months
ended March 31, 2001. The interest rate spread  increased to 2.87% for the three
months  ended  March 31,  2002 from 2.10% for the three  months  ended March 31,
2001, primarily as a result of declining market interest rates reducing costs of
liabilities  at a  faster  rate  than  the  decline  in  the  yield  on  assets.
Lower-costing  liabilities  were the result of the  replacement  of  higher-rate
borrowings  and  deposits  with  lower-rate  borrowings  and  deposits  as these
instruments came due or were repaid.  The net interest margin increased to 2.87%
for the three  months ended March 31,  2002,  up 73 bps from the 2.14%  reported
during the first quarter of 2001.

     NONINTEREST INCOME. Total noninterest income,  consisting primarily of loan
servicing fees, customer banking fees, gain on sale,  settlement and transfer of
loans,  net, gain on sale of assets,  net and other income was $88.3 million for
the three months ended March 31, 2002, representing an increase of $29.1 million
from the three months ended March 31, 2001.


                                    Page 32
<PAGE>

     Loan  servicing  fees for the  Company,  were $(8.8)  million for the three
months ended March 31, 2002,  compared to $(26.7) million the three months ended
March 31, 2001.  The following  table details the  components of loan  servicing
fees, net (in thousands):

<TABLE>
<CAPTION>
                                                                       For the Quarter Ended March 31,
                                                                     -----------------------------------
                                                                           2002               2001
                                                                           ----               ----
<S>                                                                      <C>                <C>
       Components of loan servicing fees, net:
          Loan servicing fees                                            $125,372           $113,242
          Amortization of MSRs                                           (114,325)           (58,415)
          Pass-through Interest Expense                                   (12,035)            (6,884)
          Net gain on MSRs/MSR derivatives (SFAS No. 133)                  19,280              2,405
          MSR valuation provision                                         (27,107)           (77,000)
                                                                         --------           --------
                Total loan servicing fees, net                           $ (8,815)          $(26,652)
                                                                         ========           ========

       Portfolio run off rate (residential portfolio only)                   33.9%              20.8%
       MSR value run off rate (residential portfolio only)                   23.9               16.6
       MSR amortization rate (residential portfolio only)                    25.3               16.8
</TABLE>

     As the table  reflects,  gross loan servicing fees increased  $12.1 million
from  year-ago  levels,  which is  primarily  attributable  to the growth of the
Company's  servicing  portfolio and higher  ancillary  fees.  The  single-family
residential  loan servicing  portfolio,  excluding  loans serviced for the Bank,
increased  from $83.4  billion at March 31,  2001 to $88.5  billion at March 31,
2002. The portfolio runoff rate,  representing the percentage of the residential
portfolio that has been paid off during the year,  influences MSR  amortization,
which  increased $55.9 million in the first quarter of 2002 over the same period
in 2001. MSR  amortization was also affected by a higher average MSR balance for
the three  months  ended  March 31,  2002  compared  to the same period in 2001.
Pass-through Interest Expense increased $5.2 million or 75% year over year, also
influenced by higher runoff rates. Servicing fee income for the first quarter of
2002 and 2001  includes  net pre-tax  gains of $19.3  million and $2.4  million,
respectively,  from the impact of SFAS No. 133  pertaining to the MSR fair value
hedges. After recording these gains in accordance with SFAS No. 133, the Company
determined that the fair value of the MSR asset was less than its carrying value
and recorded pre-tax valuation provisions on the MSRs of $27.1 million and $77.0
million during the three months ended March 31, 2002 and 2001, respectively. See
"--Impact of SFAS No. 133" for further discussion.

     Customer  banking fees were $58.1  million for the three months ended March
31, 2002  compared to $51.3  million for the three  months ended March 31, 2001.
The following table details the components of customer  banking fees and service
charges (in thousands):

<TABLE>
<CAPTION>
                                                                         For the Quarter Ended March 31,
                                                                         -------------------------------
                                                                             2002               2001
                                                                             ----               ----

       Components of customer banking fees and service charges:
<S>                                                                        <C>                <C>
          Transaction account fees                                         $37,583            $33,109
          Other retail customer fees                                           712                621
          Investment sales income                                           17,380             14,762
          Insurance commissions                                              2,473              2,769
                                                                           -------            -------
                  Total customer banking fees and service charges          $58,148            $51,261
                                                                           =======            =======
</TABLE>

     The increase is primarily attributed to increased emphasis by management on
transaction  account  growth and higher fee income on mutual  fund,  annuity and
other investment and insurance  product sales through CFI. 2002 also includes an
$0.8 million  reclassification  to reflect gross  revenues  from customer  check
printing  fees  rather  than  net  revenues.   Transaction  accounts  (including
custodial  accounts) as a percentage  of retail  deposits  increased to 58.2% at
March 31, 2002, from 49.9% at March 31, 2001.


                                    Page 33
<PAGE>

     Gain on sale,  settlement and transfer of loans, net totalled $34.6 million
for the three months ended March 31, 2002, an increase of $29.7 million from the
three months ended March 31, 2001. During the three months ended March 31, 2002,
California  Federal  sold $6.9  billion  in  single-family  mortgage  loans with
servicing rights retained as part of its ongoing mortgage banking  operations at
gains  of  $21.6  million  compared  to  $1.5  billion  of  such  sales  for the
corresponding  period in 2001 at gains of $3.5 million.  The overall increase in
the volume of loans  sold and the  related  gain is a result of the  significant
increase in fixed-rate  loan  originations as a result of the overall decline in
market interest rates and increased  mortgage  refinancing.  The results in 2002
include an $8.9 million  unrealized gain on the derivative  rate locks,  forward
loan sale commitments and closed loan inventory from the application of SFAS No.
133.

     Noninterest  income for the three  months  ended March 31, 2001  included a
gain of $20.7 million on the non-monetary  exchange of Star Systems common stock
for  634,520  shares  of  Concord  EFS  common  stock as a result  of  Concord's
acquisition of Star Systems in February 2001.

     NONINTEREST  EXPENSE.  Total noninterest expense was $232.5 million for the
three months ended March 31, 2002,  an increase of $1.4 million  compared to the
three months ended March 31, 2001.  Excluding the  amortization  of goodwill and
other intangible  assets,  noninterest  expense for the three months ended March
31, 2002 was $231.4  million,  an increase of $15.2 million over the same period
in the prior year. Noninterest expense for the three months ended March 31, 2002
included  increases of $7.0  million in  compensation  expense,  $3.7 million in
other noninterest expense, $2.5 million in professional fees and $2.4 million in
occupancy  and equipment  expense.  These  increases  were  partially  offset by
decreases of $13.8 million in amortization of intangible  assets and $.4 million
in foreclosed real estate operations, net.

     Compensation and employee benefits expense was $124.8 million for the three
months ended March 31,  2002,  an increase of $7.0 million from the three months
ended March 31, 2001.  The increase is  primarily  attributed  to an increase in
staff  (from  7,797  FTE at March  31,  2001 to 8,192 at  March  31,  2002)  and
temporary  personnel,  primarily in volume-related  operating groups, as well as
normal salary adjustments.

     Professional  fees were $7.3  million for the three  months ended March 31,
2002,  an increase of $2.5  million  from the three months ended March 31, 2001,
primarily  due to an overall  increase  in legal fees  related to various  legal
cases.

     Amortization  of  intangible  assets was $1.2  million for the three months
ended March 31,  2002,  a decrease of $13.8  million from the three months ended
March 31, 2001,  due to the  adoption of SFAS No. 142 on January 1, 2002,  which
requires that goodwill no longer be amortized.

     Other  noninterest  expense  was $55.7  million in 2002  compared  to $52.0
million in 2001.  The  increase in expenses  relates to increases in a number of
operating  expense   categories,   including  retail  back  office   operations,
marketing,  data processing systems expense,  courier service,  bank charges and
insurance expense.

     PROVISION FOR INCOME TAX.  During the three months ended March 31, 2002, GS
Holdings recorded net income tax expense of $91.3 million.

     During the three  months  ended March 31,  2001,  GS Holdings  recorded net
income tax expense of $36.2  million,  which included a net tax benefit of $25.8
million. In prior years, an accrued liability was established for the purpose of
satisfying  assessments  that may result from issues  arising during audits with
various state taxing  authorities.  As a result of the completion and settlement
of audits in various  state  taxing  jurisdictions,  additional  guidance on the
deductibility  of covered  asset  losses,  and the  then-current  assessment  of
exposure for tax  strategies  employed for prior years,  management  reduced its
accrued  state  tax  liability  by $39.7  million.  The  Company  also  recorded
additional  Federal tax expense of $13.9  million  due to the  reduction  of the
state tax expense.


                                    Page 34
<PAGE>

     GS  Holdings'  effective  gross  federal  tax rate was 35% during the three
months  ended  March 31,  2002 and 48% during the three  months  ended March 31,
2001, while its federal statutory tax rate was 35% during both periods. In 2001,
the  difference  between the  effective  and  statutory  rates was primarily the
result of  additional  federal  tax  liability  recorded in  conjunction  with a
reduction  in the  accrued  state tax  liability,  and  non-deductible  goodwill
amortization.  GS Holdings' effective state tax rate was 6% and (22)% during the
three months ended March 31, 2002 and 2001,  respectively.  The effective  state
tax rate  decreased  during 2001 as a result of a reduction in the accrued state
tax liability.

     MINORITY INTEREST. During each of the three months ended March 31, 2002 and
2001,  dividends  on the REIT  Preferred  Stock  were  recorded  totalling  $6.7
million, net of income tax benefit,  which will inure to the Company as a result
of the deductibility of such dividends for income tax purposes.

     IMPACT OF SFAS NO. 133. On January 1, 2001,  the Company  adopted  SFAS No.
133. The pronouncement impacted several other areas of the financial statements.
The table  summarizes  the  activity  during the first  quarter of 2002 and 2001
below (debit/(credit); in thousands):

<TABLE>
<CAPTION>
                                            Assets                       Liabilities and Equity             Pre-tax Earnings
                                --------------------------------    ---------------------------------   -----------------------
                                 Loans                                             Taxes-                  Loan    (Gain)/Loss
                                  Held    Residential Derivative     Derivative     Other                Servicing  on Sale of
                                For Sale     MSRs       Assets      Liabilities  Liabilities    OCI      Fees, Net    Loans
                                --------     ----       ------      -----------  -----------    ---      ---------    -----
<S>                             <C>       <C>         <C>            <C>          <C>        <C>         <C>         <C>
Fair value adjustments:
   MSRs and MSR hedges          $    --   $  51,777   $ (29,319)     $  (3,178)   $     --   $     --    $(19,280)   $    --
   Warehouse loans and
      pipeline hedges            18,710          --     (15,278)         5,439          --         --          --     (8,871)
   Cash flow (balance sheet)
      hedges - swaps                 --          --          --         60,849     (24,858)   (35,991)         --         --
                                -------   ---------   ---------      ---------    --------   --------    --------    -------
Fair Value Adjustments -
   First Quarter 2002            18,710      51,777     (44,597)        63,110     (24,858)   (35,991)    (19,280)    (8,871)

Other First Quarter 2002
   activity:
   MSR hedge additions               --          --     416,887             --          --         --          --         --
   MSR hedge sales and
      maturities                     --          --    (508,630)        33,622          --         --          --         --
   MSR hedge receipts
      and payments                   --          --     (18,383)        (1,559)         --         --          --         --
                                -------   ---------   ---------      ---------    --------   --------    --------    -------
Other Activity -
   First Quarter 2002                --          --    (110,126)        32,063          --         --          --         --
                                -------   ---------   ---------      ---------    --------   --------    --------    -------

Total Impact from
   SFAS No. 133 -
   First Quarter 2002           $18,710   $  51,777   $(154,723)     $  95,173    $(24,858)  $(35,991)   $(19,280)   $(8,871)
                                =======   =========   =========      =========    ========   ========    ========    =======

Total Impact from
   SFAS No. 133 - First
   Quarter 2001                 $ 5,239   $(196,080)  $ 204,663      $(151,733)   $ 56,523   $ 81,844    $ (2,405)   $    89
                                =======   =========   =========      =========    ========   ========    ========    =======
</TABLE>


                                    Page 35
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     CALIFORNIA FEDERAL GOODWILL LITIGATION

     The  Bank  is the  plaintiff  in a  lawsuit  against  the  Government,  the
California  Federal  Goodwill  Litigation.  In the California  Federal  Goodwill
Litigation,  the Bank alleged,  among other things, that the Government breached
certain  contractual  commitments  regarding the  computation  of its regulatory
capital for which the Bank sought  damages and  restitution.  The Bank's  claims
arose from changes,  mandated by FIRREA, with respect to the rules for computing
Old California Federal's regulatory capital.

     In late 1997, a Claims Court Judge ruled in favor of the Bank's  motion for
partial summary judgment as to the Government's liability to the Bank for breach
of contract,  and a formal order in that regard was subsequently issued. In late
1998, a second Claims Court Judge ruled that  California  Federal could not meet
its burden for proving lost profits damages and ordered that the case proceed to
trial on the damage issue of restitution and reliance.

     On April 16,  1999,  the Claims  Court  issued its  decision on the damages
claim against the  Government in the  California  Federal  Goodwill  Litigation,
ruling that the Government must compensate the Bank in the sum of $23.4 million.
The summary  judgment  liability  decision by the first  Claims  Court Judge was
appealed by the  Government,  and the damage  award by the second  Claims  Court
Judge was appealed by the Bank.

     On April 3, 2001,  the Court of Appeals for the Federal  Circuit upheld the
summary judgment liability decision and ruled that California Federal be allowed
to present  evidence  regarding  damages incurred under the lost profits theory.
The case has been  remanded  back to the Claims Court for a damages  trial under
the lost profits theory,  and trial is currently  expected to begin in the first
week of September 2002. The Bank intends to vigorously  pursue its claim against
the Government.

     GLENDALE GOODWILL LITIGATION

     By virtue of the Glen Fed Merger,  the Bank is also a plaintiff  in a claim
against the United States in a second lawsuit, the Glendale Goodwill Litigation.
In the  Glendale  Goodwill  Litigation,  Glendale  Federal  sued the  Government
contending that FIRREA's treatment of supervisory  goodwill constituted a breach
by the  Government of its 1981 contract with the Bank,  under which the Bank had
merged with a Florida thrift and was permitted to include the goodwill resulting
from the merger in its  regulatory  capital.  In 1992, the Claims Court found in
favor of Glendale Federal's  position,  ruling that the Government  breached its
express contractual commitment to permit Glendale Federal to include supervisory
goodwill in its regulatory capital and that Glendale Federal is entitled to seek
financial compensation.

     The trial began in February 1997 and concluded in September  1998. On April
9,  1999,  the  Claims  Court  issued  its  decision  in the  Glendale  Goodwill
Litigation,  ruling that the Government  must  compensate the Bank in the sum of
$908.9 million. This decision was appealed by the Government and the Bank.

     On February 16, 2001, the Court of Appeals for the Federal  Circuit vacated
the trial court's award of damages and remanded the case back to the trial court
for determination of total reliance damages to which the Bank might be entitled.
Oral argument  before the trial court on that issue took place on June 26, 2001,
and the Bank is awaiting  the Claims  Court's  decision.  The Bank  continues to
vigorously pursue its case for damages against the Government.


                                    Page 36
<PAGE>

     BARTOLD V. GLENDALE FEDERAL BANK ET AL.

     On September  18,  1995,  four  plaintiffs  commenced an action in Superior
Court of California,  County of Orange,  alleging that the  defendants  Glendale
Federal, to which the Bank is a successor by merger, and Verdugo, a wholly owned
subsidiary  of the Bank,  failed  timely to record their release of the mortgage
interest  following payoffs of residential  mortgage loans and, in at least some
instances,  improperly  required  borrowers to pay fees for these releases.  The
plaintiffs'  complaint  seeks  relief  for  the  named  plaintiffs,  as  well as
purportedly for all others  similarly  situated in California and throughout the
United  States and the  general  public,  on causes of action for  violation  of
California Civil Code Section 2941 and California  Business and Professions Code
Section 17200, breach of contract,  fraud and unjust enrichment.  The plaintiffs
seek statutory damages of $300 for each supposed,  separate violation of Section
2941 by Glendale Federal and Verdugo, restitution,  punitive damages, injunctive
relief and attorney's fees, among other things.

     In  October  1997,  the  trial  court  granted  summary  judgment  for  the
defendants.  In September  2000, the California  Court of Appeals  reversed this
decision and remanded for further proceedings,  including further development of
class  certification  issues.  On March 2,  2001,  the trial  court  held that a
California class had been certified.  On June 7, 2001, the trial court dismissed
two of the  four  causes  of  action  against  the  Bank,  holding  that the OTS
pre-empted  the  California  courts from  regulating  the Bank's  procedures for
reconveying deeds. The Bank believes that it has additional meritorious defenses
to plaintiffs' claims and intends to continue to contest the remaining claims in
the lawsuit vigorously.

     OTHER LITIGATION

     In  addition  to  the  matters   described   above,  GS  Holdings  and  its
subsidiaries  are involved in other legal  proceedings and claims  incidental to
the normal conduct of their  business.  Although it is impossible to predict the
outcome of any  outstanding  legal  proceedings,  management  believes that such
legal proceedings and claims,  individually or in the aggregate, will not have a
material effect on GS Holdings or the Bank.

ITEM 5.  OTHER INFORMATION.

     None.

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

     (a)  Exhibits:

          3.1  Certificate  of  Incorporation  of  the  Registrant,  as amended.
               (Incorporated  by reference  to Exhibit 3.1  to  the Registrant's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               1998.)

          3.2  By-laws  of   the  Registrant,  as   amended.  (Incorporated   by
               reference to Exhibit 3.2 of the  Registrant's Quarterly Report on
               Form 10-Q for the quarter ended September 30, 1998.)

     (b)  Reports on Form 8-K:

          None.


                                    Page 37
<PAGE>

                            GLOSSARY OF DEFINED TERMS

AICPA - American Institute of Certified Public Accountants
APB - Accounting Principles Board
APB OPINION NO. 17 - Intangible Assets
APB OPINION NO. 25 - Accounting for Stock Issued to Employees
ARM - Adjustable-rate mortgage
BANK - California Federal Bank
bps - basis points
BROKERED  DEPOSITS - Issued CDs through direct placement programs and national
       investment banking firms
CAL FED ACQUISITION - Agreement and Plan of Merger among FN Holdings, Cal Fed
       Bancorp Inc. and  California Federal Bank, A Federal Savings Bank.  FN
       Holdings acquired 100% of the outstanding stock of Cal Fed and Old
       California  Federal, and First Nationwide merged with and into Old
       California Federal in January 1997.
CALIFORNIA FEDERAL - California Federal Bank
CALIFORNIA  FEDERAL  GOODWILL  LITIGATION  -  California  Federal Bank v. United
       States, Civil Action 92-138
CD - Certificate of deposit
CFI - Cal Fed Investments
CLAIMS COURT - United States Court of Federal Claims
COFI - Cost of Funds Index (tied to the FHLB's 11th District cost of funds)
COMPANY - Golden State Holdings Inc.
EITF - Emerging Issues Task Force
EITF NO. 99-20 - Recognition of Interest Income  and Impairment on Purchased and
       Retained Beneficial Interests in Securitized Financial Assets
EPS - earnings per share
FASB - Financial Accounting Standards Board
FDICIA - Federal Deposit Insurance Corporation Improvement Act
FHLB - Federal Home Loan Bank of San Francisco
FHLB SYSTEM - Federal Home Loan Bank System
FIRREA - Financial Institutions Reform, Recovery and Enforcement Act of 1989 and
       its implementing regulations.
FN HOLDINGS - First Nationwide  Holdings Inc.
FN  HOLDINGS  ASSET  TRANSFER - FN   Holdings  contributed  all  of  its  assets
       (including all  of the  common  stock  of the  Bank) to  GS  Holdings  in
       September 1998.
FN HOLDINGS  NOTES - FN  Holdings 12 1/4%  Senior Notes, the  FN Holdings 9 1/8%
       Senior Sub Notes and the FN Holdings 10 5/8% Notes, collectively
FNMC - First Nationwide Mortgage Corporation
FTE - Full-time equivalent staff
GAAP - accounting principles  generally accepted in the United States of America
GLEN FED MERGER - Glendale  Federal Bank merged with and into the Bank
GLENDALE FEDERAL - Glendale Federal Bank, Federal Savings Bank
GLENDALE GOODWILL LITIGATION - Glendale  Federal  Bank  v.  United  States,  No.
       90-772C
GNMA - Government National Mortgage Association
GOLDEN STATE - Golden State Bancorp Inc.
GOLDEN STATE  ACQUISITION - FN Holdings Asset Transfer,  Holding Company Mergers
       and Glen Fed Merger, collectively
GOVERNMENT - United States Government
GS HOLDINGS - Golden State Holdings Inc.
HOLDING COMPANY  MERGERS - FN  Holdings   merged  with  and  into  Golden  State
       Financial  Corporation,  which owned all of the common  stock of Glendale
       Federal.
HUNTER'S GLEN - Hunter's Glen/Ford, Ltd.
IO - Interest  only
IRS - Internal Revenue  Service
LIBOR - London Interbank Offered Rate
LTWTM - Litigation Tracking Warrants
MSR - Mortgage servicing rights


                                    Page 38
<PAGE>

                      GLOSSARY OF DEFINED TERMS (CONTINUED)

NOTIONAL AMOUNT - the amount on which calculations, payments, and the value of a
       derivative  is based.  Notional  amounts do not  represent  direct credit
       exposures.
NPV - Net portfolio value
OCI - Other comprehensive income
OLD CALIFORNIA  FEDERAL - California  Federal Bank, A Federal Savings Bank prior
       to the Cal Fed Acquisition.
OTS - Office of Thrift Supervision
PASS-THROUGH  INTEREST EXPENSE - represents  interest  that  FNMC  pays  to  the
       investor(s)  for  loans serviced  by FNMC,  which are  paid  off  by  the
       borrower(s) before the end of the month.   FNMC picks up the shortfall of
       interest on the respective loans as a result of the contractual agreement
       between the servicer (FNMC) and the investor(s) (I. E., GNMA)
PO - Principal only
PREFERRED CAPITAL CORPORATION - California Federal Preferred Capital Corporation
REIT - Real Estate Investment Trust
REIT PREFERRED STOCK - 9 1/8% Noncumulative Exchangeable Preferred Stock, Series
       A, issued by California Federal  Preferred Capital Corporation in January
       1996.
REPOS - short-term securities sold under agreements to repurchase
SEC - Securities and Exchange Commission
SFAS - Statement of Financial Accounting Standards
SFAS NO. 115 - Accounting for Certain Investments  in Debt and Equity Securities
SFAS NO. 121 - Accounting for the  Impairment of Long-lived Assets and for Long-
       lived Assets to be Disposed of
SFAS  NO.  131 - Disclosures  about  Segments   of  an  Enterprise  and  Related
       Information
SFAS NO. 133 - Accounting for Derivative Instruments and Hedging Activities
SFAS NO. 142 - Accounting for Goodwill and Intangible Assets
SFAS NO. 144 - Accounting for the Impairment or Disposal of Long-Lived Assets
SOP - Statement of Position
SOP  01-6 - Accounting  by  Certain  Entities  (Including  Entities  With  Trade
       Receivables) That Lend to or Finance the Activities of Others
STOCK PLAN - Golden State Bancorp Inc. Omnibus Stock Plan
VERDUGO - Verdugo Trustee Service Corporation


                                    Page 39
<PAGE>

                                   SIGNATURES

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




                                    Golden State Holdings Inc.




                                     /S/ Richard H. Terzian
                                    --------------------------------------------
                                    By:  Richard H. Terzian
                                         Executive Vice President
                                         and Chief Financial Officer
                                         (Principal Financial Officer)

                                     /S/ Renee Nichols Tucei
                                    --------------------------------------------
                                    By:  Renee Nichols Tucei
                                         Executive Vice President and Controller
                                         (Principal Accounting Officer)



May 8, 2002