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, 2001
                                    --------------------------------------------

                                       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:                            333-64597
                               -------------------------------------------------

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

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



  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, 2001: 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 2001 REPORT ON FORM 10-Q
                                TABLE OF CONTENTS



PART I.          FINANCIAL INFORMATION                                      Page
                 ---------------------                                      ----

     Item 1.     Consolidated Financial Statements

                 Unaudited Consolidated Balance Sheets
                 March 31, 2001 and December 31, 2000........................3

                 Unaudited Consolidated Statements of Income
                 Three Months Ended March 31, 2001 and 2000..................4

                 Unaudited Consolidated Statements of Comprehensive Income
                 Three Months Ended March 31, 2001 and 2000..................5

                 Unaudited Consolidated Statement of Stockholder's Equity
                 Three Months Ended March 31, 2001...........................6

                 Unaudited Consolidated Statements of Cash Flows
                 Three Months Ended March 31, 2001 and 2000..................7

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

     Item 2.     Management's Narrative Analysis of
                 Results of Operations......................................18

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


PART II.         OTHER INFORMATION
                 -----------------

     Item 1.     Legal Proceedings..........................................27

     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..........................................29

     Item 6.     Exhibits and Reports on Form 8-K...........................29

     Glossary of Defined Terms..............................................30

     Signatures.............................................................32

     *        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, 2001.

                                     Page 2
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2001 AND DECEMBER 31, 2000
                                   (Unaudited)
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                               March 31,         December 31,
                                          Assets                                 2001                2000
                                          ------                            --------------     ---------------

    <S>                                                                        <C>                <C>
    Cash and due from banks                                                    $   832,457        $   697,441
    Interest-bearing deposits in other banks                                            98                123
    Short-term investment securities                                                83,006             85,510
                                                                               -----------        -----------
           Cash and cash equivalents                                               915,561            783,074

    Securities available for sale, at fair value                                   482,409            637,070
    Securities held to maturity                                                    480,050            587,503
    Mortgage-backed securities available for sale, at fair value                10,691,405          9,866,823
    Mortgage-backed securities held to maturity                                  1,713,837          2,886,612
    Loans held for sale, net                                                     1,682,213            845,763
    Loans receivable, net                                                       40,893,892         39,592,814
    Investment in FHLB System                                                    1,383,740          1,361,066
    Premises and equipment, net                                                    290,270            290,899
    Foreclosed real estate, net                                                     18,451             19,080
    Accrued interest receivable                                                    355,797            364,414
    Intangible assets (net of accumulated amortization of $261,090
         at March 31, 2001 and $246,150 at December 31, 2000)                      676,348            691,288
    Mortgage servicing rights, net of valuation allowance                        1,328,346          1,559,323
    Derivative assets                                                              204,663                 --
    Other assets                                                                   648,297          1,029,082
                                                                               -----------        -----------
             Total assets                                                      $61,765,279        $60,514,811
                                                                               ===========        ===========


             Liabilities, Minority Interest and Stockholder's Equity
             -------------------------------------------------------

    Deposits                                                                   $24,475,275        $23,462,372
    Securities sold under agreements to repurchase                               4,060,445          4,511,309
    Borrowings                                                                  29,119,920         28,800,557
    Derivative liabilities                                                         151,733                 --
    Other liabilities                                                            1,092,826            942,397
                                                                               -----------        -----------
             Total liabilities                                                  58,900,199         57,716,635
                                                                               -----------        -----------

    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                                              1,567,324          1,564,821
         Accumulated other comprehensive loss                                      (72,639)           (91,405)
         Retained earnings (substantially restricted)                              870,394            824,759
                                                                               -----------        -----------
             Total stockholder's equity                                          2,365,080          2,298,176
                                                                               -----------        -----------
             Total liabilities, minority interest and stockholder's equity     $61,765,279        $60,514,811
                                                                               ===========        ===========
</TABLE>

    See accompanying notes to unaudited consolidated financial statements.

                                     Page 3
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                               Three Months Ended March 31,
                                                                                              -----------------------------
                                                                                                 2001                2000
                                                                                              -----------          --------
<S>                                                                                           <C>                  <C>
Interest income:
     Loans receivable                                                                         $   777,790          $646,193
     Mortgage-backed securities available for sale                                                180,983           229,062
     Mortgage-backed securities held to maturity                                                   37,411            39,379
     Loans held for sale                                                                           20,127            13,318
     Securities available for sale                                                                 10,780            19,093
     Securities held to maturity                                                                    8,501             2,061
     Interest-bearing deposits in other banks                                                         419               401
     Dividends on FHLB stock                                                                       23,046            17,147
                                                                                              -----------          --------
         Total interest income                                                                  1,059,057           966,654
                                                                                              -----------          --------

Interest expense:
     Deposits                                                                                     240,837           218,792
     Securities sold under agreements to repurchase                                                67,945            82,906
     Borrowings                                                                                   439,803           377,853
                                                                                              -----------          --------
         Total interest expense                                                                   748,585           679,551
                                                                                              -----------          --------
         Net interest income                                                                      310,472           287,103
Provision for loan losses                                                                              --                --
                                                                                              -----------          --------
         Net interest income after provision for loan losses                                      310,472           287,103
                                                                                              -----------          --------

Noninterest income:
     Loan servicing fees, net                                                                     (26,652)           42,792
     Customer banking fees and service charges                                                     51,261            48,659
     Gain on sale, settlement and transfer of loans, net                                            4,924             6,662
     Gain on sale of assets, net                                                                      439               419
     Gain on non-monetary exchange of Star Systems common stock                                    20,671                --
     Other income                                                                                   8,588             9,566
                                                                                              -----------          --------
         Total noninterest income                                                                  59,231           108,098
                                                                                              -----------          --------

Noninterest expense:
     Compensation and employee benefits                                                           117,735           107,754
     Occupancy and equipment                                                                       37,850            37,371
     Professional fees                                                                              4,848             8,756
     Loan expense                                                                                   4,202             3,960
     Foreclosed real estate operations, net                                                          (398)           (2,233)
     Amortization of intangible assets                                                             14,940            16,443
     Other expense                                                                                 51,961            51,198
                                                                                              -----------          --------
         Total noninterest expense                                                                231,138           223,249
                                                                                              -----------          --------

Income before income taxes,  minority interest and extraordinary items                            138,565           171,952
Income tax expense (benefit)                                                                       36,183           (82,947)
Minority interest: other                                                                            6,747             6,599
                                                                                              -----------          --------
         Income before extraordinary items                                                         95,635           248,300
Extraordinary items - gains on early extinguishment of debt,
     net of applicable taxes of $879 in 2000                                                           --             1,206
                                                                                              -----------          --------
         Net income                                                                           $    95,635          $249,506
                                                                                              ===========          ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                     Page 4
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                               Three Months Ended March 31,
                                                                              -----------------------------
                                                                                 2001               2000
                                                                               --------           --------
    <S>                                                                        <C>                <C>
    Net income                                                                 $ 95,635           $249,506

    Other comprehensive income (loss), net of tax:
        Unrealized holding gain (loss) on securities available for sale:
           Unrealized holding gain (loss) arising during the period              99,215            (20,545)
           Less: reclassification adjustment for (gain) loss included
               in net income                                                        (82)                --
                                                                               --------           --------
                                                                                 99,133            (20,545)
        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 $25,689                                   (37,197)                --
                                                                               --------           --------

     Other comprehensive income (loss)                                           18,766            (20,545)
                                                                               --------           --------

     Comprehensive income                                                      $114,401           $228,961
                                                                               ========           ========

</TABLE>

    See accompanying notes to unaudited consolidated financial statements.

                                     Page 5
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                        THREE MONTHS ENDED MARCH 31, 2001
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>


                                                               Additional        Accumulated Other Comprehensive Loss
                                                  Common        Paid-in          ------------------------------------
                                                   Stock        Capital       Securities       Derivatives         Total
                                                   -----        -------       ----------       -----------         -----
<S>                                                 <C>       <C>             <C>              <C>               <C>
Balance at December 31, 2000                        $1        $1,564,821      $(91,405)        $     --          $(91,405)

Net income                                          --                --            --               --                --
Change in net unrealized holding gain (loss)
    on securities available for sale                --                --        68,759               --            68,759
Change in net unrealized holding loss
    on derivatives                                  --                --            --          (37,197)          (37,197)
Amortization of unrealized holding
    loss on securities held to maturity             --                --         1,477               --             1,477
Unrealized loss on securities reclassified
    to available-for-sale, net of tax               --                --        30,374               --            30,374
Transition adjustment upon adoption
    of SFAS No. 133                                 --                --            --          (44,647)          (44,647)
Dividends to parent                                 --                --            --               --                --
Impact of Golden State restricted
    common stock                                    --             2,117            --               --                --
Tax benefits on exercise of stock
    options                                         --               386            --               --                --
                                                    --        ----------      --------         ---------         --------

Balance at March 31, 2001                           $1        $1,567,324      $  9,205         $(81,844)         $(72,639)
                                                    ==        ==========      ========         =========         =========
</TABLE>

<TABLE>
<CAPTION>
                                                   Retained
                                                   Earnings             Total
                                                (Substantially      Stockholder's
                                                  Restricted)          Equity
                                                 -----------           ------
<S>                                               <C>                <C>
Balance at December 31, 2000                      $824,759           $2,298,176

Net income                                          95,635               95,635
Change in net unrealized holding gain (loss)
    on securities available for sale                    --               68,759
Change in net unrealized holding loss
    on derivatives                                      --              (37,197)
Amortization of unrealized holding
    loss on securities held to maturity                 --                1,477
Unrealized loss on securities reclassified
    to available-for-sale, net of tax                   --               30,374
Transition adjustment upon adoption
    of SFAS No. 133                                     --              (44,647)
Dividends to parent                                (50,000)             (50,000)
Impact of Golden State restricted
    common stock                                        --                2,117
Tax benefits on exercise of stock
    options                                             --                  386
                                                  --------           ----------

Balance at March 31, 2001                         $870,394           $2,365,080
                                                  ========           ==========

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, 2001 AND 2000
                                  (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>


                                                                                     Three Months Ended March 31,
                                                                                   ---------------------------------
                                                                                      2001                  2000
                                                                                   -----------           -----------
  <S>                                                                              <C>                   <C>
  Cash flows from operating activities:
  Net income                                                                       $    95,635           $   249,506
  Adjustments to reconcile net income to net cash provided by
     operating activities:
     Amortization of intangible assets                                                  14,940                16,443
     Amortization (accretion) of purchase accounting premiums and
         discounts, net                                                                  1,546                  (667)
     Accretion of discount on borrowings                                                   285                   265
     Amortization of mortgage servicing rights                                          58,415                46,667
     Gain on sale of assets, net                                                          (439)                 (419)
     Gain on sale of foreclosed real estate, net                                          (855)               (4,057)
     Loss on sale, settlement and transfer of loans, net                                32,766                18,926
     Capitalization of originated mortgage servicing rights                            (37,690)              (25,588)
     Extraordinary items - gains on early extinguishment of debt, net                       --                (1,206)
     Depreciation and amortization of premises and equipment                            12,562                11,947
     Amortization of deferred debt issuance costs                                        1,836                 1,837
     FHLB stock dividends                                                              (23,046)              (17,147)
     Purchases and originations of loans held for sale                              (2,289,629)           (1,037,884)
     Net proceeds from the sale of loans held for sale                               1,420,877             1,047,089
     Change in fair value of MSRs/MSR derivatives                                       (2,405)                   --
     MSR valuation provision                                                            77,000                    --
     Decrease (increase) in other assets                                               294,716              (208,943)
     Decrease (increase) in accrued interest receivable                                  8,617                (9,183)
     Increase in other liabilities                                                     216,444               137,490
     Amortization of deferred compensation expense-Golden State
         restricted common stock                                                           479                   560
     Gain on non-monetary exchange of Star Systems common stock                        (20,671)                   --
     Reduction in accrued liability for state income taxes                             (25,805)                   --
     Minority interest                                                                   6,747                 6,599
                                                                                   -----------           -----------
         Net cash (used) provided by operating activities                          $  (157,675)          $   232,235
                                                                                   -----------           -----------

</TABLE>
                                                                     (Continued)



  See accompanying notes to unaudited consolidated financial statements.

                                     Page 7
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                        Three Months Ended March 31,
                                                                                      --------------------------------
                                                                                          2001                2000
                                                                                      -------------       ------------
  <S>                                                                                 <C>                 <C>
  Cash flows from investing activities:
       Downey Acquisition                                                             $          --       $   (379,314)
       Purchases of securities available for sale                                              (155)            (5,779)
       Proceeds from maturities of securities available for sale                            269,891              8,500
       Purchases of securities held to maturity                                              (1,386)              (652)
       Principal payments and proceeds from maturities
          of securities held to maturity                                                     26,353             21,323
       Purchases of mortgage-backed securities available for sale                           (41,198)           (38,850)
       Principal payments on mortgage-backed securities available for sale                  441,524            455,672
       Principal payments on mortgage-backed securities held to maturity                    104,849             98,975
       Proceeds from sales of loans                                                           5,487              2,746
       Net decrease (increase) in loans receivable                                          177,330         (1,370,035)
       Purchases of loans receivable                                                     (1,486,453)          (457,486)
       Purchases of FHLB stock, net                                                              --            (74,820)
       Purchases of premises and equipment                                                  (12,364)            (6,840)
       Proceeds from disposal of premises and equipment                                       2,546                532
       Proceeds from sales of foreclosed real estate                                          7,211             29,146
       Purchases of mortgage servicing rights                                               (62,709)           (96,664)
       Hedge receipts                                                                       (10,005)            (3,465)
       Purchases of derivatives                                                            (121,967)           (11,140)
       Sales of derivatives                                                                 133,712             11,875
                                                                                      -------------       ------------
          Net cash used in investing activities                                            (567,334)        (1,816,276)
                                                                                      -------------       ------------

  Cash flows from financing activities:
       Net increase in deposits                                                           1,013,110              7,997
       Proceeds from additional borrowings                                               24,400,121          8,656,278
       Principal payments on borrowings                                                 (24,048,510)        (6,892,128)
       Net decrease in securities sold under agreements to repurchase                      (450,864)          (128,145)
       Dividends on common stock                                                            (50,000)            (5,000)
       Dividends paid to minority stockholders of subsidiary, net of taxes                   (6,747)            (6,599)
       Tax benefit on exercise of stock options                                                 386                 --
                                                                                      -------------       ------------
          Net cash provided by financing activities                                         857,496          1,632,403
                                                                                      -------------       ------------

  Net change in cash and cash equivalents                                                   132,487             48,362
  Cash and cash equivalents at beginning of period                                          783,074            592,878
                                                                                      -------------       ------------
  Cash and cash equivalents at end of period                                          $     915,561       $    641,240
                                                                                      =============       ============


</TABLE>


  See accompanying notes to unaudited consolidated financial statements.

                                     Page 8
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(1)    Basis of Presentation
       ---------------------

       The  accompanying   unaudited   consolidated  financial  statements  were
prepared in accordance with generally accepted accounting principles for interim
financial  information and the  requirements  of Regulation S-X,  Article 10 and
therefore  do not include  all  disclosures  necessary  for  complete  financial
statements.  In the opinion of management,  all adjustments  have been made that
are necessary for a fair  presentation of the financial  position and results of
operations  and  cash  flows  as of and  for the  periods  presented.  All  such
adjustments are of a normal recurring nature.  The results of operations for the
three months ended March 31, 2001 are not necessarily  indicative of the results
that may be expected  for the entire  fiscal year or any other  interim  period.
Certain  amounts  for  the  three-month  period  in the  prior  year  have  been
reclassified to conform to the current period's presentation.

       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 and  therefore,  activities for the  consolidated  entity are primarily
carried out by the Bank and its operating subsidiaries.

       The accompanying  unaudited consolidated financial statements include the
accounts of GS  Holdings,  the Bank and the Bank's  wholly  owned  subsidiaries.
Unless the context  otherwise  indicates,  "GS Holdings" or "Company"  refers to
Golden State Holdings Inc. as the surviving entity after the consummation of the
Golden State  Acquisition,  and as the surviving  entity in the GS Escrow Merger
for periods after the GS Escrow Merger. On September 11, 1998,  Glendale Federal
merged  with and  into the Bank  pursuant  to the Glen Fed  Merger.  Unless  the
context otherwise indicates, "California Federal" or "Bank" refers to California
Federal  Bank as the  surviving  entity after the  consummation  of the Glen Fed
Merger.

       Minority  interest  represents  amounts  attributable  to  (a)  the  REIT
Preferred Stock of California  Federal Preferred Capital  Corporation,  a wholly
owned  subsidiary of the Bank, and (b) that portion of  stockholder's  equity of
Auto One, a subsidiary of the Bank, attributable to 20% of its common stock.

       All  significant   intercompany   balances  and  transactions  have  been
eliminated  in  consolidation.  These  financial  statements  should  be read in
conjunction 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,
2000. A glossary of defined terms begins on page 30 of this document.  All terms
used but not  defined  elsewhere  herein have  meanings  ascribed to them in the
Company's Annual Report on Form 10-K.

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

(2)    Acquisitions and Divestitures
       -----------------------------

       On February 29, 2000, Auto One acquired Downey Auto Finance  Corporation,
a subsidiary of Downey Savings and Loan Association, F.A., with prime auto loans
of approximately  $370 million.  Intangible assets of $7.7 million were recorded
in connection with this acquisition.

(3)    Reclassification of Securities
       ------------------------------

       On January 1, 2001, the Bank  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


(4)    Cash, Cash Equivalents, and Statements of Cash Flows
       ----------------------------------------------------

       Cash paid  (including  interest  credited)  for  interest on deposits and
other interest-bearing  liabilities during the three months ended March 31, 2001
and 2000 was $814.5  million  and $754.6  million,  respectively.  Net cash paid
(received)  for income  taxes  during the three  months ended March 31, 2001 and
2000 was $0.8 million and $(0.1) million, respectively.

       During the three months ended March 31, 2001,  noncash activity consisted
of the  reclassification  of $1.1 billion and $85.0  million 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, a  reclassification  of $164.8
million from mortgage servicing rights to derivative assets ($173.6 million) and
derivative  liabilities ($8.8 million) relating to the adoption of SFAS No. 133,
transfers  of $4.9 million from loans held for sale (at lower of cost or market)
to  loans  receivable,  transfers  of $5.8  million  from  loans  receivable  to
foreclosed  real estate and $0.2  million of loans made to  facilitate  sales of
real estate owned.

       Noncash  activity  during  the three  months  ended  March 31,  2001 also
included an increase of $2.1 million in additional  paid-in  capital  reflecting
the impact of Golden State restricted  common stock under an employee  incentive
plan.

       During the three months ended March 31, 2000,  noncash activity consisted
of transfers of $21.0 million from loans  receivable to foreclosed  real estate,
transfers of $13.6 million from loans held for sale (at lower of cost or market)
to loans  receivable and $3.5 million of loans made to facilitate  sales of real
estate owned.

       Noncash  activity  during  the three  months  ended  March 31,  2000 also
included a $211.7 million reduction of the valuation  allowance of the Company's
deferred tax asset representing pre-merger tax benefits, of which $161.7 million
was  retained  by the  previous  owners of FN  Holdings  and an increase of $1.8
million in additional paid-in capital reflecting the impact of 220,327 shares of
Golden State restricted common stock issued during the quarter under an employee
incentive plan.

(5)    Segment Reporting
       -----------------

       Since the Company  derives a  significant  portion of its  revenues  from
interest  income,  and interest  expense is the most  significant  expense,  the
segments are reported below using net interest income.  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
                                                       -------            -------             -----
      <S>                                             <C>                <C>                <C>
      Net interest income: (1)
      2001                                            $361,614           $(21,557)          $340,057
      2000                                             331,419            (21,968)           309,451

      Noninterest income: (2)
      2001                                            $ 83,259           $(15,540)          $ 67,719
      2000                                              60,276             59,978            120,254

      Noninterest expense: (3)
      2001                                            $194,394           $ 37,904           $232,298
      2000                                             185,682             38,727            224,409

</TABLE>


                                                                     (Continued)

                                    Page 10
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


----------------

(1)    Includes $29.6 million and $22.3 million for the three months ended March
       31, 2001 and 2000,  respectively,  in earnings credit provided to FNMC by
       the Bank,  primarily for  custodial  bank account  balances  generated by
       FNMC.  Also includes $58.2 million and $53.3 million for the three months
       ended  March 31,  2001 and 2000,  respectively,  in  interest  income and
       expense on intercompany loans.

(2)    Includes  $8.5 million and $12.2 million for the three months ended March
       31, 2001 and 2000, respectively, in intercompany servicing fees.

(3)    Includes  $1.2  million for each of the three months ended March 31, 2001
       and 2000, in intercompany noninterest expense.

       The  following  reconciles  the above table to the  amounts  shown on the
consolidated  financial statements for the three months ended March 31, 2001 and
2000 (in thousands):

<TABLE>
<CAPTION>

                                                                           Three Months Ended March 31,
                                                                           ----------------------------
                                                                               2001             2000
                                                                               ----             ----
       <S>                                                                    <C>              <C>
       Net interest income:
       Total net interest income for reportable segments                      $340,057         $309,451
       Elimination of intersegment net interest income                         (29,585)         (22,348)
                                                                              --------         --------
       Total                                                                  $310,472         $287,103
                                                                              ========         ========

       Noninterest income:
       Total noninterest income for reportable segments                       $ 67,719         $120,254
       Elimination of intersegment servicing fees                               (8,488)         (12,156)
                                                                              --------         --------
       Total                                                                  $ 59,231         $108,098
                                                                              ========         ========

       Noninterest expense:
       Total noninterest expense for reportable segments                      $232,298         $224,409
       Elimination of intersegment expense                                      (1,160)          (1,160)
                                                                              --------         --------
       Total                                                                  $231,138         $223,249
                                                                              ========         ========
</TABLE>


(6)    Accrued Termination and Facilities Costs
       ----------------------------------------

       In connection  with the Golden State  Acquisition,  the Company  recorded
liabilities   resulting  from  (a)  branch   consolidations   due  to  duplicate
facilities;  (b) employee  severance and  termination  benefits due to a planned
reduction in force; and (c) expenses incurred under a contractual  obligation to
terminate services provided by outside service providers  (principally  relating
to DP systems expenses).  The merger and integration plan relative 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 reflects a summary of the activity in the liability
for the costs related to such plan since December 31, 2000 (in thousands):

<TABLE>
<CAPTION>

                                                                   Severance and
                                                 Branch             Termination       Contract
                                             Consolidations           Benefits      Terminations        Total
                                             --------------           --------      ------------        -----
<S>                                             <C>                    <C>               <C>           <C>
Balance at December 31, 2000                    $16,044                $12,529           $--           $28,573
    Additional liabilities recorded                  --                     --            --                --
    Charges to liability account                 (1,524)                    --            --            (1,524)
                                                -------                -------           ---           -------
Balance at March 31, 2001                       $14,520                $12,529           $--           $27,049
                                                =======                =======           ===           =======
</TABLE>

                                    Page 11
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(7)    Income Taxes
       ------------

       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 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.

       During the three months ended March 31, 2000, GS Holdings  recorded a net
income tax  benefit of $82.9  million,  which  included a tax  benefit of $161.7
million.  Based on  favorable  resolutions  of federal  income tax audits of Old
California  Federal  and  Glendale  Federal,  and  based on the  status of Mafco
Holdings',  including  the  Company's,  audits for the years 1991 through  1995,
management  changed  its  judgment  about  the  realizability  of the  Company's
deferred tax asset and reduced its valuation  allowance by $211.7 million during
the  three-month  period  ended  March 31,  2000.  As a result of  reducing  the
valuation  allowance,  income tax  expense  was  reduced by $161.7  million  and
goodwill was reduced by $50.0 million.

(8)    Stockholder's Equity
       --------------------

       At March 31, 2001,  there were 1,000  shares of GS Holdings  common stock
issued and outstanding.

       Dividends  on common  stock  during the three months ended March 31, 2001
and 2000 totalled $50.0 million and $5.0 million, respectively.

(9)    Executive and Stock Compensation
       --------------------------------

       In the first  quarter of 2001,  Golden  State  granted  to its  employees
non-qualified  stock options  equivalent to 851,000  shares of common stock at a
weighted  average  price of $25.67 per share 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, 2001,  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 Golden State's common stock at the  measurement  date over the exercise
price of the award.

       During  the three  months  ended  March 31,  2001,  63,516  options  were
exercised and 17,245 options were  cancelled or expired under all plans.  During
the three  months  ended March 31,  2000,  no Golden  State stock  options  were
exercised and 19,250 options were cancelled or expired under all plans.

       At March 31, 2001 and 2000, options to acquire an equivalent of 4,441,638
and 3,875,682 shares and 1,011,416 and 1,216,082 LTWTMs, respectively,  remained
outstanding under all plans.

       On January 22,  2001,  Golden State  awarded to certain of its  employees
99,108 shares of restricted stock under the Golden State Bancorp Inc.  Executive
Compensation  Plan.  The  market  value on the date of the award was  $26.38 per
share. At March 31, 2001, a total of 236,730 restricted shares 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.
The  compensation  expense  based on the stock price on the date of these awards
was recognized on a straight line basis over the vesting period for each tranche
of the award with a corresponding increase to additional paid-in capital. During
the three months ended March 31, 2001, $0.5 million in compensation  expense was
recognized related to such awards.  These restricted shares have full voting and
dividend rights.

                                    Page 12
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



(10)   Extraordinary Items
       -------------------

       During the first  quarter of 2000,  the FHLB called and the Bank  prepaid
$200  million  in FHLB  advances,  resulting  in an  extraordinary  gain of $1.2
million,  net of income taxes of $0.8 million,  on the early  extinguishment  of
such borrowings.

       Also during the first quarter of 2000, the Bank  repurchased $2.5 million
outstanding  principal  amount of the  Convertible  Subordinated  Debentures due
2001, resulting in an extraordinary gain of $41 thousand, net of income taxes of
$30 thousand, on the early extinguishment of debt.

(11)   Derivative Instruments and Hedging Activities
       ---------------------------------------------

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

       The primary focus of the Company's asset/liability  management program is
to measure and monitor the  sensitivity of the Company's net portfolio value and
net income under varying  interest rate  scenarios.  On a quarterly  basis,  the
Company  simulates the net portfolio  value and net income expected to be earned
over a twelve-month  period following the date of simulation.  The simulation is
based on a projection of market  interest  rates at varying levels and estimates
the impact of such  market  rates on the levels of  interest-earning  assets and
interest-bearing liabilities and on mortgage prepayment speeds (which affect the
mortgage servicing rights asset) during the measurement  period.  Based upon the
outcome of the simulation analysis, the Company considers the use of derivatives
as a means of reducing the  volatility of net portfolio  value and projected net
income within certain ranges of projected changes in interest rates. The Company
evaluates the effectiveness of entering into any derivative instrument agreement
by measuring  the cost of such an agreement in relation to the  reduction in net
portfolio  value 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 as a source of funds for use in the
Company's lending and investment activities and other general business purposes.
It has received  short-term  variable-rate  FHLB advances and sold Repos.  These
debt obligations  expose the Company to variability in interest  payments due to
changes  in  interest  rates.  If  interest  rates  increase,  interest  expense
increases. Conversely, if interest rates decrease, interest expense decreases.

       Management  believes it is prudent to limit the  variability of a portion
of its interest payments. It is the Company's objective to hedge between 5 to 20
percent of its variable-rate short-term interest payments.

       Strategies
       ----------

       To meet this  objective,  management  enters into  derivative  instrument
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
       -------

       Risk  management  results for the quarter ended March 31, 2001 related to
the balance sheet  hedging of FHLB  advances and Repos  indicate that the hedges
were  100%  effective  and  that  there  was  no  component  of  the  derivative
instruments'  gain or loss  which  was  excluded  from the  assessment  of hedge
effectiveness.

                                    Page 13

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


       Changes in the fair value of interest  rate swaps  designated  as hedging
instruments of the  variability of cash flows  associated with FHLB advances and
Repos are reported in OCI.  These amounts  subsequently  are  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 earnings during the first quarter
was $5.5 million.

       As of the date of the initial  application  of SFAS No.  133,  January 1,
2001,  approximately $18.1 million of losses reported in OCI and associated with
the transition  adjustment  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 December 31, 2001.

       As of March 31, 2001,  approximately  $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, 2002.

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

       Objectives and Context
       ----------------------

       The Company either purchases or originates mortgage servicing rights as a
source of fee  income.  These  mortgage-servicing  rights  expose the Company to
variability  in their  fair value due to  prepayment  risk.  Mortgage  servicing
rights are generally recorded in the financial statements at the lesser of their
amortized cost or their fair value.

       Management  believes that it is prudent to limit the  variability  in the
fair value of a portion of its MSR asset. It is the Company's objective to hedge
the servicing  rights asset associated with fixed rate,  non-prepayment  penalty
loans for which it has recorded  mortgage  servicing  rights, at coverage levels
that are  appropriate,  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
       ----------

       To meet  this  objective,  the  Company  utilizes  interest  rate  swaps,
principal only swaps,  interest rate floors, and swaptions as an asset/liability
management  strategy to hedge against  prepayment risk in its mortgage servicing
portfolio  caused by declining  interest rates.  Although the Company hedges the
change in value of its MSRs, its hedge coverage ratio does not equate to 100%.

       Interest rate swap  agreements are contracts to make a series of floating
rate  payments  in  exchange  for  receiving  a series of fixed  rate  payments.
Payments related to swap contracts are made either quarterly or semi-annually by
one of the parties depending on the specific terms of the related contract.  The
notional  amount of the  contracts,  on which the  payments  are based,  are not
exchanged.

       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 the
terms of the PO swap agreements, 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 their payment to the Company. The amounts to be paid and to be received
are then netted together each month. The structure of this instrument results in
increased   cash   flows  and   positive  changes  in  the  value  of  the  swap

                                    Page 14

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

during a declining interest rate environment.  This positive change in the value
of the swap is highly correlated to prepayment activity.

       Interest  rate  floors are  interest  rate  protection  instruments  that
involve payment from the seller to the buyer of an interest  differential.  This
differential  represents the difference between a long-term rate (e.g.,  10-year
Constant Maturity Swaps), 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 by counterparty,  should the current  long-term rate fall below the
strike level of the agreement.  The Company  generally  receives cash monthly on
purchased floors (when the current interest rate falls below the strike rate).

       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.  The nature and  strategies  associated
with swaptions are similar to the other derivative instruments described above.

       Results
       -------

       Risk  management  results  related to the hedging of  mortgage  servicing
rights  for the  quarter  ended  March  31,  2001 are  summarized  below and are
included in the caption  entitled "Loan servicing fees, net" in the accompanying
consolidated statements of income (in thousands):

<TABLE>
<CAPTION>

       <S>                                                                              <C>
       Gain on designated derivative contracts                                          $   33,597
       Decrease in value of designated mortgage servicing rights                        $  (31,192)

       Net hedge ineffectiveness                                                        $    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 1-4 unit residential
loans that are expected to be sold in the foreseeable  future.  These warehoused
loans have been  classified  as loans held for sale,  net,  in the  consolidated
balance  sheet and are  recorded  at the lower of  aggregate  amortized  cost or
market value.  These loans expose the Company to variability in 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  believes  it is prudent to limit the  variability  of a major
portion  of its loans  held for sale.  It is the  Company's  objective  to hedge
primarily all of its warehoused loans held for sale to third parties.

       Strategies
       ----------

       To meet this  objective,  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 sale hedges lock in an interest  rate and price for the
sale of either the specific  loans  classified as held for sale or for a generic
group of loans similar to the specific loans classified as held for sale.

                                    Page 15
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


       Results
       -------

       Risk management results related to the hedging of warehouse loans for the
quarter  ended  March 31,  2001 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>

       <S>                                                             <C>
       Loss on designated forward loan sale commitments                $ (1,680)
       Increase in value of warehouse loans                            $  1,405

       Net hedge ineffectiveness                                       $   (275)

</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.  Some of these rate lock  commitments
will ultimately be denied by the Company or be declined by the borrower.  During
discussions  leading to the implementation of SFAS No. 133, the DIG, a committee
organized by FASB to advise it on initial implementation  issues,  preliminarily
concluded that rate lock  commitments  for mortgages that would be held for sale
should be accounted for as derivative instruments and valued, therefore, at fair
market value.

       Subsequent  to this finding,  questions  have arisen as to the method for
calculating the value of the rate lock commitments.  Specifically, the questions
relate to whether the value of the servicing  rights  created by the sale of the
loans produced by the rate lock  commitments  should be included in the value of
the rate lock commitments  themselves.  Incorporating the value of the servicing
rights in the value of the rate lock commitments  results in the acceleration of
the value which would otherwise have been recognized upon completion of a sale.

       The FASB,  through the DIG, is addressing  this issue again.  The Company
has  chosen  not to  recognize  the  value  of  servicing  rights  in rate  lock
commitments until the committee resolves the issue.

       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 for the
quarter  ended  March 31,  2001 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>
       <S>                                                                                   <C>
       Loss on undesignated forward loan sale commitments recognized in income               $ (976)
       Gain on undesignated interest rate loan commitments recognized in income              $  113

       Net loss on derivatives                                                               $ (863)

</TABLE>

                                    Page 16
<PAGE>
                  GOLDEN STATE HOLDINGS INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(12)   Recent Accounting Pronouncements
       --------------------------------

       ACCOUNTING   FOR   TRANSFERS   AND   SERVICING   FINANCIAL   ASSETS   AND
       EXTINGUISHMENTS OF LIABILITIES

       On  September  29,  2000,  the FASB  issued  SFAS No.  140.  SFAS No. 140
replaces  SFAS No.  125,  which  was  issued  in June of 1996.  It  revises  the
standards for accounting for  securitizations  and other  transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of the provisions of SFAS No. 125 without reconsideration.  In general, SFAS No.
140 is effective for  transfers of financial  assets  occurring  after March 31,
2001 and for disclosures relating to securitization  transactions and collateral
for fiscal years ending after December 15, 2000.

       The  implementation  of  SFAS  No.  140 on  April  1,  2001  (incremental
provisions  that were not  previously  part of SFAS No. 125) is not  expected to
materially impact the Company's financial results.

       RECOGNITION  OF INTEREST  INCOME AND IMPAIRMENT ON PURCHASED AND RETURNED
       BENEFICIAL INTERESTS IN SECURITIZED FINANCIAL ASSETS

       On September  21, 2000,  the EITF issued EITF No. 99-20.  This  document,
which is effective in the second quarter of 2001,  establishes  guidance for (1)
recognizing interest income (including amortization of premiums or discounts) on
(a) all  credit-sensitive  mortgage and asset-backed  securities and (b) certain
prepayment-sensitive  securities  including agency  interest-only strips and (2)
determining  when these securities must be written down to fair value because of
impairment.  Existing GAAP did not provide  interest  recognition and impairment
guidance  for  securities  on  which  cash  flows  change  as a  result  of both
prepayments and credit losses and, in some cases, interest rate adjustments.

       The implementation of EITF No. 99-20 is not expected to materially impact
the Company's financial results.

                                    Page 17
<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.  IN NOVEMBER 2000,  GOLDEN STATE
BANCORP INC.  FILED AN S-3  REGISTRATION  STATEMENT  WITH THE SEC THAT DISCUSSES
THESE  FACTORS IN GREATER  DETAIL.  WE ASSUME NO OBLIGATION TO UPDATE ANY OF OUR
FORWARD-LOOKING STATEMENTS.

OVERVIEW

       The  principal  business  of GS  Holdings,  through  California  Federal,
consists of operating  retail  branches  that provide  deposit  products such as
demand,  transaction and savings accounts,  and selling investment products such
as mutual funds,  annuities and insurance.  In addition,  it engages in mortgage
banking  activities,  including  originating and purchasing 1-4 unit residential
loans for sale to various  investors in the secondary market or for retention in
its own  portfolio,  and  servicing  loans for  itself and  others.  To a lesser
extent,  the  Company  originates  and/or  purchases   commercial  real  estate,
commercial and consumer  loans for  investment.  Revenues are derived  primarily
from  interest  earned on loans,  interest  received  on  government  and agency
securities  and  mortgage-backed  securities,  gains on sales of loans and other
investments  and fees received in  connection  with loan  servicing,  securities
brokerage and other customer service transactions. Expenses primarily consist of
interest on customer  deposit  accounts,  interest on  short-term  and long-term
borrowings,  general and administrative  expenses consisting of compensation and
benefits,  data  processing,  occupancy and equipment,  communications,  deposit
insurance  assessments,  advertising and marketing,  professional fees and other
general and administrative expenses.

       NET INCOME

       GS Holdings reported net income for the three months ended March 31, 2001
of  $95.6  million   compared  with  net  income  of  $249.5   million  for  the
corresponding  period in 2000.  Net income for the three  months ended March 31,
2000,  included  a tax  benefit  of  $161.7  million  and  gains  on  the  early
extinguishment of debt, net of tax, of $1.2 million. Net income, excluding these
two items, was $86.6 million for the three months ended March 31, 2000.

       FINANCIAL CONDITION

       During the three months ended March 31, 2001,  consolidated  total assets
increased  $1.3  billion,  to $61.8  billion from  December 31, 2000,  and total
liabilities increased from $57.7 billion to $58.9 billion.

       During  the three  months  ended  March 31,  2001,  stockholder's  equity
increased $ 66.9 million to $2.4 billion.  The increase in stockholder's  equity
is principally the result of $95.6 million in net income for the period, a $68.8
million  improvement  in net  unrealized  gain/loss,  after tax,  on  securities
available  for  sale  and  $30.4  million  in  unrealized   loss  on  securities
reclassified from  held-to-maturity to  available-for-sale,  partially offset by
$50.0 million in common stock dividends,  a $44.6 million transition  adjustment
recorded upon the adoption of SFAS No. 133 and $37.2  million in net  unrealized
losses, after tax, on derivatives.

       GS  Holdings'  and  the  Bank's  non-performing  assets,   consisting  of
non-performing  loans, net of purchase accounting  adjustments,  foreclosed real
estate,  net, and repossessed  assets,  decreased to $140.5 million at March 31,
2001 compared  with $140.9  million at December 31, 2000.  Total  non-performing
assets as a  percentage  of the Bank's  total assets was 0.23% at both March 31,
2001 and December 31, 2000.

                                    Page 18
<PAGE>
RESULTS OF OPERATIONS

       THREE  MONTHS  ENDED MARCH 31, 2001 VERSUS  THREE  MONTHS ENDED MARCH 31,
2000

       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, 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
         Commercial banking                                          550             12             9.18
         Consumer                                                    860             22             9.95
         Auto                                                      1,637             46            11.40
                                                                 -------         ------
     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                                                                                2.10%
                                                                                                   =====
Net interest margin                                                                                 2.14%
                                                                                                   =====

Return on average assets                                                                            0.63%
                                                                                                   =====
Return on average total equity                                                                     16.81%
                                                                                                   =====
Average equity to average assets                                                                    3.76%
                                                                                                   =====

</TABLE>
                                    Page 19
<PAGE>
<TABLE>
<CAPTION>

                                                                                  Three Months Ended March 31, 2000
                                                                                  ---------------------------------
                                                                               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)                     $ 1,427          $ 22            6.04%
     Mortgage-backed securities available for sale                              13,870           229            6.61
     Mortgage-backed securities held to maturity                                 2,080            39            7.57
     Loans held for sale, net                                                      714            13            7.46
     Loans receivable, net:
         Residential                                                            27,761           478            6.89
         Commercial real estate                                                  5,481           112            8.14
         Commercial banking                                                        491            11            9.45
         Consumer                                                                  694            17            9.76
         Auto                                                                      886            28           12.55
                                                                               -------          ----
     Loans receivable, net                                                      35,313           646            7.32
     FHLB stock                                                                  1,193            18            5.78
                                                                               -------          ----
         Total interest-earning assets                                          54,597           967            7.08%
                                                                                                ----
Noninterest-earning assets                                                       2,763
                                                                               -------
         Total assets                                                          $57,360
                                                                               =======

LIABILITIES, MINORITY INTEREST
AND STOCKHOLDER'S EQUITY

Interest-bearing liabilities:
     Deposits                                                                  $22,894          $219            3.84%
     Securities sold under agreements to repurchase (3)                          5,709            83            5.75
     Borrowings (3)                                                             25,773           378            5.90
                                                                               -------          ----
         Total interest-bearing liabilities                                     54,376           680            5.03%
                                                                                                ----
Noninterest-bearing liabilities                                                    838
Minority interest                                                                  495
Stockholder's equity                                                             1,651
                                                                               -------
         Total liabilities, minority interest
              and stockholder's equity                                         $57,360
                                                                               =======
Net interest income                                                                             $287
                                                                                                ====
Interest rate spread                                                                                            2.05%
                                                                                                               =====
Net interest margin                                                                                             2.08%
                                                                                                               =====

Return on average assets                                                                                        1.74%
                                                                                                               =====
Return on average equity                                                                                       60.47%
                                                                                                               =====
Average equity to average assets                                                                                2.88%
                                                                                                               =====

</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.

                                    Page 20
<PAGE>
       The following  table shows what portion of the changes in interest income
and interest  expense were 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, 2001 vs. 2000
                                                                         Increase (Decrease) Due to
                                                              ------------------------------------------------
                                                                    Volume            Rate            Net
                                                                    ------            ----            ---
INTEREST INCOME:                                                                 (in millions)
     <S>                                                             <C>              <C>            <C>
     Securities and interest-bearing deposits in banks               $ (2)            $--            $ (2)
     Mortgage-backed securities available for sale                    (52)              4             (48)
     Mortgage-backed securities held to maturity                      (12)             10              (2)
     Loans held for sale, net                                           8              (1)              7
     Loans receivable, net                                            102              30             132
     FHLB stock                                                         3               2               5
                                                                     ----             ---            ----
          Total                                                        47              45              92
                                                                     ----             ---            ----

INTEREST EXPENSE:

     Deposits                                                           6              16              22
     Securities sold under agreements to repurchase                   (29)             14             (15)
     Borrowings                                                        45              17              62
                                                                     ----             ---            ----
          Total                                                        22              47              69
                                                                     ----             ---            ----
                  Change in net interest income                      $ 25             $(2)           $ 23
                                                                     ====             ===            ====

</TABLE>

       INTEREST  INCOME.  Total  interest  income was $1.1 billion for the three
months ended March 31, 2001,  an increase of $92.4 million from the three months
ended March 31, 2000. Total  interest-earning  assets for the three months ended
March 31,  2001  averaged  $57.0  billion,  compared  to $54.6  billion  for the
corresponding  period in 2000,  primarily as a result of increased  loan volume,
partially offset by a decline in mortgage-backed  securities. The yield on total
interest-earning  assets during the three months ended March 31, 2001  increased
to 7.44% from 7.08% for the three months ended March 31, 2000,  primarily due to
a higher  percentage of loans to total earning  assets and the lagging effect of
the repricing of variable-rate securities at higher rates during the year 2000.

       GS Holdings earned $777.8 million of interest income on loans  receivable
for the three months ended March 31,  2001,  an increase of $131.6  million from
the three months ended March 31, 2000. The average  balance of loans  receivable
was $40.7  billion for the three months ended March 31, 2001,  compared to $35.3
billion  for the  same  period  in  2000.  The  weighted  average  rate on loans
receivable  increased  to 7.65% for the three  months  ended March 31, 2001 from
7.32% for the three  months  ended March 31,  2000.  The increase in the average
balance reflects an increase in residential  loan  origination  activity and new
auto loan production from the Downey  Acquisition.  The increase in the weighted
average  rate  is  primarily  due to the  lagging  effect  of the  repricing  of
variable-rate  loans at higher rates during the year 2000,  partially  offset by
lower rates on new purchases of prime auto loans.

       GS Holdings  earned  $20.1  million of interest  income on loans held for
sale for the three months ended March 31, 2001, an increase of $6.8 million from
the three  months ended March 31,  2000.  The average  balance of loans held for
sale was $1.1 billion for the three months ended March 31, 2001,  an increase of
$0.4  billion  from the  comparable  period  in 2000,  primarily  attributed  to
increased  originations.  The  weighted  average  rate on  loans  held  for sale
decreased  to 7.09% for the three months ended March 31, 2001 from 7.46% for the
three months ended March 31, 2000,  primarily due to declining  market  interest
rates.

                                    Page 21
<PAGE>
       Interest  income on  mortgage-backed  securities  available  for sale was
$181.0  million for the three  months  ended March 31, 2001, a decrease of $48.1
million  from the three  months  ended March 31,  2000.  The  average  portfolio
balance  decreased $3.1 billion,  to $10.8  billion,  for the three months ended
March 31, 2001 compared to the same period in 2000.  The weighted  average yield
on these assets  increased  from 6.61% for the three months ended March 31, 2000
to 6.72% for the three months  ended March 31, 2001.  The decrease in the volume
is mainly attributed to payments and sales of  mortgage-backed  securities.  The
increase in the weighted  average yield is primarily due to a lagging  effect of
the repricing of variable-rate securities at higher rates during the year 2000.

       Interest income on mortgage-backed  securities held to maturity was $37.4
million for the three  months  ended March 31,  2001, a decrease of $2.0 million
from the three  months  ended  March 31,  2000.  The average  portfolio  balance
decreased  $0.3 billion,  to $1.7 billion,  for the three months ended March 31,
2001  compared  to the same  period in 2000,  primarily  due to the  run-off  of
existing  portfolios.  The run-off in these  securities  was  replaced  with the
origination  and purchase of whole loans instead of  additional  mortgage-backed
securities. The weighted average rates for the three months ended March 31, 2001
and 2000 were 8.60% and 7.57% respectively. The increase in the weighted average
rate  is  primarily  the  result  of  a  lagging  effect  of  the  repricing  of
variable-rate securities at higher rates during the year 2000.

       Interest  income on  securities  and  interest-bearing  deposits in other
banks was $19.7 million for the three months ended March 31, 2001, a decrease of
$1.9 million from the three months ended March 31, 2000.  The average  portfolio
balance was $1.3  billion and $1.4  billion for the three months ended March 31,
2001 and 2000,  respectively.  The higher weighted average rate of 6.09% for the
three months  ended March 31, 2001  compared to 6.04% for the three months ended
March 31, 2000 is primarily due to prepayment of lower rate securities.

       Dividends  on FHLB stock were $23.0  million for the three  months  ended
March 31,  2001,  an increase of $5.9  million from the three months ended March
31, 2000. The average  balance  outstanding  during the three months ended March
31, 2001 and 2000 was $1.4 billion and $1.2 billion,  respectively. The weighted
average  dividend on FHLB stock  increased  to 6.78% for the three  months ended
March  31,  2001 from  5.78% for the three  months  ended  March 31,  2000.  The
increase in the average balance and weighted average yield is due to an increase
in the amount of such stock  owned by the  Company as a result of an increase in
borrowings  under FHLB  advances  and an increase in the  dividend  rate on FHLB
stock.

       INTEREST EXPENSE. Total interest expense was $748.6 million for the three
months ended March 31, 2001,  an increase of $69.0 million from the three months
ended  March 31,  2000.  The  increase  is  primarily  the result of  additional
borrowings  under FHLB  advances and deposits  used to fund loans and offset the
reduction in securities sold under agreements to repurchase.

       Interest expense on deposits,  including  Brokered  Deposits,  was $240.8
million for the three months ended March 31, 2001,  an increase of $22.0 million
from the three  months  ended March 31,  2000.  The average  balance of deposits
outstanding  increased  from $22.9  billion for the three months ended March 31,
2000 to $23.7 billion for the three months ended March 31, 2001. The increase in
the average balance is primarily attributed to increases in the average balances
of custodial accounts, certificates of deposit, and retail customer checking and
money  market  accounts,  partially  offset  by a  decline  in  savings  account
balances.  The overall weighted average cost of deposits  increased to 4.13% for
the three  months  ended  March 31, 2001 from 3.84% for the three  months  ended
March 31,  2000,  primarily  due to a higher  average  balance  of  higher  rate
certificates of deposit in 2001.

       Interest  expense on  securities  sold  under  agreements  to  repurchase
totalled  $67.9 million for the three months ended March 31, 2001, a decrease of
$15.0 million from the three months ended March 31, 2000. The average balance of
such  borrowings  for the three  months  ended  March 31, 2001 and 2000 was $4.2
billion and $5.7 billion,  respectively.  The weighted  average interest rate on
these  instruments  increased to 6.52% for the three months ended March 31, 2001
from  5.75%  for the  three  months  ended  March  31,  2000,  primarily  due to
maturities of lower rate fixed-rate borrowings during the first quarter of 2001.

                                    Page 22
<PAGE>
       Interest  expense on  borrowings  totalled  $439.8  million for the three
months ended March 31, 2001,  an increase of $62.0 million from the three months
ended March 31, 2000. The average balance outstanding for the three months ended
March 31, 2001 and 2000 was $28.8 billion and $25.8 billion,  respectively.  The
weighted average interest rate on these  instruments  increased to 6.16% for the
three  months  ended March 31, 2001 from 5.90% for the three  months ended March
31, 2000.  The changes in the average  volume and weighted  average rate reflect
the increase in FHLB  advances at market  interest  rates used to fund loans and
purchases of mortgage-backed securities.

       NET INTEREST INCOME. Net interest income was $310.5 million for the three
months ended March 31, 2001,  an increase of $23.4 million from the three months
ended March 31, 2000. The interest rate spread  increased to 2.10% for the three
months  ended  March 31,  2001 from 2.05% for the three  months  ended March 31,
2000,  primarily  as a result  of  maturities  and  repayments  of  higher  rate
interest-bearing  liabilities being replaced with  interest-bearing  liabilities
having  comparatively  lower rates. The effect of lower rates on liabilities was
partially  offset by lower  yielding  assets  replenishing  asset  run-off  in a
declining rate environment and the repricing of variable-rate assets.

       NONINTEREST  INCOME.  Total noninterest income,  consisting  primarily of
loan servicing  fees, net,  customer  banking fees and gains on sales of assets,
was $59.2  million for the three  months ended March 31,  2001,  representing  a
decrease of $48.9 million from the three months ended March 31, 2000.

       Loan  servicing  fees  for the  Company,  net of  amortization  of  MSRs,
pass-through interest expense and net unrealized losses on MSR derivatives, were
$26.7 million of net expense for the three months ended March 31, 2001, compared
to $42.8  million in income  for the three  months  ended  March 31,  2000.  The
following  table  details  the  components  of  loan  servicing  fees,  net  (in
thousands):

<TABLE>
<CAPTION>

                                                                               For the Quarter Ended March 31,
                                                                               -------------------------------
                                                                                  2001                2000
                                                                                  ----                ----
       <S>                                                                      <C>                  <C>
       Components of loan servicing fees, net:
              Loan servicing fees                                               $113,242             $91,542
              Amortization of mortgage servicing rights                          (58,415)            (46,667)
              Pass-through interest expense                                       (6,884)             (2,083)
              SFAS No. 133 net gain on MSRs/MSR derivatives                        2,405                  --
              SFAS No. 140 MSR valuation provision                               (77,000)                 --
                                                                                --------             -------
                  Total loan servicing fees, net                                $(26,652)            $42,792
                                                                                ========             =======
</TABLE>

       As the table reflects, loan servicing fees on an absolute basis increased
$21.7  million from  year-ago  levels,  which is primarily  attributable  to the
growth of the Company's servicing portfolio and higher ancillary fees, partially
offset by the impact of higher repayment rates.  The  single-family  residential
loan servicing portfolio,  excluding loans serviced for the Bank, increased from
$76.2  billion  at March  31,  2000 to $83.4  billion  at March  31,  2001.  The
annualized  runoff rate on the  Company's  portfolio of  mortgages  serviced for
others was 20.8% in the first  quarter of 2001 compared to 10.8% during the same
period  in 2000.  This  runoff  rate also  influences  MSR  amortization,  which
increased  $11.8  million in the first  quarter of 2001 over the same  period in
2000;  the MSR  amortization  rate averaged 16.8% during the first quarter ended
March  31,  2001  compared  to  13.9%  during  the  same  period  in  2000.  MSR
amortization  was also  affected by a higher  average MSR basis during the first
quarter  ended March 31, 2001.  Pass-through  interest  expense  increased  $4.8
million (230%) year over year, also influenced by higher runoff rates. Servicing
fee income  includes a $2.4 million pre-tax gain from the impact of SFAS No. 133
pertaining to the MSR fair value hedges.  Finally,  the Company's estimated fair
value in four of its ten MSR tranches was below book value as of March 31, 2001.
As a result,  a $77 million  pre-tax  valuation  provision was  recorded.  On an
aggregate basis, at March 31, 2001 after recording the provision, the fair value
of the MSRs is $43.3  million  higher  than book value.  This  compares to $81.5
million in aggregate excess value at December 31, 2000.

                                    Page 23
<PAGE>
       Customer banking fees were $51.3 million for the three months ended March
31, 2001  compared to $48.7  million for the three  months ended March 31, 2000.
The increase is primarily  attributed  to increased  emphasis by  management  on
transaction account growth.

       Gain on sale, settlement and transfer of loans, net totalled $4.9 million
for the three  months  ended March 31, 2001, a decrease of $1.7 million from the
three  months  ended  March 31,  2000.  Gains  attributed  to early  payoffs and
settlement  of commercial  loans with  unamortized  discounts  were $0.5 million
lower in 2001  compared to 2000.  During the three  months ended March 31, 2001,
California Federal sold $1.5 billion in single-family  mortgage loans originated
for sale with servicing  rights retained as part of its ongoing mortgage banking
operations  compared to $1.1 billion of such sales for the corresponding  period
in 2000.  The overall  reduction  in the rate of gain on sale relates to channel
and product mix differences during the two periods.

       Gain on the  non-monetary  exchange  of Star  Systems  common  stock  for
Concord EFS common  stock  occurred in the first  quarter of 2001 as a result of
Concord's acquisition of Star. The Star stock had no cost basis on the Company's
balance  sheet,  giving  rise to the gain  upon the  exchange.  The stock is now
carried as an available for sale security.

       NONINTEREST EXPENSE. Total noninterest expense was $231.1 million for the
three months ended March 31, 2001,  an increase of $7.9 million  compared to the
three  months  ended March 31,  2000.  Noninterest  expense for the three months
ended  March 31,  2001  included  increases  of $10.0  million  in  compensation
expense, $1.8 million in foreclosed real estate operations, net and $0.5 million
in occupancy and equipment  expense.  These  increases were partially  offset by
decreases of $3.9 million in professional  fees and $1.5 million in amortization
of intangible assets.

       Compensation  and employee  benefits  expense was $117.7  million for the
three months ended March 31, 2001,  an increase of $10.0  million from the three
months ended March 31, 2000.  The  increase is  primarily  attributed  to normal
salary  adjustments,  coupled with a slight  increase in FTE year over year.  In
addition,  the Company has  experienced an increase in group insurance and other
benefit costs that it has elected not to pass on to its employees.

       Occupancy  and  equipment  expense was $37.9 million for the three months
ended March 31,  2001,  an increase of $0.5  million from the three months ended
March 31, 2000,  primarily due to an increase in depreciation expense related to
additional  computer equipment and furniture,  as well as increased  electricity
rates and higher contract maintenance fees.

       Professional  fees were $4.8 million for the three months ended March 31,
2001,  a decrease of $3.9  million  from the three  months ended March 31, 2000,
primarily due to an overall  reduction in consulting  and legal expenses for the
Company.

       Foreclosed  real estate  operations,  net totalled $0.4 million in income
for the three months ended March 31, 2001,  compared to $2.2 million  during the
comparable  period  in  2000,  primarily  due to  fewer  gains  on  sale  of REO
properties during 2001.

       Amortization of intangible  assets was $14.9 million for the three months
ended March 31,  2001,  a decrease of $1.5  million  from the three months ended
March 31, 2000,  primarily attributed to a reduction in the goodwill balance due
to the reversal of Old California Federal state deferred taxes.

       PROVISION  FOR INCOME TAX.  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 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 24
<PAGE>
       During the three months ended March 31, 2000, GS Holdings  recorded gross
income tax expense of $78.8 million, which was more than offset by a tax benefit
of $161.7  million,  for a net income tax  benefit  of $82.9  million.  Based on
favorable resolutions of federal income tax audits of Old California Federal and
Glendale  Federal,  and the current  status of Mafco  Holdings',  including  the
Company's,  audits for the years  1991  through  1995,  management  changed  its
judgment about the realizability of the Company's deferred tax asset and reduced
its valuation  allowance by $211.7 million during the  three-month  period ended
March 31, 2000.  As a result of reducing  the  valuation  allowance,  income tax
expense was reduced by $161.7 million and goodwill was reduced by $50.0 million.

       GS Holdings'  effective  federal tax rate was 48% during the three months
ended March 31, 2001 and (56)%  during the three  months  ended March 31,  2000,
while its federal  statutory tax rate was 35% during both periods.  In 2001, the
difference  between the effective and statutory rate 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.  In 2000,
the difference  between the effective and statutory  rates was the result of the
reduction in the deferred tax asset  valuation  allowance,  partially  offset by
nondeductible goodwill  amortization.  GS Holdings' effective state tax rate was
(22)%  and  8%  during  the  three   months  ended  March  31,  2001  and  2000,
respectively. The effective state tax rate declined during 2001 as a result of a
reduction in the accrued state tax liability.

       MINORITY INTEREST.  Dividends on the REIT Preferred Stock totalling $11.4
million were  recorded  during each of the three months ended March 31, 2001 and
2000.  Minority  interest  expense for the three months ended March 31, 2001 and
2000 relative to the REIT Preferred Stock is reflected net of related income tax
benefit of $4.7 million and $4.8 million, respectively,  which will inure to the
Company  as a result of the  deductibility  of such  dividends  for  income  tax
purposes.

                                     Page 25

<PAGE>
       IMPACT OF SFAS NO. 133. On January 1, 2001, the Company  adopted SFAS No.
133.  In  connection  with  the  adoption  of this  pronouncement,  the  Company
reclassified   $1.2   billion   in   securities   from    held-to-maturity    to
available-for-sale,  which had the  effect of  improving  the OCI  component  of
stockholder's equity by $30.4 million. The pronouncement  impacted several other
areas of the financial  statements,  as  summarized  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>
Transfer hedge component
    of MSR balance                $   --   $ (95,013)   $ 95,013   $      --     $    --    $    --    $    --      $    --


Transition adjustment (record
    initial fair values):
    MSRs and MSR hedges               --     (69,754)     78,610      (8,856)         --         --         --           --
    Warehouse loans and
      pipeline hedges              3,834          --       2,911      (5,696)         --         --         --       (1,049)
    Cash flow (balance sheet)
      hedges - swaps                  --          --          --     (75,482)     30,835     44,647         --           --
                                  ------------------------------------------------------------------------------------------
JANUARY 1, 2001
    TRANSITION ENTRIES             3,834    (164,767)    176,534     (90,034)     30,835     44,647         --       (1,049)

Fair value adjustments:
    MSRs and MSR hedges              --      (31,192)     25,324       8,273          --         --     (2,405)          --
    Warehouse loans and
      pipeline hedges              1,405          --         113      (2,656)         --         --         --        1,138
    Cash flow (balance sheet)
      hedges - swaps                  --          --          --     (62,885)     25,688     37,197         --           --
                                  ------------------------------------------------------------------------------------------
FAIR VALUE ADJUSTMENTS -
    FIRST QUARTER 2001             1,405     (31,192)     25,437     (57,268)     25,688     37,197     (2,405)       1,138

Other First Quarter 2001
    Activity:
    MSR hedge additions               --          --     121,967         --           --         --         --           --
    MSR hedge sales and
      maturities                      --          --    (133,712)        --           --         --         --           --
    MSR hedge receipts
      and payments                    --        (121)     14,437      (4,431)         --         --         --           --
                                  ------------------------------------------------------------------------------------------
OTHER ACTIVITY -
    FIRST QUARTER 2001                --        (121)      2,692      (4,431)         --         --         --           --
                                  ------------------------------------------------------------------------------------------

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 26
<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 profit  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 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 is scheduled to take place on
June 21,  2001.  The Bank  continues to  vigorously  pursue its case for damages
against the Government.

                                    Page 27
<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 June 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.  The Bank believes that it has meritorious defenses to
the claim and intends to continue to contest it 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.

                                    Page 28
<PAGE>
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 29
<PAGE>
                            GLOSSARY OF DEFINED TERMS

APB - Accounting Principles Board
APB OPINION NO. 25 - Accounting for Stock Issued to Employees
AUTO ONE - Auto One Acceptance Corporation
BANK - California Federal Bank
BROKERED DEPOSITS - Issued  certificates  of deposit  through  direct  placement
     programs and national investment banking firms
CALFED  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
CLAIMS COURT - United States Court of Federal Claims
COMPANY - Golden State Holdings Inc.
CONVERTIBLE  SUBORDINATED  DEBENTURES  DUE 2001 - In  1986,  Cal Fed  Inc.,  Old
     California  Federal's  former parent  company,  issued $125 million of 6.5%
     convertible subordinated debentures due February 20, 2001
DIG - Derivatives Implementation Group
DOWNEY  ACQUISITION  -  Auto  One's  acquisition  of  the  Downey  Auto  Finance
     Corporation in February, 2000
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
FASB - Financial Accounting Standards Board
FHLB - Federal Home Loan Bank
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
FNMC - First Nationwide Mortgage Corporation
FTE - Full-time equivalent staff
GAAP - generally accepted accounting principles
GLENDALE FEDERAL - Glendale Federal Bank, Federal Savings Bank
GLENDALE GOODWILL  LITIGATION  - Glendale  Federal  Bank v. United  States,  No.
     90-772C
GLEN FED MERGER - Glendale  Federal  Bank  merged  with and into the Bank
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 ESCROW MERGER - GS Escrow was merged  with and  into GS Holdings, pursuant to
     a merger  agreement  by and between GS Escrow and GS Holdings in  September
     1998
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
IO - Interest only
LIBOR - London Interbank Offered Rate
LTW - Litigation Tracking Warrant
MAFCO HOLDINGS - Mafco Holdings Inc.
MSR - Mortgage servicing rights

                                    Page 30
<PAGE>
OLD CALIFORNIA  FEDERAL - California Federal Bank,  A Federal Savings Bank prior
     to the Cal Fed Acquisition
OCI - Other comprehensive income
PO - Principal only
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
SFAS - Statement of Financial Accounting Standards
SFAS NO. 125 - Accounting  for Transfers  and Servicing of Financial  Assets and
     Extinguishment of Liabilities
SFAS NO. 133 - Accounting for Derivative Instruments and Hedging Activities
SFAS NO. 140 - Accounting  for Transfers  and Servicing of Financial  Assets and
     Extinguishments of Liabilities
STOCK PLAN - Golden State Bancorp Inc. Omnibus Stock Plan
VERDUGO - Verdugo Trustee Service Corporation

                                    Page 31
<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 9, 2001
                                    Page 32