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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1997

                                       OR

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE  ACT OF 1934 [NO FEE  REQUIRED]  For the  transition  period  from
     _______________ to _______________.

                         Commission File Number 1-13578

                             DOWNEY FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)

                Delaware                                 95-1953342
      (State or other jurisdiction          (I.R.S. Employer Identification No.)
    of incorporation or organization)
           3501 Jamboree Road                               92660
        Newport Beach, California                        (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (714) 854-0300

          Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
      Title of each class                               on which registered
 Common Stock, $0.01 par value                        New York Stock Exchange
                                                         Pacific Exchange

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

     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. Yes  X  No 
                                              ---    ---

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

         The aggregate  market value of the voting stock held by  non-affiliates
of the  registrant,  based upon the  closing  sale price of its Common  Stock on
February 27, 1998, on the New York Stock Exchange was $594,033,102.

     At February 27, 1998,  26,755,938 shares of the Registrant's  Common Stock,
$0.01 par value were outstanding.

                       Documents Incorporated by Reference

     Portions  of  the  Registrant's  Proxy  Statement  to  be  filed  with  the
Securities  and Exchange  Commission  in connection  with the Annual  Meeting of
Stockholders to be held April 22, 1998 are incorporated by reference in Part III
hereof.
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     The purpose of this  amendment on Form 10-K/A to the Annual  Report on Form
10-K for the fiscal year ended  December  31,  1997 (the "Form  10-K") of Downey
Financial  Corp.  ("Downey") is to amend Exhibit 27,  Financial  Data  Schedule,
filed as part of Item 14(c),  to include  data for the year ended  December  31,
1996.  Downey  hereby  amends  Item 14(c) to the Form 10-K in its  entirety  and
replaces such Item 14(c) with the following:


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                                     PART IV

ITEM 14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES AND REPORTS ON FORM 8-K 

(c)  Exhibits.

     Exhibit
     Number                          Description

     3.1   (1) Certificate of Incorporation of Downey Financial Corp.
     3.3   (2) Bylaws of Downey Financial Corp.
     10.1  (5) Downey Savings and Loan Association, F.A. Employee Stock Purchase
               Plan (Amended and Restated as of January 1, 1996).
     10    (5) Amendment  No. 1,  Downey  Savings  and  Loan  Association,  F.A.
               Employee  Stock  Purchase  Plan.  Amendment  No. 1, Effective and
               Adopted January 22, 1997.
     10.3  (5) Downey  Savings  and Loan Association, F.A. Employees' Retirement
               and Savings Plan (October 1, 1997 Restatement).
     10.4  (5) Amendment  No. 1,  Downey  Savings  and  Loan  Association,  F.A.
               Employees'  Retirement   and   Savings   Plan  (October  1,  1997
               Restatement)  Amendment  No. 1, Effective and Adopted January 28,
               1998.
     10.5  (5) Trust Agreement for Downey  Savings  and Loan  Association,  F.A.
               Employees' Retirement and Savings Plan, Effective October 1, 1997
               between Downey  Savings  and  Loan Association, F.A. and Fidelity
               Management Trust Company.
     10.6  (1) Downey Savings and Loan Association 1994 Long-Term Incentive Plan
               (as amended).
     10.7  (2) Asset  Purchase  Agreement  among  Butterfield  Savings  and Loan
               Association, FSA, Mortgage Investment, Inc., Property  Management
               Service,   Inc.  and   Butterfield  Capital   Corporation,  dated
               September 1, 1988.
     10.8  (2) Assistance  Agreement  between  and among the Federal Savings and
               Loan  Insurance   Corporation,   Butterfield   Savings  and  Loan
               Association, FSA and Downey Savings and Loan  Association,  dated
               September  29, 1988  (confidential  treatment  requested  due  to
               contractual prohibition against disclosure).
     10.9  (2) Merger of Butterfield  Savings and Loan  Association,  FSA,  into
               Downey Savings and Loan Association, dated September 29, 1989.
     10.10 (2) Founder  Retirement  Agreement  of  Maurice L.  McAlister,  dated
               December 21, 1989.
     10.11 (2) Founder  Retirement  Agreement  of  Gerald  H.  McQuarrie,  dated
               December 21, 1989.
     10.13 (2) Employment Agreement and  Nonqualified  Stock Option Agreement of
               Stephen W. Prough, dated June 14, 1994.
     10.14 (3) First Addendum to Employment Agreement of Stephen W. Prough dated
               June 14, 1994, as amended June 30, 1995.
     10.15 (4) Severance  Agreement and General Release, dated February 6, 1997,
               by and among Downey Financial  Corp.,  Downey  Savings  and  Loan
               Association, F.A. and Stephen W. Prough.
     22.   (2) Subsidiaries
     23.1  (5) Consent of Independent Auditors.
     27        Financial Data Schedule

(1) Filed as part of Downey's report on Form S-8 filed February 3, 1995.
(2) Filed as part of Downey's report on Form 8-B/A filed January 17, 1995.
(3) Filed as part of Downey's report on Form 10-K filed March 12, 1996.
(4) Filed as part of Downey's report on Form 10-K filed March 14, 1997.
(5) Filed as part of Downey's report on Form 10-K filed March 16, 1997.



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     Downey  Financial  Corp.  will  furnish any or all of the  non-confidential
exhibits  upon  payment of a  reasonable  fee.  Please send request for exhibits
and/or fee information to:

                             Downey Financial Corp.
                               3501 Jamboree Road
                         Newport Beach, California 92660
                         Attention: Corporate Secretary

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section 13  or 15(d) 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.



                                                  DOWNEY FINANCIAL CORP.



                                                By:   /s/ Thomas E. Prince
                                                   ----------------------------
                                                      Thomas E. Prince
                                                    Executive Vice President
                                                    Chief Financial Officer
                                                    (Principal Financial and
                                                       Accounting Officer)

DATED:  March 26, 1998




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