SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

For the Quarter Ended March 31, 1999              Commission File Number 1-4629


                        GOLDEN WEST FINANCIAL CORPORATION
--------------------------------------------------------------------------------


          Delaware                                      95-2080059
----------------------------------------   -------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

1901 Harrison Street, Oakland, California                            94612
-----------------------------------------                        ---------------
(Address of principal executive offices)                           (Zip Code)

Registrant's telephone number, including area code:             (510) 446-3420
                                                              ------------------


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

         The number of shares  outstanding of the  registrant's  common stock on
April 30, 1999, was 56,096,399 shares.


<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         The  consolidated   financial   statements  of  Golden  West  Financial
Corporation and subsidiaries (Golden West or Company) for the three months ended
March 31,  1999 and 1998 are  unaudited.  In the  opinion  of the  Company,  all
adjustments  (consisting only of normal  recurring  accruals) that are necessary
for a fair  statement  of the  results for such three  month  periods  have been
included.  The operating  results for the three months ended March 31, 1999, are
not necessarily indicative of the results for the full year.


                        Golden West Financial Corporation
                  Consolidated Statement of Financial Condition
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                         March 31       March 31     December 31
                                                                           1999           1998           1998
                                                                        ------------  -------------  -------------
                                                                               (Unaudited)
                                                                        ---------------------------

Assets:
<S>                                                                     <C>            <C>            <C>        
  Cash                                                                  $   196,974    $   177,913    $   250,875
  Securities available for sale at fair value                               331,937        628,235        377,005
  Other investments at cost                                               1,154,996        389,044        422,385
  Purchased mortgage-backed securities available for sale
    at fair value                                                           103,290        148,740        113,585
  Purchased mortgage-backed securities held to maturity
    at cost                                                                 518,887        718,733        572,376
  Mortgage-backed securities held to maturity with recourse at cost       3,576,300      3,424,636      3,884,347
  Mortgage-backed securities REMICs held to maturity                      5,008,319            -0-      5,461,657
  Loans receivable                                                       26,020,901     32,723,855     25,721,288
  Interest earned but uncollected                                           186,761        213,590        209,328
  Investment in capital stock of Federal Home Loan Banks--at cost                      
      which approximates fair value                                         790,955        599,960        780,303
  Real estate held for sale or investment                                    30,310         48,187         45,696
  Prepaid expenses and other assets                                         472,851        347,264        357,363
  Premises and equipment--at cost less accumulated depreciation             273,612        249,263        272,521
                                                                        ------------  -------------  -------------
                                                                        $38,666,093    $39,669,420    $38,468,729
                                                                        ============  =============  =============

Liabilities and Stockholders' Equity:
  Deposits                                                              $26,395,440    $24,559,270    $26,219,095
  Advances from Federal Home Loan Banks                                   6,114,548      7,645,830      6,163,472
  Securities sold under agreements to repurchase                            692,624      2,184,991      1,252,469
  Federal funds purchased                                                   475,000        500,000            -0-
  Accounts payable and accrued expenses                                     544,818        512,497        468,213
  Taxes on income                                                           370,842        341,043        329,409
  Subordinated notes--net of discount                                       912,033      1,110,828        911,753
  Stockholders' equity                                                    3,160,788      2,814,961      3,124,318
                                                                        ------------  -------------  -------------
                                                                        $38,666,093    $39,669,420    $38,468,729
                                                                        ============  =============  =============
</TABLE>


<PAGE>


                        Golden West Financial Corporation
                     Consolidated Statement of Net Earnings
                                   (Unaudited)
                 (Dollars in thousands except per share figures)
<TABLE>
<CAPTION>

                                                         Three Months Ended
                                                               March 31
                                                    ----------------------------
                                                        1999           1998
                                                    -------------   ------------
  Interest Income:
<S>                                                   <C>            <C>       
      Interest on loans                               $  476,244     $  628,878
      Interest on mortgage-backed securities             168,751         72,195
      Interest and dividends on investments               49,966         54,130
                                                    -------------   ------------
                                                         694,961        755,203
  Interest Expense:
      Interest on deposits                               307,567        315,210
      Interest on advances                                86,751        123,560
      Interest on repurchase agreements                   13,547         32,936
      Interest on other borrowings                        36,395         39,783
                                                    -------------   ------------
                                                         444,260        511,489
                                                    -------------   ------------
          Net Interest Income                            250,701        243,714
  Provision for loan losses                                  574          2,965
                                                    -------------   ------------
          Net Interest Income after Provision
              for Loan Losses                            250,127        240,749
  Non-Interest Income:
      Fees                                                16,159         12,947
      Gain on the sale of securities, MBS, and loans      10,063          2,507
      Other                                                9,077         10,549
                                                    -------------   ------------
                                                          35,299         26,003
  Non-Interest Expense:
      General and administrative:
          Personnel                                       51,798         46,536
          Occupancy                                       16,287         14,169
          Deposit insurance                                1,393          1,612
          Advertising                                      2,179          2,246
          Other                                           21,389         19,111
                                                    -------------   ------------
                                                          93,046         83,674
  Earnings before Taxes on Income and
      Extraordinary Item                                 192,380        183,078
      Taxes on Income                                     72,012         72,997
                                                    -------------   ------------
  Earnings before Extraordinary Item                     120,368        110,081
  Extraordinary Item:
  Federal Home Loan Bank advance prepayment
      penalty, net of tax benefit                            -0-         (7,710)
                                                    -------------   ------------
  Net Earnings                                        $  120,368     $  102,371
                                                    =============   ============

  Basic earnings per share before extraordinary       $     2.13     $     1.92
  item
  Basic earnings per share on extraordinary
      item, net of tax benefit                              0.00           (.13)
                                                    -------------   ------------
  Basic earnings per share                            $     2.13     $     1.79
                                                    =============   ============

  Diluted earnings per share before extraordinary     $     2.11     $    1.89
  item
  Diluted earnings per share on extraordinary item,
      net of tax benefit                                    0.00           (.13)
                                                    -------------   ------------
  Diluted earnings per share                          $     2.11     $     1.76
                                                    =============   ============

</TABLE>


<PAGE>


                        Golden West Financial Corporation
                      Consolidated Statement of Cash Flows
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                   March 31
                                                          ----------------------------
                                                             1999            1998
                                                          ------------   -------------
 Cash Flows from Operating Activities:
<S>                                                        <C>             <C>       
  Net earnings                                             $  120,368      $  102,371
  Adjustments to reconcile net earnings to net cash
  provided by operating activities:
    Extraordinary item                                            -0-          13,035
    Provision for loan losses                                     574           2,965
    Amortization of loan fees and discounts                    (6,194)         (5,105)
    Depreciation and amortization                               6,937           5,724
    Loans originated for sale                                (287,064)       (121,539)
    Sales of loans                                            535,344         131,940
    Decrease  in interest earned but uncollected               22,567           3,333
    Federal Home Loan Bank stock dividends                    (20,967)        (17,383)
    Increase in prepaid expenses and other assets            (106,244)        (91,604)
    Increase in accounts payable and accrued expenses          66,855          58,824
    Increase in taxes on income                                62,640          63,938
    Other, net                                                 (1,249)         (4,427)
                                                          ------------   -------------
      Net cash provided by operating activities               393,567         142,072

Cash Flows from Investing Activities:
  New loan activity:
    New real estate loans originated for portfolio         (1,790,916)     (1,345,654)
    Real estate loans purchased                                  (460)         (1,047)
    Other, net                                                (10,581)        (10,817)
                                                          ------------   -------------
                                                           (1,801,957)    ( 1,357,518)
  Real estate loan principal payments:
    Monthly payments                                          151,930         174,919
    Payoffs, net of foreclosures                            1,168,958       1,177,369
                                                          ------------   -------------
                                                            1,320,888       1,352,288

  Repayments of mortgage-backed securities                    750,827         148,520
  Proceeds from sales of real estate                           40,407          51,405
  Purchases of securities available for sale                 (150,014)           (22)
  Sales of securities available for sale                            9             223
  Matured securities available for sale                       154,208          10,042
  Increase in other investments                              (732,611)       (136,396)
  Purchases of Federal Home Loan Bank stock                       -0-            (990)
  Additions to premises and equipment                          (8,397)        (15,063)
                                                          ------------   -------------
    Net cash provided by (used in) investing activities      (426,640)         52,489
</TABLE>



<PAGE>


                        Golden West Financial Corporation
                Consolidated Statement of Cash Flows (Continued)
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                                March 31
                                                       --------------------------
                                                          1999           1998
                                                       -----------    -----------
   Cash Flows from Financing Activities:
       Deposit activity:
<S>                                                     <C>           <C>       
       Increase (decrease) in deposits, net             $ (69,200)    $  204,135
       Interest credited                                  245,545        245,418
                                                       -----------    -----------
                                                          176,345        449,553

     Additions to Federal Home Loan Bank advances       1,508,650        711,200
     Repayments of Federal Home Loan Bank advances     (1,557,573)    (1,587,707)
     Proceeds from agreements to repurchase securities         95      1,255,890
     Repayments of agreements to repurchase securities   (559,940)    (1,404,947)
     Repayments of medium-term notes                          -0-       (110,000)
     Increase in federal funds purchased                  475,000        500,000
     Dividends on common stock                             (7,921)        (7,140)
     Exercise of stock options                              2,067          4,262
     Purchase and retirement of Company stock             (57,551)          -0-
                                                       -----------    -----------
       Net cash used in financing activities              (20,828)      (188,889)
                                                       -----------    -----------
   Net Increase (Decrease) in Cash                        (53,901)         5,672
   Cash at beginning of period                            250,875        172,241
                                                       -----------    -----------
   Cash at end of period                                $ 196,974      $ 177,913
                                                       ===========    ===========

   Supplemental cash flow information:
     Cash paid for:
       Interest                                         $ 435,393      $ 507,374
       Income taxes                                         9,486          3,831
     Cash received for interest and dividends             717,528        758,536
     Noncash investing activities:
       Loans converted from adjustable rate to
           fixed-rate                                     171,370          8,374
       Loans transferred to foreclosed real estate         20,072         31,561
       Adjustable rate loans securitized into
           mortgage-backed securities with recourse           -0-        500,992
</TABLE>


<PAGE>


                        Golden West Financial Corporation
                 Consolidated Statement of Stockholders' Equity
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                      For the Three Months Ended March 31, 1999
                                 ------------------------------------------------------------------------------------
                                                                         Accumulated
                                                                        Comprehensive
                                                                         Income From
                                             Additional                  Unrealized        Total
                                  Common      Paid-in      Retained       Gains On      Stockholders'  Comprehensive
                                   Stock      Capital      Earnings      Securities        Equity         Income
                                 ----------  -----------   ----------   --------------  -------------  --------------

<S>                                <C>        <C>          <C>            <C>            <C>             <C>
Balance at January 1, 1999         $ 5,686    $ 122,159    $2,781,925     $    214,548   $ 3,124,318
Comprehensive income:
  Net earnings                         -0-          -0-       120,368              -0-       120,368     $   120,368
  Change in unrealized gains on
    securities available for sale,
    net of tax                         -0-          -0-           -0-          (20,118)      (20,118)        (20,118)
  Reclassification adjustment
    for gains included in income       -0-          -0-           -0-             (375)         (375)           (375)
                                                                                                       --------------
    Comprehensive Income                                                                                  $   99,875
                                                                                                       ==============
Cash dividends on common
  stock ($.14 per share)               -0-          -0-         (7,921)            -0-         (7,921)
Common stock issued upon
  exercise of stock options,
  including tax benefits                 7        2,060           -0-              -0-          2,067
Purchase and retirement of
  Company stock                        (62)         -0-        (57,489)            -0-        (57,551)
                                 ----------  -----------   ------------   --------------  -------------
Balance at March 31, 1999          $ 5,631    $ 124,219    $ 2,836,883     $   194,055    $ 3,160,788
                                 ==========  ===========   ============   ==============  =============
</TABLE>
<TABLE>
<CAPTION>

                                                      For the Three Months Ended March 31, 1998
                                 ------------------------------------------------------------------------------------
                                                                         Accumulated
                                                                        Comprehensive
                                                                         Income From
                                             Additional                  Unrealized        Total
                                  Common      Paid-in      Retained       Gains On      Stockholders'  Comprehensive
                                   Stock      Capital      Earnings      Securities        Equity         Income
                                 ----------  -----------   ----------   --------------  -------------  --------------

<S>                               <C>         <C>         <C>            <C>            <C>              <C>
Balance at January 1, 1998         $ 5,707     $ 85,532    $2,457,055     $   149,737    $ 2,698,031
Comprehensive income:
  Net earnings                         -0-          -0-       102,371             -0-        102,371     $   102,371
  Change in unrealized gains on
    securities available for sale,
    net of tax                         -0-          -0-           -0-          17,434         17,434          17,434
  Reclassification adjustment
    for losses included in income      -0-          -0-           -0-               3              3               3
                                                                                                       --------------
    Comprehensive Income                                                                                 $   119,808
                                                                                                       ==============
Cash dividends on common
  stock ($.125 per share)              -0-          -0-        (7,140)            -0-         (7,140)
Common stock issued upon
  exercise of stock options,
  including tax benefits                12        4,250           -0-             -0-          4,262
                                 ----------  -----------   ----------   --------------  -------------
Balance at March 31, 1998          $ 5,719     $ 89,782    $2,552,286     $   167,174    $ 2,814,961
                                 ==========  ===========   ==========   ==============  =============
</TABLE>


<PAGE>
  ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
            RESULTS OF OPERATIONS

         The  discussion  and analysis  included  herein  covers those  material
  changes in liquidity and capital  resources  that have occurred since December
  31, 1998, as well as certain material changes in results of operations  during
  the three month periods ended March 31, 1999, and 1998, respectively.

         The following  narrative is written with the presumption that the users
  have read or have access to the  Company's  1998  Annual  Report on Form 10-K,
  which  contains the latest  audited  financial  statements  and notes thereto,
  together with Management's  Discussion and Analysis of Financial Condition and
  Results of  Operations  as of December 31, 1998,  and for the year then ended.
  Therefore,  only  material  changes  in  financial  condition  and  results of
  operations are discussed herein.

         NEW ACCOUNTING PRONOUNCEMENTS

         In  1998,  Golden  West  adopted  Statement  of  Financial   Accounting
Standards No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"   (SFAS  131),  which  establishes  annual  and  interim  reporting
standards for an enterprise's  operating segments and related  disclosures about
its products,  services,  geographic  areas,  and major  customers.  The Company
operates  as a single  segment  and,  therefore,  SFAS 131 had no  effect on the
Company's financial statements.

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and Hedging  Activities"  (SFAS 133).  This  Statement  establishes
accounting and reporting  standards for derivative  instruments  and for hedging
activities.  It requires that an entity recognize all derivative  instruments as
either assets or liabilities in the statement of financial  position and measure
those  instruments  at fair value.  This  Statement is effective  for all fiscal
quarters of fiscal years  beginning  after June 15, 1999.  The Company is in the
process of assessing the impact of this  statement on its  financial  statements
and results of operations.
<TABLE>
<CAPTION>

                        Golden West Financial Corporation
                              Financial Highlights
                                   (Unaudited)
                 (Dollars in thousands except per share figures)

                                                          March 31        March 31         December 31
                                                            1999            1998              1998
                                                       -------------    ------------     --------------
<S>                                                    <C>             <C>                <C>         
 Assets                                                $ 38,666,093    $ 39,669,420       $ 38,468,729
 Loans receivable including mortgage-backed securities   35,227,697      37,015,964         35,753,253
 Deposits                                                26,395,440      24,559,270         26,219,095
 Stockholders' equity                                     3,160,788       2,814,961          3,124,318
 Stockholders' equity/total assets                            8.17%           7.10%              8.12%
 Book value per common share                           $      56.13    $      49.22       $      54.95
 Common shares outstanding                               56,312,799      57,190,004         56,861,124
 Diluted common shares outstanding                       56,883,065      58,108,240         57,429,914
 Yield on loan portfolio                                      7.25%           7.57%              7.36%
 Yield on mortgage-backed securities                          7.02%           7.23%              7.20%
 Yield on investments                                         5.55%           6.53%              5.53%
 Yield on earning assets                                      7.14%           7.51%              7.30%
 Cost of deposits                                             4.58%           5.02%              4.67%
 Cost of borrowings                                           5.73%           6.02%              5.87%
 Cost of funds                                                4.85%           5.33%              4.96%
 Yield on earning assets less cost of funds                   2.29%           2.18%              2.34%
 Ratio of nonperforming assets to total assets                 .72%            .93%               .79%
 Ratio of troubled debt restructured to total assets           .04%            .10%               .06%
 World Savings Bank, a Federal Savings Bank:
   Total assets                                        $ 31,893,907    $ 25,820,982       $ 31,912,264
   Net worth                                              2,248,514       1,769,860          2,164,854
   Net worth/total assets                                     7.05%           6.85%              6.78%
   Regulatory capital ratios:
     Core capital                                             7.04%           6.84%              6.77%
     Risk-based capital                                      13.18%          13.51%             12.93%
 World Savings and Loan Association:
   Total assets                                        $  6,433,946    $ 25,820,982       $  6,810,266
                                                                         
   Net worth                                                701,150       1,087,367            687,778
   Net worth/total assets                                    10.90%           7.64%             10.10%
   Regulatory capital ratios:
     Core capital                                             8.21%           6.62%              7.25%
     Risk-based capital                                      18.23%          13.90%             16.24%
 World Savings Bank, a State Savings Bank:
   Total assets                                        $  3,508,260    $    132,201       $  3,519,046
   Net worth                                                190,175          12,166            186,411
   Net worth/total assets                                     5.42%           9.19%              5.30%
   Regulatory capital ratios:
     Tier 1 leverage capital                                  5.35%           9.43%              5.26%
     Total risk-based capital                                25.81%          17.49%             25.15%
</TABLE>
<PAGE>


                        Golden West Financial Corporation
                              Financial Highlights
                                   (Unaudited)
                 (Dollars in thousands except per share figures)
<TABLE>
<CAPTION>

                               Three Months Ended
                                    March 31
                                                      -------------------------
                                                         1999          1998
                                                      -----------   -----------
<S>                                                   <C>           <C>       
  New real estate loans originated                    $2,077,980    $1,467,193
  Average yield on new real estate loans                   7.60%         7.76%
  Current average rate on new real estate loans (a)        6.14%         6.39%
  Increase in deposits (b)                            $  176,345    $  449,553
  Earnings before extraordinary item                     120,368       110,081
  Net earnings                                           120,368       102,371
  Basic earnings per share before extraordinary item        2.13          1.92
  Diluted earnings per share before extraordinary item      2.11          1.89
  Basic earnings per share                                  2.13          1.79
  Diluted earnings per share                                2.11          1.76
  Cash dividends on common stock                             .14          .125
  Average common shares outstanding                   56,580,974    57,126,696
  Average diluted common shares outstanding           57,145,979    58,008,840
  Ratios:(c)
    Net earnings/average net worth (ROE)(d)               15.31%        14.83%
    Net earnings/average assets (ROA)(d)                   1.25%         1.03%
    Net interest income/average assets                     2.61%         2.45%
    General and administrative expense/average assets       .97%          .84%
</TABLE>

(a)  The current rate  reflects  that the actual rate being paid by the borrower
     at time of origination.
(b)  Includes a decrease of $525 million of  wholesale  deposits for the quarter
     ended March 31, 1998.
(c)  Ratios are  annualized by  multiplying  the quarterly  computation by four.
     Averages are  computed by adding the  beginning  balance and each  monthend
     balance during the quarter and dividing by four.
(d)  The ratios for the quarter  ended March 31, 1998 include the  extraordinary
     item.  The  ratios for the  quarter  ended  March 31,  1998  excluding  the
     extraordinary item are: ROE 15.95% and ROA 1.11%.



<PAGE>


         FINANCIAL CONDITION

         The  consolidated  condensed  balance  sheet  shown in the table  below
  presents the Company's assets and liabilities in percentage terms at March 31,
  1999 and 1998, and December 31, 1998. The reader is referred to page 53 of the
  Company's  1998  Annual  Report on Form 10-K for similar  information  for the
  years 1995 through 1998 and a discussion of the changes in the  composition of
  the Company's assets and liabilities in those years.


                                     TABLE 1

                      Consolidated Condensed Balance Sheet
                               In Percentage Terms
<TABLE>
<CAPTION>
                                                                March 31                 
                                                           --------------------           December 31
                                                            1999         1998                1998
                                                           -------      -------          -------------
       Assets:
<S>                                                           <C>          <C>                    <C> 
          Cash and investments                                4.4%         3.0%                   2.7%
          Mortgage-backed securities                         23.8         10.8                   26.1
          Loans receivable                                   67.3         82.5                   66.9
          Other assets                                        4.5          3.7                    4.3
                                                           -------      -------                -------
                                                            100.0%       100.0%                 100.0%
                                                           =======      =======                =======
       Liabilities and Stockholders' Equity:
          Deposits                                           68.3%        61.9%                  68.1%
          Federal Home Loan Bank advances                    15.8         19.3                   16.0
          Securities sold under agreements to repurchase      1.8          5.5                    3.3
          Federal funds purchased                             1.2          1.3                    0.0
          Other liabilities                                   2.3          2.1                    2.1
          Subordinated debt                                   2.4          2.8                    2.4
          Stockholders' equity                                8.2          7.1                    8.1
                                                           -------      -------                -------
                                                            100.0%       100.0%                 100.0%
                                                           =======      =======                =======
</TABLE>

         During  1998,  the  Company  securitized  $8.2  billion  of loans  into
mortgage-backed  securities  which  caused  the  percentage  of  mortgage-backed
securities to total assets to increase from March 31, 1998 to March 31, 1999 and
the  percentage  of loans  receivable to total assets to decrease from March 31,
1998 to March 31, 1999. For further discussion, see pages 12 and 13.

         As the above table  shows,  the  largest  asset  component  is the loan
portfolio (including  mortgage-backed  securities),  which consists primarily of
long-term   mortgages.   Deposits   represent  the  majority  of  the  Company's
liabilities.  The disparity  between the  repricing  (maturity,  prepayment,  or
interest rate change) of deposits and  borrowings  and the repricing of mortgage
loans and  investments  can have a material  impact on the Company's  results of
operations.  The difference between the repricing  characteristics of assets and
liabilities is commonly referred to as "the gap."



<PAGE>


         The following gap table shows that, as of March 31, 1999, the Company's
assets  reprice  sooner  than  its  liabilities.  If all  repricing  assets  and
liabilities responded equally to changes in the interest rate environment,  then
the gap analysis  would  suggest  that the  Company's  earnings  would rise when
interest rates increase and would fall when interest  rates  decrease.  However,
the Company's earnings are also affected by the built-in reporting and repricing
lags inherent in the Eleventh District Cost of Funds Index (COFI),  which is the
benchmark  Golden  West  uses  to  determine  the  rate on the  majority  of its
adjustable rate mortgages  (ARMs).  The reporting lag occurs because of the time
it takes to gather the data needed to compute the index.  As a result,  the COFI
in effect in any month actually  reflects the Eleventh  District's cost of funds
at the level it was two months prior.  The repricing lag occurs  because COFI is
based  on a  portfolio  of  accounts,  not  all of  which  reprice  immediately.
Therefore,  COFI does not initially  fully  reflect a change in market  interest
rates.  Consequently,  when the interest rate environment changes, the COFI lags
cause  assets to  initially  reprice  more  slowly than  liabilities,  enhancing
earnings when rates are falling and holding down income when rates rise.


                                     TABLE 2

            Repricing of Interest-Earning Assets and Interest-Bearing
                   Liabilities, Repricing Gaps, and Gap Ratio
                              As of March 31, 1999
                              (Dollars in millions)
<TABLE>
<CAPTION>
                                                             Projected Repricing(a)
                                       -------------------------------------------------------------------
                                         0 - 3         4 - 12        1 - 5         Over 5
                                         Months        Months        Years          Years        Total
                                       -----------   -----------   -----------   ------------  -----------
Interest-Earning Assets:
<S>                                      <C>            <C>           <C>            <C>         <C>     
  Investments                            $  1,158     $      32      $     69       $    228     $  1,487
  Mortgage-backed securities                8,664            91           285            167        9,207
  Loans receivable:
    Rate-sensitive                         21,656         1,952           149            -0-       23,757
    Fixed-rate                                130           339         1,007            663        2,139
  Other(b)                                    949           -0-           -0-            -0-          949
  Impact of interest rate swaps               545           135          (663)           (17)         -0-
                                       -----------   -----------   -----------   ------------  -----------
Total                                    $ 33,102     $   2,549      $    847       $  1,041     $ 37,539
                                       ===========   ===========   ===========   ============  ===========
Interest-Bearing Liabilities(c):
  Deposits                               $ 14,477     $  10,368      $  1,547       $      3     $ 26,395
  FHLB advances                             5,500           200           122            293        6,115
  Other borrowings                          1,361             7           712            -0-        2,080
  Impact of interest rate swaps               234          (113)         (121)           -0-          -0-
                                       -----------   -----------   -----------   ------------  -----------
Total                                    $ 21,572     $  10,462      $  2,260       $    296     $ 34,590
                                       ===========   ===========   ===========   ============  ===========

Repricing gap                            $ 11,530     $  (7,913)     $ (1,413)      $    745
                                       ===========   ===========   ===========   ============

Cumulative gap                           $ 11,530     $   3,617      $  2,204       $  2,949
                                       ===========   ===========   ===========   ============

Cumulative gap as a percentage of
    total assets                            29.8%          9.4%          5.7%
                                       ===========   ===========   ===========
</TABLE>

(a)  Based on scheduled maturity or scheduled  repricing;  loans and MBS reflect
     scheduled  repayments  and  projected  prepayments  of  principal  based on
     current rates of prepayment.
(b)  Includes cash in banks and Federal Home Loan Bank (FHLB) stock.
(c)  Liabilities  with no maturity  date,  such as checking,  passbook and money
     market deposit accounts, are assigned zero months.


<PAGE>


         CASH AND INVESTMENTS

         The Office of Thrift  Supervision (OTS) requires insured  institutions,
such as World Savings Bank, FSB (WFSB),  and World Savings and Loan  Association
(WSL), to maintain a minimum amount of cash and certain  qualifying  investments
for  liquidity  purposes.  At March 31, 1999 and 1998 and at December  31, 1998,
WFSB and WSL had liquidity in excess of the regulatory  requirements.  The state
of Texas requires insured institutions,  such as World Savings Bank, SSB (WSSB),
to maintain a daily minimum  amount of cash and certain  qualifying  investments
for  liquidity  purposes.  WSSB met this  requirement  during the periods  under
discussion.

         At March 31, 1999 and 1998,  and  December  31,  1998,  the Company had
securities  available for sale in the amount of $332 million,  $628 million, and
$377 million,  respectively,  including unrealized gains on securities available
for sale of $317 million, $275 million, and $358 million, respectively. At March
31, 1999 and 1998, and December 31, 1998, the Company had no securities held for
trading in its investment securities portfolio.

         Included in the  Company's  investment  portfolio at March 31, 1999 and
1998, and December 31, 1998, were collateralized  mortgage obligations (CMOs) in
the amount of $194 million,  $61 million,  and $196 million,  respectively.  The
Company holds CMOs on which both  principal  and interest are received.  It does
not hold any  interest-only  or  principal-only  CMOs. At March 31, 1999, all of
these CMOs qualified for inclusion in the regulatory liquidity measurement.

         LOANS RECEIVABLE AND MORTGAGE-BACKED SECURITIES

         The Company invests in whole loans and mortgage-backed securities (MBS)
and, from time to time,  the Company  securitizes  loans from its portfolio into
MBS and Real Estate Mortgage Investment Conduit Securities (MBS-REMICs) that are
available to be used as collateral for  borrowings.  At March 31, 1999 and 1998,
and December 31, 1998, the balance of loans receivable including mortgage backed
securities was $35.2 billion,  $37.0 billion,  and $35.8 billion,  respectively.
Included in the $35.2  billion at March 31,  1999,  was $3.6  billion of Federal
National  Mortgage  Association  (FNMA)  mortgage-backed   securities  with  the
underlying loans subject to full credit recourse to the Company and $5.0 billion
of  MBS-REMICs.  Included in the $35.8  billion at December 31,  1998,  was $3.9
billion of FNMA MBS with the underlying loans subject to full credit recourse to
the Company and $5.5  billion of  MBS-REMICs.  Included in the $37.0  billion at
March 31, 1998, was $3.4 billion of FNMA MBS with the  underlying  loans subject
to full credit recourse to the Company

         At March 31, 1999 and 1998,  and December 31, 1998, the Company had MBS
held to maturity in the amount of $9.1 billion,  $4.1 billion, and $9.9 billion,
respectively. At March 31, 1999 and 1998, and December 31, 1998, the Company had
MBS  available for sale in the amount of $103  million,  $149 million,  and $114
million,  respectively,  including unrealized gains on MBS available for sale of
$4 million, $8 million, and $5 million, respectively. At March 31, 1999 and 1998
and December 31, 1998, the Company had no trading MBS.



<PAGE>


         During 1998,  the Company  securitized  $6.4 billion of mortgage  loans
into  MBS-REMICs.  MBS-REMICs are being used as collateral for  borrowings.  The
Company  has the  ability  and  intent to hold  these MBS  until  maturity  and,
accordingly, MBS-REMICs are classified as MBS held to maturity.

         During 1998, the Company  securitized  $1.8 billion of adjustable  rate
mortgages  (ARMs) into FNMA  COFI-indexed  MBS.  The Company has the ability and
intent  to hold  these  MBS  until  maturity  and,  accordingly,  these  MBS are
classified  as held to maturity.  The FNMA MBS held to maturity are available to
be used as collateral for  borrowings  and the  underlying  loans are subject to
full credit recourse to the Company.

         Repayments  of MBS during the first  quarter of 1999 were $751  million
compared to $149 million in the same period of 1998. MBS repayments  were higher
during the first three  months of 1999 as compared to the first three  months of
1998  due to an  increase  in  total  MBS  outstanding  and an  increase  in the
prepayment rate of the underlying mortgages.

         LOAN VOLUME

         New loan  originations  for the three  months  ended  March  31,  1999,
amounted to $2.1  billion  compared to $1.5 billion for the same period in 1998.
The high volume of originations during 1999 was due to a continued strong demand
for home loans for both purchases and refinances.  Refinanced loans  constituted
49% of new loan originations for the three months ended March 31, 1999, compared
to 44% for the three months ended March 31, 1998.

         Loans originated for sale amounted to $287 million for the three months
ended March 31, 1999,  compared to $122 million for the same period in 1998.  In
addition,  during the first  three  months of 1999,  $171  million of loans were
converted from adjustable rate to fixed rate compared to $8 million for the same
period in 1998.  The Company sold $535  million and $132  million of  fixed-rate
loans for the three months ended March 31, 1999 and 1998, respectively.

         At March 31, 1999, the Company had lending operations in 27 states. The
largest  source  of  mortgage   origination  is  loans  secured  by  residential
properties  in  California.  For the three months  ended March 31, 1999,  64% of
total loan originations were on residential properties in California compared to
59% for the same period in 1998. The five largest states, other than California,
for originations for the three months ended March 31, 1999, were Florida, Texas,
Washington,  Arizona,  and  Illinois  with a  combined  total  of  19% of  total
originations.   The   percentage   of  the  total  loan   portfolio   (including
mortgage-backed  securities with recourse and  MBS-REMICs)  that is comprised of
residential  loans in  California  was 65% at March 31, 1999  compared to 66% at
March 31, 1998 and December 31, 1998.

         The  Company  originates  adjustable  rate  mortgages  tied to  various
indexes,  including the Eleventh District Cost of Funds Index (COFI), the Golden
West Cost of Savings Index (COSI),  and the twelve-month  rolling average of the
One-Year Treasury Constant Maturity (TCM).


<PAGE>


         The following table shows the distribution of ARM originations by index
for the first quarter of 1999 and 1998.

                                     TABLE 3


                 Adjustable Rate Mortgage Originations by Index
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                       March 31
                              ----------------------------
        ARM Index                1999           1998
--------------------------    ------------   ------------
<S>                           <C>            <C>        
COFI                          $   548,633    $   989,904
COSI                            1,077,388        133,248
TCM                                38,650        163,975
                              ------------   ------------
                              $ 1,664,671    $ 1,287,127
                              ============   ============
</TABLE>



         The following  table shows the  distribution  by index of the Company's
outstanding  balance  of  adjustable  rate  mortgages  (including  ARM MBS  with
recourse and ARM MBS-REMICs) at March 31, 1999 and 1998 and December 31, 1998.


                                     TABLE 4

                      Adjustable Rate Mortgage Portfolio by
                   Index (Including ARM MBS with recourse and
                                 ARM MBS-REMICs)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                         March 31                 
                              --------------------------------     December 31
        ARM Index                 1999              1998              1998
--------------------------    --------------   ---------------   ---------------
<S>                            <C>                <C>              <C>         
COFI                           $ 28,354,954      $ 33,142,963      $ 29,761,484
COSI                              2,720,655           146,704         1,703,283
TCM                               1,250,474           239,752         1,256,775
Other                               185,290           269,948           201,756
                              --------------   ---------------   ---------------
                               $ 32,511,373      $ 33,799,367      $ 32,923,298
                              ==============   ===============   ===============
</TABLE>

         The tables on the following two pages show the Company's loan portfolio
by state at March 31, 1999 and 1998.


<PAGE>



                                     TABLE 5

                             Loan Portfolio by State
                                 March 31, 1999
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                          Residential                                                 
                          Real Estate                          Commercial                     Loans as
                    -------------------------                     Real           Total         a% of
     State            1 - 4           5+          Land           Estate        Loans (a)      Portfolio
----------------   ------------   -----------   ----------    --------------   -----------   ------------
<S>                <C>            <C>             <C>           <C>           <C>               <C>   
California         $19,452,910    $3,301,332      $   204       $  37,569     $22,792,015       65.43%
Florida              1,473,511        17,745            2             681       1,491,939        4.28
Texas                1,385,186        63,824          488           1,310       1,450,808        4.17
Illinois             1,120,218       142,985          -0-             -0-       1,263,203        3.63
New Jersey           1,187,975           -0-          -0-           4,557       1,192,532        3.42
Colorado               920,537       186,859          -0-           5,510       1,112,906        3.20
Washington             553,257       433,808          -0-             677         987,742        2.84
Arizona                737,057        22,555          -0-             -0-         759,612        2.18
Other (b)            3,719,381        46,293           63          12,720       3,778,457       10.85
                   ------------   -----------   ----------   -------------    ------------   ---------
  Totals           $30,550,032    $4,215,401      $   757       $  63,024      34,829,214      100.00%
                   ============   ===========   ==========   =============                   =========

SFAS 91 deferred loan fees                                                         (3,647)
Loan discount on purchased loans                                                   (2,878)
Undisbursed loan funds                                                             (2,928)
Allowance for loan losses                                                        (236,476)
Loans to facilitate (LTF) interest reserve                                           (361)
Troubled debt restructured (TDR) interest reserve                                  (1,372)
Loans on deposits                                                                  23,968
                                                                              ------------
     Total loan portfolio and loans securitized into FNMA MBS with recourse
     and MBS-REMICs                                                            34,605,520
Loans securitized into FNMA MBS with recourse and MBS-REMICs                   (8,584,619)(c)
                                                                              ------------
     Total loan portfolio                                                     $26,020,901
                                                                              ============
</TABLE>

(a)  The  Company has no  commercial  loans  other than  commercial  real estate
     loans.
(b)  Includes states with loans less than 2% of total loans.
(c)  The above schedule  includes the March 31, 1999 balances of loans that were
     securitized and retained as FNMA MBS with recourse and MBS-REMICs.



<PAGE>



                                     TABLE 6

                             Loan Portfolio by State
                                 March 31, 1998
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                          Residential                           
                          Real Estate                          Commercial                     Loans as
                    -------------------------                     Real           Total         a% of
     State            1 - 4           5+          Land           Estate        Loans (a)      Portfolio
----------------   ------------   -----------   ----------    --------------   -----------   ------------
<S>                <C>            <C>             <C>           <C>           <C>               <C>   
California         $20,559,134    $3,441,030      $   227       $  46,376     $24,046,767       66.06%
Florida              1,391,624        19,980            7             825       1,412,436        3.88
Texas                1,401,536        84,865          557           1,435       1,488,393        4.09
Illinois             1,207,662       165,490          -0-           1,576       1,374,728        3.78
New Jersey           1,247,812           399          -0-           5,372       1,253,583        3.44
Colorado             1,084,163       223,494          -0-           6,992       1,314,649        3.61
Washington             530,491       410,124          -0-             712         941,327        2.59
Arizona                765,220        36,671          -0-             541         802,432        2.20
Other (b)            3,701,019        52,545           86          15,385       3,769,035       10.35
                   ------------   -----------   ----------   -------------    ------------   ---------
  Totals           $31,888,661    $4,434,598      $   877       $  79,214      36,403,350      100.00%
                   ============   ===========   ==========   =============                   =========

SFAS 91 deferred loan fees                                                        (33,962)
Loan discount on purchased loans                                                   (3,689)
Undisbursed loan funds                                                             (3,579)
Allowance for loan losses                                                        (237,186)
Loans to facilitate interest reserve                                                 (570)
Troubled debt restructured interest reserve                                        (3,042)
Loans on deposits                                                                  27,169
                                                                              ------------
     Total loan portfolio and loans securitized into FNMA MBS with recourse    36,148,491
Loans securitized into FNMA MBS with recourse                                  (3,424,636)(c)
                                                                              ------------
     Total loan portfolio                                                     $32,723,855
                                                                              ============
</TABLE>

(a)  The  Company has no  commercial  loans  other than  commercial  real estate
     loans.
(b)  Includes states with loans less than 2% of total loans.
(c)  The above schedule  includes the March 31, 1998 balances of loans that were
     securitized and retained as FNMA MBS with recourse.



<PAGE>


         The Company  continues to emphasize ARM loans with interest  rates that
change  periodically  in accordance  with  movements in specified  indexes.  The
portion of the mortgage  portfolio  (including MBS and  MBS-REMICs)  composed of
rate-sensitive loans was 93% at March 31, 1999 compared to 92% at March 31, 1998
and December 31, 1998. The Company's ARM originations for the first three months
of 1999  constituted  80% of new mortgage loans made in 1999 compared to 87% for
the first three months of 1998.

         The weighted  average  maximum  lifetime cap rate on the  Company's ARM
loan portfolio  (including  ARMs swapped into MBS with recourse and  MBS-REMICs)
was 12.59%,  or 5.47% above the actual weighted  average rate at March 31, 1999,
versus 12.72%, or 5.28% above the weighted average rate at March 31, 1998.

         Approximately  $4.5 billion of the Company's ARM loans  (including  MBS
with recourse and  MBS-REMICs)  have terms that state that the interest rate may
not fall below a lifetime floor set at the time of origination or assumption. As
of March 31, 1999, $498 million of ARM loans had reached their rate floors.  The
weighted  average floor rate on the loans that had reached their floor was 7.69%
at March 31, 1999  compared to 7.75% at March 31, 1998.  Without the floor,  the
average rate on these loans would have been 6.88% at March 31, 1999 and 7.24% at
March 31, 1998.

         Loan repayments  consist of monthly loan amortization and loan payoffs.
For the three  months ended March 31, 1999,  loan  repayments  were $1.3 billion
compared  to $1.4  billion in the same period of 1998.  Although  the balance of
loans  receivable  was smaller due largely to the  securitization  of loans into
MBS,  prepayments  remained  high due to the  strong  refinance  and  home  sale
activity.

         MORTGAGE SERVICING RIGHTS

         The Company  accounts for mortgage  servicing rights in accordance with
SFAS 125.  Capitalized  mortgage  servicing  rights  are  included  in  "Prepaid
expenses and other assets" on the Consolidated Statement of Financial Condition.
The following table shows the changes in capitalized  mortgage  servicing rights
at March 31, 1999 and 1998.


                                     TABLE 7

                      Capitalized Mortgage Servicing Rights
                             (Dollars in thousands)

  <TABLE>
<CAPTION>                                                               Three Months Ended
                                                                            March 31
                                                                  ---------------------------
                                                                      1999           1998
                                                                  ------------   ------------
<S>                                                                  <C>            <C>     
  Beginning balance of capitalized mortgage servicing rights         $ 28,635       $ 11,116
  New capitalized mortgage servicing rights from loan sales             8,968          2,151
  Amortization of capitalized mortgage servicing rights                (2,353)         (892)
                                                                  ------------   ------------
  Ending balance of capitalized mortgage servicing rights            $ 35,250       $ 12,375
                                                                  ============   ============
</TABLE>
     The book value of Golden  West's  servicing  rights did not exceed the fair
value at March 31, 1999 or 1998 and,  therefore,  no write-down of the servicing
rights to their fair value was necessary.



<PAGE>


         ASSET QUALITY

         One measure of the soundness of the Company's loan and MBS portfolio is
its ratio of nonperforming  assets (NPAs) to total assets.  Nonperforming assets
include non-accrual loans (loans, including loans swapped into MBS with recourse
and loans  securitized into  MBS-REMICs,  that are 90 days or more past due) and
real  estate  acquired  through  foreclosure.   No  interest  is  recognized  on
non-accrual loans. The Company's  troubled debt restructured  (TDRs) are made up
of  loans  on  which  delinquent  payments  have  been  capitalized  or on which
temporary  interest  rate  reductions  have been made,  primarily  to  customers
adversely impacted by economic conditions.

         The following table shows the components of the Company's NPAs and TDRs
and the various ratios to total assets.


                                     TABLE 8

               Nonperforming Assets and Troubled Debt Restructured
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                           March 31              
                                                   --------------------------     December 31
                                                      1999           1998           1998
                                                   -----------    -----------   --------------
<S>                                                 <C>            <C>             <C>      
Non-accrual loans                                   $ 252,043      $ 319,324       $ 262,332
Real estate acquired through foreclosure               27,106         47,696          42,572
Real estate in judgment                                   154             69              74
                                                   -----------    -----------    ------------
Total nonperforming assets                          $ 279,303      $ 367,089       $ 304,978
                                                   ===========    ===========    ============

TDRs                                                $  16,575      $  38,686       $  22,774
                                                   ===========    ===========    ============

Ratio of NPAs to total assets                            .72%           .93%            .79%
                                                   ===========    ===========    ============

Ratio of TDRs to total assets                            .04%           .10%            .06%
                                                   ===========    ===========    ============

Ratio of NPAs and TDRs to total assets                   .76%          1.03%            .85%
                                                   ===========    ===========    ============
</TABLE>

         The lower NPAs at March 31, 1999 as compared to March 31, 1998  reflect
the strong  California  economy and housing  market.  The Company  continues  to
closely monitor all  delinquencies  and takes  appropriate  steps to protect its
interests.  Interest  foregone  on  non-accrual  loans  amounted  to $2  million
compared to $3 million for the same  period in 1998.  Interest  foregone on TDRs
amounted to $135 thousand for the three months ended March 31, 1999, compared to
$286 thousand for the three months ended March 31, 1998.

         The  tables  on the  following  page show the  Company's  nonperforming
assets by state as of March 31, 1999 and 1998.


<PAGE>



                                     TABLE 9

                          Nonperforming Assets by State
                                 March 31, 1999
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                             Non-Accrual Loans (a)                  Real Estate Owned
                      ----------------------------------     ------------------------------
                          Residential        Commercial                          Commercial                 NPAs as
                          Real Estate           Real            Residential         Real        Total       a% of
      State             1 -4         5+        Estate         1 - 4       5+       Estate      NPAs(b)       Loans
------------------    ---------   ---------  -----------     --------  ---------  ---------   ----------    --------
<S>                   <C>          <C>         <C>           <C>         <C>        <C>       <C>            <C> 
California            $161,884     $ 3,392     $  1,808      $22,736     $  -0-     $  -0-    $ 189,820      .83%
Florida                 16,841         -0-           78        1,134        -0-        -0-       18,053     1.21
Texas                    7,111         -0-          -0-          491        -0-        -0-        7,602      .52
Illinois                12,134         218          -0-        1,394        -0-        -0-       13,746     1.09
New Jersey              15,695         -0-          373          743        -0-        -0-       16,811     1.41
Colorado                 1,636         -0-            3          -0-        -0-        -0-        1,639      .15
Washington               2,102         -0-          -0-          -0-        -0-        -0-        2,102      .21
Arizona                  2,304         -0-          -0-           64        -0-        -0-        2,368      .31
Other (c)               26,380          84          -0-        1,268        -0-        -0-       27,732      .73
                      ---------   ---------  -----------     --------  ---------  ---------   ----------    -----
  Totals              $246,087     $ 3,694     $  2,262      $27,830     $  -0-     $  -0-      279,873      .80%
                      =========   =========  ===========     ========  =========  =========

REO general valuation allowance                                                                    (570)     (.00)
                                                                                              ----------    -----
Total nonperforming assets                                                                    $ 279,303      .80%
                                                                                              ==========    =====
</TABLE>

(a)  Non-accruals loans are 90 days or more past due and have no unpaid interest
     accrued.
(b)  The March 31, 1999 balances  include loans that were  securitized into FNMA
     MBS and MBS-REMICs.
(c)  Includes states with loans less than 2% of total loans.


                                    TABLE 10

                          Nonperforming Assets by State
                                 March 31, 1998
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                            Non-Accrual Loans (a)                 Real Estate Owned
                      --------------------------------     -------------------------------
                          Residential       Commercial                          Commercial                 NPAs as
                          Real Estate          Real            Residential         Real        Total        a% of
      State             1 -4         5+       Estate        1 - 4        5+       Estate      NPAs(b)       Loans
------------------    ---------   ---------  ---------     --------   ---------  ---------    ---------    ---------
<S>                   <C>          <C>        <C>          <C>         <C>         <C>        <C>          <C>  
California            $224,419     $ 7,827    $ 1,463      $42,586     $ 1,506     $  -0-     $277,801     1.16%
Florida                 12,565         -0-        188          482         -0-        -0-       13,235      .94
Texas                    8,284         -0-        -0-          935         -0-        -0-        9,219      .62
Illinois                11,030         221        -0-          612         -0-        -0-       11,863      .86
New Jersey              18,194         -0-        201          422         -0-        -0-       18,817     1.50
Colorado                 1,624         114         68           77         -0-        -0-        1,883      .14
Washington               1,969         -0-        -0-          544         -0-        -0-        2,513      .27
Arizona                  1,756         -0-        -0-          244         -0-        -0-        2,000      .25
Other (c)               29,340          41         20        1,216         162         11       30,790      .82
                      ---------   ---------  ---------     --------   ---------  ---------    ---------    -----
  Totals              $309,181     $ 8,203    $ 1,940      $47,118     $ 1,668     $   11      368,121     1.01%
                      =========   =========  =========     ========   =========  =========

REO general valuation allowance                                                                 (1,032)    (.00)
                                                                                              ---------    -----
Total nonperforming assets                                                                    $367,089     1.01%
                                                                                              =========    =====
</TABLE>

(a)  Non-accruals loans are 90 days or more past due and have no unpaid interest
     accrued.
(b)  The March 31, 1998 balances  include loans that were  securitized into FNMA
     MBS.
(c)  Includes states with loans less than 2% of total loans.


<PAGE>


         The Company provides specific valuation  allowances for losses on loans
  when  impaired,  and on real estate owned when any  significant  and permanent
  decline in value is  identified.  The Company also utilizes a methodology  for
  monitoring  and  estimating  loan  losses  that is  based  on both  historical
  experience  in the loan  portfolio  and factors  reflecting  current  economic
  conditions.  This approach uses a database that identifies losses on loans and
  foreclosed real estate from past years to the present,  broken down by year of
  origination,  type of loan, and geographical area.  Management is then able to
  estimate a range of general loss  allowances to cover losses in the portfolio.
  In addition,  periodic  reviews are made of major loans and real estate owned,
  and  major  lending  areas  are  regularly  reviewed  to  determine  potential
  problems.  Where indicated,  valuation allowances are established or adjusted.
  In estimating  possible  losses,  consideration is given to the estimated sale
  price,  cost of refurbishing,  payment of delinquent  taxes, cost of disposal,
  and  cost of  holding  the  property.  Additions  to and  reductions  from the
  allowances are reflected in current earnings.

         The table below shows the changes in the  allowance for loan losses for
the three months ended March 31, 1999 and 1998.


                                    TABLE 11

                      Changes in Allowance for Loan Losses
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               March 31
                                                                       ------------------------
                                                                         1999          1998
                                                                       ----------   -----------
<S>                                                                    <C>           <C>      
  Beginning allowance for loan losses                                  $ 244,466     $ 233,280
  Provision charged to expense                                               574         2,965
  Transfer allowance to reserve for losses
    on loans sold or securitized and retained                             (9,750)          -0-
  Less loans charged off, net                                                -0-           -0-
  Add recoveries                                                           1,186           941
                                                                       ----------   -----------
  Ending allowance for loan losses                                     $ 236,476     $ 237,186
                                                                       ==========   ===========
  Ratio of chargeoffs net of recoveries to average loans
    outstanding (including MBS with recourse and MBS-REMICs)               (.01%)        (.01%)
                                                                       ==========   ===========
</TABLE>

         As  previously  mentioned,  the  Company  has  securitized  loans  with
recourse from its portfolio into MBS and MBS-REMICs.  The Company's intent is to
hold these MBS and  MBS-REMICs  to maturity and the Company is liable for losses
on the loans underlying these securities. Because these loans underlying the MBS
and MBS-REMICs  are similar in all respects to the loans in its loan  portfolio,
the Company estimates its reserve on these securities in a manner similar to the
method it uses for the allowance  for loan losses.  The Company also sells loans
with full credit recourse and has established a reserve for potential  losses on
these  loans.  The  liability  for this  reserve  for  losses  on loans  sold or
securitized and retained is included in accounts payable and accrued expenses.



<PAGE>


         The table  below  shows the  changes in the reserve for losses on loans
  sold or securitized and retained for the three months ended March 31, 1999 and
  1998.


                                    TABLE 12

    Changes in Reserve for Losses on Loans Sold with Recourse or Securitized
                      and Retained (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               March 31
                                                                       ------------------------
                                                                         1999          1998
                                                                       ----------   -----------
  Beginning balance of reserve for losses on loans
<S>                                                                      <C>            <C>   
    sold with recourse or securitized and retained                      $  2,256       $   886
  Initial recourse at time of sale                                           543           137
  Transfer from allowance for loan losses                                  9,750           -0-
                                                                       ----------   -----------
  Ending balance of reserve for losses on loans
    sold with recourse or securitized and retained                      $ 12,549       $ 1,023
                                                                       ==========   ===========
</TABLE>


         The ratio to nonperforming  assets of the allowance for loan losses and
  the reserve for losses on loans sold or securitized and retained was 89.2% and
  64.9% at March 31,  1999 and 1998,  respectively.  At March 31, 1999 and 1998,
  the ratio to total loans  (including MBS with recourse and  MBS-REMICs) of the
  allowance  for loan  losses  and the  reserve  for  losses  on  loans  sold or
  securitized and retained was .72% and .66%, respectively.

         DEPOSITS

         Retail  deposits  increased  during  the first  quarter of 1999 by $176
  million,  including interest credited of $246 million, compared to an increase
  of $975 million,  including  interest  credited of $245 million,  in the first
  quarter of 1998.  Retail deposits  increased  during the first three months of
  1999 and 1998  primarily  due to ongoing  marketing  efforts as well as active
  promotions of market rate  transaction  accounts.  At March 31, 1999 and 1998,
  transaction  accounts (which  includes  checking,  passbook,  and money market
  accounts)  represented  37% and 23%,  respectively,  of the total  balance  of
  deposits.

         Beginning  in  January  1997,  the  Company  began  a  program  to  use
government   securities  dealers  to  sell  certificates  of  deposit  (CDs)  to
institutional  investors.  There were no outstanding  wholesale CDs at March 31,
1999 or at March 31, 1998.




<PAGE>


         The table below shows the  Company's  deposits by interest  rate and by
remaining maturity at March 31, 1999 and 1998.


                                    TABLE 13

                                    Deposits
                              (Dollars in millions)
<TABLE>
<CAPTION>
                                                                                 March 31
                                                           ---------------------------------------------------
                                                                     1999                       1998
                                                           ------------------------   ------------------------
                                                             Rate*         Amount       Rate*        Amount
                                                           ---------    -----------   ------------------------
    Deposits by rate:
<S>                                                            <C>       <C>              <C>       <C>      
      Interest-bearing checking accounts                       2.15%     $     113        2.10%      $     81
      Passbook accounts                                        1.82            517        2.11            527
      Money market deposit accounts                            4.15          9,191        4.15          5,074
      Term certificate accounts with original maturities of:
        4 weeks to 1 year                                      4.49          5,543        5.17          8,734
        1 to 2 years                                           5.03          7,592        5.46          6,292
        2 to 3 years                                           5.34          1,438        5.46          1,495
        3 to 4 years                                           5.26            357        5.45            396
        4 years and over                                       5.62          1,097        5.71          1,256
      Retail jumbo CDs                                         4.79            547        5.45            703
      Wholesale CDs                                            0.00            -0-        0.00            -0-
      All other                                                0.00            -0-        7.38              1
                                                                        -----------               ------------
                                                                         $  26,395                   $ 24,559
                                                                        ===========               ============


                                                                            1999                      1998
                                                                        -----------               ------------
    Deposits by remaining maturity:
        No contractual maturity                                          $   9,821                   $  5,682
        Maturity within one year                                            15,024                     16,465
        1 to 5 years                                                         1,547                      2,411
        Over 5 years                                                             3                          1
                                                                        -----------               ------------
                                                                         $  26,395                   $ 24,559
                                                                        ===========               ============
</TABLE>

* Weighted average interest rate, including the impact of interest rate swaps.

         At March 31, the weighted average cost of deposits was 4.58% (1999) and
5.02% (1998).

         ADVANCES FROM FEDERAL HOME LOAN BANKS

         The Company uses  borrowings  from FHLBs,  also known as "advances," to
supplement  cash  flow and to  provide  funds for loan  origination  activities.
Advances  are secured by pledges of certain  loans,  MBS-REMICs,  other MBS, and
capital  stock of FHLBs.  FHLB  advances  amounted to $6.1  billion at March 31,
1999,  compared to $7.6 billion and $6.2 billion at March 31, 1998, and December
31, 1998, respectively. During 1998, the Company paid off, before maturity, $4.4
billion of high-cost FHLB of San Francisco advances and, as a result, incurred a
$21 million pre-tax charge for the penalties  associated with these prepayments.
See Extraordinary Item discussion on page 31.


<PAGE>


         SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

         The Company borrows funds through  transactions in which securities are
sold under agreements to repurchase  (Reverse Repos).  Reverse Repos are entered
into with selected major  government  securities  dealers,  large banks, and the
Federal Home Loan Bank of San Francisco,  typically using MBS from the Company's
portfolio.  Reverse Repos with dealers,  banks and the Federal Home Loan Bank of
San Francisco amounted to $693 million,  $2.2 billion, and $1.3 billion at March
31, 1999 and 1998, and December 31, 1998, respectively.

         The Company uses  accounting and reporting  standards for transfers and
servicing of financial assets and  extinguishments  of liabilities in accordance
with SFAS 125 and SFAS 127.

         OTHER BORROWINGS

         At March 31, 1999,  Golden West, at the holding  company  level,  had a
total of $812 million of subordinated  debt issued and outstanding.  As of March
31, 1999, the Company's  subordinated  debt  securities  were rated A3 and A- by
Moody's  Investors Service  (Moody's) and Standard & Poor's  Corporation  (S&P),
respectively.  At  March  31,  1999,  Golden  West  had on  file a  registration
statement with the Securities and Exchange Commission for the sale of up to $300
million of subordinated notes.

         As of March 31, 1999,  WSL had a total of $100 million of  subordinated
notes  issued and  outstanding,  which  were rated A2 and A by Moody's  and S&P,
respectively. Although these notes had a maturity of July 1, 2000, WSL exercised
its right to call the notes on April 1, 1999.

         During  November 1996,  WFSB received  permission from the OTS to issue
non-convertible medium-term notes to institutional investors under rules similar
to Office of the  Comptroller  of the  Currency  rules  applicable  to similarly
situated  national  banks.  As of March 31, 1999,  WFSB had not issued any notes
under this authority.

         STOCKHOLDERS' EQUITY

         The Company's  stockholders'  equity  increased  during the first three
months of 1999 as a result of net earnings  partially offset by decreased market
values of securities  available for sale, the payment of quarterly  dividends to
stockholders,  and the $58 million cost of the repurchase of Company stock.  The
Company's  stockholders'  equity increased during the first three months of 1998
as a result of net earnings and increased market values of securities  available
for sale.  Unrealized  gains,  net of taxes, on securities and MBS available for
sale included in  stockholders'  equity at March 31, 1999 and 1998, and December
31, 1998, were $194 million, $167 million, and $215 million, respectively.

         From time to time,  the  Company's  capital  ratios may build to levels
well in excess of the amounts necessary to meet regulatory capital requirements.
Golden West's Board of Directors periodically reviews alternative uses of excess
capital,  including  faster  growth and  acquisitions.  At times,  the Board has
determined  that the  purchase of the  Company's  common  stock is a wise use of
excess capital.


<PAGE>


         Since 1993,  through  three  separate  actions,  Golden West's Board of
Directors  has  authorized  the  purchase by the  Company of up to 12.2  million
shares of Golden West's common stock.  As of March 31, 1999, 10.1 million shares
had been  repurchased  and retired at a cost of $518 million since October 1993,
of which  613,800  shares  were  purchased  and retired at a cost of $58 million
during the first three months of 1999.  Dividends from subsidiaries are expected
to continue to be the major source of funding for the stock repurchase  program.
The purchase of Golden West stock is not  intended to have a material  impact on
the normal liquidity of the Company.

         The  Company  has on  file a  shelf  registration  statement  with  the
Securities  and  Exchange  Commission  to issue up to two million  shares of its
preferred  stock.  The preferred stock may be issued in one or more series,  may
have varying  provisions and designations,  and may be represented by depository
shares.  The preferred stock is not convertible  into common stock. No preferred
stock has been issued under the registration.  The Company's preferred stock has
been preliminarily rated a2 by Moody's.

         REGULATORY CAPITAL

         The OTS requires federally insured institutions,  such as WFSB and WSL,
to meet certain minimum capital  requirements.  The following table shows WFSB's
regulatory  capital ratios and compares them to the OTS minimum  requirements at
March 31, 1999 and 1998.


                                    TABLE 14

                             World Savings Bank, FSB
                            Regulatory Capital Ratios
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                              March 31, 1999                                   March 31, 1998
              -----------------------------------------------   ----------------------------------------------
                     ACTUAL                  REQUIRED                  ACTUAL                  REQUIRED
              ----------------------   ----------------------   ----------------------   ----------------------
               Capital      Ratio       Capital      Ratio       Capital      Ratio       Capital      Ratio
              -----------  ---------   -----------  ---------   ----------   ---------   ----------   --------
<S>           <C>           <C>        <C>           <C>       <C>            <C>       <C>            <C>  
  Tangible    $2,247,752    7.04%      $  479,213    1.50%     $1,768,105     6.84%     $  387,893     1.50%
  Core         2,247,752    7.04        1,277,900    4.00       1,768,105     6.84       1,034,382     4.00
  Risk-based   2,391,623   13.18        1,451,557    8.00       1,863,679    13.51       1,103,194     8.00

</TABLE>

         The following table shows WSL's current  regulatory  capital ratios and
compares them to the OTS minimum requirements at March 31, 1999 and 1998.


                                    TABLE 15

                       World Savings and Loan Association
                            Regulatory Capital Ratios
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                              March 31, 1999                                     March 31, 1998
              ------------------------------------------------   ------------------------------------------------
                      ACTUAL                   REQUIRED                 ACTUAL                   REQUIRED
              -----------------------   -----------------------  ----------------------   -----------------------
               Capital       Ratio       Capital      Ratio       Capital       Ratio      Capital       Ratio
              -----------   ---------   -----------  ---------   -----------   --------   -----------   --------
<S>            <C>           <C>         <C>           <C>       <C>            <C>       <C>            <C>  
  Tangible     $ 507,282     8.21%       $  92,662     1.50%     $  929,084     6.62%     $  210,439     1.50%
  Core           507,282     8.21          247,099     4.00         929,084     6.62         561,171     4.00
  Risk-based     648,252    18.23          284,464     8.00       1,130,198    13.90         650,525     8.00

</TABLE>



<PAGE>


         In addition,  institutions  whose  exposure to interest  rate risk,  as
determined  by the OTS,  is deemed to be above  normal may be  required  to hold
additional  risk-based capital. The OTS has determined that neither WFSB nor WSL
has above-normal exposure to interest rate risk.

         The  OTS  has   adopted   rules   based   upon  five   capital   tiers:
well-capitalized,   adequately  capitalized,   undercapitalized,   significantly
undercapitalized,  and critically undercapitalized. The determination of whether
an  association  falls into a certain  classification  depends  primarily on its
capital ratios. As of March 31, 1999, the most recent  notification from the OTS
categorized  both  WFSB  and  WSL  as   "well-capitalized"   under  the  current
requirements.  There are no conditions  or events that have occurred  since that
notification   that  the   Company   believes   would  have  an  impact  on  the
categorization of either WFSB or WSL.

         The table  below  shows that  WFSB's  regulatory  capital  exceeds  the
requirements of the well-capitalized classification at March 31, 1999.


                                    TABLE 16

                             World Savings Bank, FSB
         Regulatory Capital Compared to Well-Capitalized Classification
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                  ACTUAL                       WELL-CAPITALIZED
                                           ------------------------       --------------------------
                                            Capital       Ratio              Capital        Ratio
                                           -----------   ----------       ------------   -----------
<S>                                      <C>                <C>          <C>                 <C>  
        Leverage                         $ 2,247,752        7.04%        $  1,597,376        5.00%
        Tier 1 risk-based                  2,247,752       12.39            1,916,851        6.00
        Total risk-based                   2,391,623       13.18            1,814,446       10.00
</TABLE>

         The table  below  shows  that  WSL's  regulatory  capital  exceeds  the
requirements of the well-capitalized classification at March 31, 1999.


                                    TABLE 17

                       World Savings and Loan Association
         Regulatory Capital Compared to Well-Capitalized Classification
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                    ACTUAL                     WELL-CAPITALIZED
                                           ----------------------          --------------------------
                                            Capital       Ratio              Capital        Ratio
                                           -----------   --------          ------------   -----------
<S>                                        <C>              <C>            <C>               <C>  
        Leverage                           $ 507,282        8.21%          $  308,874        5.00%
        Tier 1 risk-based                    507,282       14.27              370,648        6.00
        Total risk-based                     648,252       18.23              355,580       10.00

</TABLE>


<PAGE>


         World  Savings  Bank,  SSB is  regulated  by the FDIC and the  state of
Texas.  At March 31, WSSB had the  following  regulatory  capital  calculated in
accordance with the FDIC's capital standards:


                                    TABLE 18

                             World Savings Bank, SSB
                            Regulatory Capital Ratios
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                  March 31, 1999                                   March 31, 1998
                  -----------------------------------------------   ----------------------------------------------
                         ACTUAL                  REQUIRED                  ACTUAL                 REQUIRED
                  ----------------------   ----------------------   ----------------------  ----------------------
                   Capital       Ratio      Capital      Ratio       Capital      Ratio      Capital      Ratio
                  -----------   --------   -----------  ---------   ----------   ---------  -----------  ---------
<S>                <C>          <C>        <C>           <C>         <C>          <C>         <C>         <C>  
Tier 1 Leverage    $ 190,175     5.35%     $ 106,643     3.00%       $ 12,166     9.43%       $  3,870    3.00%
Tier 1 risk-based    190,175    25.78         29,505     4.00          12,166    17.23           2.825    4.00
Total risk-based     190,389    25.81         59,011     8.00          12,348    17.49           5,649    8.00
  </TABLE>



RESULTS OF OPERATIONS

         NET EARNINGS

         Net  earnings  for the three  months  ended  March  31,  1999 were $120
million compared to net earnings of $110 million,  before an extraordinary  item
(see extraordinary item discussion on page 31), for the three months ended March
31,  1998  Net  earnings  increased  in 1999 as  compared  1998 as a  result  of
increased net interest income,  a decrease in the provision for loan losses,  an
increase in non-interest income, and a lower effective tax rate. These increases
to  net  earnings  were   partially   offset  by  an  increase  in  general  and
administrative expenses.




<PAGE>


         SPREADS

         An  important  determinant  of the  Company's  earnings  is its primary
spread -- the  difference  between  its yield on earning  assets and its cost of
funds. The table below shows the components of the Company's spread at March 31,
1999 and 1998, and December 31, 1998.


                                    TABLE 19

                            Yield on Earning Assets,
                        Cost of Funds, and Primary Spread
<TABLE>
<CAPTION>
                                                        March 31                   December 31
                                               ----------------------------
                                                  1999            1998                1998
                                               ------------    ------------       -------------
<S>                                                <C>             <C>                <C>  
Yield on loan portfolio                            7.25%           7.57%              7.36%
Yield on MBS                                       7.02            7.23               7.20
Yield on investments                               5.55            6.53               5.53
                                               ---------       ---------          ---------
Yield on earning assets                            7.14            7.51               7.30
                                               ---------       ---------          ---------
Cost of deposits                                   4.58            5.02               4.67
Cost of borrowings                                 5.73            6.02               5.87
                                               ---------       ---------
                                                                                  ---------
Cost of funds                                      4.85            5.33               4.96
                                               ---------       ---------          ---------
Primary spread                                     2.29%           2.18%              2.34%
                                               =========       =========          =========
</TABLE>

         The Company holds ARMs to manage the rate sensitivity of the asset side
of the balance sheet. Most of the Company's ARMs have interest rates that change
in  accordance  with an index based on the cost of deposits  and  borrowings  of
savings  institutions  that are members of the FHLB of San Francisco (the COFI).
Nevertheless,  the yield on the Company's ARM portfolio  tends to lag changes in
market  interest  rates  because  of lags  related  to the index and  because of
certain loan features.  These  features  include  introductory  rates on new ARM
loans, the interest rate adjustment  frequency of ARM loans,  interest rate caps
or limits on individual rate changes and interest rate floors. On balance,  COFI
lags and ARM structural features cause the Company's assets initially to reprice
more slowly than its  liabilities,  resulting  in a temporary  reduction  in net
interest  income when rates  increase  and a temporary  increase in net interest
income when rates fall.



<PAGE>


         The  following  table shows the  Company's  revenues  and expenses as a
percentage of total revenues for the three months ended March 31, 1999 and 1998,
in order to focus on the changes in  interest  income  between  years as well as
changes in other revenue and expense amounts.


                                    TABLE 20

                       Selected Revenue and Expense Items
                        as Percentages of Total Revenues
<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    March 31
                                                             -----------------------
                                                               1999          1998
                                                             ---------     ---------
<S>                                                              <C>           <C>  
        Interest on loans (a)                                    65.3%         80.5%
        Interest on mortgage-backed securities (a)               23.1           9.3
        Interest and dividends on investments                     6.8           6.9
                                                             ---------     ---------
                                                                 95.2          96.7
        Less:
          Interest on deposits                                   42.1          40.4
          Interest on advances and other borrowings              18.7          25.1
                                                             ---------     ---------
                                                                 60.8          65.5

        Net interest income                                      34.4          31.2
          Provision for loan losses                                .1            .4
                                                             ---------     ---------
        Net interest income after provision for loan losses      34.3          30.8

        Add:
          Fees                                                    2.2           1.7
          Gain on the sale of securities, MBS, and loans          1.4            .3
          Other non-interest income                               1.2           1.3
                                                             ---------     ---------
                                                                  4.8           3.3
        Less:
          General and administrative expenses                    12.7          10.7
          Taxes on income                                         9.9           9.3
                                                             ---------     ---------
        Earnings before extraordinary item                       16.5          14.1
        Extraordinary item                                        0.0          (1.0)
                                                             ---------     ---------
        Net earnings                                             16.5%         13.1%
                                                             =========     =========

</TABLE>

(a)  During 1998, the Company  securitized  $8.2 billion of loans into MBS which
     caused the  percentage of interest on  mortgage-backed  securities to total
     revenues  to  increase  from  March  31,  1998 to  March  31,  1999 and the
     percentage  of interest on loans to total  revenues to decrease  from March
     31, 1998 to March 31, 1999. For further discussion, see pages 12 and 13.



<PAGE>


         INTEREST RATE SWAPS

         The Company  enters into  interest rate swaps as a part of its interest
rate risk management strategy. Such instruments are entered into solely to alter
the repricing characteristics of designated assets and liabilities.  The Company
does not hold any derivative financial instruments for trading purposes.

         Interest  rate swap  activity  decreased  net  interest  income by $2.7
million for the three months ended March 31, 1999,  as compared to a decrease of
$2 million for the same period in 1998.

         The following  table  summarizes  the  unrealized  gains and losses for
interest rate swaps at March 31, 1999 and 1998.


                                    TABLE 21

         Schedule of Unrealized Gains and Losses on Interest Rate Swaps
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                        March 31, 1999                             March 31, 1998
                            ----------------------------------------   ----------------------------------------
                                                            Net                                        Net
                            Unrealized    Unrealized    Unrealized     Unrealized    Unrealized    Unrealized
                               Gains        Losses        (Loss)          Gains        Losses        (Loss)
                            ------------  ------------  ------------   ------------  ------------  ------------
Interest rate swaps:
<S>                           <C>          <C>           <C>           <C>           <C>           <C>       
  Receive fixed               $   5,021    $      -0-    $   5,021     $   7,635     $     (626)   $    7,009
  Pay fixed                         108       (31,978)     (31,870)          933        (33,911)      (32,978)
                            ------------  ------------  ------------   ------------  ------------ -------------
                              $   5,129    $  (31,978)   $ (26,849)    $   8,568     $  (34,537)   $  (25,969)
                            ============  ============  ============   ============  ============ =============
</TABLE>



                                    TABLE 22

                    Schedule of Interest Rate Swaps Activity
                         (Notional amounts in millions)
<TABLE>
<CAPTION>
                                            Three Months Ended
                                              March 31, 1999
                                        ----------------------------
                                          Receive           Pay
                                           Fixed           Fixed
                                           Swaps           Swaps
                                        ------------    ------------
<S>                                         <C>             <C>    
Balance at December 31, 1998                $   512         $   899

Additions                                       -0-             -0-
Maturities                                     (104)            (40)
                                        ------------    ------------
Balance at March 31, 1999                   $   408         $   859
                                        ============    ============
</TABLE>


         The range of floating  interest rates received on swap contracts in the
first  three  months  of 1999 was  4.94% to  5.82%,  and the  range of  floating
interest  rates paid on swap  contracts  was 4.97% to 5.82%.  The range of fixed
interest  rates received on swap contracts in the first three months of 1999 was
5.17% to 8.68% and the range of fixed  interest rates paid on swap contracts was
5.58% to 9.14%.


<PAGE>


         INTEREST ON LOANS

         In the first  quarter of 1999,  interest on loans was lower than in the
comparable  1998  period by $153  million or 24.3%.  The  decrease  in the first
quarter of 1999 was due to a $7.4  billion  decrease  in the  average  portfolio
balance  and a 23 basis  point  decrease in the  average  portfolio  yield.  The
decrease  in  the  average  loan  portfolio  balance  was  primarily  due to the
securitization of loans into FNMA MBS and MBS-REMICs (see page 13).

         INTEREST ON MORTGAGE-BACKED SECURITIES

         In the first quarter of 1999,  interest on  mortgage-backed  securities
was higher than in the comparable 1998 period by $97 million or 133.7%. The 1999
increase was due primarily to a $5.6 billion  increase in the average  portfolio
balance which was partially  offset by a 14 basis point  decrease in the average
portfolio yield.  The increase in the  mortgage-backed  securities  portfolio is
primarily due to the  securitization  of loans into FNMA MBS and MBS-REMICs,  as
discussed on page 13.

         INTEREST AND DIVIDENDS ON INVESTMENTS

         The income earned on the  investment  portfolio  fluctuates,  depending
upon the volume outstanding and the yields available on short-term  investments.
For the first quarter of 1999,  interest and dividends on investments  was lower
than in the  comparable  1998  period by $4 million or 7.7%.  The  decrease  was
primarily due to a 71 basis point decrease in the average  portfolio yield which
was partially offset by a $27 million increase in the average portfolio balance.

         INTEREST ON DEPOSITS

         In the first  quarter of 1999,  interest  on deposits  decreased  by $8
million or 2.4% from the comparable  period in 1998. The first quarter  decrease
was due to a 43 basis point decrease in the average cost of deposits,  which was
partially offset by a $1.7 billion increase in the average balance of deposits.

         INTEREST ON ADVANCES AND OTHER BORROWINGS

         For  the  first  quarter  of  1999,  interest  on  advances  and  other
borrowings decreased by $60 million or 30.4% from the comparable period of 1998.
The first quarter  decrease was primarily due to a $3.4 billion  decrease in the
average  balance  and a 37 basis point  decrease  in the  average  cost of these
borrowings.

         PROVISION FOR LOAN LOSSES

         The  provision  for loan losses was $574  thousand for the three months
ended March 31,  1999,  compared to $3 million for the same period in 1998.  The
lower provision in 1999 was due to declining nonperforming assets as a result of
the strong California housing market and economy.


<PAGE>


         GENERAL AND ADMINISTRATIVE EXPENSES

         For the first  quarter of 1999,  general  and  administrative  expenses
(G&A) were $93 million  compared to $84  million  for the  comparable  period in
1998. G&A as a percentage of average assets on an annualized  basis was .97% for
the first  quarter of 1999  compared  to .84% for the same  period in 1998.  G&A
expenses  increased  in 1999 because of the  expansion  of the loan  origination
program and higher  depreciation  and  operating  expenses  associated  with the
completion of the roll-out of new computers and automated teller machines to our
branch network.

         EXTRAORDINARY ITEM

         During  the  first  quarter  of 1998,  the  Company  paid  off,  before
maturity, $2.9 billion of high-cost FHLB of San Francisco advances. As a result,
the Company  incurred a $13 million  pretax  charge in the first quarter of 1998
for the penalties  associated with the  prepayments.  In addition,  in the third
quarter of 1998,  the Company paid off,  before  maturity,  an  additional  $1.5
billion of high-cost  FHLB  advances.  As a result,  the Company  incurred an $8
million pretax charge in the third quarter of 1998 for the penalties  associated
with the prepayments.

         TAXES ON INCOME

         The Company  utilizes the accrual  method of accounting  for income tax
purposes and for  preparing its published  financial  statements.  For financial
reporting purposes only, the Company uses purchase accounting in connection with
certain assets acquired  through  mergers.  The purchase  accounting  portion of
income is not subject to tax.

         Taxes as a percentage of earnings  before the  extraordinary  item were
37.4% for the first quarter of 1999 compared to 39.9% for the same period a year
ago. The decrease in the tax rate in 1999 as compared to 1998 was due to a lower
overall state tax rate due to the expansion of business in lower taxing states.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         WFSB's  principal  sources  of funds  are  cash  flows  generated  from
earnings;  deposits; loan repayments; sales of loans; negotiable certificates of
deposit;   borrowings  from  the  FHLB;  investments  and  borrowings  from  its
affiliates;  debt  collateralized  by  mortgages,  MBS, or  securities;  and the
issuance  of  medium-term  notes.  In  addition,  WFSB  has  other  alternatives
available to provide  liquidity or finance  operations  including  federal funds
purchased,  borrowings  from public  offerings of debt,  issuances of commercial
paper,  and  borrowings  from  commercial  banks.  Furthermore,   under  certain
conditions,  WFSB may borrow from the Federal  Reserve Bank of San  Francisco to
meet short-term cash needs.  The availability of these funds will vary depending
upon policies of the FHLB, the Federal  Reserve Bank of San  Francisco,  and the
Federal Reserve Board. For a discussion of WFSB's  liquidity  positions at March
31, 1999, and 1998, and December 31, 1998, see the Cash and Investments  section
on page 12.

         WSL's  principal  sources  of  funds  are  cash  flows  generated  from
earnings;   deposits;   loan   repayments;   borrowings   from  the  FHLB;  debt
collateralized by mortgages, MBS, or securities; and the issuance of medium-term
notes. In addition,  WSL has a number of other alternatives available to provide
liquidity  or  finance  operations.   These  include  federal  funds  purchased,
borrowings from its affiliates,  borrowings from public offerings of debt, sales
of loans, negotiable certificates of deposit, issuances of commercial paper, and
borrowings from commercial banks. Furthermore, under certain conditions, WSL may
borrow from the Federal  Reserve Bank of San Francisco to meet  short-term  cash
needs.  The availability of these funds will vary depending upon policies of the
FHLB, the Federal Reserve Bank of San Francisco,  and the Federal Reserve Board.
For a discussion of WSL's  liquidity  positions at March 31, 1999, and 1998, and
December 31, 1998, see the Cash and Investments section on page 12.

         WSSB's  principal  sources  of funds  are  cash  flows  generated  from
earnings;   deposits;   loan   repayments;   borrowings   from  the  FHLB;  debt
collateralized by mortgages or securities; and borrowings from its affiliates.

         The  principal  sources of funds for WFSB's, WSL's  and WSSB's  parent,
Golden West, are dividends from subsidiaries,  interest on investments,  and the
proceeds from the issuance of debt and equity securities.  Various statutory and
regulatory  restrictions  and tax  considerations  limit the amount of dividends
WFSB and WSL can pay.  The  principal  liquidity  needs of  Golden  West are for
payment of interest  and  principal on  subordinated  debt  securities,  capital
contributions to its insured  subsidiaries  (including $489 million for the year
ended  December  31, 1998 and $100  million for the three months ended March 31,
1998),  dividends  to  stockholders,  the  purchase  of Golden  West  stock (see
stockholders'  equity  section  on page  23),  and  general  and  administrative
expenses. At March 31, 1999 and 1998, and December 31, 1998, Golden West's total
cash and investments  amounted to $848 million,  $964 million, and $898 million,
respectively.  Included in the March 31, 1999 and 1998,  and  December  31, 1998
amounts are loans to WFSB.




<PAGE>


YEAR 2000

         The  Company is aware of the system  challenges  that the Year 2000 has
created and currently has a plan in place (Year 2000 Project) to insure that all
of the  Company's  mission  critical  systems  will be Year  2000  compliant  by
mid-1999.  The plan has been developed in accordance  with guidance set forth by
federal  banking  regulators in a series of  jointly-issued  policy  statements.
Federal banking  regulators  regularly monitor the Company's progress in meeting
the  requirements  of such  policy  statements.  The Company  has  completed  an
inventory and assessment of all systems. The Company is currently in the process
of testing and modifying or replacing systems that may be affected by these Year
2000 compliance issues. Included in this process are both information technology
systems and other systems (e.g. elevators,  doorlocks) that could be affected by
Year 2000  issues.  The Company has placed  priority on  information  technology
systems  affecting  its  core  business  of  deposit-taking  and  lending.   The
evaluation,  correction  and  testing  of these  core  business  systems  is now
complete,  and these  systems  are now Year  2000  compliant.  During  the first
quarter of 1999, the Company commenced  integrated testing to ascertain that all
systems function together.

         While  the  Company  believes  it is doing  everything  technologically
possible to assure Year 2000 compliance, the success of the Year 2000 Project is
to some extent dependent upon vendor  cooperation.  The Company is requiring its
computer  systems and software  vendors to represent that the products  provided
are or will be Year 2000  compliant  and has  planned a program of  testing  for
compliance. Such testing is included in the testing previously described in this
section.  To date, the Company has no indication  that its principal  vendors or
their systems will adversely affect the Company's Year 2000 compliance efforts.

         The Company  currently  estimates that it will cost  approximately  $18
million to make all of its  computer  systems Year 2000  compliant.  The Company
will expense all costs associated with the Year 2000 Project and expects to fund
such costs through  operating cash flows. The Year 2000 Project expense incurred
during  1998 was $8 million and $3 million was  incurred  for the quarter  ended
March 31, 1999.  Included in the $18 million are estimates for  compensation  of
employees dedicated to the Year 2000 Project, consultants, hardware and software
expense and  depreciation  of the  equipment  purchased as part of this process.
However, the Company's Year 2000 expenses are not expected to result in a dollar
for dollar increase in the Company's overall  information  systems  expenditures
because the Company has dedicated a number of its existing  resources  solely to
the Year 2000 Project.

         The  Company  believes  that its Year 2000  Project  will result in the
Company's systems functioning normally, without adverse consequences.  While the
systems of others,  with whom and through which the Company  conducts  business,
are not within the  Company's  control,  the Year 2000  Project is  intended  to
provide the Company with  sufficient  advance warning that such systems will not
perform.  In the unlikely  event of a problem with the Company's  systems or the
systems of others which relate to the Company's core  business,  the Company has
developed  contingency  plans to address the potential  that one or more systems
might fail, despite efforts to the contrary.  Although the Company has no reason
to believe that such  contingency  plans will not effectively  avoid or mitigate
any adverse  consequences of such system failures,  no assurances are given that
such plans will be effective.



<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Golden West  estimates  the  sensitivity  of the Company's net interest
income,  net  earnings,   and  capital  ratios  to  interest  rate  changes  and
anticipated  growth based on simulations  using an  asset/liability  model which
takes into account the lags described on pages 11 and 27. The  simulation  model
projects net  interest  income,  net  earnings,  and capital  ratios based on an
immediate  interest  rate  increase  that is sustained  for a  thirty-six  month
period. The model is based on the actual maturity and repricing  characteristics
of interest-rate sensitive assets and liabilities. For certain assets, the model
incorporates  assumptions  regarding  the impact of changing  interest  rates on
prepayment  rates  which  are  based  on  the  Company's  historical  prepayment
information. The model factors in projections for anticipated activity levels by
product lines offered by the Company.  Based on the  information and assumptions
in effect at March 31,  1999,  Management  believes  that a 200 basis point rate
increase sustained over a thirty-six month period would not affect the Company's
long-term profitability and financial strength.

PART II. OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)      April 27, 1999 - Annual Meeting
<TABLE>
<CAPTION>
                                                                                                         Broker
                                                  For         Against       Withheld      Abstain       Non-Vote
                                             -------------- ------------- ------------- ------------- -------------
(b)       Directors elected:

<S>                                             <C>                            <C>    
          Louis J. Galen                        51,709,162                     580,440

          Antonia Hernandez                     51,717,787                     571,815

          Bernard A. Osher                      51,710,504                     579,098

(c)       Ratification of Auditors:

          Appointment of Deloitte & Touche      52,175,938        18,714                      94,950
          LLP, independent public
          accountants, for the fiscal year
          1999
</TABLE>

Other Directors continuing in office are:

     Maryellen B. Cattani, Patricia A. King, Bernard A. Osher, Kenneth T. Rosen,
Herbert M. Sandler, Marion O. Sandler, and Leslie Tang Schilling



<PAGE>


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      Index to Exhibits

             Exhibit No. Description

                  3(a)   Certificate   of   Incorporation,   as   amended,   and
                         amendments  thereto,  are  incorporated by reference to
                         Exhibit  3(a) to the  Company's  Annual  Report on Form
                         10-K (File No.  1-4269) for the year ended December 31,
                         1990.

                  3(b)   By-Laws  of the  Company,  as  amended  in  1997,.  are
                         incorporated  by  reference  to  Exhibit  3(a)  to  the
                         Company's  Annual Report on Form 10-K (File No. 1-4269)
                         for the year ended December 31, 1997.

                  4(a)   The  Registrant  agrees to furnish  to the  Commission,
                         upon request, a copy of each instrument with respect to
                         issues of  long-term  debt,  the  authorized  principal
                         amount of which does not exceed 10% of the total assets
                         of the Company.

                 10(a)   1996 Stock Option Plan, as amended,  is incorporated by
                         reference  to  Exhibit  A of the  Company's  Definitive
                         Proxy  Statement  on Schedule  14A,  filed on March 15,
                         1996,   for  the  Company's   1996  Annual  Meeting  of
                         Stockholders.

                 10(b)   Annual   Incentive   Bonus  Plan  is   incorporated  by
                         reference  to  Exhibit  A of the  Company's  Definitive
                         Proxy  Statement  on Schedule  14A,  filed on March 14,
                         1998,   for  the  Company's   1998  Annual  Meeting  of
                         Stockholders.

                 10(c)   Deferred Compensation Agreement between the Company and
                         James T. Judd is  incorporated  by reference to Exhibit
                         10(b) of the Company's Annual Report on Form 10-K (File
                         No. 1-4629) for the year ended December 31, 1986.

                 10(d)   Deferred  Compensation  Agreement  between  the Company
                         and Russell W. Kettell is  incorporated by reference to
                         Exhibit  10(c) of the  Company's  Annual Report on Form
                         10-K (File No.  1-4629) for the year ended December 31,
                         1986.




<PAGE>


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K (Continued)

     (a)     Index To Exhibits (continued)

             Exhibit No. Description

                 10(e)   Deferred Compensation Agreement between the Company and
                         J. L. Helvey is  incorporated  by  reference to Exhibit
                         10(d) of the Company's Annual Report on Form 10-K (File
                         No. 1-4629) for the year ended December 31, 1986.

                 10(f)   Form of Supplemental  Retirement  Agreement between the
                         Company and certain executive  officers is incorporated
                         by reference to Exhibit 10(j) to the  Company's  Annual
                         Report on Form  10-K  (File  No.  1-4629)  for the year
                         ended December 31, 1990.

                 10(g)   Operating lease on Company headquarters building,  1901
                         Harrison   Street,   Oakland,   California   94612,  is
                         incorporated  by  reference  to  Exhibit  10(h)  of the
                         Company's  Quarterly  Report  on Form  10-Q  (File  No.
                         1-4629) for the quarter ended September 30, 1998.

                 11      Statement of Computation of Earnings Per Share

                 27      Financial Data Schedule


         (b)      Reports on Form 8-K

                  The  Registrant  did not file any current  reports on Form 8-K
                  with the Commission during the first three months of 1999.





<PAGE>


                                   SIGNATURES

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

                                        GOLDEN WEST FINANCIAL CORPORATION

Dated:  May 13, 1999                    /s/ J. L. Helvey
                                        ------------------------------
                                        J. L. Helvey
                                        Executive Vice President
                                        (duly authorized and principal
                                        financial officer)