SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

For Quarter Ended September 30, 1996              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
October 31, 1996, was 57,337,009 shares.

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

     The consolidated  financial statements of Golden West Financial Corporation
and subsidiaries (the Company) for the three and nine months ended September 30,
1996 and 1995 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  and nine  month  periods  have been
included.  The operating  results for the three and nine months ended  September
30,  1996,  are not  necessarily  indicative  of the  results for the full year.

<TABLE>
<CAPTION>
                        Golden West Financial Corporation
                  Consolidated Statement of Financial Condition
                                   (Unaudited)
                             (Dollars in thousands)


                                                                      September 30  September 30    December 31
                                                                          1996          1995           1995
                                                                      -------------  ------------  -------------
<S>                                                                   <C>            <C>           <C>   
Assets:
  Cash                                                                $    130,467    $  173,994     $  218,695
  Securities available for sale at fair value                              650,927     1,249,736        901,856
  Other investments at cost                                              1,350,002       818,730      1,190,160
  Mortgage-backed securities available for sale without recourse at        
     fair value                                                            237,176       298,221        282,881
  Mortgage-backed securities available for sale with recourse at           
     fair value                                                            220,612           -0-            -0-
  Mortgage-backed securities held to maturity without recourse at          
     cost                                                                  814,619       917,005        893,774
  Mortgage-backed securities held to maturity with recourse at cost      2,039,227     1,969,697      2,232,686
  Loans receivable                                                      30,278,267    27,951,161     28,181,353
  Interest earned but uncollected                                          218,366       234,442        225,395
  Investment in capital stock of Federal Home Loan Banks--at cost
     which approximates fair value                                         480,468       346,356        350,955
  Real estate held for sale or investment                                   83,074        71,426         76,187
  Prepaid expenses and other assets                                        297,917       225,899        222,015
  Premises and equipment--at cost less accumulated depreciation            210,301       202,674        203,637
  Goodwill arising from acquisitions                                           -0-       138,931        138,562
                                                                      ------------   -----------    -----------
                                                                      $ 37,011,423   $34,598,272    $35,118,156
                                                                      ============   ===========    ===========
Liabilities and Stockholders' Equity:
  Customer deposits                                                   $ 21,584,365   $20,559,933    $20,847,910
  Advances from Federal Home Loan Banks                                  8,159,240     5,976,515      6,447,201
  Securities sold under agreements to repurchase                         2,227,481     1,865,172      1,817,943
  Medium-term notes                                                        689,755     1,864,229      1,597,507
  Accounts payable and accrued expenses                                    593,594       462,041        450,814
  Taxes on income                                                          163,252       352,232        356,036
  Subordinated notes--net of discount                                    1,323,592     1,321,989      1,322,392
  Stockholders' equity                                                   2,270,144     2,196,161      2,278,353
                                                                      ------------   -----------    ----------- 
                                                                      $ 37,011,423   $34,598,272    $35,118,156
                                                                      ============   ===========    ===========
</TABLE>
<PAGE>
<TABLE>
                        Golden West Financial Corporation
                     Consolidated Statement of Net Earnings
                                   (Unaudited)
                 (Dollars in thousands except per share figures)

                                                       Three Months Ended                  Nine Months Ended
                                                          September 30                       September 30
                                                  ------------------------------     -----------------------------
                                                     1996              1995             1996              1995
                                                  -----------      ------------      ------------     ------------ 
<S>                                               <C>              <C>               <C>              <C>    
Interest Income:
    Interest on loans                             $   554,245      $    540,154      $ 1,637,733       $ 1,557,366
    Interest on mortgage-backed securities             59,882            54,007          181,416           117,511
    Interest and dividends on investments              32,460            37,611           96,723           112,935
                                                  -----------      ------------      -----------      ------------ 
                                                      646,587           631,772        1,915,872         1,787,812
Interest Expense:
    Interest on customer deposits                     264,445           274,000          787,727           779,795
    Interest on advances                              107,803            87,681          289,476           280,087
    Interest on repurchase agreements                  31,054            25,565           93,408            41,169
    Interest on other borrowings                       38,338            57,093          124,152           160,596
                                                  -----------      ------------      -----------      ------------ 
                                                      441,640           444,339        1,294,763         1,261,647
                                                  -----------      ------------      -----------      -------------
      Net Interest Income                             204,947           187,433          621,109           526,165
Provision for loan losses                              23,498            14,622           59,256            44,052
                                                  -----------      ------------      -----------      ------------ 
      Net Interest Income after Provision
        for Loan Losses                               181,449           172,811          561,853           482,113
Non-Interest Income:
    Fees                                                9,504             7,690           27,872            20,399
    Gain (loss) on the sale of securities,
        MBS and loans                                   1,952              (366)           9,783              (344)
    Other                                               6,220             3,152           18,371            10,660
                                                  -----------      ------------      -----------      ------------ 
                                                       17,676            10,476           56,026            30,715
Non-Interest Expense:
    General and administrative:
        Personnel                                      40,146            37,692          119,273           111,909
        Occupancy                                      12,702            12,431           37,267            36,406
        Deposit insurance                             140,949            11,602          162,298            33,162
        Advertising                                     1,954             2,166            6,711             7,620
        Other                                          15,531            14,596           46,993            45,918
                                                  -----------      ------------      -----------      ------------ 
                                                      211,282            78,487          372,542           235,015
    Amortization of goodwill arising
        from acquisitions                                 -0-               527              -0-             2,393
                                                  -----------      ------------      -----------      ------------ 
                                                      211,282            79,014          372,542           237,408
                                                  -----------      ------------      -----------      ------------ 
Earnings (Loss) Before Taxes on Income and
    Cumulative Effect of Change in Accounting         (12,157)         104,273           245,337           275,420
    Taxes on Income                                  (147,942)          40,892           (48,626)          107,545
                                                  -----------      ------------      -----------      ------------ 
Income Before Cumulative Effect of Change in
    Accounting for Goodwill                           135,785            63,381          293,963           167,875
Cumulative Effect of Change in Accounting
    for Goodwill                                          -0-               -0-         (205,242)              -0-
                                                  -----------      ------------      -----------      ------------ 
Net Earnings                                      $   135,785      $     63,381      $    88,721      $    167,875
                                                  ===========      ============      ===========      ============ 

Earnings Per Share:
Earnings Per Share Before Cumulative Effect of
    Change in Accounting for Goodwill             $      2.32      $       1.08      $      5.01      $       2.86
Cumulative Effect of Change in Accounting
    for Goodwill                                         0.00              0.00            (3.49)             0.00
                                                  ------------     ------------      -----------      ------------ 
Net Earnings Per Share                            $      2.32      $       1.08      $      1.52      $       2.86
                                                  ============     ============      ===========      ============ 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       Golden West Financial Corporation
                                      Consolidated Statement of Cash Flows
                                                  (Unaudited)
                                             (Dollars in thousands)

                                                                 Three Months Ended             Nine Months Ended
                                                                    September 30                  September 30
                                                             ---------------------------   ----------------------------
                                                                1996           1995           1996            1995
                                                             ------------   ------------   ------------   -------------
<S>                                                          <C>            <C>            <C>            <C>    
Cash Flows From Operating Activities:
  Net earnings                                               $   135,785    $    63,381    $    88,721    $    167,875
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Provision for loan losses                                     23,498         14,622         59,256          44,052
    Cumulative effect of the change in accounting for goodwill       -0-            -0-        205,242             -0-
    Amortization of loan fees and discounts                       (5,412)        (5,493)       (18,093)        (15,052)
    Depreciation and amortization                                  4,884          5,214         14,512          16,402
    Loans originated for sale                                    (72,354)       (33,002)      (407,606)        (43,488)
    Sales of loans originated for sale                            73,715         14,435        408,594          23,982
    Decrease (increase) in interest earned but uncollected         6,198         13,894          7,029         (31,986)
    Federal Home Loan Bank stock dividends                        (6,217)        (4,659)       (20,701)        (16,779)
    Decrease (increase) in prepaid expenses and other assets       7,684         13,174       (136,688)        (15,222)
    Increase in accounts payable and accrued expenses             80,576         26,653        142,780          18,348
    Increase (decrease) in taxes on income                      (197,773)        (4,203)      (198,759)         27,772
    Other, net                                                    (4,672)        (8,405)       (11,987)        (24,852)
                                                             -----------    -----------    -----------    ------------ 
      Net cash provided by operating activities                   45,912         95,611        132,300         151,052

Cash Flows From Investing Activities:
  New loan activity:
    New real estate loans originated for portfolio            (2,034,022)    (1,342,404)   (4,791,836)      (4,535,012)
    Real estate loans purchased                                   (1,934)          (478)       (4,009)         (29,923)
    Other, net                                                    (9,559)        (4,117)      (15,074)         (60,925)
                                                             -----------    -----------    ----------     ------------ 
                                                              (2,045,515)    (1,346,999)   (4,810,919)      (4,625,860)
  Real estate loan principal payments:
    Monthly payments                                             161,679        121,752        451,541         384,311
    Payoffs, net of foreclosures                                 528,889        491,202      1,651,319       1,085,577
    Refinances                                                    62,114         50,693        202,411         126,532
                                                             -----------    -----------    -----------    ------------ 
                                                                 752,682        663,647      2,305,271       1,596,420

  Purchases of mortgage-backed securities available for sale         -0-            -0-            -0-          (6,254)
  Purchases of mortgage-backed securities held to maturity            (4)       (97,840)        (1,522)        (99,020)
  Sales of mortgage-backed securities available for sale             -0-            -0-            -0-           6,396
  Repayments of mortgage-backed securities                       100,527         63,708        320,465         121,298
  Proceeds from sales of real estate                              50,371         49,743        148,349         151,002
  Purchases of securities available for sale                    (344,476)    (1,155,102)      (674,721)     (2,627,287)
  Sales of securities available for sale                             -0-         80,015         81,133         190,625
  Maturities of securities available for sale                    207,393      1,271,065        862,264       2,750,529
  Decrease (increase) in other investments                      (139,862)       166,440       (159,842)       (284,130)
  Purchases of Federal Home Loan Bank stock                     (115,256)           -0-       (152,355)        (13,486)
  Redemptions of Federal Home Loan Bank stock                     37,649            -0-         37,649          12,650
  Additions to premises and equipment                             (7,216)        (6,358)       (21,722)        (18,232)
                                                             -----------    -----------    -----------    ------------ 
    Net cash used in investing activities                     (1,503,707)      (311,681)    (2,065,950)     (2,845,349)
</TABLE>
<PAGE>
<TABLE>
                                       Golden West Financial Corporation
                                Consolidated Statement of Cash Flows (Continued)
                                                  (Unaudited)
                                             (Dollars in thousands)

<CAPTION>
                                                                 Three Months Ended            Nine Months Ended
                                                                    September 30                  September 30
                                                             ---------------------------   ---------------------------
                                                                1996           1995           1996            1995
                                                             ------------   ------------   ------------   ------------ 
<S>                                                          <C>            <C>            <C>            <C>
Cash Flows From Financing Activities:
  Customer deposit activity:
    Increase (decrease) in deposits, net                      $  324,260     $  (399,563)   $     92,604    $    713,689
    Interest credited                                            219,507         221,341         643,851         626,855
                                                             -----------     -----------     -----------    ------------
                                                                 543,767        (178,222)        736,455       1,340,544

  Additions to Federal Home Loan Bank advances                 1,117,600          25,800       1,881,050         575,890
  Repayments of Federal Home Loan Bank advances                 (134,025)       (307,551)       (169,302)     (1,088,118)
  Proceeds from agreements to repurchase securities            1,974,262       1,429,200       3,989,933       2,894,195
  Repayments of agreements to repurchase securities           (2,064,039)       (735,714)     (3,580,395)     (1,630,844)
  Proceeds from medium-term notes                                    -0-             -0-             -0-         699,360
  Repayments of medium-term notes                                    -0-             -0-        (908,135)            -0-
  Proceeds from federal funds purchased                              -0-             -0-       1,250,000             -0-
  Repayments of federal funds purchased                              -0-             -0-      (1,250,000)       (250,000)
  Proceeds from subordinated debt                                    -0-             -0-             -0-          99,283
  Dividends on common stock                                       (5,496)         (4,990)        (16,591)        (14,955)
  Sale of  stock                                                   1,665             382           6,110           3,365
  Purchase and retirement of Company stock                       (35,196)         (2,224)        (93,703)         (2,870)
                                                             -----------     -----------    ------------    ------------ 
    Net cash provided by financing activities                  1,398,538         226,681       1,845,422       2,625,850
                                                             -----------     -----------    ------------    ------------ 
Net Increase (Decrease) in Cash                                  (59,257)         10,611         (88,228)        (68,447)
Cash at beginning of period                                      189,724         163,383         218,695         242,441
                                                             -----------    ------------    ----------- -   ------------ 
Cash at end of period                                        $   130,467    $    173,994    $    130,467    $    173,994
                                                             ===========    ============    ============    ============ 

Supplemental cash flow information:
  Cash paid for:
    Interest                                                 $   476,400    $    431,106    $  1,342,224    $  1,234,984
    Income taxes                                                  49,832          45,716         155,410          81,768
  Cash received for interest and dividends                       652,785         645,666       1,922,901       1,755,826
  Noncash investing activities:
    Loans transferred to foreclosed real estate                   64,061          56,287         163,050         162,507
    Loans securitized into MBS with recourse                         -0-         637,122         226,210       2,010,272

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        Golden West Financial Corporation
                 Consolidated Statement of Stockholders' Equity
                                   (Unaudited)
                             (Dollars in thousands)

                                                                                    Nine Months Ended
                                                                                      September 30
                                                                                --------------------------
                                                                                   1996           1995
                                                                                -----------    -----------
          <S>                                                                   <C>            <C>   
          Common Stock:
            Balance at January 1                                                $    5,887      $   5,859
            Common stock issued upon exercise of stock options                          25             14
            Common stock retired upon purchase of stock                               (174)            (7)
                                                                               -----------     ---------- 
            Balance at September 30                                                  5,738          5,866
                                                                               -----------     ---------- 

          Paid-in Capital:
            Balance at January 1                                                    55,353         45,689
            Common stock issued upon exercise of stock options                       6,085          3,351
                                                                               ------------    ---------- 
            Balance at September 30                                                 61,438         49,040
                                                                               ------------    ---------- 
          Retained Earnings:
            Balance at January 1                                                 2,140,883      1,929,740
            Net earnings                                                            88,721        167,875
            Cash dividends on common stock                                         (16,591)       (14,955)
            Retirement of stock                                                    (93,529)        (2,863)
                                                                               -----------     ---------- 
            Balance at September 30                                              2,119,484      2,079,797
                                                                               -----------     ---------- 
          Unrealized Gains on Securities Available for Sale:
            Balance at January 1                                                    76,230         18,986
            Change during period                                                     7,254         42,472
                                                                               -----------     ---------- 
            Balance at September 30                                                 83,484         61,458
                                                                               -----------     ---------- 
          Total Stockholders' Equity at September 30                            $2,270,144     $2,196,161
                                                                               ===========     ========== 

</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, 1995,
as well as certain  material  changes in results of operations  during the three
and nine month periods ended September 30, 1996, and 1995, respectively.

     The following narrative is written with the presumption that the users have
read or have access to the Company's  1995 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, 1995, and for the year then ended. Therefore, only material changes
in financial condition and results of operations are discussed herein.

         ACCOUNTING CHANGE

     In the third quarter and  effective  January 1, 1996,  the Company  adopted
Statement of Financial  Accounting  Standards  No. 72,  "Accounting  for Certain
Acquisitions of Banking or Thrift  Institutions," (SFAS 72) for goodwill related
to acquisitions made prior to September 30, 1982. SFAS 72 requires,  among other
things,  that  goodwill  resulting  from the  acquisition  of  banking or thrift
institutions  initiated  after September 30, 1982, be amortized over a period no
longer  than  the   estimated   remaining   life  of  the   acquired   long-term
interest-earning  assets.  The  adoption  of SFAS 72 for  goodwill  relating  to
acquisitions of banking or thrift  institutions  prior to September 30, 1982, is
permitted but not required. As a result, the Company wrote-off goodwill totaling
$205.2  million  as the  cumulative  effect  of the  change  in  accounting  for
goodwill.

     The adoption resulted in the restatement of earnings previously reported of
$75.5  million,  or $1.28 per share,  in the first  quarter of 1996 to a loss of
$126.6 million, or $2.15 per share. Earnings for the second quarter of 1996 have
been restated from $76.5 million,  or $1.32 per share to $79.6 million, or $1.35
per share. The Company has been accounting for acquisitions initiated subsequent
to September 30, 1982, in accordance with SFAS 72. Prior to the adoption of SFAS
72, the  goodwill  amortization  expense for goodwill  relating to  acquisitions
prior to September 30, 1982 was $3.1 million per quarter.

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

<CAPTION>
                                                       September 30    September 30       December 31
                                                           1996            1995              1995
                                                       -------------   ------------      -------------
<S>                                                    <C>             <C>               <C>   
   Assets                                              $ 37,011,423    $ 34,598,272      $ 35,118,156
   Loans receivable                                      30,278,267      27,951,161        28,181,353
   Mortgage-backed securities                             3,311,634       3,184,923         3,409,341
   Customer deposits                                     21,584,365      20,559,933        20,847,910
   Stockholders' equity                                   2,270,144       2,196,161         2,278,353
   Stockholders' equity/total assets                          6.13%           6.35%             6.49%
   Book value per common share                         $      39.57     $     37.44       $     38.70
   Common shares outstanding                             57,375,909      58,663,619        58,871,409
   Yield on loan portfolio                                    7.42%           7.70%             7.69%
   Yield on mortgage-backed securities                        7.18%           7.49%             7.41%
   Yield on investments                                       6.06%           6.05%             5.96%
   Yield on earning assets                                    7.32%           7.58%             7.56%
   Cost of deposits                                           4.95%           5.22%             5.15%
   Cost of borrowings                                         5.85%           6.22%             6.15%
   Cost of funds                                              5.28%           5.57%             5.50%
   Yield on earning assets less cost of funds                 2.04%           2.01%             2.06%
   Ratio of nonperforming assets to total assets              1.20%           1.08%             1.11%
   Ratio of troubled debt restructured to total assets         .16%            .16%              .13%
   World Savings and Loan Association:
     Total assets                                      $ 23,883,202     $32,668,619      $ 30,354,740
     Net worth                                            1,623,564       2,314,532         2,128,329
     Net worth/total assets                                   6.80%           7.08%             7.01%
     Regulatory capital ratios:
       Tangible capital                                       6.47%           6.54%             6.38%
       Core capital                                           6.47%           6.54%             6.38%
       Risk-based capital                                    14.19%          13.61%            13.40%
   World Savings Bank, a Federal Savings Bank:
     Total assets                                      $ 12,830,891     $ 1,090,619       $ 4,017,491                               
     Net worth                                              880,253         215,614           566,851
     Net worth/total assets                                   6.86%          19.77%            14.11%
     Regulatory capital ratios:
       Tangible capital                                       6.83%          19.44%            14.01%
       Core capital                                           6.83%          19.44%            14.01%
       Risk-based capital                                    12.68%          35.14%            26.55%
</TABLE>
<PAGE>
<TABLE>
                        Golden West Financial Corporation
                              Financial Highlights
                                   (Unaudited)
                 (Dollars in thousands except per share figures)

<CAPTION>
                                                            Three Months Ended             Nine Months Ended
                                                               September 30                  September 30
                                                         --------------------------   ---------------------------
                                                            1996          1995           1996           1995
                                                         -----------   ------------   ------------   ------------
<S>                                                      <C>           <C>            <C>             <C>   
   New real estate loans originated                      $2,106,376    $ 1,375,406    $ 5,199,442     $4,578,500
   Average yield on new real estate loans                     7.54%          7.84%          7.61%          7.49%
   Increase (decrease) in customer deposits              $  543,767    $  (178,222)   $   736,455     $1,340,544
   Earnings excluding 1996 nonrecurring items (a)            71,125         63,381        223,141        167,875
   Earnings before cumulative effect of change in
     accounting for goodwill                                135,785         63,381        293,963        167,875
   Net earnings                                             135,785         63,381         88,721        167,875
   Earnings per share excluding 1996 nonrecurring items (a)    1.23           1.08           3.83           2.86
   Earnings per share before cumulative effect
     of change in accounting for goodwill                      2.32           1.08           5.01           2.86
   Net earnings per share                                      2.32           1.08           1.52           2.86
   Cash dividends on common stock                              .095           .085           .285           .255
   Average common shares outstanding                     57,584,306     58,681,021     58,216,474     58,637,427
   Ratios:(b)
     Net earnings/average net worth (ROE)(c)                 24.71%         11.71%          5.45%         10.65%
     Net earnings/average assets (ROA)(c)                     1.50%           .74%           .33%           .67%
     Net interest income/average assets                       2.27%          2.18%          2.34%          2.09%
     General and administrative expense/average assets
       (G&A to Average Assets)(c)                             2.34%           .91%          1.40%           .93%

</TABLE>

(a)  Excludes the third quarter 1996 SAIF assessment of $132.6 million (pre-tax)
     and the special tax credit of $139.5 million. Also excluded is the $205.2
     million cumulative effect of the change in accounting for goodwill, which
     was effective January 1, 1996.
(b)  Ratios are  annualized by multiplying  the quarterly  computation by four
     and  the  nine-month  computation  by one  and  one-third.  Averages  are
     computed by adding the beginning balance and each monthend balance during
     the  quarter  and the nine  month  period and  dividing  by four and ten,
     respectively.
(c)  The ratios for the quarter ended September 30, 1996,  excluding the three
     1996 nonrecurring  items in footnote (a) above are: ROE 11.95%,  ROA .78%
     and G&A to Average Assets .87%. The same ratios for the nine months ended
     September 30, 1996,  are: ROE 12.69%,  ROA .84% and G&A to Average Assets
     .90%.

<PAGE>
         FINANCIAL CONDITION

     The consolidated  condensed balance sheet shown in the table below presents
the Company's  assets and liabilities in percentage  terms at September 30, 1996
and 1995,  and  December  31,  1995.  The reader is  referred  to page 48 of the
Company's 1995 Form 10-K for similar information for the years 1992 through 1995
and a discussion of the changes in the  composition of the Company's  assets and
liabilities in those years.
<TABLE>
<CAPTION>
                                                    TABLE 1

                                      Consolidated Condensed Balance Sheet
                                              In Percentage Terms

                                                              September 30                
                                                           ------------------     December 31
                                                            1996        1995         1995
                                                           -------     ------    -------------
<S>                                                        <C>          <C>      <C>    
       Assets: 
          Cash and investments                               5.8%        6.5%         6.6%
          Mortgage-backed securities                         8.9         9.2          9.7
          Loans receivable                                  81.8        80.8         80.2
          Other assets                                       3.5         3.5          3.5
                                                           -----       -----        ----- 
                                                           100.0%      100.0%       100.0%
                                                           =====       =====        ===== 

       Liabilities and Stockholders' Equity:
          Customer deposits                                 58.3%       59.4%        59.4%
          Federal Home Loan Bank advances                   22.0        17.3         18.4
          Securities sold under agreements to repurchase     6.0         5.4          5.2
          Medium-term notes                                  1.9         5.4          4.5
          Other liabilities                                  2.1         2.4          2.2
          Subordinated debt                                  3.6         3.8          3.8
          Stockholders' equity                               6.1         6.3          6.5
                                                           -----       -----        ----- 
                                                           100.0%      100.0%       100.0%
                                                           =====       =====        ===== 
</TABLE>

     As the above table shows,  customer deposits  represent the majority of the
Company's liabilities.  The largest asset component is the loan portfolio, which
consists primarily of long-term  mortgages.  The disparity between the repricing
(maturity 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.

     The gap table on the  following  page shows that, as of September 30, 1996,
the   Company's   assets  mature  or  reprice   sooner  than  its   liabilities.
Consequently,  one would expect  falling  interest  rates to lower the Company's
earnings and rising interest rates to increase the Company's earnings.  However,
the  Company's  earnings  are also  affected by the built-in lag inherent in the
Eleventh District Cost of Funds Index (COFI), which is the benchmark the Company
uses to  determine  the  rate  on the  great  majority  of its  adjustable  rate
mortgages.  Specifically,  there  is a  two-month  delay in  reporting  the COFI
because of the time required to gather the data needed to compute the index.  As
a result,  the current COFI actually  reflects the Eleventh  District's  cost of
funds at the level it was two months prior. Consequently, when the interest rate
environment  changes,  the COFI reporting lag causes assets to initially reprice
more  slowly than  liabilities,  enhancing  earnings  when rates are falling and
holding  down  income when rates rise.  In addition to the COFI  reporting  lag,
other elements of ARM loans also have an impact on earnings.  These elements are
the interest  rate  adjustment  frequency of ARM loans,  interest rate limits on
individual rate changes, interest rate floors, and introductory rates on new ARM
loans.

<PAGE>
<TABLE>
<CAPTION>

                                     TABLE 2

            Repricing of Interest-Earning Assets and Interest-Bearing
                   Liabilities, Repricing Gaps, and Gap Ratio
                            As of September 30, 1996
                              (Dollars in millions)
                                                            Projected Repricing(a)
                                     -------------------------------------------------------------------
                                         0 - 3         4 - 12         1 - 5         Over 5
                                         Months        Months         Years         Years        Total
                                     -----------   ------------   -----------   -----------   ----------
<S>                                  <C>           <C>            <C>           <C>           <C>    
Interest-Earning Assets:
  Investments                        $   1,656     $     10       $    333      $      2      $   2,001
  Mortgage-backed securities             2,354           93            358           507          3,312
  Loans receivable:
    Rate-sensitive                      25,280        1,815            113           -0-         27,208
    Fixed-rate                              75          236            985         1,499          2,795
  Other(b)                                 573          -0-            -0-           -0-            573
  Impact of interest rate swaps            629            8             24          (661)           -0-
                                     ---------     --------        -------      --------       --------    
Total                                $  30,567     $  2,162        $ 1,813      $  1,347       $ 35,889
                                     =========     ========        =======      ========       ======== 
Interest-Bearing Liabilities(c):
  Customer deposits                  $   8,095     $ 10,552        $ 2,880      $     57       $ 21,584
  FHLB advances                          7,158          440            340           221          8,159
  Other borrowings                       2,711          315            619           596          4,241
  Impact of interest rate swaps          2,219       (1,065)        (1,141)          (13)           -0-
                                     ---------     --------        -------      --------       -------- 
  Total                              $  20,183     $ 10,242        $ 2,698      $    861       $ 33,984
                                     =========     ========        =======      ========       ======== 
  Repricing gap                      $  10,384     $ (8,080)       $  (885)     $    486
                                     =========     ========        =======      ========
  Cumulative gap                     $  10,384     $  2,304        $ 1,419         1,905
                                     =========     ========        =======     =========   
 Cumulative gap as a percentage of
      total assets                       28.1%         6.2%           3.8%
                                     =========     ========        =======  
</TABLE>

(a)    Based on scheduled maturity or scheduled repricing; loans reflect
       scheduled repayments and projected prepayments of principal.
(b)    Includes cash in banks and Federal Home Loan Bank (FHLB) stock.
(c)    Liabilities  with no maturity  date,  such as 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 and Loan  Association  (World or Association) and World Savings
Bank, a Federal  Savings Bank (WFSB),  to maintain a minimum  amount of cash and
certain  qualifying  investments  for liquidity  purposes.  The current  minimum
requirement  is  equal to a  monthly  average  of 5% of  customer  deposits  and
short-term  borrowings.  For the months ended  September 30, 1996 and 1995,  and
December 31, 1995, World's average regulatory  liquidity ratios were 7%, 6%, and
8%, respectively,  consistently exceeding the requirement.  For the months ended
September 30, 1996, and December 31, 1995, WFSB's average  regulatory  liquidity
ratios were 6% and 6%, respectively, consistently exceeding the requirement. The
level  of  the  Company's  investments  position  in  excess  of  its  liquidity
requirements at any time depends on liquidity needs.

     At September  30, 1996 and 1995,  and  December  31, 1995,  the Company had
securities  available for sale in the amount of $651 million,  $1.2 billion, and
$902  million,  respectively,  including  net  unrealized  gains  on  securities
available for sale of $132 million, $89 million, and $117 million, respectively.
At  September  30, 1996 and 1995,  and  December  31,  1995,  the Company had no
securities held to maturity or for trading.

     Included in the  securities  available  for sale at September  30, 1996 and
1995, and December 31, 1995, were collateralized  mortgage obligations (CMOs) in
the amount of $216 million,  $484 million, and $408 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 September 30, 1996, the
majority of the Company's CMOs were fixed-rate  instruments with remaining terms
to maturity of five years or less, and qualified for inclusion in the regulatory
liquidity measurement.

         MORTGAGE-BACKED SECURITIES

     At September  30, 1996 and 1995,  and  December  31, 1995,  the Company had
mortgage-backed securities (MBS) held to maturity in the amount of $2.9 billion,
$2.9 billion, and $3.1 billion, respectively,  including $2.0 billion of Federal
National  Mortgage  Association  (FNMA) MBS subject to full  credit  recourse at
September 30, 1996. At September 30, 1996 and 1995,  and December 31, 1995,  the
Company had mortgage-backed  securities available for sale in the amount of $458
million, $298 million, and $283 million, respectively,  including net unrealized
gains on MBS  available for sale of $11 million,  $16 million,  and $14 million,
respectively,  and  including  $221  million of FNMA MBS  subject to full credit
recourse at September 30, 1996. At September 30, 1996 and 1995, and December 31,
1995, the Company had no trading MBS.

     In June 1996,  the Company  securitized  $226  million of  adjustable  rate
mortgages  (ARMs)  into  FNMA  COFI-indexed  MBS.  These MBS are  classified  as
available for sale.  During 1995, the Company  securitized  $2.3 billion of ARMs
into FNMA COFI-indexed MBS. The Company has the ability and intent to hold these
MBS until maturity.  Accordingly,  these MBS are classified as held to maturity.
Both the FNMA  COFI-indexed MBS available for sale and the FNMA COFI-indexed MBS
held to maturity are available to be used as collateral  for  borrowings and are
subject to full credit recourse to the Company.

<PAGE>

     Repayments  of MBS during the third  quarter  and first nine months of 1996
were $101 million and $320  million,  respectively,  compared to $64 million and
$121 million in the same  periods of 1995.  The  increase in  repayments  on MBS
during the first nine  months of 1996 as  compared  to the first nine  months of
1995  was  primarily  due  to  the  increase  in  MBS  that  resulted  from  the
securitization  of ARM loans into FNMA MBS and an increase in prepayments on the
underlying mortgages.

         LOAN PORTFOLIO

                  LOAN VOLUME

     New loan  originations  for the three  months  ended  September  30,  1996,
amounted to $2.1 billion,  the largest single quarter in the Company's  history,
compared to $1.4 billion for the same period in 1995. New loan  originations for
the nine months ended September 30, 1996, amounted to $5.2 billion,  compared to
$4.6  billion for the same period in 1995.  The  increase in loan volume in 1996
occurred because rates on new fixed-rate mortgages have generally remained above
the 8% level  during  1996,  while the  starting  rates on ARMs,  the  Company's
principal  product,  remained low and more affordable.  The Company continues to
sell most of its  fixed-rate  originations.  Loans  originated  for sale for the
three  and nine  months  ended  September  30,  1996 were $72  million  and $408
million,  respectively,  compared  to $33  million  and $43 million for the same
periods in 1995.  Although interest rates increased during the second quarter of
1996,  interest rates on fixed-rate  loans in the first nine months of 1996 have
generally  been at levels  below the same  periods of 1995,  helping to cause an
increase  in  activity  in  fixed-rate  loans  during  1996.   Refinanced  loans
constituted 29% and 35% of new loan  originations  for the three and nine months
ended September 30, 1996,  compared to 31% and 30% for the three and nine months
ended September 30, 1995.

     The Company  has lending  operations  in 24 states.  The primary  source of
mortgage  origination is loans secured by residential  properties in California.
For  the  three  and  nine  months  ended  September  30,  1996,  49%  and  51%,
respectively,  of total loan  originations  were on  residential  properties  in
California  compared  to 53% for the  same  periods  in 1995.  The five  largest
states,  other than  California,  for originations for the three and nine months
ended  September 30, 1996,  were Texas,  Florida,  Illinois,  Colorado,  and New
Jersey  with  a  combined  total  of  29%  and  28%,   respectively,   of  total
originations.   The   percentage   of  the  total  loan   portfolio   (including
mortgage-backed securities with recourse) that is comprised of residential loans
in  California  was 70% at September  30, 1996  compared to 74% at September 30,
1995, and 73% at December 31, 1995.

     The tables on the following two pages show the Company's  loan portfolio by
state at September 30, 1996 and 1995.

<PAGE>
<TABLE>
<CAPTION>

                                     TABLE 3

                             Loan Portfolio by State
                               September 30, 1996
                             (Dollars in thousands)

                         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        $19,615,787    $3,369,019    $     259    $    65,584      $23,050,649      $ 70.35%
Colorado              931,879       233,318          -0-          7,404        1,172,601        3.58
Illinois              985,939       182,522          -0-          1,857        1,170,318        3.57
Texas               1,052,319       106,486          579          1,602        1,160,986        3.54
New Jersey            992,647           409          -0-          7,155        1,000,211        3.05
Florida               917,033        17,829          143            976          935,981        2.86
Washington            397,289       341,335          -0-            765          739,389        2.26
Arizona               569,451        51,943          -0-          1,689          623,083        1.90
Virginia              474,620         7,884          -0-          1,498          484,002        1.48
Pennsylvania          452,421         4,273          -0-          3,780          460,474        1.41
Connecticut           379,277           -0-          -0-             24          379,301        1.16
Maryland              310,800         1,396          -0-            561          312,757        0.95
Oregon                199,410        11,031          -0-          2,778          213,219        0.65
Nevada                173,693         1,148          -0-            -0-          174,841        0.53
Kansas                140,487         4,951          -0-            198          145,636        0.44
Utah                  134,296            61          -0-          1,841          136,198        0.42
Minnesota             118,120         5,135          -0-            -0-          123,255        0.38
Wisconsin              87,158         4,183          -0-            -0-           91,341        0.28
Missouri               68,924         6,697          -0-            -0-           75,621        0.23
Massachusetts          52,479           -0-          -0-             20           52,499        0.16
New York               50,257           -0-          -0-             18           50,275        0.15
Washington, DC         39,633           -0-          -0-            -0-           39,633        0.12
Georgia                37,223           -0-          -0-          1,864           39,087        0.12
New Mexico             31,705           -0-          -0-            -0-           31,705        0.10
Ohio                   18,743         2,322          283          4,477           25,825        0.08
Idaho                  23,298           -0-          -0-            -0-           23,298        0.07
Delaware               20,944           -0-          -0-            -0-           20,944        0.06
North Carolina          8,067           254          -0-            511            8,832        0.03
South Dakota            4,838           -0-          -0-            -0-            4,838        0.01
Other                  12,874            18          -0-          4,698           17,590        0.06
                  -----------    ----------    ---------    -----------      -----------    -------- 
  Totals          $28,301,611    $4,352,214    $   1,264    $   109,300       32,764,389      100.00%
                  ===========    ==========    =========    ===========                     ======== 

SFAS 91 deferred loan fees                                                       (63,634)
Loan discount on purchased loans                                                  (5,436)
Undisbursed loan funds                                                            (4,913)
Allowance for loan losses                                                       (178,354)
Loans to facilitate (LTF) interest reserve                                          (532)
Troubled debt restructured (TDR) interest reserve                                 (5,237)
Loans on customer deposits                                                        31,823
                                                                             ----------- 
  Total loan portfolio and loans securitized into FNMA MBS with recourse      32,538,106
Loans securitized into FNMA MBS with recourse                                 (2,259,839)(b)
                                                                             ----------- 
  Total loan portfolio                                                       $30,278,267
                                                                             =========== 
</TABLE>

(a)    The Company has no commercial loans.
(b)    Loans amounting to $2.6 billion were  securitized with full recourse into
       Federal National Mortgage Association  mortgage-backed  securities during
       1995  and  1996.   The   September   30,  1996  balances  of  these  FNMA
       mortgage-backed securities are reflected in the amounts above.

<PAGE>
<TABLE>
<CAPTION>
                                                    TABLE 4

                                            Loan Portfolio by State
                                               September 30, 1995
                                             (Dollars in thousands)


                         Residential                                                                              
                         Real Estate                       Commercial                                     Loans as
                  --------------------------                  Real                         Total          a % of
    State            1 - 4           5+         Land         Estate     Construction     Loans (a)      Portfolio
---------------   ------------   -----------   -------    ------------- -------------   ------------   -------------
<S>               <C>            <C>           <C>         <C>           <C>            <C>            <C>
California        $18,869,206    $3,337,180    $   277    $   74,020     $    -0-       $22,280,683        73.98%
Colorado              818,258       207,409        -0-         7,841          -0-         1,033,508         3.43
Illinois              800,456       177,024        -0-         2,586          -0-           980,066         3.25
Texas                 780,265        68,344        593         1,702          -0-           850,904         2.83
New Jersey            836,725           -0-        -0-         8,440        2,214           847,379         2.81
Florida               654,941           -0-        247         1,424          -0-           656,612         2.18
Washington            347,367       299,209        -0-           796          -0-           647,372         2.15
Virginia              406,260           604        -0-         1,623          -0-           408,487         1.36
Arizona               353,127        40,271        -0-         1,745          -0-           395,143         1.31
Pennsylvania          369,861           -0-        -0-         4,347          -0-           374,208         1.24
Connecticut           302,964           -0-        -0-           -0-          -0-           302,964         1.01
Maryland              267,044           -0-        -0-           610          -0-           267,654         0.89
Oregon                173,120        10,618        -0-         3,789          -0-           187,527         0.62
Nevada                155,791         1,250        -0-           -0-          -0-           157,041         0.52
Kansas                128,558         5,193        -0-           215          -0-           133,966         0.44
Utah                   86,049            66        -0-         2,035          -0-            88,150         0.29
Missouri               65,305         7,138        -0-            77          -0-            72,520         0.24
Minnesota              70,001           -0-        -0-           -0-          -0-            70,001         0.23
Wisconsin              50,876         4,218        -0-           -0-          -0-            55,094         0.18
New York               54,494           -0-        -0-           -0-          -0-            54,494         0.18
Georgia                44,914           -0-        -0-         1,974          -0-            46,888         0.16
Washington, DC         34,591           -0-        -0-           -0-          -0-            34,591         0.11
Ohio                   25,677         2,839        438         5,383          -0-            34,337         0.11
New Mexico             23,325           -0-        -0-           -0-          -0-            23,325         0.08
Delaware               17,862           -0-        -0-           -0-          -0-            17,862         0.06
Idaho                  13,626           -0-        -0-           -0-          -0-            13,626         0.05
North Carolina          9,060           351        -0-         3,026          -0-            12,437         0.04
Other                  57,270        10,893        -0-         4,974          -0-            73,137         0.25
                  -----------    ----------     ------      --------      -------        ----------       ------ 
  Totals          $25,816,993    $4,172,607     $1,555      $126,607      $ 2,214        30,119,976       100.00%
                  ===========    ==========     ======      ========      =======                         ====== 

SFAS 91 deferred loan fees                                                                  (80,366)
Loan discount on purchased loans                                                             (6,770)
Undisbursed loan funds                                                                       (3,623)
Allowance for loan losses                                                                  (137,377)
LTF interest reserve                                                                           (512)
TDR  interest reserve                                                                        (5,244)
Loans on customer deposits                                                                   34,774
                                                                                       ------------
     Total loan portfolio and loans  securitized  into FNMA MBS with recourse            29,920,858
Loans securitized into FNMA MBS with recourse                                            (1,969,697)(b)
                                                                                        -----------  
     Total loan portfolio                                                               $27,951,161
                                                                                        ===========  
</TABLE>

(a)    The Company has no commercial loans.
(b)    Loans amounting to $2.0 billion were  securitized with full recourse into
       FNMA mortgage-backed securities during the first nine months of 1995. The
       September  30, 1995  balances  of these  mortgage-backed  securities  are
       reflected in the amounts above.

<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  (excluding  MBS) composed of  rate-sensitive
loans was 91% at September 30, 1996  compared to 90% at September 30, 1995,  and
December 31, 1995.  The  Company's  ARM  originations  for the third quarter and
first nine months of 1996 constituted  approximately 95% and 89%,  respectively,
of new mortgage  loans made in 1996  compared to 88% and 94% in the same periods
of 1995.

     The weighted  average  maximum  lifetime cap rate on the Company's ARM loan
portfolio  (including MBS with  recourse) was 12.95%,  or 5.72% above the actual
weighted average rate at September 30, 1996,  versus 13.16%,  or 5.67% above the
weighted average rate at September 30, 1995.

     Approximately  $5.4  billion of the  Company's  loans  (including  MBS with
recourse)  have terms that  state  that the  interest  rate may not fall below a
lifetime floor set at the time of  origination.  As of September 30, 1996,  $665
million of these ARM loans had reached their rate floors.  The weighted  average
floor rate on these loans was 7.75% at September 30, 1996 and 7.85% at September
30, 1995.  Without the floor,  the average  yield on these loans would have been
7.08% at September 30, 1996 and 7.54% at September 30, 1995.

     Loan repayments  consist of monthly loan  amortization,  loan payoffs,  and
refinances.  For the  three and nine  months  ended  September  30,  1996,  loan
repayments  were $753 million and $2.3 billion,  respectively,  compared to $664
million  and $1.6  billion in the same  periods of 1995.  The  increase  in loan
repayments was primarily due to higher  mortgage  payoffs and higher  refinances
within the portfolio as well as an increase in the portfolio balance.

         MORTGAGE SERVICING RIGHTS

     On January 1, 1996, the Company adopted  Statement of Financial  Accounting
Standards No. 122,  "Accounting for Mortgage  Servicing Rights" (SFAS 122). SFAS
122 amends Statement of Financial  Accounting  Standards No. 65, "Accounting for
Certain Mortgage Banking Activities," to require that any financial  institution
participating in the secondary  mortgage market  recognize,  as separate assets,
rights to service  mortgage  loans for others  when  those  rights are  acquired
through  either  the  purchase  or  origination  of  mortgage  loans  which  are
subsequently  sold  or  securitized.  SFAS  122  also  requires  that  financial
institutions  participating in the secondary mortgage market should evaluate and
measure  impairment of capitalized  mortgage  servicing rights based on the fair
value of those rights on a disaggregated  basis. For the third quarter and first
nine  months of 1996,  the  Company  recognized  gains of $1.8  million and $8.8
million,  respectively,  on the  sale  of  loans  due to the  capitalization  of
servicing  rights under SFAS 122. After  amortization,  the balance at September
30, 1996 of the capitalized servicing rights was $7.9 million.

         ASSET QUALITY

     One measure of the  soundness  of the  Company's  portfolio is its ratio of
nonperforming  assets  (NPAs) to total  assets.  Nonperforming  assets  includes
non-accrual  loans  (loans  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) is made up of loans on which
delinquent loan payments have been  capitalized or on which  temporary  interest
rate reductions have been made,  primarily to customers  negatively  impacted by
adverse economic conditions.

<PAGE>
     The following  table shows the  components  of the Company's  nonperforming
assets and TDRs, and the ratios to total assets.

<TABLE>
<CAPTION>
                                                    TABLE 5

                           Nonperforming Assets and Troubled Debt Restructured
                                         (Dollars in thousands)

                                                         September 30                       
                                                   --------------------------   December 31
                                                      1996            1995          1995
                                                   -----------   ------------   ------------  
<S>                                                <C>           <C>            <C>    
Non-accrual loans                                  $  362,817    $   301,586     $   314,086
Real estate acquired through foreclosure               81,563         70,727          75,158
Real estate in judgment                                   944            107             443
                                                   ----------    -----------     ----------- 
Total nonperforming assets                         $  445,324    $   372,420     $   389,687
                                                   ==========    ===========     =========== 
TDRs                                               $   60,732    $    56,493     $    45,222
                                                   ==========    ===========     =========== 
Ratio of NPAs to total assets                           1.20%          1.08%           1.11%
                                                   ==========    ===========     =========== 
Ratio of TDRs to total assets                            .16%           .16%            .13%
                                                   ==========    ===========     =========== 
Ratio of NPAs and TDRs to total assets                  1.36%          1.24%           1.24%
                                                   ==========    ===========     ===========

</TABLE>

     The  increase in NPAs during 1996  reflects the  continued  weakness in the
California  housing market and increased  bankruptcies  nationwide.  The Company
continues to closely monitor all  delinquencies  and takes  appropriate steps to
protect its interests.  Interest foregone on non-accrual loans is fully-reserved
and  amounted to $5 million and $15 million in the third  quarter and first nine
months of 1996  compared to $5 million  and $14 million for the same  periods of
1995.  Interest  foregone on TDRs amounted to $432 thousand and $1.2 million for
the three and nine months ended  September  30, 1996,  compared to $482 thousand
and $1.5 million for the three and nine months ended September 30, 1995.

     The  tables on the  following  two pages show the  Company's  nonperforming
assets by state at September 30, 1996 and 1995.
<PAGE>
<TABLE>
<CAPTION>
                                                    TABLE 6

                                         Nonperforming Assets by State
                                               September 30, 1996
                                             (Dollars in thousands)


                    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+         Land       Estate      NPAs(b)       Loans
-----------   ---------   ----------   ---------      --------   --------   ---------   ---------    ---------    --------
<S>           <C>         <C>           <C>           <C>         <C>       <C>         <C>          <C>
California    $291,880     $ 18,711     $   530       $63,792    $ 14,649   $    475    $  2,167     $392,204      1.70%
Colorado         1,220          119       3,092           165         -0-        -0-         -0-        4,596      0.39
Illinois         4,726          191         -0-           227         281        -0-         -0-        5,425      0.46
Texas            3,881          -0-         -0-           102         -0-        -0-         -0-        3,983      0.34
New Jersey      11,955          -0-         791         1,393         -0-        -0-         -0-       14,139      1.41
Florida          3,903          -0-         269           430         -0-        -0-         -0-        4,602      0.49
Washington       1,470          -0-         -0-           -0-         -0-        -0-         -0-        1,470      0.20
Arizona            776          -0-       1,096           -0-         -0-        -0-         -0-        1,872      0.30
Virginia         1,224          -0-         -0-           733         -0-        -0-         -0-        1,957      0.40
Pennsylvania     2,696          -0-         -0-            48         -0-        -0-         -0-        2,744      0.60
Connecticut      2,936          -0-         -0-           279         -0-        -0-         -0-        3,215      0.85
Maryland         1,596          -0-         -0-           -0-         -0-        -0-         -0-        1,596      0.51
Oregon             850          -0-         -0-           -0-         -0-        -0-         -0-          850      0.40
Nevada           1,000          -0-         -0-           -0-         -0-        -0-         -0-        1,000      0.57
Kansas             720           40         -0-           -0-         -0-        -0-         -0-          760      0.52
Utah               294          -0-         -0-           -0-         -0-        -0-         -0-          294      0.22
Minnesota          323          -0-         -0-           -0-         -0-        -0-         -0-          323      0.26
Wisconsin          -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
Missouri           849          106         -0-           -0-         -0-        -0-         -0-          955      1.26
Massachusetts      -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
New York         3,926          -0-         -0-           -0-         -0-        -0-         -0-        3,926      7.81
Washington, DC     -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
Georgia          1,443          -0-         -0-            73         -0-        -0-         -0-        1,516      3.88
New Mexico         -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
Ohio                70          -0-          58           -0-         -0-        -0-         -0-          128      0.50
Idaho              -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
Delaware           -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
North Carolina     -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
South Dakota       -0-          -0-         -0-           -0-         -0-        -0-         -0-          -0-      0.00
Other               76          -0-         -0-           -0-         -0-        -0-         -0-           76      0.43
              ---------   ----------   ---------      --------   ---------  ---------   ---------    ---------    -----
  Totals      $337,814     $ 19,167     $ 5,836       $67,242    $14,930    $    475      $2,167      447,631      1.37
              =========   ==========   =========      ========   =========  =========   =========

REO general valuation allowance                                                                        (2,307)    (0.01)
                                                                                                     --------     -----
Total nonperforming assets                                                                           $445,324      1.36%
                                                                                                     =========    =====
</TABLE>

(a) Non-accruals  loans are 90 days or more past due and have no unpaid interest
    accrued.
(b) Loans amounting to $2.6 billion were  securitized with full recourse into
    FNMA  mortgage-backed  securities during 1995 and 1996. The September 30,
    1996  balances of the related  nonperforming  assets are reflected in the
    amounts above.

<PAGE>
<TABLE>
<CAPTION>
                                                    TABLE 7

                                         Nonperforming Assets by State
                                               September 30, 1995
                                             (Dollars in thousands)


                    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    $251,455    $  12,691    $    413       $52,335     $12,650        $3,716     $333,260     1.50%
Colorado         1,658           64         -0-            49         -0-           -0-        1,771     0.17
Illinois         2,531        1,078         -0-           859         400           -0-        4,868     0.50
Texas            2,301          -0-         -0-           307         -0-           -0-        2,608     0.31
New Jersey      10,218          -0-           2           412         -0-           -0-       10,632     1.25
Florida          2,678          -0-          84           234         -0-           -0-        2,996     0.46
Washington         783          -0-         -0-           335         -0-           -0-        1,118     0.17
Virginia         2,044          -0-         -0-           326         -0-           -0-        2,370     0.58
Arizona          1,138          -0-         -0-           -0-         -0-           -0-        1,138     0.29
Pennsylvania     2,222          -0-         -0-           -0-         -0-           -0-        2,222     0.59
Connecticut      3,307          -0-         -0-           (90)        -0-           -0-        3,217     1.06
Maryland           405          -0-         -0-           213         -0-           -0-          618     0.23
Oregon             608          -0-         -0-           -0-         -0-           -0-          608     0.32
Nevada             557          -0-         -0-           113         -0-           -0-          670     0.43
Kansas             561           40         -0-            21         -0-           -0-          622     0.46
Utah               122          -0-         -0-           -0-         -0-           -0-          122     0.14
Missouri           407          -0-         -0-            32         -0-           -0-          439     0.61
Minnesota          -0-          -0-         -0-           -0-         -0-           -0-          -0-     0.00
Wisconsin          -0-          -0-         -0-           -0-         -0-           -0-          -0-     0.00
New York         2,929          -0-         -0-           724         -0-           -0-        3,653     6.70
Georgia          1,046          -0-         -0-           -0-         -0-           -0-        1,046     2.23
Washington, DC     -0-          -0-         -0-           -0-         -0-           -0-          -0-     0.00
Ohio               -0-          -0-          58            17         154           -0-          229     0.67
New Mexico           1          -0-         -0-           -0-         -0-           -0-            1     0.00
Delaware           -0-          -0-         -0-           -0-         -0-           -0-          -0-     0.00
Idaho              -0-          -0-         -0-           -0-         -0-           -0-          -0-     0.00
North Carolina      80          -0-         -0-           -0-         -0-           -0-           80     0.64
Other              105          -0-         -0-           -0-         -0-           -0-          105     0.14
              --------    ---------    --------       -------    --------      --------     --------     ---- 
   Totals     $287,156    $  13,873    $    557       $55,887    $ 13,204      $  3,716      374,393     1.24
              ========    =========    ========       =======    ========      ======== 

REO general valuation allowance                                                               (1,973)   (0.00)
                                                                                            --------    ----- 
Total nonperforming assets                                                                  $372,420     1.24%
                                                                                            ========    =====
</TABLE>
(a) Non-accruals loans are 90 days or more past due and have no unpaid interest
    accrued.
(b) Loans amounting to $2.0 billion were  securitized with full recourse into
    FNMA mortgage-backed securities during the first nine months of 1995. The
    September  30,  1995  balance  of the  related  nonperforming  assets are
    reflected in the amounts above.

<PAGE>
     The Company provides specific valuation allowances for losses on loans when
impaired,  including loans securitized into MBS with recourse or loans sold with
recourse, and on real estate owned when any significant and permanent decline in
value is identified. The Company also utilizes a methodology, based on trends in
the basic portfolio,  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 and nine months ended September 30, 1996 and 1995.
<TABLE>
<CAPTION>

                                                    TABLE 8

                                      Changes in Allowance for Loan Losses
                                             (Dollars in thousands)

                                                          Three Months Ended            Nine Months Ended
                                                             September 30                 September 30
                                                      --------------------------   -------------------------
                                                         1996          1995           1996          1995
                                                      -----------   ------------   -----------   -----------
<S>                                                   <C>           <C>            <C>           <C>    
  Beginning allowance for loan losses                 $  163,846     $  133,682    $  141,988      $ 124,003
  Provision charged to expense                            23,498         14,622        59,256         44,052
  Less loans charged off                                  (9,167)       (11,087)      (23,398)       (31,997)
  Add recoveries                                             177            160           508          1,319
                                                      ----------    -----------    ----------      ---------  
  Ending allowance for loan losses                    $  178,354    $   137,377    $  178,354      $ 137,377
                                                      ==========    ===========    ==========      ========= 
  Ratio of net charge-offs to average loans
    outstanding (including MBS with recourse)               .11%           .15%          .10%           .14%
                                                      ==========    ===========    ==========      ========= 
  Ratio of allowance for loan losses
    to nonperforming assets                                                             40.1%          36.9%
                                                                                   ==========      ========= 
</TABLE>
         CUSTOMER DEPOSITS

     Driven  by  effective,   directed  marketing  efforts,   customer  deposits
increased during the third quarter of 1996 by $544 million,  including  interest
credited of $220  million,  compared to a decrease  of $178  million,  including
interest  credited  of $221  million,  in the third  quarter  of 1995.  Customer
deposit  balances in the first nine months of 1996  increased  by $736  million,
including  interest  credited of $644  million,  compared to an increase of $1.3
billion,  including  interest  credited of $627  million,  during the first nine
months of 1995.  All of the 1995  growth  occurred in the first half of the year
and was  attributed to  increasing  interest  rates offered on savings  accounts
during those six months.

<PAGE>
         The table below shows the Company's  customer deposits by interest rate
and by remaining maturity at September 30, 1996 and 1995.

<TABLE>
<CAPTION>
                                                    TABLE 9

                                               Customer Deposits
                                             (Dollars in millions)

                                                                                  September 30
                                                               ---------------------------------------------------
                                                                       1996                         1995
                                                               ----------------------      -----------------------
                                                                Rate*       Amount         Rate*           Amount
                                                               --------     ----------     ---------    ----------
<S>                                                            <C>          <C>            <C>          <C>   
       Customer deposits by interest rate:
       Interest-bearing checking accounts                          1.22 %  $      747          1.25%       $  733
       Passbook accounts                                           2.22           549          2.23           583
       Money market deposit accounts                               3.06         1,095          3.14         1,379
       Term certificate accounts with original maturities
       of:
           4 weeks to 1 year                                       5.05         9,104          5.52         8,538
           1 to 2 years                                            5.21         5,259          5.59         3,950
           2 to 3 years                                            5.96         1,750          5.48         2,179
           3 to 4 years                                            5.58           591          5.31           698
           4 years and over                                        5.78         2,034          6.43         2,076
       Retail jumbo CDs                                            5.31           453          5.76           420
       All other                                                   7.71             2          7.72             4
                                                                           ----------                  ---------- 
                                                                           $   21,584                  $   20,560
                                                                           ==========                  ========== 

       Customer deposits by remaining maturity:
       No contractual maturity                                             $    2,391                  $    2,695
       Maturity within one year:
          4th quarter                                                           5,704                       4,584
          1st quarter                                                           6,568                       4,628
          2nd quarter                                                           2,857                       3,689
          3rd quarter                                                           1,127                       1,217
                                                                           ----------                  ---------- 
                                                                               16,256                      14,118

          1 to 2 years                                                          1,763                       2,095
          2 to 3 years                                                            772                         752
          3 to 4 years                                                            232                         601
          4 years and over                                                        170                         299
                                                                           ----------                  ---------- 
                                                                           $   21,584                  $   20,560
                                                                           ==========                  ========== 
</TABLE>

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

<PAGE>
         ADVANCES FROM FEDERAL HOME LOAN BANKS

     The Company uses  borrowings  from the FHLB,  also known as  "advances," to
supplement cash flow and to provide funds for loan origination activities.  FHLB
advances  amounted  to $8.2  billion at  September  30,  1996,  compared to $6.0
billion  and $6.4  billion  at  September  30,  1995,  and  December  31,  1995,
respectively.

         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 $2.2  billion,  $1.9  billion,  and $1.8  billion at
September  30, 1996 and 1995,  and  December 31,  1995,  respectively.  The $2.2
billion  balance at September  30, 1996,  included  $750 million in Federal Home
Loan Bank of San Francisco MBS Reverse Repos with  maturities  ranging from 1997
to 1998.

     In June 1996,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards No. 125, "Accounting for Transfers
and Servicing of Financial  Assets and  Extinguishments  of  Liabilities"  (SFAS
125).  SFAS 125 provides  accounting  and reporting  standards for transfers and
servicing  of  financial  assets  and  extinguishments  of  liabilities.   Those
standards are based on consistent application of a financial-components approach
that  focuses on control.  Under that  approach,  after a transfer of  financial
assets,  an entity recognizes the financial and servicing assets it controls and
the liabilities it has incurred,  derecognizes financial assets when control has
been surrendered, and derecognizes liabilities when extinguished. This Statement
provides consistent  standards for distinguishing  transfers of financial assets
that are sales from transfers that are secured borrowings. SFAS 125 is effective
for  transfers  and  servicing  of  financial  assets  and   extinguishments  of
liabilities   occurring   after   December  31,  1996,  and  is  to  be  applied
prospectively.  In November  1996, the FASB issued an exposure draft which would
delay the  effective  date for portions of SFAS 125 for one year.  The impact of
the exposure draft and SFAS 125 on the Company's financial condition and results
of operations is not expected to be material.

         OTHER BORROWINGS

     At September 30, 1996,  Golden West, at the holding  company  level,  had a
total of $1.1  billion  of  subordinated  debt  issued  and  outstanding.  As of
September 30, 1996, 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  September  30,  1996,  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.

     World  currently  has on file a  shelf  registration  with  the OTS for the
issuance  of $2.0  billion  of  unsecured  medium-term  notes,  all of which was
available  for  issuance at  September  30, 1996.  World had  medium-term  notes
outstanding under prior  registrations with principal amounts of $690 million at
September  30, 1996,  compared to $1.9 billion at September  30, 1995,  and $1.6
billion at December 31,  1995.  As of September  30, 1996,  World's  medium-term
notes were rated A1 and A+ by Moody's and S&P, respectively.

<PAGE>
         World also has on file a  registration  statement  with the OTS for the
sale of up to $300 million of subordinated notes and, at September 30, 1996, the
full amount was  available for  issuance.  As of September  30, 1996,  World had
issued a total of $200 million of subordinated  notes, which were rated A2 and A
by Moody's and S&P, respectively. The subordinated notes are included in World's
risk-based regulatory capital as Supplementary Capital.

         STOCKHOLDERS' EQUITY

     The Company's  stockholders'  equity decreased during the first nine months
of 1996 as a result of the $94 million cost of the purchase of Company stock and
the payment of $17 million in quarterly dividends to stockholders.  The decrease
was offset by net  earnings  for the first nine  months of 1996 and a $7 million
increase in market  values of securities  available for sale since  December 31,
1995. The Company's  stockholders' equity increased during the first nine months
of 1995 as a result of retained earnings. Unrealized gains on securities and MBS
available  for sale included in  stockholders'  equity at September 30, 1996 and
1995,  and December 31, 1995,  were $83 million,  $61 million,  and $76 million,
respectively.

     The Company adopted  Statement of Financial  Accounting  Standards No. 123,
"Accounting  for Stock-Based  Compensation"  (SFAS 123) on January 1, 1996. SFAS
123 establishes accounting and disclosure  requirements using a fair value based
method of accounting for stock based  employee  compensation  plans.  Under SFAS
123, the Company can either adopt the new fair value based accounting  method or
continue the intrinsic  value based method and provide pro forma  disclosures of
net income and earnings per share as if the  accounting  provisions  of SFAS 123
had been adopted.  The Company adopted only the disclosure  requirements of SFAS
123;  therefore such adoption has no effect on the Company's  September 30, 1996
consolidated financial statements.

     During periods of low asset growth,  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 common stock is a wise use of excess
capital.

     Since October 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 September  30, 1996,  7.6 million
shares had been  purchased  and retired at a cost of $320 million  since October
1993,  of which 1.7 million were  purchased and retired at a cost of $94 million
during the first nine months of 1996.  Dividends from World Savings 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.

     World paid a $165  million  dividend to Golden  West in March 1996,  a $165
million  dividend in June 1996 and a $245 million dividend in September 1996 for
a total of $575 million for the first nine months of 1996.  In  addition,  World
has  received  approval  from the OTS to pay up to $255 million more in upstream
dividends to Golden West. Also,  during 1996,  Golden West invested $175 million
and $95 million in WFSB in June and in September, respectively.
 <PAGE>

     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 yet
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 World and WFSB, to
meet certain minimum capital requirements. The adoption of SFAS 72 had no effect
on World's or WFSB's  regulatory  capital ratios because goodwill is required to
be deducted from regulatory capital.  Both World's and WFSB's regulatory capital
ratios  continue  to  exceed   regulatory   requirements  for   well-capitalized
institutions, the highest regulatory standard. The following table shows World's
current  regulatory  capital ratios and compares them to the current OTS minimum
requirements at September 30, 1996 and 1995.
<TABLE>
<CAPTION>

                                                    TABLE 10

                                       World Savings and Loan Association
                                           Regulatory Capital Ratios
                                             (Dollars in thousands)


                            September 30, 1996                                 September 30, 1995
              ------------------------------------------------   ------------------------------------------------
                      ACTUAL                   REQUIRED                 ACTUAL                   REQUIRED
              -----------------------   -----------------------  ----------------------   -----------------------
               Capital       Ratio       Capital      Ratio       Capital       Ratio      Capital       Ratio
              -----------   ---------   -----------  ---------   -----------   --------   -----------   ---------
<S>           <C>           <C>         <C>          <C>         <C>           <C>        <C>           <C>
   Tangible   $1,541,519      6.47%      $  357,644     1.50%     $2,123,471      6.54%    $  487,097       1.50%
   Core        1,541,519      6.47          715,288     3.00       2,123,471      6.54        974,194       3.00
   Risk-based  1,866,220     14.19        1,052,051     8.00       2,441,239     13.61      1,434,813       8.00

</TABLE>

         The following table shows WFSB's current  regulatory capital ratios and
compares them to the current OTS minimum  requirements at September 30, 1996 and
1995.

<TABLE>
<CAPTION>
                                                    TABLE 11

                                   World Savings Bank, a Federal Savings Bank
                                           Regulatory Capital Ratios
                                             (Dollars in thousands)

                            September 30, 1996                               September 30, 1995
              -----------------------------------------------   ----------------------------------------------
                     ACTUAL                  REQUIRED                  ACTUAL                  REQUIRED
              ----------------------   ----------------------   ----------------------   --------------------- 
               Capital      Ratio       Capital      Ratio       Capital      Ratio       Capital      Ratio
              -----------  ---------   -----------  ---------   ----------   ---------   ----------   --------
<S>           <C>          <C>         <C>          <C>         <C>          <C>         <C>          <C>
   Tangible   $  876,490      6.83%    $ 192,563      1.50%     $  211,297     19.44%       $16,301       1.50%
   Core          876,490      6.83       385,125      3.00         211,297     19.44         32,603       3.00
   Risk-based    901,307     12.68       568,592      8.00         212,965     35.14         48,479       8.00

</TABLE>

     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  the
Association nor WFSB has above-normal exposure to interest rate risk.

<PAGE>
     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.

     The  table  below  shows  that  World's   regulatory  capital  exceeds  the
requirements of the well capitalized classification at September 30, 1996.

<TABLE>
<CAPTION>
                                                    TABLE 12

                                       World Savings and Loan Association
                         Regulatory Capital Compared to Well Capitalized Classification
                                             (Dollars in thousands)


                                                    ACTUAL                     WELL CAPITALIZED
                                          -----------------------          --------------------------
                                           Capital        Ratio             Capital         Ratio
                                          -----------    --------          -----------    -----------
<S>                                       <C>            <C>               <C>            <C>    
        Leverage                          $1,541,519        6.47%          $1,192,146         5.00%
        Tier 1 risk-based                  1,541,519       11.72              789,038         6.00
        Total risk-based                   1,866,220       14.19            1,315,063        10.00

</TABLE>

     The  table  below  shows  that  WFSB's   regulatory   capital  exceeds  the
requirements  of the well  capitalized  classification  at  September  30, 1996.

<TABLE>
<CAPTION>

                                                    TABLE 13

                                   World Savings Bank, a Federal Savings Bank
                         Regulatory Capital Compared to Well Capitalized Classification
                                             (Dollars in thousands)


                                                  ACTUAL                       WELL CAPITALIZED
                                          ----------------------- --       --------------------------
                                           Capital        Ratio             Capital         Ratio
                                          -----------    -------- --       -----------    -----------
<S>                                       <C>            <C>               <C>            <C>    
        Leverage                          $  876,490        6.83%          $  641,876         5.00%
        Tier 1 risk-based                    876,490       12.33              426,444         6.00
        Total risk-based                     901,307       12.68              710,740        10.00

</TABLE>
<PAGE>
RESULTS OF OPERATIONS

         NET EARNINGS

     Net earnings for the quarter and nine months ended September 30, 1996, were
significantly  influenced by three  nonrecurring  items: the federally  mandated
recapitalization of the Savings Association Insurance Fund (SAIF) which resulted
in a one-time charge of $132.6 million, or $1.34 per share on an after-tax basis
at the end of the third quarter (See Deposit  Insurance Section on page 31); the
recognition  during the third quarter of $139.5  million,  or $2.40 per share of
tax benefits  arising from a prior year acquisition (see Taxes on Income section
on page 32); and the third quarter adoption,  retroactive to January 1, 1996, of
SFAS 72 which  resulted in the write-off of $205.2 million or $3.49 per share of
goodwill  during the first quarter of 1996.  Reported net earnings for the third
quarter and nine months ended  September  30, 1996 were $135.8  million or $2.32
per share and $88.7 million or $1.52 per share, respectively. Without the effect
of the three items,  net  earnings  for the third  quarter and nine months ended
September  30, 1996 would have been $71.1  million or $1.23 per share and $223.1
million or $3.83 per share, respectively, compared to $63.4 million or $1.08 per
share and $167.9 million or $2.86 per share for same periods in 1995.

         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 September
30, 1996 and 1995, and December 31, 1995.
<TABLE>
<CAPTION>
                                                    TABLE 14

                                            Yield on Earning Assets,
                                       Cost of Funds, and Primary Spread,
                                    Including Effect of Purchase Accounting

                                                            September 30                               
                                                     ---------------------------     December 31
                                                       1996            1995              1995
                                                     ---------      -----------      -----------
<S>                                                  <C>            <C>              <C>          
       Yield on loan portfolio                          7.42%         7.70%              7.69%
        Yield on MBS                                     7.18          7.49               7.41
        Yield on investments                             6.06          6.05               5.96
                                                     --------        ------           --------  
        Yield on earning assets                          7.32          7.58               7.56
                                                     --------        ------           --------  
        Cost of customer deposits                        4.95          5.22               5.15
        Cost of borrowings                               5.85          6.22               6.15
                                                     --------        ------           --------   
        Cost of funds                                    5.28          5.57               5.50
                                                    ---------        ------           --------  
        Primary spread                                   2.04%         2.01%              2.06%
                                                    =========        ======           ========  

</TABLE>

     The Company's  primary  spread is, to some degree,  dependent on changes in
interest rates because the Company's  liabilities  tend to respond somewhat more
rapidly to rate movements than its assets,  which are primarily  adjustable rate
mortgages.  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).  In
general,  the repricing of COFI ARM portfolios  tends to lag liability  interest
rate changes because of certain loan features which restrain monthly adjustments
and  because  the COFI  tends to trail  changes  in  liability  costs due to the
existence of a two-month reporting lag. Short term interest rates were generally
declining  during the second half of 1995 and early 1996 before  stabilizing and
remaining  relatively flat through September.  The effects of this interest rate
environment led to a 22 basis point reduction in the Company's cost of funds and
a 24 basis point  reduction in the yield on earning assets during the first nine
months of 1996,  resulting in a 2 basis point  decrease in the Company's  spread
since yearend 1995.

<PAGE>

     The table below shows the  Company's  revenues and expenses as a percentage
of total  revenues  for the three and nine months ended  September  30, 1996 and
1995, in order to focus on the changes in interest  income between years as well
as changes in other revenue and expense amounts.

<TABLE>
<CAPTION>
                                                    TABLE 15

                                       Selected Revenue and Expense Items
                                        as Percentages of Total Revenues


                                                            Three Months Ended         Nine Months Ended
                                                               September 30              September 30
                                                           ----------------------    ----------------------
                                                             1996         1995        1996          1995
                                                           ---------    ---------    --------     ---------
<S>                                                        <C>          <C>           <C>         <C>   
    Interest on loans                                          83.4%        84.1 %      83.1 %        85.6%
    Interest on mortgage-backed securities                      9.0          8.4         9.2           6.5
    Interest and dividends on investments                       4.9          5.9         4.9           6.2
                                                           ---------    ---------    --------     ---------
                                                               97.3         98.4        97.2          98.3

    Less:
      Interest on customer deposits                            39.8         42.7        40.0          42.9
      Interest on advances and other borrowings                26.7         26.5        25.7          26.5
                                                           ---------    ---------    --------     ---------
                                                               66.5         69.2        65.7          69.4

    Net interest income                                        30.8         29.2        31.5          28.9
      Provision for loan losses                                 3.5          2.3         3.0           2.4
                                                           --------     --------     --------     -------- 
    Net interest income after provision for loan               27.3         26.9        28.5          26.5
    losses

    Add:
      Fees                                                      1.4          1.2         1.4           1.1
      Gain (loss) on the sale of securities,
        MBS, and loans                                          0.3         (0.1)        0.5           0.0
      Other non-interest income                                 1.0          0.5         0.9           0.6
                                                           --------     --------     --------     -------- 
                                                                2.7          1.6         2.8           1.7
    Less:
      General and administrative expenses                      31.8(a)      12.2        18.9 (a)      13.0
      Amortization of goodwill                                  0.0          0.1         0.0           0.1
      Taxes on income                                         (22.2)(b)      6.3        (2.5)(b)       5.9
                                                           --------     --------     -------      -------- 
    Earnings before cumulative effect of change in
      accounting for goodwill                                  20.4          9.9        14.9           9.2
    Cumulative effect of change in accounting
      for goodwill                                              0.0          0.0       (10.4)          0.0
                                                           --------     --------     -------      -------- 
    Net earnings                                               20.4%         9.9%        4.5%          9.2%
                                                           ========     ========     =======      ======== 
</TABLE>

(a)      Without  the  effect  of the  one-time  SAIF  assessment  (see  Deposit
         Insurance section on page 31), general and administrative expenses as a
         percentage  of total  revenues  would have been 11.8% and 12.2% for the
         three and nine months ended September 30, 1996, respectively.
(b)      Without the effect of the one-time SAIF  assessment and the special tax
         credit (see Taxes on Income  section on page 32),  taxes on income as a
         percentage  of total  revenues  would  have  been 7.0% and 7.4% for the
         three and nine months ended September 30, 1996, respectively.
<PAGE>
         INTEREST RATE SWAPS AND CAPS

     The Company enters into interest rate swaps and, from time to time, caps 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 and cap activity  decreased  net interest  income by $2
million and $9 million for the three and nine months ended  September  30, 1996,
as compared to a decrease of $6 million and $24 million for the same  periods in
1995.

     The following table summarizes the unrealized gains and losses for interest
rate swaps and caps at September 30, 1996 and 1995.

<TABLE>
<CAPTION>
                                    TABLE 16

     Schedule of Unrealized Gains and Losses on Interest Rate Swaps and Caps
                             (Dollars in thousands)

                                      September 30, 1996                         September 30, 1995
                            ----------------------------------------   ----------------------------------------
                                                           Net                                         Net
                            Unrealized    Unrealized    Unrealized     Unrealized    Unrealized    Unrealized
                               Gains        Losses     Gain (Loss)        Gains        Losses      Gain (Loss)
                            ------------  ------------ -------------   ------------  ------------  ------------
<S>                         <C>           <C>           <C>             <C>           <C>          <C>
Interest rate caps          $       -0-   $       -0-  $        -0-     $       84   $       -0-    $       84
Interest rate swaps              25,763       (42,980)      (17,217)        27,998       (62,254)      (34,256)
                            -----------   -----------  ------------     ----------   -----------    ---------- 
Total                       $    25,763   $   (42,980) $    (17,217)    $   28,082   $   (62,254)   $  (34,172)
                            ===========   ===========  ============     ==========   ===========    ========== 
</TABLE>



<TABLE>
<CAPTION>
                                                    TABLE 17

                               Schedule of Interest Rate Swaps and Caps Activity
                                         (Notional amounts in millions)

                                                                  Nine Months Ended
                                                                  September 30, 1996
                                        -----------------------------------------------------------------------
                                         Receive          Pay                         Forward        Interest
                                          Fixed          Fixed          Basis         Starting         Rate
                                          Swaps          Swaps          Swaps(a)       Swaps           Caps
                                        -----------    -----------    -----------    -----------    -----------
<S>                                     <C>             <C>           <C>            <C>            <C>    
Balance at December 31, 1995            $   3,221       $   1,775     $       43     $       10      $     225
Additions                                     905             -0-            -0-            -0-            -0-
Maturities                                 (1,545)           (270)           (43)           -0-           (225)
Terminations                                  -0-             -0-            -0-            -0-            -0-
Forward starting becoming effective           -0-             -0-            -0-            -0-            -0-
Other                                         -0-             -0-            -0-            -0-            -0-
                                      -----------       ---------     ----------     ----------      --------- 
Balance at September 30, 1996         $     2,581       $   1,505     $      -0-     $       10      $     -0-
                                      ===========       =========     ==========     ==========      ========= 

</TABLE>
 (a) Receives based upon one index, pays based upon another index.

     The range of floating  interest  rates  received on swap  contracts  in the
first nine months of 1996 was 5.14% to 6.02%, and the range of floating interest
rates paid on swap  contracts  was 4.81% to 6.06%.  The range of fixed  interest
rates  received on swap  contracts in the first nine months of 1996 was 4.61% to
9.68% and the range of fixed  interest rates paid on swap contracts was 5.38% to
9.14%.

<PAGE>
         INTEREST ON LOANS

     In the third  quarter of 1996,  interest  on loans was  higher  than in the
comparable 1995 period by $14 million or 2.6%. The increase in the third quarter
of 1996 was due to a $1.8  billion  increase  in the average  portfolio  balance
which was partially offset by a 27 basis point decrease in the average portfolio
yield. For the first nine months of 1996,  interest on loans was higher than the
comparable  1995 period by $80 million or 5.2%.  The  increase was due to a $1.1
billion increase in the average portfolio balance and a ten basis point increase
in the average portfolio yield.

         INTEREST ON MORTGAGE-BACKED SECURITIES

     In the third quarter of 1996,  interest on  mortgage-backed  securities was
higher  than in the  comparable  1995  period by $6 million or 10.9%.  The third
quarter  increase was due  primarily  to a $477 million  increase in the average
portfolio  balance,  which was partially  offset by a 37 basis point decrease in
the average  portfolio  yield.  For the first nine  months of 1996,  interest on
mortgage-backed  securities was higher than in the comparable 1995 period by $64
million or 54.4% due to a $1.3 billion  increase in the average  portfolio which
was  partially  offset by a 41 basis point  decrease  in the  average  portfolio
yield. The increase in the mortgage-backed  securities portfolio,  and the lower
average  portfolio  yield were  primarily  the result of the  securitization  of
adjustable-rate loans with full credit recourse that began in 1995, as discussed
on page 12.

         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 third quarter of 1996, interest and dividends on investments were $5 million
or 13.7% lower than for the same period in 1995.  The decrease was primarily due
to a 15 basis point decrease in the average  portfolio  yield and a $447 million
decrease in the average  portfolio  balance.  For the first nine months of 1996,
interest and  dividends on  investments  was $16 million or 14.4% lower than for
the same  period in 1995.  The  decrease  was  primarily  due to a $511  million
decrease in the average  portfolio  balance and a 19 basis point decrease in the
average portfolio yield.

         INTEREST ON CUSTOMER DEPOSITS

     In the third quarter of 1996,  interest on customer  deposits  decreased by
$10 million or 3.5% from the comparable period in 1995. In the first nine months
of 1996,  interest on customer deposits increased by $8 million or 1.0% from the
comparable  period of 1995.  The third  quarter  decrease  was due to a 35 basis
point  decrease  in the  average  cost of  deposits  which was  offset by a $705
million  increase in the average  deposit  balance.  The nine month increase was
primarily  due to a $765  million  increase in the  average  balance of deposits
which was offset by a 16 basis point decrease in the average cost of deposits.

         INTEREST ON ADVANCES AND OTHER BORROWINGS

     For the third  quarter and first nine months of 1996,  interest on advances
and other  borrowings  increased  by $7 million or 4.0% and $25 million or 5.2%,
respectively,  from the comparable  periods of 1995. The third quarter  increase
was primarily due to a $1.1 billion increase in the average  balance,  which was
partially  offset by a 36 basis  point  decrease  in the  average  cost of these
borrowings. The nine month increase was primarily due to a $948 million increase
in the  average  balance  which was offset by a 28 basis  point  decrease in the
average cost of these borrowings.

         PROVISION FOR LOAN LOSSES

     The   provision   for  loan  losses  was  $23  million  and  $59   million,
respectively,  for the three and nine months ended September 30, 1996,  compared
to $14.6  million  and $44.1  million for the same  periods in 1995.  The higher
provision in 1996 reflects the increase in non-accrual loans.

<PAGE>
         GENERAL AND ADMINISTRATIVE EXPENSES

     For  the  third  quarter  and  first  nine  months  of  1996,  general  and
administrative  expenses  (G&A)  increased  by $133  million  or 169.2% and $138
million or 58.5%, respectively, from the comparable periods in 1995. The primary
reason for the  increase  in 1996 was the  $132.6  million  Savings  Association
Insurance  Fund  (SAIF)  assessment  accrued  in  September  1996  (See  Deposit
Insurance  section below).  Without the effect of the one-time SAIF  assessment,
G&A as a percentage of average  assets on an annualized  basis was .87% and .90%
for the third quarter and first nine months of 1996,  respectively,  compared to
 .91% and .93% for the same periods in 1995. Including the effect of the one-time
SAIF  assessment,  G&A as a percentage of average assets on an annualized  basis
was  2.34%  and 1.40% for the  third  quarter  and  first  nine  months of 1996,
respectively.

         DEPOSIT INSURANCE

     On  September  30,  1996,  Congress  passed and  President  Clinton  signed
legislation  to capitalize  the Savings  Association  Insurance Fund in order to
bring it into parity with the FDIC's other  insurance  fund,  the Bank Insurance
Fund (BIF).  The new banking law requires  members to pay a levy of $4.7 billion
to bring SAIF up to the required reserve level of 1.25% of insured deposits, but
lowers savings and loan deposit insurance premiums starting in 1997. As a result
of  this  legislation,   Golden  West's  subsidiary,   World  Savings  and  Loan
Association,  incurred  a one-time  charge of $132.6  million at the end of the
third quarter. Beginning on January 1, 1997, the premium paid by the Association
to the FDIC will be reduced  from $2.30 per $1,000 in savings  balances  to $.64
per  $1,000.  Beginning  on January 1, 1997,  the  premiums  paid by BIF insured
institutions,  such as WFSB,  will be increased from $0.00 per $1,000 in savings
balances to $.13 per $1,000.
<PAGE>
         CHANGE IN ACCOUNTING FOR GOODWILL

     During the third quarter of 1996,  the Company  adopted SFAS 72,  effective
January 1, 1996, for goodwill  related to  acquisitions  made prior to September
30, 1982.  SFAS 72  requires,  among other  things,  that to the extent the fair
value of liabilities assumed exceeds the fair value of assets resulting from the
acquisition  of banking or thrift  institutions  initiated  after  September 30,
1982,  the resulting  goodwill  recognized  shall be amortized  over a period no
longer  than  the   estimated   remaining   life  of  the   acquired   long-term
interest-earning  assets.  The  adoption  of SFAS  72 for  goodwill  related  to
acquisitions of banking or thrift  institutions  prior to September 30, 1982, is
permitted but not required. As a result, the Company wrote-off goodwill totaling
$205.2 million as the cumulative effect of the change in accounting for goodwill
and restated its financial statements for the first and second quarters of 1996.
Results from periods prior to 1996 have not been restated.  The Company has been
accounting  for  acquisitions  initiated  subsequent  to  September  30, 1982 in
accordance with SFAS 72.

     With the adoption of SFAS 72 and the resulting  reduction in the balance of
goodwill,  there was no amortization of goodwill for the third quarter and first
nine months of 1996. The remaining goodwill from acquisitions subsequent to 1982
amounting  to less  than  .2% of  total  assets  is not  material  and has  been
reclassified to other assets.  Goodwill  amortization  for the third quarter and
first nine months of 1995 was $527 thousand and $2.4 million, respectively.

         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.

     During the third quarter of 1996, the Company  recognized $139.5 million of
tax benefits associated with the Company's  acquisition of Beach Federal Savings
and Loan  Association  (Beach).  Specifically,  in  December  1988,  Golden West
entered into a government approved  transaction with Beach to provide management
services to that institution.  As part of the agreement, Golden West obtained an
option to take title to the stock of Beach and subsequently exercised this right
in July 1991.  When Golden West took title to the stock,  the Company  disclosed
that  tax  benefits  were  anticipated  from  operating  losses  which  had been
accumulated  at  Beach's  predecessor  institution  up to the  time of the  1988
agreement,  although  the  availability  and the amount of these  benefits  were
uncertain.  The availability of the $139.5 million of tax benefits was confirmed
in the third quarter of 1996.

     Taxes as a  percentage  of  earnings  before the  cumulative  effect of the
change in accounting  for goodwill,  the one-time SAIF  assessment and excluding
the aforementioned $139.5 million in tax benefits,  were 39.4% and 39.5% for the
third quarter and first nine months of 1996, respectively, compared to 39.2% and
39.0% for the same periods a year ago.

<PAGE>
         LIQUIDITY AND CAPITAL RESOURCES

     World's  principal sources of funds are cash flows generated from earnings;
customer  deposits;  loan  repayments;  borrowings  from the FHLB;  issuance  of
medium-term notes; and debt collateralized by mortgages,  MBS, or securities. In
addition,  World  has a  number  of  other  alternatives  available  to  provide
liquidity  or finance  operations.  These  include  borrowings  from its parent,
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,  World 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 World's  liquidity  positions at September 30, 1996, and 1995, and
December 31, 1995, see the cash and investments section on page 12.

     WFSB's  principal  sources of funds are cash flows generated from earnings;
customer deposits;  loan repayments;  borrowings from the FHLB;  investments and
borrowings from its parent; and debt  collateralized by mortgages or securities.
In  addition,  WFSB has other  alternatives  available  to provide  liquidity or
finance  operations  including  sales  of  loans.  For a  discussion  of  WFSB's
liquidity  positions at September 30, 1996, and 1995, and December 31, 1995, see
the cash and investments section on page 12.

     The principal sources of funds for Golden West (the Parent) are interest on
investments,  dividends  from World,  and the proceeds from the issuance of debt
and equity  securities.  Various  statutory and regulatory  restrictions and tax
considerations  limit the  amount of  dividends  World  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,
dividends to stockholders,  the purchase of Golden West stock (see stockholders'
equity  section  on page  23),  and  general  and  administrative  expenses.  At
September 30, 1996 and 1995, and December 31, 1995, Golden West's total cash and
investments  amounted to $910 million  (including a $600 million short-term loan
to World and a $1.5  million  short-term  loan to World  Savings  Bank,  a State
Savings Bank), $802 million, and $719 million, respectively.

PART II.          OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         11    -  Statement of Computation of Earnings Per Share

         27    -  Financial Data Schedule

<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:  November 13, 1996             /s/ J. L. Helvey
                                      ------------------------------------
                                          J. L. Helvey
                                          Executive Vice President
                                          (duly authorized and principal 
                                          financial officer)
<PAGE>
<TABLE>
                                                   EXHIBIT 11

                                       Golden West Financial Corporation
                                 Statement of Computation of Earnings Per Share
                                (Dollars in thousands except per share figures)
<CAPTION>


                                                      Three Months Ended               Nine Months Ended
                                                         September 30                    September 30
                                                 -----------------------------   ----------------------------
                                                     1996            1995            1996            1995
                                                 -------------   -------------   -------------   ------------
<S>                                               <C>             <C>             <C>            <C>    
  Earnings Before Cumulative Effect of
     Change in Accounting for Goodwill            $   135,785      $   63,381      $  293,963     $   167,875
  Cumulative Effect of Change in 
     Accounting for Goodwill                              -0-             -0-        (205,242)            -0-
                                                  -----------      ----------      ----------     ----------- 
  Net Earnings                                    $   135,785      $   63,381      $   88,721     $   167,875
                                                  ===========      ==========      ==========     =========== 

  Average Number of Common
     Shares Outstanding                            57,584,306      58,681,021      58,216,474      58,637,427
                                                  ============     ==========      ==========     =========== 

  Earnings Per Share Before Cumulative Effect
      of Change in Accounting for Goodwill        $       2.32     $     1.08      $     5.01     $      2.86
  Cumulative Effect of Change in Accounting
      for Goodwill                                        0.00           0.00           (3.49)           0.00
                                                  ------------   ------------    ------------     -----------  
  Earnings Per Common Share                       $       2.32   $       1.08    $       1.52     $      2.86
                                                  ============   ============    ============     =========== 

</TABLE>