SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

For Quarter Ended March 31, 1997                Commission File Number 1-4629


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


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

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

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

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes     X         No
    -----------       -----------

     The number of shares outstanding of the registrant's  common stock on April
30, 1997, was 56,929,364 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 months ended March 31, 1997 and
1996 are unaudited.  In the opinion of the Company, all adjustments  (consisting
only of normal  recurring  accruals)  that are necessary for a fair statement of
the results for such three  month  periods  have been  included.  The  operating
results  for the  three  months  ended  March  31,  1997,  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)


                                                                        March 31      March 31     December 31
                                                                          1997          1996           1996
                                                                      ------------   -----------   ------------
<S>                                                                   <C>            <C>            <C>    
Assets:
  Cash                                                                $    132,972   $   203,419    $   218,719
  Securities available for sale at fair value                              602,667       707,755        781,325
  Other investments at cost                                              1,538,551     1,086,255      1,078,832
  Mortgage-backed securities available for sale without recourse at        
     fair value                                                            216,332       269,590        227,466
  Mortgage-backed securities held to maturity without recourse at          
     cost                                                                  785,486       859,705        800,692
  Mortgage-backed securities held to maturity with recourse at cost      3,183,765     2,174,244      3,265,424
  Loans receivable                                                      30,698,538    28,388,930     30,113,421
  Interest earned but uncollected                                          212,280       218,347        221,604
  Investment in capital stock of Federal Home Loan Banks--at cost
     which approximates fair value                                         564,389       392,597        500,105
  Real estate held for sale or investment                                   79,687        73,864         83,052
  Prepaid expenses and other assets                                        292,312       231,499        226,054
  Premises and equipment--at cost less accumulated depreciation            223,030       205,352        213,904
                                                                      ------------   -----------   ------------ 
                                                                      $ 38,530,009   $34,811,557    $37,730,598
                                                                      ============   ===========   ============ 

Liabilities and Stockholders' Equity:
  Deposits                                                            $ 22,943,924   $20,990,781    $22,099,934
  Advances from Federal Home Loan Banks                                  8,133,882     6,459,770      8,798,433
  Securities sold under agreements to repurchase                         2,662,179     2,139,371      1,908,126
  Medium-term notes                                                        309,903       889,570        589,845
  Accounts payable and accrued expenses                                    482,335       487,897        452,182
  Taxes on income                                                          259,504       390,947        207,605
  Subordinated notes--net of discount                                    1,324,390     1,322,790      1,323,996
  Stockholders' equity                                                   2,413,892     2,130,431      2,350,477
                                                                      ------------   -----------   ------------ 
                                                                      $ 38,530,009   $34,811,557    $37,730,598
                                                                      ============   ===========   ============ 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       Golden West Financial Corporation
                                 Consolidated Statement of Net Earnings (Loss)
                                                  (Unaudited)
                                (Dollars in thousands except per share figures)

                                                       Three Months Ended
                                                            March 31
                                                  ----------------------------- 
                                                     1997              1996
                                                  -----------      ------------ 
<S>                                               <C>              <C>           
Interest Income:
    Interest on loans                             $   565,063      $    541,208
    Interest on mortgage-backed securities             74,933            61,673
    Interest and dividends on investments              34,283            36,226
                                                  -----------      ------------ 
                                                      674,279           639,107
Interest Expense:
    Interest on deposits                              280,320           265,370
    Interest on advances                              112,608            89,981
    Interest on repurchase agreements                  27,898            28,388
    Interest on other borrowings                       34,761            47,709
                                                  -----------      ------------ 
                                                      455,587           431,448
                                                  -----------      ------------ 
        Net Interest Income                           218,692           207,659
Provision for loan losses                              20,695            18,522
                                                  -----------      ------------ 
        Net Interest Income after Provision
            for Loan Losses                           197,997           189,137
Non-Interest Income:
    Fees                                               10,737             8,883
    Gain on the sale of securities,
        MBS, and loans                                  1,223             4,684
    Other                                               7,272             5,957
                                                  -----------      ------------ 
                                                       19,232            19,524
Non-Interest Expense:
    General and administrative:
        Personnel                                      44,100            39,385
        Occupancy                                      13,388            12,216
        Deposit insurance                               2,046            11,332
        Advertising                                     2,418             2,248
        Other                                          17,218            15,610
                                                  -----------      ------------ 
                                                       79,170            80,791
Earnings Before Taxes on Income and
    Cumulative Effect of Change in Accounting         138,059           127,870
    Taxes on Income                                    54,685            49,277
                                                  -----------      ------------ 
Earnings Before Cumulative Effect of Change in
    Accounting for Goodwill                            83,374            78,593
Cumulative Effect of Change in Accounting
    for Goodwill                                          -0-          (205,242)
                                                  -----------      ------------ 
Net Earnings (Loss)                               $    83,374      $   (126,649)
                                                  ===========      ============ 

Earnings (Loss) Per Share:
Earnings Per Share Before Cumulative Effect of
    Change in Accounting for Goodwill             $      1.45      $       1.34
Cumulative Effect of Change in Accounting
    for Goodwill                                         0.00             (3.49)
                                                  -----------      ------------
Net Earnings (Loss) Per Share                     $      1.45      $      (2.15)
                                                  ===========      ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        Golden West Financial Corporation
                      Consolidated Statement of Cash Flows
                                   (Unaudited)
                             (Dollars in thousands)


                                                                 Three Months Ended
                                                                      March 31
                                                             -------------------------- 
                                                                1997           1996
                                                             -----------    ----------- 
<S>                                                          <C>            <C>         
Cash Flows From Operating Activities:
  Net earnings (loss)                                        $    83,374     $ (126,649)
  Adjustments to reconcile net earnings (loss) to
  net cash provided by operating activities:
    Provision for loan losses                                     20,695         18,522
    Cumulative effect of the change in accounting for goodwill       -0-        205,242
    Amortization of loan fees and discounts                       (4,441)        (6,526)
    Depreciation and amortization                                  5,143          4,793
    Loans originated for sale                                    (53,560)      (194,359)
    Sales of loans originated for sale                            49,508        185,663
    Decrease in interest earned but uncollected                    9,324          7,048
    Federal Home Loan Bank stock dividends                       (15,722)        (9,251)
    (Increase) in prepaid expenses and other assets              (58,581)       (71,456)
    Increase in accounts payable and accrued expenses             30,153         37,083
    Increase in taxes on income                                   54,668         35,572
    Other, net                                                    (4,626)        (5,737)
                                                             -----------   ------------
      Net cash provided by operating activities                  115,935         79,945

Cash Flows From Investing Activities:
  New loan activity:
    New real estate loans originated for portfolio            (1,341,904)      (984,084)
    Real estate loans purchased                                     (652)          (200)
    Other, net                                                    (8,270)          (476)
                                                             -----------   ------------
                                                              (1,350,826)      (984,760)
  Real estate loan principal payments:
    Monthly payments                                             164,249        141,548
    Payoffs, net of foreclosures                                 487,720        521,211
    Refinances                                                    57,383         66,888
                                                             -----------    -----------
                                                                 709,352        729,647

  Purchases of mortgage-backed securities held to maturity           -0-            (62)
  Repayments of mortgage-backed securities                       106,025        104,559
  Proceeds from sales of real estate                              52,680         51,303
  Purchases of securities available for sale                         (10)      (323,235)
  Sales of securities available for sale                             -0-         74,951
  Matured securities available for sale                          175,601        444,197
  Decrease (increase) in other investments                      (459,719)       103,905
  Purchases of Federal Home Loan Bank stock                      (56,239)       (37,099)
  Additions to premises and equipment                            (14,347)        (6,939)
                                                             -----------    -----------
    Net cash provided by (used in) investing activities         (837,483)       156,467
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       Golden West Financial Corporation
                                Consolidated Statement of Cash Flows (Continued)
                                                  (Unaudited)
                                             (Dollars in thousands)


                                                                 Three Months Ended
                                                                      March 31
                                                             ---------------------------
                                                                1997           1996
                                                             ------------   ------------
<S>                                                          <C>            <C>   
Cash Flows From Financing Activities:
    Deposit activity:
    Increase (decrease) in deposits, net                      $  618,182     $  (70,839)
    Interest credited                                            225,808        213,710
                                                             -----------     ----------
                                                                 843,990        142,871

  Additions to Federal Home Loan Bank advances                    21,600         25,950
  Repayments of Federal Home Loan Bank advances                 (686,199)       (13,470)
  Proceeds from agreements to repurchase securities            1,424,702        396,362
  Repayments of agreements to repurchase securities             (670,649)       (74,934)
  Repayments of medium-term notes                               (280,000)      (708,135)
  Proceeds from federal funds purchased                              -0-        575,000
  Repayments of federal funds purchased                              -0-       (575,000)
  Dividends on common stock                                       (6,301)        (5,581)
  Sale of  stock                                                   2,009          2,262
  Purchase and retirement of Company stock                       (13,351)       (17,013)
                                                             -----------    -----------
    Net cash provided by (used in) financing activities          635,801       (251,688)
                                                             -----------    -----------
Net Decrease in Cash                                             (85,747)       (15,276)
Cash at beginning of period                                      218,719        218,695
                                                             -----------    ----------- 
Cash at end of period                                        $   132,972    $   203,419
                                                             ===========    =========== 

Supplemental cash flow information:
  Cash paid for:
    Interest                                                 $   452,524    $   453,630
    Income taxes                                                     611         19,871
  Cash received for interest and dividends                       683,603        646,155
  Noncash investing activities:
    Loans transferred to foreclosed real estate                   50,657         52,174
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       Golden West Financial Corporation
                                 Consolidated Statement of Stockholders' Equity
                                                  (Unaudited)
                                             (Dollars in thousands)

                                                                            Three Months Ended
                                                                                  March
                                                                        -------------------------- 
                                                                           1997           1996
                                                                        -----------    ----------- 
<S>                                                                     <C>           <C>    
Common Stock:
  Balance at January 1                                                  $     5,734    $     5,887
  Common stock issued upon exercise of stock options                              7              8
  Common stock retired upon purchase of stock                                   (19)           (33)
                                                                        -----------    -----------
  Balance at March 31                                                         5,722          5,862
                                                                        -----------    -----------   
Paid-in Capital:
  Balance at January 1                                                       67,953         55,353
  Common stock issued upon exercise of stock options                          2,002          2,254
                                                                        -----------    ----------- 

  Balance at March 31                                                        69,955         57,607
                                                                        -----------    ----------- 

Retained Earnings:
  Balance at January 1                                                    2,177,098      2,140,883
  Net earnings (loss)                                                        83,374       (126,649)
  Cash dividends on common stock                                             (6,301)        (5,581)
  Retirement of stock                                                       (13,332)       (16,980)
                                                                        -----------   ------------

  Balance at March 31                                                     2,240,839      1,991,673
                                                                        -----------   ------------

Unrealized Gains on Securities Available for Sale:
  Balance at January 1                                                       99,692         76,230
  Change during period                                                       (2,316)          (941)
                                                                        -----------   ------------

  Balance at March 31                                                        97,376         75,289
                                                                        -----------   ------------

Total Stockholders' Equity at March 31                                  $ 2,413,892    $ 2,130,431
                                                                        ===========   ============
</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, 1996,
as well as certain  material  changes in results of operations  during the three
month periods ended March 31, 1997, and 1996, respectively.

     The following narrative is written with the presumption that the users have
read or have access to the Company's  1996 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, 1996, and for the year then ended. Therefore, only material changes
in financial condition and results of operations are discussed herein.

     CHANGE IN ACCOUNTING FOR GOODWILL

     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.  Up until 1996,  the Company had applied SFAS 72 only to
acquisitions made after September 30, 1982. 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.  SFAS 72 requires,  among other things,
that goodwill be amortized over a period no longer than the estimated  remaining
life of the acquired long-term interest-earning assets. As a result, the Company
wrote-off goodwill totaling $205 million during 1996 as the cumulative effect of
the change in accounting for goodwill.  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.  The minor  amount  of  continuing
goodwill  amortization  no longer warrants a separate line item on the Company's
Consolidated  Statement of Net Earnings and,  therefore,  for 1996 and 1997, has
been included in other income.

     The adoption of SFAS 72 noted above resulted in the restatement of earnings
previously  reported of $76 million, or $1.28 per share, in the first quarter of
1996 to a loss of $127 million,  or $2.15 per share. The restatement  included a
charge of $3.49 per share for the cumulative  effect of change in accounting for
goodwill and a credit of $.06 per share of goodwill  amortization  for the first
quarter of 1996. For the three months ended March 31, 1996,  earnings before the
cumulative effect of the change in accounting for goodwill were $1.34 per share.
<PAGE>
<TABLE>
<CAPTION>
                        Golden West Financial Corporation
                              Financial Highlights
                                   (Unaudited)
                 (Dollars in thousands except per share figures)

                                                         March 31        March 31        December 31
                                                           1997            1996              1996
                                                       -------------    ------------     -------------
<S>                                                    <C>              <C>              <C>
   Assets                                              $ 38,530,009     $34,811,557       $37,730,598
   Loans receivable                                      30,698,538      28,388,930        30,113,421
   Mortgage-backed securities                             4,185,583       3,303,539         4,293,582
   Deposits                                              22,943,924      20,990,781        22,099,934
   Stockholders' equity                                   2,413,892       2,130,431         2,350,477
   Stockholders' equity/total assets                          6.26%           6.12%             6.23%
   Book value per common share                         $      42.19     $     36.34       $     40.99
   Common shares outstanding                             57,218,464      58,622,859        57,342,389
   Yield on loan portfolio                                    7.43%           7.64%             7.43%
   Yield on mortgage-backed securities                        7.12%           7.35%             7.13%
   Yield on investments                                       6.82%           5.68%             6.88%
   Yield on earning assets                                    7.37%           7.51%             7.37%
   Cost of deposits                                           4.98%           5.01%             4.98%
   Cost of borrowings                                         5.82%           5.95%             5.80%
   Cost of funds                                              5.27%           5.33%             5.28%
   Yield on earning assets less cost of funds                 2.10%           2.18%             2.09%
   Ratio of nonperforming assets to total assets              1.22%           1.25%             1.21%
   Ratio of troubled debt restructured to total assets         .23%            .13%              .22%
   World Savings and Loan Association:
     Total assets                                      $ 19,633,902     $27,601,561       $21,040,890
     Net worth                                            1,337,107       1,852,066         1,427,914
     Net worth/total assets                                   6.81%           6.71%             6.79%
     Regulatory capital ratios:
       Tangible capital                                       6.37%           6.70%             6.37%
       Core capital                                           6.37%           6.70%             6.37%
       Risk-based capital                                    13.74%          14.12%            13.91%
   World Savings Bank, a Federal Savings Bank:
     Total assets                                      $ 18,465,208     $ 7,127,638       $16,929,859
     Net worth                                            1,235,418         577,705         1,136,717
     Net worth/total assets                                   6.69%           8.11%             6.71%
     Regulatory capital ratios:
       Tangible capital                                       6.67%           8.05%             6.69%
       Core capital                                           6.67%           8.05%             6.69%
       Risk-based capital                                    13.26%          15.25%            13.14%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        Golden West Financial Corporation
                              Financial Highlights
                                   (Unaudited)
                 (Dollars in thousands except per share figures)

                                                                        Three Months Ended
                                                                             March 31
                                                                     --------------------------
                                                                        1997           1996
                                                                     ------------   -----------
<S>                                                                  <C>            <C>    
   New real estate loans originated                                  $ 1,395,464    $1,178,443
   Average yield on new real estate loans                                  7.52%         7.71%
   Increase in deposits (a)                                          $   843,990    $  142,871
   Earnings before cumulative effect of change in accounting for          83,374        78,593
   goodwill
   Net earnings (loss)                                                    83,374      (126,649)
   Earnings per share before cumulative effect
     of change in accounting for goodwill                                   1.45          1.34
   Net earnings (loss) per share                                            1.45         (2.15)
   Cash dividends on common stock                                            .11          .095
   Average common shares outstanding                                  57,314,639    58,788,639
   Ratios:(b)
     Net earnings (loss)/average net worth (ROE)(c)                       13.95%       (23.50%)
     Net earnings (loss)/average assets (ROA)(c)                            .88%        (1.45%)
     Net interest income/average assets                                    2.30%         2.38%
     General and administrative expense/average assets                      .83%          .93%
</TABLE>

(a)    Includes $397 million of wholesale deposits for the quarter ended March
       31, 1997.

(b)    Ratios are annualized by multiplying  the quarterly  computation by four.
       Averages are computed by adding the  beginning  balance and each monthend
       balance during the quarter and dividing by four.

(c)    The ratios for the quarter ended March 31, 1996, include the $205 million
       cumulative  effect of the change in accounting  for  goodwill,  which was
       effective  January 1, 1996.  The ratios for the  quarter  ended March 31,
       1996, excluding the change in accounting for goodwill are: ROE 14.58% and
       ROA .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 March 31, 1997 and
1996,  and December 31, 1996. The reader is referred to page 51 of the Company's
1996 Form 10-K for similar  information  for the years 1993  through  1996 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

                                                                March 31                 
                                                           --------------------      December 31
                                                            1997         1996            1996
                                                           ------       -------      -----------   
<S>                                                        <C>          <C>          <C>
       Assets:
          Cash and investments                                5.9%         5.7%           5.5%
          Mortgage-backed securities                         10.9          9.5           11.4
          Loans receivable                                   79.7         81.6           79.8
          Other assets                                        3.5          3.2            3.3
                                                           ------       ------        -------
                                                            100.0%       100.0%         100.0%
                                                           ======       ======        =======
       Liabilities and Stockholders' Equity:
          Deposits                                           59.5%        60.3%          58.6%
          Federal Home Loan Bank advances                    21.1         18.6           23.3
          Securities sold under agreements to repurchase      6.9          6.1            5.1
          Medium-term notes                                   0.8          2.6            1.6
          Other liabilities                                   2.0          2.5            1.7
          Subordinated debt                                   3.4          3.8            3.5
          Stockholders' equity                                6.3          6.1            6.2
                                                           ------       ------        -------
                                                            100.0%       100.0%         100.0%
                                                           ======       ======        =======
</TABLE>
     As the above table shows,  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 March 31, 1997,  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  lags  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. In addition, because COFI is based on a portfolio
of  accounts,  not all of which  mature or  reprice  immediately,  COFI does not
initially  reflect a change in market  interest  rates.  Consequently,  when the
interest  rate  environment  changes,  the COFI lags cause  assets to  initially
reprice more slowly than liabilities,  enhancing earnings when rates are falling
and holding  down income  when rates rise.  In addition to the COFI lags,  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 March 31, 1997
                              (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                          $  1,858     $      -0-     $     281     $       2      $   2,141
  Mortgage-backed securities              3,272             94           350           470          4,186
  Loans receivable:
    Rate-sensitive                       26,039          1,591           119           -0-         27,749
    Fixed-rate                               78            236           991         1,350          2,655
  Other(b)                                  673            -0-           -0-           -0-            673
  Impact of interest rate swaps             632            170          (256)         (546)           -0-
                                      ---------     ----------     ---------     ---------      ---------    
Total                                 $  32,552     $    2,091     $   1,485     $   1,276      $  37,404
                                      =========     ==========     =========     =========      =========   
Interest-Bearing Liabilities(c):
  Deposits                            $   8,124     $   12,093     $   2,699     $      28      $  22,944
    FHLB advances                         7,149            375           345           265          8,134
    Other borrowings                      3,080            100           619           497          4,296
    Impact of interest rate swaps         1,431           (487)         (931)          (13)           -0-
                                      ---------    -----------     ---------    -----------     --------- 
Total                                 $  19,784    $    12,081     $   2,732     $     777      $  35,374
                                      =========    ===========     =========    ==========      ========= 
Repricing gap                         $  12,768    $    (9,990)    $  (1,247)    $     499
                                      =========    ===========     =========    ========== 
Cumulative gap                        $  12,768    $     2,778     $   1,531     $   2,030
                                      =========    ===========     =========    ========== 
Cumulative gap as a percentage of
      total assets                        33.1%           7.2%          4.0%
                                      =========    ===========   ===========

</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, FSB (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 deposits and short-term  borrowings.  For the months
ended March 31, 1997 and 1996, and December 31, 1996, World's average regulatory
liquidity ratios were 8%, 5.5%, and 8%, respectively. For the months ended March
31, 1997 and 1996, and December 31, 1996,  WFSB's average  regulatory  liquidity
ratios were 5.3%, 6% and 6%,  respectively.  World and WFSB exceeded the monthly
5% requirements for each of the three months ended March 31, 1997 and all months
during 1996.  The level of the Company's  investments  position in excess of its
liquidity  requirements  at any time  depends on liquidity  needs and  available
arbitrage opportunities.

     At March 31,  1997 and  1996,  and  December  31,  1996,  the  Company  had
securities  available for sale in the amount of $603 million,  $708 million, and
$781 million,  respectively,  including unrealized gains on securities available
for sale of $156 million, $116 million, and $159 million, respectively. At March
31, 1997 and 1996, and December 31, 1996, the Company had no securities  held to
maturity or for trading.

     Included in the  securities  available for sale at March 31, 1997 and 1996,
and December 31, 1996, were  collateralized  mortgage  obligations (CMOs) in the
amount of $144  million,  $340  million,  and $170  million,  respectively.  The
Company holds CMOs on which both  principal  and interest are received.  It does
not hold any  interest-only  or  principal-only  CMOs.  At March 31,  1997,  the
majority of the Company's CMOs had remaining  terms to maturity of five years or
less, and qualified for inclusion in the regulatory liquidity measurement.

     MORTGAGE-BACKED SECURITIES

     At March 31,  1997 and  1996,  and  December  31,  1996,  the  Company  had
mortgage-backed securities (MBS) held to maturity in the amount of $4.0 billion,
$3.0 billion, and $4.1 billion, respectively,  including $3.2 billion of Federal
National Mortgage  Association (FNMA) MBS subject to full credit recourse to the
Company at March 31,  1997,  $2.2  billion at March 31, 1996 and $3.3 billion at
December 31,  1996.  At March 31, 1997 and 1996,  and  December  31,  1996,  the
Company had mortgage-backed  securities available for sale in the amount of $216
million,  $270 million,  and $227 million,  respectively,  including  unrealized
gains on MBS  available  for sale of $9 million,  $13 million,  and $11 million,
respectively.  At March 31, 1997 and 1996 and December 31, 1996, the Company had
no trading MBS.

     During  1995 and  1996,  the  Company  securitized  $2.3  billion  and $1.3
billion,   respectively,   of  adjustable   rate  mortgages   (ARMs)  into  FNMA
COFI-indexed MBS, to be used as collateral for borrowings.  These securities are
subject to full credit recourse to the Company.  The Company has the ability and
intent to hold these MBS until maturity.  Accordingly,  these MBS are classified
as held to maturity.
<PAGE>
     Repayments  of MBS  during  the first  quarter  of 1997  were $106  million
compared to $105 million in the same period of 1996. Although the balance of the
MBS  portfolio  is higher than it was a year ago,  repayments  on MBS during the
first  quarter  of 1997 as  compared  to the  first  quarter  of 1996  were flat
primarily  due to a decrease in refinances  and  prepayments  on the  underlying
loans.

     LOAN PORTFOLIO

     LOAN VOLUME

     New loan  originations  for the quarter  ended March 31, 1997,  amounted to
$1.4 billion  compared to $1.2 billion for the same period in 1996. The increase
in loan volume in 1997 over the first quarter of 1996 occurred  because rates on
new fixed-rate  mortgages were higher this year,  hovering near the 8% level for
most of the quarter.  In contrast,  the starting  rates on ARMs,  the  Company's
principal  product,  remained low and affordable.  The Company continues to sell
most of its fixed-rate  originations.  Loans originated for sale amounted to $54
million for the first  three  months of 1997  compared  to $194  million for the
first  three  months  of  1996.  Refinanced  loans  constituted  36% of new loan
originations  for the  quarter  ended  March 31,  1997,  compared to 43% for the
quarter ended March 31, 1996.

     The Company  has lending  operations  in 23 states.  The primary  source of
mortgage  origination is loans secured by residential  properties in California.
For the three months ended March 31, 1997, 52% of total loan  originations  were
on residential  properties in California  compared to 53% for the same period in
1996. The five largest states,  other than California,  for originations for the
three months ended March 31, 1997, were Florida,  Texas,  Washington,  Colorado,
and Illinois with a combined total of 26% total originations.  The percentage of
the total loan portfolio  (excluding  mortgage-backed  securities with recourse)
that is comprised of  residential  loans in California was 68% at March 31, 1997
compared to 73% at March 31, 1996, and 69% at December 31, 1996.

     The tables on the following two pages show the Company's  loan portfolio by
state at March 31, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
                                     TABLE 3

                             Loan Portfolio by State
                                 March 31, 1997
                             (Dollars in thousands)


                         Residential                                                                  
                         Real Estate                           Commercial                     Loans as
                   -------------------------                     Real            Tota          a % of
    State            1 - 4           5+          Land           Estate         Loans (a)     Portfolio
---------------   ------------   -----------   ----------   ---------------   ------------   -----------
<S>               <C>            <C>           <C>          <C>               <C>            <C>
California        $19,965,421    $3,399,540    $     250     $   55,486      $23,420,697       68.63%
Texas               1,176,028       106,963          571          1,549        1,285,111        3.77
Illinois            1,078,539       183,142          -0-          1,756        1,263,437        3.70
Colorado              993,304       236,588          -0-          7,100        1,236,992        3.62
Florida             1,085,361        20,264           88            941        1,106,654        3.24
New Jersey          1,075,776           406          -0-          6,468        1,082,650        3.17
Washington            440,186       375,010          -0-            749          815,945        2.39
Arizona               651,402        46,570          -0-            577          698,549        2.05
Pennsylvania          502,320         4,251          -0-          3,534          510,105        1.49
Virginia              499,980         8,575          -0-          1,431          509,986        1.49
Connecticut           425,616           -0-          -0-             22          425,638        1.25
Maryland              335,978         2,188          -0-            535          338,701        0.99
Oregon                223,792        11,078          -0-          2,691          237,561        0.70
Nevada                186,474         1,093          -0-            -0-          187,567        0.55
Utah                  163,441            58          -0-          1,738          165,237        0.48
Minnesota             145,192         8,357          -0-            -0-          153,549        0.45
Kansas                146,769         4,849          -0-            188          151,806        0.44
Wisconsin             105,418         3,888          -0-            -0-          109,306        0.32
Massachusetts          81,373           -0-          -0-             20           81,393        0.24
Missouri               72,461         6,328          -0-            -0-           78,789        0.23
New York               47,504           -0-          -0-            -0-           47,504        0.14
Washington DC          44,396           -0-          -0-            -0-           44,396        0.13
New Mexico             37,312           -0-          -0-            -0-           37,312        0.11
Georgia                34,316           -0-          -0-          1,706           36,022        0.11
Idaho                  27,064           -0-          -0-            -0-           27,064        0.08
Delaware               23,897           -0-          -0-            -0-           23,897        0.07
Ohio                   16,377         2,219          196          3,975           22,767        0.07
North Carolina          7,749           -0-          -0-            488            8,237        0.02
South Dakota            7,227           -0-          -0-            -0-            7,227        0.02
Other                  11,214            11          -0-          4,561           15,786        0.05
                  -----------    ----------    ---------    -----------      -----------    -------- 
  Totals          $29,611,887    $4,421,378    $   1,105    $    95,515       34,129,885      100.00%
                  ===========    ==========    =========    ===========                     ======== 

SFAS 91 deferred loan fees                                                       (54,130)
Loan discount on purchased loans                                                  (4,207)
Undisbursed loan funds                                                            (3,934)
Allowance for loan losses                                                       (209,077)
Loans to facilitate (LTF) interest reserve                                          (553)
Troubled debt restructured (TDR) interest reserve                                 (6,987)
Loans on deposits                                                                 31,306
                                                                             -----------
Total loan portfolio and loans securitized into FNMA MBS with recourse        33,882,303
Loans securitized into FNMA MBS with recourse                                 (3,183,765)(b)
                                                                             ----------- 
     Total loan portfolio                                                    $30,698,538
                                                                             ===========
</TABLE>

(a)    The Company has no commercial loans.

(b)    During 1995 and 1996,  loans  amounting to $2.3 billion and $1.3 billion,
       respectively,  were  securitized with full recourse into Federal National
       Mortgage  Association  mortgage-backed  securities.  The March  31,  1997
       balances of these FNMA  mortgage-backed  securities  are reflected in the
       amounts above.
<PAGE>
<TABLE>
<CAPTION>
                                     TABLE 4

                             Loan Portfolio by State
                                 March 31, 1996
                             (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>
California        $18,962,350    $3,348,673    $     268    $    69,921       $      -0-    $22,381,212       72.73%
Colorado              840,118       219,688          -0-          7,486              -0-      1,067,292        3.47
Illinois              847,231       181,987          -0-          2,301              -0-      1,031,519        3.35
Texas                 859,969        87,978          586          1,653              -0-        950,186        3.09
New Jersey            886,719           412          -0-          7,478              199        894,808        2.91
Florida               747,365         2,625          196          1,090              -0-        751,276        2.44
Washington            361,530       307,278          -0-            783              -0-        669,591        2.18
Arizona               451,889        52,372          -0-          1,704              -0-        505,965        1.64
Virginia              428,668         3,000          -0-          1,562              -0-        433,230        1.41
Pennsylvania          398,270           -0-          -0-          4,000              -0-        402,270        1.31
Connecticut           323,487           -0-          -0-             15              -0-        323,502        1.05
Maryland              273,918           -0-          -0-            586              -0-        274,504        0.89
Oregon                177,982        10,673          -0-          2,861              -0-        191,516        0.62
Nevada                157,545         1,200          -0-            -0-              -0-        158,745        0.52
Kansas                129,368         5,001          -0-            207              -0-        134,576        0.44
Utah                  102,878            64          -0-          1,940              -0-        104,882        0.34
Minnesota              85,262           -0-          -0-            -0-              -0-         85,262        0.28
Missouri               65,180         6,969          -0-            -0-              -0-         72,149        0.23
Wisconsin              63,103         4,205          -0-            -0-              -0-         67,308        0.22
New York               52,541           -0-          -0-             22              -0-         52,563        0.17
Georgia                41,332           -0-          -0-          2,016              -0-         43,348        0.14
Washington DC,         36,962           -0-          -0-            -0-              -0-         36,962        0.12
Ohio                   22,208         2,549          414          5,006              -0-         30,177        0.10
New Mexico             25,387           -0-          -0-            -0-              -0-         25,387        0.08
Delaware               19,237           -0-          -0-            -0-              -0-         19,237        0.06
Massachusetts          17,414           -0-          -0-             20              -0-         17,434        0.06
Idaho                  17,341           -0-          -0-            -0-              -0-         17,341        0.06
North Carolina          8,698           303          -0-            533              -0-          9,534        0.03
Other                  16,597            26          -0-          4,829              -0-         21,452        0.06
                  -----------    ----------    ---------    -----------      -----------       --------    --------
  Totals          $26,420,549    $4,235,003    $   1,464    $   116,013      $       199     30,773,228      100.00%
                  ===========    ==========    =========    ===========      ===========                   ========

SFAS 91 deferred loan fees                                                                      (74,160)
Loan discount on purchased loans                                                                 (5,776)
Undisbursed loan funds                                                                           (4,074)
Allowance for loan losses                                                                      (152,360)
Loans to facilitate (LTF) interest reserve                                                         (474)
Troubled debt restructured (TDR) interest reserve                                                (4,533)
Loans on deposits                                                                                31,323
                                                                                            ----------- 
     Total loan portfolio and loans securitized into FNMA MBS with recourse                  30,563,174
Loans securitized into FNMA MBS with recourse                                                (2,174,244)(b)
                                                                                            -----------
     Total loan portfolio                                                                   $28,388,930
                                                                                            ===========
</TABLE>
(a)    The Company has no commercial loans.

(b)    Loans amounting to $2.3 billion were  securitized with full recourse into
       Federal National Mortgage Association (FNMA)  mortgage-backed  securities
       during 1995.  The March 31, 1996  balances of these FNMA  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 92% at March 31, 1997  compared to 90% at March 31,  1996,  and 91% at
December 31, 1996. The Company's ARM  originations for the first quarter of 1997
constituted  over 94% of new mortgage  loans made in 1997 compared to 77% in the
first three months of 1996.

     The weighted  average  maximum  lifetime cap rate on the Company's ARM loan
portfolio  (including MBS with  recourse) was 12.02%,  or 5.60% above the actual
weighted  average  rate at March 31,  1997,  versus  13.08%,  or 5.64% above the
weighted average rate at March 31, 1996.

     Approximately  $5.5 billion of the Company's ARM 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  or  assumption.  As of March 31,
1997,  $637  million of ARM loans had reached  their rate  floors.  The weighted
average  floor rate on the loans that had reached their floor was 7.74% at March
31, 1997  compared to 7.79% at March 31,  1996.  Without the floor,  the average
yield on these  loans would have been 7.09% at March 31, 1997 and 7.28% at March
31, 1996.

     Loan repayments  consist of monthly loan  amortization,  loan payoffs,  and
refinances.  For the quarter  ended March 31, 1997,  loan  repayments  were $709
million compared to $730 million in the same period of 1996.

     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 for impairment of  capitalized  mortgage  servicing  rights based on the
fair value of those rights on a  disaggregated  basis. If the book value exceeds
the  fair  value  of  the  capitalized  mortgage  servicing  rights,   financial
institutions  are  required to  write-down  the  servicing  rights to their fair
value.  The book value of Golden West's servicing rights did not exceed the fair
value at March 31, 1997 or 1996 and, therefore,  no adjustment was necessary. On
January 1, 1997, the Company adopted Statement of Financial Accounting Standards
No. 125,  "Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishments   of  Liabilities"  (SFAS  125).  The  accounting  for  mortgage
servicing assets under SFAS 125 is substantially  the same as the accounting for
mortgage  servicing assets under SFAS 122. See page 22 for further discussion on
SFAS 125. For the first quarter of 1997 and 1996, the Company  recognized  gains
of $1.0 million and $4.7 million,  respectively, on the sale of loans due to the
capitalization of servicing rights. After amortization, the balance at March 31,
1997 and 1996 of the  capitalized  servicing  rights was $9.7  million  and $4.6
million, respectively.
<PAGE>
     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,  including loans swapped into MBS with recourse,  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  payments have been
capitalized  or on which  temporary  interest  rate  reductions  have been made,
primarily to customers adversely impacted by economic conditions.

     The following  table shows the  components  of the Company's  nonperforming
assets and troubled debt restructured and the various ratios to total assets.
<TABLE>
<CAPTION>
                                     TABLE 5

               Nonperforming Assets and Troubled Debt Restructured
                             (Dollars in thousands)

                                                           March 31                         
                                                   -------------------------     December 31
                                                      1997          1996            1996
                                                   ----------    -----------    ------------  
<S>                                                <C>           <C>            <C>     
Non-accrual loans                                  $  389,625    $   361,376     $   373,157
Real estate acquired through foreclosure               77,859         72,487          82,075
Real estate in judgment                                 1,274            798             416
                                                   ----------    -----------    ------------  
Total nonperforming assets                         $  468,758    $   434,661     $   455,648
                                                   ==========    ===========     =========== 
TDRs                                               $   86,931    $    46,683     $    84,082
                                                   ==========    ===========     ===========
Ratio of NPAs to total assets                           1.22%          1.25%           1.21%
                                                   ==========    ===========     =========== 
Ratio of TDRs to total assets                            .23%           .13%            .22%
                                                   ==========    ===========     =========== 
Ratio of NPAs and TDRs to total assets                  1.45%          1.38%           1.43%
                                                   ==========    ===========     =========== 
</TABLE>
     The slight increase in NPAs during 1997 reflects the continued  weakness in
the Southern  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 in the first quarter of 1997 compared
to $6 million in the same period of 1996.  Interest foregone on TDRs amounted to
$583  thousand  for the three  months  ended  March 31,  1997,  compared to $368
thousand for the three months ended March 31, 1996.

     The  tables on the  following  two pages show the  Company's  nonperforming
assets by state at March 31, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
                                     TABLE 6

                          Nonperforming Assets by State
                                 March 31, 1997
                             (Dollars in thousands)


                    Non-Accrual Loans (a)                    Real Estate Owned
              -----------------------------------     --------------------------------
                   Residential        Commercial                           Commercial   
                   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    $305,760     $ 14,352    $  2,391       $63,523     $ 9,804   $  2,289     $398,119     1.70%
Texas            5,881          -0-         -0-           803         -0-        -0-        6,684     0.52
Illinois         7,366          223         -0-           246         282        -0-        8,117     0.64
Colorado         2,150          -0-       3,089           269         -0-        -0-        5,508     0.45
Florida          6,199          -0-         263           774         -0-        -0-        7,236     0.65
New Jersey      14,029          -0-       1,544           763         -0-        -0-       16,336     1.51
Washington       2,146          -0-         -0-           -0-         -0-        -0-        2,146     0.26
Arizona          1,574          -0-         -0-            12         -0-        -0-        1,586     0.23
Pennsylvania     5,068          -0-           5           152         -0-        -0-        5,225     1.02
Virginia         1,409          -0-         -0-           538         -0-        -0-        1,947     0.38
Connecticut      3,870          -0-         -0-           598         -0-        -0-        4,468     1.05
Maryland         1,458          -0-         -0-           570         -0-        -0-        2,028     0.60
Oregon             601          -0-         -0-           -0-         -0-        -0-          601     0.25
Nevada           1,632          -0-         -0-           219         -0-        -0-        1,851     0.99
Utah               737          -0-         -0-           -0-         -0-        -0-          737     0.45
Minnesota          641          -0-         -0-           -0-         -0-        -0-          641     0.42
Kansas             724           40         -0-           -0-         -0-        -0-          764     0.50
Wisconsin          433          -0-         -0-           -0-         -0-        -0-          433     0.40
Massachusetts       64          -0-          20           -0-         -0-        -0-           84     0.10
Missouri           465           42         -0-           243          17        -0-          767     0.97
New York         3,637          -0-         -0-           141         -0-        -0-        3,778     7.95
Washington, DC     -0-          -0-         -0-           -0-         -0-        -0-          -0-     0.00
New Mexico         -0-          -0-         -0-           -0-         -0-        -0-          -0-     0.00
Georgia          1,542          -0-         -0-           -0-         -0-        -0-        1,542     4.28
Idaho              -0-          -0-         -0-           -0-         -0-        -0-          -0-     0.00
Delaware           118          -0-         -0-           -0-         -0-        -0-          118     0.49
Ohio                62          -0-           2           -0-         -0-        -0-           64     0.28
North Carolina      38          -0-         -0-           -0-         -0-        -0-           38     0.46
South Dakota       -0-          -0-         -0-           -0-         -0-        -0-          -0-     0.00
Other               50          -0-         -0-           -0-         -0-        -0-           50     0.32
              --------    ---------    --------       -------    --------   --------     ---------    -----
  Totals      $367,654     $ 14,657     $ 7,314       $68,851    $ 10,103     $2,289      470,868     1.38%
              ========    =========    ========       =======    ========   ======== 

REO general valuation allowance                                                            (2,110)   (0.01)
                                                                                         --------     ---- 
Total nonperforming assets                                                               $468,758     1.37%
                                                                                         =========    ==== 
</TABLE>
(a) Non-accruals  loans are 90 days or more past due and have no unpaid interest
    accrued.

(b) During 1995 and 1996,  loans  amounting to $2.3 billion and $1.3 billion,
    respectively,   were   securitized   with   full   recourse   into   FNMA
    mortgage-backed  securities.  The March 31, 1997  balances of the related
    nonperforming assets are reflected in the amounts above.
<PAGE>
<TABLE>
<CAPTION>
                                     TABLE 7

                          Nonperforming Assets by State
                                 March 31, 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+         Estate      NPAs(b)       Loans
-----------   ---------   ----------   ---------      --------   --------    ---------   ----------    --------
<S>           <C>         <C>          <C>            <C>        <C>         <C>         <C>           <C>
California    $300,572    $  12,549    $    368       $55,304    $12,870     $  3,779    $ 385,442     1.72%
Colorado         1,690          -0-       3,251           108         -0-         -0-        5,049     0.47
Illinois         3,464          472         -0-           791         302         -0-        5,029     0.49
Texas            4,390          -0-         -0-            53         -0-         -0-        4,443     0.47
New Jersey      11,206          -0-         687           429         -0-         -0-       12,322     1.38
Florida          3,536          -0-         150           221         -0-         -0-        3,907     0.52
Washington         458          -0-         -0-           -0-         -0-         -0-          458     0.07
Arizona          1,152          -0-         -0-            88         -0-         -0-        1,240     0.25
Virginia         1,810          -0-         -0-           302         -0-         -0-        2,112     0.49
Pennsylvania     2,439          -0-         -0-           167         -0-         -0-        2,606     0.65
Connecticut      3,536          -0-         -0-           417         -0-         -0-        3,953     1.22
Maryland         1,805          -0-         -0-           -0-         -0-         -0-        1,805     0.66
Oregon             545          -0-         -0-           -0-         -0-         -0-          545     0.28
Nevada             473          -0-         -0-           203         -0-         -0-          676     0.43
Kansas             665           40         -0-            46         -0-         -0-          751     0.56
Utah               122          -0-         -0-           -0-         -0-         -0-          122     0.12
Minnesota          -0-          -0-         -0-           -0-         -0-         -0-          -0-     0.00
Missouri           563          961         -0-            26         -0-         -0-        1,550     2.15
Wisconsin          -0-          -0-         -0-           -0-         -0-         -0-          -0-     0.00
New York         2,683          -0-         -0-            81         -0-         -0-        2,764     5.26
Georgia          1,448          -0-         -0-            36         -0-         -0-        1,484     3.42
Washington, DC       7          -0-         -0-           -0-         -0-         -0-            7     0.02
Ohio                61          -0-          58           -0-         -0-         154          273     0.90
New Mexico           1          -0-         -0-           -0-         -0-         -0-            1     0.00
Delaware           -0-          -0-         -0-           -0-         -0-         -0-          -0-     0.00
Massachusetts      -0-          -0-         -0-           -0-         -0-         -0-          -0-     0.00
Idaho               68          -0-         -0-           -0-         -0-         -0-           68     0.39
North Carolina      46          -0-         -0-           -0-         -0-         -0-           46     0.48
Other              100          -0-         -0-           -0-         -0-         -0-          100     0.47
              --------    ---------     -------       -------    --------    --------    ---------     ----
   Totals     $342,840    $  14,022     $ 4,514       $58,272    $ 13,172    $  3,933      436,753     1.42%
              ========    =========     =======       =======    ========     =======

REO general valuation allowance                                                             (2,092)   (0.01)
                                                                                         ---------     ----
Total nonperforming assets                                                               $ 434,661     1.41%
                                                                                         ==========    ====
</TABLE>
(a) Non-accruals  loans are 90 days or more past due and have no unpaid interest
    accrued.

(b) Loans amounting to $2.3 billion were  securitized with full recourse into
    FNMA  mortgage-backed  securities during 1995. The March 31, 1996 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 months ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                     TABLE 8

                      Changes in Allowance for Loan Losses
                             (Dollars in thousands)

                                                                   Three Months Ended
                                                                        March 31
                                                               --------------------------
                                                                  1997          1996
                                                               -----------   ------------
<S>                                                            <C>           <C>   
  Beginning allowance for loan losses                          $  195,702    $   141,988
  Provision charged to expense                                     20,695         18,522
  Less loans charged off                                           (7,558)        (8,360)
  Add recoveries                                                      238            210
                                                               ----------    -----------
  Ending allowance for loan losses                             $  209,077     $  152,360
                                                               ==========    ===========
  Ratio of net charge-offs to average loans
    outstanding (including MBS with recourse)                        .09%           .11%
                                                               ==========    =========== 
  Ratio of allowance for loan losses to nonperforming assets        44.6%          35.1%
                                                               ==========    ===========  
</TABLE>
     DEPOSITS

     Retail deposits increased during the first quarter of 1997 by $447 million,
including  interest  credited  of $226  million  compared to an increase of $143
million,  including  interest credited of $214 million,  in the first quarter of
1996.  Retail deposits  increased during 1997 primarily due to ongoing marketing
efforts and competitive rates offered by the Company on its insured accounts.

     Beginning in January  1997,  the Company  began a program to use brokers to
sell  certificates of deposit (CDs) to  institutional  investors.  The Company's
deposit balance at March 31, 1997 includes $397 million of these wholesale CDs.
<PAGE>
     The mix of  reported  deposits  changed  during  1997 as  compared to 1996,
primarily  due  to  a  new  program  begun  in  the  fourth   quarter  of  1996.
Specifically,  the reported balance of  interest-bearing  checking  accounts has
decreased as compared to 1996 and the reported  balance of money market accounts
has  increased  compared  to  balances  reported in 1996 as a result of this new
program  which   calculates   the  minimum  amount  of  funds  needed  to  cover
disbursements  for each customer's  checking account and transfers the remaining
funds to a money market account, reducing the Company's required reserves at the
Federal Reserve Bank.

     The table  below  shows the  Company's  deposits  by  interest  rate and by
remaining maturity at March 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                     TABLE 9

                                    Deposits
                              (Dollars in millions)

                                                                                    March 31
                                                               ---------------------------------------------------
                                                                       1997                         1996
                                                               ----------------------      -----------------------
                                                                Rate*       Amount         Rate*           Amount
                                                               --------     ----------     ---------    ----------
<S>                                                            <C>          <C>            <C>          <C>    
       Deposits by interest rate:
       Interest-bearing checking accounts                          1.17%   $      307          1.22%    $     768
       Passbook accounts                                           2.22           558          2.22           571
       Money market deposit accounts                               2.43         1,778          3.42         1,321
       Term certificate accounts with original maturities
       of:
           4 weeks to 1 year                                       5.25        11,472          5.10         8,892
           1 to 2 years                                            5.27         4,192          5.42         4,407
           2 to 3 years                                            5.50         1,334          5.86         1,920
           3 to 4 years                                            5.73           554          5.40           614
           4 years and over                                        5.69         1,941          5.95         2,067
       Retail jumbo CDs                                            5.30           410          5.36           428
       Wholesale CDs                                               5.40           397          0.00           -0-
       All other                                                   7.66             1          7.67             3
                                                                           ----------                  ---------- 
                                                                           $   22,944                  $   20,991
                                                                           ==========                  ========== 
       Deposits by remaining maturity:
       No contractual maturity                                             $    2,643                  $    2,660
       Maturity within one year:
          2nd quarter                                                           5,481                       6,152
          3rd quarter                                                           6,113                       3,382
          4th quarter                                                           4,354                       2,480
          1st quarter                                                           1,626                       2,825
                                                                           ----------                  ----------
                                                                               17,574                      14,839

       1 to 2 years                                                             1,642                       2,255
       2 to 3 years                                                               814                         414
       3 to 4 years                                                               106                         644
       4 years and over                                                           165                         179
                                                                           ----------                  ---------- 
                                                                           $   22,944                  $   20,991
                                                                           ==========                  ==========
</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.
Advances are secured by pledges of certain loans, capital stock of the FHLB, and
MBS. FHLB advances amounted to $8.1 billion at March 31, 1997,  compared to $6.5
billion and $8.8 billion at March 31, 1996, and December 31, 1996, 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 $2.7 billion,  $2.1 billion, and $1.9 billion at March
31, 1997 and 1996, and December 31, 1996, respectively. The $2.7 billion balance
at March 31,  1997,  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 SFAS
125,   "Accounting   for  Transfers  and  Servicing  of  Financial   Assets  and
Extinguishments  of  Liabilities".  SFAS 125 provides  accounting  and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities.   These  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 December  1996,  the FASB issued
Statement of Financial  Accounting Standards No. 127, "Deferral of the Effective
Date of Certain  Provisions of FASB Statement No. 125" (SFAS 127), which delayed
the effective date for portions of SFAS 125 for one year. The impact of the SFAS
125 and SFAS 127 on the Company's  financial condition and results of operations
is not expected to be material.

     OTHER BORROWINGS

     At March 31, 1997,  Golden West, at the holding company level,  had a total
of $1.1 billion of  subordinated  debt issued and  outstanding.  As of March 31,
1997, the Company's subordinated debt securities were rated A3 and A- by Moody's
Investors   Service   (Moody's)  and  Standard  &  Poor's   Corporation   (S&P),
respectively.  At  March  31,  1997,  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  March  31,  1997.  World  had  medium-term   notes
outstanding under prior  registrations with principal amounts of $310 million at
March 31, 1997,  compared to $890 million at March 31, 1996, and $590 million at
December 31, 1996. As of March 31, 1997, 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 March 31,  1997,  the full
amount was  available  for  issuance.  As of March 31, 1997,  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.

     During  November  1996,  WFSB  received  permission  from  the OTS to issue
non-convertible medium-term notes to institutional investors under rules similar
to Office of the  Comptroller  of the  Currency  rules  applicable  to similarly
situated national banks.

     STOCKHOLDERS' EQUITY

     The  Company's  stockholders'  equity  increased by $63 million  during the
first three months of 1997. The increase in stockholders' equity was primarily a
result of net earnings for the first three months of 1997,  which were partially
offset by the $13 million cost of the purchase of Company stock,  the payment of
$6 million in quarterly dividends to stockholders,  and a $2 million decrease in
market values of  securities  available  for sale since  December 31, 1996.  The
Company's  stockholders'  equity decreased during the first three months of 1996
as a result of the $127 million loss incurred during the first quarter,  the $17
million cost of the purchase of Company stock and due to a $1 million decline in
market values of securities  available for sale since December 1995.  Unrealized
gains  net of  taxes on  securities  and MBS  available  for  sale  included  in
stockholders' equity at March 31, 1997 and 1996, and December 31, 1996, were $97
million, $75 million, and $100 million, respectively.

     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 March 31, 1997,  8.0 million shares
had been  purchased and retired at a cost of $345 million since October 1993, of
which 194 thousand were  purchased  and retired at a cost of $13 million  during
the first three  months of 1997.  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 $135  million  dividend  to  Golden  West in March  1997.  In
addition,  World has  received  approval  from the OTS to pay up to $165 million
more in upstream  dividends to Golden West.  Also,  during the first  quarter of
1997, Golden West purchased from World, and subsequently  contributed as capital
to WFSB, $30 million in loans.
<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 as of January
1, 1996 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  regulatory  capital  ratios and  compares  them to the OTS
minimum requirements at March 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                                    TABLE 10

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

                              March 31, 1997                                     March 31, 1996
              ------------------------------------------------   ------------------------------------------------
                      ACTUAL                   REQUIRED                 ACTUAL                   REQUIRED
              -----------------------   -----------------------  ----------------------   -----------------------
               Capital       Ratio       Capital      Ratio       Capital       Ratio      Capital       Ratio
              -----------   ---------   -----------  ---------   -----------   --------   -----------   --------
<S>           <C>           <C>         <C>          <C>         <C>            <C>       <C>           <C>
   Tangible   $1,245,575      6.37%       $ 293,257     1.50%    $ 1,845,592      6.70%    $   413,319       1.50%
   Core        1,245,575      6.37          586,514     3.00       1,845,592      6.70         826,638       3.00
   Risk-based  1,565,900     13.74          911,568     8.00       2,169,719     14.12       1,228,984       8.00
</TABLE>
     The following  table shows WFSB's  current  regulatory  capital  ratios and
compares  them to the  current OTS  minimum  requirements  at March 31, 1997 and
1996.
<TABLE>
<CAPTION>
                                                    TABLE 11

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

                              March 31, 1997                                   March 31, 1996
              -----------------------------------------------   ----------------------------------------------
                     ACTUAL                  REQUIRED                  ACTUAL                  REQUIRED
              ----------------------   ----------------------   ----------------------   ----------------------
               Capital      Ratio       Capital      Ratio       Capital      Ratio       Capital      Ratio
              -----------  ---------   -----------  ---------   ----------   ---------   ----------   -------- 
<S>           <C>          <C>         <C>          <C>         <C>          <C>         <C>          <C>
  Tangible    $1,232,625    6.67 %     $  277,288      1.50%    $   573,896     8.05 %     $ 106,874      1.50%
   Core        1,232,625    6.67          554,576      3.00         573,896     8.05         213,748      3.00
   Risk-based  1,287,612   13.26          777,033      8.00         583,679    15.25         306,105      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 March 31, 1997.
<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                          $1,245,575        6.37 %          $  977,523        5.00%
        Tier 1 risk-based                  1,245,575       10.93               683,676        6.00
        Total risk-based                   1,565,900       13.74             1,139,460       10.00
</TABLE>

     The  table  below  shows  that  WFSB's   regulatory   capital  exceeds  the
requirements of the well capitalized classification at March 31, 1997.
<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                          $ 1,232,625        6.67%          $  924,294        5.00%
        Tier 1 risk-based                  1,232,625       12.69              582,775        6.00
        Total risk-based                   1,287,612       13.26              971,291       10.00
</TABLE>
RESULTS OF OPERATIONS

     NET EARNINGS

     Net  earnings for the three months ended March 31, 1997 were $83 million or
$1.45 per share  compared  to a loss of $127  million or $2.15 per share for the
quarter  ended March 31, 1996.  Without the  one-time  goodwill  write-off  (See
Accounting  Change  section on page 7),  Golden  West's  earnings  for the first
quarter  of 1996 would have been $79  million or $1.34 per share.  Net  earnings
increased in 1997 as a result of increased net interest income and a 2% decrease
in general and administrative expenses due to lower deposit premiums.
<PAGE>
     SFAS 128 - EARNINGS PER SHARE

     In March 1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 128,  "Measurement  of Earnings Per Share"
(SFAS 128). SFAS 128 replaces Primary and Fully-Diluted Earnings Per Share (EPS)
with "Basic EPS" and "Diluted  EPS" for fiscal  years ending after  December 15,
1997.  Basic EPS will be  calculated  by dividing net earnings for the period by
the weighted-average common shares outstanding for that period. There will be no
adjustment  to the  number of  outstanding  shares  for stock  options  or other
dilutive items as is currently done in the  calculation of Primary EPS.  Diluted
EPS will take into  account  the effect of dilutive  instruments,  such as stock
options,  but will use the average share price for the period in determining the
number of incremental shares that are to be added to the weighted average number
of shares  outstanding.  In contrast,  the current,  Fully-diluted  EPS uses the
period-ending  share price,  if it exceeds the average price, in the calculation
to determine the number of incremental  shares that are to be added. If SFAS 128
had been applied for the quarter  ended March 31,  1997,  the Basic EPS reported
would have been $1.45 and the Diluted EPS would have been $1.43. For the quarter
ended March 31, 1996,  before the cumulative effect of the change in accounting,
Basic EPS would have been $1.34 and Diluted EPS would have been $1.32.

     SPREADS

     An important determinant of the Company's earnings is its primary spread --
the difference  between its yield on earning  assets and its cost of funds.  The
table below shows the  components of the Company's  spread at March 31, 1997 and
1996, and December 31, 1996.
<TABLE>
<CAPTION>
                                    TABLE 14

                            Yield on Earning Assets,
                        Cost of Funds, and Primary Spread

                                                              March 31                      
                                                     ---------------------------          December 31
                                                       1997            1996                   1996
                                                     ---------      -----------           -------------
<S>                                                  <C>            <C>                   <C>  
        Yield on loan portfolio                          7.43%          7.64%                   7.43%
        Yield on MBS                                     7.12           7.35                    7.13
        Yield on investments                             6.82           5.68                    6.88
                                                    ---------        -------                --------
        Yield on earning assets                          7.37           7.51                    7.37
                                                    ---------        -------                --------
        Cost of deposits                                 4.98           5.01                    4.98
        Cost of borrowings                               5.82           5.95                    5.80
                                                    ---------        -------                --------
        Cost of funds                                    5.27           5.33                    5.28
                                                    ---------        -------                --------
        Primary spread                                   2.10%          2.18%                   2.09%
                                                    =========        =======                ========
</TABLE>
<PAGE>
     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.  Yields on short term and  long-term
interest rates drifted  modestly  downward between yearend 1996 and mid-February
before rising slightly in March.  The effects of this interest rate  environment
led to a one basis point  reduction in the Company's cost of funds and no change
in the yield on earning assets during the first three months of 1997,  resulting
in a 1 basis point increase in the Company's spread since yearend 1996.

     The  following  table  shows  the  Company's  revenues  and  expenses  as a
percentage of total revenues for the three months ended March 31, 1997 and 1996,
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
                                                                        March 31
                                                                  ----------------------
                                                                    1997         1996
                                                                  ---------    ---------
<S>                                                               <C>          <C>         
    Interest on loans                                                 81.5%        82.2%
    Interest on mortgage-backed securities                            10.8          9.4
    Interest and dividends on investments                              4.9          5.4
                                                                  --------     --------
                                                                      97.2         97.0
    Less:
      Interest on deposits                                            40.4         40.3
      Interest on advances and other borrowings                       25.3         25.2
                                                                  --------     -------- 
                                                                      65.7         65.5

    Net interest income                                               31.5         31.5
      Provision for loan losses                                        3.0          2.8
                                                                  --------     -------- 
    Net interest income after provision for loan losses               28.5         28.7

    Add:
      Fees                                                             1.5          1.4
      Gain on the sale of securities,  MBS, and loans                  0.2          0.7
      Other non-interest income                                        1.1          0.9
                                                                  --------     -------- 
                                                                       2.8          3.0
    Less:
      General and administrative expenses                             11.4         12.3
      Taxes on income                                                  7.9          7.5
                                                                  --------      ------- 
    Earnings before cumulative effect of change in
      accounting for goodwill                                         12.0         11.9
    Cumulative effect of change in accounting for goodwill             0.0        (31.1)
                                                                  --------     --------
    Net earnings (loss)                                               12.0%      (19.2)%
                                                                  ========     ========
</TABLE>
<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 $323
thousand for the three months ended March 31, 1997, as compared to a decrease of
$4 million for the same period in 1996.

     The following table summarizes the unrealized gains and losses for interest
rate swaps and caps at March 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                    TABLE 16

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

                                        March 31, 1997                             March 31, 1996
                            ----------------------------------------   --------------------------------------- 
                                                           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 swaps         $    23,351   $   (28,797)  $    (5,446)    $   33,070   $   (54,767)  $   (21,697)
Interest rate caps                  -0-           -0-           -0-             15           -0-            15
                            -----------   -----------  ------------    -----------  ------------  ------------ 
                            $    23,351   $   (28,797)  $    (5,446)    $   33,085   $   (54,767)  $   (21,682)
                            ===========   ===========  ============    ===========  ============  ============ 
</TABLE>
<TABLE>
<CAPTION>
                                    TABLE 17

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

                                                  Three Months Ended
                                                    March 31, 1997
                                       --------------------------------------------
                                         Receive           Pay           Forward
                                          Fixed           Fixed         Starting
                                          Swaps           Swaps           Swaps
                                       -------------   ------------    ------------
<S>                                    <C>             <C>             <C>    
Balance at December 31, 1996           $      2,581     $     1,340    $         10

Additions                                       -0-             -0-             -0-
Maturities                                     (507)           (195)            -0-
Forward starting becoming effective              10             -0-             (10)
                                        -----------     -----------     -----------
Balance at March 31, 1997               $     2,084     $     1,145     $       -0-
                                        ============    ===========     ===========
</TABLE>
     The range of floating  interest  rates  received on swap  contracts  in the
first  three  months  of 1997 was  5.47% to  5.92%,  and the  range of  floating
interest  rates paid on swap  contracts  was 4.82% to 5.92%.  The range of fixed
interest  rates received on swap contracts in the first three months of 1997 was
4.62% to 8.68% and the range of fixed  interest rates paid on swap contracts was
5.38% to 9.14%.
<PAGE>
     INTEREST ON LOANS

     In the first  quarter of 1997,  interest  on loans was  higher  than in the
comparable 1996 period by $24 million or 4.4%. The increase in the first quarter
of 1997 was due to a $2.1  billion  increase  in the average  portfolio  balance
which was partially offset by a 21 basis point decrease in the average portfolio
yield.

     INTEREST ON MORTGAGE-BACKED SECURITIES

     In the first quarter of 1997,  interest on  mortgage-backed  securities was
higher than in the  comparable  1996  period by $13  million or 21.5%.  The 1997
increase was due primarily to an $884 million increase in the average  portfolio
balance,  which was partially offset by a 30 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 first quarter of 1997,  interest and dividends on investments was lower than
in the comparable  1996 period by $2 million or 5.4%. The decrease was primarily
due to a $47  million  decrease  in the  average  portfolio  balance  which  was
partially  offset by a 16 basis point increase in the average  portfolio  yield.
Also, 1996 benefited from $4 million in interest on a tax refund.

     INTEREST ON DEPOSITS

     In the first quarter of 1997, interest on deposits increased by $15 million
or 5.6% from the comparable  period in 1996. The first quarter  increase was due
to a $1.8  billion  increase  in the  average  balance  of  deposits  which  was
partially offset by a 9 basis point decrease in the average cost of deposits.

     INTEREST ON ADVANCES AND OTHER BORROWINGS

     For the first  quarter of 1996,  interest on advances and other  borrowings
increased by $9 million or 5.5% from the  comparable  period of 1996.  The first
quarter  increase was  primarily  due to a $1.2 billion  increase in the average
balance,  which was partially offset by a 23 basis point decrease in the average
cost of these borrowings.

     PROVISION FOR LOAN LOSSES

     The  provision for loan losses was $20.7 million for the three months ended
March 31,  1997,  compared to $18.5  million  for the same  period in 1996.  The
higher  provision in 1997  resulted  from the increase in the allowance for loan
losses which reflects the increase in non-accrual loans.
<PAGE>
     GENERAL AND ADMINISTRATIVE EXPENSES

     For the first quarter of 1997,  general and  administrative  expenses (G&A)
was $79 million  compared to $81 million for the comparable  period in 1996. The
primary  reason for the decrease in 1997 was the benefit  received  from reduced
deposit  insurance  premiums  paid  by the  Association  in  1997  (See  Deposit
Insurance  section below).  Excluding the effect of the lower deposit  insurance
premiums,  total G&A increased due to the expansion of savings branches,  higher
loan volume,  and the  installation of enhancements to data processing  systems.
G&A as a percentage of average  assets on an  annualized  basis was .83% for the
first quarter of 1997 compared to .93% for the same period in 1996.

     DEPOSIT INSURANCE

     During  1996,   legislation  was  enacted  to   recapitalize   the  Savings
Association  Insurance  Fund  (SAIF) in order to bring it into  parity  with the
FDIC's other insurance fund, the Bank Insurance Fund (BIF).  The new banking law
required  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 lowered the premiums  paid by
SAIF-insured  institutions,  starting in the fourth quarter of 1996. As a result
of  this  legislation,   Golden  West's  subsidiary,   World  Savings  and  Loan
Association,  incurred a one-time charge of $133 million at the end of the third
quarter  of  1996.  Beginning  on  January  1,  1997,  the  premium  paid by the
Association to the FDIC was reduced from $2.30 per $1,000 in savings balances to
$.65 per $1,000.  Beginning on January 1, 1997, the premiums paid by BIF insured
institutions,  such as WFSB,  was  increased  from  $0.00 per  $1,000 in savings
balances to $.13 per $1,000.

     TAXES ON INCOME

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

     Taxes as a  percentage  of  earnings  before the  cumulative  effect of the
change in  accounting  for  goodwill  were  39.6% for the first  quarter of 1997
compared to 38.5% for the same period a year ago.

LIQUIDITY AND CAPITAL RESOURCES

     World's  principal sources of funds are cash flows generated from earnings;
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 March 31, 1997, and 1996, and December 31, 1996, see the
cash and investments section on page 12.
<PAGE>
     WFSB's  principal  sources of funds are cash flows generated from earnings;
deposits; loan repayments;  negotiable certificates of deposit,  borrowings from
the FHLB;  issuance of medium-term  notes;  investments  and borrowings from its
affiliates;  and debt  collateralized  by  mortgages,  MBS,  or  securities.  In
addition,  WFSB has other alternatives available to provide liquidity or finance
operations  including  borrowings from public offerings of debt, sales of loans,
issuances  of  commercial   paper,   and  borrowings  from   commercial   banks.
Furthermore,  under certain conditions, WFSB may borrow from the Federal Reserve
Bank of San Francisco to meet short-term cash needs.  The  availability of these
funds will vary depending upon policies of the FHLB, the Federal Reserve Bank of
San  Francisco,  and the  Federal  Reserve  Board.  For a  discussion  of WFSB's
liquidity  positions at March 31, 1997, and 1996, and December 31, 1996, 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  and WFSB can pay.  The
principal  liquidity  needs of  Golden  West are for  payment  of  interest  and
principal on subordinated debt securities (of which $115 million matures in 1997
and $200 million in 1998),  capital  contributions  to its insured  subsidiaries
(including  $60  million  for the three  months  ended  March 31,  1997 and $500
million  for  the  year  ended   December  31,  1996  to  WFSB),   dividends  to
stockholders,  the  purchase  of Golden  West  stock (see  stockholders'  equity
section on page 23), and general and administrative  expenses. At March 31, 1997
and 1996,  and  December  31, 1996,  Golden  West's  total cash and  investments
amounted to $978 million (including a $600 million long-term loan to WFSB), $857
million  (including a $700 million  short-term loan to World),  and $913 million
(including a $600 million long-term loan to WFSB), respectively.
<PAGE>
PART II. OTHER INFORMATION

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

(a)      May 1, 1997 - Annual Meeting
<TABLE>
<CAPTION>
                                                                                                         Broker
                                                 For           Against      Withheld      Abstain       Non-Vote
                                             -------------  ------------- ------------- ------------- -------------
<S>                                          <C>            <C>           <C>           <C>           <C>   
(b)       Directors elected:

          Maryellen B. Cattani                 50,814,439                      114,460

          Kenneth T. Rosen                     50,802,345                      126,554

          Herbert M. Sandler                   50,800,034                      128,865

(c)       Approve the adoption of the
          Company's Annual Incentive Bonus
          Plan                                 50,362,908        454,834                     111,155             2

(d)       Ratification of Auditors:

          Appointment of Deloitte & Touche
          LLP, independent public
          accountants, for the fiscal year
          1997                                 50,835,115         15,677                      78,107
</TABLE>

Other Directors continuing in office are:

Louis J. Galen,  Antonia  Hernandez,  Patricia  A. King,  Bernard A.  Osher,
Marion O.  Sandler and Leslie Tang Schilling

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.1 -   Annual Incentive Bonus Plan

         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:  May 13, 1997                     /s/ J. L. Helvey
                                         --------------------------------------
                                         J. L. Helvey
                                         Executive Vice President
                                         (duly authorized and principal
                                         financial officer)
<PAGE>
                                  EXHIBIT 10.1

                        Golden West Financial Corporation
                           Annual Incentive Bonus Plan
                           (Effective January 1, 1997)


     Section 1. Establishment and Purpose

     1.1 Purpose.  Golden West  Financial  Corporation  (the  "Company")  hereby
establishes  the Golden West  Financial  Corporation  Incentive  Bonus Plan (the
"Plan"),  effective as of January 1, 1997.  The Plan is designed to preserve the
deductibility to the Company of certain  compensation paid to executive officers
of the Company. Further, the Plan is intended to offer the additional benefit of
having a portion of  executive  compensation  directly  linked to the  Company's
performance.

     1.2 Effective Date. The Plan is effective as of January 1, 1997, subject to
the approval by an affirmative vote, at the 1997 Annual Meeting of Stockholders,
or any  adjournment  thereof,  of the holders of a majority  of the  outstanding
shares of the  common  stock of the  Company,  present in person or by proxy and
entitled to vote at such meeting.

     Section 2. Definitions

     2.1 Defined Terms.  When used in the Plan,  the following  terms shall have
the  meanings  specified  below:  2.1.1  "Board"  means the  Company's  Board of
Directors.

     2.1.2  "Committee"  means  the  Compensation  Committee  of  the  Board  of
Directors of the Company.

     2.1.3  "Earnings  Per Share"  means the  number  derived  by  dividing  net
earnings after taxes available to common  shareholders  for the Plan Year by the
weighted-average  number of common shares  outstanding  (calculated  using daily
averages, based on actual days during the year) for the Plan year.

     2.1.4  "General and  Administrative  Expenses to Average  Assets" means the
ratio  derived  by  dividing  non-interest  expense  (excluding  FDIC  insurance
premiums  and  expenses  related  to mutual  funds) for the Plan Year by average
assets for the Plan Year. For the purposes of this definition, average assets is
computed by adding the beginning  balance and each monthend  balance  during the
year and dividing by 13.

     2.1.5 "Maximum  Award" means the maximum award pursuant to this Plan to any
individual Participant for any one Plan Year, which shall be $750,000.

     2.1.6  "Non-Performing  Assets to Total  Assets" means the ratio derived by
dividing the sum of real estate acquired through  foreclosure plus loans 90 days
or more past due by the total  assets of the  Company  as of the end of the Plan
Year.

     2.1.7  "Participant"  means  as to any  Plan  Year a key  executive  of the
Company who is likely to have a  significant  impact on the  performance  of the
Company. An employee must be approved as a Participant by the Committee.

     2.1.8 "Performance Measures" means one or more of the following:  Return on
Average  Assets;  Return on Average  Equity;  Earnings  Per Share;  General  and
Administrative  Expenses to Average Assets; and  Non-Performing  Assets to Total
Assets.

     2.1.9 "Plan Year" means the 1997 calendar year and each succeeding calendar
year, through 2002.

     2.1.10 "Return on Average Assets" means the percentage  derived by dividing
the Company's net earnings  after taxes for the Plan Year by the average  assets
for the Plan  Year.  For the  purposes  of this  definition,  average  assets is
computed by adding the beginning  balance and each monthend  balance  during the
Plan Year and dividing by 13.
<PAGE>
     2.1.11 "Return on Average Equity" means the percentage  derived by dividing
the  Company's  net  earnings  after  taxes  for the  Plan  Year by the  average
stockholders'  common  equity  for  the  Plan  Year.  For the  purposes  of this
definition  average  stockholders'  common  equity is  calculated  by adding the
beginning balance and each monthend balance during the Plan Year and dividing by
13.

     2.1.12  "Target  Award"  means  the  target  incentive  opportunity  for an
individual,  expressed as a dollar amount payable for the attainment of a target
level  of  performance.  The  schedule  of  individual  Target  Awards  shall be
determined by the Committee in accordance with Section 3.1.

     Section 3. Awards and Committee Determinations

     3.1 Opportunity.  The Committee shall approve participation in the Plan and
establish  a Target  Award  for each  Participant,  based on his or her role and
responsibilities, within the first 90 days of the applicable Plan Year.

     3.2 Awards. Payment under this Plan will be based on a payout table adopted
by the Committee (in its sole discretion) in writing within the first 90 days of
the Plan Year.  The  Committee  reserves the right (in its sole  discretion)  to
modify  the table from year to year,  provided  that such  modification  is done
within  the first 90 days of the  applicable  Plan Year.  The payout  table will
provide 100% of a Participant's  Target Award if a certain level of performance,
as determined using the Performance  Measures, is achieved and greater or lesser
awards for performance that exceeds or is less than, respectively,  the level at
which 100% of Target Awards are paid. No participant's award under this Plan may
exceed 1.5 times his or her Target  Award,  and in no event may a  Participant's
award under this Plan exceed the Maximum Award.

     3.3 Reduction Prior to Payment. The Committee, in its sole discretion,  may
reduce (but not  increase)  the award for any  Participant  below the award that
would otherwise be payable in accordance with the Plan.

     3.4 Determination.  The Committee shall determine, in writing, the level of
performance  achieved and the respective  percentage of Target Awards earned for
the Plan Year prior to payment of awards.

     Section 4. Payment of Awards

     4.1 Right to Receive Payment. Any award that may become due under this Plan
shall be made  solely  from the general  assets of the  Company,  normally on or
before the March 20th next  following  the end of the Plan Year during which the
award was earned.  Nothing in this Plan shall be  construed to create a trust or
to establish or evidence any  Participant's  claim of any right other than as an
unsecured general creditor with respect to any payment to which he or she may be
entitled.

     4.1.1  Employment  for Plan Year. If a  Participant's  employment  with the
Company continues for the entire Plan Year, the Participant shall be entitled to
receive  full payment of the award amount  determined  under  Section 3 for such
Plan Year in accordance with the terms of the Plan.

     4.1.2  Resignation,  Disability  or  Death.  In the  event  of  the  death,
disability or resignation of a Participant during a Plan Year, the Committee (in
its sole  discretion) will determine the amount of the partial award (if any) to
be paid to such Participant for such Plan Year. Payments will be made in cash at
the same time as other awards to Participants are made for the same Plan Year.

     4.1.3 Discharge. If during a Plan Year, a Participant's employment with the
Company  terminates by reason of  discharge,  then the  Participant  will not be
eligible for and shall forfeit any award under this Plan for the Plan Year.

     4.2 Form of Payment. Awards under this Plan will be made in cash.

     4.3 Beneficiaries.  Each Participant may designate,  in writing and on such
form as the  Company may  prescribe,  one or more  beneficiaries  to receive any
amount  that  is  payable  after  the  individual's  death.  In the  event  of a
Participant's death, any award that is payable to such Participant shall be paid
to his or her  beneficiary  or,  in the  event  that  no  beneficiary  has  been
designated, to his or her estate.
<PAGE>
     Section 5. Administration

     5.1 Committee. The Plan shall be administered by the Committee.

     5.2 Rules  and  Interpretation.  The  Committee  shall be  vested  with all
discretion and authority as it deems  necessary or appropriate to administer the
Plan and to interpret the provisions of the Plan. Any determination, decision or
action of the Committee in  connection  with the  construction,  interpretation,
administration or application of the Plan shall be final, conclusive and binding
upon all persons and shall be given the maximum deference permitted by law.

     5.3 Records. The records of the Committee with respect to the Plan shall be
conclusive on all Participants and their beneficiaries and on all other persons.

     5.4 Tax  Withholding.  The Company  shall  withhold  all  applicable  taxes
required by law from any payment,  including any federal,  FICA, state and local
taxes.

     Section 6. General Provisions

     6.1  Nonassignability.  Prior to the time of any payment  under the Plan, a
Participant shall have no right by way of anticipation or otherwise to assign or
transfer any interest under this Plan.

     6.2  Employment  Rights/Participation.  The  establishment  and  subsequent
operation of the Plan,  including  eligibility  as a  Participant,  shall not be
construed as conferring  any legal or other rights upon any  Participant  or any
other individual for the continuation of his or her employment for any Plan Year
or any other  period.  The Company  expressly  reserves the right,  which may be
exercised  at any time and  without  regard to when  during a Plan Year or other
accounting period such exercise occurs, to discharge any individual and/or treat
him or her without regard to the effect which such treatment might have upon him
or her as a Participant  in this Plan.  Being a Participant in any one Plan Year
does not confer any right to be named as a Participant  for any succeeding  Plan
Year.

     6.3 No Individual  Liability.  No member of the Committee or the Board,  or
any officer of the Company,  shall be liable for any determination,  decision or
action  made in good faith with  respect to the Plan or any award made under the
Plan.

     6.4 Severability;  Governing Law. If any particular  provision of this Plan
is found to be invalid or  unenforceable,  such  provision  shall not affect the
other provisions of the Plan, but the Plan shall be construed in all respects as
if such invalid provision had been omitted.  The provisions of the Plan shall be
governed  by  and  construed  in  accordance  with  the  laws  of the  State  of
California.

     6.5 Affiliates of the Company.  Requirements  referring to employment  with
the  Company or payment of awards can be  performed  through  the Company or any
affiliate of the Company, as determined by the Committee.

     6.6 1997 Plan Year. For Plan Year 1997, all actions that would otherwise be
required to be taken prior to the  beginning of a Plan Year shall be taken prior
to April 1, 1997.

     Section 7. Amendment and Termination

     The Committee may prospectively amend or terminate the Plan at any time and
for any reason.

                                    GOLDEN WEST FINANCIAL CORPORATION

Dated:  January 1, 1997             /s/ J. L. Helvey
                                    --------------------------------------------
                                    J. L. Helvey
                                    Executive Vice President
                                    (duly authorized and principal financial
                                    officer)
<PAGE>
<TABLE>
<CAPTION>
                                   EXHIBIT 11

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

                                                      Three Months Ended
                                                           March 31
                                                 -----------------------------
                                                     1997            1996
                                                 -------------   -------------
<S>                                              <C>             <C>   
  Earnings Before Cumulative Effect of
     Change in Accounting for Goodwill           $      83,374   $      78,593
  Cumulative Effect of Change in
     Accounting for Goodwill                               -0-        (205,242)
                                                 -------------   -------------
  Net Earnings (Loss)                            $      83,374   $    (126,649)
                                                 =============   =============
  Average Number of Common Shares Outstanding       57,314,639      58,788,639
                                                 =============   =============
  Earnings Per Share Before Cumulative Effect
      of Change in Accounting for Goodwill       $        1.45   $        1.34
  Cumulative Effect of Change in Accounting
      for Goodwill                                        0.00           (3.49)
                                                 -------------   -------------
  Earnings (Loss) Per Common Share               $        1.45   $       (2.15)
                                                 =============   =============
</TABLE>