SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

For the Quarter Ended September 30, 1999           Commission File Number 1-4629


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


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

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

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


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

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

         The number of shares  outstanding of the  registrant's  common stock on
October 31, 1999, was 53,869,754 shares.


<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         The  consolidated   financial   statements  of  Golden  West  Financial
Corporation  and  subsidiaries  (Golden  West or Company) for the three and nine
months ended  September 30, 1999 and 1998 are  unaudited.  In the opinion of the
Company, all adjustments (consisting only of normal recurring accruals) that are
necessary  for a fair  statement  of the  results  for such three and nine month
periods have been included.  The operating results for the three and nine months
ended September 30, 1999, are not necessarily  indicative of the results for the
full year.


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

<TABLE>
<CAPTION>

                                                                       September 30    September 30   December 31
                                                                           1999           1998           1998
                                                                        ------------  -------------  -------------
                                                                               (Unaudited)
                                                                        ---------------------------

Assets:
<S>                                                                      <C>            <C>            <C>
  Cash                                                                   $  237,614     $  199,747     $  250,875
  Securities available for sale at fair value                               346,255        310,296        377,005
  Other investments at cost                                                 678,332        890,379        422,385
  Purchased mortgage-backed securities available for sale
    at fair value                                                            84,540        125,107        113,585
  Purchased mortgage-backed securities held to maturity
    at cost                                                                 449,477        629,036        572,376
  Mortgage-backed securities held to maturity with recourse at cost       3,036,257      4,201,842      3,884,347
  Mortgage-backed securities-REMICs held to maturity at cost              7,684,755      3,440,637      5,461,657
  Loans receivable                                                       25,856,148     27,940,415     25,721,288
  Interest earned but uncollected                                           165,882        200,036        209,328
  Investment in capital stock of Federal Home Loan Banks--at cost
      which approximates fair value                                         533,623        768,601        780,303
  Real estate held for sale or investment                                    17,232         45,659         45,696
  Prepaid expenses and other assets                                         601,352        365,451        357,363
  Premises and equipment--at cost less accumulated depreciation             274,010        265,800        272,521
                                                                        ------------  -------------  -------------
                                                                        $39,965,477    $39,383,006    $38,468,729
                                                                        ============  =============  =============

Liabilities and Stockholders' Equity:
  Deposits                                                              $26,549,828    $25,477,429    $26,219,095
  Advances from Federal Home Loan Banks                                   8,109,333      6,866,847      6,163,472
  Securities sold under agreements to repurchase                            772,940      2,310,198      1,252,469
  Accounts payable and accrued expenses                                     312,484        523,230        468,213
  Taxes on income                                                           286,193        307,969        329,409
  Subordinated notes--net of discount                                       812,694        911,467        911,753
  Stockholders' equity                                                    3,122,005      2,985,866      3,124,318
                                                                        ------------  -------------  -------------
                                                                        $39,965,477    $39,383,006    $38,468,729
                                                                        ============  =============  =============
</TABLE>


<PAGE>


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

                                                         Three Months Ended               Nine Months Ended
                                                           September 30                     September 30
                                                    ----------------------------    -----------------------------
                                                        1999           1998            1999             1998
                                                    -------------   ------------    ------------    -------------
  Interest Income:
<S>                                                   <C>            <C>            <C>              <C>
      Interest on loans                               $  445,576     $  529,135     $ 1,367,178      $ 1,745,201
      Interest on mortgage-backed securities             204,444        156,234         562,558          333,965
      Interest and dividends on investments               52,233         59,088         152,776          161,063
                                                    -------------   ------------    ------------    -------------
                                                         702,253        744,457       2,082,512        2,240,229
  Interest Expense:
      Interest on deposits                               309,640        327,589         923,274          963,878
      Interest on advances                                93,533        112,394         262,713          341,160
      Interest on repurchase agreements                   13,742         27,750          46,032           93,783
      Interest on other borrowings                        33,374         38,582          99,322          120,355
                                                    -------------   ------------    ------------    -------------
                                                         450,289        506,315       1,331,341        1,519,176
                                                    -------------   ------------    ------------    -------------
          Net Interest Income                            251,964        238,142         751,171          721,053
  Provision for (recovery of) loan losses                 (1,253)         3,130          (1,406)           8,777
                                                    -------------   ------------    ------------    -------------
          Net Interest Income after Provision
              for (Recovery of) Loan Losses              253,217        235,012         752,577          712,276
  Non-Interest Income:
      Fees                                                16,180         16,224          49,101           44,887
      Gain on the sale of securities, MBS, and loans       3,001          6,417          21,313           28,001
      Other                                               12,257          8,182          38,871           27,035
                                                    -------------   ------------    ------------    -------------
                                                          31,438         30,823         109,285           99,923
  Non-Interest Expense:
      General and administrative:
          Personnel                                       54,766         49,632         158,982          144,212
          Occupancy                                       16,861         15,636          49,565           44,754
          Deposit insurance                                1,310          1,444           4,048            4,572
          Advertising                                      3,378          2,189           8,586            7,653
          Other                                           19,732         18,604          63,938           57,024
                                                    -------------   ------------    ------------    -------------
                                                          96,047         87,505         285,119          258,215
  Earnings before Taxes on Income and
      Extraordinary Item                                 188,608        178,330         576,743          553,984
  Taxes on Income                                         70,537         70,309         215,917          218,932
                                                    -------------   ------------    ------------    -------------
  Earnings before Extraordinary Item                     118,071        108,021         360,826          335,052
  Extraordinary Item:
  Federal Home Loan Bank advance prepayment
      penalty, net of tax benefit                            -0-         (4,801)           -0-          (12,511)
                                                    -------------   ------------    ------------    -------------
  Net Earnings                                         $ 118,071     $  103,220      $  360,826       $  322,541
                                                    =============   ============    ============    =============

  Basic earnings per share before extraordinary item   $    2.16     $     1.87      $    6.48        $    5.84

  Basic earnings per share on extraordinary
      item, net of tax benefit                              0.00           (.08)          0.00             (.22)
                                                    -------------   ------------    ------------    -------------
  Basic earnings per share                             $    2.16     $     1.79      $    6.48        $    5.62
                                                    =============   ============    ============    =============

  Diluted earnings per share before extraordinary item $    2.14     $     1.85      $    6.42        $    5.78
  Diluted earnings per share on extraordinary item,
      net of tax benefit                                    0.00           (.08)          0.00             (.22)
                                                    -------------   ------------    ------------    -------------
  Diluted earnings per share                           $    2.14     $     1.77      $    6.42        $    5.56
                                                    =============   ============    ============    =============
</TABLE>



<PAGE>


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

<TABLE>
<CAPTION>

                                                               Three Months Ended            Nine Months Ended
                                                                  September 30                  September 30
                                                           ---------------------------   ---------------------------
                                                              1999           1998           1999           1998
                                                           ------------   ------------   ------------   ------------
Cash Flows from Operating Activities:
<S>                                                          <C>            <C>            <C>            <C>
  Net earnings                                               $ 118,071      $ 103,220      $ 360,826      $ 322,541
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Extraordinary item                                             -0-          8,117            -0-         21,152
    Provision for (recovery of) loan losses                     (1,253)         3,130         (1,406)         8,777
    Amortization of loan fees and discounts                     (1,962)        (5,474)       (12,481)       (16,568)
    Depreciation and amortization                                6,926          6,369         20,892         18,060
    Loans originated for sale                                 (113,497)      (291,424)      (717,442)      (625,382)
    Sales of loans                                             168,310        375,872      1,129,073        776,038
    Decrease  in interest earned but uncollected                 9,924          9,651         43,446         16,887
    Federal Home Loan Bank stock dividends                      (8,038)       (12,559)       (28,993)       (40,274)
    Increase in prepaid expenses and other assets              (10,318)          (452)      (245,678)      (107,284)
    Increase (decrease) in accounts payable and accrued       (269,785)         2,433       (167,651)        76,905
expenses
    Increase (decrease) in taxes on income                     (33,547)       (11,412)        (9,120)        31,819
    Other, net                                                  (4,145)           785         (6,724)        (5,087)
                                                           ------------   ------------   ------------   ------------
      Net cash provided by (used in) operating activities     (139,314)       188,256        364,742        477,584

Cash Flows from Investing Activities:
  New loan activity:
    New real estate loans originated for portfolio          (3,482,228)    (1,886,820)    (7,826,284)    (5,091,687)
    Real estate loans purchased                                   (205)          (648)        (1,140)        (2,337)
    Other, net                                                 (21,560)       (65,120)       (58,694)       (85,491)
                                                           ------------   ------------   ------------   ------------
                                                            (3,503,993)    (1,952,588)    (7,886,118)    (5,179,515)
  Real estate loan principal payments:
    Monthly payments                                           145,593        158,922        440,805        493,429
    Payoffs, net of foreclosures                             1,002,369      1,340,611      3,430,193      4,073,503
                                                           ------------   ------------   ------------   ------------
                                                             1,147,962      1,499,533      3,870,998      4,566,932

  Repayments of mortgage-backed securities                     663,936        723,795      2,209,804      1,239,664
  Proceeds from sales of real estate                            25,438         31,484         93,241        118,020
  Purchases of securities available for sale                (2,740,856)      (183,116)    (4,205,922)      (310,597)
  Sales of securities available for sale                           -0-            -0-             19         81,373
  Matured securities available for sale                      2,746,870        304,096      4,172,283        557,767
  Increase in other investments                               (361,452)      (746,379)      (255,947)      (637,731)
  Purchases of Federal Home Loan Bank stock                        -0-        (49,253)          -0-        (149,247)
  Redemption of Federal Home Loan Bank stock                     8,858            -0-        275,673            -0-
  Additions to premises and equipment                           (8,707)       (13,495)       (26,151)       (48,792)
                                                           ------------   ------------   ------------   ------------
    Net cash provided by (used in) investing activities     (2,021,944)      (385,923)    (1,752,120)       237,874
</TABLE>



<PAGE>


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

<TABLE>
<CAPTION>

                                                              Three Months Ended               Nine Months Ended
                                                                 September 30                    September 30
                                                                                          ----------------------------
                                                          -------------   ------------
                                                              1999           1998            1999            1998
                                                          -------------   ------------    ------------    ------------
   Cash Flows from Financing Activities:
       Deposit activity:
<S>                                                          <C>          <C>              <C>             <C>
       Increase (decrease) in deposits, net                 $  (47,781)   $   213,571     $  (441,298)    $   589,384
       Interest credited                                       261,903        270,150         772,031         778,328
                                                          -------------   ------------    ------------    ------------
                                                               214,122        483,721         330,733       1,367,712

     Additions to Federal Home Loan Bank advances            2,005,500      2,712,440       3,518,580       5,976,940
     Repayments of Federal Home Loan Bank advances              (7,565)    (3,341,798)     (1,572,717)     (7,648,071)
     Proceeds from agreements to repurchase securities       1,548,894      3,490,320       5,549,145       6,554,310
     Repayments of agreements to repurchase securities      (1,460,892)    (2,996,555)     (6,028,674)     (6,578,160)
     Repayments of medium-term notes                               -0-            -0-             -0-        (110,000)
     Repayment of subordinated debt                                -0-       (100,000)       (100,000)       (200,000)
     Dividends on common stock                                  (7,663)        (7,214)        (23,417)        (21,517)
     Exercise of stock options                                   4,075          2,286           8,629          15,133
     Purchase and retirement of Company stock                 (138,510)       (44,299)       (308,162)        (44,299)
                                                          -------------   ------------    ------------    ------------
       Net cash provided by (used in) financing activities   2,157,961        198,901       1,374,117        (687,952)
                                                          -------------   ------------    ------------    ------------
   Net Increase (Decrease) in Cash                              (3,297)         1,234         (13,261)         27,506
   Cash at beginning of period                                 240,911        198,513         250,875         172,241
                                                          -------------   ------------    ------------    ------------
   Cash at end of period                                    $  237,614     $  199,747     $   237,614     $   199,747
                                                          =============   ============    ============    ============

   Supplemental cash flow information:
     Cash paid for:
       Interest                                             $  439,930     $  510,620     $ 1,318,456     $ 1,525,208
       Income taxes                                            104,090         77,500         225,194         181,582
     Cash received for interest and dividends                  712,177        754,108       2,125,958       2,257,116
     Noncash investing activities:
       Loans converted from adjustable rate to
           fixed-rate                                           32,424         70,607         503,750         113,996
       Loans transferred to foreclosed real estate              16,180         29,614          54,748          88,667
       Loans securitized into MBS and MBS-REMICs                   -0-            -0-       3,700,579       5,698,458
</TABLE>


<PAGE>


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

<TABLE>
<CAPTION>
                                                    For the Nine Months Ended September 30, 1999
                                 ------------------------------------------------------------------------------------
                                                                         Accumulated
                                                                        Comprehensive
                                                                         Income From
                                             Additional                  Unrealized        Total
                                  Common      Paid-in      Retained       Gains On      Stockholders'  Comprehensive
                                   Stock      Capital      Earnings      Securities        Equity         Income
                                 ----------  -----------   ----------   --------------  -------------  --------------

<S>                                <C>        <C>          <C>            <C>            <C>
Balance at January 1, 1999         $ 5,686    $ 122,159    $2,781,925     $   214,548    $ 3,124,318
Comprehensive income:
  Net earnings                         -0-          -0-       360,826             -0-        360,826     $   360,826
  Change in  unrealized gains on
    securities  available  for sale,
    net of tax                         -0-          -0-           -0-         (39,439)       (39,439)        (39,439)
  Reclassification adjustment
    for gains included in income       -0-          -0-           -0-            (750)          (750)           (750)
                                                                                                       --------------
    Comprehensive Income                                                                                 $   320,637
                                                                                                       ==============
Cash dividends on common
  stock ($.42 per share)               -0-          -0-       (23,417)            -0-        (23,417)
Common stock issued upon
  exercise of stock options,
  including tax benefits                35        8,594           -0-             -0-          8,629
Purchase and retirement of
  Company stock                       (322)         -0-      (307,840)            -0-       (308,162)
                                 ----------  -----------   ----------   --------------  -------------
Balance at September 30, 1999      $ 5,399    $ 130,753    $2,811,494     $   174,359    $ 3,122,005
                                 ==========  ===========   ==========   ==============  =============
</TABLE>
<TABLE>
<CAPTION>

                                                    For the Nine Months Ended September 30, 1998
                                 ------------------------------------------------------------------------------------
                                                                         Accumulated
                                                                        Comprehensive
                                                                         Income From
                                             Additional                  Unrealized        Total
                                  Common      Paid-in      Retained       Gains On      Stockholders'  Comprehensive
                                   Stock      Capital      Earnings      Securities        Equity         Income
                                 ----------  -----------   ----------   --------------  -------------  --------------

<S>                                <C>         <C>         <C>            <C>            <C>
Balance at January 1, 1998         $ 5,707     $ 85,532    $2,457,055     $   149,737    $ 2,698,031
Comprehensive income:
  Net earnings                         -0-          -0-       322,541             -0-        322,541     $   322,541
  Change in  unrealized  gains on
    securities  available  for sale,
    net of tax                         -0-          -0-          -0-           23,998         23,998          23,998
  Reclassification adjustment
    for gains included in income       -0-          -0-          -0-           (8,022)        (8,022)         (8,022)
                                                                                                       --------------
    Comprehensive Income                                                                                 $   338,517
                                                                                                       ==============
Cash dividends on common
  stock ($.375 per share)              -0-          -0-      (21,517)             -0-        (21,517)
Common stock issued upon
  exercise of stock options,
  including tax benefits                66       15,068          -0-              -0-         15,134
Purchase and retirement of
  Company stock                        (56)         -0-      (44,243)             -0-        (44,299)
                                -----------  -----------   ----------   -------------   -------------
Balance at September 30, 1998      $ 5,717    $ 100,600    $2,713,836     $   165,713    $ 2,985,866
                                 ==========  ===========   ==========   ==============  =============
</TABLE>


<PAGE>


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

         The  discussion  and analysis  included  herein  covers those  material
  changes in liquidity and capital  resources  that have occurred since December
  31, 1998, as well as certain material changes in results of operations  during
  the  three  and nine  month  periods  ended  September  30,  1999,  and  1998,
  respectively.

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

         This report contains certain forward-looking statements,  which are not
  historical facts and pertain to future operating results of the Company.  Such
  statements are  forward-looking  statements  within the meaning of the Private
  Securities Litigation Reform Act of 1995. These forward looking statements are
  inherently  subject  to  significant  business,   economic,   and  competitive
  uncertainties  and  contingencies,  many of which  are  beyond  the  Company's
  control. In addition, these forward-looking  statements are subject to change.
  Actual  results  may differ  materially  from the results  discussed  in these
  forward-looking  statements for the reasons, among others, discussed under the
  heading  "Asset/Liability  Management"  in  the  Management's  Discussion  and
  Analysis of Financial  Condition  and Results of  Operations  in the Company's
  1998 Annual Report on Form 10-K.

         NEW ACCOUNTING PRONOUNCEMENTS

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

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and Hedging  Activities"  (SFAS 133).  This  Statement  establishes
accounting and reporting  standards for derivative  instruments  and for hedging
activities.  It requires that an entity recognize all derivative  instruments as
either assets or liabilities in the statement of financial  position and measure
those  instruments  at fair value.  In June 1999,  the FASB issued  Statement of
Financial Accounting  Standards No. 137, "Accounting for Derivative  Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133"
(SFAS 137) which  delayed  the  effective  date of SFAS 133 until  fiscal  years
beginning  after June 15, 2000.  The Company is in the process of assessing  the
impact of this statement on its financial statements and results of operations.
<PAGE>

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

                                                       September 30      September 30       December 31
                                                            1999            1998               1998
                                                       -------------    ------------     --------------
<S>                                                    <C>             <C>                <C>
 Assets                                                $ 39,965,477    $ 39,383,006       $ 38,468,729
 Loans receivable including mortgage-backed securities   37,111,177      36,337,037         35,753,253
 Deposits                                                26,549,828      25,477,429         26,219,095
 Stockholders' equity                                     3,122,005       2,985,866          3,124,318
 Stockholders' equity/total assets                            7.81%           7.58%              8.12%
 Book value per common share                           $      57.83    $      52.23       $      54.95
 Common shares outstanding                               53,990,504      57,172,249         56,861,124
 Diluted common shares outstanding                       54,471,358      57,743,225         57,429,914
 Yield on loan portfolio                                      7.02%           7.49%              7.36%
 Yield on mortgage-backed securities                          7.07%           7.23%              7.20%
 Yield on investments                                         6.10%           6.20%              5.53%
 Yield on earning assets                                      7.02%           7.40%              7.30%
 Cost of deposits                                             4.50%           4.91%              4.67%
 Cost of borrowings                                           5.53%           5.92%              5.87%
 Cost of funds                                                4.78%           5.20%              4.96%
 Yield on earning assets less cost of funds                   2.24%           2.20%              2.34%
 Ratio of nonperforming assets to total assets                 .61%            .78%               .79%
 Ratio of troubled debt restructured to total assets           .04%            .06%               .06%
 World Savings Bank, FSB:
   Total assets                                        $ 35,186,048    $ 31,854,886       $ 31,912,264
   Net worth                                              2,425,617       2,095,404          2,164,854
   Net worth/total assets                                     6.89%           6.58%              6.78%
   Regulatory capital ratios:
     Core capital                                             6.89%           6.57%              6.77%
     Risk-based capital                                      12.81%          12.76%             12.93%
 World Savings and Loan Association:
   Total assets                                         $ 5,468,506     $ 8,288,587       $  6,810,266
   Net worth                                                649,136         804,414            687,778
   Net worth/total assets                                    11.87%           9.71%             10.10%
   Regulatory capital ratios:
     Core capital                                             9.03%           7.91%              7.25%
     Risk-based capital                                      17.64%          16.72%             16.24%
 World Savings Bank, SSB:
   Total assets                                         $ 3,501,022     $ 3,426,447       $  3,519,046
   Net worth                                                198,539         182,914            186,411
   Net worth/total assets                                     5.67%           5.34%              5.30%
   Regulatory capital ratios:
     Tier 1 leverage capital                                  5.51%           5.67%              5.26%
     Total risk-based capital                                26.52%          25.20%             25.15%
</TABLE>



<PAGE>


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

                                                         Three Months Ended            Nine Months Ended
                                                            September 30                 September 30
                                                      -------------------------   ----------------------------
                                                         1999          1998          1999            1998
                                                      -----------   -----------   ------------   -------------
<S>                                                   <C>           <C>            <C>             <C>
  New real estate loans originated                    $3,595,725    $2,178,244     $8,543,726     $ 5,717,069
  Fully indexed rate on new real estate loans              7.56%         7.76%          7.57%           7.76%
  Current average rate on new real estate loans (a)        5.91%         6.13%          6.02%           6.20%
  New adjustable rate mortgages as a percentage of
    new real estate loans originated                      94.53%        83.91%         88.82%          85.80%
  Increase in deposits (b)(c)                         $  214,122    $  483,721     $  330,733     $ 1,367,712
  Earnings before extraordinary item                     118,071       108,021        360,826         335,052
  Net earnings                                           118,071       103,220        360,826         322,541
  Basic earnings per share before extraordinary item        2.16          1.87           6.48            5.84
  Diluted earnings per share before extraordinary item      2.14          1.85           6.42            5.78
  Basic earnings per share                                  2.16          1.79           6.48            5.62
  Diluted earnings per share                                2.14          1.77           6.42            5.56
  Cash dividends on common stock                             .14          .125            .42            .375
  Average common shares outstanding                   54,698,032    57,562,090     55,715,591      57,343,932
  Average diluted common shares outstanding           55,163,060    58,182,842     56,176,340      57,997,076
  Ratios:(d)
    Net earnings/average net worth (ROE)(e)               15.01%        13.97%         15.25%          15.04%
    Net earnings/average assets (ROA)(e)                   1.21%         1.05%          1.24%           1.09%
    Net interest income/average assets                     2.58%         2.43%          2.59%           2.44%
    General and administrative expense/average assets       .98%          .89%           .98%            .87%
    Efficiency ratio (f)                                  33.89%        32.53%         33.14%          31.45%
</TABLE>

(a)  The current  rate  reflects  the actual rate being paid by the  borrower at
     time of  origination.
(b)  Includes a decrease  of $525  million of  wholesale  deposits  for the nine
     months ended September 30, 1998.
(c)  Includes  the  effect  of the sale of three  branches  with a total of $119
     million in  deposits  during the  second  quarter of 1999,  the sale of one
     branch with $29 million in deposits  during the third quarter of 1999,  and
     the sale of one branch with $36 million in deposits in March of 1998.
(d)  Ratios are annualized by multiplying the quarterly  computation by four and
     the nine-month  computation by one and one-third.  Averages are computed by
     adding the beginning  balance and each monthend  balance during the quarter
     and nine-month period and dividing by four and ten, respectively.
(e)  The ratios for the three and nine months ended  September  30, 1998 include
     the extraordinary item. The ratios for the quarter ended September 30, 1998
     excluding  the  extraordinary  item are:  ROE  14.62%  and ROA  1.10%.  The
     year-to-date  ratios as of September 30, 1998  excluding the  extraordinary
     item are: ROE 15.62% and ROA 1.24%.
(f)  The efficiency ratio is calculated by dividing  general and  administrative
     expense by net interest income plus other income.



<PAGE>


         FINANCIAL CONDITION

         The  consolidated  condensed  balance  sheet  shown in the table  below
  presents the Company's assets and liabilities in percentage terms at September
  30, 1999 and 1998, and December 31, 1998. The reader is referred to page 53 of
  the Company's 1998 Annual Report on Form 10-K for similar  information for the
  years 1995 through 1998 and a discussion of the changes in the  composition of
  the Company's assets and liabilities in those years.
<TABLE>
<CAPTION>

                                     TABLE 1

                      Consolidated Condensed Balance Sheet
                               In Percentage Terms

                                                              September 30
                                                           --------------------           December 31
                                                            1999         1998                1998
                                                           -------      -------          -------------
       Assets:
<S>                                                           <C>          <C>                    <C>
          Cash and investments                                3.2%         3.6%                   2.7%
          Mortgage-backed securities                         28.2         21.3                   26.1
          Loans receivable                                   64.7         70.9                   66.9
          Other assets                                        3.9          4.2                    4.3
                                                           -------      -------                -------
                                                            100.0%       100.0%                 100.0%
                                                           =======      =======                =======
       Liabilities and Stockholders' Equity:
          Deposits                                           66.4%        64.7%                  68.1%
          Federal Home Loan Bank advances                    20.3         17.4                   16.0
          Securities sold under agreements to repurchase      1.9          5.9                    3.3
          Other liabilities                                   1.6          2.1                    2.1
          Subordinated debt                                   2.0          2.3                    2.4
          Stockholders' equity                                7.8          7.6                    8.1
                                                           -------      -------                -------
                                                            100.0%       100.0%                 100.0%
                                                           =======      =======                =======
</TABLE>

         For the first nine  months of 1999 and 1998,  the  Company  securitized
$3.7  billion  and $5.7  billion,  respectively,  of loans into  mortgage-backed
securities  which caused the percentage of  mortgage-backed  securities to total
assets to  increase  from  September  30,  1998 to  September  30,  1999 and the
percentage of loans  receivable  to total assets to decrease from  September 30,
1998 to September 30, 1999. For further discussion, see pages 12 and 13.

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



<PAGE>


         The  following  gap table shows that,  as of September  30,  1999,  the
Company's  assets reprice sooner than its  liabilities.  If all repricing assets
and liabilities  responded  equally to changes in the interest rate environment,
then the gap analysis would suggest that the Company's  earnings would rise when
interest rates increase and would fall when interest  rates  decrease.  However,
the Company's earnings are also affected by the built-in reporting and repricing
lags inherent in the Eleventh District Cost of Funds Index (COFI),  which is the
benchmark  Golden  West  uses  to  determine  the  rate on the  majority  of its
adjustable rate mortgages  (ARMs).  The reporting lag occurs because of the time
it takes to gather the data needed to compute the index.  As a result,  the COFI
in effect in any month actually  reflects the Eleventh  District's cost of funds
at the level it was two months prior.  The repricing lag occurs  because COFI is
based  on a  portfolio  of  accounts,  not  all of  which  reprice  immediately.
Therefore,  COFI does not initially  fully  reflect a change in market  interest
rates.  Consequently,  when the interest rate environment changes, the COFI lags
cause  assets to  initially  reprice  more  slowly than  liabilities,  enhancing
earnings when rates are falling and holding down income when rates rise.

<TABLE>
<CAPTION>

                                     TABLE 2

            Repricing of Interest-Earning Assets and Interest-Bearing
                   Liabilities, Repricing Gaps, and Gap Ratio
                            As of September 30, 1999
                              (Dollars in millions)

                                                             Projected Repricing(a)
                                       -------------------------------------------------------------------
                                         0 - 3         4 - 12        1 - 5         Over 5
                                         Months        Months        Years          Years        Total
                                       -----------   -----------   -----------   ------------  -----------
Interest-Earning Assets:
<S>                                       <C>           <C>           <C>            <C>         <C>
  Investments                             $   670       $   160       $    17       $    178     $  1,025
  Mortgage-backed securities                9,722           208           739            586       11,255
  Loans receivable:
    Rate-sensitive                         22,049         2,402           220            -0-       24,671
    Fixed-rate                                 49           135           426            471        1,081
  Other(b)                                    710           -0-           -0-            -0-          710
  Impact of interest rate swaps               540           140          (680)           -0-          -0-
                                       -----------   -----------   -----------   ------------  -----------
Total                                    $ 33,740      $  3,045      $    722       $  1,235     $ 38,742
                                       ===========   ===========   ===========   ============  ===========
Interest-Bearing Liabilities(c):
  Deposits                               $ 16,108      $  8,378      $  2,037       $     27     $ 26,550
  FHLB advances                             7,500           215           106            288        8,109
  Other borrowings                            773           100           713            -0-        1,586
  Impact of interest rate swaps               248           (70)         (178)           -0-          -0-
                                       -----------   -----------   -----------   ------------  ===========
Total                                    $ 24,629      $  8,623      $  2,678       $    315     $ 36,245
                                       ===========   ===========   ===========   ===========   ===========

Repricing gap                            $  9,111      $ (5,578)     $ (1,956)      $    920     $  2,497
                                       ===========   ===========   ===========   ============  ===========

Cumulative gap                           $  9,111      $  3,533      $  1,577       $  2,497
                                       ===========   ===========   ===========   ============

Cumulative gap as a percentage of
    total assets                            22.8%          8.8%          3.9%
                                       ===========   ===========   ===========
</TABLE>

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


<PAGE>


         CASH AND INVESTMENTS

         The Office of Thrift  Supervision (OTS) requires insured  institutions,
such as World Savings Bank, FSB (WFSB),  and World Savings and Loan  Association
(WSL), to maintain a minimum amount of cash and certain  qualifying  investments
for liquidity purposes. At September 30, 1999 and 1998 and at December 31, 1998,
WFSB and WSL had liquidity in excess of the regulatory  requirements.  The state
of Texas requires insured institutions,  such as World Savings Bank, SSB (WSSB),
to maintain a daily minimum  amount of cash and certain  qualifying  investments
for liquidity  purposes.  WSSB had liquidity in excess of the requirement during
the periods under discussion.

         At September 30, 1999 and 1998,  and December 31, 1998, the Company had
securities  available for sale in the amount of $346 million,  $310 million, and
$377 million,  respectively,  including unrealized gains on securities available
for sale of $287 million,  $274  million,  and $358  million,  respectively.  At
September  30,  1999 and  1998,  and  December  31,  1998,  the  Company  had no
securities held for trading in its investment securities portfolio.

         Included in the  Company's  investment  portfolio at September 30, 1999
and 1998, and December 31, 1998, were collateralized mortgage obligations (CMOs)
in the amount of $140 million, $98 million, and $196 million,  respectively. The
Company  holds  CMOs on which both  principal  and  interest  are  received.  At
September 30, 1999,  all of these CMOs qualified for inclusion in the regulatory
liquidity   measurement.   The  Company  does  not  hold  any  interest-only  or
principal-only CMOs.

         LOANS RECEIVABLE AND MORTGAGE-BACKED SECURITIES

         The Company invests in whole loans and mortgage-backed securities (MBS)
and, from time to time,  the Company  securitizes  loans from its portfolio into
MBS and Real Estate Mortgage Investment Conduit Securities (MBS-REMICs) that are
available to be used as  collateral  for  borrowings.  At September 30, 1999 and
1998,  and  December  31,  1998,  the  balance  of  loans  receivable  including
mortgage-backed  securities was $37.1 billion, $36.3 billion, and $35.8 billion,
respectively.  Included in the $37.1  billion at September  30,  1999,  was $3.0
billion  of  Federal  National  Mortgage   Association  (FNMA)   mortgage-backed
securities  with the  underlying  loans  subject to full credit  recourse to the
Company  and $7.7  billion  of  MBS-REMICs.  Included  in the $35.8  billion  at
December  31,  1998,  was $3.9  billion  of FNMA MBS with the  underlying  loans
subject to full credit  recourse to the Company and $5.5 billion of  MBS-REMICs.
Included in the $36.3  billion at September  30, 1998,  was $4.2 billion of FNMA
MBS with the underlying loans subject to full credit recourse to the Company and
$3.4 billion of MBS-REMICs.

         At September 30, 1999 and 1998,  and December 31, 1998, the Company had
MBS held to  maturity in the amount of $11.2  billion,  $8.3  billion,  and $9.9
billion,  respectively.  At September 30, 1999 and 1998,  and December 31, 1998,
the  Company  had MBS  available  for sale in the  amount of $85  million,  $125
million,  and $114  million,  respectively,  including  unrealized  gains on MBS
available for sale of $2 million, $6 million, and $5 million,  respectively.  At
September  30, 1999 and 1998 and December  31, 1998,  the Company had no trading
MBS.



<PAGE>


     The Company  securitized  $3.7 billion and $6.4  billion of mortgage  loans
into MBS-REMICs in the first nine months of 1999 and for the year ended December
31, 1998, respectively.  MBS-REMICs are being used as collateral for borrowings.
The Company has the  ability  and intent to hold these MBS until  maturity  and,
accordingly, MBS-REMICs are classified as MBS held to maturity.

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

     Repayments  of MBS during the third  quarter  and first nine months of 1999
were $664 million and $2.2 billion,  respectively,  compared to $724 million and
$1.2 billion during the same periods of 1998.  MBS repayments  were lower during
the third  quarter  of 1999 as  compared  to the third  quarter of 1998 due to a
decline in the repayment rates of the underlying mortgages.  MBS repayments were
higher during the first nine months of 1999 as compared to the first nine months
of 1998 due to an  increase  in total MBS  outstanding  and an  increase  in the
prepayment rate of the underlying mortgages.

                  LOAN VOLUME

     New loan  originations  for the three and nine months ended  September  30,
1999, amounted to $3.6 billion and $8.5 billion, respectively,  compared to $2.2
billion  and $5.7  billion  for the same  periods  in 1998.  The high  volume of
originations  during  1999 was due to the  renewed  demand for  adjustable  rate
loans, the Company's primary product, as interest rates moved up and the cost of
fixed-rate loans increased.  In addition,  the Company increased the size of its
loan  origination  staff to take advantage of the favorable  market  conditions.
Refinanced loans  constituted 35% and 41% of new loan originations for the three
and nine months ended September 30, 1999,  compared to 42% and 43% for the three
and nine months ended September 30, 1998.

         Loans originated for sale amounted to $113 million and $717 million for
the three and nine months ended September 30, 1999, compared to $291 million and
$625 million for the same periods in 1998. The reduction in loans originated for
sale during the third  quarter of 1999 as compared to the third  quarter of 1998
was attributable to the decrease in fixed-rate  originations due to higher rates
being offered on  fixed-rate  loans.  In addition,  during the third quarter and
first nine months of 1999,  $32 million and $504 million of loans were converted
at the  customer's  request from  adjustable  rate to fixed rate compared to $71
million and $114  million for the same  periods in 1998.  The Company  sold $168
million and $1.1 billion of fixed-rate loans for the three and nine months ended
September 30, 1999, respectively,  compared to $376 million and $776 million for
the same periods of 1998.

         At September 30, 1999, the Company had lending operations in 29 states.
The  largest  source of mortgage  origination  is loans  secured by  residential
properties  in  California.  For the three and nine months ended  September  30,
1999, 62% and 64% of total loan originations  were on residential  properties in
California  compared  to 63% and 62% for the  same  periods  in  1998.  The five
largest states,  other than  California,  for  originations  for the nine months
ended September 30, 1999, were Florida, Texas, Washington, Illinois, and Arizona
with a combined total of 19% of total originations, respectively. The percentage
of the total loan portfolio (including  mortgage-backed securities with recourse
and MBS-REMICs) that is comprised of residential  loans in California was 65% at
September 30, 1999 compared to 66% at September 30, 1998 and December 31, 1998.


<PAGE>


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

     The following table shows the distribution of ARM originations by index for
the third quarter and first nine months of 1999
and 1998.
<TABLE>
<CAPTION>

                                     TABLE 3

                 Adjustable Rate Mortgage Originations by Index
                             (Dollars in thousands)

                                  Three Months Ended              Nine Months Ended
                                     September 30                   September 30
                              ----------------------------   ----------------------------
        ARM Index                1999            1998           1999            1998
--------------------------    ------------   -------------   ------------    ------------
<S>                           <C>             <C>            <C>             <C>
COFI                          $   945,825     $   973,983    $ 2,256,015     $ 2,991,734
COSI                            2,382,470         344,777      5,190,298         940,035
TCM                                70,830         509,109        142,571         973,742
                              ------------   -------------   ------------    ------------
                              $ 3,399,125     $ 1,827,869    $ 7,588,884     $ 4,905,511
                              ============   =============   ============    ============
</TABLE>



         The following  table shows the  distribution  by index of the Company's
outstanding  balance  of  adjustable  rate  mortgages  (including  ARM MBS  with
recourse and ARM  MBS-REMICs)  at  September  30, 1999 and 1998 and December 31,
1998.
<TABLE>
<CAPTION>

                                     TABLE 4

                      Adjustable Rate Mortgage Portfolio by
                   Index (Including ARM MBS with recourse and
                                 ARM MBS-REMICs)
                             (Dollars in thousands)

                                       September 30               December 31
                              --------------------------------
        ARM Index                 1999              1998              1998
--------------------------    --------------   ---------------   ---------------
<S>                            <C>                <C>              <C>
COFI                           $ 26,451,321      $ 31,256,900      $ 29,761,484
COSI                              6,580,191           932,147         1,703,283
TCM                               1,209,742         1,018,831         1,256,775
Other                               154,620           221,999           201,756
                              --------------   ---------------   ---------------
                               $ 34,395,874      $ 33,429,877      $ 32,923,298
                              ==============   ===============   ===============
</TABLE>



         The tables on the following two pages show the Company's loan portfolio
by state at September 30, 1999 and 1998.


<PAGE>
<TABLE>
<CAPTION>


                                     TABLE 5

                             Loan Portfolio by State
                               September 30, 1999
                             (Dollars in thousands)

                          Residential
                          Real Estate                          Commercial                     Loans as
                    -------------------------                     Real           Total         a% of
     State            1 - 4           5+          Land           Estate        Loans (a)      Portfolio
----------------   ------------   -----------   ----------    --------------   -----------   ------------
<S>                <C>            <C>             <C>           <C>          <C>                <C>
California         $20,482,201    $3,341,495      $   193       $  30,322    $ 23,854,211       64.91%
Florida              1,622,784        16,234          -0-             504       1,639,522        4.46
Texas                1,486,019        60,920          434           1,248       1,548,621        4.21
Illinois             1,153,525       124,934          -0-             -0-       1,278,459        3.48
New Jersey           1,236,155           -0-          -0-           3,883       1,240,038        3.37
Colorado               926,423       173,075          -0-           5,218       1,104,716        3.01
Washington             633,838       463,754          -0-             656       1,098,248        2.99
Arizona                791,442        18,890          -0-             -0-         810,332        2.20
Other (b)            4,124,093        44,805           55          10,679       4,179,632       11.37
                   ------------   -----------   ----------   -------------    ------------   ---------
  Totals           $32,456,480    $4,244,107      $   682       $  52,510      36,753,779      100.00%
                   ============   ===========   ==========   =============                   =========

SFAS 91 net deferred loan costs                                                    44,875
Loan discount on purchased loans                                                   (2,090)
Undisbursed loan funds                                                             (5,201)
Allowance for loan losses                                                        (233,277)
Loans to facilitate (LTF) interest reserve                                           (353)
Troubled debt restructured (TDR) interest reserve                                  (1,259)
Loans on deposits                                                                  20,686
                                                                              ------------
     Total loan portfolio and loans securitized into FNMA MBS with recourse
     and MBS-REMICs                                                            36,577,160
Loans securitized into FNMA MBS with recourse and MBS-REMICs                  (10,721,012)(c)
                                                                              ------------
     Total loans receivable                                                   $25,856,148
                                                                              ============
</TABLE>

(a)  The  Company has no  commercial  loans  other than  commercial  real estate
     loans.
(b)  Includes states with loans less than 2% of total loans.
(c)  The above  schedule  includes the September 30, 1999 balances of loans that
     were securitized and retained as FNMA MBS with recourse and MBS-REMICs.



<PAGE>
<TABLE>
<CAPTION>


                                     TABLE 6

                             Loan Portfolio by State
                               September 30, 1998
                             (Dollars in thousands)

                          Residential
                          Real Estate                          Commercial                     Loans as
                    -------------------------                     Real           Total         a% of
     State            1 - 4           5+          Land           Estate        Loans (a)      Portfolio
----------------   ------------   -----------   ----------    --------------   -----------   ------------
<S>                <C>            <C>             <C>           <C>          <C>                <C>
California         $20,097,429    $3,381,050      $   216       $  42,197    $ 23,520,892       65.65%

Florida              1,438,608        19,052            4             703       1,458,367        4.07
Texas                1,410,729        70,144          524           1,374       1,482,771        4.14
Illinois             1,186,384       152,000          -0-           1,481       1,339,865        3.74
New Jersey           1,227,348           -0-          -0-           4,633       1,231,981        3.44
Colorado             1,022,793       206,054          -0-           5,975       1,234,822        3.45
Washington             542,281       416,926          -0-             693         959,900        2.68
Arizona                757,130        24,201          -0-             -0-         781,331        2.18
Other (b)            3,751,002        53,569           68          13,579       3,818,218       10.65
                   ------------   -----------   ----------   -------------    ------------   ---------
  Totals           $31,433,704    $4,322,996      $   812       $  70,635      35,828,147      100.00%
                   ============   ===========   ==========   =============                   =========

SFAS 91 net deferred loan fees                                                    (20,134)
Loan discount on purchased loans                                                   (3,309)
Undisbursed loan funds                                                             (3,321)
Allowance for loan losses                                                        (242,415)
Loans to facilitate interest reserve                                                 (514)
Troubled debt restructured interest reserve                                        (2,214)
Loans on deposits                                                                  26,654
                                                                              ------------
     Total loan portfolio and loans securitized into FNMA MBS with recourse
     and MBS-REMIC                                                             35,582,894
Loans securitized into FNMA MBS with recourse and MBS-REMIC                    (7,642,479)(c)
                                                                              ------------
     Total loans receivable                                                   $27,940,415
                                                                              ============
</TABLE>

(a)  The  Company has no  commercial  loans  other than  commercial  real estate
     loans.
(b)  Includes states with loans less than 2% of total loans.
(c)  The above  schedule  includes the September 30, 1998 balances of loans that
     were securitized and retained as FNMA MBS with recourse and MBS-REMIC.



<PAGE>


         The Company  continues to emphasize ARM loans with interest  rates that
change  periodically  in accordance  with  movements in specified  indexes.  The
portion of the mortgage  portfolio  (including MBS and  MBS-REMICs)  composed of
rate-sensitive  loans was 93% at September  30, 1999,  92% at September 30, 1998
and December 31, 1998. The Company's ARM  originations for the first nine months
of 1999  constituted  89% of new mortgage loans made in 1999 compared to 86% for
the first nine months of 1998.

         The weighted  average  maximum  lifetime cap rate on the  Company's ARM
loan portfolio  (including  ARMs swapped into MBS with recourse and  MBS-REMICs)
was 12.49%,  or 5.51% above the actual  weighted  average rate at September  30,
1999,  versus 12.64%,  or 5.27% above the weighted average rate at September 30,
1998.

         Approximately  $4.8 billion of the Company's ARM loans  (including  MBS
with recourse and  MBS-REMICs)  have terms that state that the interest rate may
not fall below a lifetime floor set at the time of origination or assumption. As
of September 30, 1999,  $486 million of ARM loans had reached their rate floors.
The weighted  average  floor rate on the loans that had reached  their floor was
7.62% at September 30, 1999 compared to 7.74% at September 30, 1998. Without the
floor,  the average rate on these loans would have been 6.76% at  September  30,
1999 and 7.17% at September 30, 1998.

         Loan repayments  consist of monthly loan amortization and loan payoffs.
For the three and nine months ended  September 30, 1999,  loan  repayments  were
$1.1 billion and $3.9 billion,  respectively,  compared to $1.5 billion and $4.6
billion  in the same  periods  of 1998.  The  decrease  in loan  repayments  was
primarily  due to a decrease  in loan  prepayments  during the third  quarter of
1999.

         MORTGAGE SERVICING RIGHTS

         The Company  accounts for mortgage  servicing rights in accordance with
SFAS 125.  Capitalized  mortgage  servicing  rights  are  included  in  "Prepaid
expenses and other assets" on the Consolidated Statement of Financial Condition.
The following table shows the changes in capitalized  mortgage  servicing rights
for the three and nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                     TABLE 7

                      Capitalized Mortgage Servicing Rights
                             (Dollars in thousands)

                                                                    Three Months Ended              Nine Months Ended
                                                                       September 30                   September 30
                                                                 --------------------------    --------------------------
                                                                     1999           1998           1999          1998
                                                                 -----------    -----------    -----------   ------------
<S>                                                                <C>            <C>            <C>            <C>
  Beginning balance of capitalized mortgage servicing rights       $ 39,860       $ 15,749       $ 28,635       $ 11,116
  New capitalized mortgage servicing rights from loan sales           2,785          5,822         19,244         12,410
  Amortization of capitalized mortgage servicing rights              (3,269)        (1,381)        (8,503)        (3,336)
                                                                 -----------    -----------    -----------   ------------
  Ending balance of capitalized mortgage servicing rights          $ 39,376       $ 20,190       $ 39,376       $ 20,190
                                                                 ===========    ===========    ===========   ============
</TABLE>

     The book value of Golden  West's  servicing  rights did not exceed the fair
value at  September  30,  1999 or 1998  and,  therefore,  no  write-down  of the
servicing rights to their fair value was necessary.


<PAGE>


         ASSET QUALITY

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

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

                                     TABLE 8

               Nonperforming Assets and Troubled Debt Restructured
                             (Dollars in thousands)

                                                         September 30
                                                   --------------------------    December 31
                                                      1999           1998           1998
                                                   -----------    -----------   --------------
<S>                                                 <C>            <C>             <C>
Non-accrual loans                                   $ 230,777      $ 264,198       $ 262,332
Real estate acquired through foreclosure               14,256         44,537          42,572
Real estate in judgment                                   174            -0-              74
                                                   -----------    -----------    ------------
Total nonperforming assets                          $ 245,207      $ 308,735       $ 304,978
                                                   ===========    ===========    ============

TDRs                                                $  15,281      $  24,118       $  22,774
                                                   ===========    ===========    ============

Ratio of NPAs to total assets                            .61%           .78%            .79%
                                                   ===========    ===========    ============

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

Ratio of NPAs and TDRs to total assets                   .65%           .84%            .85%
                                                   ===========    ===========    ============
</TABLE>

         The lower NPAs at September  30, 1999 as compared to September 30, 1998
reflect  primarily  the  strong  economy  and  housing  market,   especially  in
California. The Company continues to closely monitor all delinquencies and takes
appropriate  steps to protect its  interests.  Interest  foregone on non-accrual
loans  amounted to $790  thousand and $4 million in the third  quarter and first
nine  months of 1999  compared  to $738  thousand  and $6  million  for the same
periods in 1998.  Interest  foregone on TDRs  amounted to $107 thousand and $350
thousand for the three and nine months  ended  September  30, 1999,  compared to
$203  thousand and $729  thousand for the three and nine months ended  September
30, 1998.

         The  tables  on the  following  page show the  Company's  nonperforming
assets by state as of September 30, 1999 and 1998.


<PAGE>
<TABLE>
<CAPTION>


                                     TABLE 9

                          Nonperforming Assets by State
                               September 30, 1999
                             (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(b)
------------------    ---------   ---------  -----------     --------  ---------  ---------   ----------    --------
<S>                   <C>          <C>         <C>           <C>         <C>        <C>       <C>           <C>
California            $134,026     $ 3,287     $  1,661      $10,808     $  440     $  -0-    $ 150,222      .63%
Florida                 16,500         -0-          179          349        -0-        -0-       17,028     1.04
Texas                    9,112         -0-          -0-          603        -0-        -0-        9,715      .63
Illinois                 9,866         216          -0-          699        -0-        -0-       10,781      .84
New Jersey              16,463         -0-           45          131        -0-        -0-       16,639     1.34
Colorado                 1,209       1,032          -0-           77        -0-        -0-        2,318      .21
Washington               2,344         -0-          -0-          -0-        -0-        -0-        2,344      .21
Arizona                  4,074         124          -0-          -0-        -0-        -0-        4,198      .52
Other (c)               27,801         103        2,735        1,647        -0-        -0-       32,286      .77
                      ---------   ---------  -----------     --------  ---------  ---------   ----------    -----
  Totals              $221,395     $ 4,762     $  4,620      $14,314     $  440     $  -0-      245,531      .67%
                      =========   =========  ===========     ========  =========  =========

REO general valuation allowance                                                                    (324)    (.00)
                                                                                              ----------   ------
Total nonperforming assets                                                                     $245,207      .67%
                                                                                              ==========   ======
</TABLE>

(a)  Non-accruals loans are 90 days or more past due and have no unpaid interest
     accrued.
(b)  The September 30, 1999 balances  include loans that were  securitized  into
     FNMA MBS and MBS-REMICs.
(c)  Includes states with loans less than 2% of total loans.
<TABLE>
<CAPTION>

                                    TABLE 10

                          Nonperforming Assets by State
                               September 30, 1998
                             (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(b)
------------------    ---------   ---------  ---------     --------   ---------  ---------    ---------    ---------
<S>                   <C>           <C>        <C>         <C>         <C>         <C>       <C>            <C>
California            $178,080      $5,835     $  462      $39,236     $ 1,027     $  -0-    $ 224,640      .96%
Florida                 13,506         -0-         80          926         -0-        -0-       14,512     1.00
Texas                    7,434         -0-        -0-          755         -0-        -0-        8,189      .55
Illinois                10,487         220        -0-        1,242         -0-        -0-       11,949      .89
New Jersey              14,805         -0-         57          875         -0-        -0-       15,737     1.28
Colorado                 1,141         -0-          3          -0-         -0-        -0-        1,144      .09
Washington               1,620         -0-        -0-          -0-         -0-        -0-        1,620      .17
Arizona                  2,618         -0-        -0-          112         -0-        -0-        2,730      .35
Other (c)               27,810          40        -0-        1,294         -0-         11       29,155      .76
                      ---------   ---------  ---------     --------   ---------  ---------    ---------    -----
  Totals              $257,501      $6,095     $  602      $44,440     $ 1,027     $   11      309,676      .86%
                      =========   =========  =========     ========   =========  =========

REO general valuation allowance                                                                   (941)    (.00)
                                                                                              ---------    -----
Total nonperforming assets                                                                    $308,735      .86%
                                                                                              =========    =====
</TABLE>

(a)  Non-accruals loans are 90 days or more past due and have no unpaid interest
     accrued.
(b)  The September 30, 1998 balances  include loans that were  securitized  into
     FNMA MBS and MBS-REMIC.
(c)  Includes states with loans less than 2% of total loans.


<PAGE>


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

     The table below shows the changes in the  allowance for loan losses for the
three and nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 11

                      Changes in Allowance for Loan Losses
                             (Dollars in thousands)

                                                                        Three Months Ended         Nine Months Ended
                                                                           September 30              September 30
                                                                     ------------------------  ------------------------
                                                                        1999         1998         1999         1998
                                                                     -----------  -----------  -----------   ----------
<S>                                                                   <C>          <C>          <C>          <C>
  Beginning allowance for loan losses                                 $ 233,471    $ 239,537    $ 244,466    $ 233,280
  Provision (recovery) charged (credited) to expense                     (1,253)       3,130       (1,406)       8,777
  Transfer of allowance from (to) reserve for losses
    on loans sold or securitized and retained                               213          -0-      (11,922)         -0-
  Less loans charged off, net                                               -0-         (370)         -0-          -0-
  Add recoveries                                                            846          118        2,139          358
                                                                     -----------  -----------  -----------   ----------
  Ending allowance for loan losses                                    $ 233,277    $ 242,415    $ 233,277    $ 242,415
                                                                     ===========  ===========  ===========   ==========
  Ratio of chargeoffs net of recoveries to average loans
    outstanding (including MBS with recourse and MBS-REMICs)              (.01%)        .00%        (.01%)        .00%
                                                                     ===========  ===========  ===========   ==========
</TABLE>

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



<PAGE>


         The table  below  shows the  changes in the reserve for losses on loans
sold with  recourse or  securitized  and  retained for the three and nine months
ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 12

 Changes in Reserve for Losses on Loans Sold with Recourse or Securitized and Retained
                             (Dollars in thousands)

                                                              Three Months Ended         Nine Months Ended
                                                                 September 30               September 30
                                                           ------------------------   -----------------------
                                                              1999         1998         1999         1998
                                                           -----------   ----------   ----------   ----------
  Beginning balance of reserve for losses on loans
<S>                                                          <C>           <C>          <C>           <C>
    sold with recourse or securitized and retained           $ 15,397      $ 1,363     $  2,256      $   886
  Initial recourse at time of sale charged to expense             183          381        1,189          858
  Transfer from (to) allowance for loan losses                   (213)         -0-       11,922          -0-
                                                           -----------   ----------   ----------   ----------
  Ending balance of reserve for losses on loans
    sold with recourse or securitized and retained           $ 15,367      $ 1,744     $ 15,367      $ 1,744
                                                           ===========   ==========   ==========   ==========
</TABLE>


         The ratio to nonperforming  assets of the allowance for loan losses and
the reserve for losses on loans sold with recourse or  securitized  and retained
was 101.4% and 79.1% at September 30, 1999 and 1998, respectively.  At September
30, 1999 and 1998,  the ratio to total loans  (including  MBS with  recourse and
MBS-REMICs) of the allowance for loan losses and the reserve for losses on loans
sold with recourse or securitized and retained was .68% and .69%, respectively.

         DEPOSITS

         Retail  deposits  increased  during  the third  quarter of 1999 by $214
million, including interest credited of $262 million, compared to an increase of
$484 million,  including interest credited of $270 million, in the third quarter
of 1998. Retail deposits  increased during the first nine months of 1999 by $331
million, including interest credited of $772 million, compared to an increase of
$1.9 billion,  including  interest  credited of $778 million,  in the first nine
months of 1998.  During the third  quarter of 1999,  the Company sold one branch
with a total of $29 million in deposits and in the second  quarter of 1999,  the
Company sold three branches with a total of $119 million in deposits. During the
first quarter of 1998, the Company sold one branch with $36 million in deposits.
Retail deposit  balances were  essentially  unchanged during 1999 as the Company
concentrated  marketing efforts on building the loyalty of existing  depositors.
Retail deposits  increased during the first nine months of 1998 primarily due to
ongoing   marketing  efforts  as  well  as  active  promotions  of  market  rate
transaction  accounts.  At  September  30, 1999 and 1998,  transaction  accounts
(which includes checking,  passbook,  and money market accounts) represented 38%
and 31%, respectively, of the total balance of deposits.

         Beginning  in  January  1997,  the  Company  began  a  program  to  use
government   securities  dealers  to  sell  certificates  of  deposit  (CDs)  to
institutional investors (wholesale CDs). There were no outstanding wholesale CDs
at September 30, 1999 or at September 30, 1998.




<PAGE>


         The table below shows the  Company's  deposits by interest  rate and by
remaining maturity at September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 13

                                    Deposits
                              (Dollars in millions)

                                                                               September 30
                                                           ---------------------------------------------------
                                                                     1999                       1998
                                                           ------------------------   ------------------------
                                                             Rate*         Amount       Rate*        Amount
                                                           ---------    -----------   ------------------------
    Deposits by rate:
<S>                                                            <C>         <C>            <C>       <C>
      Interest-bearing checking accounts (a)                   3.06%       $   119        2.24%     $      87
      Passbook accounts                                        1.80            504        2.73            666
      Money market deposit accounts (a)                        4.07          9,558        4.37          7,168
      Term certificate accounts with original maturities of:
        4 weeks to 1 year                                      4.62          6,279        4.95          6,741
        1 to 2 years                                           4.88          6,998        5.36          7,331
        2 to 3 years                                           5.26          1,439        5.43          1,376
        3 to 4 years                                           5.24            350        5.32            371
        4 years and over                                       5.45            655        5.80          1,178
      Retail jumbo CDs                                         4.79            648        5.20            558
      Wholesale CDs                                            0.00            -0-        0.00            -0-
      All other                                                0.00            -0-        7.60              1
                                                                        -----------               ------------
                                                                          $ 26,550                   $ 25,477
                                                                        ===========               ============


                                                                            1999                      1998
                                                                        -----------               ------------
    Deposits by remaining maturity:
        No contractual maturity                                           $ 10,181                   $  7,921
        Maturity within one year                                            14,305                     15,242
        1 to 5 years                                                         2,037                      2,307
        Over 5 years                                                            27                          7
                                                                        -----------               ------------
                                                                          $ 26,550                   $ 25,477
                                                                        ===========               ============
</TABLE>

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

(a)  At  September   30,  1999  and  1998,   $3.2  billion  and  $2.5   billion,
     respectively,  of interest-bearing  checking accounts were swept into money
     market deposit accounts.

     At September 30, the weighted average cost of deposits was 4.50% (1999) and
4.91% (1998).

         ADVANCES FROM FEDERAL HOME LOAN BANKS

         The Company uses  borrowings  from FHLBs,  also known as "advances," to
supplement  cash  flow and to  provide  funds for loan  origination  activities.
Advances  are secured by pledges of certain  loans,  MBS-REMICs,  other MBS, and
capital stock of FHLBs.  FHLB advances amounted to $8.1 billion at September 30,
1999,  compared to $6.9  billion and $6.2 billion at  September  30,  1998,  and
December  31, 1998,  respectively.  During  1998,  the Company paid off,  before
maturity,  $4.4 billion of high-cost  FHLB of San  Francisco  advances and, as a
result,  incurred a $21 million pre-tax charge for the penalties associated with
these prepayments. See Extraordinary Item discussion on page 34.


<PAGE>


         SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

         The Company borrows funds through  transactions in which securities are
sold under agreements to repurchase  (Reverse Repos).  Reverse Repos are entered
into with selected major  government  securities  dealers,  large banks, and the
Federal Home Loan Bank of San Francisco,  typically using MBS from the Company's
portfolio.  Reverse Repos with dealers,  banks and the Federal Home Loan Bank of
San  Francisco  amounted to $773  million,  $2.3  billion,  and $1.3  billion at
September 30, 1999 and 1998, and December 31, 1998, respectively.

         OTHER BORROWINGS

         At September 30, 1999, Golden West, at the holding company level, had a
total of $813  million  of  subordinated  debt  issued  and  outstanding.  As of
September 30, 1999, the Company's subordinated debt securities were rated A3 and
A-  by  Moody's  Investors  Service  (Moody's)  and  Standard  &  Poor's  (S&P),
respectively.  At  September  30, 1999,  Golden West had on file a  registration
statement with the Securities and Exchange Commission for the sale of up to $300
million of subordinated notes.

         During  November 1996,  WFSB received  permission from the OTS to issue
non-convertible medium-term notes to institutional investors under rules similar
to Office of the  Comptroller  of the  Currency  rules  applicable  to similarly
situated national banks. As of September 30, 1999, WFSB had not issued any notes
under this authority.

         STOCKHOLDERS' EQUITY

         The Company's stockholders' equity decreased by $2.3 million during the
first nine months of 1999 as a result of the $308 million cost of the repurchase
of Company  stock,  the decrease in market  values of  securities  available for
sale, and the payment of quarterly  dividends to  stockholders.  These decreases
were  partially   offset  by  net  earnings  of  $361  million.   The  Company's
stockholders'  equity increased during the first nine months of 1998 as a result
of net earnings and increased  market  values of  securities  available for sale
partially offset by the payment of quarterly dividends to stockholders,  and the
$44 million cost of the repurchase of Company stock.  Unrealized  gains,  net of
taxes, on securities and MBS available for sale included in stockholders' equity
at September 30, 1999 and 1998, and December 31, 1998,  were $174 million,  $166
million, and $215 million, respectively.

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

         In November 1999, the Company acted to effect a three-for-one  split of
its outstanding Common Stock in the form of a 200% stock dividend. This dividend
is payable  December 10, 1999,  to holders of record at the close of business on
November  15,  1999.  Per  share  amounts,  in this 10-Q  filing,  have not been
restated to reflect this stock dividend.


<PAGE>


         Since 1993,  through  four  separate  actions,  Golden  West's Board of
Directors  has  authorized  the  purchase by the  Company of up to 14.9  million
shares of Golden  West's common  stock.  As of September 30, 1999,  12.7 million
shares had been  repurchased and retired at a cost of $769 million since October
1993, of which 3.2 million  shares were  purchased and retired at a cost of $308
million during the first nine months of 1999.  Dividends from  subsidiaries  are
expected to continue to be the major source of funding for the stock  repurchase
program.  The  purchase of Golden West stock is not  intended to have a material
impact on the normal liquidity of the Company.

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

         REGULATORY CAPITAL

         The OTS requires federally insured institutions,  such as WFSB and WSL,
to meet certain minimum capital  requirements.  The following table shows WFSB's
regulatory  capital ratios and compares them to the OTS minimum  requirements at
September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 14

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

                            September 30, 1999                               September 30, 1998
              -----------------------------------------------   ----------------------------------------------
                     ACTUAL                  REQUIRED                  ACTUAL                  REQUIRED
              ----------------------   ----------------------   ----------------------   ----------------------
               Capital      Ratio       Capital      Ratio       Capital      Ratio       Capital      Ratio
              -----------  ---------   -----------  ---------   ----------   ---------   ----------   --------
<S>           <C>           <C>       <C>            <C>       <C>            <C>       <C>            <C>
  Tangible    $2,425,414    6.89%     $   528,211    1.50%     $2,094,134     6.57%     $  478,353     1.50%
  Core         2,425,414    6.89        1,408,563    4.00       2,094,134     6.57       1,275,607     4.00
  Risk-based   2,576,183   12.81        1,608,362    8.00       2,197,128    12.76       1,377,966     8.00

</TABLE>

         The following table shows WSL's current  regulatory  capital ratios and
compares them to the OTS minimum requirements at September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 15

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

                            September 30, 1999                                 September 30, 1998
              ------------------------------------------------   ------------------------------------------------
                      ACTUAL                   REQUIRED                 ACTUAL                   REQUIRED
              -----------------------   -----------------------  ----------------------   -----------------------
               Capital       Ratio       Capital      Ratio       Capital       Ratio      Capital       Ratio
              -----------   ---------   -----------  ---------   -----------   --------   -----------   --------
<S>            <C>           <C>         <C>           <C>       <C>            <C>       <C>            <C>
  Tangible     $ 474,911     9.03%       $  78,866     1.50%     $  638,887     7.91%     $  121,168     1.50%
  Core           474,911     9.03          210,310     4.00         638,887     7.91         323,115     4.00
  Risk-based     508,128    17.64          230,434     8.00         797,702    16.72         381,666     8.00

</TABLE>


<PAGE>


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

         The  OTS  has   adopted   rules   based   upon  five   capital   tiers:
well-capitalized,   adequately  capitalized,   undercapitalized,   significantly
undercapitalized,  and critically undercapitalized. The determination of whether
an  association  falls into a certain  classification  depends  primarily on its
capital ratios. As of September 30, 1999, the most recent  notification from the
OTS  categorized  both  WFSB and WSL as  "well-capitalized"  under  the  current
requirements.  There are no conditions  or events that have occurred  since that
notification   that  the   Company   believes   would  have  an  impact  on  the
categorization of either WFSB or WSL.

         The table  below  shows that  WFSB's  regulatory  capital  exceeds  the
requirements of the well-capitalized classification at September 30, 1999.
<TABLE>
<CAPTION>

                                    TABLE 16

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

                                                  ACTUAL                       WELL-CAPITALIZED
                                           ------------------------       --------------------------
                                            Capital       Ratio              Capital        Ratio
                                           -----------   ----------        ------------   -----------
<S>                                      <C>                <C>           <C>                <C>
        Leverage                         $ 2,425,414        6.89%         $ 1,760,703        5.00%
        Tier 1 risk-based                  2,425,414       12.06            1,206,271        6.00
        Total risk-based                   2,576,183       12.81            2,010,452       10.00
</TABLE>

         The table  below  shows  that  WSL's  regulatory  capital  exceeds  the
requirements of the well-capitalized classification at September 30, 1999.
<TABLE>
<CAPTION>

                                    TABLE 17

                       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                           $ 474,911        9.03%           $ 262,888        5.00%
        Tier 1 risk-based                    474,911       16.49              172,826        6.00
        Total risk-based                     508,128       17.64              288,043       10.00

</TABLE>


<PAGE>


         World  Savings  Bank,  SSB is  regulated  by the FDIC and the  state of
Texas. At September 30, WSSB had the following  regulatory capital calculated in
accordance with the FDIC's capital standards:
<TABLE>
<CAPTION>

                                    TABLE 18

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

                                September 30, 1999                               September 30, 1998
                  -----------------------------------------------   ----------------------------------------------
                         ACTUAL                  REQUIRED                  ACTUAL                 REQUIRED
                  ----------------------   ----------------------   ----------------------  ----------------------
                   Capital       Ratio      Capital      Ratio       Capital      Ratio      Capital      Ratio
                  -----------   --------   -----------  ---------   ----------   ---------  -----------  ---------
<S>                 <C>         <C>        <C>           <C>       <C>            <C>         <C>         <C>
  Tier 1 leverage   $198,539    5.51%      $ 108,148     3.00%     $  182,914     5.67%       $ 96,719    3.00%
  Tier 1 risk-based  198,539    26.49         29,977     4.00         182,914    25.17          29,071    4.00
  Tota risk-based    198,781    26.52         59,953     8.00         183,147    25.20          58,141    8.00

</TABLE>


RESULTS OF OPERATIONS

         NET EARNINGS

         Net earnings for the three  months ended  September  30, 1999 were $118
million compared to net earnings of $108 million, before extraordinary item (see
extraordinary  item discussion on page 33), for the three months ended September
30, 1998.  Net earnings for the nine months ended  September  30, 1999 were $361
million compared to net earnings of $335 million,  before an extraordinary item,
for the nine months ended  September  30, 1998.  Net earnings  increased for the
first nine  months of 1999 as compared to the same period in 1998 as a result of
increased  net interest  income,  a decrease in the  provision  for loan losses,
increased non-interest income before the one-time gains (see non-interest income
discussion on page 32), and a lower  effective tax rate.  These increases to net
earnings  were  partially  offset by an increase  in general and  administrative
expenses.


<PAGE>


         YIELD ON INTEREST-EARNING ASSETS/COST OF FUNDS

         An  important  determinant  of the  Company's  earnings  is its primary
spread -- the  difference  between  its yield on earning  assets and its cost of
funds. The table below shows the components of the Company's spread at September
30, 1999 and 1998, and December 31, 1998.
<TABLE>
<CAPTION>

                                    TABLE 19

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

                                                      September 30
                                               ----------------------------       December 31
                                                  1999            1998                1998
                                               ------------    ------------       -------------
<S>                                                <C>             <C>                <C>
Yield on loan portfolio                            7.02%           7.49%              7.36%
Yield on MBS                                       7.07            7.23               7.20
Yield on investments                               6.10            6.20               5.53
                                               ---------       ---------          ---------
Yield on earning assets                            7.02            7.40               7.30
                                               ---------       ---------          ---------
Cost of deposits                                   4.50            4.91               4.67
Cost of borrowings                                 5.53            5.92               5.87
                                               ---------       ---------          ---------
Cost of funds                                      4.78            5.20               4.96
                                               ---------       ---------          ---------
Primary spread                                     2.24%           2.20%              2.34%
                                               =========       =========          =========
</TABLE>

         The Company holds ARMs to manage the rate sensitivity of the asset side
of the balance  sheet.  The yield on the Company's  ARM  portfolio  tends to lag
changes  in market  interest  rates  because  of lags  related  to the index and
because of certain loan features.  These features include  introductory rates on
new ARM loans,  the interest rate  adjustment  frequency of ARM loans,  interest
rate caps or limits on individual rate changes and interest rate floors. 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).  On balance,  COFI lags and ARM
structural  features cause the Company's assets initially to reprice more slowly
than its liabilities,  resulting in a temporary reduction in net interest income
when rates increase and a temporary  increase in net interest  income when rates
fall.



<PAGE>
<TABLE>
<CAPTION>
                                    TABLE 20
        Average Interest-Earning Assets and Interest-Bearing Liabilities
                             (Dollars in thousands)

                                      Three Months Ended               Three Months Ended
                                      September 30, 1999               September 30, 1998
                                -------------------------------  -------------------------------
                                            Annualized   End of              Annualized  End of
                                 Average     Average     Period   Average      Average   Period
                                Balances(a)  Yield       Yield   Balances(a)    Yield     Yield
                                ----------  ----------  -------  -----------  ---------  -------
   ASSETS
<S>                             <C>             <C>      <C>     <C>             <C>      <C>
   Investment Securities       $ 3,271,302      5.51%    6.10%  $ 3,320,093      5.76%    6.20%
   Mortgage-backed securities   11,585,161      7.06%    7.07%    8,661,540      7.22%    7.23%
   Loans receivable (b)         24,857,797      7.17%    7.02%   28,104,328      7.53% .  7.49%
   Invest.in capital stock         530,442      5.42%    5.37%      753,214      6.01%    5.89%
    of FHLBs                    ----------  ----------           -----------  ---------
   Interest-earning assets     $40,244,702      6.98%           $40,839,175      7.29%
                                ==========  ==========           ===========  =========

   LIABILITIES
   Deposits:
       Checking accounts       $   110,918      2.27%    3.06%    $  81,889      2.13%    2.24%
       Savings accounts         10,405,105      3.95%    3.96%    7,383,928      4.14%    4.23%
       Term accounts            16,944,575      4.87%    4.84%   18,743,957      5.35%    5.23%
                                ----------  ----------  -------  -----------  ---------  -------
           Total deposits       27,460,598      4.51%    4.50%   26,209,774      5.00%    4.91%
  Advances from FHLBs            6,970,600      5.37%    5.36%    7,648,969      5.88%    5.77%
  Reverse repurchases            1,067,588      5.15%    5.08%    1,955,234      5.68%    5.59%
  Other borrowings               2,165,713      6.16%    7.63%    2,317,764      6.66%    7.90%
                                ----------  ----------           -----------  ---------
  Interest-bearing liabilities $37,664,499      4.78%           $38,131,741      5.31%
                                ==========  ==========           ===========  =========
  Annualized net interest spread                2.20%                            1.98%
                                            ==========                        =========
  Net interest income          $   251,964                      $   238,142
                                ==========                       ===========
  Annualized net yield on average
    interest-earning assets                     2.50%                            2.33%
                                            ==========                        =========
</TABLE>
(a)  Averages are computed using daily balances.
(b)  Includes nonaccrual loans (90 days or more past due).
<TABLE>
<CAPTION>
                                    TABLE 21
        Average Interest-Earning Assets and Interest-Bearing Liabilities
                             (Dollars in thousands)

                                      Nine Months Ended                Nine Months Ended
                                      September 30, 1999               September 30, 1998
                                -------------------------------  -------------------------------
                                             Annualized  End of              Annualized  End of
                                  Average     Average    Period   Average      Average   Period
                                Balances(a)    Yield     Yield   Balances(a)    Yield     Yield
                                ----------  ----------  -------  -----------  ---------  -------
   ASSETS
<S>                             <C>             <C>      <C>     <C>             <C>      <C>
   Investment Securities       $ 3,229,203      5.25%    6.10%  $ 2,989,002      5.86%    6.20%
   Mortgage-backed securities   10,655,509      7.04%    7.07%    6,211,961      7.17%    7.23%
   Loans receivable(b)          25,242,449      7.22%    7.02%   30,939,057      7.52%    7.49%
   Invest. in capital stock        643,782      5.32%    5.37%      669,244      5.93%    5.89%
     of FHLB                    ----------  ----------           -----------  ---------
   Interest-earning assets     $39,770,943      6.98%           $40,809,264      7.32%
                                ==========  ==========           ===========  =========
   LIABILITIES
   Deposits:
       Checking accounts       $   107,116      2.18%    3.06%  $    75,196      1.31%    2.24%
       Savings accounts          9,964,785      3.91%    3.96%    6,216,625      3.97%    4.23%
       Term accounts            17,170,638      4.89%    4.84%   19,428,999      5.34%    5.23%
                                ----------  ----------  -------  -----------  ---------  -------
           Total deposits       27,242,539      4.52%    4.50%   25,720,820      5.00%    4.91%
   Advances from FHLB            6,477,019      5.41%    5.36%    7,813,013      5.82%    5.77%
   Reverse repurchases           1,197,857      5.12%    5.08%    2,212,798      5.65%    5.59%
   Other borrowings              2,191,376      6.04%    7.63%    2,394,947      6.70%    7.90%
                                ----------  ----------           -----------  ---------
   Interest-bearing liabilities$37,108,791      4.78%           $38,141,578      5.31%
                                ==========  ==========           ===========  =========
   Annualized net interest spread               2.20%                            2.01%
                                            ==========                        =========
   Net interest income         $   751,171                      $   721,053
                                ==========                       ===========
   Annualized net yield on
   average interest-earning assets              2.52%                            2.36%
                                            ==========                        =========
</TABLE>
(a)  Averages are computed using daily balances.
(b)  Includes nonaccrual loans (90 days or more past due).
<PAGE>



         The  following  table shows the  Company's  revenues  and expenses as a
percentage of total  revenues for the three and nine months ended  September 30,
1999 and 1998, in order to focus on the changes in interest income between years
as well as changes in other revenue and expense amounts.
<TABLE>
<CAPTION>

                                    TABLE 22

                       Selected Revenue and Expense Items
                        as Percentages of Total Revenues

                                                              Three Months Ended         Nine Months Ended
                                                                 September 30               September 30
                                                             ----------------------    -----------------------
                                                               1999         1998         1999         1998
                                                             ---------    ---------    ----------   ----------
<S>                                                              <C>          <C>           <C>          <C>
        Interest on loans (a)                                    60.7%        68.2%         62.3%        74.6%
        Interest on mortgage-backed securities (a)               27.9         20.2          25.7         14.2
        Interest and dividends on investments                     7.1          7.6           7.0          6.9
                                                             ---------    ---------    ----------   ----------
                                                                 95.7         96.0          95.0         95.7
        Less:
          Interest on deposits                                   42.2         42.3          42.1         41.2
          Interest on advances and other borrowings              19.2         23.0          18.6         23.7
                                                             ---------    ---------    ----------   ----------
                                                                 61.4         65.3          60.7         64.9

        Net interest income                                      34.3         30.7          34.3         30.8
          Provision for (recovery of) loan losses                 (.2)          .4           (.1)          .4
                                                             ---------    ---------    ----------   ----------
        Net interest income after provision for loan             34.5         30.3          34.4         30.4
        losses

        Add:
          Fees                                                    2.2          2.1           2.2          1.9
          Gain on the sale of securities, MBS, and loans           .4           .8           1.0          1.2
          Other non-interest income                               1.7          1.1           1.8          1.2
                                                             ---------    ---------    ----------   ----------
                                                                  4.3          4.0           5.0          4.3
        Less:
          General and administrative expenses                    13.1         11.3          13.0         11.0
          Taxes on income                                         9.6          9.1           9.9          9.4
                                                             ---------    ---------    ----------   ----------
        Earnings before extraordinary item                       16.1         13.9          16.5         14.3
        Extraordinary item                                        0.0          (.6)          0.0          (.5)
                                                             ---------    ---------    ----------   ----------
        Net earnings                                             16.1%        13.3%         16.5%        13.8%
                                                             =========    =========    ==========   ==========

</TABLE>

(a)      During the nine  months  ended  September  30,  1999 and the year ended
         December  31,  1998,  the  Company  securitized  $3.7  billion and $8.2
         billion, respectively, of loans into MBS which caused the percentage of
         interest on  mortgage-backed  securities to total  revenues to increase
         from  September  30, 1998 to September  30, 1999 and the  percentage of
         interest on loans to total revenues to decrease from September 30, 1998
         to September 30, 1999. For further discussion, see pages 12 and 13.



<PAGE>


         INTEREST RATE SWAPS

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

         Interest  rate swap  activity  increased  net  interest  income by $511
thousand and  decreased  net  interest  income by $3.2 million for the three and
nine months ended September 30, 1999, as compared to decreases of $2 million and
$7 million for the same periods in 1998.

         The following  table  summarizes  the  unrealized  gains and losses for
interest rate swaps at September 30, 1999 and 1998.
<TABLE>
<CAPTION>

                                    TABLE 23

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

                                      September 30, 1999                         September 30, 1998
                            ----------------------------------------   ----------------------------------------
                                                            Net                                        Net
                                                        Unrealized                                 Unrealized
                            Unrealized    Unrealized       Gain        Unrealized    Unrealized       Gain
                               Gains        Losses        (Loss)          Gains        Losses        (Loss)
                            ------------  ------------  ------------   ------------  ------------  ------------
Interest rate swaps:
<S>                           <C>           <C>          <C>            <C>           <C>          <C>
  Receive fixed               $     647     $      67    $      580     $  12,416     $       9    $   12,407
  Pay fixed                       3,312        13,862       (10,550)          -0-        59,066       (59,066)
                            ------------  ------------  ------------   ------------  ------------ -------------
                              $   3,959     $  13,929    $   (9,970)    $  12,416     $  59,075    $  (46,659)
                            ============  ============  ============   ============  ============ =============
</TABLE>
<TABLE>
<CAPTION>


                                    TABLE 24

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

                                             Nine Months Ended
                                            September 30, 1999
                                        ----------------------------
                                          Receive           Pay
                                           Fixed           Fixed
                                           Swaps           Swaps
                                        ------------    ------------
<S>                                        <C>             <C>
Balance at December 31, 1998                $   512         $   899
Additions                                        80             -0-
Maturities                                     (317)           (147)
                                        ------------    ------------
Balance at September 30, 1999               $   275         $   752
                                        ============    ============

</TABLE>

         The range of floating  interest rates received on swap contracts in the
first nine months of 1999 was 5.06% to 5.97%, and the range of floating interest
rates paid on swap  contracts  was 5.29% to 5.52%.  The range of fixed  interest
rates  received on swap  contracts in the first nine months of 1999 was 5.50% to
8.18% and the range of fixed  interest rates paid on swap contracts was 5.58% to
8.85%.


<PAGE>


         INTEREST ON LOANS

         In the third  quarter of 1999,  interest on loans was lower than in the
comparable  1998  period by $84  million  or 15.8%.  The  decrease  in the third
quarter of 1999 was due to a $3.2  billion  decrease  in the  average  portfolio
balance and a 36 basis point decrease in the average  portfolio  yield.  For the
first nine months of 1999,  interest  on loans was lower than in the  comparable
1998 period by $378  million or 21.7%.  The  decrease  was due to a $5.7 billion
decrease in the average  portfolio  balance and a 30 basis point decrease in the
average  portfolio yield. The decrease in the average loan portfolio balance was
primarily due to the  securitization  of loans into FNMA MBS and MBS-REMICs (see
pages 12 and 13).

         INTEREST ON MORTGAGE-BACKED SECURITIES

         In the third quarter of 1999,  interest on  mortgage-backed  securities
was higher than in the comparable 1998 period by $48 million or 30.9%.  The 1999
increase was due primarily to a $2.9 billion  increase in the average  portfolio
balance,  which was partially offset by a 16 basis point decrease in the average
portfolio yield. For the first nine months of 1999,  interest on mortgage-backed
securities  was higher than in the  comparable  1998  period by $229  million or
68.4% due primarily to a $4.4 billion increase in the average portfolio balance,
which was partially offset by a 13 basis point decrease in the average portfolio
yield. The increase in the mortgage-backed securities portfolio is primarily due
to the  securitization  of loans into FNMA MBS and  MBS-REMICs,  as discussed on
pages 12 and 13.

         INTEREST AND DIVIDENDS ON INVESTMENTS

         The income earned on the  investment  portfolio  fluctuates,  depending
upon the volume outstanding and the yields available on short-term  investments.
For the third quarter of 1999,  interest and dividends on investments  was lower
than in the  comparable  1998 period by $6.9 million or 11.6%.  The decrease was
primarily due to a $49 million decrease in the average  portfolio  balance and a
36 basis  point  decrease  in the average  portfolio  yield.  For the first nine
months of 1999,  interest  and  dividends on  investments  was lower than in the
comparable  1998 period by $8.3 million or 5.1%.  The decrease was primarily due
to a 59 basis point decrease in the average  portfolio yield which was partially
offset by a $240 million increase in the average portfolio balance.

         INTEREST ON DEPOSITS

         In the third  quarter of 1999,  interest on deposits  decreased  by $18
million or 5.5% from the comparable  period in 1998. The third quarter  decrease
was due to a 49 basis point decrease in the average cost of deposits,  which was
partially  offset by a $1.3 billion increase in the average balance of deposits.
In the first nine months of 1999,  interest on deposits decreased by $41 million
or 4.2%  from the  comparable  period  in  1998.  The nine  month  decrease  was
primarily  due to a 47 basis point  decrease in the  average  cost of  deposits,
which was partially  offset by a $1.5 billion increase in the average balance of
deposits.



<PAGE>


         INTEREST ON ADVANCES AND OTHER BORROWINGS

         For the third  quarter  and first  nine  months  of 1999,  interest  on
advances and other borrowings decreased by $38 million or 21.3% and $147 million
or 26.5%,  respectively,  from the comparable periods of 1998. The third quarter
decrease was primarily due to a $1.7 billion decrease in the average balance and
a 52 basis  point  decrease in the average  cost of these  borrowings.  The nine
month  decrease  was  primarily  due to a $2.6  billion  decrease in the average
balance and a 45 basis point decrease in the average cost of these borrowings.

         PROVISION FOR (RECOVERY OF) LOAN LOSSES

         The  recovery  of loan  losses  was  $1.3  million  and  $1.4  million,
respectively,  for the three and nine months ended September 30, 1999,  compared
to a provision for loan losses of $3 million and $9 million for the same periods
in  1998.   The  decrease  in  the  provision  in  1999  was  due  to  declining
nonperforming  assets and lower loan losses as a result of the strong California
housing market and economy.

         NON-INTEREST INCOME

         Non-interest income was $31 million and $109 million, respectively, for
the three and nine months ended September 30, 1999,  compared to $31 million and
$100  million for the same  periods in 1998.  Non-interest  income for the three
months ended  September  30, 1999 included a gain of $628 thousand from the sale
of one savings  offices located in a market with limited growth  potential.  For
the nine months ended September 30, 1999,  non-interest income included gains of
$8 million from the sale of four savings offices located in markets with limited
growth  potential.  Non-interest  income for the nine months ended September 30,
1998, included a gain of $13 million before tax from the redemption of preferred
stock  which was called by the issuer and a gain of $3 million  from the sale of
one savings branch.  Without the effects of these one-time  gains,  non-interest
income for the three and nine months ended  September 30, 1999,  was $31 million
and $101 million,  respectively,  as compared to $31 million and $84 million for
the same periods in 1998.  The  increases  in 1999 as compared to 1998  resulted
from a higher amount of loan  prepayment fees and increased gains on the sale of
fixed-rate mortgages.

         GENERAL AND ADMINISTRATIVE EXPENSES

         For the third  quarter  and first  nine  months  of 1999,  general  and
administrative  expenses (G&A) were $96 million and $285 million,  respectively,
compared to $88 million and $258 million for the comparable periods in 1998. G&A
as a percentage of average assets on an annualized basis was .98%, for the third
quarter and first nine months of 1999  compared to .89% and .87%,  respectively,
for the same periods in 1998.  G&A expenses  increased in 1999 because of normal
increases  in  employee  compensation,  the  expansion  of the loan  origination
organization to take advantage of opportunities to increase mortgage volume, and
investments in new computers and automated  teller machines to enhance  customer
service in our branches.



<PAGE>


         EXTRAORDINARY ITEM

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

         TAXES ON INCOME

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

         Taxes as a percentage of earnings  before the  extraordinary  item were
37.4%, for the third quarter and first nine months of 1999 compared to 39.4% and
39.5%,  respectively,  for the same  periods a year ago. The decrease in the tax
rate in 1999 as compared to 1998 was due to a lower  overall  state tax rate due
to the expansion of business in lower taxing states.


LIQUIDITY AND CAPITAL RESOURCES

         WFSB's  principal  sources  of funds  are  cash  flows  generated  from
earnings;  deposits; loan repayments; sales of loans; negotiable certificates of
deposit;   borrowings  from  the  FHLB;  investments  and  borrowings  from  its
affiliates;  debt  collateralized  by  mortgages,  MBS, or  securities;  and the
issuance  of  medium-term  notes.  In  addition,  WFSB  has  other  alternatives
available to provide  liquidity or finance  operations  including  federal funds
purchased,  borrowings  from public  offerings of debt,  issuances of commercial
paper,  and  borrowings  from  commercial  banks.  Furthermore,   under  certain
conditions,  WFSB may borrow from the Federal  Reserve Bank of San  Francisco to
meet short-term cash needs.  The availability of these funds will vary depending
upon policies of the FHLB, the Federal  Reserve Bank of San  Francisco,  and the
Federal  Reserve  Board.  For a  discussion  of WFSB's  liquidity  positions  at
September  30,  1999,  and  1998,  and  December  31,  1998,  see the  Cash  and
Investments section on page 12.

         WSL's  principal  sources  of  funds  are  cash  flows  generated  from
earnings;  deposits;  loan  repayments;  borrowings  from  the  FHLB;  and  debt
collateralized by mortgages,  MBS, or securities.  In addition, WSL has a number
of other  alternatives  available to provide  liquidity  or finance  operations.
These  include  federal  funds   purchased,   borrowings  from  its  affiliates,
borrowings  from  public   offerings  of  debt,   sales  of  loans,   negotiable
certificates  of deposit,  issuances of commercial  paper,  and borrowings  from
commercial banks. Furthermore, under certain conditions, WSL may borrow from the
Federal  Reserve  Bank of San  Francisco  to meet  short-term  cash  needs.  The
availability  of these funds will vary  depending upon policies of the FHLB, the
Federal  Reserve Bank of San Francisco,  and the Federal  Reserve  Board.  For a
discussion of WSL's  liquidity  positions at September 30, 1999,  and 1998,  and
December 31, 1998, see the Cash and Investments section on page 12.



<PAGE>


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

         The principal  sources of funds for WFSB's,  WSL's,  and WSSB's parent,
Golden West, are dividends from subsidiaries,  interest on investments,  and the
proceeds from the issuance of debt and equity securities.  Various statutory and
regulatory  restrictions  and tax  considerations  limit the amount of dividends
WFSB and WSL can pay.  The  principal  liquidity  needs of  Golden  West are for
payment of interest  and  principal on  subordinated  debt  securities,  capital
contributions to its insured  subsidiaries  (including $489 million for the year
ended December 31, 1998 and $466 million for the nine months ended September 30,
1998),  dividends  to  stockholders,  the  purchase  of Golden  West  stock (see
stockholders'  equity  section  on page  23),  and  general  and  administrative
expenses.  At September 30, 1999 and 1998, and December 31, 1998,  Golden West's
total cash and  investments  amounted to $680 million,  $728  million,  and $898
million, respectively. Included in the September 30, 1999 and 1998, and December
31, 1998 amounts are loans to WFSB.

YEAR 2000

         The  Company is aware of the system  challenges  that the Year 2000 has
created and has implemented a plan (Year 2000 Project) to insure that all of the
Company's  mission  critical  systems are Year 2000  compliant by the end of the
second  quarter of 1999,  and to evaluate,  test,  and modify other systems that
might  also  be  affected.  The  evaluation,   correction  and  testing  of  the
mission-critical  systems was completed  during the first  quarter of 1999,  and
during  the  second  quarter  of  1999,  the  Company   successfully   completed
integration  testing to confirm that all such  systems  function  together.  All
mission critical systems have now been upgraded and placed into production.  The
Company has  completed  an inventory  and  assessment  of all other  non-mission
systems and has  completed  the  testing  and  modification  or  replacement  of
substantially  all of those systems that may be affected by Year 2000 compliance
issues.  The Year 2000 project was  developed in  accordance  with  guidance set
forth by  federal  banking  regulators  in a  series  of  jointly-issued  policy
statements.  Federal banking regulators regularly monitor the Company's progress
in meeting the requirements of such policy statements.

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



<PAGE>


         The Company  currently  estimates that it will cost  approximately  $18
million to make all of its  computer  systems Year 2000  compliant.  The Company
will expense all costs associated with the Year 2000 Project and expects to fund
such costs through  operating cash flows. The Year 2000 Project expense incurred
during 1998 was $8 million and $8 million was incurred for the nine months ended
September 30, 1999.  Included in the $18 million are estimates for  compensation
of  employees  dedicated  to the Year 2000  Project,  consultants,  hardware and
software  expense and  depreciation  of the equipment  purchased as part of this
process. However, the Company's Year 2000 expenses are not expected to result in
a dollar  for dollar  increase  in the  Company's  overall  information  systems
expenditures  because  the  Company  has  dedicated  a  number  of its  existing
resources solely to the Year 2000 Project.

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


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Golden West  estimates  the  sensitivity  of the Company's net interest
income,  net  earnings,   and  capital  ratios  to  interest  rate  changes  and
anticipated  growth based on simulations  using an  asset/liability  model which
takes into account the lags described on pages 11 and 27. The  simulation  model
projects net  interest  income,  net  earnings,  and capital  ratios based on an
immediate  interest  rate  increase  that is sustained  for a  thirty-six  month
period. The model is based on the actual maturity and repricing  characteristics
of interest-rate sensitive assets and liabilities. For certain assets, the model
incorporates  assumptions  regarding  the impact of changing  interest  rates on
prepayment  rates  which  are  based  on  the  Company's  historical  prepayment
information. The model factors in projections for anticipated activity levels by
product lines offered by the Company.  Based on the  information and assumptions
in effect at September 30, 1999, Management believes that a 200 basis point rate
increase sustained over a thirty-six month period would not adversely affect the
Company's long-term profitability and financial strength.



<PAGE>


PART II.  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a) Index to Exhibits

         Exhibit No. Description

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

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

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

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

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

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

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


<PAGE>


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

(a) Index to Exhibits (continued)

        Exhibit No. Description

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

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

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

            11      Statement of Computation of Earnings Per Share

            27      Financial Data Schedule



(b)  Reports on Form 8-K

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





<PAGE>





                                   SIGNATURES

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

                                       GOLDEN WEST FINANCIAL CORPORATION

Dated:  November 12, 1999              /s/ J. L. Helvey
                                       -----------------------------
                                       J. L. Helvey
                                       Executive Vice President
                                       (duly authorized and principal financial
                                       officer)