<PAGE> 1

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C. 20549

                                  FORM 10-Q

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 1998

                                      or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                        
                              ---------------------  ------------------------

                        Commission File Number 0-25664

                              SGV BANCORP, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


DELAWARE                                                          95-4524789
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I. R. S. Employer 
incorporation or organization)                               Identification No.)


225 NORTH BARRANCA STREET, WEST COVINA, CALIFORNIA                      91791
--------------------------------------------------------------------------------
(Address of principal executive offices)


                                (626) 859-4200
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


                                Not Applicable
--------------------------------------------------------------------------------
                    (Former name, former address and former 
                   fiscal year, if changed since last report)

      Indicate by check mark  whether the  registrant  (1) has filed all reports
require  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.        /X/ Yes  / / No


                    APPLICABLE ONLY TO CORPORATE ISSUERS:
      Indicate the number of shares  outstanding of each of the issuer's classes
of common stock, as of the latest  practicable date:  2,218,823 shares of common
stock, par value $0.01 per share, were outstanding as of November 9, 1998.


<PAGE> 2



                              SGV BANCORP, INC.
                                  FORM 10-Q
                                    INDEX


PART I      FINANCIAL INFORMATION                                           PAGE
                                                                            ----

Item 1      Consolidated Statements of Financial Condition:
            September 30, 1998 (unaudited) and June 30, 1998..................1

            Consolidated Statements of Operations (unaudited):
            For the Three Months Ended September 30, 1998 and 1997............2

            Consolidated Statements of Cash Flows(unaudited):
            For the Three Months Ended September 30, 1998 and 1997............3

            Notes to Consolidated Financial Statements........................5

Item 2      Management's Discussion and Analysis of
            Results of Operations and Financial Condition.....................7

Item 3      Quantitative and Qualitative Disclosure Regarding Market Risk....18

PART II     OTHER INFORMATION

Item 1      Legal Proceedings................................................19

Item 2      Changes in Securities............................................19

Item 3      Defaults Upon Senior Securities..................................19

Item 4      Submission of Matters to a Vote of Security Holders..............19

Item 5      Other Information................................................19

Item 6      Exhibits and Reports on Form 8-K.................................19

SIGNATURES...................................................................20



<PAGE> 3



<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
--------------------------------------------------------------------------------------------------------------
                                                                            September 30,         June 30,
                                                                                1998                1998
                                                                           ---------------    ----------------
                                                                              (Unaudited)
<S>                                                                           <C>               <C> 
ASSETS:
 Cash and cash equivalents, including short-term bank obligations of
  $41,850 at September 30, 1998 and $16,202 at June 30, 1998                  $    46,459       $    20,008
 Investment securities available for sale, amortized cost of $12,199
   at September 30, 1998 and $19,241 at June 30, 1998                              12,061            19,221
 Mortgage-backed securities available for sale, amortized cost of
  $30,204 at September 30, 1998 and $29,386 at June 30, 1998                       30,240            29,383
 Mortgage-backed securities held to maturity, estimated fair value of
  $37,314 at September 30, 1998 and $30,089 at June 30, 1998                       37,145            29,936
 Loans receivable held for sale                                                     1,616               391
 Loans receivable held for investment, net of allowance for estimated
  loan losses of $1,449 at September 30, 1998 and $1,425 at June 30, 1998         311,643           295,739
 Accrued interest receivable                                                        2,916             2,774
 Stock of Federal Home Loan Bank of San Francisco, at cost                          5,202             4,234
 Real estate acquired through foreclosure, net                                      1,084             1,902
 Premises and equipment, net                                                        3,409             3,537
 Prepaid expenses and other assets, net                                             1,202             1,221
                                                                           ---------------    ----------------
     Total assets                                                             $   452,977       $   408,346
                                                                           ===============    ================

LIABILITIES AND STOCKHOLDERS' EQUITY
 LIABILITIES:
 Deposit accounts                                                             $   302,049       $   295,281
 Federal Home Loan Bank advances                                                  104,037            70,543
 Securities sold under agreements to repurchase                                    10,300             6,000
 Accrued expenses and other liabilities                                             5,690             4,289
                                                                           ---------------    ----------------
     Total liabilities                                                        $   422,076           376,113

 STOCKHOLDERS' EQUITY:
 Preferred stock, $.01 par value; 2,000,000 shares authorized; none
  Issued
 Common stock, $.01 par value;  10,000,000 shares authorized;
    2,727,656 issued; 2,218,823 shares outstanding at September 30, 1998
    and 2,348,068 shares outstanding at June 30, 1998                                  27                27
 Additional paid-in capital                                                        21,195            21,147
 Retained earnings, substantially restricted                                       17,254            16,688
 Accumulated other comprehensive income                                               (60)              (13)
 Deferred stock compensation                                                       (1,462)           (1,555)
 Treasury stock; 508,833 shares at September 30, 1998 and
    379,588 shares at June 30, 1998                                                (6,053)           (4,061)
                                                                           ---------------    ----------------
    Total stockholders' equity                                                     30,901            32,233
                                                                           ---------------    ----------------
    Total liabilities and stockholders' equity                                $   452,977       $   408,346
                                                                           ===============    ================
</TABLE>
                                                            1

<PAGE> 4
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)
--------------------------------------------------------------------------------------------------------------
                                                                                   FOR THE THREE MONTHS
                                                                                    ENDED SEPTEMBER 30,

                                                                                 1998                1997
                                                                           ---------------    ----------------
<S>                                                                           <C>               <C>        
INTEREST INCOME:
  Interest on loans                                                           $     5,939       $     5,478
  Interest on investment securities                                                   365               313
  Interest on mortgage-backed securities                                            1,024             1,268
  Other                                                                               209               265
                                                                           ---------------    ----------------
      Total interest income                                                         7,537             7,324
                                                                           ---------------    ----------------
INTEREST EXPENSE:
  Interest on deposit accounts                                                      3,397             3,475
  Interest on borrowings                                                            1,278             1,342
                                                                           ---------------    ----------------
      Total interest expense                                                        4,675             4,817
                                                                           ---------------    ----------------


Net interest income before provision
  for estimated loan losses                                                         2,862             2,507
PROVISION FOR ESTIMATED LOAN LOSSES                                                   269                75
                                                                           ---------------    ----------------
Net interest income after provision for
  estimated loan losses                                                             2,593             2,432

OTHER INCOME:
  Loan servicing and other fees                                                       145               126
  Deposit account fees                                                                144               128
  Secondary marketing activity, net                                                    21                (5)
  Gain on sale of securities available for sale, net                                    7                37
  Other income                                                                         96                41
  Net gain on real estate acquired through foreclosure                                145                12
                                                                           ---------------    ----------------
      Total other income                                                              558               339
                                                                           ---------------    ----------------

GENERAL AND ADMINISTRATIVE EXPENSES:
  Compensation and other employee expenses                                          1,229             1,188
  Office occupancy                                                                    266               269
  Equipment                                                                           277               254
  Advertising                                                                          30                52
  FDIC insurance premiums                                                              44                44
  Other operating expenses                                                            343               389
                                                                           ---------------    ----------------
      Total general and administrative expenses                                     2,189             2,196
                                                                           ---------------    ----------------

EARNINGS BEFORE INCOME TAXES                                                          962               575
INCOME TAXES                                                                          396               244
                                                                           ---------------    ----------------
     NET EARNINGS                                                             $       566       $       331
                                                                           ===============    ================
EARNINGS PER SHARE-Basic                                                      $      0.25       $      0.14
                                                                           ===============    ================
EARNINGS PER SHARE-Diluted                                                    $      0.24       $      0.14
                                                                           ===============    ================


                                                       2
</TABLE>


<PAGE> 5

<TABLE>
<CAPTION>


SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
-------------------------------------------------------------------------------------------------------------
                                                                                FOR THE THREE MONTHS
                                                                                 ENDED SEPTEMBER 30,

                                                                           1998                1997
                                                                       --------------      ---------------
<S>                                                                      <C>                 <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings (loss)                                                     $     566           $     331
 Adjustments to reconcile net earnings to net
  cash provided by operating activities:
   Depreciation and amortization                                               172                 162
   Loans originated for sale                                                (6,145)             (3,099)
   Proceeds from sale of loans                                               4,960               2,992
   Gain on sale of loans, net                                                  (40)                (10)
   Gain on sale of investments available for sale, net                         (10)                 (6)
   Gain on sale of mortgage-backed securities available for sale, net           (2)                (31)
   Federal Home Loan Bank stock dividend                                       (62)                (61)
   Increase in prepaid expenses and other assets                                (6)                (11)
   Amortization of deferred loan fees                                          (27)                (25)
   Deferred loan origination costs                                            (119)                (56)
   Increase (decrease) in accrued expenses and other liabilities            (1,434)               (227)
   Provision for estimated loan losses                                         269                  75
   (Recapture of) provision for estimated real estate losses                   (45)                  9
   Premium amortization, net                                                   168                  60
   (Increase) decrease in accrued interest receivable                         (143)                 71
   Other, net                                                                 (222)                257
                                                                       --------------      --------------
    Net cash provided by operating activities                                  748                 431

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of investment securities available for sale                       (6,948)            (11,500)
 Proceeds from sale and redemption of investment securities
  available for sale                                                        14,010              11,506
 Purchase of mortgage-backed securities available for sale                 (10,153)
 Proceeds from sale of mortgage-backed securities available for sale          6,931             14,480
 Purchase of mortgage-backed securities held to maturity                   (10,030)
 Principal repayments on mortgage-backed securities                          5,124               3,211
 Loans funded, net                                                         (16,102)             (5,277)
 Loans purchased, net                                                      (22,015)            (29,003)
 Principal repayments on loans                                              21,531               9,323
 Proceeds from sale of real estate                                           1,582                 511
 Purchase of premises and equipment                                            (17)                (81)
 Purchase of Federal Home Loan Bank Stock                                     (906)
 Other, net                                                                    (15)                (32)
                                                                       --------------      --------------
    Net cash used in investing activities                                  (17,008)             (6,862)





                                                       3
</TABLE>

<PAGE> 6

<TABLE>
<CAPTION>


SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
-----------------------------------------------------------------------------------------------
                                                                   FOR THE THREE MONTHS
                                                                    ENDED SEPTEMBER 30,
                                                            -----------------------------------
                                                                 1998                  1997
                                                            ---------------     ---------------
<S>                                                          <C>                 <C>        
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase in certificate accounts                        $     5,865         $       801
 Net increase (decrease) in passbook, money market savings
   NOW and non-interest-bearing accounts                             902               3,816
 Proceeds from Federal Home Loan Bank advances                    35,000
 Repayment of Federal Home Loan Bank advances                     (1,505)             (2,094)
 Proceeds from securities sold under agreements to repurchase      4,300
 Repayment of securities sold under agreements to repurchase                          (3,430)
 Purchase of treasury stock                                       (1,992)
 Other, net                                                          141                  70
                                                            --------------      ---------------
    Net cash (used in) provided by financing activities           42,711                (837)

NET (DECREASE) INCREASE  IN CASH AND CASH
    EQUIVALENTS                                                   26,451              (7,268)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                    20,008              22,664
                                                            --------------      ---------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                     $    46,459         $    15,396
                                                            ==============      ===============

SUPPLEMENTAL CASH FLOW DISCLOSURES
 Cash paid during the period for:
Interest                                                     $     4,646         $     4,845
Income taxes, net                                                    375                  60

NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure                             692                 304
Change in net unrealized loss on investment securities and
  mortgage-backed securities available for sale, net of taxes        (47)                105

</TABLE>





                                         4





<PAGE> 7


                      SGV BANCORP, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1998
                                 (UNAUDITED)

1.     Basis of Presentation:
       ---------------------

      SGV Bancorp, Inc. (SGV) is a savings and loan holding company incorporated
in the state of Delaware  that was organized for the purpose of acquiring all of
the capital stock of First Federal  Savings and Loan  Association of San Gabriel
Valley (the Association)  upon its conversion from a federally  chartered mutual
savings and loan  association  to a federally  chartered  stock savings and loan
association. On June 28, 1995, SGV completed its sale of 2,727,656 shares of its
common stock through  subscription and community  offerings to the Association's
depositors,   the  Employee  Stock  Ownership  Plan  and  the  public  and  used
approximately  60% of the net  proceeds  from such sales to purchase  all of the
Association's common stock issued in the Association's conversion to stock form.
Such business  combination  was  accounted  for at  historical  cost in a manner
similar to a pooling of interests.

      SGV  engages  only in  limited  business  operations  primarily  involving
investments in federal agency securities and mortgage-backed  securities, and as
a result,  substantially all of the net earnings and performance  figures herein
reflect the results of the Association.

      The  Association  is primarily  engaged in  attracting  deposits  from the
general public in the areas in which its branches are located and investing such
deposits  and other  available  funds  primarily  in mortgage  loans  secured by
one-to-four  family residences.  To a lesser extent, the Association  invests in
multi-family  residential  mortgages,  commercial  real  estate,  land and other
loans. The Association's  revenues are derived  principally from interest on its
mortgage loans, and to a lesser extent, interest and dividends on its investment
and mortgage-backed securities and income from loan servicing. The Association's
primary sources of funds are deposits, principal and interest payments on loans,
advances from the Federal Home Loan Bank of San  Francisco  (the FHLB) and, to a
lesser  extent,  proceeds from the sale of loans.  As of September 30, 1998, the
Association operated eight branch offices located in the San Gabriel Valley.

      The consolidated financial statements include the accounts of SGV Bancorp,
Inc. and its wholly-owned subsidiary, First Federal Savings and Loan Association
of San Gabriel  Valley and its  wholly-owned  subsidiary,  First Covina  Service
Company  (collectively,  the Company).  All material  intercompany  balances and
transactions have been eliminated in consolidation.

      The accompanying  consolidated  financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management all necessary adjustments,  consisting
only of normal recurring adjustments necessary for a fair presentation have been
included.  The results of operations for the three-month  period ended September
30, 1998 are not necessarily  indicative of the results that may be expected for
the entire fiscal year.


                                        5

<PAGE> 8


      These  consolidated  financial  statements and the  information  under the
heading  "Management's  Discussion  and  Analysis of Results of  Operations  and
Financial Condition" should be read in conjunction with the audited consolidated
financial  statements and notes thereto of SGV Bancorp,  Inc. for the year ended
June 30,  1998  included  in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended June 30, 1998.

<TABLE>
<CAPTION>
2.    Earnings Per Share
      ------------------

      Earnings per share reconciliation is as follows:

                                                               WEIGHTED
                                                               AVERAGE
                                               INCOME            SHARES        PER SHARE
                                             (NUMERATOR)      (DENOMINATOR)       AMOUNT
                                            -------------    ---------------   -----------

                                                          SEPTEMBER 30, 1998
                                            ----------------------------------------------
<S>                                           <C>              <C>             <C>     
BASIC EPS
  Income available to common stockholders     $  566,000       2,291,000       $   0.25
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                             -          98,000          (0.01)
                                            --------------  --------------  -------------- 
DILUTED EPS
  Income available to common stockholders     $  566,000       2,389,000       $   0.24
                                            ==============  ==============  ==============
</TABLE>

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30, 1997
                                            ----------------------------------------------

<S>                                           <C>              <C>             <C>     
BASIC EPS
  Income available to common stockholders     $  331,000       2,342,000       $   0.14

EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                             -         117,000              -
                                            --------------  --------------  --------------

DILUTED EPS
  Income available to common stockholders     $  331,000       2,459,000       $   0.14
                                            ==============  ==============  ==============
</TABLE>

3.    Comprehensive Income
      --------------------

      The Company adopted Statement of Financial  Accounting  Standards No. 130,
Reporting  Comprehensive  Income,  effective July 1, 1998. The standard requires
that  comprehensive  income and its  components  be disclosed  in the  financial
statements. The Company's comprehensive income includes all items which comprise
net income plus the unrealized holding losses on available-for-sale  securities.
For the three months ended September 1998 and 1997, the Company's  comprehensive
income was as follows:

<TABLE>
<CAPTION>

                                 SEPTEMBER 30, 1998     SEPTEMBER 30, 1997
                                 ------------------     ------------------
                                            (Dollars in thousands)

<S>                                   <C>                    <C>    
Net income                            $   566                $   331
Other comprehensive income                (47)                   105
(loss)
                                 -----------------      ------------------
    Total comprehensive income        $   519                $   436
                                 ==================     ==================
</TABLE>

                                       6
<PAGE> 9

4.    Accounting Principles
      ---------------------

      In June 1997, the FASB issued SFAS No. 131,  DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED  INFORMATION.  SFAS No. 131  establishes  standards of
reporting by publicly held business  enterprises  and  disclosure of information
about operating  segments in annual financial  statements to a lesser extent, in
interim financial reports issued to shareholders.  SFAS No. 131 is effective for
fiscal years  beginning after December 15, 1997.  Since the primary  business of
the  Company  is  performed  through  the  Association,  there  is  no  material
difference in the  information  already  presented in the  financial  statements
contained  herein and those  required under SFAS No. 131 for  information  about
operating segments. At this time, no additional disclosure is required.

      SFAS  No.  133,   ACCOUNTING  FOR  DERIVATIVE   INSTRUMENTS   AND  HEDGING
ACTIVITIES,  was issued in June 1998 and  establishes  accounting  and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  (collectively  referred to as derivatives) and for
hedging activities.  SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Earlier  application is encouraged,  but it
is permitted  only as of the  beginning of any fiscal  quarter that begins after
June 1998.  The  adoption of the  provisions  of SFAS No. 133 is not expected to
have a material impact on the results of operations or the financial position of
the Company.

5.    Use of Estimates in the Preparation of Financial Statements
      -----------------------------------------------------------

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.


Item 2. Management's  Discussion  and  Analysis  of  Results  of  Operations and
        ------------------------------------------------------------------------
        Financial Condition
        -------------------

      This  Management's  Discussion and Analysis  should be read in conjunction
with the Management's  Discussion and Analysis contained in the Company's Annual
Report on Form 10- K, which focuses upon relevant  matters  occurring during the
year ended June 30, 1998.  Accordingly, the  ensuing discussion focuses upon the
material matters at and for the three months ended September 30, 1998.

GENERAL
-------

      The principal  business of the Company is attracting  retail deposits from
the general public and investing those  deposits,  together with funds generated
from  operations and  borrowings,  primarily in one- to four-family  residential
mortgage loans. To a lesser extent,  the Company engages in secondary  marketing
activities and invests in  multi-family,  commercial real estate,  construction,
land and  consumer  loans.  Loan sales  come from  loans  held in the  Company's
portfolio  designated as being held for sale or originated during the period and
being so designated.

                                         7

<PAGE> 10


The  Company  retains  virtually all  the servicing  rights  of  loans sold. The
Company's revenues are derived  principally from interest on its mortgage loans,
and  to  a  lesser  extent,   interest  and  dividends  on  its  investment  and
mortgage-backed securities and income from loan servicing. The Company's primary
sources  of funds  are  deposits,  principal  and  interest  payments  on loans,
advances from the FHLB, securities sold under agreements to repurchase and, to a
lesser extent, proceeds from the sale of loans.

RESULTS OF OPERATIONS
---------------------

      The Company  posted net  earnings of $566,000  for the three  months ended
September  30, 1998  compared to net  earnings of $331,000  for the three months
ended September 30, 1997. For the three months ended September 30, 1998, the net
earnings  were  $0.25 per  share-basic  compared  to net  earnings  of $0.14 per
share-basic  for the three months ended  September 30, 1997. A discussion of the
specific  components  of net earnings is set forth in the Notes to  Consolidated
Financial Statements.

Net Interest Income
-------------------

      Net interest  income before the  provision  for estimated  loan losses was
$2.9  million for the three  months ended  September  30, 1998  compared to $2.5
million for the three months ended September 30, 1997.

Interest Income
---------------

      Total  interest  income for the three months ended  September 30, 1998 was
$7.5 million, an increase of $0.2 million from the comparable period a year ago.
The increase in interest income was primarily due to the $13.7 million  increase
in the  average  balance of  interest-earning  assets to $409.1  million for the
three months ended  September 30, 1998 from $395.4  million for the three months
ended September 30, 1997. The interest income on loans increased to $5.9 million
for the three  months ended  September  30, 1998 from $5.5 million for the three
months  ended  September  30,  1997.  The  increase in interest on loans was due
partially  to  the  increase  in  the  average  balance  of   loans   receivable
outstanding to $304.9 million for the three months ended September 30, 1998 from
$289.9  million for the three months ended  September 30, 1997. The increase was
also due to the increase in the average  yield on loans  receivable to 7.79% for
the three months ended September 30, 1998 compared to 7.56% for the three months
ended  September 30, 1997 partially  related to the purchase of higher  yielding
equity lines of credit in December 1997. The interest income on  mortgage-backed
securities  decreased to $1.0 million for the three months ended  September  30,
1998 from $1.3  million  from the three  months  ended  September  30, 1997 as a
result of the decrease in average balances  outstanding to $63.8 million for the
three months ended  September  30, 1998 from $71.2  million for the three months
ended  September 30, 1997.  The decrease in interest  income on  mortgage-backed
securities  was also due to the  decrease in the average  yield to 6.42% for the
three months  ended  September  30, 1998  compared to 7.13% for the three months
ended  September  30,  1997  primarily  due to the  purchase  of lower  yielding
securities during the past year and to the increase in prepayments  resulting in
a faster  amortization  of  premiums on  previously  purchased  securities.  The
interest income on investment  securities and other securities was approximately
the same for both  periods  which  resulted  from the  increase  in the  average
balance  outstanding  to $40.5 million for the three months ended  September 30,


                                          8
<PAGE> 11


1998 from  $34.4  million  for the same  period a year ago  being  offset by the
decrease in the average yield to 5.67% for the three months ended  September 30,
1998 from 6.73% for the same period a year ago.

Interest Expense
----------------

      Total interest  expense for the three months ended  September 30, 1998 was
$4.7  million,  a decrease of $142,000  from $4.8  million for the three  months
ended September 30, 1997. The decrease in interest  expense was primarily due to
the decrease in the average cost of interest  bearing  liabilities  to 4.98% for
the three months ended  September 30, 1998 from 5.24% for the same period a year
ago,  partially  offset by the $7.8 million  increase in the average  balance of
interest-bearing  liabilities  to  $375.8  million  for the three  months  ended
September 30, 1998 from the same period a year ago.  Interest expense on savings
accounts decreased to $3.4 million for the three months ended September 30, 1998
from $3.5 million for the same period a year ago.  This  decrease was related to
the  decrease  in the  average  cost of savings  accounts to 4.72% for the three
months  ended  September  30,  1998 from  4.90%  for the same  period a year ago
partially  offset by the increase in the average balance of savings  accounts to
$288.0 million for the three months ended September 30, 1998 from $283.4 million
for the same period a year ago.  Interest  expense on  borrowings  decreased  by
$64,000 in a  period-to-period  comparison  due primarily to the decrease in the
average cost of  borrowings  to 5.83% for the three months ended  September  30,
1998 from 6.34% for the same period a year ago.














                                         9

<PAGE> 12


Analysis of Net Interest Income
-------------------------------

      The  following  table sets forth average  interest  rates on the Company's
interest-earning  assets and  interest-bearing  liabilities  for the three month
period ended September 30, 1998 and September 30, 1997 (dollars are in thousands
and average balances are based on month-end amounts):
<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED SEPTEMBER 30,
                                            ---------------------------------------------------
                                                       1998                       1997
                                            ---------------------------------------------------
                                               AVERAGE      YIELD        AVERAGE        YIELD
                                               BALANCE      RATE         BALANCE         RATE
                                            ------------  ---------  --------------  ----------
<S>                                          <C>            <C>        <C>              <C>  
ASSETS:
  Interest-earning assets:
    Loans receivable                         $ 304,853      7.79%      $  289,899       7.56%
    Mortgage-backed securities                  63,802      6.42           71,168       7.13
    Investment securities and other             40,466      5.67           34,352       6.73
                                            ------------             --------------
        Total interest-earning assets          409,121      7.37%         395,419       7.39%
  Non-interest-earning assets                   13,553                     13,199
                                            ------------             --------------
        Total assets                         $ 422,674                 $  408,618
                                            ============             ==============

LIABILITIES AND EQUITY:
  Interest-bearing liabilities
    Savings accounts                         $ 288,007      4.72%      $  283,426       4.90%
    Borrowings                                  87,782      5.83           84,571       6.34
                                            ------------             --------------
        Total interest-bearing liabilities     375,789      4.98%         367,997       5.24%
  Non-interest-bearing liabilities              15,228                     10,445
  Stockholders' equity                          31,657                     30,176
                                            ------------             --------------
        Total liabilities and equity         $ 422,674                 $  408,618
                                            ============             ==============

  Net interest rate spread                                  2.39%                       2.17%
  Net interest margin                                       2.80%                       2.54%
  Ratio of interest-earning assets
    to interest-bearing liabilities                       108.87%                     107.45%
</TABLE>



      The Company's average net interest spread increased to 2.39% for the three
months  ended  September  30, 1998 as compared  2.17% for the three months ended
September  30, 1997.  The increase was due primarily to the decrease in the cost
of  interest-bearing  liabilities  which decreased to 4.98% for the three months
ended  September  30, 1998 from 5.24% for the three months ended  September  30,
1997. The decrease in the cost of  interest-bearing  liabilities  was due to the
significant  increase in the average balance of core deposits  (passbook,  money
market and interest-bearing checking accounts) and to the overall lower interest
rate environment  enabling the Company to renew existing certificates of deposit
and borrowings at lower  interest rates.   The  Company  was  able  to  maintain
its  yield  on  interest-bearing  assets  at  similar  levels  on  a  period-to-



                                        10

<PAGE> 13

period comparison by increasing its investment in higher yielding assets such as
equity lines of credit and non-residential real estate loans.

      The average  yield on loans  receivable  increased  to 7.79% for the three
months ended  September 30, 1998 from 7.56% for the three months ended September
30,  1997.  The  increase  in yield was due  primarily  to the  origination  and
purchase  of  higher   yielding  loans  such  as  equity  lines  of  credit  and
non-residential  real estate loans during the past twelve months.  In regards to
the equity lines of credit,  the  portfolio  has provided the Company a yield in
excess of 13% since  acquisition in December 1997. The Company  recognizes  that
the  portfolio of equity  lines of credit also has a higher  credit risk profile
than  the  rest of the  Company's  loan  portfolio.  As part of the  performance
monitoring of this portfolio,  the Company reviews the entire portfolio at least
annually. The average yield on mortgage-backed securities decreased to 6.42% for
the three months ended  September 30, 1998 from 7.13% for the three months ended
September 30, 1997.  The decrease  was due  to  the  Company's purchase of fixed
rate mortgage-backed securities with lower  yields  during the past  year and to
the  increase  in  prepayments resulting  from  the  lower overall interest rate
environment which  have required  the Company to accelerate the amortization  of
related  premiums.   The  average  yield  on  investment  securities  and  other
securities decreased to 5.67% for the three months ended September 30, 1998 from
6.73% for three months ended  September  30,  1997 as a  result  of the  overall
lower interest rate environment.

      The  decrease  in the  average  cost of savings  accounts to 4.72% for the
three months ended  September 30, 1998 from 4.90% for the same period a year ago
was the result of the $26.5  million  increase  in the  average  balance of core
deposits (passbook,  money market and interest-bearing checking accounts), which
generally  have a lower cost of funds than  certificates  of  deposit,  to $87.9
million for the three months ended September 30, 1998 from $61.4 million for the
same period a year ago. There was also a corresponding  reduction in the average
balance of  certificates  of deposit which  decreased to $200.1  million for the
three months ended  September 30, 1998 from $222.0 million for the same period a
year ago. The Company's  average cost of  borrowings  decreased to 5.83% for the
three months ended  September 30, 1998 from 6.34% for the same period a year ago
as the Company renewed existing borrowings with those of lower rates in relation
to the  decrease in the overall  interest  rate  environment.  The Company  also
borrowed additional funds during the three months ended September 30, 1998 at an
average rate below 5.00% with a weighted  average term in excess of three years.
The   borrowings   were   entered   into  to   facilitate   the  growth  of  the
interest-earning assets of the Company.

Provision for Estimated Loan Losses
-----------------------------------

      The  provision for estimated  loan losses  totaled  $269,000 for the three
months  ended  September  30, 1998 as  compared to $75,000 for the three  months
ended  September  30, 1997.  The increase was due  primarily to the initial fair
value writedowns on two recently foreclosed properties totaling $168,000 and the
charge-off  of  several  home  equity  lines of  credit  totaling  approximately
$70,000. See "Financial Condition."

Other Income
------------

      Other income  increased  to $558,000 for the three months ended  September
30, 1998 from  $339,000  for the three  months ended  September  30,  1997.  The
increase  was  due  partially  to the  


                                        11

<PAGE> 14

$145,000  in net  gains  on  real  estate operations  for the three months ended
September 30, 1998 as compared to $12,000 for  the same  period a year ago.  The
increase in real  estate  operations  was related to the gains  recognized  upon
the sale of several real estate owned properties.  Also, the Company experienced
an increase in other income derived from the net income of its subsidiary, First
Covina Service Company, related  to the increased commissions earned on the sale
of tax-deferred annuities and other investment vehicles. Fee income derived from
loan operations, savings accounts and secondary  marketing also reflected slight
increases for the  three months ended September 30, 1998 as compared to the same
period a year  ago.  See "Financial Condition."

General and Administrative Expenses
-----------------------------------

      The Company's general and administrative expenses totaled $2.2 million for
the three  months ended  September  30, 1998 and 1997.  The $41,000  increase in
compensation  and other  employee  expenses to $1.2 million for the three months
ended  September  30,  1998 as  compared  to the same  period a year ago was due
primarily to additional staffing for open positions. This increase was offset by
the $46,000  decrease  in other  operating  expenses  to $343,000  for the three
months  ended  September  30,  1998 as  compared  to the same  period a year ago
related to the decrease in general office expense requirements.

Income Taxes
------------

      The  Company's  income  taxes  increased  to $396,000 for the three months
ended  September  30, 1998  compared  to $244,000 in income  taxes for the three
months ended September 30, 1996 related to the increase in pre-tax earnings on a
period-to-period  comparison. The effective tax rates for the three months ended
September 30, 1998 and September  30, 1997 were  approximately  41.2% and 42.4%,
respectively.

FINANCIAL CONDITION
-------------------

      The Company's  total assets  increased to $453.0  million at September 30,
1998 from $408.3 million in total assets at June 30, 1998.  The Company's  loans
receivable  held for investment  increased by $15.9 million to $311.6 million at
September 30, 1998 compared to $295.7  million at June 30, 1998.  Although there
was a  substantial  increase  in loan  prepayments  in the  three  months  ended
September  30, 1998,  the Company was able to increase  the loan  portfolio as a
result of the purchase of $22.0 million in adjustable rate mortgage  loans.  The
Company's  investment in overnight federal funds sold increased to $41.9 million
at  September  30,  1998 from $16.2  million at June 30, 1998 as a result of the
delay in the  funding  of a $35  million  loan  purchase.  This  loan  purchase,
comprised of  well-seasoned  single-family  adjustable rate mortgage loans,  was
initially scheduled to close on September 30, 1998 but was delayed until October
2, 1998 at  which  time the  purchase  was  consummated.  The  Company's earlier
purchases  of loans and the  commitment  to purchase the $35 million in loans at
September 30 were entered into with the intent on  increasing  interest  income,
replacing loans which prepaid early and reducing its  sensitivity  to changes in
interest rates.

      During the three months ended  September 30, 1998, the Company  originated
and  purchased  for  investment  a total of $38.1  million in mortgage  loans as
compared to the $34.3

                                           12
<PAGE> 15

million purchased and originated in the three month period ended  September  30,
1997.  The loans  purchased  in the three  months  ended September 30, 1998 were
adjustable rate and primarily  indexed  to COFI.  The  COFI is a lagging  market
index  and  therefore  may adjust more slowly than the cost of the Association's
interest-bearing  liabilities.   As  the  determination  of  the   COFI  becomes
concentrated in fewer  institutions, funding decisions by a relatively few large
institutions could potentially further reduce the correlation of COFI to changes
in  general  market  interest rates and the Company's cost of funds. The Company
also originated $6.1 million in  loans  held  for  sale  and  sold approximately
$5.0 million in mortgage loans to  the secondary  market during the three months
ended  September 30, 1998 as  compared to approximately  $3.0 million originated
and sold for the same period a year ago.

      The Company's  non-performing assets totaled $2.8 million at September 30,
1998 compared to $3.8 million at June 30, 1998.  The decrease in  non-performing
assets was due primarily to the decrease in the balance of real estate  acquired
in  settlement  of loans which totaled $1.1 million at September 30, 1998 versus
$1.9 million at June 30, 1998.  The  Company's  non-performing  loans  decreased
slightly to $1.7  million at  September  30, 1998 from $1.9  million at June 30,
1998. This change reduced the Company's ratio of non-performing  assets to total
assets to 0.62% at September 30, 1998 from 0.93% at June 30, 1998.

      The following table sets forth the non-performing  assets at September 30,
1998 and June 30, 1998:
<TABLE>
<CAPTION>

                                          SEPTEMBER 30, 1998      JUNE 30, 1998
                                        ---------------------- -----------------
                                                 (Dollars in thousands)
<S>                                           <C>                  <C>      
Non-accrual loans                             $   1,738            $   1,911
Real estate acquired through foreclosure          1,084                1,902
                                             ------------         ------------
      Non-performing assets                   $   2,822            $   3,813
                                             ============         ============

Non-performing assets as a percent
  of total assets                                  0.62%                0.93%

Non-performing loans as a percent
of gross loans receivable                          0.55%                0.64%

</TABLE>

      The Company considers a loan impaired when it is probable that the Company
will be unable to collect all contractual  principal and interest payments under
the terms of the loan  agreement.  Loans are evaluated for impairment as part of
the Company's  normal  internal asset review  process.  The Company  applies the
measurement  provisions of SFAS No. 114 to all loans in its  portfolio  with the
exception of one- to four-family  residential mortgage loans  and consumer lines
of credit which are evaluated on a collective basis for impairment. Also,  loans
which  have delays  in  payments  of  less than four  months are not necessarily
considered impaired  unless other  factors apply  to the loans.  The  accrual of
interest income on impaired loans is discontinued when, in management's opinion,
the  borrower may  be unable  to  meet  payments  as  they become due.  When the
interest accrual  is  discontinued, all  unpaid  accrued  interest  is reversed.
Interest income is subsequently  recognized only to the extent cash payments are
received. Where impairment is considered temporary, an allowance is established.
Impaired loans  which are performing under the contractual terms are reported as
performing  loans,  and cash payments are allocated to


                                        13
<PAGE> 16

principal and  interest in accordance  with the terms of the loan.  At September
30, 1998,  the  Company  had no  classified  loans  considered  impaired with no
specific reserves set aside as of September 30, 1998 as determined in accordance
with  SFAS  No. 114.  In  comparison,  as  of  June 30, 1998,  the  Company  had
classified  $569,000  of  its  loans  as  impaired  with  $100,000  in  specific
reserves.   In addition,  as of  September 30, 1998 the Company had $1.7 million
in  loans  which  were  collectively  evaluated  for  impairment with $49,000 in
specific  reserves  established  compared  to  $1.3  million  at  June  30, 1998
collectively  evaluated  for  impairment  with  no  specific reserves set aside.
The average recorded investment in impaired loans, inclusive of those  evaluated
collectively,  during  the  three  months  ended  September 30, 1998,  was  $1.9
million, whereas, the average for the twelve months ended June 30, 1998 was $2.9
million.

      The Company, in consideration of the current economic  environment and the
condition of the loan  portfolio,  maintained  the allowance for estimated  loan
losses at September  30, 1998 at $1.4  million.  Although  loans on  non-accrual
status have decreased to $1.7 million at September 30, 1998 from $1.9 million at
June 30, 1998,  the  allowance  for  estimated  loan losses is  maintained at an
amount  management  considers  adequate  to  cover  estimated  losses  in  loans
receivable which are deemed probable and estimable.  The allowance is based upon
a  number  of  factors,  including  current  economic  conditions,  actual  loss
experience and industry trends. The Company's non-performing loans are primarily
made up of one- to four-family  residential  mortgage loans. The following table
sets forth the activity in the Company's allowance for estimated loan losses for
the three months ended September 30, 1998:
<TABLE>
<CAPTION>

                                           Activity for the three months ended
                                                    September 30, 1998
                                        ----------------------------------------
                                                 (Dollars in thousands)

<S>                                                  <C>         
Balance at June 30, 1998                             $  1,425,000
Add:
    Provision for estimated loan losses                   269,000
    Recoveries of previous charge-offs                          -
Less:
    Charge-off of consumer loans                           76,000
    Charge-off of real estate loans                       169,000
Balance at September 30, 1998                        $  1,449,000
                                                  =================
</TABLE>

      The  Company's total  liabilities increased to $422.1 million at September
30, 1998 from $376.1 million at June 30, 1998. Total deposit accounts  increased
$6.7  million to $302.0  million  at September  30, 1998 from $295.3  million at
June 30,  1998,  primarily  as  a  result  of the  increase  in the  balance  of
certificates of deposit,  which provided  partial funding for the loan purchases
made and  committed  to, and due to interest  credited to accounts.  The Company
increased its borrowings  from the FHLB by $33.5 million and its securities sold
under  agreements to  repurchase  by $4.3 million  during the three months ended
September  30, 1998 to provide the  majority of funding for the  purchased  loan
portfolios and the  commitment for the loan purchase  funded on October 2, 1998.
The  Company  continues  to utilize  FHLB  advances  and  securities  sold under
agreements to repurchase as part of its asset and liability management strategy.



                                        14


<PAGE> 17


      The Company's stockholders' equity decreased to $30.9 million at September
30, 1998 from $32.2 million at June 30, 1997 due primarily to the  completion of
a 5% stock repurchase program whereby the Company  repurchased 117,245 shares at
an average cost of $15.67 per share.  The Company also  announced  its intent to
repurchase  an  additional  5% of its  outstanding  common stock and to date has
repurchased 12,000 shares. The reduction in stockholders'  equity resulting from
the stock  repurchases  was partially  offset by the net earnings posted for the
period.

LIQUIDITY
---------

      The  Company's  primary  sources  of funds  are  deposits,  principal  and
interest  payments  on loans  and  mortgage-backed  securities,  FHLB  advances,
securities sold under agreements to repurchase,  increases in deposits and, to a
lesser extent, proceeds from the sale of loans and investments. While maturities
and scheduled  amortization of loans are predictable  sources of funds,  deposit
flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition.

      The  Association,  by regulation,  must maintain its liquidity ratio at no
less than 4.0% of deposits and short-term borrowings.  Liquidity represents cash
and the majority of the Company's investments which are not committed or pledged
to specific liabilities. The Association's average liquidity ratio for September
30, 1998 and September 30, 1997 was 26.16% and 11.76%, respectively.

COMMITMENTS AND CONTINGENT LIABILITIES
--------------------------------------

      At September  30, 1998,  other than the  Company's  commitment to purchase
approximately  $35 million in single-family  adjustable rate mortgage loans from
another financial  institution,  there were no material changes to the Company's
commitments  or  contingent  liabilities  from the period ended June 30, 1998 as
discussed  in the  Company's  notes  to the  consolidated  financial  statements
reflected in the audited consolidated financial statements of SGV Bancorp, Inc.,
for the year ended June 30, 1998  included in the Annual Report on Form 10-K for
the year ended June 30, 1998. At September 30, 1998, the Company had outstanding
commitments to originate or purchase mortgage loans of $37.3 million,  including
the approximate $35 million bulk loan purchase discussed earlier, as compared to
$3.0 million at June 30, 1998.

REGULATORY CAPITAL
------------------

      The Office of Thrift Supervision (OTS) capital regulations require savings
institutions to meet three minimum capital requirements: a 1.5% tangible capital
ratio, a 3% leverage  (core  capital) ratio and an 8% risk-based  capital ratio.
The core capital  requirement has been  effectively  increased to 4% because the
prompt corrective action  legislation  provides that institutions with less than
4% core capital will be deemed  "undercapitalized".  In addition, the OTS, under
the prompt  corrective  action  regulation  can impose  various  constraints  on
institutions   depending   on  their  level  of   capitalization   ranging  from
well-capitalized  to critically  undercapitalized.  At September  30, 1998,  the
Association was considered "well-capitalized".



                                       15

<PAGE> 18



      The Association was in compliance with the capital  requirements in effect
as of September 30, 1998. The following  table reflects the required  ratios and
the actual capital ratios of the Association at September 30, 1998:
<TABLE>
<CAPTION>

                                                                CAPITAL
                                                        ------------------------
                  ACTUAL       REQUIRED       EXCESS       ACTUAL     REQUIRED
                  CAPITAL       CAPITAL       AMOUNT      PERCENT      PERCENT
                 ----------  ------------  -----------  ----------  ------------
                        (Dollars in thousands)
<S>             <C>           <C>           <C>            <C>          <C>  
Tangible        $  28,664     $   6,783     $  21,881      6.34%        1.50%

Core            $  28,664     $  13,567     $  15,097      6.34%        3.00%

Risk-based      $  30,064     $  16,619     $  13,445     14.47%        8.00%

</TABLE>


PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
--------------------------------------------------------------

      In addition to historical information,  this Form 10-Q may include forward
looking  statements  based on current  management  expectations.  The  Company's
actual  results  could differ  materially  from those  management  expectations.
Factors  that  could  cause  future  results  to vary  from  current  management
expectations  include,  but are not limited  to,  general  economic  conditions,
legislative and regulatory changes,  monetary and fiscal policies of the federal
government, changes in tax policies, rates and regulations of federal, state and
local tax  authorities,  changes in interest rates,  deposit flows,  the cost of
funds,  demand for loan products,  demand for financial  services,  competition,
changes in the  quality or  composition  of the  Company's  loan and  investment
portfolios, changes in accounting principles,  policies or guidelines, and other
economic,  competitive,  governmental and  technological  factors  affecting the
Company's operations, markets products, services and prices. Further description
of the risks and  uncertainties  to the  business of the Company are included in
detail in the Company's Form 10-K for the fiscal year ended June 30, 1998.

YEAR 2000
---------

      The year 2000 issue  concerns the  potential  impact of historic  computer
software  code that only  utilizes  two digits to represent  the  calendar  year
(e.g.,  "98" for "1998").  Software so developed  could  produce  inaccurate  or
unpredictable  results  upon  January 1, 2000,  when  current  and future  dates
present a lower two digit  year  number  than  dates in the prior  century.  The
Company,  similar  to most  financial  services  providers,  is  subject  to the
potential  impact  of  the  year  2000  issue  due to the  nature  of  financial
information. Potential impacts to the Company may arise from software, hardware,
and  equipment  both  within the  Company's  direct  control  and outside of the
Company's ownership,  yet with which the Company electronically or operationally
interfaces (i.e., vendors providing or receiving service bureau information).


                                       16
<PAGE> 19


      Financial institution  regulators have recently increased their focus upon
year 2000 issues,  issuing guidance  concerning the  responsibilities  of senior
management and directors. Year 2000 testing and certification is being addressed
as a key safety and soundness issue in conjunction with regulatory exams.

      In order to address the year 2000 issue,  the  Company has  developed  and
implemented a five phase plan divided into the following major components:

      o  awareness
      o  assessment
      o  renovation
      o  validation
      o  implementation

      The  Company  has  completed  the  first  two  phases  of the  plan and is
currently  working  internally  and with  external  vendors  on the final  three
phases.  Because the Company  outsources its data processing and item processing
operations,  a  significant  component  of the Year  2000  Plan is to work  with
external  vendors to test and certify their systems as year 2000 compliant.  The
Company  replaced its internal retail branch computer system and its back office
computer systems in 1997 with personal  computers which are year 2000 ready. The
software used in these systems,  both purchased and related to our external data
processing vendors, is currently being tested for year 2000 readiness. Also, the
Company is currently testing its primary data processor for year 2000 readiness.
The Company has contacted its primary  vendors and others with whom it relies on
to assure  their  systems  will be year  2000  ready.  However,  there can be no
assurance  that these  systems of other  vendors will be year 2000 ready or that
any such failure in readiness by such vendors  would not have an adverse  effect
on the Company's operations.  Another important segment of the Year 2000 Plan is
to identify those loan customers  whose possible lack of year 2000  preparedness
might expose the Association to financial  loss. It is management's  belief that
the Company does not have any material financial exposure in regards to its loan
portfolio as the portfolio is comprised  primarily of loans to individuals  and,
to  a  lessor  extent, to  businesses  secured  by  real estate. In management's
estimation, loans  secured by  real estate are less likely to be impacted by any
year 2000 issues.

Upon  completion  of its review  and  testing of both  internal  operations  and
external vendors,  the Company will complete its contingency  plans. The Company
has recently completed testing of its data processing  provider,  which presents
the Company with its largest exposure to year 2000 readiness  issues,  and is in
the process of evaluating the results. Also, the Company has participated in the
initial  testing of the Federal Reserve Bank wire transfer system and is also in
the  process  of   evaluating   the  results  of  this  test.   The  Company  is
participating,  through proxy  testing,  with its data  processor in third party
interfaces for year 2000 readiness.  After evaluation of such test results,  the
Company  will  finalize  its  contingency   plans.  It  is  expected  that  such
contingency plans will be completed by January 31, 1999.

      The Company expects its year 2000 date conversion  project to be completed
by March 31, 1999. During the execution of this project,  the Company will incur
internal  staff  costs as well as  consulting  and  other  expenses  related  to
enhancements  necessary  to prepare  the  systems  for the year 2000.  Since the
Company replaced many of the internal systems with year 2000 compliant


                                       17
<PAGE> 20


personal computers in 1997, the  expenses incurred  to bring the Company to year
2000  compliance  will be expensed as incurred,  with the majority of such costs
being the reallocation of current staff to bring about this readiness. As stated
earlier, the Company replaced the majority of its internal computer hardware and
software in early 1997. The capitalized  costs of this replacement was in excess
of $700,000 and is being  amortized  over several years in  compliance  with the
Company's normal depreciation of such hardware or software.  The future expenses
of the  year  2000  project  as  well as the  related  potential  effect  on the
Company's  earnings is not expected to have a material  effect on its  financial
position or results of operations.  Management  does not expect the future costs
of the year 2000 project to exceed $200,000,  which is primarily  related to the
reallocation of internal staff's resources.


Item 3. Quantitative and Qualitative Disclosure about Market Risk
        ---------------------------------------------------------


MANAGEMENT OF INTEREST RATE RISK
--------------------------------

      The  Company's  profitability  is dependent to a large extent upon its net
interest  income,  which  is the  difference  between  its  interest  income  on
interest-earning assets, such as loans and investments, and its interest expense
on interest-bearing  liabilities, such as deposits and borrowings. To manage its
interest  rate risk,  the Company has  utilized the  following  strategies : (i)
emphasizing  the  origination  and/or  purchase  of   adjustable-rate   one-  to
four-family  mortgage loans for portfolio;  (ii) selling to the secondary market
substantially all fixed-rate mortgage loans originated;  (iii) holding primarily
short-term  mortgage-backed  and investment  securities;  and (iv) attempting to
reduce the overall  interest rate sensitivity of liabilities by emphasizing core
and  longer-term  deposits,  utilizing FHLB advances and  securities  sold under
agreements to repurchase.

      The Company's interest rate sensitivity is monitored by management through
the use of an interest  rate risk (IRR) model.  Based on internal IRR  modeling,
management  does not  believe  that  there  has been a  material  change  in the
Company's  interest rate  sensitivity  from June 30, 1998 to September 30, 1998.
All  methods  used to  measure  interest  rate  sensitivity  involve  the use of
assumptions,  which may tend to  oversimplify  the manner in which actual yields
and costs respond to changes in market  interest rates.  The Company's  interest
rate sensitivity should be reviewed in conjunction with the financial statements
and notes thereto  contained in the Company's  Annual Report for the fiscal year
ended June 30, 1998.





                                         18

<PAGE> 21




PART II. OTHER INFORMATION


Item 1.     Legal Proceedings
            -----------------

      The Company is involved as plaintiff or defendant in various legal actions
incident to its business, none of which is believed by management to be material
to the financial condition of the Company.

Item 2.      Changes in Securities
             ---------------------
                   None.

Item 3.      Defaults in Securities
             ----------------------
                   None.

Item 4.      Submission of Matters to a Vote of Security Holders
             ---------------------------------------------------
                   None.

Item 5.      Other Information
             -----------------
                   None.

Item 6.      Exhibits and Reports on Form 8-K
             --------------------------------

      (a)    The following exhibits are filed as part of this report:

       3.1 Certificate of Incorporation of SGV Bancorp, Inc. *
       3.2 Bylaws of SGV Bancorp, Inc. *
      11.0 Computation of per share earnings (filed herewith).
      27.0 Financial data schedule (filed herewith).
      (b)   Reports on Form 8-K
                  None.
-------------------
*  Incorporated  herein  by  reference  from the  Exhibits  to the  Registration
Statement on Form S-1, as amended, filed on March 6, 1995 and declared effective
on May 9, 1995, Registration No. 33-90018.




<PAGE> 22



                                  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.


                                          SGV BANCORP, INC.




November 9, 1998                          /s/  Barrett G. Andersen
----------------------------              -------------------------------------
            Date                          Barrett G. Andersen
                                          President and Chief Executive Officer



November 9, 1998                          /s/ Ronald A. Ott
----------------------------              -------------------------------------
            Date                          Ronald A. Ott
                                          Executive Vice President
                                          Chief Financial Officer and Treasurer














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