<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 December 31, 1999
                                       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 incorporation                 (I.R.S. Employer
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:  2,221,871 shares of common
stock, par value $0.01 per share, were outstanding as of February 3, 1999.


<PAGE> 2



                                SGV BANCORP, INC.
                                    FORM 10-Q
                                      INDEX


PART I      FINANCIAL INFORMATION                                        PAGE
                                                                         ----


Item 1      Consolidated Statements of Financial Condition:
            December 31, 1999 (unaudited) and June 30, 1999................1

            Consolidated Statements of Operations (unaudited):
            For the Three Months and Six Months Ended December 31,
            1999 and 1998..................................................2

            Consolidated Statements of Cash Flows (unaudited):
            For the Six Months Ended December 31, 1999 and 1998............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...................................................16

PART II     OTHER INFORMATION

Item 1      Legal Proceedings.............................................20

Item 2      Changes in Securities.........................................20

Item 3      Defaults Upon Senior Securities...............................20

Item 4      Submission of Matters to a Vote of Security Holders...........20

Item 5      Other Information.............................................20

Item 6      Exhibits and Reports on Form 8-K..............................20

SIGNATURES................................................................22




<PAGE> 3
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
-----------------------------------------------------------------------------------------------------------
                                                                               DECEMBER 31      JUNE 30,
                                                                                  1999            1999
                                                                             ---------------   ------------
                                                                               (Unaudited)
<S>                                                                           <C>               <C>
ASSETS:
 Cash and cash equivalents, including short-term bank obligations of
  $7,135 at December 31, 1999 and $4,940 at June 30, 1999                     $     12,366      $   9,515
Investment securities available for sale, amortized cost of $32,555
  at December 31, 1999 and $26,109 at June 30, 1999                                 32,035         25,816
Mortgage-backed securities available for sale, amortized cost of
  $23,097 at December 31, 1999 and $25,326 at June 30, 1999                         22,373         24,871
Mortgage-backed securities held to maturity, estimated fair value of
  $33,860 at December 31, 1999 and $36,984 at June 30, 1999                         35,228         37,717
Loans receivable held for sale                                                          75            100
Loans receivable held for investment, net of allowance for loan losses of
  $2,080 at December 31, 1999 and $1,845 at June 30, 1999                          371,182        354,989
Accrued interest receivable                                                          2,923          2,979
Stock of Federal Home Loan Bank of San Francisco, at cost                            5,552          5,407
Real estate acquired through foreclosure, net                                          142            827
Premises and equipment, net                                                          3,507          3,166
Prepaid expenses and other assets, net                                               4,396          3,343
                                                                             ---------------   ------------
   Total assets                                                               $    489,779      $ 468,730
                                                                             ===============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
 LIABILITIES:
 Deposit accounts                                                             $    358,219      $ 324,106
 Federal Home Loan Bank advances                                                    93,917        108,002
 Securities sold under agreements to repurchase
 Accrued expenses and other liabilities                                              3,827          4,251
                                                                            ---------------   ------------
    Total liabilities                                                              455,963        436,359

 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; 2,221,871 shares outstanding at December 31, 1999
      and 2,176,323 shares outstanding at June 30, 1999                                 27             27
 Additional paid-in capital                                                         21,418         21,297
 Retained earnings, substantially restricted                                        20,197         19,236
 Accumulated other comprehensive income                                               (732)          (440)
 Deferred stock compensation                                                        (1,032)        (1,141)
 Treasury stock; 505,755 shares at December 31, 1999
   and 551,333 at June 30, 1999                                                     (6,062)        (6,608)
                                                                             ---------------   ------------
    Total stockholders' equity                                                      33,816         32,371
                                                                             ---------------   ------------
    Total liabilities and stockholders' equity                                $    489,779      $ 468,730
                                                                             ===============   ============
</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       FOR THE SIX MONTHS
                                                                   ENDED DECEMBER 31,        ENDED DECEMBER 31,
                                                                   1999          1998        1999          1998
                                                                ---------     ---------    ---------     ---------
<S>                                                             <C>           <C>          <C>           <C>
INTEREST INCOME:
  Interest on loans                                             $  6,977      $  6,717     $ 13,754      $ 12,656
  Interest on investment securities                                  597           283        1,171           648
  Interest on mortgage-backed securities                             969           980        1,948         2,004
  Other                                                              126           146          254           355
                                                                ---------     ---------    ---------     ---------
      Total interest income                                        8,669         8,126       17,127        15,663
                                                                ---------     ---------    ---------     ---------
INTEREST EXPENSE:
  Interest on deposit accounts                                     3,759         3,442        7,414         6,839
  Interest on borrowings                                           1,342         1,590        2,702         2,868
                                                                ---------     ---------    ---------     ---------
      Total interest expense                                       5,101         5,032       10,116         9,707
                                                                ---------     ---------    ---------     ---------
Net interest income before provision for loan losses               3,568         3,094        7,011         5,956
PROVISION FOR LOAN LOSSES                                            160           210          370           479
                                                                ---------     ---------    ---------     ---------
Net interest income after provision for loan losses                3,408         2,884        6,641         5,477

OTHER INCOME:
  Loan servicing and other fees                                      145           151          257           296
  Deposit account fees                                               202           144          396           288
  Secondary marketing activity, net                                   12            40           15            61
  Gain on sale or redemption of securities
    available for sale, net                                           65             -           36             7
  Other income                                                       153           158          310           254
                                                                ---------     ---------    ---------     ---------
      Total other income                                             577           493        1,014           906
                                                                ---------     ---------    ---------     ---------
OTHER EXPENSES:
  Compensation and other employee expenses                         1,534         1,249        2,956         2,478
  Office occupancy                                                   279           269          550           535
  Data Processing and Equipment                                      315           298          659           575
  Advertising                                                         60            38          120            68
  FDIC insurance premiums                                             47            43           94            87
  Merger-related expenses                                            157             -          387             -
  Other operating expenses                                           602           409        1,072           752
                                                                ---------     ---------    ---------     ---------
      Total general and administrative expenses                    2,994         2,306        5,838         4,495
  Net gain (loss) on real estate acquired through foreclosure          1            10          (48)         (135)
                                                                ---------     ---------    ---------     ---------
      Total other expenses                                         2,995         2,316        5,790         4,360
                                                                ---------     ---------    ---------     ---------

EARNINGS BEFORE INCOME TAXES                                         990         1,061        1,865         2,023
INCOME TAXES                                                         462           437          904           833
                                                                ---------     ---------    ---------     ---------
    NET EARNINGS                                                $    528      $    624     $    961      $  1,190
                                                                =========     =========    =========     =========
EARNINGS PER SHARE - Basic                                      $   0.24      $   0.28     $   0.44      $   0.53
                                                                =========     =========    =========     =========
EARNINGS PER SHARE - Diluted                                    $   0.22      $   0.27     $   0.41      $   0.51
                                                                =========     =========    =========     =========
</TABLE>
                                                  2

<PAGE> 5
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                       FOR THE SIX MONTHS
                                                                                                       ENDED DECEMBER 31,
                                                                                                  ---------------------------
                                                                                                       1999          1998
                                                                                                  -------------  ------------
<S>                                                                                                 <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings                                                                                       $    961      $    1,190
 Adjustments to reconcile net earnings to net cash provided by operating activities:
   Depreciation and amortization                                                                         460             320
   Loans originated for sale                                                                          (2,891)        (11,266)
   Proceeds from sale of loans                                                                         2,932          10,455
   Gain on sale of loans, net                                                                            (16)            (85)
   Gain on sale of investments available for sale, net                                                   (36)            (10)
   Gain on sale of mortgage-backed securities available for sale, net                                                     (2)
   Federal Home Loan Bank stock dividend                                                                (145)           (126)
   Increase in prepaid expenses and other assets                                                      (1,204)         (2,538)
   Amortization of deferred loan fees                                                                    (70)           (159)
   Deferred loan origination costs                                                                      (141)           (228)
   (Decrease) increase in accrued expenses and other liabilities                                        (221)            343
   Provision for loan losses                                                                             370             479
   Provision for (recapture of) real estate losses                                                         3             (45)
   Premium amortization, net                                                                             188             386
   Decrease (increase) in accrued interest receivable                                                     57            (297)
   Other, net                                                                                             65             133
                                                                                                  -------------  ------------
    Net cash provided by (used in) operating activities                                                  312          (1,450)

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of investment securities available for sale                                                (47,000)        (65,871)
 Proceeds from sale and redemption of investment securities available for sale                        40,584          59,802
 Purchase of mortgage-backed securities available for sale                                                           (10,153)
 Proceeds from sale of mortgage-backed securities available for sale                                                   6,931
 Purchase of mortgage-backed securities held to maturity                                                (667)        (10,030)
 Principal repayments on mortgage-backed securities                                                    5,307          11,939
 Loans funded, net                                                                                   (30,210)        (35,521)
 Loans purchased, net                                                                                (13,454)        (63,926)
 Principal repayments on loans                                                                        27,815          46,993
 Proceeds from sale of real estate                                                                       737           2,127
 Purchase of premises and equipment                                                                     (651)            (71)
 Purchase of Federal Home Loan Bank Stock                                                                               (906)
 Other, net                                                                                             (727)            (37)
                                                                                                  -------------  ------------
    Net cash used in investing activities                                                            (18,266)        (58,723)
</TABLE>
                                                3


<PAGE> 6
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
-----------------------------------------------------------------------------------------------------------------
                                                                                         FOR THE SIX MONTHS
                                                                                         ENDED DECEMBER 31,
                                                                                    -----------------------------
                                                                                        1999            1998
                                                                                    -------------   -------------
<S>                                                                                   <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase (decrease) in certificate accounts                                      $   4,926       $  (4,603)
 Net (decrease) increase in passbook , money market savings
  NOW and non-interest-bearing accounts                                                  (7,615)         26,886
 Purchase of deposit accounts                                                            36,802
 Proceeds from Federal Home Loan Bank advances                                           14,000          46,500
 Repayment of Federal Home Loan Bank advances                                           (28,085)        (13,052)
 Proceeds from securities sold under agreements to repurchase                                             4,300
 Repayment of securities sold under agreements to repurchase                                             (6,000)
 Exercise of stock options                                                                  479
 Purchase of treasury stock                                                                              (2,486)
 Other, net                                                                                 298             215
                                                                                    -------------   -------------
    Net cash provided by financing activities                                            20,805          51,760

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                      2,851          (8,413)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            9,515          20,008
                                                                                    -------------   -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                              $  12,366       $  11,595
                                                                                    =============   =============

SUPPLEMENTAL CASH FLOW DISCLOSURES
  Cash paid during the period for:
Interest                                                                              $  10,062       $   9,629
Income taxes, net                                                                           875           1,060

NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure                                                                    951
Change in net unrealized loss on investment securities and
  mortgage-backed securities available for sale, net of taxes                              (292)            (68)
</TABLE>


                                              4

<PAGE> 7




                        SGV BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999
                                   (UNAUDITED)

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

      The accompanying  unaudited  consolidated financial statements include the
accounts of SGV Bancorp,  Inc. (the "Company") and its wholly-owned  subsidiary,
First  Federal  Savings  and  Loan   Association  of  San  Gabriel  Valley  (the
"Association")  and its wholly-owned  subsidiary,  First Covina Service Company.
The interim  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 six-month period ended December 31,
1999 are not necessarily  indicative of the results that may be expected for the
entire fiscal year.

      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,  1999  included  in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended June 30, 1999.


2.    Earnings Per Share
      ------------------

      Earnings per share reconciliation is as follows:

<TABLE>
<CAPTION>
                                                                               WEIGHTED
                                                                               AVERAGE
                                                             INCOME             SHARES          PER SHARE
                                                           (NUMERATOR)       (DENOMINATOR)        AMOUNT
                                                         --------------    ----------------   -------------

                                                                THREE MONTHS ENDED DECEMBER 31, 1999
                                                         --------------------------------------------------
<S>                                                       <C>                 <C>               <C>
BASIC EPS
  Income available to common stockholders                 $   528,000         2,188,000         $  0.24
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                                      160,000           (0.02)
                                                         --------------    ----------------   -------------
DILUTED EPS
  Income available to common stockholders                 $   528,000         2,348,000         $  0.22
                                                         ==============    ================   =============

                                                                   SIX MONTHS ENDED DECEMBER 31, 1999
                                                         --------------------------------------------------
BASIC EPS
  Income available to common stockholders                 $   961,000         2,183,000         $  0.44
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                                      163,000           (0.03)
                                                         --------------    ----------------   -------------
DILUTED EPS
  Income available to common stockholders                 $   961,000         2,346,000         $  0.41
                                                         ==============    ================   =============

                                               5


<PAGE> 8

                                                                THREE MONTHS ENDED DECEMBER 31, 1998
                                                         --------------------------------------------------
BASIC EPS
  Income available to common stockholders                 $   624,000         2,208,000         $  0.28
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                          -            68,000           (0.01)
                                                         --------------    ----------------   -------------
DILUTED EPS
  Income available to common stockholders                 $    624,000        2,276,000         $  0.27
                                                         ==============    ================   =============

                                                                 SIX MONTHS ENDED DECEMBER 31, 1998
                                                         --------------------------------------------------
BASIC EPS
  Income available to common stockholders                 $  1,190,000        2,254,000         $  0.53
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                           -           83,000           (0.02)
                                                         --------------    ----------------   -------------
DILUTED EPS
  Income available to common stockholders                 $  1,190,000        2,337,000         $  0.51
                                                         ==============    ================   =============
</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 and six months ended  December 1999 and 1998, the Company's
comprehensive income was as follows:
<TABLE>
<CAPTION>
                                                             FOR THE THREE MONTHS ENDED
                                             ----------------------------------------------------
                                                DECEMBER 31, 1999            DECEMBER 31, 1998
                                             -----------------------      -----------------------
                                                            (Dollars in thousands)
<S>                                                 <C>                          <C>
Net income                                          $  528                       $   624
Other comprehensive loss                              (129)                          (21)
                                             -----------------------      -----------------------
    Total comprehensive income                      $  399                       $   603
                                             =======================      =======================
                                                               FOR THE SIX MONTHS ENDED
                                             ----------------------------------------------------
                                                DECEMBER 31, 1999            DECEMBER 31, 1998
                                             -----------------------      -----------------------
                                                            (Dollars in thousands)
Net income                                          $  961                       $ 1,190
Other comprehensive loss                              (292)                          (68)
                                             -----------------------      -----------------------
    Total comprehensive income                      $  669                       $ 1,122
                                             =======================      =======================
</TABLE>


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

      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. In July 1999,  the  Financial  Accounting
Standards   Board  (FASB)  issued  SFAS  No.  137,   ACCOUNTING  FOR  DERIVATIVE
INSTRUMENTS  AND HEDGING  ACTIVITIES  - DEFERRAL OF THE  EFFECTIVE  DATE OF FASB
STATEMENT  NO. 133,  which delays the  effective  date of SFAS No. 133 to fiscal
years beginning after June 15, 2000. 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 as amended by SFAS No.
137 is not expected to have a material  impact on the results of  operations  or
the financial position of the Company.

                                       6

<PAGE> 9

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, 1999.  Accordingly,  the ensuing discussion focuses upon the
material  matters at and for the three months and six months ended  December 31,
1999.

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.  The Company has historically retained the servicing rights
of loans sold,  although it has recently sold loans to the secondary market on a
servicing  released basis. 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.

RECENT DEVELOPMENTS - ACQUISITION BY INDYMAC MORTGAGE HOLDINGS, INC.
--------------------------------------------------------------------

      On July  12,  1999,  the  Company  and  IndyMac  Mortgage  Holdings,  Inc.
("IndyMac")  entered into a definitive  agreement pursuant to which IndyMac will
acquire  the  Company for cash.  Under the terms of the merger  agreement,  each
share of the  Company's  common stock will be  exchangeable  for $25.00 in cash.
This  price may be  subject  to  adjustment  as a result of  changes  in the net
portfolio  value of certain assets and  liabilities of the Company.  In no event
will the purchase  price be reduced  below $22.50 or increased  above $27.50 per
share.  Based  upon a per share  price of  $25.00,  IndyMac  will pay a total of
approximately  $62.5 million to acquire all of the Company's shares  outstanding
and  subject to options.  In  accordance  with the terms of the  amended  merger
agreement,  IndyMac will be the surviving  entity of the merger.  The merger has
been approved by the shareholders of both companies in separate special meetings
held on December  14, 1999.  The merger  still  requires the approval of certain
regulatory agencies. The merger is expected to be completed in the first half of
2000.

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

      The Company  posted net  earnings of $528,000  for the three  months ended
December  31, 1999  compared to net  earnings of $624,000  for the three  months
ended  December 31, 1998. In regard to basic  earnings per share,  for the three
months ended December 31, 1999, net earnings were $0.24 compared to net earnings
of $0.28 for the three months ended  December 31, 1998. For the six months ended
December 31, 1999,  the net earnings were $961,000 as compared to $1,190,000 for
the six months ended  December 31, 1998. In regard to basic  earnings per share,
for the six months ended  December 31, 1999, net earnings were $0.44 compared to
net  earnings  of $0.53 for the six months  ended  December  31,  1998.  The net
earnings  for  the  three  and six  months  ended  December  31,  1999  included
approximately  $157,000  and  $387,000,  respectively,  in expenses  incurred in
connection with the pending merger with IndyMac  Mortgage  Holdings,  Inc. (such
costs are not considered  deductible under current tax laws;  therefore,  no tax
benefit has been provided).

                                       7

<PAGE> 10



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

      Net interest  income before the provision for loan losses was $3.6 million
for the three  months ended  December 31, 1999  compared to $3.1 million for the
three months ended  December  31,  1998.  For the six months ended  December 31,
1999,  net interest  income was $7.0 million as compared to $6.0 million for the
six months ended December 31, 1998.

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

      Total  interest  income for the three months  ended  December 31, 1999 was
$8.7 million, an increase of $543,000 from the comparable period a year ago. The
increase in interest  income was primarily due to the $37.8 million  increase in
the average balance of  interest-earning  assets to $476.7 million for the three
months ended  December  31, 1999 from $438.9  million for the three months ended
December 31,  1998.  The  majority of the growth in  interest-earning  assets is
attributed to the savings  account  acquisition  from  Citibank,  California,  a
federal savings bank in July 1999, which  contributed  approximately $37 million
in funds  available for  investment.  The interest  income on loans increased to
$7.0 million for the three months ended  December 31, 1999 from $6.7 million for
the three months ended  December 31, 1998. The increase in interest on loans was
due  primarily  to the  increase  in the  average  balance  of loans  receivable
outstanding  to $369.1 million for the three months ended December 31, 1999 from
$345.1 million for the three months ended  December 31, 1998.  This increase was
partially  offset by the decrease in the average  yield on loans  receivable  to
7.56% for the three  months ended  December  31, 1999  compared to 7.79% for the
three months ended  December 31, 1998  primarily  due to a lower  interest  rate
environment for a majority of the past calendar year producing downward pressure
on lagging indices.  Although interest rates have been increasing recently,  the
lagging indices and loans indexed to such indices will increase, but at a slower
pace.  For example,  the Company has  approximately  44% of its  mortgage  loans
indexed  to the  eleventh  district  cost of funds  index  (COFI) and this index
averaged 25 basis points lower during the three month period ending December 31,
1999 as compared to the three  months  ended  December  31,  1998.  The interest
income on mortgage-backed securities totaled $969,000 for the three months ended
December 31, 1999,  slightly below the $980,000 posted for the comparable period
a year ago. Although the average balance  outstanding  declined to $58.8 million
for the three  months ended  December 31, 1999 from $63.9  million for the three
months ended December 31, 1998, the average yield on mortgage-backed  securities
increased to 6.59% for the three  months ended  December 31, 1999 from 6.13% for
the comparable  period a year ago. The interest income on investment  securities
and other  securities  increased to $723,000 for the three months ended December
31, 1999 from  $429,000 for the same period a year ago  primarily as a result of
the increase in the average  balances of such  securities  to $48.8 million from
$29.9 million for the same period a year ago.

      Total interest income for the six months ended December 31, 1999 increased
to $17.1  million,  representing  a 9.3%  increase  from the  $15.7  million  in
interest income for six months ended December 31, 1998. The increase in interest
income was due to primarily to the $51.5 million increase in the average balance
of  interest-earning  assets to $473.5 million for the six months ended December
31, 1999.  Partially  offsetting  this increase was the reduction in the overall
yield on interest-earning  assets to 7.23% for the six months ended December 31,
1999 from 7.42% for the same period a year ago. Total  interest  income on loans
receivable  increased  to $13.8  million for the six months  ended  December 31,
1999, an increase of $1.1 million from the same period a year ago. This increase
was due to the $37.4 million increase in the average balance of loans receivable
to $364.1 million for the six months ended December 31, 1999,  partially  offset
by the 20 basis point  reduction  in the average  yield to 7.55% for the current
period. Interest income on the mortgage-backed  securities portfolio reflected a
slight decrease of $56,000 to $1.9 million for the six months ended December 31,
1999, due primarily to the reduction in the average  balance of  mortgage-backed
securities  to $60.1  million for the current  period from $63.4 million for the
same period a year ago. Interest on investment and other securities increased to
$1.4  million for the six months  ended  December 31, 1999 from $1.0 million for
the same period a year ago. This increase was due to the substantial increase in
the average balance of investment and other  securities to $49.3 million for the
six months ended December 31, 1999 from $31.9 million for the same period a year
ago,  partially  offset by the 50 basis point  decrease in the average  yield to
5.78% for the current period. The decline in the overall yield on investment and
other securities was the result of maintaining higher short-term  investments as
a result of the  acquisition  of the  deposits  from  Citibank and the desire to
maintain  higher  liquidity in anticipation of a higher than usual need for cash
due to Y2K.

                                       8

<PAGE> 11


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

      Total  interest  expense for the three months ended  December 31, 1999 was
$5.1 million,  a slight  increase from the $5.0 million in interest  expense for
the three months ended December 31, 1998.  The increase in interest  expense was
primarily  due to  the  increase  in the  average  balance  of  interest-bearing
liabilities  to $440.3  million for the three months ended  December 31, 1999 as
compared  to $406.6  million  for the three  months  ended  December  31,  1998,
partially  offset  by  the 32  basis  point  decrease  in the  average  cost  of
interest-bearing  liabilities  to 4.63% for the three months ended  December 31,
1999.  Interest  expense on savings  accounts  increased to $3.8 million for the
three  months  ended  December  31, 1999 from $3.4 million for the same period a
year ago. This increase was related to the $49.6 million increase in the average
balance of  interest-bearing  savings  accounts to $345.7  million for the three
months ended  December 31, 1999 due primarily to the  acquisition of $35 million
in interest-bearing savings accounts from Citibank in July 1999. The increase in
interest  expense from higher  average  balances was partially  offset by the 30
basis point  decrease in the average  cost of savings  accounts to 4.35% for the
three months ended  December 31, 1999 from 4.65% for the same period a year ago.
Interest  expense on  borrowings  decreased  by $248,000 to $1.3 million for the
three months ended  December 31, 1999 due to the $15.9  million  decrease in the
average  balance of  borrowings  to $94.7  million  for the three  months  ended
December  31, 1999 and to the eight basis point  decrease in the average cost of
borrowings to 5.67% for the three months ended  December 31, 1999 from 5.75% for
the same period a year ago. The Company  reduced its  borrowings  in the current
period  primarily as a result of the cash received from the deposit  acquisition
from Citibank in July 1999.

      The total  interest  expense for the six months  ended  December  31, 1999
totaled $10.1 million,  representing  a $409,000  increase from the $9.7 million
for the same  period a year  ago.  The  increase  in  interest  expense  was due
primarily   to  the  $48.6   million   increase  in  the   average   balance  of
interest-bearing liabilities to $437.6 million for the six months ended December
31,  1999,  substantially  offset by the 37 basis point  decrease in the average
cost of interest-bearing  liabilities to 4.62% for the current period.  Interest
expense on deposit  accounts  increased to $7.4 million for the six months ended
December  31,  1999  from $6.8  million  for the same  period a year  ago.  This
increase was due to the $49.1 million increase in the average balance of deposit
accounts to $341.2 million for the six months ended December 31, 1999, partially
offset by the 33 basis point  decrease in the average  cost of deposits to 4.35%
for the current period.  Interest expense on borrowings declined to $2.7 million
for the six months ended December 31, 1999 from $2.9 million for the same period
a year ago due  primarily  to the 30 basis point  decline in the average cost of
borrowings to 5.61% for the six months ended December 31, 1999.

                                       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 and
six month periods ended  December 31, 1999 and December 31, 1998 (dollars are in
thousands and average balances are based on month-end amounts):
<TABLE>
<CAPTION>
                                            FOR THE THREE MONTHS ENDED            FOR THE SIX MONTHS ENDED
                                                    DECEMBER 31,                        DECEMBER 31,
                                              1999              1998            1999               1998
                                        ---------------   ---------------   --------------    ----------------
                                        AVERAGE   YIELD   AVERAGE   YIELD   AVERAGE  YIELD    AVERAGE   YIELD
                                        BALANCE   RATE    BALANCE   RATE    BALANCE  RATE     BALANCE   RATE
<S>                                     <C>       <C>     <C>       <C>     <C>       <C>     <C>        <C>
ASSETS:
  Interest-earning assets:
    Loans receivable                    $369,113  7.56%   $345,125  7.79%   $364,132  7.55%   $326,667   7.75%
    Mortgage-backed securities            58,811  6.59      63,924  6.13      60,067  6.49      63,360   6.33
    Investment securities and other       48,808  5.93      29,886  5.74      49,316  5.78      31,931   6.28
                                        ---------         ---------         ---------         ---------
      Total interest-earning assets      476,732  7.27%    438,935  7.41%    473,515  7.23%    421,958   7.42%
  Noninterest-earning assets              16,537            14,296            16,497            13,848
                                        ---------         ---------         ---------         ---------
      Total assets                      $493,269          $453,231          $490,012          $435,806
                                        =========         =========         =========         =========
LIABILITIES AND EQUITY:
  Interest-bearing liabilities:
    Savings accounts                    $345,657  4.35%   $296,091  4.65%   $341,248  4.35%   $292,063   4.68%
    Borrowings                            94,686  5.67     110,553  5.75      96,384  5.61      96,967   5.91
                                        ---------         ---------         ---------         ---------
     Total interest-bearing liabilities  440,343  4.63%    406,644  4.95%    437,632  4.62%    389,030   4.99%
  Noninterest-bearing liabilities         19,740            15,497            19,483            15,335
  Stockholders' equity                    33,186            31,090            32,897            31,441
                                        ---------         ---------         ---------         ---------
      Total liabilities and equity      $493,269          $453,231          $490,012          $435,806
                                        =========         =========         =========         =========
  Net interest rate spread                        2.64%             2.46%             2.61%              2.43%
  Net interest margin                             2.99%             2.82%             2.96%              2.82%
  Ratio of interest-earning assets to
    interest-bearing liabilities          108.26%           107.94%           108.20%           108.46%
</TABLE>


      The Company's average net interest spread increased to 2.64% for the three
months ended December  31, 1999 as compared to 2.46% for the three  months ended
December 31, 1998. The increase was due primarily to the decrease in the cost of
interest-bearing  liabilities  to 4.63% for the three months ended  December 31,
1999 from 4.95% for the three  months ended  December 31, 1998.  The decrease in
the cost of  interest-bearing  liabilities was due to the continued  increase in
the average  balance of core deposits  (comprised of passbook,  money market and
interest-bearing checking accounts),  which have an overall lower cost of funds,
and to the  replacement of matured  borrowings  with deposits  received from the
acquisition in July 1999 of $37 million in savings accounts from Citibank.  This
decrease in the  average  cost of  interest-bearing  liabilities  was  partially
offset by the decrease in the overall yield on interest-earning  assets to 7.27%
for the three  months  ended  December 31, 1999 from 7.41% for the same period a
year ago primarily due to the impact of lower  interest  rates for a majority of
calendar  1999  resulting  in lower  initial  yields on new loans funded and the
overall reduction in indices related to the Company's  adjustable-rate  mortgage
loans.

      The overall yield on  interest-earning  assets declined by 14 basis points
to 7.27% for the three  months  ended  December  31,  1999.  The majority of the
decline was the result of the decrease in the average yield on loans  receivable
to 7.56% for the three months  ended  December 31, 1999 from 7.79% for the three
months ended December 31, 1998.  This decrease in yield was due primarily to the
decline in the COFI index  which,  on average,  was 25 basis points lower during
the three months  ended  December 31, 1999 as compared to the same period a year
ago. The Company's adjustable rate loan portfolio comprises approximately 76% of
the total loan portfolio and the adjustable  rate loans indexed to COFI comprise
44% of total loans. The average yield on mortgage-backed  securities improved to
6.59% for the three months ended  December 31, 1999 as compared to 6.13% for the
three months  ended  December  31, 1998 due  primarily  to the  reduction in the
amortization of premiums related to the

                                       10

<PAGE> 13


reduction in prepayment speeds resulting from rising interest rates. The average
yield on investment  securities and other securities increased slightly to 5.93%
for the three months  ended  December 31, 1999 from 5.74% for three months ended
December 31, 1998.  The Company's  overall  yield was slightly  depressed as the
average balance of investment and other securities comprised over 10.2% of total
interest-earning  assets  during the three  months  ended  December  31, 1999 as
compared  to  approximately  6.8% for the  comparable  period a year  ago.  This
increase was due to the maintenance of higher  short-term  investments  received
from the Citibank deposit acquisition through the Y2K period.

      The average yield on interest-earning assets declined to 7.23% for the six
months  ended  December  31, 1999 from 7.42% for the same period a year ago. The
decline in the  overall  yield was  primarily  the result of the 20 basis  point
decline in the yield on the loan portfolio  which decreased to 7.55% for the six
months ended  December 31, 1999.  The decline in the yield on the loan portfolio
was due to the  aforementioned  lower rates on COFI-based  adjustable loans. The
yield on  mortgage-backed  securities  improved  slightly  to 6.49%  for the six
months ended  December 31, 1999 from 6.33% for the same period a year ago due to
the  decrease  in the  amortization  of  premiums  resulting  from  the  reduced
prepayment  speeds.  The yield on investment and other  securities was 5.78% for
the six months ended  December 31, 1999,  representing a 50 basis points decline
from  the  same  period  a year  ago.  This  decline  was  primarily  due to the
maintenance  of higher  balances of  short-term  investments  during the current
period following the funds received from the deposit acquisition.

      The overall cost of interest-bearing liabilities declined to 4.63% for the
three months ended  December 31, 1999 from 4.95% for the same period a year ago.
This was due to  declines  in both the  average  costs of savings  accounts  and
borrowings.  The decrease in the average  cost of savings  accounts to 4.35% for
the three months  ended  December 31, 1999 from 4.65% for the same period a year
ago was the result of the $34.1 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 $127.9
million for the three months ended  December 31, 1999 from $93.8 million for the
same  period a year  ago.  The  growth  in the core  deposits  was  aided by the
Citibank deposit  acquisition which contributed  approximately  $13.2 million in
core deposits in July 1999. The Company's  average cost of borrowings  decreased
slightly to 5.67% for the three  months  ended  December 31, 1999 from 5.75% for
the  same  period  a year  ago as  the  Company  renewed  or  paid-off  existing
borrowings with those of lower rates.

      For the six months ended December 31, 1999,  the cost of  interest-bearing
liabilities  decreased to 4.62%, a decline of 37 basis points from 4.99% for the
same period a year ago. The overall  decrease was due to the decline in both the
average cost of savings accounts and of borrowings.  The average cost of savings
accounts  declined by 33 basis points to 4.35% for the six months ended December
31, 1999 from 4.68% for the same  period a year ago.  The decline was due to the
$37.2 million  increase in average core  deposits,  which  generally  have lower
interest  rates,  to $128.6  million for the six months ended December 31, 1999.
The  average  cost of  borrowings  for the six months  ended  December  31, 1999
declined by 30 basis points to 5.61% for the six months ended December 31, 1999,
primarily  due to the  replacement  of  matured  borrowings  with those of lower
rates.

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

      The provision for loan losses totaled  $160,000 for the three months ended
December 31, 1999 as compared to $210,000  for the three  months ended  December
31,  1998.  The  Company's  provision  for loan loss charge for the three months
ended  December  31, 1999 was  partially  due to the  charge-off  of $100,000 in
consumer  loans and to the increase in the allowance for loan losses  related to
the increase in the loan portfolio during the quarter.  For the six months ended
December 31, 1999 the provision for loan losses totaled $370,000, as compared to
$479,000  for the  same  period  a year  ago.  The  decline  from a year  ago is
primarily due to the decline in net  charge-offs  to $136,000 for the six months
ended  December 31, 1999 as compared to $341,000 for the same period a year ago.
See "Financial Condition."

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

      Other  income  increased  slightly to $577,000  for the three months ended
December 31, 1999 from $493,000 for the three months ended December 31, 1998 The
Company's  fee income on savings  accounts  increased by $58,000 to $202,000 for
the three months  ended  December 31, 1999 as compared to the same period a


                                       11

<PAGE> 14


year ago due to the increase in core deposits and the deposit  acquisition.  The
Company also posted $65,000 in net gains on sales of  investments  available for
sale  and for  mark-to-market  adjustments  in the  investments  underlying  the
Company's  deferred  compensation  plans in the three months ended  December 31,
1999 as compared to a net of zero for the comparable  period a year ago. For the
six months  ended  December  31,  1999,  other  income  increased  approximately
$108,000 to $1.0 million.  The majority of the increase was due to increased fee
income on savings  accounts which  increased by $108,000 to $396,000 for the six
months ended December 31, 1999 from $288,000 for the same period a year ago. See
" Financial Condition."

Other Expenses
--------------

      The  Company's  other  expenses  increased  to $3.0  million for the three
months ended  December 31, 1999 as compared to $2.3 million for the three months
ended December 31, 1998. The Company  incurred  approximately  $157,000 in costs
for its pending merger with IndyMac  Mortgage  Holdings,  Inc.  during the three
months ended December 31, 1999.  Compensation and other employee costs increased
approximately  $285,000 to $1.5 million for the three months ended  December 31,
1999  due to  additional  employees,  partially  related  to the  branch  office
purchased from Citibank, and to the increase in stock-related compensation plans
as a result of the increase in the value of the Company's  common stock.  All of
the other categories of other expenses reflected  increases due to the operation
of an additional  branch in the three months ended December 31, 1999 as compared
to the same period a year ago.  Included  in other  expenses  was  approximately
$93,000 in amortization of the goodwill associated with the premiums paid on the
deposits acquired from Citibank and from a prior acquisition. For the six months
ended December 31, 1999, the Company's other expenses  increased to $5.8 million
from $4.4  million for the same period a year ago. The  Company's  costs for the
pending merger with IndyMac  totaled  $387,000 for the six months ended December
31, 1999.  Compensation  and other employee costs  increased to $3.0 million for
the six months  ended  December  31, 1999  compared to $2.5 million for the same
period  a  year  ago  due  primarily  to  increased   costs  for   stock-related
compensation  plans and  additional  personnel.  Data  processing  and equipment
charges  increased by  approximately  $84,000 in the three months ended December
31, 1999 to $659,000 due primarily to the Citibank acquisition.  Other operating
expenses  increased  to $1.1  million,  an increase of $320,000 due to increased
amortization of goodwill related to the deposit  acquisition,  the initial costs
to convert and acquire the deposits  from  Citibank,  and to a lessor  extent on
Y2K- related issues.

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

      The  Company's  income  taxes  increased  to $462,000 for the three months
ended  December  31, 1999  compared  to  $437,000 in income  taxes for the three
months ended  December 31, 1998.  The increase in taxes was primarily due to the
expected  non-deductibility  of the  $157,000 in costs  incurred  regarding  the
pending  merger  with  IndyMac  Mortgage  Holdings,  Inc.  As a result  of these
non-deductible  expenses,  the  effective  tax rate for the three  months  ended
December  31,  1999  increased  to 46.7% from 41.2% for the three  months  ended
December 31, 1998. For the six months ended December 31, 1999,  total taxes were
$904,000,  a $71,000  increase  from the $833,000 in total taxes accrued for the
same period a year ago.  As for the six months  ended  December  31,  1999,  the
increase in taxes was due to the expected  non-deductibility  of the $387,000 in
costs  incurred  regarding  the pending  merger with IndyMac.  As a result,  the
effective tax rate for the six months ended December 31, 1999 increased to 48.5%
from 41.2% for the same period a year ago.

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

      The  Company's  total assets  increased to $489.8  million at December 31,
1999 from $468.7 million in total assets at June 30, 1999.  The Company's  loans
receivable  held for investment  increased by $16.2 million to $371.2 million at
December 31, 1999 compared to $355.0 million at June 30, 1999. The growth in the
loan  portfolio  was due to the  origination  and  purchase of $45.8  million in
mortgage  loans during the six months ended December 31, 1999. Due to the recent
increase in interest rates, the level of prepayments declined significantly from
that experienced during most of fiscal 1999. Total principal repayments on loans
received  during the six months  ended  December  31, 1999 was $27.8  million as
compared  to  $47.0  million  for the  same  period a year  ago.  The  Company's
investment in short-term  investments and overnight federal funds sold increased
to $22.1  million  at  December  31,  1999 from $14.4  million at June 30,  1999
primarily  due to the  receipt  of  cash  from  the  settlement  of


                                       12

<PAGE> 15


the  deposit  acquisition  from  Citibank  and the  desire  to  maintain  higher
short-term  investments in anticipation of a higher than normal cash need due to
Y2K.

      During the six months ended December 31, 1999, the Company  originated and
purchased for  investment a total of $42.9 million in mortgage loans as compared
to the $99.4  million  purchased  and  originated  in the six month period ended
December 31, 1998. In regards to the loans funded for  portfolio  during the six
months ended December 31, 1999,  approximately 94% were adjustable rate mortgage
loans as fixed-rate  loan rates rose  significantly  during the six months ended
December  31, 1999 which  curtailed  interest in this type of loan.  Also,  as a
result of the  increase in interest  rates for fixed rate  mortgage  loans,  the
Company only  originated $2.9 million in loans held for sale and an equal amount
in mortgage  loans to the secondary  market during the six months ended December
31,  1999.  The total  mortgage-backed  securities  portfolio  declined to $57.6
million at December 31, 1999 from $62.6 million at June 30, 1999, primarily as a
result of principal reductions as the Company only purchased $667,000 during the
six months ended December 31, 1999. The Company's other assets  increased during
the six months  ended  December  31, 1999  primarily  due to the $1.3 million in
deposit premiums related to the Citibank acquisition.

      The Company's  non-performing  assets totaled $1.9 million at December 31,
1999 compared to $2.4 million at June 30, 1999.  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  $142,000  at  December  31, 1999 versus
$827,000 at June 30, 1999. This  improvement was partially  offset by the slight
increase in non-performing  loans to $1.8 million at December 31, 1999 from $1.5
million  at  June  30,  1999.   This  change  reduced  the  Company's  ratio  of
non-performing  assets to total  assets to 0.39% at December 31, 1999 from 0.50%
at June 30, 1999.

      The following table sets forth the  non-performing  assets at December 31,
1999 and June 30, 1999:
<TABLE>
<CAPTION>
                                               DECEMBER 31, 1999          JUNE 30, 1999
                                           -----------------------   ----------------------
                                                       (Dollars in thousands)
<S>                                               <C>                      <C>
Non-accrual loans                                 $ 1,753                  $ 1,524
Real estate acquired through foreclosure              142                      827
    Non-performing assets                       --------------          --------------
                                                  $ 1,895                  $ 2,351
                                                ==============          ==============
Non-performing assets as a percent
  of total assets                                    0.39%                    0.50%
Non-performing loans as a percent
  of gross loans receivable                          0.47%                    0.43%
</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, as amended by SFAS No. 118, 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 principal and
interest  in  accordance  with the terms of the loan.  For those loans which are
reviewed  individually  for  impairment,  at December 31, 1999,  the Company had
classified one loan totaling  $185,000 as impaired with no specific reserves and
had no such loans  classified  as  impaired  at June 30,  1999 with no  specific
reserves as determined  in accordance  with SFAS No. 114, as amended by SFAS No.
118. In addition,  the Company had $1.6 million and $1.5 million at December 31,
1999 and June 30, 1999, respectively, in impaired loans, which were collectively
evaluated for impairment  with $256,000 and $238,000 in reserves set aside as of
December  31,  1999  and June  30,  1999,  respectively.  The  average  recorded
investment in impaired loans,

                                       13

<PAGE> 16



inclusive of those evaluated collectively,  during the six months ended December
31, 1999,  was $1.6  million,  whereas,  the average for the twelve months ended
June 30, 1999 was $1.9 million.

      The Company, in consideration of the current economic  environment and the
condition of the loan  portfolio,  maintained  the  allowance for loan losses at
December 31, 1999 at $2.1 million.  Although  loans on  non-accrual  status have
increased  slightly to $1.8  million at December  31, 1999 from $1.5  million at
June 30,  1999,  the  allowance  for 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
loan losses for the six months ended December 31, 1999:

<TABLE>
<CAPTION>

                                                   ACTIVITY FOR THE SIX MONTHS ENDED
                                                          DECEMBER 31, 1999
                                               ----------------------------------------
                                                        (Dollars in thousands)

<CAPTION>
<S>                                                          <C>
Balance at June 30, 1999                                     $  1,845
Add:
    Provision for loan losses                                     370
    Recoveries of previous charge-offs                              9
Less:
    Charge-off of consumer loans                                  144
    Charge-off of real estate loans                                 0
                                                       -----------------
Balance at December 31, 1999                                 $  2,080
                                                       =================
</TABLE>

      The Company's  total  liabilities  increased to $456.0 million at December
31, 1999 from $436.4 million at June 30, 1999. Total deposit accounts  increased
$34.1 million to $358.2 million at December 31, 1999 from $324.1 million at June
30, 1999,  primarily as a result of the  acquisition  of deposit  accounts  from
Citibank in July 1999.  The Company  decreased its  borrowings  from the FHLB by
$14.1  million  during the three months  ended  December 31, 1999 as the Company
used a  portion  of the cash  received  from  the  acquisition  of the  Citibank
deposits to allow  maturing  short-term  FHLB  borrowings to roll off.  Also, an
additional  $14.0 million in FHLB borrowings which matured during the six months
ending  December  31, 1999 were renewed  into  five-year  terms to assist in the
lengthening  of the average  life of the  Company's  liabilities  and lessen its
interest-rate  sensitivity.  The Company  continues to utilize FHLB advances and
securities  sold  under  agreements  to  repurchase  as  part of its  asset  and
liability management strategy.

      The Company's  stockholders' equity increased to $33.8 million at December
31, 1999 from $32.4  million at June 30, 1999  primarily  as a result of the net
earnings for the six months ending  December 31, 1999 and due to the exercise of
approximately 45,000 in vested options in December 1999. The common stock issued
on behalf of the exercised options was from the Company's treasury stock.

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 December
31, 1999 and December 31, 1998 was 17.84% and 15.56%, respectively.

                                       14

<PAGE> 17


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

      At December  31,  1999,  there were no material  changes to the  Company's
commitments  or  contingent  liabilities  from the period ended June 30, 1999 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, 1999  included in the Annual Report on Form 10-K for
the year ended June 30, 1999. At December 31, 1999, the Company had  outstanding
commitments to originate or purchase mortgage loans of $1.8 million, as compared
to $4.8 million at June 30, 1999.

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 December 31,  1999,  the
Association was considered "well-capitalized".

      The Association was in compliance with the capital  requirements in effect
as of December 31, 1999. The following  table  reflects the required  ratios and
the actual capital ratios of the Association at December 31, 1999:
<TABLE>
<CAPTION>
                                                                                CAPITAL
                                                                      ---------------------------
                                    ACTUAL     REQUIRED     EXCESS       ACTUAL       REQUIRED
                                    CAPITAL    CAPITAL      AMOUNT      PERCENT       PERCENT
                                  ----------- ----------  ----------  -----------   -------------
                                        (Dollars in thousands)
        <S>                       <C>          <C>        <C>           <C>             <C>
        Tangible                  $ 31,535     $ 7,339    $ 24,196       6.45%          1.50%

        Core                      $ 31,535     $19,570    $ 11,965       6.45%          4.00%

        Risk-based                $ 33,359     $21,054    $ 12,305      12.68%          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 management's 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,
1999.

YEAR 2000
---------

      As of January 31, 2000,  the Company has  experienced  no  disruptions  or
problems regarding the year 2000 changeover.  As part of the Company's Y2K plan,
on January 1, 2000, the Company tested and sampled  internal  systems  including
its primary  third-party data processor,  telecommunication  systems,  automated
teller  machines and related  third-party  vendors  supporting  these  machines,
various third-party software applications and the Company's ability to interface
with its correspondent  banks such as the Federal Reserve Bank of San Francisco.
All sampling


                                       15

<PAGE> 18


and testing completed on January 1, 2000 indicated all systems were operating as
normal.  Through  January 31, 2000, all of the Company's  internal  hardware and
software  continue  to  operate  as normal  and  to-date,  and to the  Company's
knowledge,  all  vendors  utilized by the  Company in its daily  operations  are
operating normally and have not indicated any Y2K anomalies.

      As of January 31, 2000,  there has been no indication of any  misstatement
or  misrepresentation  of any deposit or loan customer  financial position based
upon the  records of the  Company.  Also,  from the  deposit  or loan  customers
perspective,  no  customers  have  advised the Company  that they are having any
Y2K-related issues which would present any financial exposure to the Company.

      The Company will  continue to monitor and oversee all internal  operations
and be in  contact  with its  vendors  regarding  the  upcoming  dates  (such as
February 29, 2000) which are  identified  as  presenting  potential  Y2K issues.
Based upon the successful transition through the January 1, 2000 rollover period
and the  previously  conducted  testing,  the Company  does not  anticipate  any
significant problems to arise.

      The Company's expenditures for the Y2K effort total approximately $222,000
through  December 31, 1999, which is below the expected total of $260,000 (these
costs  exclude  approximately  $700,000 in hardware  and  software  purchased in
1997). A significant  portion of the estimated costs incurred for the Y2K effort
was the use of internal staff  resources which totaled  approximately  $168,000.
The Company does not expect to incur any material costs over the next few months
in regards to Y2K.

RECENT LEGISLATION
------------------

      Recent  legislation  designed to modernize the regulation of the financial
services  industry  expands the ability of bank  holding  companies to affiliate
with other types of financial services companies such as insurance companies and
investment banking companies.  However,  the legislation provides that companies
that acquire control of a single savings  association after May 4, 1999 (or that
filed an  application  for that purpose after that date) are not entitled to the
unrestricted  activities formerly allowed for a unitary savings and loan holding
company. Rather, these companies will have authority to engage in the activities
permitted "a financial  holding  company" under the new  legislation,  including
insurance  and  securities-related  activities,  and  the  activities  currently
permitted for multiple savings and loan holding companies,  but generally not in
commercial   activities.   The   authority   for   unrestricted   activities  is
grandfathered  for  unitary  savings  and loan  holding  companies,  such as the
Company,  that  existed  prior  to May  4,  1999.  However,  the  authority  for
unrestricted  activities  would  not  apply to any  company  that  acquired  the
Company.  Accordingly, it is likely that after the consummation of the Company's
acquisition by IndyMac Mortgage Holdings,  Inc., IndyMac will not be entitled to
engage  in the  unrestricted  activities  in  which  the  Company  is  currently
authorized to engage.

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
the majority of the fixed-rate  mortgage loans originated;  and (iii) 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  Association's  interest rate  sensitivity  is monitored by management
through the use of an internally  generated  model which estimates the change in
net portfolio value ("NPV") over a range of interest rate scenarios.  NPV is the
present value of expected cash flows from assets,  liabilities  and  off-balance
sheet contracts.  An NPV Ratio, in any interest rate scenario, is defined as the
NPV in that scenario divided by the market value of assets in


                                       16

<PAGE> 19


the same scenario.  The Sensitivity  Measure is the decline in the NPV Ratio, in
basis points, caused by a 2% increase or decrease in rates, whichever produces a
larger decline. The higher an institution's  Sensitivity Measure is, the greater
its exposure to interest  rate risk is considered to be. The OTS also produces a
similar  analysis  using  its  own  model,  based  upon  data  submitted  on the
Association's quarterly Thrift Financial Reports.

      As of  December  31,  1999,  the  Association's  Sensitivity  Measure,  as
measured by the Association,  was 1.61%. The Sensitivity  Measure as measured by
the OTS,  will not be  available  until  later in the first  quarter of calendar
2000.  Historically,  the differences between the two measurements are partially
attributed to differences in assigning various prepayment rates, decay rates and
discount  rates.  The  Association  compares  the results  from the OTS with its
internally generated results and provides the Board of Directors a comparison to
determine if there is any additional risk.

      In addition  to  monitoring  selected  measures  of NPV,  management  also
monitors  effects on net  interest  income  resulting  from  changes in interest
rates.  These  measures  are used in  conjunction  with NPV measures to identify
potential  interest rate risk. The Association  projects net interest income for
the next 12-month period, based upon certain specific assumptions. For the years
ended June 30, 1999,  1998 and 1997, the  forecasted net interest  income in the
existing rate environment  (held constant for the period) for interest rate risk
management  purposes  was  $11.5  million,  $10.2  million,  and  $8.1  million,
respectively,  compared  to the actual net  interest  income  recorded  of $12.4
million, $10.9 million, and $9.6 million, respectively.

      Certain  shortcomings  are inherent in the  methodology  used in the above
interest rate risk measurements.  Modeling changes in NPV requires the making of
certain  assumptions  which may tend to oversimplify  the manner in which actual
yields and costs respond to changes in market interest rates.  First, the models
assume that the composition of the Association's  interest  sensitive assets and
liabilities  existing at the  beginning of a period  remains  constant  over the
period being  measured.  Second,  the models assume that a particular  change in
interest  rates is  reflected  uniformly  across the yield curve  regardless  of
duration to maturity or repricing of specific assets and liabilities. Third, the
model does not take into account the Association's  business or strategic plans.
Accordingly, although the NPV measurements and interest income models do provide
an indication of the  Association's  interest rate risk exposure at a particular
point in time,  such  measurements  are not  intended  to and do not  provide  a
precise  forecast  of the  effect of  changes  in market  interest  rates on the
Association's net interest income and will differ from actual results.

                                       17

<PAGE> 20


      The following table sets forth, at December 31, 1999 and June 30, 1999, an
analysis of the Association's internal report of its interest rate risk measured
by the estimated  changes in the NPV resulting from  instantaneous and sustained
parallel  shifts in the yield curve (+/-300 basis points,  measured in 100 basis
point increments).
<TABLE>
<CAPTION>

           CHANGE IN                   NET PORTFOLIO VALUE - DECEMBER 31, 1999
         INTEREST RATES       ---------------------------------------------------------
         IN BASIS POINTS                                              NPV AS A % OF
          (RATE SHOCK)                              CHANGE            PRESENT VALUE
                                   AMOUNT              $                  ASSETS
                              --------------    ---------------    --------------------
                                             (DOLLARS IN THOUSANDS)

             <S>                 <C>              <C>                      <C>
              300                $  26,988        $  (14,555)              5.69%
              200                   32,536            (9,007)              6.74%
              100                   37,391            (4,152)              7.63%
               --                   41,544                 -               8.35%
             (100)                  42,867             1,323               8.55%
             (200)                  41,017              (527)              8.16%
             (300)                  39,858            (1,686)              7.90%

           CHANGE IN                     NET PORTFOLIO VALUE - JUNE 30, 1999
         INTEREST RATES       ---------------------------------------------------------
         IN BASIS POINTS                                              NPV AS A % OF
          (RATE SHOCK)                              CHANGE            PRESENT VALUE
                                   AMOUNT              $                  ASSETS
                              --------------    ---------------    --------------------
                                             (DOLLARS IN THOUSANDS)

              300                $  26,429        $  (14,378)              5.68%
              200                   32,065            (8,742)              6.79%
              100                   36,939            (3,868)              7.71%
               --                   40,807                 -               8.41%
             (100)                  39,691            (1,115)              8.28%
             (200)                  39,976              (831)              8.29%
             (300)                  41,642               836               8.55%
</TABLE>

      At December 31, 1999,  the  Association  was generally  more  sensitive to
rising interest rates than was evident at June 30, 1999. Although there has been
an increase in the overall  interest rate  environment  from June 30, 1999,  the
increased  sensitivity  resulting  from these  higher  interest  rates have been
partially offset by the increase in core deposits,  primarily due to the deposit
acquisition,  and the  replacement of $14 million in short-term  borrowings with
those of longer  terms.  In  comparing  the  Association's  NPV as a percent  of
present value assets in the current  interest rate  environment for December 31,
1999 and June 30, 1999,  the ratios  reflect a very slight decline to 8.35% from
8.41%.  Also, the changes evident in the falling interest rate  environments are
primarily due to changes in the estimated decay rates of core deposits.

      In regards to the  application of the above analysis on the pending merger
with  IndyMac,  the  figures  presented  above are only  intended  to provide an
indication of relative  interest rate sensitivity of the Association at December
31, 1999 and June 30, 1999. As defined in the original  merger  agreement  dated
July 12, 1999 and the amended and restated merger  agreement,  dated October 25,
1999, there are several  adjustments which must be considered before arriving at
an  overall  NPV which can be used as  outlined  in the merger  agreement.  Such
adjustments  include,  but are not  limited  to,  the  additional  equity of the
holding  company  (adjusted for  intercompany  eliminations),  exercise of stock
options, expenses incurred in connection with the pending merger and a review of
the assumptions used in developing the NPV analysis.

      Although  the  Company  does  provide  IndyMac  with  an  analysis  of the
Association's NPV on a periodic basis (including the NPV analysis as of December
31, 1999) and provides a summary of the adjustments for items as outlined in the
merger  agreement,  IndyMac has twenty business days to review this adjusted NPV
and question or comment on the  analysis.  The December 31, 1999 NPV analysis is
currently  undergoing  this review  process.  For further  information on NPV in
context with the pending merger,  please refer to the merger agreements as noted
above.

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

      The Company held its Annual Meeting of  Shareholders on November 18, 1999.
At the Annual Meeting,  the shareholders elected Thomas A. Patronite and John D.
Randall to three-year terms.  Directors Royce A. Stutzman,  Barrett G. Andersen,
Irven G. Reynolds and Benjamin S. Wong have terms of office that continued after
the Annual Meeting. The shareholders also ratified the appointment of Deloitte &
Touche LLP as  independent  auditors of the Company for the year ending June 30,
2000.

      The vote on each matter was as follows:

1. For Directors:                                                    BROKER
                                    FOR      WITHHELD    ABSTAIN    NON-VOTES
Thomas A. Patronite              1,962,359    13,514        --         --
John D. Randall                  1,962,359    13,514        --         --

2. Other Matters:

Ratification of the appointment
of Deloitte & Touche LLP as
independent auditors for the
Company                          1,969,028     3,240       3,605       --

      The Company held a Special  Meeting of  Shareholders on December 14, 1999.
At this  Special  Meeting,  the  shareholders  approved the Amended and Restated
Agreement  and Plan of Merger by and  between  SGV  Bancorp,  Inc.  and  IndyMac
Mortgage Holdings, Inc.

Approval of the Amended and                                            BROKER
Restated Agreement and Plan of      FOR      AGAINST    ABSTAIN       NON-VOTES
Merger with IndyMac Mortgage
Holdings Inc.                    1,659,903    4,605      6,500           --


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:

      2.1  Agreement and Plan of Merger By and Between SGV Bancorp, Inc. and
           IndyMac Mortgage Holdings, Inc., Dated as of July 12, 1999**

                                       19

<PAGE> 22


      2.2  Amended and Restated Plan of Merger By and Between SGV Bancorp, Inc.
           and IndyMac  Mortgage  Holdings,  Inc., Dated as of July 12, 1999 and
           Amended and Restated as of October 25, 1999 ***
      3.1  Certificate of Incorporation of SGV Bancorp, Inc. *
      3.2  Bylaws of SGV Bancorp, Inc. *
     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.
**    Incorporated by reference from the Form 8-K (File No. 000-25664) filed
      with the SEC on July 14, 1999.
***   Incorporated  herein by reference from the  appendices  to the  definitive
      merger proxy statement filed on November 5, 1999.

                                       20

<PAGE> 23




                                   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.




February 3, 2000                          /s/ Barrett G. Andersen
----------------------------              --------------------------------------
Date                                      Barrett G. Andersen
                                          President and Chief Executive Officer



February 3, 2000                          /s/ Ronald A. Ott
-----------------------------             --------------------------------------
Date                                      Ronald A. Ott
                                          Executive Vice President
                                          Chief Financial Officer and Treasurer