<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 March 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 or             (I. R. S. Employer 
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:  2,176,323 shares of common
stock, par value $0.01 per share, were outstanding as of May 12, 1999.



<PAGE> 2



                                SGV BANCORP, INC.
                                    FORM 10-Q
                                      INDEX


PART I      FINANCIAL INFORMATION                                         PAGE
                                                                          ----

Item 1      Consolidated Statements of Financial Condition:
            March 31, 1999 (unaudited) and June 30, 1998....................1

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

            Consolidated Statements of Cash Flows (unaudited):
            For the Nine Months Ended March 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...................8

Item 3      Quantitative and Qualitative Disclosure Regarding Market Risk...20

PART II     OTHER INFORMATION

Item 1      Legal Proceedings...............................................21

Item 2      Changes in Securities...........................................21

Item 3      Defaults Upon Senior Securities.................................21

Item 4      Submission of Matters to a Vote of Security Holders.............21

Item 5      Other Information...............................................21

Item 6      Exhibits and Reports on Form 8-K................................21

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







<PAGE> 3
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
---------------------------------------------------------------------------------------------------------
                                                                                March 31,       June 30,
                                                                                  1999            1998
                                                                             ---------------  -----------
                                                                               (Unaudited)
<S>                                                                           <C>             <C>       
ASSETS:
  Cash and cash equivalents, including short-term bank obligations of
    $16,475 at March 31, 1999 and $16,202 at June 30, 1998                    $    21,288     $   20,008
  Investment securities available for sale, amortized cost of $16,668
    at March 31, 1999 and $19,241 at June 30, 1998                                 16,571         19,221
  Mortgage-backed securities available for sale, amortized cost of
    $22,883 at March 31, 1999 and $29,386 at June 30, 1998                         22,814         29,383
  Mortgage-backed securities held to maturity, estimated fair value of
    $35,661 at March 31, 1999 and $30,089 at June 30, 1998                         35,711         29,936
  Loans receivable held for sale                                                    1,382            391
  Loans receivable held for investment, net of allowance for estimated
    loan losses of $1,732 at March 31, 1999 and $1,425 at June 30, 1998           350,231        295,739
  Accrued interest receivable                                                       2,975          2,774
  Stock of Federal Home Loan Bank of San Francisco, at cost                         5,338          4,234
  Real estate acquired through foreclosure, net                                     1,592          1,902
  Premises and equipment, net                                                       3,247          3,537
  Prepaid expenses and other assets, net                                            3,351          1,221
                                                                              ------------    -----------
      Total assets                                                            $   464,500     $  408,346
                                                                              ============    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

 LIABILITIES:
  Deposit accounts                                                            $   323,928     $  295,281
  Federal Home Loan Bank advances                                                 103,946         70,543
  Securities sold under agreements to repurchase                                                   6,000
  Accrued expenses and other liabilities                                            4,634          4,289
                                                                              ------------    -----------
      Total liabilities                                                           432,508        376,113

 STOCKHOLDERS' EQUITY:
  Preferred  stock,  $.01 par value;  2,000,000 shares  authorized;  none issued
  Common stock, $.01 par value; 10,000,000 shares authorized;
    2,727,656 issued; 2,176,323 shares outstanding at March 31, 1999 and
    2,348,068 shares outstanding at June 30, 1998                                     27             27
  Additional paid-in capital                                                      21,259         21,147
  Retained earnings, substantially restricted                                     18,579         16,688
  Accumulated other comprehensive income                                             (97)           (13)
  Deferred stock compensation                                                     (1,168)        (1,555)
  Treasury stock, 551,333 shares at March 31,1999 and
    379,588 shares at June 30, 1998                                               (6,608)        (4,061)
                                                                              ------------    -----------
      Total stockholders' equity                                                  31,992         32,233
                                                                              ------------    -----------
      Total liabilities and stockholders' equity                              $  464,500      $ 408,346
                                                                              ============    ===========
</TABLE>
                                             1
 

<PAGE> 4
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)(UNAUDITED)
----------------------------------------------------------------------------------------------------
                                                       For the Three Months    For the Nine Months
                                                         Ended March 31,         Ended March 31,
                                                         1999         1998        1999        1998
                                                       --------     --------    --------    --------
<S>                                                    <C>          <C>         <C>         <C>    
INTEREST INCOME:
  Interest on loans                                    $ 6,707      $ 6,158     $19,363     $17,616
  Interest on investment securities                        403          241       1,051         817
  Interest on mortgage-backed securities                   888          904       2,892       3,157
  Other                                                     97          131         452         627
                                                       --------     --------    --------    --------
      Total interest income                              8,095        7,434      23,758      22,217
                                                       --------     --------    --------    --------

INTEREST EXPENSE:
  Interest on deposit accounts                           3,367        3,323      10,206      10,356
  Interest on borrowings                                 1,511        1,210       4,379       3,834
                                                       --------     --------    --------    --------
      Total interest expense                             4,878        4,533      14,585      14,190
                                                       --------     --------    --------    --------

Net interest income before provision
  for estimated loan losses                              3,217        2,901       9,173       8,027
PROVISION FOR ESTIMATED LOAN LOSSES                        280          115         759         458
                                                       --------     --------    --------    --------
Net interest income after provision for
  estimated loan losses                                  2,937        2,786       8,414       7,569

OTHER INCOME (EXPENSE):
  Loan servicing and other fees                            132          138         428         401
  Deposit account fees                                     143          125         431         389
  Secondary marketing activity, net                         28           (1)         89           8
  Gain on sale or redemption of securities
    available for sale, net                                 28            2          35          39
  Other income                                             139           83         393         164
  Net gain (loss) on real estate acquired through
    foreclosure                                             28          (70)        163        (133)
                                                       --------     --------    --------    --------
      Total other income                                   498          277       1,539         868
                                                       --------     --------    --------    --------

GENERAL AND ADMINISTRATIVE EXPENSES:
  Compensation and other employee expenses               1,299        1,228       3,777       3,610
  Office occupancy                                         244          260         779         801
  Equipment                                                 52           75         161         197
  Data processing                                          234          221         700         628
  Advertising                                               40           42         108         120
  FDIC insurance premiums                                   45           46         132         135
  Other operating expenses                                 349          344       1,101       1,120
                                                       --------     --------    --------    --------
      Total general and administrative expenses          2,263        2,216       6,758       6,611
                                                       --------     --------    --------    --------

EARNINGS BEFORE INCOME TAXES                             1,172          847       3,195       1,826
INCOME TAXES                                               471          356       1,304         770
                                                       --------     --------    --------    --------
      NET EARNINGS                                     $   701      $   491     $ 1,891     $ 1,056
                                                       ========     ========    ========    ========
EARNINGS PER SHARE - Basic                             $  0.32      $  0.21     $  0.85     $  0.45
                                                       ========     ========    ========    ========
EARNINGS PER SHARE - Diluted                           $  0.31      $  0.20     $  0.82     $  0.43
                                                       ========     ========    ========    ========
</TABLE>

                                                     2



<PAGE> 5
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
-------------------------------------------------------------------------------------------------------------
                                                                                     FOR THE NINE MONTHS
                                                                                       ENDED MARCH 31,
                                                                              -------------------------------
                                                                                  1999              1998
                                                                              ------------      -------------
<S>                                                                           <C>               <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                                                $     1,891       $     1,056
  Adjustments to reconcile net earnings to net
    cash provided by operating activities:
      Depreciation and amortization                                                   503               509
      Loans originated for sale                                                   (16,402)          (13,791)
      Proceeds from sale of loans                                                  15,619            13,142
      Gain on sale of loans, net                                                     (113)              (33)
      Gain on sale of investments available for sale, net                             (38)               (6)
      Gain on sale of mortgage-backed securities available for sale, net               (2)              (33)
      Federal Home Loan Bank stock dividend                                          (198)             (187)
      Increase in prepaid expenses and other assets                                (2,206)             (108)
      Amortization of deferred loan costs, net                                       (224)              (88)
      Deferred loan origination costs                                                (343)             (218)
      Increase in accrued expenses and other liabilities                              406               358
      Provision for estimated loan losses                                             759               458
      (Recapture of) provision for estimated real estate losses                       (52)              111
      Premium amortization, net                                                       622               294
      (Increase) decrease in accrued interest receivable                             (201)              124
      Other, net                                                                      222                19
                                                                              ------------      -------------
        Net cash provided by operating activities                                     243             1,607

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of investment securities available for sale                            (83,273)          (25,748)
  Proceeds from sale and redemption of investment securities
    available for sale                                                             85,892            22,506
  Purchase of mortgage-backed securities available for sale                       (10,153)           (5,080)
  Proceeds from sale of mortgage-backed securities available for sale               6,931            16,566
  Purchase of mortgage-backed securities held to maturity                         (15,060)
  Principal repayments on mortgage-backed securities                               18,667            10,240
  Loans funded, net                                                               (58,291)          (23,048)
  Loans purchased, net                                                            (70,963)          (40,623)
  Principal repayments on loans                                                    71,714            37,979
  Proceeds from sale of real estate                                                 2,687             1,448
  Purchase of premises and equipment                                                 (137)             (220)
  Purchase of Federal Home Loan Bank Stock                                           (906)
  Other, net                                                                          (63)              (99)
                                                                              ------------      -------------
      Net cash used in investing activities                                       (52,955)           (6,079)
</TABLE>

                                                     3



<PAGE> 6
<TABLE>
<CAPTION>

SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
----------------------------------------------------------------------------------------------------
                                                                           FOR THE NINE MONTHS
                                                                              ENDED MARCH 31,
                                                                     -------------------------------
                                                                         1999              1998
                                                                     ------------      -------------
<S>                                                                  <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net decrease in certificate accounts                               $   (15,676)      $    (20,068)
  Net increase in passbook, money market savings,
    NOW and non-interest-bearing accounts                                 44,323             21,851
  Proceeds from Federal Home Loan Bank advances                           59,500
  Repayment of Federal Home Loan Bank advances                           (26,097)            (8,777)
  Proceeds from securities sold under agreements to repurchase             4,300
  Repayment of securities sold under agreements to repurchase            (10,300)
  Purchase of treasury stock                                              (2,547)            (3,430)
  Other, net                                                                 489                593
                                                                     ------------      -------------
      Net cash provided by (used in) financing activities                 53,992             (9,831)

NET INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS                                                          1,280            (14,303)

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

CASH AND CASH EQUIVALENTS, END OF PERIOD                             $    21,288       $      8,361
                                                                     ============      =============

SUPPLEMENTAL CASH FLOW DISCLOSURES 
  Cash paid during the period for:
Interest                                                             $    14,570       $     14,218
Income taxes, net                                                          1,510                536

NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure                                   2,241              2,135
Change in net unrealized loss on investment securities and
  mortgage-backed securities available for sale, net of taxes                (85)                82
Loans to facilitate sales of real estate acquired through foreclosure                           152

</TABLE>


                                       4




<PAGE> 7


                        SGV BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 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 three and nine-month  periods ended
March  31,  1999  are not  necessarily  indicative  of the  results  that may be
expected for the entire fiscal year.

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





                                       5



<PAGE> 8
<TABLE>
<CAPTION>

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

      Earnings per share reconciliation is as follows:

                                                                  WEIGHTED
                                                                  AVERAGE
                                                 INCOME           SHARES        PER SHARE
                                               (NUMERATOR)      (DENOMINATOR)      AMOUNT
                                              --------------   --------------   -----------
                                                    THREE MONTHS ENDED MARCH 31, 1999
                                              ---------------------------------------------
<S>                                             <C>               <C>            <C>     
BASIC EPS
  Income available to common stockholders       $  701,000        2,179,000      $   0.32
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                           56,000         (0.01)
                                              --------------   --------------   -----------
DILUTED EPS
  Income available to common stockholders       $  701,000        2,235,000      $   0.31
                                              ==============   ==============   ===========
                                                    NINE MONTHS ENDED MARCH 31, 1999
                                              ---------------------------------------------
BASIC EPS
  Income available to common stockholders       $1,891,000        2,231,000      $   0.85
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                           74,000         (0.03)
                                              --------------   --------------   -----------
DILUTED EPS
  Income available to common stockholders       $1,891,000        2,305,000      $   0.82
                                              ==============   ==============   ===========
                                                    THREE MONTHS ENDED MARCH 31, 1998
                                              ---------------------------------------------
BASIC EPS
  Income available to common stockholders          491,000        2,345,000      $   0.21
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                          121,000         (0.01)
                                              --------------   --------------   -----------
DILUTED EPS
  Income available to common stockholders       $  491,000        2,466,000      $   0.20
                                              ==============   ==============   ===========
                                                      NINE MONTHS ENDED MARCH 31, 1998
                                              ---------------------------------------------
BASIC EPS
  Income available to common stockholders       $1,056,000        2,344,000      $   0.45
EFFECT OF DILUTIVE SECURITIES
  Incremental shares from assumed exercise
    of outstanding options                                          122,000         (0.02)
                                              --------------   --------------   -----------
DILUTED EPS
  Income available to common stockholders       $1,056,000        2,466,000      $   0.43
                                              ==============   ==============   ===========
</TABLE>


                                                   6



<PAGE> 9


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 nine months ended March 1999 and 1998,  the  Company's
comprehensive income was as follows:

<TABLE>
<CAPTION>

                                               FOR THE THREE MONTHS ENDED
                                     ---------------------------------------------
                                        March 31, 1999            March 31, 1998
                                     -------------------      --------------------
                                               (Dollars in thousands)
<S>                                     <C>                         <C>       
Net income                              $     701                   $      491

Other comprehensive income (loss)             (16)                          (5)
                                        -----------                 -----------
    Total comprehensive income          $     685                   $      486
                                        ===========                 ===========
                                               FOR THE NINE MONTHS ENDED
                                     ---------------------------------------------
                                        March 31, 1999            March 31, 1998
                                     -------------------      --------------------
                                               (Dollars in thousands)
Net income                              $   1,891                   $    1,056
Other comprehensive income (loss)             (84)                          84
                                        -----------                 -----------
    Total comprehensive income          $   1,807                   $    1,140
                                        ===========                 ===========
</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. Earlier  application is encouraged,  but it
is permitted  only as of the  beginning of any fiscal  quarter that begins after
June 1998.  The  adoption of the  provisions  of SFAS No. 133 is not expected to
have a material impact on the results of operations or the financial position of
the Company.

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

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

                                       7



<PAGE> 10



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

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

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

      The Company  posted net  earnings of $701,000  for the three  months ended
March 31, 1999  compared to net  earnings of $491,000 for the three months ended
March 31,  1998.  For the nine months ended March 31, 1999,  the  Company's  net
earnings were $1.9 million,  as compared to net earnings of $1.1 million for the
nine months ended March 31, 1998. For the three months ended March 31, 1999, the
net earnings  were $0.32 per share - basic,  compared to $0.21 per share - basic
for the three months  ended March 31, 1998.  For the nine months ended March 31,
1999, the net earnings were $0.85 per share - basic, compared to net earnings of
$0.45 per share - basic for the nine months  ended March 31,  1998. A discussion
of the specific  components  of net earnings per share is set forth in the Notes
to Consolidated Financial Statements.

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

      Net interest  income before the  provision  for estimated  loan losses was
$3.2 million for the three months ended March 31, 1999  compared to $2.9 million
for the three months  ended March 31, 1998.  For the nine months ended March 31,
1999, net interest income was $9.2 million compared to $8.0 million for the nine
months ended March 31, 1998.

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

      Total  interest  income for the three months ended March 31, 1999 was $8.1
million,  an increase of $700,000  from the  comparable  period a year ago.  The
increase in interest  income was primarily due to the $55.5 million  increase in
the average balance of  interest-earning  assets to $447.0 million for the three
months ended March 31, 1999 from $391.5 million for the three months ended March
31, 1998.  This increase was partially  offset by the 36 basis point decrease in
the average yield on interest-earning assets to 7.24% for the three months ended
March 31, 1999 as compared to 7.60% for the  comparable  period a year ago.  The
decrease in the average yield

                                       8



<PAGE> 11


was primarily  due to a decrease in the indices  which the Company's  adjustable
rate  mortgage  loans are tied to,  replacing  loans  paid off due to the higher
level of  prepayments  with  those of lower  rates and  faster  amortization  of
premiums on  mortgage-backed  securities  due to  increased  prepayment  speeds.
Specifically,  in the case of the Eleventh  District Cost of Funds Index (COFI),
this index has fallen  approximately  40 basis  points  over the last 12 months.
This decline  affected  approximately  50% of the entire mortgage loan portfolio
which is indexed to COFI. Interest income on loans increased to $6.7 million for
the three  months  ended March 31, 1999 from $6.2  million for the three  months
ended March 31, 1998  primarily  due to the  increase in the average  balance of
loans receivable  outstanding to $351.4 million for the three months ended March
31, 1999 from $312.7  million for the three  months  ended March 31,  1998.  The
increase in interest on loans was partially  offset by the decrease in the yield
on loans to 7.63% for the three  months  ended March 31, 1999 from 7.88% for the
three months ended March 31, 1998 due to the reasons described above.

      The interest income on  mortgage-backed  securities  decreased slightly to
$888,000 for the three months ended March 31, 1999  compared to $904,000 for the
three months ended March 31,  1998.  The slight  decrease was the result of a 65
basis point decline in the average yield to 5.97%  partially  offset by the $4.9
million increase in the average balance of  mortgage-backed  securities to $59.5
million.  This decline in yield on the mortgage-backed  securities portfolio was
primarily  due to the faster  amortization  of premiums on purchased  securities
resulting  from  increased  prepayments  as a result of the lower  interest rate
environment.  The interest income on investment securities and other investments
increased  by $128,000 to $500,000 for the three months ended March 31, 1999 due
primarily to the $11.9  million  increase in the average  balance of  investment
securities and other  investments to $36.1 million.  The increase in income from
higher average balances was partially offset by the decline in the average yield
to 5.55% for the three  months  ended  March  31,  1999 from  6.17% for the same
period a year ago.

      Total  interest  income for the nine months ended March 31, 1999 was $23.8
million,  an increase of $1.5 million from the comparable period a year ago. The
increase in interest  income was primarily due to the $35.3 million  increase in
the average  balance of  interest-earning  assets to $429.9 million for the nine
months ended March 31, 1999 from $394.6  million for the nine months ended March
31, 1998. The interest  income on loans  increased to $19.4 million for the nine
months  ended March 31, 1999 from $17.6  million for the nine months ended March
31, 1998.  The increase in interest on loans  receivable was due to the increase
in the average balance of loans receivable outstanding to $334.4 million for the
nine months  ended March 31, 1999 from $302.5  million for the nine months ended
March 31, 1998,  partially offset by the decrease in the yield on loans to 7.72%
for the nine months  ended  March 31, 1999 from 7.77% for the nine months  ended
March 31, 1998. The interest income on mortgage-backed  securities  decreased to
$2.9 million for the nine months  ended March 31, 1999  compared to $3.2 million
for the nine months ended March 31, 1998 primarily as a result of the decline in
the average  yield to 6.21% for the  current  period  versus  6.82% for the same
period a year ago.  This decline was  primarily  due to the lower  interest rate
environment   resulting  in  an  increase  in   prepayment   speeds  and  faster
amortization  of  the  related  premiums.  The  interest  income  on  investment
securities and other securities  increased slightly to $1.5 million for the nine
months  ended March 31,  1999 as compared to $1.4  million for the same period a
year ago. The increase in investment  securities and other income was due to the
increase in the average balance to $33.4 million for the nine months ended March
31, 1999 versus $30.4 million for the same period a year ago. Partially offset


                                       9


<PAGE> 12





by the  decrease in the average  yield to 6.01% for the  current  period  versus
6.34% for the same period a year ago due to the lower interest rate environment.
The total yield on total interest-earning assets decreased to 7.37% for the nine
months ended March 31, 1999 as compared to 7.51% for the nine months ended March
31, 1998.

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

      Total interest  expense for the three months ended March 31, 1999 was $4.9
million,  an increase of $345,000  from $4.5  million for the three months ended
March 31,  1998.  The  increase in interest  expense  was  primarily  due to the
increase  in the  average  balance  of  interest-bearing  liabilities  to $415.7
million for the three  months  ended March 31, 1999 from $360.8  million for the
three months ended March 31, 1998. This increase was partially  offset by the 34
basis point decline in the average cost of interest-bearing liabilities to 4.69%
for the three months ended March 31, 1999 compared to 5.03% for the three months
ended March 31, 1998.  Interest  expense on  interest-bearing  savings  accounts
increased  slightly to $3.4  million for the three  months  ended March 31, 1999
from $3.3  million  for the same  period a year ago.  This  increase in interest
expense  on  interest-bearing  savings  accounts  was due to the  $24.3  million
increase in average  savings  accounts to $307.9  million for the current period
versus  $283.6  million  for the same  period a year ago  offset by the 32 basis
point  decrease in the average cost of funds to 4.37% for the three months ended
March 31, 1999 versus  4.69% for the same period a year ago.  The decline in the
average cost of funds on savings accounts was due to the shift in deposit mix to
a higher  concentration  of core savings  accounts  (comprised  of money market,
checking and savings accounts) and to the lower interest rate  environment.  The
average  balance of core savings  accounts  increased by $45.6 million to $120.7
million for the three  months  ended  March 31, 1999 from $75.1  million for the
same period a year ago. Conversely,  the Company's dependence on certificates of
deposit declined as the average balance of certificates of deposit  decreased by
$21.3 million to $187.2 million for the current period versus $208.5 million for
the same period a year ago. The interest expense on borrowings increased to $1.5
million for the three  months  ended  March 31,  1999 from $1.2  million for the
three  months  ended March 31,  1998.  The  increase  was  primarily  due to the
increase in the average  balance of borrowings to $107.8 million for the current
period versus $77.2 million for the same period a year ago,  partially offset by
the decline in the average cost of  borrowings  to 5.61% for the current  period
versus  6.27% for the same period a year ago. The decline in the average cost of
borrowings  was due to the addition of new  borrowings  at  substantially  lower
rates.

      Total  interest  expense  increased  to $14.6  million for the nine months
ended  March 31, 1999 from $14.2  million  for the nine  months  ended March 31,
1998.  The  increase  was  due  to  the  increase  in  the  average  balance  of
interest-bearing  liabilities  to $397.1 million for the nine months ended March
31, 1999 as compared to $365.4 million for the nine months ended March 31, 1998,
partially  offset  by the  decrease  in the  average  cost  of  interest-bearing
liabilities  to 4.90% for the nine  months  ended  March 31, 1999 as compared to
5.18% for the same  period a year ago.  Interest  expense  on  savings  accounts
decreased  slightly to $10.2  million  for the nine months  ended March 31, 1999
from $10.4  million  for the same  period a year ago.  The  decrease in interest
expense was due to the decline in the average cost of savings  accounts to 4.58%
for the  current  period  from 4.85% for the same  period a year ago,  partially
offset by the  increase  in the  average  balance of savings  accounts to $297.0
million  for the current  period from $284.6  million for the same period a year
ago. As stated above, the decline in the average cost of funds was due


                                       10


<PAGE> 13



to the lower interest  environment  and the change in composition of the savings
portfolio  to a higher  concentration  of core  savings  accounts.  The interest
expense on borrowings  increased to $4.4 million for the nine months ended March
31,  1999 from $3.8  million  for the nine  months  ended  March 31,  1998.  The
increase  in  interest  expense on  borrowings  was due to the  increase  in the
average  balance of  borrowings  to $100.1  million for the current  period from
$80.8 million for the same period a year ago,  partially  offset by the decrease
in the average cost of borrowings  to 5.83% for the current  period versus 6.33%
for the same period a year ago.

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
nine month  periods  ended  March 31, 1999 and March 31,  1998  (dollars  are in
thousands and average  balances are primarily based on month-end  amounts except
in certain  situations  where a daily  average is necessary to properly  reflect
average balances):

<TABLE>
<CAPTION>
                                                     FOR THE THREE MONTHS ENDED      FOR THE NINE MONTHS ENDED
                                                             MARCH 31,                        MARCH 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                              $351,441   7.63%  $312,720   7.88%   $334,428  7.72%  $302,483  7.77%
    Mortgage-backed securities                      59,472   5.97     54,617   6.62      62,103  6.21     61,723  6.82
    Investment securities and other                 36,067   5.55     24,134   6.17      33,362  6.01     30,385  6.34
                                                  --------          --------           --------         --------
      Total interest-earnings assets               446,980   7.24%   391,471   7.60%    429,893  7.37%   394,591  7.51%
                                                  --------          --------           --------         --------
  Noninterest-earning assets                        16,634            13,560             14,463           13,511
                                                  --------          --------           --------         --------
      Total assets                                $463,614          $405,031           $444,356         $408,102
                                                  ========          ========           ========         ========
LIABILITIES AND EQUITY:
  Interest-bearing liabilities:
    Savings accounts                              $307,882   4.37%  $283,598   4.69%   $297,000  4.58%  $284,626  4.85%
    Borrowings                                     107,785   5.61     77,192   6.27     100,102  5.83     80,768  6.33
                                                  --------          --------           --------         --------
      Total interest-bearing liabilities           415,667   4.69%   360,790   5.03%    397,102  4.90%   365,394  5.18%
  Non-interest-bearing liabilities                  16,426            13,010             15,747           12,029
  Stockholders' equity                              31,521            31,231             31,507           30,679
                                                  --------          --------           --------         --------
      Total liabilities and equity                $463,614          $405,031           $444,356         $408,102
                                                  ========          ========           ========         ========

  Net interest rate spread                                   2.55%             2.57%             2.47%            2.33%
  Net interest margin                                        2.88%             2.96%             2.85%            2.71%
  Ratio of interest-earning assets to
    interest-bearing liabilities                    107.53%           108.50%            108.26%          107.99%

</TABLE>

      The Company's average net interest spread decreased  slightly to 2.55% for
the three  months  ended  March 31, 1999 from 2.57% for the three  months  ended
March 31, 1998.  The decrease in the average net interest  spread was  primarily
due to the decrease in the average yield of interest-earning assets to 7.24% for
the three  months  ended  March 31, 1999 from 7.60% for the three  months  ended
March 31, 1998  substantially  offset by the  decrease  in the  average  cost of
interest-bearing  liabilities to 4.69% for the current period from 5.03% for the
same period a year ago. In regard to the nine months ended March 31,  1999,  the
average net interest spread increased by 14 basis points to 2.47% from 2.33% for
the nine months ended March 31,  1998.  


                                       11


<PAGE> 14


The  increase  in the  average net  interest  spread for current  period was due
primarily  to the 28 basis point  decline in the average  cost of funds to 4.90%
for the nine months ended March 31, 1999 versus 5.18% for the same period a year
ago.

      The Company's  yield on its  interest-earning  assets declined by 36 basis
points to 7.24% for the three  months  ended  March 31,  1999 from 7.60% for the
three  months  ended March 31, 1998.  The yields in all  interest-earning  asset
categories  declined for the three-month period ended March 31, 1999 as compared
to the same  period a year ago.  The yield on loans  receivable  declined  by 25
basis points to 7.63% for the three months ended March 31, 1999 due primarily to
the  decrease  in all  adjustable  rate loan  indices  resulting  from the lower
interest  rate  environment.  This  resulted  in lower  yields on the  Company's
adjustable rate mortgage loans,  which comprise  approximately  75% of the total
mortgage loan portfolio. The lower interest rate environment also contributed to
the  increase in  prepayments  resulting  in higher  yielding  loans  paying off
earlier than  expected.  The Company was able to originate or purchase  loans to
replace those prepaid and to increase the overall  portfolio  balance,  but with
interest rates usually lower than those prepaid.

      The  decline in the yield in  interest-earning  assets was also due to the
substantial decline in the yield for mortgage-backed  securities which decreased
by 65 basis points to 5.97% for the three months ended March 31, 1999 from 6.62%
for the same  period a year  ago.  As stated  above,  the  decline  in yield was
primarily the result of the increase in the prepayment speeds resulting from the
lower interest rate environment.  The increase in prepayment speeds required the
Company to increase the  amortization  of the  premiums on purchased  securities
producing lower overall yields.  Also, the yield on investment  income and other
securities declined  substantially to 5.55% for the three months ended March 31,
1999 from 6.17% for the same period a year ago due  primarily to lower  interest
rates.  The average yield on  interest-earning  assets declined to 7.37% for the
nine months  ended March 31, 1999 from 7.51% for the nine months ended March 31,
1998.  The  decline  in the  average  yield was due to the same  overall  issues
discussed.

      The Company's cost of  interest-bearing  liabilities has declined  sharply
for the current three and nine-month periods ended March 31, 1999 as compared to
the same periods a year ago. These  declines were due to the continued  emphasis
on building core savings accounts,  replacing maturing  certificates of deposits
with those of lower rates, and the addition of lower cost borrowings.  As stated
above,  the Company has increased the percentage of core savings accounts during
the past year with a  corresponding  reduction in the percentage of certificates
of deposits.  The increase in average core savings accounts to approximately 39%
of total  savings  accounts  for the three  months  ended  March  31,  1999 from
approximately  26% for the same period a year ago  combined  with the renewal of
maturing  certificates  of deposit at lower  interest  rates have  produced  the
substantial  decrease in the average cost of savings. The result of this process
was a decline in the  average  cost of savings  accounts  to 4.37% for the three
months  ended  March 31,  1999 from 4.69% for the three  months  ended March 31,
1998. In regards to the  Company's  borrowings,  the cost of borrowings  for the
three-month period ended March 31, 1999 has reflected  significant  decreases in
comparison  to the same period a year ago.  For the three months ended March 31,
1999, the average cost of borrowings  declined to 5.61% from 6.27% for the three
months ended March 31, 1998. The reduced cost of borrowings was primarily due to
the maturity of approximately $30 million in borrowings with an average interest
rate in excess of 


                                       12

<PAGE> 15


6.00% and the approximately $60 million in new or replacement borrowings with an
average  interest rate of less than 5.00% during the nine months ended March 31,
1999.

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

      The provision  for estimated  loan losses for the three months ended March
31, 1999 was $280,000  compared  with  $115,000 for the three months ended March
31, 1998.  The increase was due to the increased  write-offs  of consumer  loans
during the period,  a general  increase in the reserve for growth related issues
and the establishment of a reserve for a single-family residential loan expected
to be foreclosed on in the next few months.  For the nine months ended March 31,
1999, the provision for estimated  loan losses  totaled  $759,000 as compared to
$458,000 for the same period a year ago.  The increase was due to the  increased
consumer  loan  write-offs,  primarily  related  to the  equity  lines of credit
program, as compared to the same period a year ago. See "Financial Condition."

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

      Other  income  increased  to $498,000 for the three months ended March 31,
1999 from  $277,000 for the three months ended March 31, 1998.  The increase was
due to the  realization of $28,000 in net gains on real estate owned activity in
the current  period versus a $70,000 net loss for the same period a year ago and
increases in fee income primarily  related to the sale of non-insured  products.
The Company's secondary marketing activities also generated $28,000 in net gains
for the three  months  ended March 31, 1999 as compared to a $1,000 net loss for
the same period a year ago.  For the nine months  ended  March 31,  1999,  other
income  increased to $1.5 million from  $868,000  primarily as a result of a net
gain on real estate owned activities of $163,000 for the period as compared to a
$133,000  net loss for the same  period a year ago,  an  increase to $89,000 for
secondary marketing  activities as compared to $8,000 for the same period a year
ago and increases in commissions earned on the sale of non-insured  products and
other fee income on deposit account activities. See "Financial Condition."

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

      For the three  months  ended March 31,  1999,  general and  administrative
expenses  increased  slightly to $2.3  million  from $2.2  million for the three
months  ended  March 31,  1998.  The  increase  was due  primarily  to a general
increase in  compensation  costs  partially  offset by a decrease  in  equipment
related  expenses as compared to the same period a year ago. For the nine months
ended March 31, 1999, the general and administrative  expenses increased to $6.8
million from $6.6 million for the same period a year ago,  primarily  related to
the overall increase in compensation costs.

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

      The Company  recorded  $471,000 in income taxes for the three months ended
March 31, 1999  compared to $356,000  for the three months ended March 31, 1998.
The  effective tax rates for the three months ended March 31, 1999 and March 31,
1998 were approximately 40.2% and 42.0%, respectively. For the nine months ended
March 31,  1999,  the income  taxes  recorded  was $1.3  million as  compared to
$770,000  for the same  period a year ago.  The  increase in taxes for 


                                       13

<PAGE> 16


the three months and nine months ended March 31, 1999 was due to the improvement
in pre-tax income.

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

      The  Company's  total  assets were $464.5  million at March 31,  1999,  an
increase of $56.2  million  from the $408.3  million in total assets at June 30,
1998. The Company's  loans  receivable  held for  investment  increased by $54.5
million to $350.2  million at March 31, 1999 as  compared  to $295.7  million at
June 30, 1998.  The  Company's  mortgage-backed  securities  portfolio  remained
approximately the same with a total investment of approximately $58.5 million at
March 31, 1999 compared to $59.3 million at June 30, 1998.

      The Company's loan portfolio  increase for the nine months ended March 31,
1999 was due primarily to the  origination  and purchase of  approximately  $129
million in mortgage loans for the held for investment  portfolio during the nine
month period ending March 31, 1999. Of the loans originated and purchased during
this period,  approximately $88 million had adjustable rate features.  The loans
originated and purchased with adjustable rate features were indexed to COFI, the
one year constant  maturity  index,  LIBOR and the 12 MAT (a lagging index based
upon the rolling  average of the one year  treasury  yield).  The  Company  also
originated  $16.4 million of mortgage loans for sale to the secondary market and
sold approximately $15.6 million during the nine months ended March 31, 1999 for
a net gain of $89,000.

      The Company's non-performing assets totaled $3.0 million at March 31, 1999
compared to $3.8 million at June 30, 1998. The decrease in non-performing assets
was  due  to  the  decrease  in the  amount  of  real  estate  acquired  through
foreclosure  to $1.6 million at March 31, 1999  compared to $1.9 million at June
30, 1998 and to the  decrease in total loans on  non-accrual  to $1.4 million at
March 31, 1999 compared to $1.9 million at June 30, 1998. The overall result was
a decrease in the Company's  ratio of  non-performing  assets to total assets to
0.65% at March 31, 1999 from 0.93% at June 30, 1998.

      The following table sets forth the non-performing assets at March 31, 1999
and June 30, 1998:

<TABLE>
<CAPTION>

                                                    MARCH 31, 1999       JUNE 30, 1998
                                                  ------------------   -----------------
                                                            (DOLLARS IN THOUSANDS)
<S>                                                    <C>                   <C>     
Non-accrual loans                                      $  1,413              $  1,911
Real estate acquired through foreclosure                  1,592                 1,902
                                                      -----------           -----------
      Non-performing assets                            $  3,005              $  3,813
                                                      ===========           ===========
Non-performing assets as a percent of
  total assets                                             0.65%                 0.93%

Non-performing loans as a percent of
  gross loans receivable                                   0.40%                 0.64%

</TABLE>

      The Company considers a loan impaired when it is probable that the Company
will be unable to collect all contractual  principal and interest payments under
the terms of the loan  agreement.  Loans are evaluated for impairment as part of
the Company's  normal  internal asset 


                                       14


<PAGE> 17



review process.  The Company applies the measurement  provisions of SFAS No. 114
to all  loans  in its  portfolio  with  the  exception  of one-  to  four-family
residential mortgage loans and consumer lines of credit which are evaluated on a
collective  basis for impairment.  Also,  loans which have delays in payments of
less than four  months are not  necessarily  considered  impaired  unless  other
factors apply to the loans.  The accrual of interest income on impaired loans is
discontinued when, in management's  opinion,  the borrower may be unable to meet
payments as they become due.  When the  interest  accrual is  discontinued,  all
unpaid accrued interest is reversed.  Interest income is subsequently recognized
only to the extent cash  payments are received.  Where  impairment is considered
temporary,  an allowance is  established.  Impaired  loans which are  performing
under the contractual  terms are reported as performing loans, and cash payments
are  allocated to principal  and  interest in  accordance  with the terms of the
loan.  At March  31,  1999,  the  Company  had  classified  none of its loans as
impaired with no specific  reserves set aside as of March 31, 1999 as determined
in accordance with SFAS No. 114. In comparison, as of June 30, 1998, the Company
had  classified  $569,000  of its loans as  impaired  with  $100,000 in specific
reserves.  In addition,  as of March 31,  1999,  the Company had $1.4 million in
loans which were collectively evaluated for impairment with $245,000 in specific
reserves  established  compared to $1.3  million at June 30,  1998  collectively
evaluated  for  impairment  with no  specific  reserves  set aside.  The average
recorded   investment   in  impaired   loans,   inclusive  of  those   evaluated
collectively,  during the nine months  ended March 31, 1999,  was $2.0  million,
whereas, the average for the twelve months ended June 30, 1998 was $2.9 million.

      The Company,  in consideration  of the current local economic  environment
and the condition of the loan portfolio,  maintained the allowance for estimated
loan losses at March 31, 1999 at $1.7  million.  Although  loans on  non-accrual
status  have  decreased  slightly  to $1.4  million at March 31,  1999 from $1.9
million at June 30, 1998,  the allowance for estimated loan losses is maintained
at an amount  management  considers  adequate to cover estimated losses in loans
receivable which are deemed probable and estimable.  The allowance is based upon
a  number  of  factors,  including  current  economic  conditions,  actual  loss
experience and industry trends. The Company's non-performing loans are primarily
made up of one- to four-family  residential  mortgage loans. The following table
sets forth the activity in the Company's allowance for estimated loan losses for
the nine months ended March 31, 1999:

<TABLE>
<CAPTION>
                                                ACTIVITY FOR THE NINE MONTHS
                                                            ENDED
                                                       MARCH 31, 1999
                                               --------------------------------
<S>                                                     <C>
Balance at June 30, 1998                                $ 1,425,000
Add:
    Provision for estimated loan losses                     759,000
    Recoveries of previous charge-offs
Less:
    Charge-offs of consumer loans                           180,000
    Charge-offs of real estate loans                        272,000
                                                       -------------
Balance at March 31, 1999                               $ 1,732,000
                                                       =============
</TABLE>

      The Company's total  liabilities  increased to $432.5 million at March 31,
1999 from $376.1  million at June 30, 1998.  Total  deposit  accounts  increased
$28.6  million to $323.9  million at 


                                       15


<PAGE> 18


March 31, 1999 from $295.3  million at June 30, 1998 due primarily to the growth
in the Company's  core savings  accounts.  Core savings  accounts,  comprised of
money market, checking and passbook accounts,  increased to approximately $140.2
million at March 31, 1999 from approximately $95.8 million at June 30, 1998. The
growth in core  deposits was partially  offset by the $15.7 million  decrease in
certificates  of deposit to $183.8 million at March 31, 1999 from $199.5 million
at June 30,  1998.  As a result of the increase in core  savings  accounts,  the
percentage of core savings  accounts  represents  43.3% of total  deposits as of
March 31, 1999.  The Company  increased  its  borrowings  during the nine months
ended March 31, 1999 to $103.9  million from $70.5 million at June 30, 1998. The
increase in borrowings was part of the funding strategy of the overall growth in
total  assets.  In September  1998,  the Company  borrowed  approximately  $41.5
million from the Federal Home Loan Bank with an average rate slightly below 5.0%
and an average term of approximately 39 months. 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 decreased slightly to $32.0 million at
March  31,  1999  from  $32.2  million  at June 30,  1998 due  primarily  to the
repurchase of 171,745  shares of the  Company's  common stock at a total cost of
$2.5 million. This reduction in stockholders' equity was substantially offset by
the $1.9 million in net earnings from operations.

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  certain  investments  which  are  not  committed  or  pledged  to  specific
liabilities.  The  Association's  average liquidity ratio for March 31, 1999 and
March 31, 1998 was 16.42% and 16.79%, respectively.

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

      At March  31,  1999,  there  were no  material  changes  to the  Company's
commitments  or  contingent  liabilities  from the period ended June 30, 1998 as
discussed  in the  Company's  notes  to the  consolidated  financial  statements
reflected in the audited consolidated financial statements of SGV Bancorp, Inc.,
for the year ended June 30, 1998  included in the Annual Report on Form 10-K for
the year ended June 30,  1998.  At March 31, 1999,  the Company had  outstanding
commitments to originate or purchase mortgage loans of $11.5 million as compared
to $3.0 million at June 30, 1998.

                                       16



<PAGE> 19


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

      The Association was in compliance with the capital  requirements in effect
as of March 31, 1999. The following  table reflects the required  ratios and the
actual capital ratios of the Association at March 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        $  30,214    $   6,963    $  23,251      6.51%        1.50%

Core            $  30,214    $  13,925    $  16,289      6.51%        3.00%

Risk-based      $  31,701    $  18,614    $  13,087     13.62%        8.00%

</TABLE>


YEAR 2000 READINESS DISCLOSURE  
------------------------------

      In recent  years the Company  has been  executing a formal plan to address
year  2000  issues  ("Y2K").  The Y2K  issues  relate  to the way  software  was
programmed through much of this Century. Specifically, years were coded with two
digits.  The Company's Y2K plan has been designed to address potential  problems
that could arise from software, hardware and equipment both within the Company's
direct  control  and  outside of the  Company's  control,  yet which the Company
relies upon, in that it  electronically  or  operationally  interfaces with such
software, hardware and equipment.

      The  Company   principally   utilizes   third-party  data  processors  and
third-party software for its information technology (IT) needs. As a result, the
year 2000 compliance of the company's  information  technology  assets,  such as
computer hardware,  software and systems,  is primarily  dependent upon the year
2000 compliance  efforts and results of its third-party  vendors.  The year 2000
compliance of the Company's  non-IT assets,  such as automated  teller machines,
copiers, fax machines,  elevators, and HVAC systems, is also primarily dependent
upon the year 2000 compliance efforts and results of third parties.

      Financial institution regulators have focused their attention on year 2000
issues and have published  guidance  concerning the  responsibilities  of senior
management and directors.  Year 2000 testing and certification,  liquidity risk,
customer awareness,  and contingency  planning are being addressed as key safety
and soundness issues in conjunction with regulatory Y2K examinations.

      The Company  has  appointed a year 2000 team that  includes  officers  and
staff from all operational  areas.  The team is responsible for the development,
implementation and monitoring of the 


                                       17

<PAGE> 20



Company's Year 2000 Plan. Also, the Company has enlisted the services of outside
contractors  to assist in the  attainment  of year 2000  readiness.  In order to
address  the year 2000  issue,  the  Company has  developed  and  implemented  a
five-phase plan, which is divided into the following major components:

      awareness
      assessment
      renovation
      validation
      implementation

      The  Company  has  completed  the  first  two  phases  of the  plan and is
currently  working  internally  and with  external  vendors  on the final  three
phases.   The  Company   believes  that  third-party   service   providers  have
significantly completed the renovation phase. Also, the validation or test phase
has been completed for the Company's data processor, ATM processor,  primary ATM
interchange  provider,  Federal  Reserve Bank of San Francisco,  and Fannie Mae.
Because  the  Company   outsources  its  data  processing  and  item  processing
operations,  a  significant  component  of the Year  2000  Plan is to work  with
external  vendors to test and certify their systems as year 2000 compliant.  The
majority of software used in these  systems,  both  purchased and related to our
external data processing  vendors,  has been tested for year 2000 readiness with
minimal  issues  detected.  Any  issues  detected  have  been  reported  to  the
respective vendor or service provider for corrective action.  None of the issues
noted during the testing,  if not  corrected by year 2000,  are expected to have
any material effect on the Company.  The Company's primary  third-party  service
bureau  provides  data  processing  for all of the Company's  savings  accounts,
lending operations and its general ledger. Upon review of the test results,  the
few issues detected were forwarded to the data processor for corrective  action.
Although  the Company is confident  these  issues will be resolved,  none of the
issues  detected  are  expected  to have any  material  impact to the  Company's
successful  transition to year 2000 even if they have not been corrected by year
2000.  The Company also completed  testing with the Federal  Reserve Bank of San
Francisco,  its primary ATM processor,  primary ATM  interchange  provider,  and
Fannie Mae and  detected  no  date-related  issues  which  would be  expected to
present any material Y2K problems to the Company.

      The Company surveyed its primary vendors and others with whom it relies on
to assure  their  systems  will be year 2000  ready.  Of the vendors the Company
considers critical to its operations, all have responded that they are year 2000
ready or are in process of becoming ready. Vendors the Company considers mission
critical include its primary data processor,  item processor,  ATM provider, the
Federal  Reserve  Bank and the  Federal  Home Loan Bank,  as well as all utility
providers.  Of the critical  vendors the Company  tested,  no material year 2000
date  related  issues were  identified.  In  addition,  the majority of critical
vendors not tested  (primarily  utility  providers)  have indicated they are Y2K
ready. As of March 31, 1999, three utility providers have not responded of their
Y2K  readiness.  If  any  mission  critical  vendor  were  to  fall  out  of Y2K
compliance, the Company will seek to switch to a new vendor. However, due to the
timing required to change to another vendor, if mission critical vendors are not
year 2000 ready (all have stated that they are or expect to be year 2000 ready),
the Company may be adversely  affected.  Further,  the Company will be unable to
seek alternative service providers with respect to some critical vendors such as
utility providers.  The Company has endeavored to determine such vendors will be
year 2000 compliant and at this time,  based upon  information  supplied by such
vendors,  has no information  suggesting  utility  services will be interrupted.
However,  any disruption in utility  service would directly affect the Company's
ability to operate.


                                       18

<PAGE> 21


      In regard to vendors or service  providers the Company deems are important
for  the  normal  operations  of  the  Company,  but  not  considered  critical,
approximately  87% have  responded  that they are year 2000 ready or are working
towards readiness.  The Company is performing follow-up work on those vendors or
service  providers  (primarily title companies and appraisal firms) who have not
responded.  If the Company  believes  that one of these vendors will not be year
2000 ready by June 30, 1999, the Company will review other solutions,  including
changing vendors. However, there can be no assurance that these systems or other
vendors  will be year 2000 ready or that any such  failure in  readiness by such
vendors  would not have an  adverse  effect  on the  Company's  operations.  The
Company is  participating,  through proxy  testing,  with its data  processor in
third-party interfaces for year 2000 readiness and remains on target to complete
testing by June 30, 1999.

      Another  important segment of the Year 2000 Plan is to identify those loan
customers or deposit  customers  whose  possible lack of year 2000  preparedness
might  expose the  Company to  financial  loss.  The  Company  completes  a risk
analysis of their large dollar fund users and fund  providers  quarterly and has
determined  that such  customers  are not  expected to expose the Company to any
material impact by a lack of year 2000 preparedness.  Also, the analysis of fund
users indicates that the Company does not expect to have any material  financial
exposure in regard to its loan portfolio as the portfolio is comprised primarily
of loans to individuals and, to a lessor extent,  to businesses  secured by real
estate. Management believes that loans secured by real estate are less likely to
be impacted by any year 2000 issues.

      The Company has  completed  its Year 2000  Contingency  Plan for  handling
issues which may present concern to the Company if certain  processes or vendors
are unable to provide  services.  The  contingency  plan has been reviewed by an
independent outside consultant for feasibility with management's stated business
resumption goals and other plans adopted by the Company. Recommendations made by
the consultant were reviewed by management and incorporated into the contingency
plan. This plan will be updated continuously throughout 1999, as new information
becomes available on the Company's vendors and service providers.

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

      The Company  believes it has  developed an  effective  and prudent plan to
review,  renovate  and resolve any  potential  year 2000  issues.  In respect to
operations under the Company's direct control and due to management's  year 2000
readiness efforts and those of its strategic business partners,  management does
not expect that Year 2000 failures will have a material  effect on the financial
condition  or results  of  operations  of the  Company.  However,  the impact of
disruptions in the 



                                       19

<PAGE> 22


local or national economy as a result of year 2000 issues is not quantifiable at
this time and could  adversely and materially  affect the Company.  In addition,
the Company is heavily  dependent on the year 2000  readiness of  infrastructure
suppliers such as utilities, communication and other such Services. As discussed
above,  such  infrastructure  suppliers would have year 2000  disruptions,  this
could adversely and materially  affect the Company's ability to provide services
to its customers.

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

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

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
all conforming  fixed-rate  mortgage loans  originated;  (iii) holding primarily
short-term  mortgage-backed  and investment  securities;  and (iv) attempting to
reduce the overall  interest rate sensitivity of liabilities by emphasizing core
and  longer-term  deposits,  utilizing FHLB advances and  securities  sold under
agreements to repurchase.

      The Company's interest rate sensitivity is monitored by management through
the use of an interest  rate risk (IRR) model.  Based on internal IRR  modeling,
management  does not  believe  that  there  has been a  material  change  in the
Company's  interest rate  sensitivity  from June 30, 1998 to March 31, 1999. All
methods  used  to  measure  interest  rate   sensitivity   involve  the  use  of
assumptions,  which may tend to  oversimplify  the manner in which actual yields
and costs respond to changes in market  interest rates.  The Company's  interest
rate sensitivity should be reviewed in conjunction with the financial statements
and notes thereto  contained in the Company's  Annual Report for the fiscal year
ended June 30, 1998.

                                       20



<PAGE> 23



PART II. OTHER INFORMATION


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

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

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

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

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

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

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

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

        3.1 Certificate of Incorporation of SGV Bancorp, Inc. *
        3.2 Bylaws of SGV Bancorp, Inc. *
       11.0 Computation of per share earnings (filed herewith).
       27.0 Financial data schedule (filed herewith).
      (b)   Reports on Form 8-K
                 Announcement of intent to purchase two branches from Citibank 
                 filed with the Securities and Exchange Commission on
                 April 5, 1999.
-------------------
*     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.

                                       21



<PAGE> 24




                                   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.




May 11, 1999                        /s/  Barrett G. Andersen
-------------------------           --------------------------------------------
            Date                          Barrett G. Andersen
                                          President and Chief Executive Officer



May 11, 1999                        /s/  Ronald A. Ott
-------------------------           --------------------------------------------
            Date                          Ronald A. Ott
                                          Executive Vice President
                                          Chief Financial Officer and Treasurer





                                       22