SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                 -----------------------------------------------

                                    FORM 10-Q

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

     For  the quarterly period ended March 31, 2000

 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 33-93312

                           BEAL FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (exact name of registrant as specified in its charter)

         Texas                                         75-2583551
--------------------------------------------------------------------------------
(State of other jurisdiction of                     (I.R.S. Employer
incorporation of organization)                    Identification Number)

Suite 300, LB 66, 15770 North Dallas Parkway, Dallas, Texas           75248
--------------------------------------------------------------------------------
         (Address of principal executive offices)                   (Zip code)

Registrant's telephone number, including area code: (972) 404-4000

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )

     As of March 31, 2000, there were 300,000 shares of the Registrant's  common
stock issued and outstanding.


<PAGE>

                           BEAL FINANCIAL CORPORATION

                                      INDEX



                                                                           PAGE
                                                                          NUMBER

PART  I.   FINANCIAL INFORMATION

           Item 1. - Financial Statements . . . . . . . . . . . . . . . . . . 1

           Item 2. - Management's Discussion and Analysis of  Financial
                       Condition and Results of Operations . . . . . . . . . .5

PART  II.  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .11

           SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

<PAGE>

BEAL FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
    (Unaudited)
(In thousands, except per share data)

<TABLE>
<CAPTION>

                                                          March 31,    December 31,
                                                            2000          1999
                                                         ----------    ------------
<S>                                                     <C>            <C>
ASSETS

     Cash                                                $      449     $      746
     Interest bearing deposits                               83,606        114,670
                                                         ----------     ----------

          CASH AND CASH EQUIVALENTS                          84,055        115,416

     Accrued interest receivable                             11,882         12,879
     Securities available for sale                           68,304         70,080

     Net loans receivable                                 1,135,239      1,128,753
          Less allowance for losses                         (11,547)       (12,344)
                                                         ----------     ----------
                                                          1,123,692      1,116,409

     Federal Home Loan Bank stock                            11,148          9,670
     Real estate held for investment or sale                 93,941         93,166
     Premises and equipment, net                              5,380          5,520
     Other assets                                             7,526          6,766
                                                         ----------     ----------
          TOTAL ASSETS                                   $1,405,928     $1,429,906
                                                         ==========     ==========

LIABILITIES
     Deposit accounts                                    $  939,514     $  993,289
     Federal Home Loan Bank advances                        220,000        191,000
     Senior notes, net                                       39,834         44,336
     Other borrowings                                         7,217          7,272
     Other liabilities                                       12,266         13,847
                                                         ----------     ----------
          TOTAL LIABILITIES                               1,218,831      1,249,744

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Common stock, par value $1 per share
          authorized              375
          issued and outstanding  300                           300            300
     Paid-in capital                                          2,740          2,740
     Accumulated other comprehensive income (loss)             (324)          (443)
     Retained earnings                                      244,381        237,565
                                                         ----------     ----------
                                                            247,097        240,162
     Stockholder note receivable                            (60,000)       (60,000)
                                                         ----------     ----------
          TOTAL STOCKHOLDERS' EQUITY                        187,097        180,162
                                                         ----------     ----------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $1,405,928     $1,429,906
                                                         ==========     ==========

</TABLE>

                 See notes to consolidated financial statements


                                        1


<PAGE>

BEAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited)
   (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                 March 31,
                                                            2000          1999
                                                         ----------    ------------
<S>                                                      <C>            <C>
Interest Income:
     Loans, including fees                                $28,832        $29,946
     Purchased discount accretion                           6,534          9,673
     Investment securities                                  2,287          2,622
                                                          -------        -------
          TOTAL INTEREST INCOME                            37,653         42,241

Interest expense:
     Deposits                                              13,782         12,529
     Federal Home Loan Bank advances
      and other borrowings                                  1,947          1,290
     Senior notes                                           1,546          2,035
                                                          -------        -------

          TOTAL INTEREST EXPENSE                           17,275         15,854
                                                          -------        -------
          NET INTEREST INCOME                              20,378         26,387

Provision for loan losses                                     624          1,173
                                                          -------        -------
          NET INTEREST INCOME AFTER
           PROVISION FOR LOAN LOSSES                       19,754         25,214

Other income
     Gain on real estate transactions                         889          1,110
     Other real estate operations, net                        936          1,323
     Other operating income                                   311          1,281
                                                          -------        -------
          TOTAL NONINTEREST INCOME                          2,136          3,714

Other expense
     Salaries and employee benefits                         2,100          1,930
     Occupancy and equipment                                  584            526
     SAIF deposit insurance premium                            59            155
     Other operating expenses                               2,149          2,122
                                                          -------        -------

          TOTAL NONINTEREST EXPENSES                        4,892          4,733
                                                          -------        -------

          INCOME BEFORE INCOME TAXES                       16,998         24,195

     Income Taxes                                             182          1,594
                                                          -------        -------

          NET INCOME                                      $16,816        $22,601
                                                          =======        =======
     Income per common share                              $ 56.05        $ 75.34

     Weighted average number of common shares
      outstanding                                             300            300

</TABLE>

                 See notes to consolidated financial statements


                                        2

<PAGE>

BEAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW
    (Unaudited)
   (In thousands)

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                           March 31,
                                                                   -------------------------
                                                                      2000          1999
                                                                   ----------    ------------
<S>                                                                <C>            <C>
OPERATING ACTIVITIES
     Net income                                                     $ 16,816       $ 22,601

     Adjustments to reconcile net income to
      net cash provided by operating activities
          Depreciation and amortization                                  498            487
          Accretion of purchased discount                             (6,534)        (9,673)
          Provision for loan losses                                      624          1,173
          Amortization of bond premium and underwriting costs            231            202
          Gains on real estate transactions                             (889)        (1,110)

     Changes in operating assets and liabilities
          Accrued interest receivable                                    972           (864)
          Prepaid expenses and other assets                             (477)        (1,827)
          Accrued interest payable-bonds                              (1,488)        (1,833)
          Other liabilities and accrued expenses                         172          2,138
                                                                    --------       --------
               Net cash provided by operating activities               9,925         11,294

INVESTING ACTIVITIES
     Proceeds from:
          Loan collections, less originations and advances            22,307         69,799
          Maturities of securities available for sale                  1,992          5,326
          Sales of real estate                                         3,657          5,037
     Purchase of:
          Loans and bid deposits on loan purchases                   (26,758)      (123,211)
          Federal Home Loan Bank stock                                (1,478)          (457)
          Real estate held for investment or sale                     (1,572)          (709)
          Premises and equipment                                         (69)          (225)
                                                                    --------       --------

               Net cash used in investing activities                  (1,921)       (44,440)

FINANCING ACTIVITIES
     Net decrease in deposit accounts                                (53,775)       (34,023)
     Prepayment of senior notes                                       (4,535)             -
     Repayments of long-term debt                                        (55)          (117)
     Proceeds from advances from the Federal Home Loan Bank           29,000        124,000
     Loan to shareholder                                                   -        (60,000)
     Cash dividends paid                                             (10,000)             -
                                                                    --------       --------
               Net cash provided by (used in)
                financing activities                                 (39,365)        29,860
                                                                    --------       --------

               Net decrease in cash and cash equivalents             (31,361)        (3,286)

Cash and cash equivalents at beginning of period                     115,416         72,139
                                                                    --------       --------
Cash and cash equivalents at end of period                          $ 84,055       $ 68,853
                                                                    ========       ========

Supplemental disclosure of cash flow information
     Cash paid during the period for
          Interest                                                  $ 17,525       $ 15,613
          Income taxes                                                  (360)         1,063

Supplemental disclosure of noncash investing
and financing activities
          Real estate acquired in foreclosure or in
           settlement of loans                                      $  3,373       $  3,992


</TABLE>

                 See notes to consolidated financial statements

                                       3


<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- COMPREHENSIVE INCOME

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Although certain changes in net assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

The components of other comprehensive income are as follows:

                                                Three months ended March 31,
                                                ----------------------------
                                                   2000            1999
                                                ------------    ------------

     Net income                                   $16,816          $22,601

     Other comprehensive income net
      unrealized gains (losses) on investment
      securities - available-for-sale                 119             (718)
                                                  -------          -------
     Comprehensive income                         $16,935          $21,883
                                                  =======          =======

                                       4
<PAGE>

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


WHEN USED IN THIS FORM 10-Q, THE WORDS "BELIEVES", "ANTICIPATES", "EXPECTS", AND
SIMILAR  EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD LOOKING  STATEMENTS.  SUCH
STATEMENTS  ARE  SUBJECT TO CERTAIN  RISKS AND  UNCERTAINTIES  WHICH COULD CAUSE
ACTUAL  RESULTS TO DIFFER  MATERIALLY.  READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE  FORWARD  LOOKING  STATEMENTS  WHICH SPEAK ONLY AS OF THE DATE
HEREOF,  AND TO ADVISE  READERS  THAT  VARIOUS  FACTORS  INCLUDING  REGIONAL AND
NATIONAL ECONOMIC CONDITIONS, CHANGES IN LEVELS OF MARKET INTEREST RATES, CREDIT
RISK OF LENDING ACTIVITIES, AND COMPETITIVE AND REGULATORY FACTORS, COULD AFFECT
THE COMPANY'S FINANCIAL PERFORMANCE AND COULD CAUSE THE COMPANY'S ACTUAL RESULTS
FOR FUTURE PERIODS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED OR PROJECTED. THE
COMPANY  UNDERTAKES  NO  OBLIGATION  TO  PUBLICLY  RELEASE  THE  RESULTS  OF ANY
REVISIONS TO FORWARD LOOKING  STATEMENTS  WHICH MAY BE MADE TO REFLECT EVENTS OR
CIRCUMSTANCES   AFTER  THE  DATE  HEREOF  OR  TO  REFLECT  THE   OCCURRENCE   OF
UNANTICIPATED EVENTS.

FINANCIAL CONDITION

     Beal Financial  Corporation  ("Beal Financial" and with it's  subsidiaries,
the  "Company"),  the parent  company of Beal Bank,  ssb, (the "Bank") had total
assets of $1.4 billion at both March 31, 2000  December 31, 1999.  Cash and cash
equivalents  decreased  $31.4  million,  as  the  Bank  maintained  excess  cash
liquidity in anticipation of possible Year 2000 issues.

     Total liabilities likewise remained relatively unchanged at $1.2 billion at
March 31, 2000 and December 31, 1999. A $53.8 million decrease in deposits and a
$4.5  million  decrease  in senior  notes,  net,  were  primarily  funded by the
decrease  in cash and cash  equivalents  and a $29.0  million  increase  in FHLB
advances.

     Stockholders'  equity increased $6.9 million or 3.85%,  from $180.2 million
at December 31, 1999 to $187.1  million at March 31, 2000.  The increase was the
result of $16.8 million in net income less  dividends to  stockholders  of $10.0
million.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999

     NET INCOME.  For the three months ended March 31, 2000, net income of $16.8
million  represented a decrease of $5.8 million,  or 25.6% from the three months
ended March 31,  1999.  As  discussed  in more detail  below,  the  decrease was
primarily  due to a  decrease  in net  interest  income  of $6.0  million  and a
decrease in total noninterest income of $1.6 million, which was partially offset
by a decrease in the  provision  for loan  losses of $549,000  and a decrease in
income taxes of $1.4 million.

     INTEREST INCOME.  Interest income decreased $4.6 million,  or 10.86%,  from
$42.2 million at March 31, 1999 to $37.6 million at March 31, 2000.  The primary
reason for the  decrease was a decrease in purchase  discount  accretion of $3.1
million,  and a


                                       5

<PAGE>

decrease  in  interest  income on loans,  including  fees of $1.1  million.  The
average balance of  interest-earning  assets increased $33.0 million during this
period, as compared to the same period a year ago,  primarily due to an increase
in the average balance of loans receivable of $68.3 million, partially offset by
a  decrease  in  the  average  balance  of  investment   securities,   primarily
mortgage-backed  securities,  of $18.1  million  and a decrease  in the  average
balance of interest-earning  deposits of $17.0 million.  The net interest spread
decreased from 7.98% for the three months ended March 31, 1999, to 5.51% for the
same period  ended March 31, 2000,  primarily  due to a decrease in the yield on
average  earning  assets from 13.43 to 11.51% for the three month periods ending
March 31, 1999 and 2000,  respectively.  This  decrease  was due  primarily to a
decrease in the amount of purchased  discount accretion taken in relation to the
amount of loans outstanding,  specifically one loan relationship  prepaid during
the first quarter of 1999  resulting in purchase  discount of $2.1 million being
taken into income during that quarter. Adding to the decrease was an increase in
the yield on average interest-bearing liabilities from 5.45% to 6.00%.

     INTEREST EXPENSE.  Interest expense increased $1.4 million,  or 8.96%, from
$15.9 million at March 31, 1999 to $17.3 million at March 31, 2000. The increase
resulted primarily from an increase in the average rate paid on interest-bearing
liabilities  which  increased from 5.45% at March 31, 1999 to 6.00% at March 31,
2000. The increase in the rate paid on average interest-bearing  liabilities was
due primarily to an increase in the yield on the average  balance of certificate
accounts from 5.11% at March 31, 1999 to 5.74% at March 31, 2000 and an increase
in the rate paid on the average balance of FHLB advances from 4.87% to 5.88% for
the same time period  reflecting the general rise in interest rates. The average
balance of interest bearing liabilities  decreased by $11.6 million,  from March
31, 1999 to March 31, 2000.

     PROVISION  FOR LOAN LOSSES.  The provision for loan losses is determined by
management as an amount  sufficient to maintain the allowance for loan losses at
a level  considered  adequate  to  absorb  future  losses  inherent  in the loan
portfolio in accordance  with  generally  accepted  accounting  principles.  The
provision  for loan losses  decreased  $549,000 to $624,000 for the three months
ended March 31,  2000,  as compared to $1.2 million for three months ended March
31, 1999.

     The  Company  establishes  an  allowance  for  loan  losses  based  upon  a
systematic  analysis of risk factors in the loan portfolio as well as a specific
analysis of certain impaired loans.  This analysis includes an evaluation of the
Company's  loan  portfolio,   past  loan  loss   experience,   current  economic
conditions,  loan volume and growth, composition of the loan portfolio and other
relevant  factors.   Management's  analysis  results  in  the  establishment  of
allowance amounts by loan type based on allocations by asset classification. The
allowance for loan losses as a percentage of net non-performing loans was 12.26%
at March 31, 1999 as compared to 15.15% at March 31,  2000.  Net  non-performing
loans  decreased  $37.9 million,  from $114.1 million at March 31, 1999 to $76.2
million at March 31, 2000.

                                       6

<PAGE>


     Although management believes that it uses the best information available to
determine the  allowance for loan losses,  unforeseen  market  conditions  could
result in  adjustments  and net  earnings  could be  significantly  affected  if
circumstances differ substantially from the assumptions used in making the final
determination.  Future additions to the Company's allowance for loan losses will
be the result of periodic loan,  property and collateral reviews and thus cannot
be predicted with absolute  certainty in advance.  In addition,  bank regulatory
agencies,  as an integral part of the examination  process,  periodically review
the Company's  allowance for loan losses.  Such agencies may require the Company
to recognize  additions to the allowance  level based upon their judgment of the
information available to them at the time of their examination.

     NON-INTEREST  INCOME.  Total non-interest income decreased $1.6 million, or
42.49% to $2.1  million at March 31, 2000 from $3.7  million at March 31,  1999.
The  decrease  was due  primarily  to a decrease  in other  operating  income of
$970,000,  a decrease in other real  estate  operations,  net of $387,000  and a
decrease in gain on real estate transactions of $221,000.  The decrease in other
operating  income is primarily the result of the Bank collecting on a deficiency
in excess of $1.0 million in the first quarter of 1999.

     Gains on the sales of loans and real  estate  generally  are  dependent  on
various  factors  which are not  necessarily  within the control of the Company,
including market and economic conditions. As a result, there can be no assurance
that the gains on sales of loans and real  estate  reported  by the  Company  in
prior  periods  will be  reported  in future  periods  or that there will not be
substantial periodic variation in the results from such activities.

     NON-INTEREST EXPENSE.  Non-interest expense increased $159,000, or 3.36% to
$4.9 million at March 31, 2000 from $4.7 million at March 31, 1999. The increase
was primarily due to an increase in salaries and employee  benefits of $170,000,
offset by a decrease in SAIF deposit insurance premium of $96,000.

FEDERAL AND STATE TAXATION

     FEDERAL  TAXATION.  Beal Financial and all of its subsidiaries have elected
Subchapter-S status for federal income tax purposes.  Concurrent with the change
to Subchapter-S  status,  Beal Financial and all subsidiaries  changed their tax
and fiscal year-ends to December 31, from their previous June 30 year-ends.

     Beal  Financial  generally will not be responsible to pay any federal taxes
on its net income.  The only exception will involve  possible  Subchapter-C  tax
liabilities  on net built -in gains which the Company had as of January 1, 2000,
which may have to be recognized  during the 10 year period  ending  December 31,
2006.   Recognition  of  built-in  gains/losses  are  also  subject  to  certain
limitations.  Approximately  $300,000 of the tax  expense  for the three  months
ended March 31, 2000,  related to tax on recognized  built-in

                                       7

<PAGE>

gains.  It is not  anticipated  that  the tax  expenses  related  to  recognized
built-ins gains will be material in any given quarter.  The future tax liability
for the taxable  earnings of Beal  Financial will be the  responsibility  of the
shareholders  of Beal  Financial.  The Board of Directors  of Beal  Financial in
February,  2000,  declared  and paid  dividends  to the  shareholders,  of $10.0
million.  It is  anticipated  that  future  dividends  to  shareholders  will be
declared  in an amount  equal to at least  their tax  liability  related  to the
earnings of Beal Financial.

     TEXAS STATE INCOME TAXATION. Beal Financial currently files Texas franchise
tax  returns.  Texas  imposes a franchise  tax on the taxable  income of savings
institutions  and other  corporations.  The  franchise tax equals the greater of
$2.50 per $1,000 of taxable  capital  apportioned to Texas, or $45.00 per $1,000
of net taxable  earned surplus  apportioned to Texas.  Taxable earned surplus is
the federal  corporate taxable income of each company within the corporate group
determined on a separate company basis with certain modifications. Franchise tax
expense  for the three  months  ended  March 31,  2000 was  $152,000,  primarily
relating to Texas franchise tax.  During this same period  however,  the Company
received a $270,000 refund of California state taxes which had the net effect of
decreasing franchise tax expense by $118,000.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of funds for operations are deposits obtained
from its  market  area,  principal  and  interest  payments  on loans,  brokered
deposits,  and advances from the FHLB of Dallas and to a lesser extent, from the
sale of  assets.  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.

     Historically,  the primary  investing  activity of the Company has been the
purchase of discounted loans from various U.S.  government  agencies through the
sealed bid process or auctions and from other private sellers.  During the three
month period ended March 31, 2000,  the Company  purchased  $26.8 million of net
loans,  as compared to purchases of $123.2  million on for the same period ended
last year. Loan  originations  for the three month period,  ended March 31, 2000
totaled  $64.6  million of which  $50.5 has been  funded,  as  compared  to loan
originations of $21.8 million for the same period last year.

     The  Company's  primary  financing   activity  has  historically  been  the
attraction  of  deposits.  During the three  months  ended March 31,  2000,  the
Company 's deposit levels remained  virtually  unchanged,  decreasing only $53.8
million.  The  Company  had  senior  notes,  net,  of $39.8  million  and  other
borrowings of $7.2 million at March 31, 2000.

     The Company  continues to have the ability to borrow  additional funds from
the FHLB by pledging assets as collateral,  subject to certain restrictions.  At
March 31, 2000, the Company had an undrawn advance arrangement with the FHLB for
$54.7 million.

                                       8

<PAGE>

     The Bank is required to maintain minimum levels of liquid assets as defined
by the Texas Savings and Loan Department ("Texas  Department").  Unless approved
in advance by the Texas Department, a Texas savings bank is required to maintain
a minimum of 10% of the previous  quarters average deposits in liquid assets. At
March 31, 2000, the Bank's liquidity ratio was 15.05%.

     The Company's most liquid asset is cash and cash equivalents.  The level of
cash  equivalents  is  dependent  on the  Company's  operating,  financing,  and
investing activities during any given period. At March 31, 2000, the Company had
cash and cash equivalents of $84.1 million.

     The Company  anticipates  that it will have  sufficient  funds available to
meet its current foreseeable commitments. At March 31, 2000, the Company had one
outstanding  commitment to originate a loan for $12.5 million and no outstanding
commitments to purchase  loans.  Certificates  of deposit which are scheduled to
mature in one year or less at March 31, 2000 totaled $736.0 million.  Due to the
Company's  high  interest  rate spread,  management  has  typically  relied upon
interest rate  sensitive  short-term  deposits to fund its loan  purchases.  The
Company  believes the potential  interest rate risk is acceptable in view of the
Company's belief that it can maintain an acceptable net interest spread.

     At March 31, 2000, the Bank exceeded each of its three capital requirements
and is considered well capitalized for regulatory  purposes.  The following is a
summary of the Bank's regulatory capital position at March 31, 2000.

<TABLE>
<CAPTION>
                                                      At March 31, 2000
                                           ----------------------------------------
                                                Required               Actual
                                           ------------------    ------------------
                                            Amount   Percent       Amount   Percent
                                           --------  --------    ---------  -------
                                                     (Dollars in Thousands)
<S>                                       <C>          <C>      <C>         <C>
Leverage capital........................   $ 70,288      5.0%    $219,985    15.6%
Tier 1 capital..........................     62,420      6.0      219,985    21.2
Total risk-based capital................    104,033     10.0      231,532    22.3

</TABLE>

     The Bank recently  submitted a new business plan for  consideration  by the
Texas  Savings and Loan  Department.  This plan  reflects the Senior Notes being
repaid upon maturity in the third  quarter of 2000.  In addition it  anticipates
loan  growth  of  approximately  $500.0  million  in the third  quarter  of 2000
primarily  through the expected purchase of a number of loan pools being offered
by various third party  sellers.  The plan reflects Tier 1 capital  remaining in
excess of 9% during the three year period set forth in the plan. Until this plan
is approved by the Texas Savings and Loan  Department,  the Bank operates  under
its current plan which generally  anticipates a decline in total assets,  absent
the Bank being the successful  bidder for  additional  bulk asset  purchases;  a
continued   improvement   in  the  Bank's  level  of  classified   assets;   the
discontinuation of the Bank's foreign lending program;  and the Bank maintaining
a Tier 1 capital  ratio of at least 10%. The Texas  Department  must be provided
with prior  written  notice of any  actions  planned or  anticipated  that might
reasonably  be  expected  to result in a material  deviation  from the  approved
business  plan.  The Bank  requested  and received  approval to

                                       9
<PAGE>

deviate from its  business  plan during the last quarter of 1999 due to the bulk
purchase of single family residential loans. Aside from this bulk loan purchase,
the Bank is in compliance with the plan, as classified  asset levels continue to
improve, the Bank's Tier 1 capital level is significantly above 10% and the Bank
discontinued  its foreign lending  program prior to October,  1999 when the plan
was submitted.

IMPACT ON INFLATION AND CHANGING PRICES

     The Consolidated  Financial  Statements and Notes thereto  presented herein
have been prepared in accordance with generally accepted accounting  principles,
which require the  measurement  of financial  position and operating  results in
terms of  historical  dollars  without  considering  the change in the  relative
purchasing power of money over time due to inflation. The impact of inflation is
reflected in the  increased  cost of the  Company's  operations.  Nearly all the
assets and  liabilities of the Company's are financial,  unlike most  industrial
companies.  As a result,  the  Company's  performance  is  directly  impacted by
changes in interest  rates,  which are  indirectly  influenced  by  inflationary
expectations.  Since the  Company  has  historically  placed  more  emphasis  on
increasing  net  interest  margin  rather than on  matching  the  maturities  of
interest rate sensitive  assets and  liabilities,  changes in interest rates may
have a greater  impact on the  Company's  financial  condition  and  results  of
operations.  Changes  in  investment  rates do no  necessarily  move to the same
extent as changes in the price of goods and services.

RATIOS OF EARNINGS TO FIXED CHARGES

     The  Company's  consolidated  ratios of earnings  to fixed  charges for the
three  months  ended  March  31,  2000 are set  forth  below.  Earnings  used in
computing the ratios shown consist of earnings from continuing operations before
taxes and  interest  expense.  Fixed  charges,  excluding  interest on deposits,
represent interest expense on borrowings.  Fixed charges,  including interest on
deposits,  represent  all of the  foregoing  items plus  interest  on  deposits.
Interest expense (other than on deposits)  includes interest on FHLB borrowings,
the Senior Notes and other borrowed funds.

                                              For the Three Months Ended
                                                     March 31, 2000
                                              --------------------------

  Excluding interest on deposits...........              5.9:1
  Including interest on deposits...........              1.2:1


MARKET RISK

     The Company's  estimated  sensitivity to interest rate risk, as measured by
the estimated interest earnings sensitivity profile and the interest sensitivity
gap analysis,  has not materially changed from the information  disclosed in the
Company's annual report on Form 10-K for the year ended December 31, 1999.


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<PAGE>

YEAR 2000

     No disruptions in systems, service to customers or operation of the Company
were  experienced  as a result of the year 2000,  referring to the date rollover
from December 31, 1999 to January 1, 2000.  The Year 2000 issue is the result of
computer  programs being written using two digits rather than four to define the
applicable  year.  Any of the  computer  programs  used by the Company that have
time-sensitive software could have recognized a date using "00" as the year 1900
rather  that the year  2000.  This  could  have  resulted  in system  failure or
miscalculations,  had management not made the Year 2000  preparations  disclosed
previously  in its filings  with the  Securities  and Exchange  Commission.  The
Company  expensed all costs  associated with its  preparations for the Year 2000
which were immaterial.

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is  involved  in various  legal  proceedings  occurring  in the
ordinary  course of business.  Management of the Company,  based on  discussions
with litigation counsel, believes that such proceedings will not have a material
adverse  effect on the financial  condition or operations of the Company.  There
can be no assurance that any of the outstanding  legal  proceedings to which the
Company is a party will not be decided adversely to the Company's  interests and
have a  material  adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

Item 2. Changes in Securities

     None.

Item 3. Defaults upon Senior 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) Exhibits 27 - Financial Data Schedule


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<PAGE>

                                   SIGNATURES

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


                                            BEAL FINANCIAL CORPORATION
                                            Registrant


                                            /s/ D. Andrew Beal
Date: May 13, 2000                          -------------------------------
                                            D. Andrew Beal
                                            Chairman and President


                                            /s/ James W. Lewis, Jr.
Date: May 13, 2000                          -------------------------------
                                            James W. Lewis, Jr.
                                            Chief Accounting Officer


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