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

                                   FORM 10-Q
          (Mark One)
          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended  SEPTEMBER 30, 1996
                              OR
           OF THE SECURITIES EXCHANGE ACT OF 1934
          For the transition period from             to

                                  1-14074
                           (Commission File Number)
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

                        ContiFinancial Corporation
            (Exact name of registrant as specified in its charter)

             
            Delaware                                       13-3852588
(State or other jurisdiction of incorporation                (I.R.S.
or organization)                                  Employer Identification No.)

277 Park Avenue
New York, New York                                           10172
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code:           (212) 207-2800


                                no change
  (Former name, former address and former fiscal year, if changed since last
                                    report)

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

The Company had  44,380,949  shares of common stock outstanding as of
November  6, 1996.

<PAGE>
Page 2

   PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.

                          CONTIFINANCIAL CORPORATION
                     Condensed Consolidated Balance Sheets
                  as of September 30, 1996 and March 31, 1996
                   (dollars in thousands, except share data)
                                  (unaudited)
<TABLE>
<CAPTION>

                                                                               September 30,         MARCH 31,
                                                                                    1996                 1996
                                                                               --------------       -----------
<S>                                                                <C>                     <C>
                                                                                
                              Assets
Cash and cash equivalents                                                      $    42,822            $   32,479
Securities purchased under agreements to resell                                    397,123               179,875
Interest-only and residual certificates                                            270,012               293,218
Capitalized servicing fees receivable                                               19,082                11,689
Trade  receivables, net                                                            572,005               352,325
Other                                                                               36,010                22,954
                                                                               --------------       ------------
      Total assets                                                              $1,337,054            $  892,540
                                                                               ==============       ============

               Liabilities and Stockholders' Equity
Liabilities:
Securities sold but not yet purchased                                            $ 395,282             $ 180,729
Payables to affiliates                                                             224,873               337,734
Senior Notes                                                                       299,147                     -
Other                                                                               74,078                79,258
                                                                               --------------       ------------
      Total liabilities                                                            993,380               597,721
                                                                               --------------       ------------

Commitments and contingencies

Stockholders' equit:
   Preferred stock  (par value $0.01 per share; 25,000,000 shares
authorized; none issued or outstanding at September 30, 1996 and 
March 31, 1996)                                                                        -                     - 

   Common stock (par value $0.01 per share;  250,000,000 shares
authorized; 44,380,949 shares issued and outstanding at September 30,
1996 and March 31, 1996)                                                              444                   444

   Paid-in capital                                                                 294,742               294,701
   Retained earnings                                                                67,597                22,648
   Treasury stock (11,311 shares of common stock, at cost)                           (237)                     -
   Deferred compensation                                                          (18,872)              (22,974)
                                                                               --------------       ------------
      Total stockholders' equity                                                   343,674               294,819
                                                                               --------------       ------------
      Total liabilities and stockholders' equity                               $ 1,337,054           $   892,540
                                                                               ==============       ============

</TABLE>

The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of these statements.

<PAGE>
Page 3

                          CONTIFINANCIAL  CORPORATION
                       Consolidated Statements of Income
        for the three and six months ended September 30, 1996 and 1995
                 (dollars in thousands, except per share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS                           SIX MONTHS
                                                                 ENDED SEPTEMBER 30,                  ENDED SEPTEMBER 30,
                                                         --------------------------------      -----------------------------
                                                              1996              1995               1996             1995
                                                         ------------     ----------------     -------------    ------------
<S>                                                  <C>              <C>                 <C>                <C>
 
Gross income
   Gain on sale of receivables                           $  44,203           $  37,589          $  75,369          $  60,144
   Interest                                                 33,179              25,082             61,694             42,965

   Net servicing income                                     10,893               7,320             19,966             12,086
   Other income                                              1,408                 840              2,417              1,808
                                                         ------------     ----------------     -------------    ------------
      Total gross income                                    89,683              70,831            159,446            117,003
                                                         ------------     ----------------     -------------    ------------

Expenses
   Compensation and benefits                                15,788              12,112             28,196             19,952
   Interest (includes $5,080, $6,065,
   $11,306 and $9,336 for the three and
   six months ended September 30, 1996
   and 1995, respectively, to                               24,326              22,273             43,988             37,518
   affiliates)


   Provision for loan losses                                 89.00              109.00             308.00             257.00
   General and administrative                                6,978               3,557             11,757              6,814
                                                         ------------     ----------------     -------------    ------------
      Total expenses                                        47,181              38,051             84,249             64,541
                                                         ------------     ----------------     -------------    ------------
Income before income taxes and
   minority interest                                        42,502              32,780             75,197             52,462
Income taxes                                                16,986              12,752             30,248             20,408
                                                         ------------     ----------------     -------------    ------------
Income before minority interest                             25,516              20,028             44,949             32,054
Minority interest of subsidiary                                  -                   -                  -              3,310
                                                         ------------     ----------------     -------------    ------------
      Net income                                      $     25,516           $  20,028      $      44,949      $      28,744
                                                         ============     ================     =============    ============
Primary and fully diluted earnings per
common share                                        $         0.58                         $         1.02
                                                         ============                          ============= 
Fully diluted weighted average number of
shares outstanding                                      43,949,105                             43,996,236
                                                         ============                          ============= 
Primary weighted average number of shares
outstanding                                             43,914,518                             43,906,400
                                                         ============                          ============= 
</TABLE>


The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of  these statements.




<PAGE>
Page 4

                          CONTIFINANCIAL CORPORATION
                Condensed Consolidated Statements of Cash Flows
             for the six months ended September 30, 1996 and 1995
                            (dollars in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                               SIX MONTHS
                                                                          ENDED SEPTEMBER 30,
                                                                  ----------------------------------
                                                                        1996                 1995
                                                                  -------------           -----------
<S>                                                         <C>                       <C>

Net cash used in operating activities                            $ (169,484)              $ (113,516)
                                                                  -------------           -----------
Cash flows from investing activities:
  Acquisition of minority interest in  ContiMortgage                       -                 (34,350)
  Purchase of property and equipment                                   (448)                    (729)
                                                                  -------------           -----------
         Cash used in investing activities                             (448)                 (35,079)
                                                                  -------------           -----------
 Cash flows from financing activities:
   Net decrease in payables to affiliates                          (122,000)                    --

   Net proceeds from issuance of Senior Notes                        293,136                    --

   Net increase  in due to affiliates                                 9,139                  151,082
                                                                  -------------           -----------
          Net cash provided by financing activities                 180,275                  151,082
                                                                  -------------           -----------
Net increase in cash and cash equivalents                            10,343                    2,487
Cash and cash equivalents at beginning of  period                    32,479                    2,822
                                                                  -------------           -----------
Cash and cash equivalents at end of period                    $      42,822              $     5,309
                                                                  =============           ===========
</TABLE>


The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of these statements.




<PAGE>
Page 5


                          CONTIFINANCIAL CORPORATION
        Notes to Unaudited Condensed Consolidated Financial Statements
                              September 30, 1996
                            (dollars in thousands)


1.  BASIS OF PRESENTATION

The  accompanying  unaudited condensed consolidated  financial  statements  of
ContiFinancial Corporation  and  its  wholly-owned subsidiaries (collectively,
"ContiFinancial" or the "Company") have  been  prepared  pursuant to the rules
and regulations of the Securities and Exchange Commission  and, in the opinion
of management, reflect all normal, recurring adjustments which  are  necessary
for a fair presentation of the financial position, results of operations,  and
cash  flows  for  each  period shown.  The results for interim periods are not
necessarily  indicative  of  financial  results  for  the  full  year.   These
unaudited  condensed consolidated  financial  statements  should  be  read  in
conjunction  with  the  audited  Consolidated  Financial  Statements and notes
thereto included in the Company's Annual Report on Form 10-K   for  the fiscal
year ended March 31, 1996 (the "Annual Report").  All significant intercompany
accounts and transactions have been eliminated in consolidation.


2. RECENT ACCOUNTING PRONOUNCEMENTS

In  June  1996,  the  Financial  Accounting  Standards  Board  ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting  for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS  125") which addresses the accounting for transfers of financial assets
in which the transferor has some continuing involvement either with the assets
transferred  or  with the transferee.  A transfer of financial assets in which
the transferor surrenders control over those assets is accounted for as a sale
to  the extent that  consideration  other  than  beneficial  interest  in  the
transferred   assets  is  received  in  exchange.   SFAS  125   requires  that
liabilities and  derivatives  incurred or obtained by transferors as part of a
transfer  of  financial  assets  be  initially  measured  at  fair  value,  if
practicable.  In  addition,  SFAS  125  requires  that  servicing  assets  and
liabilities be subsequently measured  by the amortization over their estimated
life and assessment of asset impairment  be  based on such assets' fair value.
SFAS  125 is effective for transfers and servicing  of  financial  assets  and
extinguishments of liabilities occurring after December 31, 1996, and is to be
applied  prospectively.   The  Company  is  currently evaluating the impact of
SFAS 125 on its financial position and results of operations.

In  October 1995, the FASB issued SFAS No. 123,  "Accounting  for  Stock-Based
Compensation"  ("SFAS  123")  which  was  adopted  on April 1, 1996.  SFAS 123
allows  companies  either  to  continue  to  account for stock-based  employee
compensation plans under existing accounting standards  or  adopt a fair value
based method of accounting for stock options as compensation  expense over the
service period (generally the vesting period) as defined in the  new standard.
SFAS  123  requires  that if a company continues to account for stock  options
under Accounting Principles  Board  ("APB")  Opinion  No.  25, it must provide
annual pro forma net income and earnings per share information "as if" the new
fair  value approach had been adopted.  The Company will continue  to  account
for stock-based  compensation  under  APB  Opinion  No.  25  and will 

<PAGE>
Page 6

make the required  disclosures  at March 31, 1997.  As a result, the adoption
of  this standard did not have an impact on the Company's financial position 
or results of operations.

3.  SENIOR NOTES

On August 14, 1996, the  Company issued $300 million of unsecured senior notes
(the "Senior Notes") due August  15,  2003.   Proceeds  to the Company, net of
underwriting fees and market discount were $293,136.

The Senior Notes  bear interest at 8.375% payable semiannually on February 15
and August 15 commencing February 15, 1997.  The Senior Notes are  redeemable
as a whole or in part, at the option of the Company, at any time or from time
to time, at a redemption price equal to the greater of (i) 100% of their
principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semiannual basis at the treasury yield plus 50 basis points,
plus in each case accrued interest to the date of redemption.

The  Company  is  required  to  comply  with various operating  and  financial
covenants as defined in the agreements governing  the  issuance  of the Senior
Notes.   Among other restrictions, the Company has limitations on indebtedness
and restricted payments.

The Senior  Notes  are  equal in right of payment with all existing and future
senior indebtedness of the  Company  and will be senior in right of payment to
all future subordinated indebtedness of the Company.

Interest expense on the Senior Notes was $3,056 for the period from August 19,
1996 through September 30, 1996.

4.  PAYABLES TO AFFILIATES

In connection with the sale of the Senior  Notes (as discussed in Note 3), the
Company prepaid in full the $125,000 term note  payable  to  Continental Grain
Company ("Continental Grain") originally due on September 30, 1997.



<PAGE>
Page 7

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

This discussion should be read in conjunction with the accompanying  unaudited
condensed  consolidated  financial  statements  and  notes  thereto,  and  the
Company's audited consolidated financial statements and notes thereto included
in  the  Annual  Report.   Certain  statements  under  this caption constitute
"forward-looking    statements"   under   federal   securities   laws.     See
"Forward-looking  Statements"  section.

General

The Company is engaged  in  the  consumer  and  commercial finance business by
originating and servicing home equity loans and providing  financing and asset
securitization expertise to originators of a broad range of  loans, leases and
receivables.  Through ContiMortgage Corporation ("ContiMortgage"), the Company
is a leading originator, purchaser, seller and servicer of home  equity  loans
made  to  borrowers  whose  borrowing  needs  may  not  be  met by traditional
financial institutions due to credit exceptions or other factors.  The Company
has strategic alliances with various originators of a broad range of  consumer
and  commercial  loans  and  other  assets,  ("Strategic Alliances").  Through
ContiTrade   Services  L.L.C.  ("ContiTrade")  and   ContiFinancial   Services
Corporation ("ContiFinancial  Services"),  an  NASD broker/dealer, the Company
provides  financing  and  asset  securitization  expertise,   respectively  to
ContiMortgage and its Strategic Alliance clients.

The  Company's  Strategic  Alliance  clients  are originators of consumer  and
commercial loans, leases and receivables.  The  Company provides financing and
asset securitization execution and expertise to the  Strategic Alliance client
while  the client provides a consistent flow of securitizable  assets  to  the
Company.   In  certain  Strategic  Alliances,  the  Company receives interests
("Strategic Alliance Equity Interests") in the Strategic Alliance client.  The
realization of value on such Strategic Alliance Equity Interests is subject to
many factors, including the future growth and profitability  of  the Strategic
Alliance  clients  and  the  completion  of  initial public offerings by  such
Strategic Alliance clients.

On November 8, 1996, the Company purchased United  Lending  Group  ("ULG"),  a
west  coast-based  home  equity lender specializing in retail originations via
direct mail and telemarketing  throughout  the  United States.  ULG originates
approximately $30 million  of home equity and home improvement loans per month
in 26 states.  ContiMortgage will service the product  originated  by  ULG and
retained by the Company for securitization.




<PAGE>
Page 8



The following table presents loan portfolio data relating to the three and six
month periods ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
                                                  Three Months                    Six Months
                                               Ended September 30,            Ended September 30,
                                          ---------------------------    -----------------------------
Loan  Portfolio Data                           1996           1995            1996           1995
                                          ------------    -----------    ------------    -------------
<S>                                     <C>            <C>            <C>             <C>

ContiMortgage serviced loan portfolio       $4,852,045     $2,954,808      $4,852,045     $2,954,808
ContiMortgage loan originations               $885,407       $559,532      $1,563,535     $1,006,812
Securitizations and sales:
    ContiMortgage                             $814,420       $450,184      $1,507,374       $750,184
    Strategic alliances                        311,924        692,000         612,399        883,000
                                          ------------    -----------    ------------    -------------
Total securitizations and sales             $1,126,344     $1,142,184      $2,119,773     $1,633,184
                                          ============    ===========    ============    =============
</TABLE>



Certain Accounting Considerations

For  a  discussion  of  recent  accounting  pronouncements,  see Note 2 to the
unaudited condensed consolidated financial statements, Part I, Item I.

As  a  fundamental  part of its business and financing strategy,  the  Company
sells substantially all of its loans or other assets through securitization in
the form of REMICs, owner  trusts or grantor trusts.  In a securitization, the
Company sells loans or other  assets  that it has originated or purchased to a
trust for a cash purchase price and an  interest  in the loans or other assets
securitized (in the form of the "excess spread").   The cash purchase price is
raised  through  an  offering  of  pass-through  certificates  by  the  trust.
Following the securitization, the purchasers of the  pass-through certificates
receive the principal collected and the investor pass-through interest rate on
the certificate balance, while the Company receives the  excess  spread.   The
excess  spread  represents,  over  the  life of the loans or other assets, the
excess of the weighted average coupon on  each  pool of  loans or other assets
sold over the sum of the pass-through interest rate  plus  a  normal servicing
fee, a trustee fee, an insurance fee and an estimate of annual  future  credit
losses related to the loans or other assets securitized (the "Excess Spread").
The  majority  of the Company's gross income is recognized as gain on sale  of
loans or other assets,  which  represents  the value of the Excess Spread less
origination and underwriting costs.  The present value of the Excess Spread is
the  Excess Spread receivable (the "Excess Spread  Receivable").   The  Excess
Spread  Receivable  is  either  a contractual right or a certificated security
generally  in  the  form of an interest-only  or  residual  certificate.   The
majority of the Company's  Excess  Spread Receivable at September 30, 1996 and
March 31, 1996 is interest-only and  residual certificates.  Consequently, the
Company's consolidated balance sheets  designate  Excess  Spread Receivable as
"interest-only and residual certificates."

The Company recognizes the gain on sale of loans or other assets in the fiscal
year in which such loans or other assets are sold, although cash (representing
the Excess Spread and servicing fees) is received by the Company over the life
of the loans or other assets.  Concurrent with recognizing  such gain on sale,
the  Company  records  the  Excess  Spread  Receivable  as  an  asset  on  its
consolidated balance sheets.  The Excess Spread Receivable is reduced  as cash
distributions are received from the securitization.

<PAGE>
Page 9

Due  to the fact that the gain recognized in the year of sale is equal to  the
present  value  of the estimated future cash flows from the Excess Spread, the
amount of cash actually  received  over the lives of the loans or other assets
normally exceeds the gain previously recognized at the time the loans or other
assets were sold and therefore interest  income is recognized over the life of
the loans or other assets securitized.  In periods subsequent to the sale, the
Company may recognize an increase in fair value of Excess Spread Receivable as
gain on sale of receivables to the extent  that  estimates  of  the loan pools
future  remaining  lives exceed those originally projected.  This estimate  of
extended  life  is performed  by  reviewing  past  prepayment  experience  and
estimating future  prepayment experience by considering numerous factors which
include current market assumptions, the interest rate environment and economic
factors.  If actual  prepayments  with  respect  to sold loans occur faster or
credit experience is worse than projected at the time  such  loans  were sold,
the carrying value of the Excess Spread Receivable may have to be written down
through  a  charge  to  earnings  in  the  period of adjustment.  To date, the
Company has not been required to record such  a  downward  adjustment  on  its
portfolio  as  a  whole.  The Company believes that one factor contributing to
this positive experience  is  the  Company's determination that over time home
equity loan prepayments have been less  volatile  than  conventional  mortgage
prepayments.

Additionally, upon sale or securitization of servicing retained mortgages, the
Company  capitalizes  the  cost  associated with the right to service mortgage
loans based on its relative fair value.   The  Company  determines  fair value
based  on  the  present  value  of estimated net future cash flows related  to
servicing income.  The cost allocated  to the servicing rights is amortized in
proportion  to  and  over the period of estimated  net  future  servicing  fee
income.   The  Company  periodically   reviews   capitalized   servicing  fees
receivable   for  valuation  impairment.   This  review  is  performed  on   a
disaggregated basis for the predominant risk characteristics of the underlying
loans which are  loan  type,  term  and credit quality.  The Company generally
makes loans to credit impaired borrowers  whose borrowing needs may not be met
by traditional financial institutions due to  credit  exceptions.  The Company
has  found  that credit impaired borrowers are payment sensitive  rather  than
interest rate sensitive.  As such the Company does not consider interest rates
a predominant  risk  characteristic  for  purposes  of  valuation  impairment.
Impairment  is  recognized  in  a  valuation  allowance for each disaggregated
stratum in the period of impairment

Financial Condition

September 30, 1996

Securities purchased under agreements to resell  increased $217.2 million from
$179.9 million at March 31, 1996 to $397.1 million at September 30, 1996.  The
Company hedges its interest rate exposure on its receivables held for sale and
loans and other assets sold, with recourse, under  its asset purchase and sale
facilities   with   certain   financial  institutions  ("Purchase   and   Sale
Facilities"), through the use of United States Treasury Securities and futures
contracts.  Securities purchased  under  agreements to resell are part of this
hedging strategy.  The increase in securities  purchased  under  agreement  to
resell was primarily due to the increase in receivables held for sale.

Interest-only  and  residual  certificates decreased $23.2 million from $293.2
million at March 31, 1996 to $270.0  million  at  September  30,  1996.   This
decrease  represented  $96.5  million  of sales of such certificates and $20.7
million of collections partially offset  by  $79.0 million recorded during the
six  months  ended  September  30,  1996 related to  new  securitizations  and
recorded interest income of $15.0 million.


<PAGE>
Page 10

Capitalized  servicing  fees receivable  increased  $7.4  million  from  $11.7
million at March 31, 1996  to  $19.1  million  at  September  30,  1996.  This
balance  reflected  the  capitalization  of  $10.2 million of servicing rights
partially offset by amortization of $3.0 million.

Trade  receivables increased by a net amount of  $219.7  million  from  $352.3
million  at  March  31,  1996  to  $572.0 million at September 30, 1996.  This
increase was primarily due to a net increase in receivables held for sale from
$296.2 million as of March 31, 1996  to  $487.5 million at September 30, 1996.
The  net  increase  in receivables held for sale  was  primarily  due  to  the
investment of the net  cash  proceeds  available  from  the  Company's initial
public  offering  in  February  1996  (the  "IPO") and the sale of the  $300.0
million Senior Notes, partially offset by the  repayment of the $125.0 million
term   note   ("the  Term  Note")   payable  to  Continental   Grain   Company
("Continental Grain"),  in  addition  to  the  sale  of  certain Excess Spread
Receivables.

Other assets increased $13.0 million from $23.0 million at  March  31, 1996 to
$36.0  million  at September 30, 1996.  This increase is primarily due  to  an
increase of approximately  $11.0  million  of  deferred  issuance costs on the
Senior Notes.

Securities  sold  but not yet purchased increased $214.6 million  from  $180.7
million at March 31, 1996 to $395.3 million at September 30, 1996. The Company
hedges its interest  rate  exposure on its receivables held for sale and other
assets sold with recourse under  its  Purchase and Sale Facilities through the
use of United States Treasury Securities  and  futures contracts.   Securities
purchased under agreements to resell are part of  this hedging strategy.  This
increase in securities sold but not yet purchased was  primarily  due  to  the
increase in receivables held for sale.

On August 14, 1996 the Company issued $300.0 million of unsecured senior notes
(  the  "Senior  Notes")  and  received  net proceeds of $293.1 million, after
underwriting fees and market discount, resulting in the balance sheet increase
from March 31, 1996.  The Senior Notes were  issued  at  a  discount  which is
being amortized over the life of the Senior Notes, resulting in the balance of
$299.1 million as of September 30, 1996.

Payables  to affiliates decreased $112.8 million from $337.7 million at  March
31, 1996 to  $224.9 million at September 30, 1996.  The decrease was primarily
due to the prepayment  of  the $125.0 million Term Note payable to Continental
Grain upon receipt of the proceeds from the issuance of the Senior Notes.

Other liabilities decreased  $5.2 million from $79.3 million at March 31, 1996
to $74.1 million at September  30,  1996.   The decrease is primarily due to a
decrease in accounts payable and accrued expenses resulting from a decrease in
amounts payable under the Purchase and Sale Facilities  and due to the payment
of  the fiscal 1996 incentive accruals during the six months  ended  September
30, 1996.

Stockholders'  equity increased $48.9 million from $294.8 million at March 31,
1996 to $343.7 million  at  September  30,  1996  due  to  net income of $44.9
million and the amortization of deferred compensation of $4.0 million.

<PAGE>
Page 11

Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995

The Company's total gross income increased from $70.8 million  for  the  three
months  ended  September  30, 1995 to $89.7 million for the three months ended
September 30, 1996, representing  a  27%  increase.   Net income has increased
from  $20.0 million for the three months ended September  30,  1995  to  $25.5
million  for  the  three  months ended  September 30, 1996, representing a 27%
increase.

On a percentage basis, the  following  table sets forth the composition of the
Company's  results  as a percentage of total  gross  income  for  the  periods
indicated:


 
                                                            Three Months
                                                        Ended September 30,
                                                        ---------------------
Gross income                                             1996           1995
                                                       --------      ---------
   Gain on sale of receivables                          49.29%         53.07%
   Interest                                             36.99%         35.41%
   Net servicing income                                 12.15%         10.33%
   Other income                                          1.57%          1.19%
                                                       --------      ---------
      Total gross income                               100.00%        100.00%
                                                       --------      ---------

Expenses
   Compensation and benefits                            17.61%         17.10%
   Interest                                             27.12%         31.45%
   Provision for loan losses                             0.10%          0.15%
   General and administrative                            7.78%          5.02%
                                                       --------      ---------
     Total expenses                                     52.61%         53.72%
                                                       --------      ---------

Income before income taxes and minority                 47.39%         46.28%
interest
Income taxes                                            18.94%         18.00%
Minority interest of subsidiary                          0.00%          0.00%
                                                       --------      ---------
      Net income                                        28.45%         28.28%
                                                       ========      =========





Income. The increase  in  total  gross  income  was due to a greater volume of
loans originated as a result of the expansion of  the  Company's wholesale and
broker home equity loan origination sources.

<PAGE>
Page 12

The  following table sets forth information regarding the  components  of  the
Company's  total  gross  income  in  each  of  the  three  month periods ended
September 30:





                                                         THREE MONTHS
                                                     ENDED SEPTEMBER 30,
                                                  ---------------------------
                                                       1996            1995
                                                  -----------     -----------
                                                        (in thousands)
Gain on sale of receivables                         $44,203          $ 37,589
Interest                                             33,179            25,082
Net servicing income                                 10,893             7,320
Other income                                          1,408               840
                                                  -----------     -----------
   Total gross income                              $ 89,683          $ 70,831
                                                  ===========     ===========


Gain on sale of receivables was the primary component of total  gross  income,
comprising  49%  and  53%  of  total  gross  income  in the three months ended
September 30, 1996 and 1995, respectively.  Gain on sale  of  receivables as a
percentage  of total gross income was lower for the second quarter  of  fiscal
1997 due to an increase in servicing income associated with a larger servicing
portfolio and balance of interest earning assets.  Gain on sale of receivables
increased $6.6 million or 18% for the three months ended September 30, 1996 as
compared to the corresponding period in 1995.

Gain on sale  of  receivables represents income primarily from the structuring
and sale of pools of   home  equity  loans,  originated  by  ContiMortgage and
Strategic Alliance clients of the Company, to REMICs, owner trusts and grantor
trusts.  In addition, gains on sale of  receivables are earned upon whole loan
sales and upon the securitization of commercial and multi-family  loans, Title
I home improvement loans, franchise loans, small business loans and  equipment
leases  which  are  sold into REMICs and whole loan and other trust structures
(collectively, "Structured Finance Transactions").

The increase in the amount of gain on sale of receivables was primarily due to
a larger gain on sale  percentage  earned  in the three months ended September
30, 1996 as compared to the corresponding period  in 1995.  The larger gain on
sale  percentage  was  due  to  an  increased  proportion   of   ContiMortgage
securitizations   which   yield   higher   gain   on   sale  percentages  than
securitizations and placements for Strategic Alliance clients.   For the three
months ended September 30, 1996, ContiMortgage securitizations represented 72%
of  total  volume as compared to 39% for the three months ended September  30,
1995.  This  resulted  in a gain of 63 basis points in Excess Spread or a $7.2
million increase in gain  on  sale  of  receivables  in the three months ended
September 30, 1996 as compared to the corresponding period in 1995.

The Company structured and sold $1.1 billion of mortgages  and  leases  in the
three months ended September 30, 1996, a slight decrease of $15.8 million from
the  three months ended September 30, 1995, which reduced the gain on sale  of
receivables  by $0.6 million. The combination of the $7.2 million increase due
to a higher gain  on  sale  percentage  partially  offset  by  a  $0.6 million
increase due to decreased securitization volume netted to a total increase  in
gain  on sale of receivables from the three months ended September 30, 

<PAGE>
Page 13

1995 of $6.6 million.  The  gain  on  sale  of  receivables  as  a percentage 
of loans securitized and sold for the three months ended September  30,  1996
and 1995 was 3.9%  and 3.3%, respectively.

Interest  income  increased  $8.1  million  or  32% for the three months ended
September  30, 1996 from the corresponding period  in  1995.  Interest  income
represents interest  earned  on  loans  originated or purchased by the Company
during the period from their origination  or purchase until the actual sale of
the loans, as well as the recognition of the increased value of the discounted
Excess Spread Receivables over time. The interest  earned  on loans originated
and  purchased  contributed  $4.6  million to the increase between  the  three
months ended September 30, 1996 and  1995.  The increase in interest earned on
loans originated and purchased was due primarily  to a $191.8 million increase
in  the  average  balance  of   loans  originated and purchased  but  not  yet
securitized during the periods. The recognition  of the increased value of the
discounted Excess Spread Receivables over time accounted  for  $3.5 million of
the increase in interest income which was due to the increase in  the  average
investment  in  Excess  Spread Receivables in the three months ended September
30, 1996 as compared to the corresponding period in 1995.

Net servicing income increased  $3.6 million or 49% for the three months ended
September 30, 1996 compared to the  corresponding  period  in  1995 due to the
increase in the size of the servicing portfolio and the volume of  loan  sales
and  securitizations.   The  Company's loan servicing portfolio increased $1.9
billion or 64% to $4.9 billion  from September 30, 1995 to September 30, 1996,
contributing $2.9 million or a 72%  increase  between  the three months ending
September 30, 1995 and 1996. Additionally, net servicing  income  increased by
$0.7  million  in the second quarter of fiscal 1997 as compared to the  second
quarter of fiscal 1996 due to capitalized servicing income associated with the
81% increase in  the  ContiMortgage home equity loan sales and securitizations
for the three months ended September 30, 1996 as compared to the corresponding
period in 1995.

Other income increased  $0.6  million  or 68% for the three month period ended
September 30, 1996 compared to the corresponding period in 1995.  Other income
consists  primarily  of  "purchase  premium  refunds"  received  from  certain
origination sources related to loans  that  prepay  within a contractually set
time  period. Upon origination of a loan, the Company  will  pay  a  wholesale
originator  a  purchase  premium  for  the loan or pools of loans. The Company
negotiates agreements with wholesale originators  that  provide that a portion
of such purchase premium will be repaid if individual loans  are repaid within
a  contractually  set time period. The income from "purchase premium  refunds"
increased due to the increase in ContiMortgage origination volume.

Expenses. Total expenses  for  the  three  months  ended  September  30,  1996
increased  $9.1  million  or  24%  from the corresponding period in 1995. This
increase in total expenses was due to the increase in number of employees, the
granting of "restricted" common stock and costs associated with increased home
equity loan volume.


<PAGE>
Page 14



The following table sets forth the components  of  the  Company's expenses for
the three months ended September 30, 1996 and 1995.



                                                THREE MONTHS
                                              ENDED SEPTEMBER 30,
                                           --------------------------
                                               1996             1995
                                           -----------     -----------
                                                (in thousands)
Compensation and benefits                   $15,788          $12,112
Interest                                     24,326           22,273
Provision for loan losses                     89.00           109.00
General and administrative                    6,978            3,557
                                           -----------     -----------
    Total expenses                         $ 47,181        $  38,051
                                           ===========     ===========




Compensation and benefits expense increased $3.7 million  or 30% for the three
months ended September 30, 1996 compared to the corresponding  period  in 1995
due  to the addition of new personnel, change in incentive compensation plans,
the granting  of  restricted  common  stock  and  commissions  paid to certain
employees on volume of loan originations.  On September 30, 1996,  the Company
had  532  employees as compared to 294 employees on September 30, 1995,  which
primarily contributed to a $2.8 million increase in salary partially offset by
a $2.2 million  decrease  in incentive compensation for the three months ended
September 30, 1996 as compared  to  the  corresponding  period  in  1995.   In
connection  with  the IPO, shares of "restricted" common stock were granted to
certain key employees.   The "restricted" common stock granted, subject to the
employee's continued employment  with  the  Company, vest between February 14,
1996 and March 31, 2000.  The granting of "restricted"  common stock increased
the compensation expense for three months ended September  30,  1996  by  $2.6
million compared to the corresponding period in 1995.  The commissions paid to
certain  ContiMortgage  employees  increased $0.5 million for the three months
ended September 30, 1996 as compared  to  the  corresponding  period  in 1995.
Compensation  and  benefits  expense  represented  18%  and 17% of total gross
income for the three months ended September 30, 1996 and 1995, respectively.

Interest expense increased $2.1 million or 9% to $24.3 million  for  the three
months  ended  September  30,  1996  as  compared  to  $22.2  million  for the
corresponding  period  in  1995  primarily  as  a  result  of interest expense
associated with the issuance of the Senior Notes, the costs  of the sale, with
limited recourse, of certain Excess Spread Receivables and an overall increase
in  the cost of borrowing offset by decreased expenses from the  Purchase  and
Sale  Facilities  and  decreased borrowing from Continental Grain. The average
borrowings from Continental  Grain,  Purchase  and Sale Facilities, the Senior
Notes and the Excess Spread Receivables sold, with limited recourse, increased
by $96.2 million for the three months ended September 30, 1996, as compared to
the  corresponding  period in 1995 resulting in a  $1.7  million  increase  in
interest expense. The  increase in the Company's combined interest rates by 11
basis points increased interest  expense  by $0.4 million for the three months
ended September 30, 1996 as compared to the  corresponding period in 1995. The
combination of the $0.4 million increase due to  a  higher  combined  interest
rate  and  the  $1.7 million increase due to increased balances resulted in  a
total increase of $2.1 million in interest expense for  the three months ended
September 30, 1996 compared to the corresponding period in 1995.


<PAGE>
Page 15

Provision for loan  losses  decreased  to  $0.09  million or 18% for the three
months  ended September 30, 1996 as compared to $0.1  million  for  the  three
months ended  September  30,  1995.  Provision  for loan losses is recorded in
sufficient amounts to maintain an allowance at a  level considered adequate to
cover anticipated losses resulting from liquidation  of  receivables  held for
sale  and  receivables sold with limited recourse under the Purchase and  Sale
Facilities,  prior to securitization.  Provision for credit losses recorded at
securitization  is  reserved  in  the  value  of   interest-only  and residual
certificates.   The decrease in the three months ended September 30,  1996  as
compared to the corresponding  period in 1995 resulted from a determination of
adequate reserves in light of actual loss experience.

General and administrative expenses  increased  $3.4  million  or  96% for the
three months ended September 30, 1996 compared to the corresponding  period in
1995,  and  represented   8% and 5% of total gross income for the three months
ended September 30, 1996 and  1995,  respectively.   The primary cause of  the
increase  was a $2.0 million increase in costs associated  with  underwriting,
originating  and  servicing  higher  loan  volumes.  In the three months ended
September 30, 1996, the origination volume increased 58%  as  compared  to the
three  months  ended  September  30,  1995.   Increased expense related to the
implementation  of  collection technology  accounted  for  approximately  $0.2
million of the increase.   The  remaining  increase  was  due  primarily to an
increase in general and administrative expenses of $1.2 million related to the
increase in the number of employees from 294 on September 30, 1995  to  532 on
September 30, 1996.

Income  Taxes. The Company is included in the consolidated Federal income  tax
return of  Continental  Grain.  The  Company's  provision for income taxes was
$17.0 million and $12.8 million for the three months  ended September 30, 1996
and  1995,  respectively. The increase in taxes of 33% for  the  three  months
ended September  30,  1996  compared  to  the corresponding period in 1995 was
substantially  related to the increase in income  before  taxes  and  minority
interest over the  same  period.  The  effective tax rate for the three months
ended September 30, 1996 increased to 40.0%  from   38.9%  in  the  comparable
period in fiscal 1996 due to a change in the provision for state income taxes.



<PAGE>
Page 16

SIX MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1995

The  Company's  total  gross income increased from $117.0 million for the  six
months ended September 30,  1995  to  $159.4  million for the six months ended
September 30, 1996, representing a 36% increase.   Net  income  has  increased
from  $28.7  million  for  the  six  months  ended September 30, 1995 to $44.9
million  for  the six months ended  September 30,  1996,  representing  a  56%
increase.

On a percentage  basis,  the following table sets forth the composition of the
Company's results as a percentage  of  total  gross  income  for  the  periods
indicated:



                                                           Six Months
                                                      Ended September 30,
                                                  -------------------------
Gross income                                        1996             1995
                                                 ----------      ----------


   Gain on sale of receivables                   47.27%              51.40%
   Interest                                      38.69%              36.72%
   Net servicing income                          12.52%              10.33%
   Other income                                   1.52%               1.55%
                                                 ----------      ----------
      Total gross income                        100.00%             100.00%
                                                -----------      ----------

Expenses
   Compensation and benefits                     17.69%              17.05%
   Interest                                      27.59%              32.07%
   Provision for loan losses                      0.19%               0.22%
   General and administrative                     7.37%               5.82%
                                                 ----------      ----------
     Total expenses                              52.84%              55.16%
                                                 ----------      ----------

Income before income taxes and minority          47.16%              44.84%
   interest
Income taxes                                     18.97%              17.44%
Minority interest of subsidiary                   0.00%               2.83%
                                                 ----------      ----------
      Net income                                 28.19%              24.57%
                                                 ----------      ----------



<PAGE>
Page 17


Income.  The  increase  in  total  gross income was due to a greater volume of
loans originated as a result of the  expansion  of the Company's wholesale and
broker home equity loan origination sources.  The  following  table sets forth
information  regarding the components of the Company's total gross  income  in
each of the six month periods ended September 30:




                                                 SIX MONTHS
                                             ENDED SEPTEMBER 30,
                                        --------------------------
                                            1996           1995
                                        -----------    -----------
                                             (in thousands)

Gain on sale of receivables              $75,369         $60,144
Interest                                  61,694          42,965
Net servicing income                      19,966          12,086
Other income                               2,417           1,808
                                        -----------    -----------
   Total gross income                   $159,446       $ 117,003
                                        ===========    ===========



Gain on sale of  receivables  was the primary component of total gross income,
comprising 47% and 51% of total gross income in the six months ended September
30, 1996 and 1995, respectively.   Gain on sale of receivables as a percentage
of total gross income was lower for the six month ended September 30, 1996 due
to  an  increase  in  servicing  income associated  with  a  larger  servicing
portfolio and balance of interest earning assets.  Gain on sale of receivables
increased $15.2 million or 25% for  the six months ended September 30, 1996 as
compared to the corresponding period in 1995.

The increase in the amount of gain on sale of receivables was due primarily to
an increase in securitizations volume  in  addition  to  a larger gain on sale
percentage in the six months ended September 30, 1996. The  Company structured
and  sold  $2.1  billion  of  mortgages  and  leases  in the six months  ended
September  30,  1996, an increase of $0.5 billion from the  six  months  ended
September 30, 1995  which contributed $12.1 million of the increase in gain on
sale of receivables.

The larger gain on sale  percentage  was  due  to  an  increased proportion of
ContiMortgage securitizations which yield higher gain on sale percentages than
securitizations and placements for Strategic Alliance clients.   For  the  six
months ended September 30, 1996, ContiMortgage represented 78% of total volume
as compared to 46% for the six months ended September 30, 1995.  This shift in
securitization  type resulted in a gain of 19 basis points in Excess Spread or
a $3.1 million increase in gain on sale of receivables in the six months ended
September 30, 1996  as  compared  to  the  corresponding  period in 1995.  The
combination of the $3.1 million increase due to the gain on sale on percentage
and the $12.1 million increase due to increased securitization volume resulted
in a total increase in gain on sale of receivables from the  six  months ended
September  30,  1995  of $15.2 million. The gain on sale of receivables  as  a
percentage of  loans securitized  and  sold for the six months ended September
30, 1996 and 1995 was 3.9% and 3.7%, respectively.

<PAGE>
Page 18

Interest income increased $18.7 million  or  44%  for  the  six  months  ended
September  30,  1996  from  the  corresponding period in 1995. Interest income
represents interest earned on loans  originated  or  purchased  by the Company
during the period from their origination or purchase until the actual  sale of
the loans, as well as the recognition of the increased value of the discounted
Excess  Spread  Receivables over time. The interest earned on loans originated
and purchased contributed $10.7 million to the increase between the six months
ended September 30,  1996  and  1995. The increase in interest earned on loans
originated and purchased was due  primarily  to  the  increase  in the average
balance of  loans originated and purchased but not yet securitized  during the
periods,  an increase of $188.9 million in the six months ended September  30,
1996 as compared  to  the corresponding period in 1995. The recognition of the
increased  value  of  the  discounted  Excess  Spread  Receivables  over  time
accounted for $8.0 million of the increase in interest income which was due to
the increase in the average investment in Excess Spread Receivables in the six
months ended September  30,  1996  as  compared to the corresponding period in
1995.

Net servicing income increased $7.9 million  or  65%  for the six months ended
September 30, 1996 compared to the corresponding period  in  1995  due  to the
increase  in  the size of the servicing portfolio and the volume of loan sales
and securitizations.   The  Company's  loan servicing portfolio increased $1.9
billion or 64% to $4.9 billion from September  30, 1995 to September 30, 1996,
contributing  $5.3 million or a 72% increase between  the  six  months  ending
September 30, 1996  and  1995. Additionally, net servicing income increased by
$2.6 million in the six months ended September 30, 1996 as compared to the six
months ended September 30, 1995 due to capitalized servicing income associated
with  the  101%  increase in  the  volume  of  ContiMortgage  loan  sales  and
securitizations for the six months ended September 30, 1996 as compared to the
corresponding period in 1995.

Other income increased  $0.6 million or 34% for the six months ended September
30, 1996 compared to the  corresponding period in 1995.  Other income consists
primarily of "purchase premium  refunds"  received  from  certain  origination
sources  related to loans that prepay within a contractually set time  period.
Upon origination  of  a  loan,  the  Company will pay a wholesale originator a
purchase  premium  for the loan or pools  of  loans.  The  Company  negotiates
agreements with wholesale  originators  that  provide  that  a portion of such
purchase  premium  will  be  repaid  if individual loans are repaid  within  a
contractually  set time period. The income  from  "purchase  premium  refunds"
increased due to increases in origination volume.

Expenses. Total expenses for the six months ended September 30, 1996 increased
$19.7 million or  31%  from the corresponding period in 1995. This increase in
total expenses was due to the increase in number of employees, the granting of
"restricted" common stock and costs associated with increased home equity loan
volume.



<PAGE>
Page 19


The following table sets  forth  the  components of the Company's expenses for
the six months ended September 30, 1996 and 1995.



                                                Six Months
                                              Ended September 30,
                                          ------------------------
                                             1996           1995
                                          ---------      ---------
                                              (in thousands)
Compensation and benefits                 $28,196        $ 19,952
Interest                                   43,988          37,518
Provision for loan losses                  308.00          257.00
General and administrative                 11,757           6,814
                                          ---------      ---------
   Total expenses                         $84,249        $ 64,541
                                          =========      =========




Compensation and benefits expense increased  $8.2  million  or 41% for the six
months ended September 30, 1996 compared to the corresponding  period  in 1995
due  to the addition of new personnel, change in incentive compensation plans,
the granting  of  restricted  common  stock  and  commissions  paid to certain
employees on volume of loan originations.  On September 30, 1996,  the Company
had  532  employees as compared to 294 employees on September 30, 1995,  which
primarily contributed  to  a  $5.4 million increase in salary offset by a $2.3
million decrease in incentive compensation  for the six months ended September
30, 1996 as compared to the corresponding period  in 1995.  In connection with
the  IPO,  shares  of "restricted" common stock were granted  to  certain  key
employees.  The "restricted"  common  stock granted, subject to the employee's
continued employment with the Company,  vests  between  February  14, 1996 and
March  31,  2000.   The  granting  of "restricted" common stock increased  the
compensation expense for six months  ended September 30, 1996 by $4.1 million.
The commissions paid to certain ContiMortgage employees increased $1.0 million
for the six months ended  September 30,  1996 as compared to the corresponding
period in 1995. Compensation and benefits  expense  represented 18% and 17% of
total  gross  income for the six months ended September  30,  1996  and  1995,
respectively.

Interest expense  increased  $6.5  million or 17% to $44.0 million for the six
months  ended  September  30,  1996  as compared  to  $37.5  million  for  the
corresponding  period  in 1995 primarily  as  a  result  of  interest  expense
incurred in connection with the issuance of the Senior Notes, the costs of the
sale, with limited recourse,  of  certain Excess Spread Receivables, increased
borrowings from Continental Grain and  an  overall  increase  in  the  cost of
borrowing  offset by decreased expenses from the Purchase and Sale Facilities.
The average  borrowings  from Continental Grain, Purchase and Sale Facilities,
the  Senior  Notes  and  the Excess  Spread  Receivables  sold,  with  limited
recourse, increased by $176.3  million  for the six months ended September 30,
1996, as compared to the corresponding period  in  1995  resulting  in  a $6.2
million  increase in interest expense.  The increase in the Company's combined
interest rates  by  4  basis points increased interest expense by $0.3 million
for the six months ended  September  30, 1996 as compared to the corresponding
period in 1995.  The combination of the  $0.3 million increase due to a higher
combined interest rate and the $6.2 million increase due to increased balances
resulted in a total increase of $6.5 million  in interest expense for  the six
months ended September 30, 1996 compared to the corresponding period in 1995.

<PAGE>
Page 20

Provision for loan losses increased slightly to  $0.31  million  for  the  six
months  ended  September  30, 1996 as compared to $0.26 million the six months
ended  September 30, 1995. Provision for loan losses is recorded in sufficient
amounts to maintain an allowance  at  a  level  considered  adequate  to cover
anticipated losses resulting from liquidation of receivables held for sale and
receivables  sold  with  limited  recourse under Purchase and Sale Facilities,
prior  to sale or securitization. Provision  for  credit  losses  recorded  at
securitization  is  reserved  in  the  value  of  interest-only  and  residual
certificates.  The slight increase in the six months ended September 30,  1996
as  compared to the corresponding period in 1995 resulted from a determination
of adequate reserves in light of actual loss experience.

General  and administrative expenses increased $4.9 million or 73% for the six
months ended  September 30, 1996 compared to the corresponding period in 1995,
and represented  7%  and  6%  of  total  gross income for the six months ended
September 30, 1996 and 1995, respectively.   The primary cause of the increase
was a $2.7 million increase in costs associated with underwriting, originating
and servicing higher loan volumes. In the six months ended September 30, 1996,
the  origination volume increased 55% as compared  to  the  six  months  ended
September  30,  1995.  Expenses  related  to  the implementation of collection
technology accounted  for approximately $0.3 million  of  the  increase.   The
remaining   increase   was  due  primarily  to  an  increase  in  general  and
administrative expenses  related  to  the  increase in the number of employees
from 532 on September 30, 1996 as compared to  294  on  September  30, 1995 of
approximately $1.9 million.

Income  Taxes. The Company is included in the consolidated Federal income  tax
return of  Continental  Grain.  The  Company's  provision for income taxes was
$30.2 million and $20.4 million for the six months  ended  September  30, 1996
and 1995, respectively. The increase in taxes of  48% for the six months ended
September   30,  1996  compared  to  the  corresponding  period  in  1995  was
substantially  related  to  the  increase  in income before taxes and minority
interest over the same period. The effective tax rate for the six months ended
September 30, 1996 increased to 40.2% from 38.9%  in  the comparable period in
fiscal 1996 due to a change in the provision for state income taxes.

Minority Interest. Minority interest represents the portion  of  income before
taxes   and  minority  interest  due  to  the  20%  minority  shareholders  of
ContiMortgage.   Minority  interest  was $3.3 million for the six months ended
September 30, 1995.  The change in minority  interest  was directly related to
the  change in the Company's ownership percentage of ContiMortgage.   On  June
19, 1995,  ContiTrade Services Corporation ("ContiTrade Services") effectively
acquired control  of  the  remaining  20%  minority interest in ContiMortgage,
which became a wholly-owned subsidiary of ContiTrade  Services.   Accordingly,
the results of operations for the six months ended September 30, 1995  include
approximately  three  months  of  minority interest of $3.3 million, while the
comparable period of fiscal 1997 reflected  100%  ownership  of  ContiMortgage
during the period.

Liquidity and Capital Resources

In  a  securitization, the Company recognizes a gain on the sale of  loans  or
assets securitized  upon  the  closing  of  the  securitization,  but does not
receive  the cash representing such gain until it receives the Excess  Spread,
which is payable over the actual life of the loan or other assets securitized.
The Company  incurs  significant  expenses in connection with a securitization
and incurs both current and deferred  tax  liabilities as a result of the gain
on sale.  Therefore, the Company requires continued  access  to short and long
term  external sources of cash to fund its operations.  The Company's  primary
cash requirements  are  expected to include the 

<PAGE>
Page 21

funding of: (i) mortgage, loan and lease originations  and  purchases  pending 
their pooling and sale; (ii) the points  and expenses paid in connection  with
the  acquisition  of  wholesale loans; (iii)  fees  and  expenses  incurred in
connection  with  its securitization program; (iv) over  collateralization  or
reserve  accounts  requirements  in  connection  with  loans and leases pooled
and  sold; (v)  ongoing  administrative  and  other operating  expenses;  (vi)
payments  related  to  its  tax obligations under a tax sharing agreement with
Continental  Grain;  and  (vii) interest  and  principal  payments  under  the
payables  to  affiliates  and  Senior  Notes;  and  (viii)  the  costs  of the
Purchase  and  Sale Facilities.   See "Forward-looking Statements".

As a result of its growing securitization  program,  the Company has operated,
and expects to continue to operate, on a negative cash  flow  basis,  which is
expected  to  increase  as  the  volume  of  its  loan and asset purchases and
originations   increases   and   its   securitization  program   grows.    See
"Forward-looking  Statements".   The  Company  securitized  and  sold  in  the
secondary market $2.1 billion of loans  in  the six months ended September 30,
1996 compared to $1.6 billion in the six months ended September 30, 1995.  The
Company used $169.5 million of cash in operations  during the six months ended
September 30, 1996.

During  the life of the REMICs, owner trusts or grantor  trusts,  the  Company
subordinates  to  the  rights  of holders of senior interests a portion of the
Excess Spread otherwise due to the  Company as a credit enhancement to support
the sale of senior interests.  The terms  of  the  REMICs,  owner  trusts  and
grantor  trusts  generally require that the Excess Spread otherwise payable to
the Company during the early months of the trusts be used to increase the cash
reserve account, or  to  repay  the  senior  interests  in  order  to increase
overcollateralization  to  specified  maximums.   The  value of such "deposit"
accounts is included in the value of Excess Spread Receivables and the related
gain on sale of receivables, net of necessary reserves for  credit  losses, if
applicable.

The  increased use of securitization transactions as a funding source  by  the
Company  has  resulted in a significant increase in the amount of gain on sale
of receivables  recognized  by  the  Company.   During  the  six  months ended
September 30, 1996, the Company recognized gain on sale of receivables  in the
amount of $75.4 million compared to $60.1 million for the corresponding period
in  1995.  The recognition of gain on sale of receivables will have a negative
impact on the cash flows of the  Company to the extent the Company is required
to pay  state  and  Federal  income  taxes  on  these  amounts  in  the period
recognized,  notwithstanding  that  the  Company  does  not  receive  the cash
representing  the gain until later periods as the related loans are repaid  or
otherwise collected.

The Company's primary  sources  of  liquidity  are  sales of loans, leases and
other  assets  through  securitization, the sale of loans,  leases  and  other
assets under the Purchase  and  Sale  Facilities,  the  sale  of Excess Spread
Receivables,  the  sale  of  $300.0 million of Senior Notes and the  financing
provided by Continental Grain.

Through ContiTrade, the Company  had  $1.45 billion of committed sale capacity
under its Purchase and Sale Facilities  with various financial institutions as
of September 30,1996.  The Purchase and Sale  Facilities  allow  ContiTrade to
sell, with limited recourse, interests in designated pools of loans  and other
assets.   The  Company  has  guaranteed  ContiTrade's  obligations  under  the
Purchase  and  Sale  Facilities.   These  agreements  generally  have one year
renewable terms (one Purchase and Sale Facility has a two-year  term),  all of
which will expire between November 1996 and September 1998.  On September  30,
1996,  the  Company  had  utilized  $779.1 million of the capacity under these
facilities.  During  October 1996, the  Company  obtained  

<PAGE>
Page 22

a  new Purchase and Sale   Facility  with  a  capacity  of  $300.0  million. 
The  Company currently  anticipates that  it will  be able  to  renew these 
facilities  when  they  expire and to obtain additional facilities.

Since  fiscal  1995,  ContiSecurities  Asset Funding Corp. ("CSAF"), has  been
selling certain Excess Spread Receivables,  with  limited recourse, to provide
cash to fund the Company's securitization program.    At March 31, 1996, $91.0
million of these sales were outstanding.  On April 1, 1996,  CSAF  sold  $96.5
million    of   certain   interest-only   and   residual   certificates,   and
ContiFinancial,  as  well  as Continental Grain, guaranteed CSAF's performance
thereunder.   At September 30,  1996,  $169.6  million  of  these  sales  were
outstanding.  Under  the  recourse  provisions  of  the  agreements,  CSAF  is
responsible for  losses incurred by the purchaser within an agreed-upon range.
CSAF's  performance  obligations  in  these  transactions  are  guaranteed  by
Continental  Grain  for  an  agreed-upon  fee. Although the Company intends to
continue  to  pursue  opportunities  to  sell Excess  Spread  Receivables,  no
assurance  can  be given that such opportunities  will  be  available  in  the
future.

On August 14, 1996,  the Company issued $300 million of unsecured Senior Notes
maturing August 15, 2003.   The  Senior  Notes bear interest at 8.375% payable
semiannually on February 15 and August 15  commencing  February 15, 1997.  The
Senior  Notes  are  redeemable  as a whole or in part, at the  option  of  the
Company, at any time or from time  to time, at a redemption price equal to the
greater of (i) 100% of their principal  amount and (ii) the sum of the present
values of the remaining scheduled payments  of  principal and interest thereon
discounted to the date of redemption on a semiannual  basis  at  the  treasury
yield plus 50 basis points, plus in each case accrued interest to the date  of
redemption.  Proceeds  to  the  Company,  net  of underwriting fees and market
discount were $293.1 million.  Of this amount, $125.0  million was used by the
Company to repay in full the Term Note payable to Continental  Grain  and  the
remaining  funds  have  been  used  for  general corporate purposes, including
funding   loan   originations   and   purchases,   supporting   securitization
transactions and other working capital needs.

In  order  to  fund the Company's growth prior to the IPO,  Continental  Grain
provided the Company  with  intercompany  financing ("Intercompany Debt").  To
refinance the Intercompany Debt, simultaneously  with  the  completion  of the
IPO,  Continental  Grain  purchased  from the Company a $125 million five-year
note issued under an indenture (the "Indenture Note"), a $74 million four-year
note (the "Four Year Note") and the $125 million Term Note for $324 million in
aggregate (collectively, the "Notes").   The  Term Note was prepaid in full on
August  19, 1996 after the Company's issuance of  $300  million  of  unsecured
Senior Notes as discussed above.  The Company's ability to refinance the Notes
is subject  to  limitations contained in the Continental Grain debt agreements
such as restrictions  on  the incurrence of debt and liens and other financial
covenants.

The net proceeds from the IPO  and  the issuance of the Senior Notes were used
by  the  Company  for  general  corporate  purposes,  including  funding  loan
originations and purchases, supporting  securitization transactions (including
the retention of Excess Spread Receivables)  and  other working capital needs.
Sales of the loans, leases and other assets through  securitizations, the sale
of  loans under the Purchase and Sale Facilities, the sale  of  Excess  Spread
Receivables  and  further  issuances  of debt (subject to the covenants of the
Notes), together with cash on hand, are  expected to be sufficient to fund the
Company's  liquidity requirements for at least  the  next  12  months  if  the
Company's future  operations  are  consistent with management's current growth
expectations.  The Company has no commitments  for  additional  financing  and
there can be no  assurance that the Company will be successful in consummating
any such financing transactions in the future 

<PAGE>
Page 23

on terms  that  the  Company  would  consider  to be favorable.   Furthermore,
no  assurance  can  be  given  that  Continental  Grain  will  provide  such  
financing if the Company is unable to obtain third party financing or that the
terms  of  the Continental Grain debt agreements   will   permit  the  Company
to  obtain  such  financing.     See "Forward-looking Statements".

Forward-looking Statements

Certain statements contained  in  this Quarterly Report on Form 10-Q which are
not historical fact may be deemed to  be  forward-looking statements under the
federal securities laws.  There are many important  factors  that  could cause
the Company's actual results to differ materially from those indicated  in the
forward-looking  statements.   Such  factors  include, but are not limited to,
general  economic  conditions,  including  interest   rate  risk,  prepayment,
delinquency  and  default rates, changes (legislative and  otherwise)  in  the
asset securitization  industry, demand for the Company's  services, the impact
of certain covenants in loan agreements of  the Company and Continental Grain,
the  degree  to which the  Company  is  leveraged,  the  Company's  needs  for
financing, and other risks identified in the Company's Securities and Exchange
Commission filings.



<PAGE>
Page 24

                          PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

In July 1995,  Wellington  Funding & Business Consultants, Inc. ("Wellington")
commenced an action against Continental Grain, ContiTrade Services Corporation
and ContiFinancial Services  in  the  Supreme  Court of the State of New York,
County  of New York (the "Wellington Litigation").   This  action  involved  a
previously  discontinued  business.   Wellington asserted claims for breach of
contract and defamation.   On July 3, 1996,  after  a two week trial, the jury
returned a verdict in favor of Wellington for $11 million  in compensatory and
$30  million  in  punitive  damages.   The defendants believe the  verdict  is
against the weight of the evidence and contrary to law and have sought to have
the verdict overturned by the trial court  or  on and failing that will pursue
appellate review.

Under an indemnity from Continental Grain to ContiFinancial, Continental Grain
is  obligated  to  indemnify  ContiFinancial for any  loss  arising  from  the
Wellington Litigation.  Based on  the  indemnity  from  Continental  Grain and
after   consultation  with  legal  counsel,  the  Company  believes  that  the
Wellington  Litigation  will  not  have  a material effect on the consolidated
financial position or results of operations.

Item 2. Changes in Securities.

       None.

Item 3. Defaults Upon Senior Securities.

       None.

Item 4. Submission of Matters to a Vote of Security HOLDERS.

(a)  The annual meeting of shareholders  of  the  Company was held
   September 17, 1996.

(c)   Holders  of  common  shares  voted  at this meeting  on  the
  following  matters,  which  wereset  forth  in   full   in   the
  registrant's proxy statement dated July 26, 1996:

(i)  Election of Class I Directors


Nominee            For          Against        Abstain      Non-Vote

James E.          43,117,734     0.00          24,052         0.00
Moore

Donald L.         43,118,514     0.00          23,272         0.00
Staheli


(i) Appointment of Auditors

                    For          Against        Abstain      Non-Vote

                  43,130,770     2,250          8,766         0.00

Appointment of the firm of Arthur Andersen LLP as the independent
accountants  for the Company for the fiscal year ending March 31, 1997.

                     For          Against        Abstain      Non-Vote
(ii) Plan         40,319,263     1,808,233     10,335       1,003,955
Amendment:


To  approve  the  Company's  Section  162(m) Performance Based
Executive Bonus Plan.

<PAGE>
Page 25

Item 5. Other Information.

       None

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

        (a) Exhibits

        Exhibit
        No.           Description

        10.2    Indenture - 8 3/8% Senior Notes due 2003

        10.3    First Amendment to Note Purchase Agreement

        10.4    First Supplemental Indenture

        11.2    Computation of the Company's earnings per common share

        27.1    Financial Data Schedule

        (b)  Reports on Form 8-K.

           None



<PAGE>
Page 26


                                 SIGNATURES



Pursuant  to  the requirements 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.


                          ContiFinancial Corporation





Date                  Signature                Title


November 14, 1996     /s/ Jerome M. Perelson   Senior Vice President and Chief
                      Jerome M. Perelson          Financial Officer (Principal
                                                  Financial Officer)

November 14, 1996     /s/ Susan E. O'Donovan   Vice President and Controller
                      Susan E. O'Donovan          (Principal Accounting Officer)