SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

                                   FORM 10-K/A

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

                   For the fiscal year ended December 31, 1996

                                       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 33-76930

                         TELEBANC FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              13-3759196
-------------------------------                             --------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

1111 NORTH HIGHLAND STREET, ARLINGTON, VIRGINIA                     22201
-----------------------------------------------                    ----------
(Address of principal executive offices)                           (Zip Code)

       Registrant's telephone number, including area code: (703) 247-3700.

          Securities registered pursuant to Section 12(b) of the Act:

                                (Not applicable)

          Securities registered pursuant to Section 12(g) of the Act:

                                (Not applicable)

    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

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]

    Based upon the closing  price of the  registrant's  common stock as of March
20, 1997, the aggregate market value of the voting stock held by  non-affiliates
of the registrant is $10.4 million.*

    The  number of shares  outstanding  of each of the  registrant's  classes of
common stock, as of the latest practicable date is:

                 Class: Common Stock, par value $.01 per share.
                Outstanding at March 20, 1997: 2,211,961 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:
PARTS I AND II: Annual report to shareholders for the fiscal year ended December
31, 1996.
PART III: Portions of the definitive proxy statement for the 1996 Annual Meeting
of

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*    Solely  for  purposes  of this  calculation,  all  executive  officers  and
     directors  of  the  registrant,  Employee  Stock  Ownership  Plan  and  all
     shareholders  reporting  beneficial  ownership  of  more  than  5%  of  the
     registrant's  common stock are considered to be affiliates.  This reference
     to affiliate status is not necessarily a conclusive determination for other
     purposes.

<PAGE>

                                EXPLANATORY NOTE

         This Form 10-K/A is being filed solely to file Exhibits 4.2 and 4.3.

                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)(1) The following  consolidated  financial  statements of registrant
and its  subsidiary  and report of  independent  auditors are included in Item 8
hereof.

         Report of Independent Auditors.

         Consolidated  Statements of Financial Condition - December 31, 1996 and
1995.

         Consolidated  Statements of Operations - Years Ended December 31, 1996,
1995 and 1994.

         Consolidated  Statements  of  Changes in  Stockholders'  Equity - Years
Ended December 31, 1996, 1995 and 1994.

         Consolidated  Statements of Cash Flows - Years Ended December 31, 1996,
1995 and 1994.

         Notes to Consolidated Financial Statements.

         (a)(2) All  schedules  for which  provision  is made in the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required under the related  instructions or are  inapplicable and therefore have
been omitted.

         (a)(3) The following  exhibits are either filed with this Report or are
incorporated herein by reference:

         3.1(a)   Amended  and  Restated  Certificate  of  Incorporation  of the
                  Company.*

         3.1(b)   Certificate of Designation.***

         3.2      Bylaws of the Company.****

         4.1      Specimen certificate of shares of Common Stock.**

         4.2      Form of  Indenture  between the Company and  Wilmington  Trust
                  Company as Trustee.*

         4.3      Form of Warrant  Agreement  between the Company and Wilmington
                  Trust Company as Warrant Agent.*

         10.1     1994 Stock Option Plan.**

         10.2     Tax  Allocation  Agreement,  dated April 7, 1994,  between the
                  Bank and the Company.*

         10.3     Unit Purchase Agreement,  dated as of February 19, 1997, among
                  the Company and the Purchasers identified therein.***

         10.4     Amended  and  Restated  Acquisition  Agreement,  dated  as  of
                  February 19, 1997, among the Company,  Arbor Capital Partners,
                  Inc., MET Holdings Corporation, and William M. Daugherty.***

         11       Statement regarding computation of per share earnings.****

<PAGE>

         13       1996 Annual Report to Stockholders.****

         21       Subsidiaries of the Registrant.****

         23.1     Consent of Arthur Andersen LLP and KPMG Peat Marwick LLP.****

         27       Financial Data Schedule.****

         99.1     Independent auditor's report of Arthur Andersen LLP.****

         99.2     Independent auditor's report of KPMG Peat Marwick.****

         99.3     Definitive  proxy  statement  for the 1997  Annual  Meeting of
                  Stockholders.****

         (b) The Registrant did not file any Current  Reports on Form 8-K during
the fourth quarter of its fiscal year ended December 31, 1996.

         (c)      Exhibits to this Form 10-K/A are attached.

         (d)      Not applicable.

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

*      Incorporated  by  reference  to  pre-effective  Amendment  No.  1 to  the
       Company's  registration  statement on Form S-1 (File No.  33-76930) filed
       with the SEC on May 3, 1994.

**     Incorporated by reference to the Company's registration statement on Form
       S-1 (File No. 33-76930) filed with the SEC on March 25, 1994.

***    Incorporated by reference from the Company's  Current Report on Form 8-K,
       as filed with the SEC on March 17, 1997.

****   Exhibit  was previously  filed as  part of the Company's Annual Report on
       Form 10-K,  for  the  year ended  December 31, 1996 with the SEC on March
       31, 1997.


<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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 as of the 6th day of
June, 1997.

                                       TELEBANC FINANCIAL CORPORATION
                                       ------------------------------
                                                Registrant


                                        By:   /s/ Aileen Lopez Pugh
                                           -------------------------
                                              Aileen Lopez Pugh
                                              Executive Vice President - Chief
                                                 Financial Officer/Treasurer



<PAGE>


                                  EXHIBIT INDEX


                                                                   Sequentially
                                                                   Numbered
Exhibit No.                        Exhibit                         Page
-----------                        -------                         ------------
3.1(a)  Amended and Restated Certificate of Incorporation of the Company.*

3.1(b)  Certificate of Designation.***

3.2     Bylaws of the Company.****

4.1     Specimen certificate of shares of Common Stock.**

4.2     Form of Indenture  between the Company and  Wilmington  Trust Company as
        Trustee.*

4.3     Form of Warrant  Agreement  between  the Company  and  Wilmington  Trust
        Company as Warrant Agent.*

10.1    1994 Stock Option Plan.**

10.2    Tax Allocation Agreement,  dated April 7, 1994, between the Bank and the
        Company.*

10.3    Unit  Purchase  Agreement,  dated as of  February  19,  1997,  among the
        Company and the Purchasers identified therein.***

10.4    Amended and  Restated  Acquisition  Agreement,  dated as of February 19,
        1997,  among the Company,  Arbor Capital  Partners,  Inc.,  MET Holdings
        Corporation, and William M. Daugherty.***

11      Statement regarding computation of per share earnings.****

13      1996 Annual Report to Stockholders.****

21      Subsidiaries of the Registrant.****

23.1    Consent of Arthur Andersen LLP and KPMG Peat Marwick LLP.****

27      Financial Data Schedule.****

99.1    Independent auditor's report of Arthur Andersen LLP.****

99.2    Independent auditor's report of KPMG Peat Marwick.****

99.3    Definitive   proxy   statement   for  the   1997   Annual   Meeting   of
        Stockholders.****

*      Incorporated  by  reference  to  pre-effective  Amendment  No.  1 to  the
       Company's  registration  statement on Form S-1 (File No.  33-76930) filed
       with the SEC on May 3, 1994.

**     Incorporated by reference to the Company's registration statement on Form
       S-1 (File No. 33-76930) filed with the SEC on March 25, 1994.

***    Incorporated by reference from the Company's  Current Report on Form 8-K,
       as filed with the SEC on March 17, 1997.

****   Exhibit  was previously filed  as part of the Company's  Annual Report on
       Form 10-K for the year ended December 31, 1996 with  the SEC on March 31,
       1997.