SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

    |X| 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 Stockholders.
----------
*    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

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     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.


                                EXPLANATORY NOTE

     This Form 10-K/A is being filed solely to file Exhibit 27.


                                     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.**

         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.****



<PAGE>



         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 filed as part of the  Company's  Report on Form  10-K,  as
         filed with the SEC on March 31, 1997.

*****    Exhibit was filed as part of the  Company's  Report on Form 10-K/A,  as
         filed with the SEC on April 24, 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 7th day of
May, 1997.

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


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




<PAGE>



                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

                                                                                                   Sequentially
                                                                                                     Numbered
  Exhibit No.                                       Exhibit                                            Page
  -----------                                       -------                                            ----
<S>   <C>        <C>                                                          
      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.**

      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 filed as part of the  Company's  Report on Form 10-K,  as filed with the SEC on March 31, 1997.

*****    Exhibit was filed as part of the Company's Report on Form 10-K/A,  as filed with the SEC on April 24, 1997.

</TABLE>