SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K/A

           AMENDMENT NO. 2 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR
                  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                        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                   (IRS Employer
    incorporation organization)                    Identification No.)

   1111 North Highland Street                             22201
        Arlington, Virginia
        -------------------                        ------------------
  (Address of principal executive office)             (Zip Code)

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


<PAGE>



           ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  following  table  sets forth the names,  ages,  positions  and the
offices held in the Company and TeleBank by each of the  executive  officers and
directors of the Company as of April 30, 1998:

<TABLE>
<CAPTION>
                          NAME               AGE                        POSITIONS AND OFFICES
                          ----               ---                        ---------------------

<S>               <C>                       <C>               <C>
                  David A. Smilow            36               Chairman of the Board of the Company and TeleBank

                  Mitchell H. Caplan         40               Vice Chairman, President and Chief Executive Officer of the Company
                                                              and TeleBank

                  Aileen Lopez Pugh  30                       Executive Vice President and Chief Financial Officer of the Company
                                                              and TeleBank

                  David R. DeCamp (1)(2)     38               Director of the Company and TeleBank

                  Mark Rollinson             61               Director of the Company and TeleBank

                  Arlen W. Gelbard (1)(2)    40               Director of the Company and TeleBank

                  Dean C. Kehler (1)(2)      41               Director of the Company and TeleBank

                  Steven F. Piaker (1)(2)    35               Director of the Company and TeleBank
</TABLE>

(1)  Member of the  compensation  committees of the Company and TeleBank and the
     stock option committee of the Company.
(2)  Member of the audit and compliance committees of the Company and TeleBank.

         DAVID A. SMILOW, Chairman of the Board of the Company since March 1994,
also served as Chief  Executive  Officer of the Company from March 1994 to April
1998.  Mr.  Smilow has also served as  Chairman  of the Board of TeleBank  since
January  1994,  and from  January  1994 to April 1998 served as Chief  Executive
Officer of TeleBank.  Prior to January  1994,  Mr. Smilow served as President of
TeleBank.

         MITCHELL  H.  CAPLAN has served as the Vice  Chairman  of the Board and
President  of the Company  since March 1994,  and since April 1998 has served as
Chief  Executive  Officer of the  Company.  Mr.  Caplan has also  served as Vice
Chairman and President of TeleBank  since January 1994, and since April 1998 has
served as Chief  Executive  Officer of TeleBank.  From 1990 until December 1993,
Mr.  Caplan was a member of the law firms of  Danziger & Caplan and  Zuckerman &
Gore,   where  he  represented  and  advised   private  and  public   commercial
institutions, including MET Holdings.

         AILEEN  LOPEZ  PUGH has served as  Executive  Vice  President  -- Chief
Financial  Officer of the Company  and  TeleBank  since  August  1994.  Prior to
joining  management of the Company and  TeleBank,  Ms. Pugh served as a director
from 1993 to 1994. From December 1993 to May 1994, she served as a consultant to
MET Holdings in connection with the  organization of the Company and its initial
public  offering.   From  1989  through  1992,  Ms.  Pugh,  a  certified  public
accountant, was an auditor with KPMG Peat Marwick.

         DAVID R.  DECAMP  has  served as a director  of the  Company  since its
formation in March 1994 and as a director of TeleBank  since 1992. Mr. DeCamp is
a Senior Vice President of Grubb & Ellis, a commercial real estate broker.  From
1988 to 1996,  Mr.  DeCamp was a  commercial  real estate  broker with Cassidy &
Pinkard,  Inc. Mr. DeCamp is the Chairman of the Audit and Compliance Committees
of the Company and TeleBank , respectively.

         MARK  ROLLINSON  has  served as a  director  of the  Company  since its
formation  in March 1994 and as a  director  of  TeleBank  since  1992.  He is a
self-employed attorney in Leesburg, Virginia.

         ARLEN W.  GELBARD has served as a director of the Company and  TeleBank
since April 1996. Mr. Gelbard is a member of the law firm of Hofheimer Gartlir &
Gross,  LLP, New York, New York where he has specialized in  transactional  real
estate, lending,


                                       2

<PAGE>

leasing,  foreclosures  and workouts  since 1982. Mr. Gelbard is a member of the
New York State Bar Association and American Bar Association.  Mr. Gelbard is the
Chairman of the Compensation Committee of each of the Company and TeleBank.

         DEAN C. KEHLER has served as a director  of the  Company  and  TeleBank
since February 1997. Mr. Kehler has been a Managing  Director of CIBC Wood Gundy
Securities and co-head of the High Yield Group since August 1995.  From February
1990 to August 1995, Mr. Kehler was a founding partner and Managing  Director of
The Argosy Group, L.P., which was acquired by CIBC Wood Gundy in August 1995.

         STEVEN F. PIAKER has served as a director of the Company since February
1997.  Since 1994,  Mr.  Piaker has been a Senior Vice  President and Partner of
Conning & Company,  a provider  of asset  management,  private  equity  capital,
corporate finance services and research to the insurance and financial  services
industries.  Prior to 1994 Mr.  Piaker  served  as a Senior  Vice  President  of
Conseco, Inc. where he was involved in the formation of that company,  corporate
finance, leveraged buyouts and private placements.

                         ITEM 11. EXECUTIVE COMPENSATION

         COMPENSATION

         Set forth below is certain information for the three fiscal years ended
December  31,  1997,  1996 and 1995  relating  to  compensation  received by the
Company's  Chief  Executive  Officer and all  executive  officers of the Company
other  than the Chief  Executive  Officer  (collectively  the  "Named  Executive
Officers")  whose  total  annual  salary  and bonus for the  fiscal  year  ended
December 31, 1997, exceeded $100,000 for services rendered in all capacities.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                        LONG-TERM                              
                                                                                        ---------                              
                                                         ANNUAL COMPENSATION        COMPENSATION AWARDS                        
                                                         -------------------        -------------------                        
                                                                                                                               
                                                                                        SECURITIES                             
NAME AND                                                                                UNDERLYING       ALL OTHER           
PRINCIPAL POSITION                            YEAR    SALARY ($)(A)  BONUS ($)           OPTIONS (#)     COMPENSATION ($)(B) 
------------------                            ----    -------------  ---------           -----------     -------------------
<S>                                           <C>     <C>          <C>                    <C>            <C>                  
David A. Smilow, Chairman of the                                                                                               
 Company and of TeleBank (c)                  1997    $ 205,000    $ 200,000              100,000        $ 15,000             
                                              1996      205,000      188,000                  ---          15,000              
                                              1995      205,000      150,000                  ---          15,000              

Mitchell H. Caplan, Vice Chairman,
 President and CEO of the Company             1997      205,000      200,000              100,000          15,000  
 and Vice Chairman, President and             1996      205,000      188,000                  ---          15,000  
 Chief Executive Officer of TeleBank(c)       1995      205,000      150,000                  ---          15,000

Aileen Lopez Pugh, Executive Vice             1997       79,500      100,000               10,000          13,913
 President - Chief Financial Officer          1996       75,000       60,000               15,000          13,500
 of the Company and TeleBank                  1995       75,000       60,000                5,000          13,500

----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Salary earned from the Company and TeleBank.
(b)  Dollar value of contributions by TeleBank to each officer's  account in the
     Company's Employee Stock Option Plan.
(c)  During 1997, Mr. Smilow served as the Company's Chief Executive Officer. In
     April 1998, Mr. Caplan became the Company's Chief Executive Officer.


                                       3

<PAGE>

         STOCK OPTIONS

         Option Grants. The following table contains information with respect to
grants of stock  options for Common  Stock to the Named  Executive  Officers who
received options during 1997. All such grants were made under the Company's 1994
or 1997 Stock  Option  Plan.  The Company  does not have any stock  appreciation
rights ("SARs").
<TABLE>
<CAPTION>
                              OPTION GRANTS IN 1997
                                                                                        POTENTIAL REALIZABLE VALUE
                                                                                        AT ASSUMED ANNUAL RATES OF
                                                                                       STOCK PRICE APPRECIATION FOR
                               INDIVIDUAL GRANTS (A)                                          OPTION TERM (A)
---------------------------------------------------------------------------------------------------------------------
                                         % OF TOTAL OPTIONS
                          NUMBER OF            GRANTED
                     SECURITIES UNDERLYING  TO EMPLOYEES EXERCISE OR BASE  EXPIRATION
NAME                  OPTIONS GRANTED (#)  IN FISCAL YEAR  PRICE ($/SH)       DATE          5%  ($)      10% ($)
----                  ------------------- ------------------------------     ------         -------      -------
<S>                        <C>                  <C>          <C>             <C>           <C>       <C>       
David A. Smilow            40,000(b)            14.0%        $13.50          2/28/07       $339,603  $  860,621
                           60,000(c)            21.0          13.50          2/28/07        509,405   1,290,931
Mitchell H. Caplan         40,000(b)            14.0          13.50          2/28/07        339,603     860,621
                           60,000(c)            21.0          13.50          2/28/07        509,405   1,290,931
Aileen Lopez Pugh          10,000(d)             3.5          13.50          2/15/07         84,901     215,155

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

</TABLE>

(a)  The dollar  amounts under these columns are the result of  calculations  at
     the 5% and 10% assumed annual growth rates mandated by the Commission  and,
     therefore,  are not intended to forecast possible future  appreciation,  if
     any, in the Company's Common Stock price.

(b)  Grants covering 40,000 shares to Messrs. Caplan and Smilow are nonqualified
     options  vesting to the  extent of 1/3 of such  shares on each of the first
     three  anniversaries  of the date of grant  that  expire  if not  exercised
     within 30 days of first becoming exercisable.

(c)  Options  grants  were  made on  February  28,  1997  with  20%  immediately
     exercisable  and 20% becoming  exercisable in each  subsequent year through
     2001.

(d)  Option  grants  were  made on  February  15,  1997,  with  20%  immediately
     exercisable  and 20% becoming  exercisable in each  subsequent year through
     2001.

         Option  Exercises and Holdings.  The Named  Executive  Officers did not
exercise any stock options during 1997. The following table presents information
with  respect to  outstanding  options held by the Named  Executive  Officers at
year-end 1997. There are no outstanding SARs.

<TABLE>
<CAPTION>
                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                            AND FY-END OPTION VALUES

                                                           Number of Securities
                                                      Underlying Unexercised Options        Value of Unexercised
                                                                    at                      In-the-Money Options
                                                                FY-End (#)                   at FY-End ($) (1)
                                                                ----------                   -----------------
                          Shares
                       Acquired on        Value
Name                   Exercise (#)    Realized ($)     Exercisable    Unexercisable    Exercisable     Unexercisable
----                   ------------    ------------     -----------    -------------    -----------     -------------
<S>                      <C>             <C>            <C>                <C>         <C>              <C>       
David A. Smilow          13,333          $74,998        129,365            62,667      $ 1,264,121      $  266,333
Mitchell H. Caplan          ---              ---         142,698           62,667        1,320,787         266,333
Aileen Lopez Pugh           ---              ---          16,000           19,000          163,375         148,500
------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Based on last reported sale price of the Company's  Common Stock on December
31, 1997 of $17.75 per share and  applicable  per share  exercise  price for the
options. For each of Messrs.  Smilow and Caplan,  42,617 options were granted on
April 28, 1994 with an exercise  price of $6.125,  with the remainder  having an
exercise  price  equal to  $7.125.  The  options  expire in April  2004 and were
granted with 20% immediately  exercisable  and 20% becoming  exercisable in each
subsequent  year for five  years.  Also for each of Messrs.  Smilow and  Caplan,
100,000  options  were  granted on February  28, 1997 with an exercise  price of
$13.50 and an expiration  date of 2007.  Grants  covering  60,000 shares to each
Messrs. Caplan and Smilow are ten-year,  nonqualified options vesting 20% on the
date of grant and 20% per year  thereafter.  Grants  covering  40,000  shares to
Messrs.  Caplan and Smilow are nonqualified options vesting to the extent of 1/3
of such  shares on each of the first  three  anniversaries  of the date of grant
that expire if not exercised  within 30 days of first becoming  exercisable.  As
for Ms.  Pugh,  the  Company has  granted a total of 35,000  options

                                       4

<PAGE>

with 5,000 options  granted on April 28, 1994 with an exercise  price of $6.125,
5,000  options  granted on February  15,  1995 with an exercise  price of $5.50,
15,000 options  granted on February 15, 1996 with an exercise price of $7.75 and
10,000  options  granted on February 15, 1997 with an exercise  price of $13.50.
The options  expire in April 2004,  February  2005,  February  2006 and February
2007,  respectively.  All  option  grants  for Ms.  Pugh were  granted  with 20%
immediately exercisable and 20% becoming exercisable in each subsequent year for
five years.

         COMPENSATION OF DIRECTORS

         Non-employee  directors  of the Company  receive  $750 for each Company
board and committee  meeting  attended,  and non-employee  directors of TeleBank
receive $750 for each TeleBank board or committee meeting attended. In addition,
non-employee  directors are reimbursed for travel costs and other  out-of-pocket
expenses  incurred in attending such meeting.  Annual directors' fees are capped
at $3,000 per board  member of the  Company,  and  $12,000  per board  member of
TeleBank.

         ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  tables  set forth  certain  information  regarding  the
beneficial  ownership of the Company's Common Stock and Series A Preferred Stock
as of April 30, 1998 by (i) any person known to the Company to be the beneficial
owner of more than 5% of any class of the Company's voting securities, (ii) each
director and person  nominated  to be a director as of December 31, 1997,  (iii)
the Chief  Executive  Officer  and the Named  Executive  Officers,  and (iv) all
directors and executive  officers as a group.  Except as otherwise  noted,  each
beneficial owner has sole investment and voting power with respect to the listed
shares.

SECURITY OWNERSHIP OF THE COMPANY'S SECURITIES









                                       5


<PAGE>

<TABLE>
<CAPTION>
                                                                   
                                                                   AMOUNT AND NATURE       PERCENTAGE OF: CLASS    
TITLE                                                                OF BENEFICIAL        OUTSTANDING / COMPANY'S  
OF CLASS      NAME OF BENEFICIAL OWNER                                 OWNERSHIP           VOTING SECURITIES (a)   
--------      ------------------------                                 ---------           ---------------------   
<S>                                                                      <C>                  <C>      <C>  
Series A      Conning Insurance Capital Limited                          4,719                25.03% / 6.31%
Preferred       Partnership III
Stock         c/o Conning & Company
              CityPlace II, 185 Asylum Street
              Hartford, CT  06103

              Conning Insurance Capital International                      667                3.54% / 0.89%
                Partners III, L.P.
              c/o Conning & Company
              CityPlace II, 185 Asylum Street
              Hartford, CT  06103

              General American Life Insurance Company                    1,539                 8.16% / 2.06%
              700 Market Street
              St. Louis, MO  63101

              PC Investment Company                                      6,925                36.74% / 9.27%
              401 Theodore Fremd Avenue
              Rye, NY  10580

              The Northwestern Mutual Life Insurance                     5,000                26.53% / 6.69%
                Company
              720 East Wisconsin Avenue
              Milwaukee, WI  53202

</TABLE>

---------------------
(a)  Each share of Series A Preferred  Stock has  40.12519  votes,  based on its
     conversion   into  an   equivalent   number  of  shares  of  Common  Stock.
     Accordingly, the percentages reflected include (i) the percentage of Series
     A Preferred  Stock  outstanding  and (ii) the  percentage  of the Company's
     Voting Securities  beneficially  owned,  giving effect to the voting rights
     held by the owners of Series A Preferred.


                                       6


<PAGE>

<TABLE>
<CAPTION>
                                                                   
                                                                   AMOUNT AND NATURE                           
TITLE                                                                OF BENEFICIAL             PERCENTAGE OF                      
OF CLASS      NAME OF BENEFICIAL OWNER                                 OWNERSHIP             CLASS OUTSTANDING  
--------      ------------------------                                 ---------             -----------------  
<S>                                                                     <C>                             <C>  
Common Stock  MET Holdings Corporation                                  1,433,081                       63.9%
              405 Park Avenue, Suite 1104
              New York, NY 10022 (a)

              David A. Smilow                                             155,290 (b)                    6.9%
              Mitchell H. Caplan                                          142,698 (c)                    6.0%
              David R. DeCamp                                              10,000 (d)                    *
              Arlen W. Gelbard                                              4,000 (e)                    *
              Dean C. Kehler                                              280,876 (f)                   11.1%
              Steven F. Piaker                                            224,139 (g)                    9.1%
              Mark Rollinson                                               12,000 (h)                    *
              Aileen Lopez  Pugh                                           29,300 (i)                    1.3%
              Directors and Executive Officers as a group
              (9 individuals)                                             927,628 (j)                   29.3%
              TeleBanc Employee Stock Ownership Plan                       75,525                        3.4%

</TABLE>

--------------------------------------------------------------------------------
*    Less than 1%.
(a)  MET  Holdings  is the  predecessor  savings  and loan  holding  company  of
     Metropolitan Bank for Savings,  F.S.B.  ("Metropolitan Bank"). MET Holdings
     organized the Company so that it could become,  in March 1994,  the holding
     company  for  Metropolitan  Bank as part of the  Company's  initial  public
     offering  of debt and  equity  securities  in 1994.  Metropolitan  Bank was
     renamed  "TeleBank" in March 1996, and is a wholly owned  subsidiary of the
     Company.
(b)  Includes  options  to  acquire  129,365  shares of Common  Stock  which are
     exercisable  within  sixty days of April 30,  1998.  Mr.  Smilow also holds
     significant  ownership  positions  in  the  outstanding  securities  of MET
     Holdings. See "Security Ownership of the Company's Parent by Management."
(c)  Comprised  of options to acquire  142,698  shares of Common Stock which are
     exercisable  within  sixty days of April 30,  1998.  Mr.  Caplan also holds
     significant  ownership  positions  in  the  outstanding  securities  of MET
     Holdings. See "Security Ownership of the Company's Parent by Management."
(d)  Includes  options  to  acquire  9,000  shares  of  Common  Stock  which are
     exercisable within sixty days of April 30, 1998.
(e)  Comprised  of options to acquire  4,000  shares of Common  Stock  which are
     exercisable within sixty days of April 30, 1998.
(f)  Dean C. Kehler is the designated  director for CIBC WG Argosy Merchant Fund
     2, LLC., which holds the interest set forth above. Mr. Kehler disclaims any
     beneficial ownership in such interest.
(g)  Steven F. Piaker is the designated  director for Conning  Insurance Capital
     Limited  Partnership  III  and  Conning  Insurance  Capital   International
     Partners III, L.P.,  which hold the  beneficial  interests set forth above.
     Mr. Piaker disclaims any beneficial ownership in such interests.
(h)  Includes  options  to  acquire  4,000  shares  of  Common  Stock  which are
     exercisable within sixty days of April 30, 1998.
(i)  Includes  options  to  acquire  16,000  shares  of Common  Stock  which are
     exercisable  within  sixty days of April 30,  1998 and  warrants  for 6,200
     shares of Common Stock.
(j)  Includes  options  to  acquire  305,063  shares of Common  Stock  which are
     exercisable within sixty days of April 30, 1998.

                                       7


<PAGE>


SECURITY OWNERSHIP OF THE COMPANY'S PARENT BY MANAGEMENT

         The following table sets forth certain information as of APRIL 30, 1998
with respect to the  beneficial  ownership by the  management  of the Company of
equity securities of the Company's parent,  MET Holdings.  MET Holdings has four
classes of equity  securities,  Class A Common Stock,  Class B Common Stock,  6%
Class A Serial Preferred Stock ("Class A Serial Preferred Stock") and 6% Class B
Serial Preferred Stock ("Class B Serial Preferred Stock").  No shares of Class A
Serial Preferred Stock have been issued.  The Class A Serial Preferred Stock and
Class B Serial  Preferred  Stock have  certain  limited  voting  rights.  Unless
otherwise required by law, the Class B Common Stock is non-voting.

<TABLE>
<CAPTION>

NAME                                                     EQUITY SECURITY OWNED                   PERCENT OF CLASS
----                                                     ---------------------                   ----------------
<S>                                              <C>                                                   <C>   
David A. Smilow                                  4,091 (Class A Common Stock) (a)                      41.5 %
                                                 1,641 (Class B Common Stock) (a)                      26.5
                                                 2,091 (Class B Serial Preferred Stock) (a)            42.2

Mitchell H. Caplan                                 985 (Class A Common Stock) (b)                       9.9
                                                 1,053 (Class B Common Stock) (b)                      17.0
                                                 1,079 (Class B Serial Preferred Stock) (b)            21.8

Michael A. Smilow                                  110 (Class A Common Stock)                           1.1
                                                   117 (Class B Common Stock)                           1.9

Directors and Executive Officers                 5,186 (Class A Common Stock)                          52.6
  of the Company as a group                      2,811 (Class B Common Stock)                          49.8
  (9 individuals)                                3,170 (Class B Serial Preferred Stock)                63.9

</TABLE>

--------------------
(a)  Includes 3,252 shares of Class A Common Stock, 980 shares of Class B Common
     Stock and 893 shares of Class B Serial  Preferred  Stock,  with  respect to
     which Mr. D. Smilow shares beneficial ownership with his wife and children.

(b)  Includes 645 shares of Class A Common  Stock,  655 shares of Class B Common
     Stock and 1,079 shares of Class B Serial Preferred  Stock,  with respect to
     which Mr. Caplan shares beneficial ownership.




             ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In February 1997, the Company consummated the purchase of the assets of
Arbor Capital Partners, Inc., which was majority owned by MET Holdings,  through
the  issuance of 162,461  shares of Common  Stock and a $500,000  cash  payment.
Messrs. D. Smilow and Caplan are shareholders of MET Holdings.

         During  1997 the Company  engaged  Hofheimer  Gartlir & Gross,  LLP, of
which Mr. Gelbard is a member, on various matters. Additionally, CIBC Wood Gundy
Securities,  of which Mr. Kehler is Managing Director,  acted as placement agent
for the Company's private  placement of trust preferred  securities in June 1997
and invested in the securities  through certain of its merchant funds.  See Item
1. -- Business -- General.






                                       8

<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  amendment  to report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                         TELEBANC FINANCIAL CORPORATION

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

April 30, 1998