<PAGE>
==============================================================================
                         UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                           FORM 10-K
(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
          For the Fiscal Year Ended December 31, 1997
                               OR
[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Transition Period from   N/A  to  
                                                   -----      -----

                 Commission File Number: 1-9566
                    FirstFed Financial Corp.
     (Exact name of registrant as specified in its charter)

              Delaware                               95-4087449
       (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)               Identification No.)

           401 Wilshire Boulevard
         Santa Monica, California                      90401-1490
       (Address of principal executive offices)        (Zip Code)

           Registrant's telephone number, including area code: (310) 319-6000

               Securities registered pursuant to Section 12(b) of the Act:
                         Common Stock $0.01 par value
                              (Title of Class)

            Securities registered pursuant to Section 12(g) of the Act: None

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

The  approximate aggregate market value of the voting stock  held
by  non-affiliates  of the Registrant as of  February  13,  1998:
$366,084,000.

The number of shares of Registrant's $0.01 par value common stock
outstanding as of  February 13, 1998:  10,592,318.

               DOCUMENTS INCORPORATED BY REFERENCE

Portions   of   the  Proxy  Statement  for  Annual   Meeting   of
Stockholders, April 22, 1998 (Parts III & IV).

Indicate  by  check  mark  if  disclosure  of  delinquent  filers
pursuant  to Item 405 of Regulation S-K (sub-section  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
the Form 10-K or any amendment to this Form 10-K. [ ]
==============================================================================
<PAGE>

                    FirstFed Financial Corp.
                              Index


<TABLE>                                                          
<CAPTION>
                                                          Page
<S>      <C>                                              <C>
Part I   Item 1.  Business                                3
         
         Item 2.  Properties                              27

         Item 3.  Legal Proceedings                       27
         
         Item 4.  Submission of Matters to a Vote of 
                  Security Holders                        27

Part II  Item 5.  Market for Registrant's Common 
                  Equity and Related Stockholder Matters  27

         Item 6.  Selected Financial Data                 28
         
         Item 7.  Management's Discussion and Analysis 
                  of Financial Condition and Results 
                  of Operations                           29
         
         Item 8.  Financial Statements and 
                  Supplementary Data                      49
                  
                  Notes to Consolidated Financial 
                  Statements                              53
                  
                  Independent Auditors' Report            83
         
         Item 9.  Changes In and Disagreements with 
                  Accountants on Accounting and 
                  Financial Disclosure                    84

Part III Item 10. Directors and Executive Officers 
                  of the Registrant                       84
         
         Item 11. Executive Compensation                  84
         
         Item 12. Security Ownership of Certain 
                  Beneficial Owners and Management        84
         
         Item 13. Certain Relationships and Related 
                  Transactions                            84

Part IV  Item 14. Exhibits, Consolidated Financial 
                  Statement Schedules, and Reports 
                  on Form 8K                              84

Signatures and Power of Attorney                          86
</TABLE>
                                       2
<PAGE>
                             PART I

ITEM 1--BUSINESS

 General Description

     FirstFed Financial Corp., a Delaware corporation ["FFC," and
collectively  with  its sole and wholly-owned  subsidiary,  First
Federal  Bank  of  California (the "Bank"), the  "Company"],  was
incorporated on February 3, 1987. Since September 22,  1987,  FFC
has  operated  as  a  savings and loan  holding  company  engaged
primarily in the business of owning the Bank. Because the Company
does not presently engage in any independent business operations,
substantially all earnings and performance figures herein reflect
the operations of the Bank.

      The Bank was organized in 1929 as a state-chartered savings
and loan association, and, in 1935, converted to a federal mutual
charter.  In  February 1983 the Bank obtained a  federal  savings
bank  charter,  and, in December 1983, converted from  mutual  to
stock ownership.

     The principal business of the Bank is attracting savings and
checking  deposits  from  the  general  public,  and  using  such
deposits, together with borrowings and other funds, to make  real
estate secured loans.

      At  December 31, 1997, the Company had assets totaling $4.2
billion,  a  slight increase from $4.1 billion  at  December  31,
1996. The Company recorded net earnings of $23.1 million for  the
year  ended  December 31, 1997, net earnings of $8.2 million  for
the  year  ended  December 31, 1996, and  net  earnings  of  $6.5
million for the year ended December 31, 1995.

      The Bank derives its revenues principally from interest  on
loans and investments, loan  origination fees and servicing  fees
on  loans  sold.  Its  major items of  expense  are  interest  on
deposits and borrowings, and general and administrative expense.

     As of February 13, 1998, the Bank operated 24 retail savings
branches,  all  located  in  Southern California.  Permission  to
operate  all full-service branches must be granted by the  Office
of   Thrift  Supervision  ("OTS").  In  addition  to  the  retail
branches,  the  Bank  has  a retail call  center  which  conducts
transactions with deposit customers by telephone, a  retail  loan
office,  a  wholesale  loan  office  and  "Lend  FFB,"   a   loan
origination group which operates primarily by telephone.

      The  Bank's  principal  market  continues  to  be  Southern
California.  Lend  FFB   solicits loans  from  areas  outside  of
Southern   California,  including  certain  areas   in   Northern
California.  Loans originated by the Lend FFB unit are originated
primarily for sale.

      The  Bank  has  three  wholly-owned  subsidiaries:  Seaside
Financial Corporation, Oceanside Insurance Agency, Inc. and Santa
Monica  Capital Group, all of which are California  corporations.
See  "Subsidiaries."  The  Bank  conducts  its  loan  origination
business under the name "FirstFed Mortgage Services."

 Current Operating Environment

     The Company's operating results are significantly influenced
by national and regional economic conditions, monetary and fiscal
policies   of   the  federal  government,  housing   demand   and
affordability and general levels of interest rates.

      The  Bank's primary market area is Los Angeles County. This
area  of  Southern  California  continues  to  recover  from  the
economic  recession which hit the area earlier this decade.   The
economic  recovery  in Southern California  is  being  driven  by
strength   in   the  entertainment,  manufacturing  and   tourist
                                       3
<PAGE>
industries.   Consumer  confidence remains  high  due  to  strong
growth in employment and increases in personal income.  According
to   the   UCLA  Anderson  Forecast  for  December,  1997  ("UCLA
Forecast"), California has created 343,000 new jobs over the last
twelve  months and 47% of these jobs occurred in the Greater  Los
Angeles region.

      According  to  the  UCLA Forecast,  the  region's  economic
expansion could be adversely impacted in the near future  by  the
Asian international economic crisis.  This crisis may impact  the
region's  ability  to export its goods and may  also  impact  the
level of Asian tourists who visit the area.

      Home  values in the Los Angeles County area increased  2.8%
during 1997 and are expected to increase 4% in 1998 according  to
the  UCLA  Forecast.  The affordability of  housing  in  Southern
California has improved substantially over the last year  due  to
the  combination  of a favorable interest rate climate  and  home
prices resulting from the recession.  Also, demand for housing by
immigrants  in  the Los Angeles area has helped  strengthen  home
sales in the region.

      Consistent  with the improved real estate  climate  in  the
greater  Los  Angeles  area,  the  Bank's  non-performing  assets
declined  to 0.96% of total assets at the end of 1997 from  1.78%
at the end of 1996 and 2.33% at the end of 1995.

      The  Bank  continually  monitors  the  sufficiency  of  the
collateral  supporting  its  loan  portfolio.  The  portfolio  is
evaluated  on  a  number of factors including property  location,
date  of  origination and the original loan-to-value  ratio.  The
Bank adjusts its general allowance for anticipated loan losses as
a  result of these evaluations. The provision for loan losses was
$20.5 million in 1997 compared to $35.2 million in 1996 and $28.4
million in 1995.

      The  ratio  of  general valuation allowance to  the  Bank's
assets  with loss exposure (the Bank's loan portfolio  plus  real
estate  owned) was 1.86% at the end of 1997 compared to 1.73%  at
the  end  of  1996  and  1.35% at the end of  1995.  The  general
valuation  allowance at December 31, 1997 increased  because  the
provision for loan losses exceeded net charge-offs. See "Business
- Loan Loss Experience Summary."

      The  Bank also maintains separate valuation allowances  for
impaired loans and loans sold with recourse. See "Business - Loan
Loss  Experience  Summary" for additional  information  regarding
valuation allowances for these loans.

      Current  Interest Rate Environment.  Due  to  the  relative
strength  of  the  national economy, the  Federal  Reserve  Board
("FRB")  did not change interest rates during 1997 and  decreased
interest  rates  only  once during 1996  which  resulted  in  key
interest rates remaining flat for the last two years.  There  has
been  downward pressure on interest rates for the last few months
due to deflationary concerns resulting from economic weakness  on
the   international   level.  In  a   declining   interest   rate
environment, the Bank's interest rate spread typically  increases
(savings and borrowing costs decrease immediately while the  loan
portfolio  yield stays approximately the same.)  The  reverse  is
true  during periods of increasing interest rates.  The time  lag
inherent  in  the  loan  portfolio results from  operational  and
regulatory  constraints  which do not  allow  the  Bank  to  pass
through  monthly  changes in the primary index utilized  for  the
majority  of its adjustable rate loan customers for a  period  of
ninety  days. Due to the stable interest rate environment  during
1997  and 1996, the time lag had an insignificant effect  on  the
Bank's   operations.    See  "Asset-Liability   Management"   and
"Components  of Earnings - Net Interest Income" in  "Management's
Discussion  and  Analysis of Financial Condition and  Results  of
Operations" for additional information.

      Competition.  The  Bank experiences strong  competition  in
attracting  and retaining deposits and  originating  real  estate
loans. It competes for deposits with many of the nation's largest
savings  institutions and commercial banks which have significant
operations in Southern California.
                                       4
<PAGE>
      The  Bank  also  competes for deposits with credit  unions,
thrift  and loan associations, money market mutual funds, issuers
of  corporate debt securities and the government. In addition  to
the  rates of interest offered to depositors, the Bank's  ability
to  attract  and  retain deposits depends upon  the  quality  and
variety  of  services  offered, the  convenience  of  its  branch
locations and its financial strength as perceived by depositors.

      The  Bank  competes  for real estate loans  primarily  with
savings   institutions,   commercial  banks,   mortgage   banking
companies  and  insurance  companies.  The  primary  factors   in
competing for loans are interest rates, loan fees, interest  rate
caps,  interest  rate adjustment provisions and the  quality  and
extent of service to borrowers and mortgage brokers.

      Environmental Concerns.  Under certain circumstances,  such
as  when  it actively participates in the management or operation
of  a  property securing its loans, the Bank could have liability
for  any  properties found to have pollutant or  toxic  features.
Environmental  protection laws are strict and  impose  joint  and
several  liability on numerous parties. It is  possible  for  the
cost of cleanup of environmental problems to exceed the value  of
the  security  property.  The  Bank  has  adopted   environmental
underwriting  requirements  when  considering  loans  secured  by
properties  which  appear  to  have  environmentally  high   risk
characteristics (e.g. commercial, industrial and construction  of
all  types,  which  may contain friable asbestos  or  lead  paint
hazards). These requirements are intended to minimize the risk of
environmental  hazard  liability. The Bank's  policies  are  also
designed to avoid the potential for liability imposed on  lenders
who assume the management of a property.

      Business Concentration. The Bank has no single customer  or
group  of customers, either as depositors or borrowers, the  loss
of  any one or more of which would have a material adverse effect
on the Bank's operations or earnings prospects.

      Yields  Earned  and Rates Paid.  Net interest  income,  the
major  component of core earnings for the Bank, depends primarily
upon the difference between the combined average yield earned  on
the  loan  and  investment security portfolios and  the  combined
average interest rate paid on deposits and borrowings, as well as
the    relative   balances   of   interest-earning   assets   and
interest-bearing  liabilities. See "Management's  Discussion  and
Analysis  of  Financial  Condition and Results  of  Operations  -
Overview  and Components of Earnings - Net Interest  Income"  for
further analysis and discussion.

Lending Activities

      General. The Bank's primary lending activity has  been  the
origination  of  loans for the purpose of enabling  borrowers  to
purchase, refinance or construct improvements on residential real
property. The loan portfolio primarily consists of loans made  to
home  buyers  and  homeowners on the security  of  single  family
dwellings  and  multi-family dwellings. The loan  portfolio  also
includes loans secured by commercial and industrial properties.

      For  an  analysis  of  loan portfolio  composition  and  an
analysis  of  the  types of loans originated,  see  "Management's
Discussion  and  Analysis of Financial Condition and  Results  of
Operations  -  Balance Sheet Analysis - Loan Portfolio  and  Loan
Composition."

      Origination  and  Sale  of Loans.  The  Bank  employs  loan
officers  on an incentive compensation basis to obtain  qualified
applicants  for loans. The Bank also derives business from  other
sources  such  as  mortgage brokers, borrower  referrals,  direct
telephone sales and clients from its retail banking branches.
                                       5
<PAGE>
      Loan  originations  were  $481.3 million  in  1997,  $302.8
million  in  1996  and $299.3 million in 1995.  Loan  origination
volume  increased  in  1997 due to the increase  in  real  estate
activity in the Bank's market areas.  $46.6 million in loans were
originated by Lend FFB during 1997.

      Loans sold totaled $52.4 million in 1997, $24.1 million  in
1996  and $36.5 million in 1995. For the year ended December  31,
1997, $86.6 million in loans were originated for sale compared to
$22.9  million  in  1996  and $34.6 million  during  1995.  Loans
originated   for  resale  totaled  18%,  8%  and  12%   of   loan
originations  during  1997,  1996  and  1995,  respectively.  The
increase is due to fixed rate loans originated by Lend FFB  which
are originated typically for resale.

     Loans held-for-sale at December 31, 1997, 1996 and 1995 were
$40.4  million,  $6.2  million  and $7.4  million,  respectively,
constituting 1.30%, 0.20% and 0.24%, respectively, of the  Bank's
total  loans  at  such  dates.  In December  of  1995,  the  Bank
transferred $19.2 million of loans previously "held-for-sale"  to
its "held-for-investment" portfolio.

      Loans  originated for resale are recorded at the  lower  of
cost or market.  The time from origination to sale may take up to
three  months  due to administrative requirements.   During  this
time  period the Bank will be exposed to price adjustments  as  a
result of fluctuations in market interest rates.

      The  Bank structures mortgage-backed securities with  loans
from  its  own loan portfolio for use in collateralized borrowing
arrangements. In exchange for the improvement in credit risk when
the  mortgage-backed securities are formed,  guarantee  fees  are
paid  to the Federal Home Loan Mortgage Corporation ("FHLMC")  or
the  Federal  National Mortgage Association ("FNMA").   No  loans
were  converted into mortgage-backed securities in 1997 and 1996.
However,   $59.7   million   in   loans   were   converted   into
mortgage-backed  securities  during  1995.   All  of  the   loans
underlying the mortgage-backed securities were originated by  the
Bank.   Therefore, mortgage-backed securities generally have  the
same   experience   with   respect  to   prepayment,   repayment,
delinquencies  and other factors as the remainder of  the  Bank's
portfolio.

      In accordance with SFAS No. 115, the portfolio of mortgage-
backed  securities was recorded at fair value as of December  31,
1997,  1996  and  1995. Negative fair value adjustments  of  $0.4
million  and  $4.1  million,  net  of  taxes,  were  recorded  in
stockholders' equity at December 31, 1997 and December 31,  1996.
A  positive fair value adjustment of $4.9 million, net of  taxes,
was recorded in stockholder's equity at December 31, 1995.

      The  Bank  serviced  $519.4  million  in  loans  for  other
investors as of December 31, 1997. $218.1 million of these  loans
were sold under recourse arrangements. The Bank has an additional
$18.9  million  in  loans that were formed  into  mortgage-backed
securities  with recourse features, but were still owned  by  the
Bank as of December 31, 1997. Due to regulatory requirements, the
Bank  maintains capital for loans sold with recourse as if  those
loans  had not been sold. The Bank had been active in these types
of  transactions in the past, but has not entered  into  any  new
recourse  arrangements since 1989 when a change  in  the  capital
regulations took effect. Loans sold with recourse are  considered
along  with  the Bank's own loans in determining the adequacy  of
general  loan valuation allowances. The decrease in the principal
balance of loans sold with recourse to $218.1 million at the  end
of 1997 from $230.8 million at the end of 1996 and $247.6 million
at  the  end  of 1995 was due to loan amortization,  payoffs  and
foreclosures.

      Interest  Rates, Terms and Fees.  The Bank makes adjustable
mortgage  loans ("AMLs") with 30 and 40 year terms  and  interest
rates  which adjust each month based upon the Federal  Home  Loan
Bank's  Eleventh  District Cost of Funds  Index  ("Index").  (See
"Asset-Liability  Management"  in  "Management's  Discussion  and
Analysis  of  Financial  Condition and Results  of  Operations.")
While  the  monthly payment adjusts annually, the maximum  annual
change  in  the  payment  is limited  to  7.5%.   Any  additional 
                                       6
<PAGE>
interest  due  as  a result of a rising Index  is  added  to  the
principal balance of the loan ("negative amortization"). Payments
are  adjusted  every  five  years  without  regard  to  the  7.5%
limitation to provide for full amortization during the balance of
the  loan term. Although the interest rates are adjusted monthly,
these  loans  have maximum interest rates which  can  be  charged
ranging from 400 to 750 basis points above their initial interest
rate.  Generally, these loans may be assumed at any  time  during
their  term provided that the person assuming the loan meets  the
Bank's  credit  standards  and enters  into  a  separate  written
agreement  with  the  Bank.  Additionally, the  new  borrower  is
required  to pay assumption fees customarily charged for  similar
transactions.

     The Bank offers two primary AML products based on the Index,
the "AML IIC" and the "AML IID." The initial interest rate on the
AML  IIC  is below market for the first three months of the  loan
term.  The AML IID has no below market initial interest rate  but
starts  with a pay rate similar to the AML IIC. This  results  in
immediate  negative amortization but allows the loan to  earn  at
the  fully  indexed interest rate immediately. The difference  in
negative amortization on these two products is minor. 79% of  the
Bank's AML loan origination volume in 1997 was comprised of these
two  products.  The  Bank also originates adjustable  rate  loans
based on the one year treasury and LIBOR rates.

      Under  current portfolio loan programs, the  Bank  normally
lends  less  than  or equal to 90% of a single family  property's
appraised value at the time of loan origination.

      The  Bank generally requires that borrowers obtain  private
mortgage  insurance on loans in excess of 80%  of  the  appraised
property  value. On certain loans originated for  the  portfolio,
the  Bank  charges  premium rates and/or  fees  in  exchange  for
waiving  the insurance requirement. Management believes that  the
additional  rates and fees charged on these loans compensate  the
Bank  for the additional risks associated with this type of loan.
Subsequent to the origination of a portfolio loan, the  Bank  may
purchase  private mortgage insurance with its own  funds.   Under
certain of these mortgage insurance programs, the Bank acts as co-
insurer and participates with the insurer in absorbing any future
loss.   As  of  December 31, 1997 and 1996, loans which  had  co-
insurance   totaled   $219.9   million   and   $258.9    million,
respectively. Loans over 80% loan-to-value, for which  there  was
no private mortgage insurance, totaled $163.8 million at December
31,  1997  compared to $122.5 million at December  31,  1996  and
$132.5 million at December 31, 1995.

      Because  AML loan-to-value ratios may increase above  those
established  at  the  time of loan origination  due  to  negative
amortization,  the  Bank rarely lends in excess  of  90%  of  the
appraised value on AMLs. When the Bank does lend in excess of 90%
of  the  appraised  value, additional fees and higher  rates  are
charged, and there is no below market initial interest rate.  The
amount  of  negative amortization recorded by the Bank  increases
during periods of rising interest rates. As of December 31, 1997,
negative  amortization on all loans serviced by the Bank  totaled
$13.9  million, compared to $11.0 million at December  31,  1996.
The  increase in negative amortization during 1997 is due  to  an
increase in adjustable rate loans originated.

     Although regulations permit a maximum amortization period of
40  years  for  real estate secured home loans and 30  years  for
other  real estate loans, the majority of the Bank's real  estate
loans  provide  for a maximum amortization term of  30  years  or
less.  Loans with 40-year terms constituted 11% and 14%  of  loan
originations during 1997 and 1996, respectively.
                                       7
<PAGE>
       The   following  table  shows  the  contractual  remaining
maturities of the Bank's loans at December 31, 1997:
<TABLE>
<CAPTION>

                                                Loan Maturity Analysis
                                                   Maturity Period
                                -------------------------------------------------------------------------------
                                                          >1 Year
                                Total         1 Year      To 5      >5-10      >10-20      >20-30      >30
                                Balance       or Less     Years     Years      Years       Years       Years
                                ----------    -------     --------  --------   ----------  ----------  --------
                                               (Dollars In Thousands)
<S>                             <C>           <C>         <C>       <C>        <C>         <C>         <C>       
Interest rate sensitive  loans: 
AMLs                            $3,102,438    $44,894     $210,294  $386,217   $1,278,855  $1,077,454  $104,724
 Fixed-rate loans:
  1st mortgages                     36,758      2,869        7,437     7,919        8,140      10,393         -
  2nd mortgages                      1,459        122          447       344          546           -         -
  Consumer and other loans           4,509      2,428        2,081         -            -           -         -
                                ----------    -------     --------  --------   ----------   ---------  --------
 Total                          $3,145,164    $50,313     $220,259  $394,480   $1,287,541   $1,087,847 $104,724
                                ==========    =======     ========  ========   ==========   ========== ======== 
</TABLE>


Non-accrual, Past Due, Impaired and Restructured Loans

      The  Bank  establishes allowances for  delinquent  interest
equal  to the amount of accrued interest on all loans 90 days  or
more past due or in foreclosure. This practice effectively places
such   loans  on  non-accrual  status  for  financial   reporting
purposes.

      The  following is a summary of non-accrual loans for  which
delinquent interest allowances had been established as of the end
of each of the periods indicated:
<TABLE>
<CAPTION>
                                   % of               % of              % of               % of               % of
                        1997      Total    1996      Total    1995      Total    1994      Total    1993      Total
                        -------   -----    -------   -----    -------   -----    -------   -----    ------    -----
                                                (Dollars In Thousands)
<S>                     <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>
Non-accrual Loans:
Single family           $16,799   49%      $25,602   35%      $25,991   26%      $13,041   14%      $25,317   24%
Multi-family             15,785   46        44,754   62        69,579   70        60,213   64        70,207   66
Commercial                1,533    5         2,223    3         3,313    4        20,986   22        10,307   10
Other                         -    -             -    -           220    -           245    -           245    -
                        -------   -----    -------   -----    -------   -----     ------   -----   --------   -----
   Total Non-accrual                                 
    Loans               $34,117   100%     $72,579   100%     $99,103   100%      $94,485  100%    $106,076   100%
                        =======   =====    =======   =====    =======   =====     =======  =====   ========   =====
</TABLE>

      The  allowance for delinquent interest, based on loans past
due  more  than 90 days or in foreclosure, totaled $1.8  million,
$4.2  million,  $5.6 million, $5.2 million and  $5.7  million  at
December 31, 1997, 1996, 1995, 1994 and 1993, respectively.

      The Bank's modified loans resulted primarily from temporary
modifications  of principal and interest payments.   Under  these
arrangements, loan terms are typically reduced to no less than  a
monthly interest payment required under the note. If the borrower
is  unable to return to scheduled principal and interest payments
at  the  end  of the modification period, foreclosure proceedings
are initiated or the modification period may be extended.  As  of
December  31,  1997, the Bank had modified loans  totaling  $16.7
million,  net  of  loan loss allowances of  $4.1  million.   This
compares with $19.0 million, net of loan loss allowances of  $5.5
million as of December 31, 1996.  Modified loans 90 days or  more
delinquent  as  of  December 31, 1996  were  $472  thousand.   No
modified loans were 90 days or more delinquent as of December 31,
1997 or December 31, 1995.

     Statement  of  Financial  Accounting  Standards   No.   114,
"Accounting  by  Creditors for Impairment of a Loan"  ("SFAS  No.
114"),  requires the measurement of impaired loans based  on  the
present  value  of expected future cash flows discounted  at  the
loan's  effective  interest rate, or  at  the  loan's  observable
                                       8
<PAGE>
market price or at the fair value of its collateral. SFAS No. 114
does  not  apply  to large groups of homogeneous loans  that  are
collectively  reviewed  for  impairment.   For  the  Bank,  loans
collectively  reviewed for impairment include all  single  family
loans  less than $500 thousand and multi-family loans  less  than
$750 thousand. The adoption of SFAS No. 114 did not result in any
material additions to the Bank's provision for loan losses.

      Prior  to the adoption of SFAS No. 114, the Bank considered
the  transfer  of  specific  allowances  from  general  valuation
allowances to be  "charge-offs."  Pursuant to  SFAS No. 114,  the
Bank now considers allowances on impaired loans to be charge-offs
only  if the loan is foreclosed upon or the borrower is permitted
to satisfy the debt with less than a full repayment of the amount
owed.

      Pursuant  to  SFAS  No. 114, a loan  is  considered  to  be
impaired  when management believes that it is probable  that  the
Bank  will  be  unable  to  collect all  amounts  due  under  the
contractual  terms of the loan. Estimated impairment  losses  are
recorded as separate valuation allowances and may be subsequently
adjusted  based  upon changes in the measurement  of  impairment.
Impaired  loans, which are disclosed net of valuation allowances,
include  non-accrual  major loans (single family  loans  with  an
outstanding  principal  amount greater  than  or  equal  to  $500
thousand  and multi-family and commercial real estate loans  with
an  outstanding principal amount greater than or  equal  to  $750
thousand),  modified loans, and major loans  less  than  90  days
delinquent in which full payment of principal and interest is not
expected to be received.

      Valuation allowances for impairment totaled $9.8 million as
of  December 31, 1997 and $12.4 million as of December 31,  1996.
The  following is a summary of impaired loans, net  of  valuation
allowances for impairment, for the periods indicated:
<TABLE>
<CAPTION>
                             December 31,       December 31,
                                1997               1996
                             ------------       ------------
                                  (Dollars In Thousands)

<S>                          <C>                <C>
Non-accrual loans            $      8,260       $     20,052
Modified loans                      8,090              9,728
Other impaired loans                9,335              7,854
                             ------------       ------------
                             $     25,685       $     37,634
                             ============       ============
</TABLE>
        
      When  a  loan  is  considered impaired, the  Bank  measures
impairment  based  on the present value of expected  future  cash
flows  (over  a period not to exceed 5 years) discounted  at  the
loan's  effective  interest  rate.   However,  if  the  loan   is
"collateral-dependent" or a probable foreclosure,  impairment  is
measured  based  on the fair value of the collateral.   When  the
measure  of an impaired loan is less than the recorded investment
in  the  loan, the Bank records an impairment allowance equal  to
the excess of the Bank's recorded investment in the loan over its
measured  value. Impaired loans for which there were no valuation
allowances  established totaled $2.5 million and $4.1 million  as
of  December  31,  1997 and December 31, 1996, respectively.  The
following  summary  details impaired  loans  measured  using  the
present  value  of expected future cash flows discounted  at  the
effective  interest rate of the loan and impaired loans  measured
using the fair value method for the periods indicated:
<TABLE>
<CAPTION>
                             December 31,       December 31,
                                1997               1996
                             ------------       ------------
                                 (Dollars In Thousands)

<S>                          <C>                <C>
Present value method         $      1,067       $      2,992
Fair value method                  24,618             34,642
                             ------------       ------------
Total impaired loans         $     25,685       $     37,634
                             ============       ============
</TABLE>
                                       
                                       9
<PAGE>

     The present value of an impaired loan's expected future cash
flows  will change from one reporting period to the next  because
of  the  passage of time and also may change because  of  revised
estimates in the amount or timing of those cash flows.  The  Bank
records  the  entire change in the present value of the  expected
future cash flows as an impairment valuation allowance which  may
necessitate  an  increase  in  the  provision  for  loan  losses.
Similarly,  the  fair  value  of the collateral  of  an  impaired
collateral-dependent loan may change from one reporting period to
the next.  The Bank also records a change in the measure of these
impaired  loans  as an impairment valuation allowance  which  may
necessitate an adjustment to the provision for loan losses.

      The  following is an analysis of the activity in the Bank's
valuation  allowance  for  impaired  loans  during  the   periods
indicated (dollars in thousands):
<TABLE>
<CAPTION>

<S>                                                <C>
Balance at December 31, 1994                       $ 23,887
 Provision for loan losses                           21,418
 Net charge-offs                                    (19,204)
                                                   --------
Balance at December 31, 1995                         26,101
 Provision for loan losses                           11,387
 Net charge-offs                                    (25,138)
                                                   --------
Balance at December 31, 1996                         12,350
       Provision for loan losses                      7,345
   Net charge-offs                                   (9,920)
                                                   --------
Balance at December 31, 1997                       $  9,775
                                                   ========
</TABLE>

      Cash payments received from impaired loans are recorded  in
accordance with the contractual terms of the loan.  The principal
portion of the payment is used to reduce the principal balance of
the  loan, whereas the interest portion is recognized as interest
income.

      The  average  recorded  investment in  impaired  loans  for
December  31, 1997 and 1996 was $24.5 million and $52.7  million,
respectively.  The  amount  of interest  income  recognized  from
impaired loans during the years ended December 31, 1997 and  1996
was  $1.9 million and $2.7 million, respectively, under the  cash
basis method of accounting.  Interest income recognized under the
accrual  basis method of accounting for the years ended  December
31,  1997  and  1996  totaled  $1.9  million  and  $2.5  million,
respectively.

      The  table  below shows the Bank's net investment  in  non-
accrual loans determined to be impaired, by property type, as  of
the periods indicated:
<TABLE>
<CAPTION>

                             December 31,  December 31,
                                 1997         1996
                             ------------  ------------
                              (Dollars In Thousands)

<S>                          <C>           <C>        
Single family                $   856       $    2,002
Multi-family                   6,893           17,417
Commercial                       511              633
                             -------       ----------
                             $ 8,260       $   20,052
                             =======       ==========
</TABLE>

      Loan  Loss Experience Summary. The Bank maintains a general
valuation allowance to absorb possible future losses that may  be
realized  on  its loan portfolio. The allowance is  reviewed  and
adjusted  at  least  quarterly based upon a  number  of  factors,
including   asset  classifications,  economic  trends,   industry
experience,  industry  and  geographic concentrations,  estimated
collateral   values,  management's  assessment  of  credit   risk
inherent  in  the portfolio, historical loss experience  and  the
Bank's underwriting practices.
                                       10
<PAGE>


      The  following is an analysis of the activity in the Bank's
general loan valuation allowance for the periods indicated:

<TABLE>
<CAPTION>

                                                   Year Ended December 31,
                                        ------------------------------------------------
                                          1997      1996      1995      1994      1993
                                        ------------------------------------------------
                                                    (Dollars In Thousands)
<S>                                     <C>       <C>       <C>       <C>       <C>
Beginning General Loan Valuation
    Allowance                           $54,900   $42,876   $55,353   $46,900   $27,854
Provision  for Loan Losses               13,155    23,768     6,958    53,172    67,679
Charge-Offs, Net of Recoveries:
  Single Family                          (5,633)   (8,845)   (6,040)  (16,127)   (8,605)
   Multi-Family                           2,341    (2,448)  (13,676)  (19,800)  (38,178)
   Commercial                               482       240       851      (664)   (1,574)
   Non-Real Estate                          226         9       (67)     (180)     (276)
                                        -------   -------   -------   -------   -------
   Total  Net  Charge-Offs               (2,584)  (11,044)  (18,932)  (36,771)  (48,633)
                                        -------   -------   -------   -------   -------
Transfer to Liability Account for
         Loans  Sold  with Recourse      (4,234)        -      (503)   (7,948)        -
Transfer to Real Estate General
    Valuation  Allowance.                     -      (700)        -         -         -
                                        -------   -------   -------   -------   -------
Ending General Loan Valuation
        Allowance                       $61,237   $54,900   $42,876   $55,353   $46,900
                                        =======   =======   =======   =======   =======
</TABLE>


     The general valuation allowance for loans sold with recourse
was included in the total general valuation allowance balance for
the overall loan portfolio in years prior to 1994.  The amount of
such  recourse  general valuation allowance was $6.2  million  at
December   31,  1993.  The  activity  in  the  general  valuation
allowance for loans sold with recourse for 1997, 1996 and 1995 is
presented below (dollars in thousands):
<TABLE>
<CAPTION>
<S>                                         <C>
Balance at December 31, 1994                $    7,948
Provision for losses                             2,123
Transfer from general valuation allowance          503
Net charge-offs                                 (1,524)
                                            ----------
Balance at December 31, 1995                     9,050
Net charge-offs                                   (652)
                                            ----------
Balance at December 31, 1996                     8,398
Transfer from general valuation allowance        4,234
Net recoveries                                     397
                                            ----------
Balance at December 31, 1997                $   13,029
                                            ==========

</TABLE>
      Based  on  the factors above, the Bank's general  valuation
allowance (including general valuation allowances for loans  sold
with  recourse)  was  2.12% of total assets  with  loss  exposure
(including loans sold with recourse) at December 31, 1997,  1.86%
at December 31, 1996 and 1.52% at December 31, 1995. Depending on
the  economy and real estate markets in which the Bank  operates,
increases  in the general valuation allowance may be required  in
future periods. In addition, various regulatory agencies,  as  an
integral  part of their examination process, periodically  review
the  Bank's  general  valuation  allowance.  These  agencies  may
require  the  Bank  to  establish  additional  general  valuation
allowances  based on their judgment of the information  available
at the time of their examination.
                                       11
<PAGE>

      The following table details general valuation allowances by
loan  type  for  the  periods indicated,  including  the  general
valuation allowance for loans sold with recourse:
<TABLE>
<CAPTION>
                                     % of                 % of                 % of                 % of                 % of
                           1997      Total      1996      Total      1995      Total      1994      Total      1993      Total
                           ---------------------------------------------------------------------------------------------------
                                                         (Dollars In Thousands)
<S>                        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Real Estate Loans:
  Single Family            $21,583   29%        $15,355   24%        $ 8,887   17%        $ 6,938   11%        $ 6,607   14%
  Multi-Family              45,029   61          44,078   70          35,278   68          50,018   79          37,691   81
  Commercial                 6,658    9           3,587    6           7,529   15           6,170   10           2,551    5
   Non-Real  Estate Loans.     996    1             278    -             232    -             175    -              51    -
                           -------  ---         -------  ---         -------  ---         -------  ---         -------  ---    
  Total                    $74,266  100%        $63,298  100%        $51,926  100%        $63,301  100%        $46,900  100%
                           =======  ===         =======  ===         =======  ===         =======  ===

</TABLE>
      Net  loan charge-offs, including net charge-offs  from  the
general  valuation allowance, impaired allowance and the  general
valuation  allowance for loans sold with recourse  totaled  $12.1
million,  $37.5 million, $39.7 million, $45.4 million  and  $48.6
million  for  1997,  1996,  1995, 1994  and  1993,  respectively,
representing 0.39%, 1.21%, 1.28%, 1.58% and 1.82% of the  average
loan  portfolio for such periods.  Charge-offs have improved over
the  last  two  years  due  to the improvement  in  the  Southern
California economy and real estate market.

      Any  increase  in  charge-offs would adversely  impact  the
Company's future loan loss provisions and earnings.

      See  "Management's  Discussion and  Analysis  of  Financial
Condition  and Results of Operations - Asset Quality Ratios"  for
an  analysis  of  the Bank's general valuation  allowances  as  a
percentage  of  non-accrual loans, the total loan  portfolio  and
total loans with loss exposure.

     Potential Problem Loans.  The Bank also had $41.6 million in
potential  problem  loans as of December 31, 1997  compared  with
$44.0 million as of December 31, 1996.  These are loans which  do
not  meet  the criteria of impaired or non-performing  loans  but
have displayed some past or present weakness.  If the weakness is
not  corrected, the loan could eventually result in a loss to the
Bank.

      The  Bank's Asset Classification Committee meets  at  least
quarterly  to  review  and  monitor the  condition  of  the  loan
portfolio  on  an ongoing basis. Additionally, a special  workout
group  of  the Bank's officers meets at least monthly to  resolve
delinquent loan situations and to initiate actions enforcing  the
Bank's  rights  in  security properties pending  foreclosure  and
liquidation.

       Non-performing  Assets.   For  a  further  discussion   of
non-performing assets, see "Management's Discussion and  Analysis
of Financial Condition and Results of Operations - Non-Performing
Assets."

      Generally, loans greater than 60 days delinquent are placed
into  foreclosure  and a valuation allowance is  established,  if
necessary.  The  Bank  acquires title to  the  property  in  most
foreclosure  actions in which the loan is not reinstated  by  the
borrower. Once real estate is acquired in settlement of  a  loan,
the  property is recorded at fair value less estimated  costs  to
sell.

     Following the acquisition of foreclosed real estate ("REO"),
the  Bank  evaluates  the  property and establishes  a  plan  for
marketing  and  disposing of the property.  After inspecting  the
property,  the  Bank  determines  whether  the  property  may  be
disposed   of   in   its  present  condition   or   if   repairs,
rehabilitation or improvements are necessary.
                                       12
<PAGE>
      The  following  table  provides information  regarding  the
Bank's REO activity for the periods indicated:

<TABLE>
<CAPTION>
                                    Real Estate Owned Activity
                                      Year Ended December 31,
                                    ---------------------------
                                      1997     1996      1995
                                    -------   -------   -------
                                       (Dollars In Thousands)
<S>                                 <C>       <C>       <C>
Beginning Balance                   $ 14,331  $19,701   $16,724
Additions                             49,150   74,886    64,053
Sales                                (53,263) (80,256)  (61,076)
                                    --------  -------   -------
Ending  Balance                     $ 10,218  $14,331   $19,701
                                    ========  =======   =======
</TABLE>

       Other   Interest-Earning  Assets.  The   Bank   owned   no
contractually delinquent interest-earning assets other than loans
as of December 31, 1997.

 Investment Activities

      Savings institutions are required by federal regulations to
maintain  a minimum ratio of liquid assets which may be  invested
in  certain government and other specified securities. This level
is  adjusted from time to time in response to prevailing economic
conditions and as a means of controlling the amount of  available
mortgage  credit. At December 31, 1997, the regulatory  liquidity
requirement  was  4.00% and the Bank's liquidity  percentage  was
5.13%.

     It is the Bank's policy to maintain liquidity investments at
a  modest  level and to use available cash to originate mortgages
which  normally command higher yields. Therefore, interest income
on  investments  generally  represents  less  than  5%  of  total
revenues.

       The   following  table  summarizes  the  total  investment
portfolio  at historical cost by type at the end of  the  periods
indicated:
<TABLE>
<CAPTION>

                                                           December  31,
                                       ----------------------------------------------
                                        1997      1996      1995      1994      1993
                                       ----------------------------------------------
                                                  (Dollars In Thousands)

<S>                                   <C>       <C>       <C>       <C>      <C>
U.S.  Treasury Securities             $   300   $   301   $   301   $ 4,205  $  5,111
U.S.  Agency  Securities               48,142    49,989    46,561    36,565    42,600
Collateralized Mortgage
 Obligations                            1,009     8,776    29,874    43,282    56,125
                                       ------    ------    ------    ------    ------
                                       49,451    59,066    76,736    84,052   103,836
                                       
Unrealized loss on
 securities available-for-sale           (541)     (157)     (552)        -         -
                                      -------   -------   -------   -------  --------
                                      $48,910   $58,909   $76,184   $84,052  $103,836
                                      =======   =======   =======   =======  ========

Weighted average yield on
 interest-earnings invest-
 ments  end  of period                   5.17%     5.98%     5.15%     5.08%     5.16%
                                         ====      ====      ====      ====      ====

</TABLE>

                                       13
<PAGE>


      The  following is a summary of the maturities of investment
securities at historical value as of December 31, 1997:
<TABLE>
<CAPTION>


                                                                         Maturity
                                       --------------------------------------------------------------------------------
                                                                                                Total Historical
                                         Within 1 Year             1-5 Years                         Value
                                       -----------------       ------------------      --------------------------------
                                                Weighted                 Weighted                Weighted      Average
                                                Average                  Average                 Average       Maturity
                                       Amount    Yield          Amount    Yield        Amount     Yield         Yrs/Mos
                                       -----------------       ------------------      --------------------------------
                                                                        (Dollars In Thousands)
<S>                                   <C>         <C>         <C>          <C>         <C>          <C>           <C>
U.S. Treasury
  Securities                          $   100     6.69%       $   200      5.97%       $   300      6.21%         2/6
U.S. Agency Securities                 20,000     5.31         28,142      5.08         48,142      5.17          2/6
Collateralized Mortgage
 Obligations                            1,009     4.54              -         -          1,009      4.54          0/4
                                      -------                 -------                  -------                
                                      $21,109     5.28        $28,342      5.08        $49,451      5.17          2/6
                                      =======                 =======                  =======                 
</TABLE>

 Sources of Funds

      General. The Bank's principal sources of funds are  savings
deposits,  advances  from  the Federal  Home  Loan  Bank  of  San
Francisco  ("FHLBSF")  and securities sold  under  agreements  to
repurchase.

      Deposits. The Bank obtains deposits through three different
sources:  1) its retail branch system, 2) phone solicitations  by
designated employees,  and 3) national brokerage firms.

     The cost of funds, operating margins and net earnings of the
Bank  associated  with  brokered and telemarketing  deposits  are
generally comparable to the cost of funds, operating margins  and
net earnings of the Bank associated with retail deposits, Federal
Home  Loan  Bank  ("FHLB") borrowings and securities  sold  under
agreements  to repurchase.  As the cost of each source  of  funds
fluctuates  from  time  to time, the Bank seeks  funds  from  the
lowest cost source until the relative costs change.  As the costs
of funds, operating margins and net income of the Bank associated
with each source of funds are generally comparable, the Bank does
not deem the impact of a change in incremental use of any one  of
the specific sources of funds at a given time to be material.

       Deposits   acquired  through  telemarketing  efforts   are
typically placed with the Bank by professional money managers and
represented   5%,  6% and 11% of total deposits at  December  31,
1997,  1996  and  1995, respectively. The level of  telemarketing
deposits varies based on yields available to depositors on  other
investment  instruments  and the depositors'  perception  of  the
Bank's credit worthiness.

       Deposits   acquired  through  national   brokerage   firms
represented  20%, 20% and 23% of total deposits at  December  31,
1997,  1996  and  1995, respectively.  Any fees paid  to  deposit
brokers  are  amortized over the term of the  deposit.  Based  on
historical  renewal percentages, management believes  that  these
deposits  are a stable source of funds. Institutions meeting  the
regulatory  capital  standards  necessary  to  be  deemed   well-
capitalized are not required to obtain a waiver from the FDIC  in
order  to accept brokered deposits.  See "Management's Discussion
and Analysis - Capital Resources and Liquidity."
                                       14
<PAGE>

     Retail deposits were $1.5 billion at December 31, 1997, 1996
and  1995.  Retail  deposits comprised 75% of total  deposits  at
December 31, 1997, 74% of total deposits at December 31, 1996 and
66%  at  December 31, 1995. The level of deposits  has  decreased
slightly  over the last three years due to increased  competition
for  retail savings deposits in Southern California. In order  to
increase  fee income at the retail branches and decrease interest
costs,  the  Bank's  retail deposit marketing efforts  have  been
concentrated on obtaining demand deposit accounts over  the  last
two  years.  The Bank operated 24 retail branches at the  end  of
1997.

      The  following tables set forth information  regarding  the
amount  of  deposits  in the various types  of  savings  programs
offered  by  the Bank at the end of the years indicated  and  the
average balances and rates for those years:
<TABLE>
<CAPTION>

                                                        December 31,
                                        ----------------------------------------------------------
                                            1997                   1996                  1995
                                        --------------         ---------------       -------------
                                        Amount       %          Amount       %        Amount    %
                                        ----------------------------------------------------------
                                                        (Dollars In Thousands)
<S>                                    <C>          <C>        <C>         <C>     <C>         <C>
Variable rate non-term  accounts:
  Money market deposit accounts
  (weighted average rate of 3.36%,
   2.82% and 2.52%)                       $156,221    8%         $130,173    7%      $125,352    6%
  Interest-bearing checking accounts
   (weighted average rate of 1.78%
   1.01% and 1.20%)                        130,765    7           165,616    8        145,801    7
  Passbook accounts (2.04%, 2.04%
   and 2.04%)                               86,547    4            94,718    5         96,948    4
  Non-interest bearing checking
   accounts                                112,373    6            40,404    2         54,876    2
                                          --------   --           -------   --        -------   --
                                           485,906   25           430,911   22        422,977   19
                                          --------   --           -------   --        -------   --
  Fixed term rate certificate accounts:
  Under six month term (weighted
    average rate of 5.07%, 5.11%
     and 5.21%)                            120,637   61            60,430    8        126,599    6
  Six month term (weighted average
   rate of 6.00%, 5.69% and 5.42%)         103,901    5           204,048   10        417,855   19
  Nine month term (weighted average of
   5.64%, 5.45% and 5.98%)                 374,259   19           246,777   13        144,308    6
  One year to 18 month  term (weighted
   average rate of 5.53%, 5.32% and
   5.57%)                                  348,941   18           304,532   16        235,164   11
  Two year or 30 month term (weighted
    average rate of 5.23%, 5.32% and
    5.55%)                                  30,689    2            40,498    2        239,411   11
  Over 30 month term (weighted
    average rate of 5.85%, 6.27%
    and 6.31%)                             125,971    7           202,724   10        238,742   11
  Negotiable certificates of $100,000
  and greater, 30 day to one year terms
  (weighted average rate of 5.50%,
   5.39% and 5.66%)                       353,343    18           367,528   19        379,980   17
                                        ---------    --         ---------   --      ---------   --
                                        1,457,741    75         1,526,537   78      1,782,059   81
                                        ---------    --         ---------   --      ---------   --
  Total deposits (weighted average
   rate of 4.66, 4.67% and 4.89%)      $1,943,647   100%       $1,957,448  100%    $2,205,036  100%
                                       ==========   ===        ==========  ===     ==========  === 
</TABLE>
                                       15
<PAGE>
<TABLE>
<CAPTION>
                                                                During the Year Ended December 31,

                                                       1997                  1996                  1995
                                                ------------------    ------------------    ------------------
                                                Average    Average    Average    Average    Average    Average
                                                Balance     Rate      Balance     Rate      Balance     Rate
                                                ------------------    ------------------    ------------------
                                                                    (Dollars In Thousands)
<S>                                            <C>           <C>     <C>           <C>       <C>         <C>
Passbook Accounts                              $   83,958    2.06%   $   94,858    2.02%     $  103,737  2.20%
Money Market Deposit Accounts                     138,764    3.16       125,722    2.61         137,099  2.59
Interest-bearing Checking Accounts                111,246    1.00       142,487    0.96         195,920  1.39
Fixed Term Certificate Accounts                 1,638,892    5.22     1,772,621    5.36       1,808,422  5.56
                                               ----------    ----    ----------    ----      ----------  ----  
                                               $1,972,860    4.70%   $2,135,688    4.76%     $2,245,178  4.86%
                                               ==========    ====    ==========    ====      ==========  ====
</TABLE>

     The following table shows the maturity distribution of jumbo
certificates of deposit ($100,000 and greater) as of December 31,
1997 (dollars in thousands):
<TABLE>
<CAPTION>
                                      <S>                               <C>
                                      Maturing in:
                                        1 month or less                 $  93,612
                                        Over  1  month to 3  months        90,886
                                        Over  3  months to  6  months      81,856
                                        Over  6  months to 12  months      86,989
                                                                        ---------
                                                Total                   $ 353,343
                                                                        =========
</TABLE>


       Based  on  historical  renewal  percentages  at  maturity,
management  believes that jumbo certificates  of  deposit  are  a
stable  source of funds. For additional information with  respect
to  deposits,  see Note 8 of the Notes to Consolidated  Financial
Statements.

      Borrowings. The FHLB System functions as a source of credit
to financial institutions which are members of a regional Federal
Home  Loan Bank. The Bank may apply for advances from the  FHLBSF
secured by the FHLBSF capital stock owned by the Bank, certain of
the  Bank's  mortgages and other assets (principally  obligations
issued  or guaranteed by the United States government or agencies
thereof).  Advances  can  be requested  for  any  sound  business
purpose  which  an  institution  is  authorized  to  pursue.  Any
institution not meeting the qualified thrift lender test will  be
subject  to  restrictions on its ability to obtain advances  from
the FHLBSF. See "Summary of Material Legislation and Regulation -
Qualified  Thrift Lender Test." In granting advances, the  FHLBSF
also  considers  a member's creditworthiness and  other  relevant
factors.

     Total advances from the FHLBSF were $1.3 billion at December
31,  1997 at a weighted average rate of 5.80%. This compares with
advances of $1.2 billion at December 31, 1996 and $890.0  million
at  December  31,  1995 at weighted average rates  of  5.71%  and
6.12%, respectively. These advances were often the most available
source  of funds to the Bank during 1997 and 1996.  The Bank  has
credit availability with the FHLBSF which allows it to borrow  up
to  40%  of  the Bank's assets or approximately $1.7  billion  at
December 31, 1997.

     The Bank enters into sales of securities under agreements to
repurchase  (reverse  repurchase agreements)  which  require  the
repurchase of the same securities.  The agreements are treated as
borrowings in the Company's Consolidated Statements of  Financial
Condition.  There  are certain risks involved  with  doing  these
types  of  transactions. In order to minimize  these  risks,  the
Bank's  policy  is to enter into agreements only with  well-known
national  brokerage  firms  which meet their  regulatory  capital
requirements.  Borrowings  under  reverse  repurchase  agreements
totaled $577.7 million at December 31, 1997 at a weighted average
rate of 5.66% and were secured by mortgage-backed securities with
principal  balances  totaling $603.6  million.  Borrowings  under
reverse  repurchase agreements totaled $646.5 million at December
31,  1996  and  $724.6 million at December 31, 1995  at  weighted
average rates of 5.42% and 5.68%, respectively.
                                       16
<PAGE>

      The  Company issued $50 million in 10-year senior unsecured
notes  ("Notes")  in September of 1994.  The Notes  are  interest
only,  with an interest rate of 11.75% and are due October  2004.
The $47.8 million in net proceeds were contributed to the Bank as
capital.   The  Notes are governed by the terms of  an  indenture
dated  September  28,  1994  (the  "Indenture").   The  Indenture
contains  financial  and operating covenants which,  among  other
things,  (i)  limit the incurrence of debt by the  Company,  (ii)
limit  the  payment of dividends and the making of certain  other
distributions by the Company and its subsidiaries, including  the
Bank,  (iii) limit the disposition of, and the existence of liens
on,  the  stock  of the Company's subsidiaries,  (iv)  limit  the
existence  of  certain liens on other property or assets  of  the
Company  and (v) limit the ability of the Company to  enter  into
certain transactions with affiliates. Management does not believe
that these covenants impair the Bank's activities in the ordinary
course  of  business.  The amount of annual interest due  on  the
Notes is $5.9 million.  The Company is solely dependent upon  the
Bank's ability to pay dividends to provide funds for meeting  the
interest   due  on  these  Notes.   See  "Summary   of   Material
Legislation  and  Regulations" for  a  discussion  of  regulatory
restrictions on dividends and other capital distributions.

      Borrowings  from  all sources totaled  $1.9  billion,  $1.9
billion  and  $1.7 billion at weighted average  rates  of  5.91%,
5.77%   and   6.11%  at  December  31,  1997,  1996   and   1995,
respectively.   Due  to increased competition for  deposits,  the
Bank  increased its use of borrowings in 1997, 1996 and  1995  to
meet its cash flow requirements.

      The  Bank's  portfolio  of short term  borrowings  includes
short-term variable rate credit advances and FHLB advances due in
less  than  one  year  from  the FHLBSF,  securities  sold  under
agreements  to  repurchase and other short term  borrowings.  The
following schedule summarizes short term borrowings for the  last
three years:
<TABLE>
<CAPTION>
                                                                                  Maximum
                                                                                 Month-End
                                                                                Outstanding
                                                        End of Period             Balance            Average Period
                                                        ------------------      During the         ------------------
                                                        Outstanding   Rate        Period           Outstanding   Rate
                                                        -----------   ----      -----------        -----------   ----
                                                                        (Dollars In Thousands)
<S>                                                     <C>           <C>       <C>                <C>           <C>
1997
----
Short term variable rate credit advances                $         -      -%     $         -        $       600   6.01%
Short term FHLB Advances                                  1,310,000   5.80        1,345,000          1,170,417   5.75
Securities  sold  under  agreements  to  repurchase         577,670   5.66          634,976            603,264   5.60
Other  short  term borrowings                                 4,000   5.85           26,500             15,703   5.63

1996
----
Short term variable rate credit advances                $    32,000   7.33      $    32,000        $        87   7.33%
Short  term  FHLB Advances                                  980,000   5.69        1,140,000            896,250   5.74
Securities  sold  under  agreements  to  repurchase         646,482   5.42          715,465            678,420   5.40
Other  short term borrowings                                  2,000   5.53           22,900             15,802   5.55

1995
----
Short term variable rate credit advances                $    21,000   6.90%     $    59,000        $     9,154   6.09%
Short  term  FHLB Advances                                  810,000   6.11          990,000            728,077   6.32
Securities  sold  under  agreements  to  repurchase         724,643   5.68          749,546            718,057   5.93
Other  short  term borrowings                                 2,300   5.82           15,000              8,565   5.99

</TABLE>

 Other Sources

      See  "Management's  Discussion and  Analysis  of  Financial
Condition  and Results of Operations - Sources of  Funds"  for  a
discussion of other funding sources.
                                       17
<PAGE>




 Subsidiaries

      The  Bank  has  three  wholly-owned  subsidiaries:  Seaside
Financial  Corporation ("Seaside"), Oceanside  Insurance  Agency,
Inc. ("Oceanside"), and Santa Monica Capital Group ("SMCG"),  all
of which are California corporations.

      As of December 31, 1997, the Bank had invested an aggregate
of  $487  thousand (primarily equity) in Seaside,  Oceanside  and
SMCG.  Revenues  and  operating  results  of  these  subsidiaries
accounted for less than 1% of consolidated revenues in  1997  and
no  material  change is presently foreseen. For the past  several
years, only Seaside and Oceanside have been active.

      Real  Estate Development Activities. Seaside has  not  been
involved  in  any real estate development activity for  the  last
several  years  and  there are no plans for  future  real  estate
projects.   Therefore,  no  gains  or  losses  on   real   estate
development activities were recorded during 1997, 1996 or 1995.

      Seaside  continues to hold one condominium  unit  which  is
rented  to the Bank for use by its employees.  In 1995, a  house,
previously  rented  to  the  Bank,  was  sold  and,  in  1997,  a
condominium, also rented to the Bank, was sold.  At December  31,
1997,  Seaside's  investment in the remaining  unit  totaled  $39
thousand.   There were no loans outstanding against the  property
at   December  31,  1997.   The  unit  is  located  in   Southern
California.

      Trustee  Activities. Seaside acts as trustee on the  Bank's
deeds  of trust. Trustee fees for this activity amounted to  $494
thousand, $695 thousand and $462 thousand in 1997, 1996 and 1995,
respectively.

       Insurance  Brokerage  Activities.   Oceanside  engages  in
limited insurance brokerage activities.  Income to date from this
source   has  been  insignificant.   In  1996,  Oceanside   began
operating  as a licensed life insurance agent for the purpose  of
receiving  commissions  on the sale of fixed  and  variable  rate
annuities and mutual funds conducted in the Bank's offices  by  a
licensed  third  party vendor.  During 1997 and  1996,  Oceanside
received  commission income of $462 thousand and  $428  thousand,
respectively, from the sale of non-insured investment products by
the  Bank's  strategic partner, Independent Financial Securities,
Inc.  ("IFS").   IFS,  a registered broker-dealer,  conducts  its
sales  activities  in  the Bank's branch  offices  and  the  Bank
receives  a  percentage of the commissions on such sales  through
its licensed insurance agency, Oceanside.

 Employees

      As  of December 31, 1997, the Bank had a total of 437  full
time equivalent employees, including 107 part-time employees.  No
employees  were represented by a collective bargaining group.  At
present,  the Company has no employees who are not also employees
of  the  Bank. The Bank provides its regular full-time  employees
with  a  comprehensive benefits program that includes  basic  and
major  medical  insurance,  long-term disability  coverage,  sick
leave,  a  401(k)  plan  and  a  profit  sharing  employee  stock
ownership plan. The Bank considers its employee relations  to  be
excellent.
                                       18
<PAGE>
Summary of Material Legislation and Regulations

      General.   FFC, as a savings and loan holding  company,  is
registered  with, and subject to regulation and  examination  by,
the  OTS.  The Bank, which is a federally chartered savings  bank
and  a  member  of  the  FHLBSF, is  subject  to  regulation  and
examination  by  the  OTS with respect to most  of  its  business
activities, including, among others, lending activities,  capital
standards,  general  investment  authority,  deposit  taking  and
borrowing  authority,  mergers and other  business  combinations,
establishment   of  branch  offices,  and  permitted   subsidiary
investments and activities.  The Bank's deposits are  insured  by
the FDIC through the SAIF.  As insurer, the FDIC is authorized to
conduct  examinations of the Bank.  The Bank is also  subject  to
Federal Reserve Board regulations concerning reserves required to
be maintained against deposits.

      As a member of the FHLB System, the Bank is required to own
capital  stock in its regional FHLB, the FHLBSF, in an amount  at
least  equal  to  the  greater of 1% of the  aggregate  principal
amount  of  its unpaid residential mortgage loans, home  purchase
contracts and similar obligations at the end of each year, or  5%
of  its outstanding borrowings from the FHLBSF.  The Bank was  in
compliance  with  this requirement, with an investment  of  $68.6
million in FHLBSF stock at December 31, 1997.

      The  FHLBSF serves as a source of liquidity for the  member
institutions  within  its  assigned  region,  the  FHLB  Eleventh
District.  It is funded primarily from proceeds derived from  the
sale  of  consolidated obligations of the FHLB System.  It  makes
advances  to  members in accordance with policies and  procedures
established by the Federal Housing Finance Board and the Board of
Directors  of  the  FHLBSF.  At December  31,  1997,  the  Bank's
advances from the FHLBSF amounted to $1.3 billion, or 34% of  the
Company's total funding sources (deposits and borrowings).

      The  FHLBs are required to provide funds for the resolution
of  troubled savings institutions and to contribute to affordable
housing  programs through direct loans or interest  subsidies  on
advances  targeted for community investment and low and  moderate
income  housing  projects.   These contributions  have  adversely
affected  the level of FHLB dividends paid and could continue  to
do  so  in  the future.  These contributions also could  have  an
adverse effect on the value of FHLB stock in the future. For  the
year ended December 31, 1997, dividends paid by the FHLBSF to the
Bank totaled approximately $4.0 million.

       Savings   and  Loan  Holding  Company  Regulations.    The
activities of savings and loan holding companies are governed  by
the Home Owners' Loan Act, as amended.  Pursuant to that statute,
the  Company  is subject to certain restrictions with respect  to
its activities and investments.

     A savings and loan holding company, like FFC, which controls
only one savings association, is exempt from restrictions on  the
conduct  of unrelated business activities that are applicable  to
savings  and  loan holding companies that control more  than  one
savings  association.  The restrictions on multiple  savings  and
loan  holding  companies are similar to the restrictions  on  the
conduct  of  unrelated  business activities  applicable  to  bank
holding  companies  under  the Bank  Holding  Company  Act.   The
Company  would become subject to these restrictions if it were to
acquire  control of another savings association or  if  the  Bank
were  to  fail to meet its qualified thrift lender ("QTL")  test.
See "Qualified Thrift Lender Test."
                                       19
<PAGE>

     The OTS may impose restrictions when it has reasonable cause
to believe that the continuation of any particular activity by  a
savings  and loan holding company constitutes a serious  risk  to
the  financial  safety, soundness or stability  of  such  holding
company's  savings institution. Specifically,  the  OTS  may,  as
necessary,  (i)  limit the payment of dividends  by  the  savings
institution;   (ii)  limit  transactions  between   the   savings
institution and its holding company or its affiliates; and  (iii)
limit  any  activities of the savings institution that  create  a
serious risk that the liabilities of the holding company and  its
affiliates may be imposed on the savings institution.   Any  such
limits  will  be  issued in the form of a  directive  having  the
effect of a cease-and-desist order.

     Regulatory Capital Requirements.  The capital regulations of
the  OTS (the "Capital Regulations") require the Bank to maintain
"tangible  capital"  of at least 1.5% of adjusted  total  assets,
"core  capital" of at least 3% of adjusted total  assets,  and  a
"risk-based  capital"  ratio  of  at  least  8%.   The  OTS   may
establish,  on  a case-by-case basis, individual minimum  capital
requirements  for  a  savings institution  which  vary  from  the
requirements  that  would  otherwise  apply  under  the   Capital
Regulations.

      "Tangible  capital" means stockholders' equity computed  in
accordance with generally accepted accounting principles less any
intangible  assets, less unrealized gains and losses  on  certain
"available-for-sale"   securities,   plus   purchased    mortgage
servicing rights and purchased credit card relationships, subject
to  certain limitations.  "Core capital" is generally defined the
same   as   tangible  capital  except  that  certain   qualifying
intangible  assets  may  be  included.   The  Bank  has  no  such
qualifying intangible assets as of December 31, 1997.  The "risk-
based capital" ratio is defined as the ratio of total capital  to
total  assets  after  the  assets  have  been  risk-weighted   in
accordance with certain percentages developed by the OTS and  the
other  bank  regulatory agencies.  Total capital for purposes  of
the  risk-based capital requirements consists of core capital and
supplementary  capital, less cash pledged for credit  support  in
certain loan sales.  Supplementary capital includes, among  other
things,  a portion of the general loan valuation allowance.   The
general  loan  valuation allowance may generally be  included  in
supplementary  capital up to 1.25% of risk-weighted  assets.   At
December  31, 1997, $30.0 million of the Bank's $61.2 million  in
general   valuation  allowances  was  included  in  supplementary
capital.   Supplementary  capital  may  be  used  to  satisfy  an
institution's  risk-based capital requirement in  an  amount  not
greater  than  its  core capital.  The Bank is considered  to  be
"well  capitalized" for purposes of these capital measures.   See
"Management's Discussion and Analysis of Financial Condition  and
Results of Operations - Capital Resources and Liquidity - Capital
Requirements."

      The  Capital Regulations substantially changed the  capital
requirements  for asset sales with recourse or the  retention  of
the   subordinated   portion   of  a   senior/subordinated   loan
participation   or  interest  in  a  package   of   loans   sold.
Essentially,  the  Capital Regulations  treat  asset  sales  with
recourse  as  if they had not occurred, and generally  require  a
savings institution to maintain capital against the entire amount
of  assets sold with recourse, even if the recourse is  for  less
than  the full amount of assets sold, with one limited exception.
The  exception is that assets sold with recourse with respect  to
which  the recourse percentage is less than the applicable  risk-
based  capital  requirement  are not  included  in  risk-weighted
assets;  however,  capital is required to  be  maintained  in  an
amount  equal  to  such recourse amount. A savings  institution's
retention  of  the  subordinated portion of a senior/subordinated
loan  participation or interest in a package  of  loans  sold  is
treated in the same manner as an asset sale with recourse.  Since
the  change in regulation, which occurred in 1989, the  Bank  has
not  been  active in such loan sales.  At December 31,  1997  the
Bank  had  loans  sold  with recourse or  subordination  totaling
$218.1  million  on  which  it was required  to  hold  additional
capital.  The amount of capital required to be maintained against
such off-balance sheet loans was $11.1 million.
                                       20
<PAGE>

      A  savings  institution which fails  to  meet  its  capital
standards  must  submit a capital restoration  plan  to  the  OTS
District  Director  which  describes  the  manner  in  which  the
institution  proposes to increase its capital and the  activities
in  which it will engage, and requires that any increase  in  its
assets  be  met with a commensurate increase in tangible  capital
and  risk-based capital.  The OTS also has the authority to issue
a  capital  directive  to  a savings institution  that  does  not
satisfy  its minimum capital requirements.  The capital directive
may also specify corrective actions to be taken.

      Insurance  of Accounts.  The FDIC administers two  separate
deposit insurance funds.  The Bank Insurance Fund ("BIF") insures
the  deposits  of  commercial banks and other institutions  which
were  insured by the FDIC prior to the enactment of the Financial
Institutions  Reform,  Recovery  and  Enforcement  Act  of   1989
("FIRREA")  .   The Savings Association Insurance  Fund  ("SAIF")
insures  the deposits of savings institutions which were  insured
by  the  Federal Savings and Loan Insurance Corporation ("FSLIC")
prior  to  the  enactment of FIRREA.  The FDIC is  authorized  to
increase  deposit  insurance  premiums  if  it  determines   such
increases are appropriate to maintain the reserves of either  the
SAIF  or  the BIF or to fund the administration of the  FDIC.  In
addition,  the  FDIC  is  authorized to  levy  emergency  special
assessments on BIF and SAIF members.

      The  FDIC  has implemented a risk-based assessment  system,
under which an institution's insurance assessment is based on the
probability  that the deposit insurance fund will  incur  a  loss
with  respect to the institution, the likely amount of  any  such
loss, and the revenue needs of the deposit insurance fund.  Under
the  risk-based  assessment  system,  a  savings  institution  is
categorized   into   one  of  three  capital   categories:   well
capitalized,  adequately  capitalized, and  undercapitalized.   A
savings  institution  is  also  categorized  into  one  of  three
supervisory subgroup categories based on evaluations by the OTS.

      The FDIC may terminate the deposit insurance of any insured
depository  if  the  FDIC determines, after a hearing,  that  the
institution  has  engaged or is engaging  in  unsafe  or  unsound
practices,  is  in  an  unsafe or unsound condition  to  continue
operations  or  has  violated any applicable law,  regulation  or
order or any condition imposed in writing by the FDIC.  The  FDIC
may also suspend deposit insurance temporarily during the hearing
process if the institution has no tangible capital (which may  be
calculated  under certain conditions by including goodwill).   In
addition,  FDIC regulations provide that any insured  institution
that  falls below a 2% minimum leverage ratio will be subject  to
FDIC  deposit  insurance termination proceedings  unless  it  has
submitted,  and is in compliance with, a capital  plan  with  its
primary federal regulator and the FDIC.

      In  addition to deposit insurance assessments, the OTS  has
imposed assessments and examination fees on savings institutions.
OTS  assessments for the Bank were $609 thousand  in  1997,  $611
thousand in 1996 and $603 thousand in 1995.

      The  SAIF was recapitalized as part of the Economic  Growth
and  Regulatory  Paperwork Reduction Act of 1996  (the  "Economic
Growth  Act"),  which  was  enacted  September  30,  1996.   This
legislation included the Deposit Insurance Funds Act of 1996 (the
"DIFA")  which  provided  for the recapitalization  of  the  SAIF
through a special assessment levied on all institutions that have
SAIF-insured deposits.  The Economic Growth Act provides that  if
the thrift charter has been eliminated by January 1, 1999 through
additional legislation, then the BIF, which insures the  accounts
of  most  commercial banks, and the SAIF will be merged into  the
"Deposit  Insurance  Fund" ("DIF") of  the  FDIC.   There  is  no
assurance that such additional legislation will be enacted.

      The  Economic  Growth  Act also  provided  for  funding  of
payments   due  on  a  bond  issued  by  the  Federal   Insurance
Corporation ("FICO"), the prohibition on the shifting of deposits
from  the SAIF to the BIF, the imposition of certain restrictions
on  the deposit insurance assessments that may be charged by  the
FDIC, and the refund of excess assessments.
                                       21
<PAGE>

     The SAIF special assessment imposed a tax deductible special
assessment on SAIF-assessable deposits held as of March 31, 1995,
at  a rate sufficient to capitalize the SAIF (i.e., to cause  the
SAIF  to  achieve its designated reserve ratio of 1.25%  of  SAIF
deposits)  as of October 1, 1996.  The assessment was accrued  in
the  third quarter and paid in the fourth quarter of 1996.  As  a
result of the recapitalization of the SAIF, the disparity between
the  deposit premiums paid by SAIF-insured institutions, such  as
the   Bank,   and   BIF-insured  institutions  has  significantly
narrowed.  The impact of the special SAIF assessment on the  Bank
and  the  positive effects of the reduced insurance  premium  are
discussed in "Management's Discussion and Analysis - Overview."

      The  Economic  Growth  Act  contained  a  number  of  other
provisions concerning financial institutions, none of which  have
a  significant effect on the Bank or its operations at this time.
These include changing the availability of a tax bad debt reserve
deduction  (see "Business - Taxation"), regulatory burden  relief
measures reducing government regulation of financial institutions
and  streamlining consumer statutes, revised quantitative  limits
on  certain  types  of lending, an expansion  of  the  "qualified
thrift  investments" definition for purposes of determining  what
constitutes a QTL, and statutory limitations on lender  liability
under environmental laws.

      Liquidity.  Federal regulations currently require a savings
institution to maintain a monthly average daily balance of liquid
assets   (including   cash,  certain  time   deposits,   bankers'
acceptances  and  specified United States  government,  state  or
federal  agency  obligations) equal to at  least  4%  of:  (i)the
average daily balance of its net withdrawable accounts and short-
term  borrowings during the preceding calendar quarter or (ii)the
ending balance of its net withdrawable accounts as of the end  of
the  preceding calendar quarter.  This liquidity requirement  may
be  changed from time to time by the OTS to any amount within the
range of 4% to 10% of such accounts and borrowings depending upon
economic conditions and the deposit flows of member institutions.
On  November 24, 1997, the OTS reduced this liquidity requirement
to  4%  from  5%.  The OTS also gave institutions the  option  of
using  a  quarterly  average calculation or  an  end  of  quarter
calculation of the liquidity base and removed the requirement  of
maintaining a monthly average balance of short-term liquid assets
equal  to  at least 1% of the average daily balance  of  its  net
withdrawable  accounts  and  short  term  borrowings.    Monetary
penalties  may  be  imposed for failure to meet  these  liquidity
ratio  requirements.  The Bank's liquidity ratio for the  quarter
ended  December 31, 1997 was 5.13%, which exceeded the applicable
requirements.

      Community Reinvestment Act.  The Community Reinvestment Act
("CRA")  requires each savings institution, as well as commercial
banks  and  certain  other lenders, to identify  the  communities
served by the institution's offices and to identify the types  of
credit  the  institution  is  prepared  to  extend  within  those
communities.   The  CRA  also  requires  the  OTS  to  assess  an
institution's  performance in meeting the  credit  needs  of  its
identified  communities  as  part  of  its  examination  of   the
institution,  and to take such assessments into consideration  in
reviewing  applications  with respect to  branches,  mergers  and
other  business combinations, including acquisitions  by  savings
and loan holding companies.  An unsatisfactory CRA rating may  be
the  basis  for denying such an application and community  groups
have  successfully  protested applications on  CRA  grounds.   In
connection  with  its  assessment of  CRA  performance,  the  OTS
assigns  CRA ratings of "outstanding," "satisfactory," "needs  to
improve"  or  "substantial noncompliance."  The  Bank  was  rated
"satisfactory" in its last CRA examination, which  was  conducted
in  1996.   New CRA regulations which were enacted in  late  1995
took  effect  starting  in  1996, for examinations  in  1997  and
thereafter.    Under  the  new  regulations,   institutions   are
evaluated  based  on:   (i)  performance  in  lending  in   their
assessment  areas;  (ii)  the  provision  of  deposit  and  other
community  services  in their assessment  areas;  and  (iii)  the
investment  in  housing-related  and  other  qualified  community
investments. Under the new regulations, an institution  which  is
found  to  be  deficient  in  its  performance  in  meeting   its
community's  credit needs may be subject to enforcement  actions,
including cease and desist orders and civil money penalties.
                                       22
<PAGE>

      Restrictions  on Dividends and Other Capital Distributions.
Savings  association subsidiaries of holding companies  generally
are required to provide not less than thirty days' advance notice
to  their OTS District Director of any proposed declaration of  a
dividend on the association's stock.

      Under  OTS regulations, limitations are imposed on "capital
distributions" by savings institutions, including cash dividends,
payments  to repurchase or otherwise acquire its shares, payments
to  stockholders of another institution in a cash-out merger  and
other  distributions charged against capital.   The  regulations,
which  establish  a three-tiered system of regulation,  establish
"safe-harbor" amounts of capital distributions that  institutions
can  make after providing notice to the OTS, but without  needing
prior approval.  Institutions can distribute amounts in excess of
the safe-harbor only with the prior approval of the OTS.

     Although the OTS has never prohibited the Bank from making a
capital  distribution, the OTS nevertheless retains the authority
to  prohibit any capital distribution otherwise authorized  under
the   regulations  if  the  OTS  determines  that   the   capital
distribution would constitute an unsafe or unsound practice.  The
regulations  also state that the capital distribution limitations
apply   to  direct  and  indirect  distributions  to  affiliates,
including   those   occurring   in  connection   with   corporate
reorganizations.  Moreover, the Bank would not  be  permitted  to
pay  cash dividends if it were deemed to be an "undercapitalized"
institution for purposes of the "prompt corrective action" rules.
At  December 31, 1997, the Bank met the standards necessary to be
deemed  to  be  "well capitalized" for purposes  of  the  "prompt
corrective action" rules.

      Limits  on Types of Loans and Investments.  Federal savings
institutions are authorized, without quantitative limits, to make
loans on the security of liens upon residential real property and
to  invest in a variety of instruments such as obligations of, or
fully  guaranteed  as to principal and interest  by,  the  United
States;   stock   or  bonds  of  the  FHLB;  certain   mortgages,
obligations, or other securities which have been sold by FHLMC or
FNMA; and certain securities issued by, or fully guaranteed as to
principal and interest by, the Student Loan Marketing Association
and  the Government National Mortgage Association.  Certain other
types  of  loans  or  investments  may  be  acquired  subject  to
quantitative limits:  secured or unsecured loans for  commercial,
corporate,  business,  or agricultural  purposes,  loans  on  the
security  of liens upon nonresidential real property, investments
in  personal property, consumer loans and certain securities such
as  commercial  paper and corporate debt, and construction  loans
without security.

      Savings  institutions are subject to the same  loans-to-one
borrower  ("LTOB") restrictions that are applicable  to  national
banks,  with  limited provisions for exceptions. In general,  the
national bank standard restricts loans to a single borrower to no
more than 15% of a bank's capital and surplus, plus an additional
10%  if  the loan is collateralized by certain readily marketable
collateral. The Bank's loans were within the LTOB limitations  at
December 31, 1997.

      Savings  institutions and their subsidiaries are prohibited
from acquiring or retaining any corporate debt security that,  at
the  time of acquisition, is not rated in one of the four highest
rating   categories   by  at  least  one  nationally   recognized
statistical  rating organization.  The Bank has no  impermissible
equity investments in its investment portfolio.

      Safety  and  Soundness Standards.  OTS regulations  contain
"safety and soundness" standards covering various aspects of  the
operations  of  savings institutions. The  guidelines  relate  to
internal   controls,  information  systems  and  internal   audit
systems,  loan documentation, credit underwriting, interest  rate
exposure, asset growth, executive compensation, maximum ratios of
classified assets to capital, and minimum earnings sufficient  to
absorb  losses without impairing capital.  If the OTS  determines
that  a  savings  institution has failed to meet the  safety  and
soundness standards, it may require the institution to submit  to
the OTS, and thereafter comply with, a compliance plan acceptable
to  the  OTS  describing the steps the institution will  take  to
attain  compliance  with the applicable  standard  and  the  time
within which those steps will be taken.
                                       23
<PAGE>

     Federal regulations contain a number of measures intended to
promote early identification of management problems at depository
institutions and to ensure that regulators intervene promptly  to
require  corrective action by institutions.   The  Bank's  annual
management  report  on  the  effectiveness  of  internal  control
standards  and compliance with certain designated  laws  will  be
made available in March of 1998.

      Prompt  Corrective Action.  The "prompt corrective  action"
regulations  require  insured  depository  institutions   to   be
classified  into  one  of five categories  based  primarily  upon
capital  adequacy, ranging from "well capitalized" to "critically
undercapitalized." These regulations  require, subject to certain
exceptions,  the  appropriate  federal  banking  agency  to  take
"prompt  corrective action" with respect to an institution  which
becomes "undercapitalized" and to take additional actions if  the
institution    becomes   "significantly   undercapitalized"    or
"critically undercapitalized."

      Only  "well  capitalized" institutions may obtain  brokered
deposits   without   a   waiver.   An  "adequately   capitalized"
institution  can obtain brokered deposits only if it  receives  a
waiver from the FDIC.  An "undercapitalized" institution may  not
accept  brokered deposits under any circumstances.  The Bank  met
the "well-capitalized" standards throughout 1997 and was eligible
to accept brokered deposits without a waiver.

      Qualified  Thrift Lender Test.  In general,  the  QTL  test
requires  that  65%  of  an  institution's  portfolio  assets  be
invested  in  "qualified  thrift investments"  (primarily  loans,
securities and other investments related to housing), measured on
a  monthly  average basis for nine out of every 12  months  on  a
rolling  basis.  Any savings institution that fails to  meet  the
QTL  test must either convert to a bank charter or become subject
to   national  bank-type  restrictions  on  branching,   business
activities,  and  dividends,  and  its  ability  to  obtain  FHLB
advances is affected.  The Bank met the QTL test at December  31,
1997,  with  96% of its portfolio assets comprised of  "qualified
thrift investments."

      Transactions with Affiliates.  Federal savings institutions
are  subject  to the provisions of Sections 23A and  23B  of  the
Federal  Reserve Act.  Section 23A restricts  loans or extensions
of  credit  to, or investments in, or certain other  transactions
with,  affiliates  and  as to the amount  of  advances  to  third
parties  collateralized  by  the  securities  or  obligations  of
affiliates.   Section  23B generally requires  that  transactions
with  affiliates  must be on a non-preferential  basis.   Federal
savings institutions may not make any extension of credit  to  an
affiliate  which is engaged in activities not permitted  by  bank
holding companies, and may not invest in securities issued by  an
affiliate (except with respect to a subsidiary).  The Company  is
an "affiliate" of the Bank for the purposes of these provisions.

      Transactions  with Insiders.  Federal savings  institutions
are  subject to the restrictions of Sections 22(g) and (h) of the
Federal  Reserve  Act  which, among other  things,  restrict  the
amount  of  extensions of credit which may be made  to  executive
officers, directors, certain principal shareholders (collectively
"insiders"),  and to their related interests.   When  lending  to
insiders,  a  savings association must follow credit underwriting
procedures  that are not less stringent than those applicable  to
comparable  transactions  with persons outside  the  association.
The  amount that a savings association can lend in the  aggregate
to  insiders  (and to their related interests) is limited  to  an
amount  equal  to  the  association's core capital  and  surplus.
Insiders  are  also  prohibited  from  knowingly  receiving   (or
knowingly  permitting  their related interests  to  receive)  any
extensions of credit not authorized under these statutes.
                                       24
<PAGE>

      Federal  Reserve System.  Federal Reserve Board regulations
require  savings  institutions to maintain  non-interest  bearing
reserves  against their transaction accounts.   The  reserve  for
transaction accounts as of December 31, 1997 was 3% of the  first
$44.9 million of such accounts and 10% (subject to adjustment  by
the  Federal Reserve Board between 8% and 14%) of the balance  of
such accounts. The Bank is in compliance with these requirements.

     Taxation.  The Company, the Bank and its subsidiaries file a
consolidated federal income tax return on a calendar  year  basis
using the accrual method.  The maximum marginal federal tax  rate
is currently 35%.

      In  August 1996, the Small Business Job Protection Act (the
"Act")  was  signed into law.  One provision of the Act  repealed
the  reserve  method  of  accounting for bad  debts  for  savings
institutions  effective for taxable years beginning  after  1995.
Therefore, the Bank used the specific charge-off method in filing
its  1996  federal tax return and will use this method in  filing
its 1997 federal tax return.

     The Bank may be required to recapture its "applicable excess
reserves", if its federal tax bad debt reserves are in excess  of
its base year reserve amount described above.  As of December 31,
1997, the Bank had no applicable excess reserves.  The base  year
reserves  will  be  subject to recapture and the  Bank  could  be
required to recognize a tax liability if:  (1)  the Bank fails to
qualify as a "bank" for federal income tax purposes; (2)  certain
distributions are made with respect to the stock of the Bank; (3)
the  bad  debt  reserves are used for any purpose other  than  to
absorb bad debt losses; or (4)  there is a change in federal  tax
law.   The  enactment  of this legislation has  not  and  is  not
expected  to  have a material impact on the Bank's operations  or
financial position.

      In  1995, the Bank was allowed an addition to its  tax  bad
debt  reserves  under the experience method equal to  the  amount
necessary to bring the tax reserve balance to the level that  was
established  at December 31, 1987.  In accordance  with  the  Tax
Reform  Act of 1986, the Bank was generally able to maintain  the
balance  of its tax reserve at the December 31, 1987 level,  even
if  the  result would have been less using the experience method.
If  the  Bank had failed the 60% qualifying asset test, it  would
not  have  been  permitted to calculate its bad  debt  deductions
under the reserve method.

      For state tax purposes, the Bank is allowed an addition  to
its  tax bad debt reserves in an amount necessary to fill  up  to
its tax reserve balance calculated using the experience method.

      To the extent that distributions by the Bank to the Company
that  are  permitted under federal regulations exceed the  Bank's
earnings  and  profits  (as  computed  for  federal  income   tax
purposes),  such distributions would be treated for tax  purposes
as being made out of the Bank's excess bad debt reserve and would
thereby constitute taxable income to the Bank in an amount  equal
to the lesser of the Bank's excess bad debt reserve or the amount
which,  when reduced by the amount of income tax attributable  to
the  inclusion of such amount in gross income, is  equal  to  the
amount  of  such distribution.  At December 31, 1997, the  Bank's
excess  bad  debt reserve was zero.  At December  31,  1997,  the
Bank's  earnings and profits (as computed for federal income  tax
purposes) were approximately $170.1 million.

     At December 31, 1997, the Bank had $35.9 million in deferred
tax  assets.  No  valuation  allowance  was  established  because
management  believes that it is more likely  than  not  that  the
deferred  tax assets will be realized.  Deferred tax  liabilities
totaled $37.7 million at December 31, 1997.
                                       25
<PAGE>

      The  Bank is subject to an alternative minimum tax if  such
tax  is  larger  than  the  tax  otherwise  payable.   Generally,
alternative  minimum  taxable  income  is  a  taxpayer's  regular
taxable income, increased by the taxpayer's tax preference  items
for  the year and adjusted by computing certain deductions  in  a
special  manner which negates the acceleration of such deductions
under the regular tax.  The adjusted income is then reduced by an
exemption  amount  and is subject to tax at  a  20%  rate.    The
excess of the addition to the bad debt reserve computed under the
percentage  of  taxable income method over the  increase  in  the
reserve  calculated on the basis of actual experience is an  item
of  tax preference.  No alternative minimum taxes were applicable
to the Bank for tax years 1997, 1996 or 1995.

      California tax laws have generally conformed to federal tax
laws  since several provisions of the Tax Reform Act of 1986 were
adopted in September 1987.

     For California franchise tax purposes, federal savings banks
are  taxed  as "financial corporations" at a rate 2% higher  than
that   applicable  to  non-financial  corporations   because   of
exemptions from certain state and local taxes. The tax rates  for
1997, 1996 and 1995 were 10.84%, 11.30% and 11.30%, respectively.
The  Franchise Tax Board ("FTB") has not yet announced a rate for
1998.

      During 1997, the Internal Revenue Service ("IRS") completed
its  examination of the Company's consolidated federal income tax
returns  for  tax years up to and including 1992. The adjustments
made  by  the  IRS  related to temporary differences  as  to  the
recognition  of certain taxable income and expense items.   While
the  Company  had provided deferred taxes for federal  and  state
purposes,  the  changes in the period of recognition  of  certain
income and expense items resulted in interest due to the IRS  and
FTB.  As  a result, the Company paid $7.4 million in interest  to
the  IRS  and  FTB  during 1997 and accrued  an  additional  $210
thousand  in  interest  during 1997.  During  1996,  the  Company
recorded  a  net  reversal of $5.1 million in  accrued  interest.
Interest  expense of $3.5 million was accrued during  1995.   The
remaining  $1.4  million in accrued interest as of  December  31,
1997 is for interest due with amended returns which have not  yet
been filed.
                                       26
<PAGE>

ITEM 2--PROPERTIES

      At  December 31, 1997, the Bank owned the building and land
for  seven  of its branch offices, owned the building but  leased
the  land  for three additional offices, and leased its remaining
offices.  Properties  leased by the Bank  include  its  home  and
executive offices located in a 12-story office tower in  downtown
Santa  Monica  and  a  general services and corporate  operations
office  building  in  Santa Monica. FFC does  not  lease  or  own
properties.  For  information concerning rental obligations,  see
Note 6 of the Notes to Consolidated Financial Statements.

ITEM 3--LEGAL PROCEEDINGS

      The  Company  is  involved as a plaintiff or  defendant  in
various legal actions incident to its business, none of which are
believed by management to be material to the Company.


ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                             PART II

ITEM 5--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER  MATTERS

      (a)   Market  Information. The Company's  common  stock  is
traded  on the New York Stock Exchange ("NYSE") under the  symbol
"FED."   Included  in "Management's Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations"  is  a  chart
representing  the  range of high and low  stock  prices  for  the
Company's  common stock for each quarterly period  for  the  last
five years.

      (b)   Holders.  As of February 13, 1998,  the  Company  had
10,592,318  shares of its common stock outstanding,  representing
approximately  957  record stockholders,  which  total  does  not
include  the  number  of stockholders whose shares  are  held  in
street name.

      (c)   Dividends. As a publicly traded company, the  Company
has no history of dividend payments on its common stock. However,
the Company may in the future adopt a policy of paying dividends,
depending  on  its net earnings, financial position  and  capital
requirements,   as   well   as   regulatory   restrictions,   tax
consequences and the ability of the Company to obtain a  dividend
from  the Bank for payment to stockholders. OTS regulations limit
amounts  that the Bank can pay as a dividend to the  Company.  No
dividend  may  be  paid  if  the Bank's  net  worth  falls  below
regulatory  requirements. (See "Business -  Summary  of  Material
Legislation and Regulations" for other regulatory restrictions on
dividends.)  Within these regulations, the Board of Directors  of
the Bank declared and paid $5.9 million in dividends during 1997,
1996  and  1995.  These dividends enabled the Company to  service
the $50 million in Notes due October 2004.

      The  ability  of  the  Company to  pay  dividends  is  also
restricted by the covenants contained in its Indenture pertaining
to  $50  million  in  Notes due October 2004.   See  "Business  -
Borrowings."
                                       27
<PAGE>



ITEM 6--SELECTED FINANCIAL DATA

     Selected financial data for the Company is presented below:
<TABLE>
<CAPTION>
            FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
          FIVE YEAR CONSOLIDATED SUMMARY OF OPERATIONS

                                               1997          1996          1995          1994          1993
                                            ------------------------------------------------------------------
                                                     (Dollars In Thousands, Except per Share Data)


<S>                                         <C>           <C>           <C>           <C>           <C>
For the Year Ended December 31:
   Interest  income                         $  299,220    $  297,178    $   301,735   $  235,424    $  229,445
   Interest  expense                           204,226       198,031        224,077      157,655       131,616
   Net  interest income                         94,994        99,147         77,658       77,769        97,829
   Provision  for loan losses                   20,500        35,155         28,376       85,700        67,679
   Other  income                                10,218        10,915          8,725       11,264        12,054
   Non-interest  expense                        44,151        59,175         45,903       45,496        45,298
  Earnings (loss) before
    income  taxes (benefit)                     40,561        15,732         12,104      (42,163)       (3,094)
    Income  taxes  (benefit)                    17,461         7,488          5,569      (17,699)       (1,046)
    Net   earnings  (loss)                      23,100         8,244          6,535      (24,464)       (2,048)
  Basic earnings (loss)
    per  share                                    2.19          0.78           0.62        (2.32)        (0.20)
  Diluted earnings (loss)
    per  share                                    2.15          0.78           0.61        (2.32)        (0.20)
End of Year:
  Loans receivable                           3,145,164     3,048,469      3,059,780    3,072,309     2,715,063
   Mortgage-backed  securities                 676,058       746,006        843,819      830,715       717,056
   Investment  securities                       48,910        58,909         67,813       74,654        95,063
    Total  assets                            4,160,115     4,143,852      4,139,737    4,157,414     3,661,117
     Deposits                                1,943,647     1,957,448      2,205,036    2,298,914     2,305,480
     Borrowings                              1,941,670     1,940,482      1,666,943    1,604,821     1,093,149
    Liabilities                              3,937,328     3,949,302      3,943,446    3,972,727     3,452,825
   Stockholders'  equity                       222,787       194,550        196,291      184,687       208,292
   Book  value per share                         21.04         18.48          18.49        17.42         19.78
Selected Ratios:
   Return on average assets                       0.56%         0.20%          0.16%       (0.64)%       (0.06)%
   Return on average equity                      11.25%         4.22%          3.47%      (12.78)%       (1.01)%
  Ratio of non-performing
     assets to total assets                       0.96%         1.78%          2.33%        2.23%         3.23%
Other Data:
  Number of Bank full service
     branches                                       24            25             25           25            24

</TABLE>
      Also  see  summarized results of operations on a  quarterly
basis  for  1997,  1996  and 1995 in Note  15  of  the  Notes  to
Consolidated Financial Statements.
                                       28
<PAGE>

ITEM   7--MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS


OVERVIEW

      The Company's results of operations are primarily affected
by  its  levels  of  net interest income,  provisions  for  loan
losses,  non-interest income, non-interest  expense  and  income
taxes.  The  Company's results are strongly  influenced  by  the
Southern California economy in which it operates.

      Net  earnings  of $23.1 million or $2.15  per  share  were
recorded  in 1997, compared to net earnings of $8.2  million  or
$0.78  per share in 1996 and $6.5 million or $0.61 per share  in
1995.   All per share amounts are presented on a diluted  basis.
The  Company's results over the last three years have  continued
to  improve  as  Southern  California  has  recovered  from  the
economic   recession  of  the  early  1990's.  Loan  charge-offs
declined  to $12.1 million in 1997 compared to $37.5 million  in
1996  and  $39.7  million  in 1995.  In addition,  transfers  to
valuation allowances for impaired loans declined to $7.3 million
in 1997 compared to $11.4 million in 1996 and $21.4 in 1995.

      Certain  key financial ratios for the Company are presented
below:
<TABLE>
<CAPTION>
                                                                        Average
                                  Return on          Return on         Equity to
                                   Average            Average           Average
                                   Assets             Equity             Assets
                                   ---------------------------------------------

                <S>                <C>               <C>                 <C>
                1997                .56%              11.25%             4.95%
                1996                .20                4.22              4.61
                1995                .16                3.47              4.49
                1994               (.64)             (12.78)             4.97
                1993               (.06)              (1.01)             5.61

</TABLE>

      Core  earnings  reflect the Company's results  from  basic
operations and were $60.6 million in 1997, $60.5 million in 1996
and  $45.6  million in 1995.  Core earnings are defined  as  net
interest  income  before provision for loan  losses  plus  other
income  (excluding  gain on sale of loans and  securities)  less
non-interest  expense.  Non-recurring items  are  excluded  from
core earnings.  Core earnings increased in 1997 compared to 1996
and  in  1996 compared to 1995 due to decreased levels  of  non-
performing assets and interest rates.

      Non-performing assets (primarily loans 90 days past due or
in  foreclosure plus foreclosed real estate) decreased to  $40.1
million  or 0.96% of total assets at December 31, 1997  compared
to  $73.9 million or 1.78% of total assets at December 31,  1996
and $96.6 million or 2.33% of total assets at December 31, 1995.
The  decreasing trend in non-performing assets over the last two
years  is  due  to  a  lower balances of  delinquent  loans  and
foreclosed properties of all collateral types.

      At  December  31,  1997, the Bank's regulatory  risk-based
capital  ratio  was  12.29% and the tangible  and  core  capital
ratios   were  6.28%.   The  Bank  met  the  regulatory  capital
standards to be deemed "well-capitalized" at December 31, 1997.

     The Bank's deposits are insured by the SAIF up to a maximum
of $100,000 for each insured depositor.  In the third quarter of
1996, legislation was enacted by Congress which included a  one-
time assessment for SAIF members such as the Bank.  Accordingly,
the Bank recorded an accrual for the one-time assessment, net of
tax, of $8.7 million during the third quarter of 1996 (based  on
its  level of insured deposits at March 31, 1995).  The one-time
assessment  was  paid during the fourth quarter  of  1996.   The
Bank's FDIC insurance premiums decreased to $1.9 million in 1997
compared to $5.4 million in 1996 due to a drop in the assessment
rate  to 9.3 basis points from 23 basis points after the payment
of the special assessment.
                                       29
<PAGE>
      
Risks and Uncertainties

      In  the  normal course of business, the Company encounters
two  significant  types of risk: economic  risk  and  regulatory
risk.

                                           ECONOMIC RISK

     There are two main components of economic risk: credit risk
and market risk (which includes interest rate risk.)

     Credit Risk

      Credit  risk is the risk of default in the Company's  loan
portfolio  that  results from a  borrower's  inability  to  make
contractually required payments. See "Loan Loss Provisions"  and
"Non-performing Assets."  The determination of the allowance for
loan losses and the valuation of real estate collateral is based
on  estimates  that are susceptible to changes in  the  economic
environment and market conditions.  Management believes that the
allowance  for loan losses as of December 31, 1997 was  adequate
based on information available at that time.  A downward turn in
the  current  economic climate could increase the likelihood  of
losses  due  to credit risks.  This could create  the  need  for
additional loan loss provisions.

     Market Risk

     Market risk is the risk of loss from unfavorable changes in
market prices and interest rates.  The Bank's market risk arises
primarily  from the interest rate risk inherent in  its  lending
and deposit taking activities.  See "Asset Liability Management"
for additional information relating to market risk.

                                        REGULATORY RISK

      Regulatory risk is the risk that the regulators will reach
different  conclusions than management regarding  the  financial
position  of the Company.  The OTS examines the Bank's financial
results annually. The OTS reviews the allowance for loan  losses
and  may  require  the  Bank to adjust the  allowance  based  on
information available at the time of their examination.

                                           OTHER RISKS

     Year 2000 Issue

      The  Year 2000 issue arises because most computer hardware
and software was developed without considering the impact of the
upcoming change in the century.  These computers have only a two
digit field for the date which could change to the year 00 after
1999.   The  00 in this case could denote the Year 1900  causing
computer applications to create erroneous results or to fail  to
make a calculation.

      Early in 1997, the Bank developed a process for addressing
the  Year  2000 issue for the Bank's major computer systems  and
applications.  An internal committee was formed to  address  the
issue and a formal project plan was developed.

      The  Bank's  major  computer applications  are  owned  and
operated   by  third  party  vendors.   Therefore,  the   Bank's
challenge  is to ensure that its vendors are compliant  or  have
plans  to  become compliant before the Year 2000.   Because  the
Bank  had plans to convert its major data processing systems  to
new  systems  during 1997 and 1998, requirements for  Year  2000
compliance   have  been  made  a  part  of  all  new  contracts.
Contractual  arrangements with the Bank's major data  processing
vendors  provide  for  representations and warranties  regarding
Year  2000  compliance, regular monitoring of the vendors'  Year
2000  project, substantial system compliance by the end of 1998,
and testing and verification in early 1999.
                                       30
<PAGE>

      Other  vendors  using computer-related  date  fields  were
surveyed  to  determine the level of compliance with  Year  2000
issues  and  their plans to rectify any problems.   All  vendors
were requested to reach compliance by the first quarter of 1999.
This  should  allow sufficient time for the Bank to test  system
compliance  and determine the appropriate action  based  on  the
results.

      The  Bank  is  developing contingency plans to  cover  the
possibility  that  certain  vendors  may  be  unable  to  become
compliant  within  the  required time  frame.   Depending  on  a
particular situation, the Bank will develop a process  by  which
it  will determine whether to retain or discontinue the business
relationship with the vendor.  This decision will  be  based  on
the  impact  of  the  particular non-compliance  on  the  Bank's
operations,  the  vendor's projected time  frame  for  achieving
compliance,  and  the cost to upgrade, replace or  purchase  the
required software or hardware.

      Because  of  the  third party nature  of  its  major  data
processing relationships, the Bank is not expected to  bear  any
programming cost of making its systems Year 2000 compliant.  The
Bank's  major cost of Year 2000 compliance is related  to  staff
and  management time spent planning, monitoring and testing  the
systems,  which  is  not  expected to  be  a  significant  cost.
Therefore,  Year 2000 issues are expected to have an  immaterial
impact  on  the  Company's results of operations, liquidity  and
capital expenditures.

     Inflation

      Inflation substantially impacts the financial position and
operations  of  financial  intermediaries,  such  as  banks  and
savings  institutions.  These entities primarily  hold  monetary
assets  and liabilities and, as such, can experience significant
purchasing power gains and losses over relatively short  periods
of  time. In addition, interest rate changes during inflationary
periods  change  the  amounts  and  composition  of  assets  and
liabilities held by financial intermediaries and could result in
regulatory pressure for additional equity investment.

     Pending Lawsuits

     The Bank has been named as a defendant in various lawsuits,
none of which is expected to have a materially adverse effect on
the Company.
                                       31
<PAGE>


                     COMPONENTS OF EARNINGS

 Net Interest Income

      Net  interest  income  is  the primary  component  of  the
Company's  earnings.  The  chief determinants  of  net  interest
income  are  the dollar amounts of interest-earning  assets  and
interest-bearing liabilities and the interest  rates  earned  or
paid thereon. The greater the excess of average interest-earning
assets  over  average  interest-bearing  liabilities,  the  more
beneficial  the  impact on net interest income.  The  excess  of
average  interest-earning  assets over average  interest-bearing
liabilities  was $109.9 million in 1997, $92.9 million  in  1996
and  $63.1 million in 1995. The increase over the last two years
was due to improved net earnings and a continued improvement  in
asset quality.

      The  Company's net interest income is also impacted  by  a
three month time lag before changes in the cost of funds can  be
passed  along to monthly adjustable rate loan customers. Savings
and borrowing costs adjust to market rates immediately while  it
takes several months for the loan yield to adjust. This time lag
decreases  the Company's net interest income during  periods  of
rising  interest  rates. The reverse is true during  periods  of
declining  interest rates. See "Asset-Liability Management"  for
further discussion.

      The following table sets forth the components of interest-
earning  assets  and liabilities, the excess of interest-earning
assets over interest-bearing liabilities, the yields earned  and
rates paid and net interest income for the periods indicated:
<TABLE>
<CAPTION>

                                                   1997          1996          1995
                                                 --------------------------------------
                                                       (Dollars In Thousands)

<S>                                              <C>           <C>           <C>    
Average loans and mortgage-backed
 securities (1)                                  $3,811,179    $3,806,979    $3,940,247
Average investment securities                       160,224       165,710       176,131
                                                 ----------    ----------    ----------
Average interest-earning assets                   3,971,403     3,972,689     4,116,378
                                                 ----------    ----------    ----------
Average savings deposits                          1,972,860     2,135,688     2,245,178
Average borrowings                                1,888,662     1,744,091     1,808,072
                                                 ----------    ----------    ----------
Average interest-bearing liabilities              3,861,522     3,879,779     4,053,250
                                                 ----------    ----------    ----------
Excess of interest-earning assets over
 interest-bearing liabilities                    $  109,881    $   92,910    $   63,128
                                                 ==========    ==========    ==========

Yields earned on average interest
 earning assets                                        7.40%         7.36%         7.23%
Rates paid on average interest-
 bearing liabilities                                   5.27          5.25(3)       5.51
Net interest rate spread                               2.13          2.11          1.72
Effective net spread                                   2.28          2.24          1.80
Total interest income (2)                        $  293,931    $  292,564    $  297,683
Total interest expense (2)                          203,434       203,633(3)    223,501
                                                 ----------    ----------    ----------
Net interest income                              $   90,497    $   88,931(3) $   74,182
                                                 ==========    ==========    ==========
</TABLE>
----------
1  Non-accrual loans were included in the average dollar  amount
of  loans outstanding, but no income was recognized  during  the
period that each such loan was on non-accrual status.
2  Dividends on FHLB stock and miscellaneous interest income and
expense were not considered in this analysis.
3Excludes the effect of the IRS accrued interest reversal.

      The yield on earning assets increased slightly to 7.40% in
1997  from  7.36%  in  1996 due to a decline  in  non-performing
assets.   This  was offset by an 8 basis point decrease  in  the
COFI  Index which determines the yield on over 95% of the Bank's
loan  portfolio.  The Bank's cost of funds increased by 2  basis
points in 1997 compared to 1996 due to the more extensive use of
borrowings  which cost more than deposits. The increase  in  net
interest spread from 1995 to 1996 was also due to improved asset
quality, offset by the increased cost deposits and borrowings.
                                       32
<PAGE>

      The  table below sets forth certain information  regarding
changes in the interest income and interest expense of the  Bank
for  the  periods  indicated.  For each  category  of  interest-
earning assets and interest-bearing liabilities, information  is
provided  on  changes  attributable to  (i)  changes  in  volume
(changes  in  average balance multiplied by old rate)  and  (ii)
changes  in  rates  (changes in rate multiplied  by  prior  year
average balance):
<TABLE>
<CAPTION>

                                                     Year Ended                     Year Ended
                                                 December 31, 1997               December 31, 1996
                                                       Versus                         Versus
                                                 December 31, 1996               December 31, 1995
                                             --------------------------      ---------------------------
                                                   Change  Due To                  Change Due To
                                             --------------------------      ---------------------------
                                             Rate     Volume      Total      Rate      Volume      Total
                                             --------------------------      ---------------------------
                                                              (Dollars  In Thousands)
<S>                                         <C>        <C>       <C>         <C>        <C>        <C>
Interest Income:
  Loans and mortgage-backed
   securities                               $ 1,867    $  312    $2,179      $(9,851)   $ 5,054    $(4,797)
  Investments                                  (505)     (307)     (812)        (590)       268       (322)
                                            -------    ------    ------      -------     ------    -------
    Total interest income                     1,362         5     1,367      (10,441)     5,322     (5,119)
                                            -------    ------    ------      -------     ------    -------     

Interest Expense:
  Deposits                                   (1,137)   (7,671)   (8,808)      (5,245)    (2,308)    (7,553)
  Borrowings (1)                                141     8,468     8,609       (8,116)    (4,199)   (12,315)
                                            -------     -----     -----      -------     ------    -------
    Total interest expense                     (996)      797      (199)     (13,361)    (6,507)   (19,868)
                                            -------     -----     -----      -------     ------    -------         

    Change in net
     interest income                        $ 2,358    $ (792)   $1,566       $2,920    $11,829    $14,749
                                            =======    ======    ======       ======    =======    =======
</TABLE>

1 Excludes the IRS interest reversal.

Note:  Changes in rate/volume (change in rate multiplied by  the
change  in average volume) have been allocated to the change  in
rate   or  the  change  in  volume  based  upon  the  respective
percentages  of the combined totals. Dividends on  Federal  Home
Loan  Bank  stock and miscellaneous interest income and  expense
were not considered in this analysis.

Interest Rate Spreads and Yield on Average Interest-Earning Assets
<TABLE>
<CAPTION>

                                                                 Year Ended December  31,
                                      1997              1996             1995              1994              1993
                                ---------------   ---------------   ---------------   ---------------   ---------------  
                                During   End of   During   End of   During   End of   During   End of   During   End of
                                Period   Period   Period   Period   Period   Period   Period   Period   Period   Period


<S>                             <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Weighted average yield
 on loans and mortgage-
 backed   securities            7.49%    7.48%    7.44%    7.47%    7.31%    7.63%    6.25%    6.50%    6.64%    6.20%
Weighted average yield
 on  investment  portfolio(1)   5.40     6.06     5.71     5.98     5.56     5.15     5.00     5.08     4.70     5.16
Weighted average yield
 on all interest-earning
  assets                        7.40     7.42     7.36     7.45     7.23     7.59     6.20     6.47     6.56     6.17
Weighted average rate
  paid on deposits              4.70     4.66     4.76     4.67     4.86     4.89     3.85     4.49     3.76     3.60
Weighted average rate
 paid on borrowings and
   FHLB  advances               5.86     5.91     5.85(4)  5.77     6.32     6.11     4.93     6.04     4.09     3.99
Weighted average rate
 paid on all interest-
  bearing liabilities           5.27     5.28     5.25     5.22     5.51     5.41     4.27     5.12     3.89     3.73
Effective net spread(2)         2.28              2.24              1.80              1.99              2.77
Interest rate spread(3)         2.13     2.14     2.11%    2.23%    1.72%    2.18%    1.93%    1.35%    2.67%    2.44%
</TABLE>

----------
1   Dividends on FHLB stock and miscellaneous interest income were not
considered in this analysis.
2   Net  interest  income  (the difference in the  dollar  amounts  of
interest earned and paid) divided by average interest-earning assets.
3  Weighted average yield on all interest-earning assets less weighted
average rate paid on all interest-bearing liabilities.
4  Excludes effect of IRS accrued interest reversal.
                                       33
<PAGE>

Loss Provision

      The  Company recorded $20.5 million in loan loss provisions
during 1997, 42% less than the $35.2 million recorded in 1996 and
$28.4  million  in  1995.   The Southern California  real  estate
markets continued to improve during 1997.

      The  Bank  has a policy of providing for general  valuation
allowances,  unallocated to any specific loan, but  available  to
offset any future loan losses.  The allowance is maintained at an
amount  that management believes adequate to cover estimable  and
probable  loan losses. The general valuation allowance, excluding
the  general  valuation allowance for loans sold  with  recourse,
totaled $61.2 million and $54.9 million at December 31, 1997  and
December  31,  1996,  respectively.   The  increase  in   general
valuation allowances from 1996 to 1997 is a result of a  decrease
in  loan  charge-offs.   In addition, the Bank  provided  a  $7.3
million  provision  for  losses on the impaired  loan  portfolio.
Loan   charge-offs   decreased  from  0.99%  of   average   loans
outstanding  in  1996  to 0.32% of average loans  outstanding  in
1997.   The  Company  also  maintains  valuation  allowances  for
impaired loans and loans sold with recourse. See "Allowances  for
Loan Losses." Management performs regular risk assessments of the
Bank's  loan portfolio to maintain appropriate general  valuation
allowances.

      Additional loan loss provisions may also be required to the
extent  that  charge-offs  are  recorded  against  the  valuation
allowance  for impaired loans or the general valuation allowance.
Loan  charge-offs decreased to $12.1 million in 1997  from  $37.5
million  in  1996  and $39.7 million in 1995. Charge-offs  result
from  declines in the value of the underlying collateral  of  the
non-performing loans.

  Non-interest Income

      Loan  servicing and other fees were $6.2 million in  1997,
$6.4  million in 1996 and $6.1 million in 1995.  Increased  fees
earned  from  loans  brokered to other lenders  were  offset  by
decreased fees on loans serviced for other lenders during  1997.
The  increased fees in 1996 compared to 1995 were primarily  the
fees earned on loans brokered to other lenders.

      Gain (loss) on sale of loans increased to $652 thousand in
1997,  compared with $253 thousand in 1996 and a  loss  of  $1.6
million in 1995.  The increased gains from 1996 to 1997 were the
result  of  cash  gains and fees recognized on  sales  of  loans
originated by the Bank's new originaton unit, "Lend  FFB."   The
loss  in 1995 resulted from a $2.1 million provision for  losses
on loans that had been sold with recourse in prior years.

      Real  estate  operations resulted in a  net  gain  of  $20
thousand  compared to gains of $1.2 million  in  1996  and  $2.0
million  in  1995.  The amounts for 1997 and 1996  include  $1.6
million and $745 thousand, respectively in provisions for losses
on  real  estate.   Gains from real estate operations  generally
result from the recovery of excess valuation allowances upon the
sale   of   foreclosed  properties.  The  Bank  normally   sells
foreclosed properties within a few months after acquisition.

      Other operating income, which increased to $3.3 million in
1997 from $3.0 million in 1996 and $2.2 million in 1995 consists
primarily  of  fees earned for services provided in  the  retail
savings   branches.  Fees  earned  by  retail  savings  branches
increased  due  to management's efforts to improve  fee  income,
commissions   on   the  sale  of  alternative  investments   and
additional fees earned from off-site ATMs.
                                       34
<PAGE>

 Non-interest Expense

      The  ratio of non-interest expense to average total assets
for  1997  was 1.06%, consistent with the ratio for  1996  after
excluding  the  additional cost of the SAIF special  assessment.
The  ratio  for 1995 was  1.10%.  Including the SAIF assessment,
the  ratio  of non-interest expense to average total assets  was
1.43% for 1996.

      Salary and benefit costs increased 4% in 1997 compared  to
1996  due to incentive costs and retirement benefits.  Incentive
costs   were  higher  due  to  the  Bank's  increase   in   loan
originations.   Retirement  benefits  increased   due   to   the
promotion  of an individual who will be included in  the  Bank's
SERP  and  the  establishment of a 401(k) Plan  for  the  Bank's
employees.   Salary  and  benefit costs  decreased  5%  in  1996
compared  to  1995  due to decreased salary  and  benefit  costs
primarily due to attrition.

     Occupancy expense increased 9% in 1997 compared to 1996 due
primarily  to  the  additional costs  and  depreciation  expense
associated with the Bank's new loan origination system and  call
center.   Occupancy expense was substantially unchanged in  1996
compared to 1995.

      Other  operating expenses increased 21%  during  1997  and
consist  primarily  of costs associated with the  upcoming  data
processing  conversion and an increase in legal expenses.  Other
operating  expenses decreased 2% in 1996 compared  to  1995  due
primarily to lower insurance and data processing charges.

      Advertising expense increased by 18% in 1997  compared  to
1996   due   to  additional  brand  advertising  and   increased
advertising for Lend FFB.  Advertising expense increased by  29%
in  1996  compared  to  1995 due to the cost  of  new  marketing
initiatives related to retail deposit acquisition.

      Federal  deposit insurance decreased in 1997  compared  to
1996  due to a drop in the deposit insurance rate from 0.26%  to
0.093%  as a result of the Economic Growth Act and a decline  in
total  deposits.   Excluding  the  $15.0  million  special  SAIF
assessment, deposit insurance decreased in 1996 compared to 1995
due to a decline in deposits and a $268 thousand refund received
in  the fourth quarter of 1996 as a result of an assessment rate
reduction.
                                       35
<PAGE>

The  following  table  details the  components  of  non-interest
expense for the periods indicated:

<TABLE>
<CAPTION>

                                                        Non-Interest Expense
                                                      Year  Ended  December 31,
                                       -------------------------------------------------------
                                         1997       1996        1995        1994        1993
                                       -------------------------------------------------------
                                                         (Dollars In Thousands)
<S>                                    <C>         <C>         <C>         <C>         <C>         
Salaries and Employee Benefits:
       Salaries                        $15,413     $15,749     $16,436     $16,887     $16,557
   Incentive compensation                  883         556         899       1,363       1,425
   Payroll taxes                         1,371       1,389       1,400       1,498       1,388
   Employee benefit insurance            1,048       1,137       1,180       1,225       1,332       
   Bonus compensation                    1,100       1,000       1,001         300         633
    Profit sharing                         501         500         500         200         200
   Pension                                   -         241         436         481         468
    SERP                                   628         506         408         471         434
    401(k)                                 392           -           -           -           -
     Other  salaries  and  benefits      1,404         850         785         309         443
                                        22,740      21,928      23,045      22,734      22,880
Occupancy:
   Rent                                  4,351       4,270       4,250       4,246       3,898
    Equipment                            1,336         959         885       1,246       1,285
    Maintenance costs                      450         477         460         594         741
   Other occupancy                         741         583         663         600         892
                                         6,878       6,289       6,258       6,686       6,816
Other Operating Expense:
    Insurance                              345         381         528         748         570
    Goodwill                               839         915         996         996         650
     Data   processing                   1,043         945       1,012       1,094         895
    Contributions                          412         401         341         412         591
    Professional services                1,682         832         777         732         799
    Supervisory exam                       610         611         603         547         531
    Other  operating costs               4,935       4,086       4,110       4,424       4,458
                                         9,866       8,171       8,367       8,953       8,494
Federal Deposit Insurance:
   Deposit insurance premiums            1,872       5,418       6,400       5,151       4,622
    SAIF  special assessment                 -      15,007           -           -           -
                                         1,872      20,425       6,400       5,151       4,622

   Advertising                           2,795       2,362       1,833       1,972       2,486
        Total                          $44,151     $59,175     $45,903     $45,496     $45,298

   Non-interest expense as
    % of average assets                   1.06%       1.43%(1)    1.10%       1.18%       1.26%

</TABLE>
1  The ratio for 1996 includes the special SAIF assessment.  Excluding
 the SAIF assessment, the ratio would have been 1.06%.
                                       36
<PAGE>
                                 
                                   
                                   
                        BALANCE SHEET ANALYSIS

      Consolidated assets at the end of 1997 were $4.2  billion,
representing a slight increase from $4.1 billion at the  end  of
1996  and  1995.   Asset growth during 1997 was attributable  to
growth  in  the  loan portfolio due to a 59%  increase  in  loan
originations.  Loan sales during 1997 were $52.4 million in 1997
compared  to  $24.1 million in 1996. Increased loan originations
during 1996 were largely offset by loan payoffs and sales during
the year.

 Loan Portfolio

      At  the end of 1997, 96% of the Bank's loan portfolio  was
adjustable  based  on monthly changes in the  Eleventh  District
Federal Home Loan Bank Cost of Funds Index. As part of its asset-
liability management strategy, the Bank has maintained the level
of  adjustable loans in its portfolio at over 90% for  over  ten
years.  Management  believes that the high level  of  adjustable
rate mortgages will help insulate the Bank from fluctuations  in
interest rates, notwithstanding the several month lag between  a
change  in its monthly cost of funds and a corresponding  change
in its loan yields. See "Asset - Liability Management."

      The  Board of Directors has authorized the origination  of
fixed-rate loans, which feature initial fixed interest rates for
3,  5  or  7 years and thereafter become adjustable,  up  to  an
aggregate  limit of $120 million. Management believes  that  the
limited  origination  of  fixed-rate  loans  will  enhance   the
Company's overall return on assets and improve loan originations
in this economy.

      In  1997  and 1996, the Bank through its lending division,
FirstFed  Mortgage  Services, placed  $22.8  million  and  $19.1
million, respectively in mortgages with other lenders under  fee
arrangements, which amount is not included in loan originations.
In  1997, loans made on the security of single family properties
(one  to four units) comprised 89% of the dollar amount  of  new
loan  originations; loans made on the security  of  multi-family
properties comprised 10% of new originations; and loans made  on
the  security of commercial real estate properties comprised  1%
of new originations.  No construction loans and an insignificant
amount  of  consumer loans were originated in 1997.   Adjustable
rate  mortgages comprised 85% of new loan activity  during  1997
compared to 94% in 1996.

      The following table details loan originations by loan type
for the periods indicated:
<TABLE>
<CAPTION>

                                                      Loan Originations by Type
                                                        Year Ended December 31,
                                            -----------------------------------------------------
                                               1997       1996       1995       1994       1993
                                            -----------------------------------------------------
                                                        (Dollars  In Thousands)

<S>                                         <C>        <C>        <C>        <C>         <C>
Single  Family  (one to four units)         $430,223   $239,866   $237,508   $734,438    $499,560
Multi-Family                                  48,033     57,414     55,832    164,788     236,211
Commercial                                     2,551      5,568      4,881      9,858       9,638
Other                                            444          -      1,031        230         419
                                            --------   --------   --------   --------    --------
      Total                                 $481,251   $302,848   $299,252   $909,314    $745,828
                                            ========   ========   ========   ========    ========
</TABLE>

      Loans  originated upon the sale of the Bank's real  estate
owned  were $31.6 million or 7% of total originations  in  1997.
$1.0  million  of  these  loans were  originated  based  on  the
security  of  single  family  properties,  $29.8  million   were
originated based on the security of multi-family properties  and
$759   thousand  were  based  on  the  security  of   commercial
properties.

      From  time-to-time, the Bank converts loans into mortgage-
backed  securities  for use in securitized  borrowings  (reverse
repurchase  agreements) No loans were converted  into  mortgage-
backed  securities during 1997 or 1996.  $59.7 million of  loans
were   converted  into  mortgage-backed  securities   in   1995.
Securitized  loans  have a lower risk weighting  for  regulatory
risk-based capital purposes. In exchange for the enhanced credit
risk  associated with mortgage-backed securities, the Bank  pays
guarantee fees to FHLMC and/or FNMA.
                                       37
<PAGE>

      The Bank's adjustable rate loan products often provide for
first   year   monthly  payments  that  are   lower   than   the
fully-indexed interest and principal due. Any interest not fully
paid by such lower first year payments is added to the principal
balance  of  the  loan. This causes negative amortization  until
payments  increase  to cover interest and principal  shortfalls.
Due  to negative amortization, loan-to-value ratios may increase
above those calculated at the inception of the loan.

      To  date, the Bank's foreclosure experience on loans  with
negative  amortization has been no different from  that  on  the
fully-amortizing portfolio. The amount of negative  amortization
recorded  by the Bank decreases in periods of declining interest
rates and increases during periods of increasing interest rates.
The  balance  of negative amortization on all loans serviced  by
the  Bank  was  $13.9 million at December 31, 1997  compared  to
$11.0  million at December 31, 1996 and $6.7 million at December
31, 1995.

      The  Bank does not normally lend in excess of 90%  of  the
appraised   collateral  value  on  adjustable   mortgage   loans
("AMLs").  Where  the Bank does lend in excess  of  90%  of  the
appraised value, additional fees and rates are charged. Mortgage
insurance is required on loans in excess of 80% or premium rates
and/or fees are charged if the mortgage insurance requirement is
waived.  Subsequent to the origination of a loan, the  Bank  may
purchase  private mortgage insurance with its own  funds.  Loans
originated  under  this program for which there  is  no  private
mortgage  insurance totaled $163.8 million at December 31,  1997
compared  to  $122.5  million at December 31,  1996  and  $132.5
million  at December 31, 1995.  See "Business - Interest  Rates,
Terms and Fees."

  Loan Composition

      Loans  based  on the security of single family  properties
(one  to four units) comprise the largest category of the Bank's
loan  portfolio (including mortgage-backed securities). The loan
portfolio  also  includes  loans  secured  by  multi-family  and
commercial  properties. At December 31, 1997, approximately  62%
of  the  loan and mortgage-backed securities portfolio consisted
of  first  liens  on single family properties.  First  liens  on
multi-family  properties  comprised  approximately  32%  of  the
portfolio,  and first liens on commercial properties represented
approximately 5% of the portfolio.

       Multi-family  and  commercial  real  estate   loans   are
considered  more susceptible to market risk than  single  family
loans  and  higher  interest  rates  and  fees  are  charged  to
borrowers   for   these  loans.  Approximately   10%   of   loan
originations  in  1997 were multi-family loans compared  to  19%
during  both 1996 and 1995.  Multi-family loans originated  upon
the sale of REO were approximately 6%, 16% and 14% of total loan
originations during 1997, 1996 and 1995, respectively.

      The Bank also has loss exposure on certain loans sold with
recourse.   These  loans  are  substantially  all   secured   by
multi-family  properties.   Loans  sold  with  recourse  totaled
$218.1  million as of December 31, 1997, $230.8  million  as  of
December  31, 1996 and $247.6 million as of December  31,  1995.
Although  no longer owned by the Bank, these loans are  combined
with the Bank's loan portfolio for purposes of computing general
valuation  allowances and measuring risk exposure for regulatory
capital purposes.  Under the Bank's current policy, it no longer
enters into loans sold with recourse agreements.
                                       38
<PAGE>

      The  following  table sets forth the  composition  of  the
Bank's  portfolio  of loans and mortgage-backed  securities  for
each of the last five years:
<TABLE>
<CAPTION>


                                                              Loan Portfolio Composition
                                                                    December  31,
                                             ------------------------------------------------------------------
                                                1997          1996          1995          1994          1993  
                                             ------------------------------------------------------------------
                                                                (Dollars  In Thousands)
<S>                                          <C>           <C>           <C>           <C>           <C>
REAL ESTATE LOANS:
 First trust deed residential loans:
   One unit                                  $1,450,433    $1,279,267    $1,221,927    $1,192,251    $  862,340
   Two to four units                            351,175       342,230       351,942       350,718       340,035
   Five or more units                         1,217,577     1,277,634     1,344,866     1,357,251     1,298,794
                                             ----------    ----------    ----------    ----------    ----------
Residential  loans                            3,019,185     2,899,131     2,918,735     2,900,220     2,501,169
OTHER REAL ESTATE LOANS:
   Commercial and industrial                    196,575       210,953       221,982       246,340       245,387
   Second trust deeds                            15,441        17,497         2,213        20,401        24,606
    Other                                         6,303         2,137         3,157         4,793         5,861
                                             ----------    ----------    ----------    ----------    ----------        
     Real estate loans                        3,237,504     3,129,718     3,146,087     3,171,754     2,777,023
NON-REAL ESTATE LOANS:
   Manufactured housing                           1,154         1,480         1,938         2,439         2,763
   Deposit accounts                               1,644         1,042         1,104         1,301         1,086
   Consumer                                         185           236           359           506           964
                                             ----------    ----------    ----------    ----------    ----------        
     Loans receivable                         3,240,487     3,132,476     3,149,488     3,176,000     2,781,836
     LESS:
   General valuation allowance                   61,237        54,900        42,876        55,353        46,900
  Valuation allowances -
   impaired loans                                 9,775        12,350        26,101        23,887             -
   Unrealized  loan fees                         24,311        16,757        20,731        24,451        19,273
                                             ----------    ----------    ----------    ----------    ----------   
     Net loans receivable                     3,145,164     3,048,469     3,059,780     3,072,309     2,715,663
FHLMC AND FNMA MORT-
 GAGE-BACKED SECURITIES:
  Secured by single family
     dwellings                                  657,342       715,286       810,980       794,126       678,884
  Secured by multi-family
     dwellings                                   18,716        20,189        24,468        27,191        29,399
                                            -----------    ----------    ----------    ----------    ----------
     Mortgage-backed securities                 676,058       735,475       835,448       821,317       708,283
                                            -----------    ----------    ----------    ----------    ----------             
       TOTAL                                $ 3,821,222    $3,783,944    $3,895,228    $3,893,626    $3,423,946
                                            ===========    ==========    ==========    ==========    ==========
                                       
</TABLE>
                                       39


                        ASSET QUALITY


 Asset Quality Ratios


      The  following table sets forth certain asset quality ratios  of
the Bank for the periods indicated:
<TABLE>
<CAPTION>

                                                                    December 31,
                                                      ------------------------------------------
                                                       1997     1996     1995     1994     1993
                                                      ------------------------------------------

<S>                                                  <C>       <C>      <C>      <C>      <C>
Non-performing  Loans  to Loans Receivable(1)           .91%    1.89%    2.44%    2.39%    3.28%
Non-performing  Assets  to  Total Assets(2)             .96%    1.78%    2.33%    2.23%    3.23%
Loan Loss Allowances to Non-performing
   Loans(3)                                          193.38%   94.27%   65.62%   78.27%   52.23%
General Loss Allowances to Assets
    with  Loss  Exposure(4)                            1.86%    1.73%    1.35%    1.73%    1.46%
General Loss Allowances to Total Assets with
    Loss  Exposure(5)                                  2.12%    1.86%    1.52%    1.82%    1.48%
</TABLE>
----------
1     Non-performing  loans  are  net  of  valuation  allowances
related  to  those  loans.  Loans  receivable exclude  mortgage-
backed                      securities  and are before deducting
unrealized loan fees, general valuation allowances and valuation
allowances for impaired loans.
2     Non-performing  assets  are net  of  valuation  allowances
related to those assets.
3   The   Bank's  loan  loss  allowances,  including   valuation
allowances  for  non-performing  loans  and  general   valuation
allowances                                                   but
excluding  general valuation allowances for loans  sold  by  the
Bank with full or limited recourse.  Non-performing loans are  b
efore deducting valuation allowances related to those loans.
4     The Bank's general valuation allowances, excluding general
valuation  allowances   for loans sold  with   full  or  limited
recourse.         The  Bank's assets with loss exposure  include
primarily  loans  and real estate owned, but  exclude  mortgage-
backed securities.
5     The Bank's general valuation allowances, including general
valuation  allowances  for loans  sold  with   full  or  limited
recourse.        Assets  with loss exposure include  the  Bank's
loan  portfolio  plus  loans  sold with  recourse,  but  exclude
mortgage-backed  securities.
                                       40
<PAGE>


                      NON-PERFORMING ASSETS

     Non-performing assets, as defined by the Bank, include loans
delinquent  over 90 days or in foreclosure, real estate  acquired
in  settlement  of  loans,  and other loans  less  than  90  days
delinquent but for which collectibility is questionable.

     The table below details the amounts of non-performing assets
by  type of collateral. Also shown is the ratio of non-performing
assets to total assets.
<TABLE>
<CAPTION>


                                                        Non-Performing Assets
                                                             December 31,
                             ----------------------------------------------------------------------------------
                                 1997              1996             1995            1994             1993
                             ----------------------------------------------------------------------------------
                             $          %      $          %     $          %     $         %     $          %
                             ----------------------------------------------------------------------------------
                                                                (Dollars In Thousands)
<S>                             
Real Estate Owned:          <C>     <C>       <C>     <C>      <C>     <C>      <C>     <C>      <C>      <C>
Single  Family               $5,806  14.48%    $6,840   9.25%   $7,252   7.50%   $5,711   6.17%   $10,052   8.50%
Multi-Family                  4,034  10.06      7,339   9.93     9,827  10.17    10,647  11.50     16,015  13.55
Commercial                      826   2.06        673    .91     2,544   2.63       366   0.39        327   0.28
                             ------ ------     ------ ------    ------ ------    ------ ------    ------- ------
Other                            52     13          -      -        78   0.08         -      -        484   0.41
Total Real Estate
   Owned                     10,718  26.73     14,852  20.09    19,701  20.38    16,724  18.06     26,878  22.74
                             ------ ------     ------ ------    ------ ------    ------ ------    ------- ------
Non-Performing Loans:
Single   Family              16,799  41.90     25,602  34.64    25,991  26.89    13,041  14.08     25,317  21.41
Multi-Family                 15,785  39.37     44,754  60.55    69,579  72.00    60,213  65.02     70,207  59.39
Commercial                    1,533   3.82      2,223   3.01     3,313   3.43    20,986  22.66     10,307   8.72
Other                             -      -          -      -       220   0.23       245   0.26        245   0.20
Less Valuation
  Allowances                 (4,738)(11.82)   (13,522)(18.29)  (22,159)(22.93)  (18,596)(20.08)   (14,732)(12.46)
                             ------  -----     ------  -----    ------  -----    ------  -----     ------  -----
Total Non-Performing
    Loans                    29,379  73.27     59,057  79.91    76,944  79.62    75,889  81.94     91,344  77.26
                            ------- ------    ------- ------   ------- ------   ------- ------   -------- ------
Total                       $40,097 100.00%   $73,909 100.00%  $96,645 100.00%  $92,613 100.00%  $118,222 100.00%
                            ======= ======    ======= ======   ======= ======   ======= ======   ======== ======
Ratio of Non-Performing
  Assets To Total Assets:              .96%             1.78%            2.33%            2.23%             3.23%
                                    ======            ======           ======           ======            ======
</TABLE>
 
     The  decrease in non-performing loans in 1997 compared to 1996
  is  due  to  reductions  in delinquent loans  and  non-performing
  loans  of  all  asset types due to improvement  in  the  Southern
  California  real  estate markets. The decrease in  non-performing
  loans  in  1996 compared to 1995 was due primarily to a  decrease
  in delinquent and non-performing multi-family loans.
  
     Single  family  non-performing  loans  are  primarily  due  to
  recession-related factors such as layoffs, decreased incomes  and
  decreased  real  estate values. Multi-family and commercial  non-
  performing loans are attributable primarily to economic  factors,
  declines  in  occupancy rates, and decreased real estate  values.
  The  Bank  actively  monitors the status  of  all  non-performing
  loans.
  
     Impaired loans totaled $25.7 million, $37.6 million and  $86.4
  million,  net  of  related  allowances  of  $9.8  million,  $12.4
  million and $26.1 million as of  December 31, 1997, December  31,
  1996  and 1995, respectively. See "Business - Risk Elements"  for
  a further discussion of impaired loans.
                                       41  
<PAGE>                                       


     The Bank has debt restructurings which result from temporary
modifications  of principal and interest payments.   Under  these
arrangements, loan terms are typically reduced to no less than  a
required  monthly interest payment.  Any loss of  revenues  under
the  modified  terms would be immaterial to  the  Bank.   If  the
borrower  is unable to return to scheduled principal and interest
payments  at  the  end  of the modification  period,  foreclosure
procedures  are  initiated,  or, in  certain  circumstances,  the
modification  period is extended. As of December  31,  1997,  the
Bank  had modified loans totaling $16.7 million, net of loan loss
allowances.   This compares with $19.0 million and $19.3  million
net  of allowances as of December 31, 1996 and December 31, 1995,
respectively. Modified loans included in the impaired loan totals
above totaled $8.1 million, $9.7 million and $16.6 million,  net,
as of December 31, 1997, 1996 and 1995, respectively. No modified
loans were 90 days or more delinquent as of December 31, 1997  or
December  31, 1995. Modified loans 90 days or more delinquent  as
of December 31, 1996 were $472 thousand.

 Allowances for Loan Losses

      For an analysis of the changes in the loan loss allowances,
see  "Business  -  Risk  Elements."  At December  31,  1997,  the
general  valuation allowance was $61.2 million or  1.86%  of  the
Bank's  loans with loss exposure.  This compares to 1.73% at  the
end  of  1996 and 1.35% at the end of 1995.  In addition  to  the
general valuation allowance and the allowance for impaired  loans
mentioned  above, the Bank also maintains an allowance for  loans
sold with recourse. These allowances amounted to 5.97%, 3.64% and
3.65% of loans sold with recourse at December 31, 1997, 1996  and
1995,  respectively.  Management considers the current  level  of
loss  allowances  adequate to cover the Bank's loss  exposure  at
this  time.   However,  there can be  no  assurance  that  future
additions to loan loss allowances will not be required.


                CAPITAL RESOURCES AND LIQUIDITY

Liquidity Requirements

      Federal regulations currently require a savings institution
to  maintain  a  monthly average daily balance of  liquid  assets
(including cash, certain time deposits, bankers' acceptances  and
specified  United  States  government, state  or  federal  agency
obligations)  equal  to  at  least 4% of:  (i)the  average  daily
balance   of   its  net  withdrawable  accounts  and   short-term
borrowings  during  the  preceding calendar  quarter  or  (ii)the
ending balance of its net withdrawable accounts as of the end  of
the preceding calendar quarter.  The liquidity requirement may be
changed  from  time-to-time by the OTS to any amount  within  the
range of 4% to 10% of such accounts and borrowings depending upon
economic conditions and the deposit flows of member institutions.
On  November 24, 1997, the OTS reduced this liquidity requirement
to  4%  from  5%.  The OTS also gave institutions the  option  of
using  a  quarterly  average calculation or  an  end  of  quarter
calculation of the liquidity base and removed the requirement  of
maintaining a monthly average balance of short-term liquid assets
equal  to  at least 1% of the average daily balance  of  its  net
withdrawable  accounts  and  short  term  borrowings.    Monetary
penalties  may  be  imposed for failure to meet  these  liquidity
ratio  requirements.  The Bank's liquidity ratio for the  quarter
ended  December 31, 1997 was 5.13%, which exceeded the applicable
requirements.


 External Sources of Funds

      External  sources of funds include savings  deposits,  loan
sales, advances from the FHLBSF and reverse repurchase agreements
("reverse  repos").  For purposes of funding  asset  growth,  the
source  or  sources of funds with the lowest total cost  for  the
desired term are generally selected. The funding source used most
often during 1997 was FHLB advances.
                                       42
<PAGE>

      Deposits  obtained from national brokerage firms ("brokered
deposits")  are  considered  a  source  of  funds  similar  to  a
borrowing.  In evaluating brokered deposits as a source of funds,
the  cost  of  these  deposits, including  commission  costs,  is
compared to other funding sources. Brokered deposits were  $378.1
million at December 31, 1997.  This compares to $389.4 million at
December 31, 1996 and  $502.0 million at December 31, 1995.

      Deposits at retail savings offices have remained steady  at
approximately  $1.5  billion  for  the  last  three  years.   Not
considering  interest  credited  of  $62.4  million,   the   Bank
experienced  $52.0  million  in  deposit  outflows  from  savings
offices  during  1997  due  to  the availability  of  alternative
investments  paying  higher  returns  to  customers  and  intense
competition for deposits by other financial institutions.

      The  Bank  also  solicits  deposits  through  telemarketing
efforts.  Telemarketing  deposits  are  obtained  by  the  Bank's
employees  via telephone, from depositors outside of  the  Bank's
normal service areas. Telemarketing deposits decreased by 11%  to
$99.8  million  at  the end of 1997.  This compares  with  $112.6
million at the end of 1996 and $239.1 million at the end of 1995.
The   level  of  telemarketing  deposits  varies  based  on   the
availability of higher yielding investments to investors, who are
often   professional   money  managers.   The   availability   of
telemarketing  deposits  also  varies  based  on  the  investors'
perception of the Bank's creditworthiness.

      Reverse  repurchase  agreements are short  term  borrowings
secured by mortgage-backed securities. These borrowings decreased
11%  to $577.7 million at the end of 1997 from $646.5 million  at
the  end  of  1996  and  $724.6  million  at  the  end  of  1995.
Borrowings  under  reverse repurchase agreements  have  decreased
over  the  last  three years due to paydowns  of  the  underlying
collateral.   The Bank did not securitize any mortgage  loans  in
1997 or 1996 for this purpose.

      FHLB advances increased to $1.3 billion at the end of  1997
compared to $1.2 billion at the end of 1996 and $890.0 million at
the  end  of 1995.  FHLB advances increased during 1997 and  1996
because  these  were  often  the  lowest  cost  source  of  funds
available to the Bank.

     Sales of loans were $52.4 million in 1997.  This compares to
$24.1  million  during 1996 and $36.5 million  during  1995.  The
volume  of  loans sold varies with the amount of  saleable  loans
originated.


 Internal Sources of Funds

      Internal  sources of funds include scheduled loan principal
payments,  loan payoffs, and positive cash flows from operations.
Principal  payments  were $ 289.1 million  in  1997  compared  to
$199.3  million  in 1996 and $161.6 million in  1995.   Principal
payments  include  both amortization and prepayments  and  are  a
function  of  real  estate  activity and  the  general  level  of
interest rates.


Capital Requirements

      Current regulatory capital standards require that the  Bank
maintain tangible capital of at least 1.5% of total assets,  core
capital  of 3.0% of total assets, and risk-based capital of  8.0%
of  total  assets, risk-weighted. Among other things, failure  to
comply  with  these capital standards will result in restrictions
on  asset  growth and necessitate the preparation  of  a  capital
plan,  subject to regulatory approval. Generally, any institution
with  a  risk-based capital ratio in excess of  10%  and  a  core
capital ratio greater than 5% is considered well-capitalized  for
regulatory purposes. Institutions who maintain this capital level
can  take in brokered deposits at their discretion, and  if  they
achieve a sufficient ranking on their regulatory examination, may
be assessed a lower deposit insurance rate.
                                       43

<PAGE>
       Management  presently  intends  to  maintain  its  capital
position  at levels above those required by regulators to  ensure
operating  flexibility  and growth capacity  for  the  Bank.  The
Bank's  capital  position  is actively monitored  by  management.
The Bank met the regulatory capital standards to be deemed "well-
capitalized" for purposes of the various regulatory  measures  of
capital including the prompt corrective action regulations.

      To  be  considered "well capitalized" for purposes  of  the
prompt corrective action requirements the Bank must maintain  the
capital ratios as set forth in the table below:
<TABLE>
<CAPTION>
      
                                                 December 31, 1997
                                               ---------------------
                                                Amount           %
                                               --------        -----
                                               (Dollars In Thousands)
   <S>                                         <C>            <C>   
   Core capital requirement                    $207,929        5.00%
   Bank's core capital                          261,099        6.28
                                               --------       -----
     Excess core capital                       $ 53,170        1.28%
                                               ========       =====  
                                               
   Tier 1 risk-based capital requirement       $142,166        6.00%
   Bank's tier 1 risk-based capital             261,099       11.02
                                               --------       -----
     Excess tier 1 risk-based capital          $118,933        5.02%
                                               ========       =====  

   Risk-based capital requirement              $236,943       10.00%
   Bank's risk-based capital                    291,106       12.29
                                               --------       -----  
     Excess risk-based capital                 $ 54,163        2.29%
                                               ========       =====
</TABLE>

                   ASSET-LIABILITY MANAGEMENT

      The Bank's primary objective in managing interest rate risk
is to minimize the adverse impact of changes in interest rates on
the  Bank's net interest income and capital, while, at  the  same
time, adjusting the Bank's asset-liability mix to the achieve the
most favorable impact on earnings.

      The Bank's asset-liability management policy is designed to
improve  the  balance between the maturities  and  repricings  of
interest-earning assets and interest-bearing liabilities in order
to  better insulate net earnings from interest rate fluctuations.
Under  this  program, the Bank emphasizes the funding of  monthly
adjustable  mortgages with short term savings and borrowings  and
matching the maturities of these assets and liabilities.

      The  majority  of the Bank's assets are monthly  adjustable
rate  mortgages  with  interest rates  that  fluctuate  based  on
changes  in  the  FHLBSF Eleventh District Cost  of  Funds  Index
("Index").  These  mortgages constitute  over  95%  of  the  loan
portfolio  at the end of 1997. Comparisons over the last  several
years  show  that  changes in the Bank's cost of funds  generally
correlates with changes in the Index. The Bank does not  use  any
futures, options or swaps in its asset-liability strategy.

      Assets  and liabilities which are subject to repricing  are
considered  rate  sensitive.  The mis-match in the  repricing  of
rate  sensitive  assets  and liabilities  is  referred  to  as  a
company's  "GAP."   The GAP is positive if rate-sensitive  assets
exceed  rate-sensitive  liabilities. Generally,  a  positive  GAP
benefits  a company during periods of increasing interest  rates.
The  reverse is true during periods of decreasing interest rates.
However, because the Index lags changes in market interest  rates
by three months while the Bank's short-term savings and borrowing
costs   adjust  immediately,  the  Bank's  net  interest   income
initially  decreases during periods of rising interest rates  and
increases during periods of declining interest rates.
                                       44
<PAGE>

      In  order  to  minimize the impact of rate fluctuations  on
earnings, management's goal is to keep the one year GAP  at  less
than 20% of total assets (positive or negative).  At December 31,
1997 the Company's one-year GAP was a positive $172.2 million  or
4.14% of total assets.  This compares with positive GAP ratios of
5.8%  and  8.4% of total assets at December 31, 1996 and December
31, 1995, respectively.

      The  following chart shows the interest sensitivity of  the
Company's assets and liabilities by repricing period at  December
31,  1997  and  the consolidated GAP position as a percentage  of
total assets at that time:


INTEREST-SENSITIVITY GAP
<TABLE>
<CAPTION>

                                                        Balances        Balances        Balances        Balances         
                                                        Repricing       Repricing       Repricing       Repricing
                                        Total           Within          Within          Within          After
                                        Balance         0-3 Months      4-12 Months     1-5 Years       5 Years
                                        -------------------------------------------------------------------------
                                                              (Dollars In Thousands)

<S>                                     <C>             <C>             <C>             <C>             <C>
Interest-Earning Assets:                                                                                
 Repurchase Agreements                  $   115,000     $   115,000     $          -    $        -      $        -
 Investment Securities                       48,910          10,326           38,374           210               -
    Mortgage-backed   Securities            676,058         666,084            1,602         6,484           1,888
 Loans Receivable                         3,145,164       3,030,652           32,877        37,730          43,905
                                        -----------     -----------     ------------    ----------      ----------     
   Total Interest-Earning
       Assets                           $ 3,985,132     $ 3,822,062     $     72,853    $   44,424      $   45,793
                                        ===========     ===========     ============    ==========      ==========

Interest-Bearing Liabilities:
  Demand Accounts                       $   485,906     $   485,906     $          -    $        -      $        -
  Fixed Rate Term Certificate             1,457,741         646,072           699,108       105,608          6,953
  Borrowings:
   FHLB Advances                          1,310,000         775,000           535,000             -              -
   Reverse Repurchase                                 
   Agreements                               577,670         412,764           164,906             -              -
   Other Borrowings                          54,000           4,000                 -             -         50,000
                                        -----------     -----------     -------------   -----------     ----------
           Total Interest-Bearing
            Liabilities                 $ 3,885,317     $ 2,323,742     $   1,399,014   $   105,608     $   56,953
                                        ===========     ===========     =============   ===========     ==========

Interest-Sensitivity     Gap            $    99,815     $ 1,498,320     $  (1,326,161)  $   (61,184)    $  (11,160)
                                        ===========     ===========     =============   ===========     ==========

Interest-Sensitivity Gap as a
 Percentage of Total Assets                                   36.02%            (31.88)%      (1.47)%        (0.27)%
                                                              =====              =====         ====           ====

Cumulative Interest-Sensitivity Gap                     $1,498,319       $     172,158  $   110,974     $   99,814
                                                        ==========       =============  ===========     ==========

Cumulative Interest-Sensitivity
 Gap as a Percentage of Total 
 Assets                                                       36.02%              4.14%         2.66%          2.40%
                                                              =====               ====          ====           ====
</TABLE>
                                       45  
<PAGE>                                       

Another  measure of interest rate risk, required to be  performed
by  OTS-regulated institutions, is an analysis specified  by  OTS
Thrift  Bulletin TB-13, "Interest Rate Risk Exposure:  Guidelines
on   Director   and   Officer  Responsibilities".    Under   this
regulation, institutions are required to establish limits on  the
sensitivity of their net interest income and net portfolio  value
to changes in interest rates.  Such changes in interest rates are
defined  as  instantaneous and sustained  movements  in  interest
rates in 100 basis point increments.  Following are the estimated
impact  of  a  parallel shift in interest rates at  December  31,
1997, calculated in a manner consistent with the requirements  of
Thrift Bulletin No. 13:
<TABLE>
<CAPTION>

                                                 Percentage Change in
                                             ------------------------------
          Change in Interest Rates           Net Interest     Net Portfolio
          (In     Basis    Points)             Income(1)         Value(2)
          ------------------------           ------------     -------------

              <S>                                <C>              <C>                                                          
               +200                              (18)%            (10)%
               +100                               (9)%             (5)%
              --100                                 9%               3%
              --200                                17%               4%

</TABLE>
________
  
  
(1)    The  percentage change in this column represents projected
net interest income for 12  months           in a stable interest
rate  environment versus the net interest income in  the  various
rate scenarios.
  
(2)        The percentage change in this  column represents   net
portfolio   value  of   the  Bank in a  stable     interest  rate
environment  versus the net portfolio value in the  various  rate
scenarios.  The OTS              defines net portfolio  value  as
the  present value of  expected cash flows  from existing  assets
minus  the  present  value of expected cash flows  from  existing
liabilities.
                                       46
<PAGE>
  
The  following table shows the fair value and contract  terms  of
the   Bank's   interest-earning   assets   and   interest-bearing
liabilities  as  of  December 31, 1997 categorized  by  type  and
expected maturity for each of the next five years and thereafter:
<TABLE>                                      
<CAPTION>

                                                       Expected Maturity Date as of December 31,
                              ---------------------------------------------------------------------------------------------
                                                                                          There-       Total          Fair
                              1998        1999        2000        2001        2002        after        Balance        Value
                              ----------------------------------------------------------------------------------------------
<S>                         <C>           <C>         <C>         <C>         <C>         <C>          <C>            <C>
Interest Earning Assets 
Loans Receivable:
Adjustable Rate Loans:
    Single   family           $181,106    $164,246    $148,808    $134,778    $122,048    $1,012,601   $1,763,587     $1,818,629
    Average interest rate        7.73%        7.74%       7.74%       7.74%       7.74%         7.85%        7.80%            
    Multi-family                83,742      79,561      75,502      71,673      68,062       826,156    1,204,696      1,231,614
    Average interest rate         7.53%       7.53%       7.53%       7.53%       7.53%         7.47%        7.49%
 Commercial  and Industrial     16,018      15,198      13,874      13,010      12,386       131,072      201,558        211,752
    Average interest rate         8.01%       8.01%       7.96%       7.95%       7.95%         7.97%        7.97%
Fixed Rate Loans:
 Single family                   3,447       2,377       2,173       1,941       1,727        16,892       28,557         28,924
    Average interest rate         8.38%       7.97%       8.02%       7.99%       7.94%         7.63%        7.82%
 Multi-family                      931         823         782         744         707         2,982        6,969          7,394
    Average interest rate         9.19%       9.22%       9.24%       9.25%       9.26%         9.25%        9.24%
 Commercial and Industrial         308         301         284         210          57            72        1,232          1,274
    Average interest rate        10.53%      10.56%      10.58%      10.72%      10.42%        10.00%       10.55%
 Other loans                       557         564         569         577         584         2,920        5,771          5,506
    Average interest rate         1.01%       1.08%       1.16%       1.23%       1.33%         7.83%        4.54%         
    Consumer loans               1,871         228           -           -           -             -        2,099          2,097
   Average interest rate         11.69%      18.00%                                                         12.38%         
   Non-performing loans         29,379           -           -           -           -             -       29,379         29,379
Mortgage-backed
 Securities:
 Adjustable                     73,246      66,214      59,737      53,867      48,550       363,980      665,594        665,584
 Average interest rate            6.21%       6.21%       6.21%       6.21%       6.21%         6.21%        6.21%
 Fixed                           5,040       2,268         524         473         428         1,866       10,599         10,474
    Average interest rate         6.17%       6.87%       8.50%       8.50%       8.50%         8.48%        7.04%
 Repurchase Agreements         115,000           -           -           -           -             -      115,000        115,000
   Average interest rate          6.44%                                                                      6.44%
 Investments Securities         21,109           -         200           -      28,142             -       49,451         48,910
 Average interest rate            5.31%                   5.94%                   5.01%                      5.14%     
 Total Interest-Earning
                              --------    --------    --------    --------    --------    ----------   ----------     ----------
Assets                        $531,754    $331,780    $302,453    $277,273    $282,691    $2,358,541   $4,084,492     $4,176,537
                              ========    ========    ========    ========    ========    ==========   ==========     ==========

             
Interest-Bearing Liabilities
Deposits:
Non-Term Accounts             $485,906    $      -    $      -    $      -    $      -    $        -   $  485,906       $485,906
   Average interest rate          0.60%                                                                      0.60%
Certificate Accounts         1,345,178      88,966      10,123       2,251       4,270         6,953    1,457,741      1,458,317
    Average interest rate         5.42%       5.84%       5.53%       5.47%       5.77%         5.80%        5.45%
Borrowings:
 FHLB Advances               1,310,000           -           -           -           -             -    1,310,000      1,310,335
   Average interest rate          5.80%                                                                      5.80%
 Reverse repurchase
  agreements                   577,670           -           -           -           -             -      577,670        578,088
   Average interest rate          5.66%                                                                      5.66%
 Senior Unsecured Notes              -           -           -           -           -        50,000       50,000         50,000
    Average interest rate                                                                      11.75%       11.75%
 Unsecured Term Funds            4,000           -           -           -           -             -        4,000          4,004
   Average interest rate          5.80%                                                                      5.80%

Total Interest Bearing      ----------    --------    --------    --------    --------    ----------   ----------     ----------
Liabilities                 $3,722,754    $ 88,966    $ 10,123    $  2,251    $  4,270    $   56,953   $3,885,317     $3,886,650
                            ==========    ========    ========    ========    ========    ==========   ==========     ==========

</TABLE>

(1)                                 Expected    maturities    are
contractual  maturities  adjusted for prepayments  of  principal.
The   Bank                        uses  certain  assumptions   to
estimate  fair  values  and  expected  maturities.   For  assets,
expected   maturities   are  based  upon  contractual   maturity,
projected   repayments  and   prepayments  of   principal.    The
prepayment  experience  used is based on  the  Bank's  historical
experience.   The Bank's average CPR (Constant Prepayment   Rate)
is 9.2% for the single  family  portfolio and 5.5% for its multi-
family  and  commercial real estate portfolios.  The  Bank   used
estimated    deposit   runoff   based   on   available   industry
information.
                                       47
<PAGE>


                          STOCK PRICES

        The common stock of FirstFed Financial Corp. is traded on
the  New York Stock Exchange under the trading symbol "FED."  The
quarterly  high and low information presented below is  based  on
information supplied by the New York Stock Exchange.

        The  Company has never declared or paid a cash  dividend.
The  Company  repurchased 127,000 shares of its common  stock  in
1996  at  an average cost of $16.17 pursuant to a 1987  Board  of
Directors' authorization to repurchase up to 10% of the Company's
then  outstanding shares.  No shares were repurchased during 1997
or  1995.  As of December 31, 1997, a total of 923,520 shares had
been  repurchased at an average cost of $12.87 per share.   Based
on the number of shares outstanding at December 31, 1987, 137,000
shares remain eligible for repurchase under this program.

                     PRICE RANGE OF COMMON STOCK
  
<TABLE>
<CAPTION>
                    First Quarter       Second Quarter       Third Quarter       Fourth Quarter
                    -------------       --------------       -------------       --------------       
                    High      Low       High       Low       High      Low       High       Low
  
<S>                 <C>       <C>       <C>        <C>       <C>      <C>        <C>        <C>
1997                28        21 1/2    31 1/16    22 1/2    34 7/8   30 3/4     39 1/2     35
1996                15 7/8    12 3/8    17 1/2     15 1/2    19 3/4   16 3/4     24 1/4     19 1/2
1995                16        11 1/8    17 3/4     14 5/8    17 5/8   14 1/2     18 1/2     13 3/4
1994                17        13 3/8    17 1/4     13 3/8    16 1/2   13 3/4     15 1/4     10 1/4
1993                26 1/2    19 1/4    20 7/8     15 1/4    20 3/8   16 1/4     19 3/4     14 7/8
</TABLE>
  
                                       48
<PAGE>

ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
                              FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
                          CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                      DECEMBER 31, 1997 AND 1996
                           (Dollars In Thousands, Except per Share Data)



                                                                1997                         1996
                                                            -----------                   ----------
<S>                                                          <C>                          <C>      
ASSETS
Cash and cash equivalents                                    $  163,135                   $  162,402
Investment securities, available-for-sale
  (at fair value ) (Note 2)                                      48,910                       58,909
Mortgage-backed securities, available-for-sale
  (at  fair  value)  (Notes  3  and  10)                        676,058                      746,006
Loans receivable, held-for-sale (fair value of $40,800
 and $6,238) (Note 4)                                            40,382                        6,195
Loans  receivable,  net (Note  4)                             3,104,782                    3,042,274
Accrued interest and dividends receivable                        26,990                       26,910
Real estate (Note 5)                                             10,257                       14,445
Office properties and equipment, net (Note 6)                     9,868                        8,944
Investment in Federal Home Loan Bank (FHLB)
 stock, at cost (Note 7)                                         68,592                       62,400
Other assets (Note 1)                                            11,141                       15,367
                                                             ----------                   ----------      
                                                             $4,160,115                   $4,143,852
                                                             ==========                   ==========
LIABILITIES
Deposits (Note 8)                                            $1,943,647                   $1,957,448
FHLB  advances  and other borrowings (Note  9)                1,364,000                    1,294,000
Securities sold under agreements to repurchase
 (Note 10)                                                      577,670                      646,482
Accrued  expenses  and  other  liabilities                       52,011                       51,372
                                                              ---------                    ---------     
                                                              3,937,328                    3,949,302
                                                              ---------                    ---------
COMMITMENTS AND CONTINGENT
   LIABILITIES (NOTES 4, 6  AND 13)

STOCKHOLDERS' EQUITY (NOTES 12 AND 13)
Common stock, par value $.01 per share; authorized
 25,000,000 shares; issued 11,511,138 and
 11,453,369 shares, outstanding 10,587,618 and
 10,529,849 shares                                                  115                          115
Additional paid-in capital                                       29,628                       28,677
Retained earnings-substantially restricted                      207,065                      183,965
Loan to employee stock ownership plan                            (1,744)                      (2,132)
Treasury stock, at cost,
       923,520      shares                                      (11,885)                     (11,885)
Unrealized loss on investment securities
   available-for-sale, net  of  taxes                              (392)                      (4,190)
                                                             ----------                   ----------
                                                                222,787                      194,550
                                                             ----------                   ----------
                                                             $4,160,115                   $4,143,852
                                                             ==========                   ==========

</TABLE>
 See accompanying notes to consolidated financial statements.
                                       49
<PAGE>
<TABLE>
<CAPTION>

                                                   FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                                YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                                (Dollars In Thousands, Except per Share Data)

                                                        1997          1996          1995
                                                     ----------   ----------    ----------
<S>                                                  <C>          <C>           <C>
Interest income:
 Interest on loans.                                  $  237,835   $  229,000    $  233,648
 Interest on mortgage-backed securities                  48,652       54,825        54,389
 Interest and dividends on investments                   12,733       13,353        13,698
                                                     ----------   ----------    ----------
    Total interest income                               299,220      297,178       301,735
                                                     ----------   ----------    ----------

Interest expense:
  Interest on deposits (Note 8)                          92,678      101,595       109,151
  Interest on borrowings (Note 9)                       111,548       96,436       114,926
                                                     ----------   ----------    ----------         
    Total interest expense                              204,226      198,031       224,077
                                                     ----------   ----------    ----------

Net interest income                                      94,994       99,147        77,658
 Provision for loan losses (Note 4)                      20,500       35,155        28,376
                                                     ----------   ----------    ----------
Net interest income after provision for
loan losses                                              74,494       63,992        49,282
                                                     ----------   ----------    ----------
Other income:
  Loan servicing and other fees                           6,233        6,402         6,126
  Gain (loss) on sale of loans                              652          253        (1,581)
   Real estate operations, net                               20        1,246         2,015
  Other operating income                                  3,313        3,014         2,165
                                                     ----------   ----------    ----------
    Total other income                                   10,218       10,915         8,725
                                                     ----------   ----------    ----------

Non-interest expense:
  Salaries and employee benefits (Note 13)               22,740       21,928        23,045
  Occupancy (Note 6)                                      6,878        6,289         6,258
  Advertising                                             2,795        2,362         1,833
  Federal deposit insurance                               1,872        5,418         6,400
  SAIF special assessment                                     -       15,007             -
  Other operating expense                                 9,866        8,171         8,367
                                                     ----------   ----------    ----------
    Total non-interest expense                           44,151       59,175        45,903
                                                     ----------   ----------    ----------

Earnings before income taxes                             40,561       15,732        12,104
Income       taxes       (Note      11)                  17,461        7,488         5,569
                                                     ----------   ----------    ----------      
Net earnings                                         $   23,100   $    8,244    $    6,535
                                                     ==========   ==========    ==========

Earnings per share  (Notes 12 and 15)
  Basic                                              $     2.19   $     0.78    $     0.62
                                                     ==========   ==========    ==========
  Diluted                                            $     2.15   $     0.78    $     0.61
                                                     ==========   ==========    ==========

Weighted average shares outstanding (Notes 12 & 15)

Basic                                                10,569,772   10,551,765    10,605,693
                                                     ==========   ==========    ==========
Diluted                                              10,747,008   10,636,236    10,656,863
                                                     ==========   ==========    ==========
</TABLE>

 See accompanying notes to consolidated financial statements.
                                       50
<PAGE>
<TABLE>                                                      
<CAPTION>

                                                      FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
                                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                     YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                                                (Dollars In Thousands)

                                                                                                Unrealized
                                                                                                Gain (Loss) on
                                                                                                Securities
                                                             Retained                           Available
                                                             Earnings                           for Sale,
                                                             (Sub-        Loan to               Net of
                                                 Additional  stantially   ESOP                  Taxes             
                                        Common   Paid-In     Restricted)  (Notes 12  Treasury   (Notes 3
                                        Stock    Capital     (Note 12)     and 13)   Stock      and   4)        Total
                                        --------------------------------------------------------------------------------
<S>                                     <C>      <C>         <C>          <C>        <C>        <C>             <C>
Balance, December 31, 1994              $114     $28,061     $ 169,186    $(2,842)   $(9,832)   $      -        $184,687
Exercise of employee stock options         -         151             -          -          -           -             151
Net decrease in loan to employee stock
 ownership plan                            -           -             -        342          -           -             342
Unrealized gain on securities
 available-for-sale, net of taxes          -           -             -          -          -       4,576           4,576
Net earnings 1995                          -           -         6,535          -          -           -           6,535
                                        ----     -------     ---------    -------    -------    --------        --------

Balance, December 31, 1995               114      28,212       175,721     (2,500)    (9,832)      4,576         196,291
Exercise of employee  stock options        1         465             -          -          -           -             466
Net decrease in loan to employee stock
 ownership plan                            -           -             -        368          -           -             368
Common stock repurchased
  (127,000 shares)                         -           -             -          -     (2,053)          -          (2,053)
Unrealized loss on securities
 available-for-sale, net of taxes          -           -             -          -          -      (8,766)         (8,766)
Net earnings 1996                          -           -         8,244          -          -           -           8,244
                                        ----     -------     ---------    -------    -------    --------        --------

Balance, December 31, 1996               115      28,677       183,965     (2,132)   (11,885)     (4,190)        194,550
Exercise of employee stock options         -         892             -          -          -           -             892
Net decrease in loan to employee stock
 ownership plan                            -           -             -        388          -           -             388
Unrealized gain on securities
 available-for-sale, net of taxes          -           -             -          -          -       3,798           3,798
Benefit from stock option tax
 adjustment                                -          59             -          -          -           -              59
Net earnings 1997                          -           -        23,100          -          -           -          23,100
                                        ----     -------     ---------    -------    -------    --------        --------
Balance, December 31, 1997              $115     $29,628      $207,065    $(1,744)  $(11,885)      $(392)       $222,787
                                        ====     =======     =========    =======    =======    ========        ========
</TABLE>

See accompanying notes to consolidated financial statements.
                                       51
<PAGE>
<TABLE>
<CAPTION>

                                FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                             YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                        (Dollars In Thousands)


                                                        1997           1996          1995
                                                     ----------     ---------      --------
<S>                                                  <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                    
Net earnings                                         $   23,100     $   8,244      $  6,535
Adjustments to reconcile net earnings to
 net cash provided by operating activities:
   Net  change in loans held-for-sale                   (34,187)        1,182        23,022
   Depreciation and amortization                          1,775         1,722         1,735
   Provision for losses on loans                         20,500        35,155        28,376
   Provision for losses on real estate owned              1,639           745             -
   Valuation adjustments on real estate sold              3,795           291           221
   Amortization of fees and discounts                    (1,503)       (2,210)       (2,749)
   Decrease in deferred premium on sale of loans            387           588           865
   Negative amortization on loans                        (2,497)       (3,770)       (5,044)
   Change in deferred taxes                               2,919          (102)        4,972
   Increase (decrease) in tax interest accrual           (7,182)       (5,135)        3,524
   (Increase) decrease in interest and dividends             
   receivable                                               (80)        1,710        (4,200)
   Increase (decrease) in interest payable                  633        (8,685)        2,714
   (Increase) decrease in other assets                   (1,237)       (4,049)        1,573
   Increase (decrease) in accrued expenses and             
    other  liabilities                                    3,373          (177)       (1,763)
                                                     ----------     ---------      --------
    Total adjustments                                   (11,665)       17,265        53,246
                                                     ----------     ---------      --------
     Net cash provided by operating activities           11,435        25,509        59,781
                                                     ----------     ---------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Loans made to customers and principal collections
 on loans                                              (121,095)      (84,424)     (129,393)
Loans purchased                                               -             -          (115)
Loans  repurchased under recourse arrangements           (7,899)      (14,806)      (27,212)
Proceeds  from sales of real estate owned                53,263        80,256        61,076
Proceeds from maturities and principal payments
  of investment securities available-for-sale            37,912        86,329        20,267
Principal reductions of mortgage-backed
  securities available-for-sale                          76,923        84,544        53,973
Purchases of investment securities
 available-for-sale                                     (28,400)      (79,405)      (13,095)
Purchases of FHLB stock                                  (2,186)            -             -
Purchases of treasury stock                                   -        (2,053)            -
Other                                                    (1,288)        2,525         6,324
                                                     ----------     ---------      --------
 Net cash provided (used) by investing activities         7,230        72,966       (28,175)
                                                     ----------     ---------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits                                (13,801)     (247,588)      (93,878)
Net  increase in short term borrowings                   51,188       282,539       327,322
Repayment  of long term borrowings                      (50,000)       (9,000)     (265,200)
Other                                                    (5,319)        1,098         1,175
                                                     ----------     ---------      --------
 Net cash provided (used) by financing activities       (17,932)       27,049       (30,581)
                                                     ----------     ---------      --------
Net increase in cash and cash
 equivalents                                                733       125,524         1,025
Cash  and cash equivalents at beginning of year         162,402        36,878        35,853
                                                     ----------     ---------      --------
Cash  and cash equivalents at end of year            $  163,135     $ 162,402      $ 36,878
                                                     ==========     =========      ========

</TABLE>
See accompanying notes to consolidated financial statements.
                                       52
<PAGE>

  
(1) Summary of Significant Accounting Policies

      The  following is a summary of the significant accounting
policies  of  FirstFed  Financial  Corp.  ("Company")  and  its
wholly-owned  subsidiary  First  Federal  Bank  of   California
("Bank").

      The  preparation of the Company's financial  statements  in
conformity with generally accepted accounting principles requires
management  to  make estimates and assumptions  that  affect  the
reported  amounts  of assets and liabilities and  disclosures  of
contingent  assets and liabilities at the date of  the  financial
statements  and  the reported operations of the Company  for  the
periods   presented.   Actual  results  may  differ  from   those
estimates calculated by management.

 Principles of Consolidation

      The  consolidated financial statements include the accounts
of  the  Company and its subsidiary, the Bank. The Bank maintains
24  full-service  savings  branches in Southern  California.  The
Bank's  primary  business consists of attracting retail  deposits
from  the  general  public  and  originating  loans  secured   by
mortgages  on  residential real estate.  All  significant  inter-
company  balances  and  transactions  have  been  eliminated   in
consolidation.  Certain items in the 1995 and  1996  consolidated
financial  statements have been reclassified to  conform  to  the
1997 presentation.

Statement of Cash Flows

      For  purposes  of  reporting  cash  flows,  cash  and  cash
equivalents  include cash, overnight investments  and  securities
purchased  under agreements to resell with maturities  within  90
days of the date of purchase.

Financial Instruments

       Statement  of  Financial  Accounting  Standards  No.  107,
"Disclosures  about  Fair Value of Financial Instruments"  ("SFAS
No. 107"), requires the disclosure of the fair value of financial
instruments,  whether  or  not recognized  on  the  statement  of
financial condition, for which it is practicable to estimate  the
value. A significant portion of the Bank's assets and liabilities
are financial instruments as defined under SFAS No. 107. SFAS No.
107 requires that the Bank disclose fair values for its financial
instruments. Fair values, estimates and assumptions are set forth
in Note 16, Fair Value of Financial Instruments.

Risks Associated with Financial Instruments

     The credit risk of a financial instrument is the possibility
that  a  loss  may  result from the failure of another  party  to
perform  in accordance with the terms of the  contract. The  most
significant  credit  risk associated with  the  Bank's  financial
instruments    is   concentrated   in   its   loans   receivable.
Additionally, the Bank is subject to credit risk on certain loans
sold  with  recourse.  The  Bank has  established  a  system  for
monitoring the level of credit risk in its loan portfolio and for
loans sold with recourse.

     The market risk of a financial instrument is the possibility
that  future changes in market prices may reduce the value  of  a
financial  instrument or increase the contractual obligations  of
the  Bank.   The  Bank's  market  risk  is  concentrated  in  its
portfolios  of  loans  receivable and  real  estate  acquired  by
foreclosure.   When  a  borrower fails to  meet  the  contractual
requirements of his or her loan agreement,
                                       53
<PAGE>


(1) Summary of Significant Accounting Policies (continued)

 the Bank is subject to the market risk of the collateral securing
the loan. Likewise, the Bank is subject to the volatility of real
estate   prices   with  respect  to  real  estate   acquired   by
foreclosure. The Bank's securities available-for-sale are  traded
in  active  markets. The value of these securities is susceptible
to the fluctuations of the market.

Interest Rate Risk

      Financial instruments are subject to interest rate risk  to
the  extent that they report on a frequency, degree or basis that
varies from market pricing. The Bank is subject to interest  rate
risk to the degree that its interest-earning assets reprice on  a
different   frequency  or  schedule  than  its   interest-bearing
liabilities.  A  majority  of  the Bank's  loans  receivable  and
mortgage-backed securities reprice based on the Eleventh District
Cost  of  Funds Index (the "Index"). The repricing of  the  Index
tends to lag market interest rates. The Bank closely monitors the
pricing sensitivity of its financial instruments.

Concentrations of Credit Risk

      Concentrations  of credit risk would exist  for  groups  of
borrowers  when  they have similar economic characteristics  that
would  cause their ability to meet contractual obligations to  be
similarly  affected by changes in economic or  other  conditions.
The ability of the Bank's borrowers to repay their commitments is
contingent  on several factors, including the economic conditions
in  the  borrowers' geographic area and the individual  financial
condition  of  the borrowers. The Bank's lending  activities  are
primarily concentrated in Southern California. The Bank does  not
have significant exposure to any individual customer.

Securities Purchased under Agreements to Resell

     The Bank invests in securities purchased under agreements to
resell ("repurchase agreements"). The Bank obtains collateral for
these  agreements,  which  normally  consists  of  U.S.  treasury
securities  or mortgage-backed securities guaranteed by  agencies
of the U.S. government.  The collateral is held in the custody of
a  trustee, who is not a party to the transaction.  The  duration
of  these  agreements is typically 1 to 30 days. The  Bank  deals
only  with nationally recognized investment banking firms as  the
counterparties  to  these agreements.  The Bank's  investment  in
repurchase  agreements consisted solely of  securities  purchased
under agreements to resell identical securities.

Investments and Mortgage-Backed Securities

      The Bank's investment in securities principally consists of
U.S.   Treasury   and   agency  securities  and   mortgage-backed
securities.  The Bank creates mortgage-backed securities when  it
exchanges pools of its own loans for mortgage-backed securities.

The  Bank  classifies its investment in securities  as  "held-to-
maturity"  securities, "trading" securities  and  "available-for-
sale" securities as applicable.

      The  Bank  classifies all of its investments and  mortgage-
backed   securities   as  "available-for-sale"   based   upon   a
determination that such securities may be sold at a  future  date
or  that  there may be foreseeable circumstances under which  the
Bank would sell such securities.
                                       54
<PAGE>


(1)  Summary of Significant Accounting Policies (continued)

      Securities designated as available-for-sale are recorded at
fair  value.  Changes  in  the  fair  value  of  debt  securities
available-for-sale  are  included  in  stockholders'  equity   as
unrealized  gains (losses) on securities available-for-sale,  net
of  taxes.  Unrealized  losses on available-for-sale  securities,
reflecting  a decline in value judged to be other than temporary,
are  charged  to  earnings  in  the  Consolidated  Statements  of
Operations.  Unrealized  gains  or losses  on  available-for-sale
securities are computed on a specific identification basis.

     The Bank did not hold any trading securities at December 31,
1997 or 1996.


Loans Held-for-Investment

      The  Bank's loan portfolio is primarily comprised of single
family  residential loans (one to four units),  and  multi-family
loans  (five or more units). Loans are generally recorded at  the
contractual amounts owed by borrowers, less unearned interest and
allowances for loan losses.

Loans Held-for-Sale

     The Bank identifies loans that foreseeably may be sold prior
to maturity and classifies them as held-for-sale. These loans are
carried  at  the  lower of amortized cost or  fair  value  on  an
aggregate  basis  by  type of asset. For  loans,  fair  value  is
calculated on an aggregate basis as determined by current  market
investor yield requirements.

Impaired Loans

      The  Bank  evaluates  loans  for  impairment  whenever  the
collectibility of contractual principal and interest payments  is
questionable.   A  loan  is  impaired  when,  based  on   current
circumstances  and events, a creditor will be unable  to  collect
all  amounts  contractually due under a  loan  agreement.   Large
groups of smaller balance homogenous loans that  are collectively
evaluated  for  impairment are not subject to the application  of
SFAS No. 114.

     Cash payments received from impaired loans are recorded in
accordance with the contractual terms of the loan.  The principal
portion of the payment is used to reduce the principal balance of
the loan, whereas the interest portion is recognized as interest
income.

Allowances for Loan Losses

      The Bank maintains a general valuation allowance for loan
losses  for the inherent risk in the loan portfolio  which  has
yet to be specifically identified. The allowance is unallocated
to  any specific loan. The allowance is maintained at an amount
that  management  believes  adequate  to  cover  estimable  and
probable  loan losses based on a risk analysis of  the  current
portfolio.  Additionally, management performs periodic  reviews
of  the  loan portfolio to identify potential problems  and  to
establish  impairment allowances if losses are expected  to  be
incurred.  Additions to the allowances are charged to earnings.
The  regulatory agencies periodically review the allowances for
loan  losses and may require the Bank to adjust the  allowances
based  on  information available to them at the time  of  their
examination.
                                       55
<PAGE>


(1)  Summary of Significant Accounting Policies (continued)

      General allowances are provided for all loans, regardless
of  any specific allowances provided. The determination of  the
Bank's  general allowance for loan losses is based on estimates
that  are  affected  by  changes in the  regional  or  national
economy  and market conditions. The Bank's management believes,
based  on  economic  and market conditions,  that  the  general
allowance for loan losses is adequate as of December  31,  1997
and 1996.  Should there be an economic or market downturn or if
market  interest rates increase significantly, the  Bank  could
experience  a  material increase in the level of loan  defaults
and charge-offs.

Loan Origination Fees and Costs

      Loan origination fees and certain direct loan origination
costs are deferred and recognized over the lives of the related
loans  as  an  adjustment  of loan yields  using  the  interest
method.   When  a  loan is repaid or sold, any unamortized  net
deferred fee balance is credited to income.

 Gain or Loss on Sale of Loans

      The  Bank primarily sells its mortgage loans on a servicing
released basis and recognizes cash gains or losses immediately in
its  Statement  of  Operations.  The  Bank  has  previously  sold
mortgage  loans  and loan participations on a servicing  retained
basis with yield rates to the buyer based upon the current market
rates  which  may differ from the contractual rate of  the  loans
sold. Under Statement of Financial Accounting Standards No.  125,
servicing assets or liabilities and other retained interests  are
required  to be recorded as an allocation of the carrying  amount
of  the loans sold based on the estimated relative fair values of
the  loans  sold  and  any retained interests,  less  liabilities
incurred. Servicing assets are evaluated for impairment based  on
the  asset's  fair  value.  The Bank  estimates  fair  values  by
discounting  servicing  assets  cash  flows  using  discount  and
prepayment rates that it believes market participants would  use.
The Bank had no such activity in 1997.

     Servicing assets arising from the sale of loans are included
in  other  assets and were $4,744,000 and $5,131,000 at  December
31, 1997 and 1996, respectively.  No additional  servicing assets
were recorded in 1997, 1996 and 1995.

Real Estate

       The  Bank's  real estate acquired in settlement  of  loans
("REO")   consists  of  property  acquired  through   foreclosure
proceedings  or  by deed in lieu of foreclosure.  Generally,  all
loans greater than 60 days delinquent are placed into foreclosure
and,  if  necessary, a valuation  allowance is established.   The
Bank  acquires title to the property in most foreclosure  actions
that  are  not reinstated by the borrower.  Once real  estate  is
acquired in settlement of a loan, the property is recorded as REO
at  fair  market value, less estimated selling costs.  The  REO's
balance  is  adjusted for any subsequent declines in  fair  value
through a valuation allowance.

      The  recognition  of gain on the sale  of  real  estate  is
dependent  on a number of factors relating to the nature  of  the
property, terms of sale, and any future involvement of  the  Bank
or  its  subsidiaries  in the property sold.  If  a  real  estate
transaction  does not meet certain down payment,  cash  flow  and
loan amortization requirements, income is deferred and recognized
under an alternative method.
                                       56
<PAGE>


(1)  Summary of Significant Accounting Policies (continued)

 Depreciation and Amortization

      Depreciation of office properties and equipment is provided
by  use  of  the  straight-line method over the estimated  useful
lives   of   the   related  assets.  Amortization  of   leasehold
improvements is provided by use of the straight-line method  over
the  lesser  of the life of the improvement or the  term  of  the
lease.

 Income Taxes

      The  Company files a consolidated federal income tax return
and  a combined California franchise tax report with the Bank and
its  subsidiaries. The Bank accounts for income taxes  using  the
asset  and liability method.  In the asset and liability  method,
deferred  tax assets and liabilities are established  as  of  the
reporting   date   for   the  realizable   cumulative   temporary
differences between the financial reporting and tax return  bases
of  the Bank's assets and liabilities. The tax rates applied  are
the  statutory rates expected to be in effect when the  temporary
differences are realized or settled.


 Earnings Per Share

     Effective December 31, 1997 the Company adopted Statement of
Financial Accounting Standard No. 128, Earnings Per Share  ("SFAS
No.  128"). Under SFAS No. 128, the Company is required to report
both basic and diluted net earnings per share. Basic net earnings
per  share is determined by dividing net earnings by the  average
number  of shares of common stock outstanding, while diluted  net
earnings per share is determined by dividing net earnings by  the
average number of shares of common stock outstanding adjusted for
the dilutive effect of common stock equivalents. Net earnings per
share  for 1996 and 1995 have been restated to conform  with  the
provisions of the pronouncement.


(2)  Investment Securities

      The  amounts advanced under agreements to resell securities
(repurchase agreements) represent short-term investments.  During
the  agreement period the securities are maintained by the dealer
under  a  written custodial agreement that explicitly  recognizes
the  Bank's interest in the securities. The Bank had $115,000,000
and  $128,000,000 in agreements to resell securities at  December
31,  1997 and 1996, respectively which are classified as cash and
cash  equivalents  in  the accompanying Statements  of  Financial
Condition.  Securities  purchased  under  agreements  to   resell
averaged  $91,195,000 and $68,622,000 during 1997 and  1996,  and
the  maximum amounts outstanding at any month end during 1997 and
1996 were $154,000,000 and $141,000,000, respectively.
                                       57
<PAGE>


(2)  Investment Securities (continued)

      Investment securities, available-for-sale, are recorded  at
fair value and summarized below for the periods indicated:
<TABLE>
<CAPTION>

                                                        1997
                                --------------------------------------------------------
                                                Gross          Gross
                                Historical      Unrealized     Unrealized        Fair
                                Value           Gains          Losses            Value
                                ---------------------------------------------------------
                                                (Dollars In Thousands)
<S>                             <C>                <C>         <C>               <C>
United States Government
  and federal agency
    obligations                 $   48,442         $     1     $    (527)        $ 47,916
Collateralized
     Mortgage   Obligations          1,009               -          ( 15)             994
                                ----------         -------     ---------         --------
                                $   49,451         $     1     $    (542)        $ 48,910
                                ==========         =======     =========         ========
</TABLE>
<TABLE>
<CAPTION>

                                                        1996
                                ---------------------------------------------------------
                                                Gross          Gross               
                                Historical      Unrealized     Unrealized          Fair
                                Value           Gains          Losses              Value
                                ---------------------------------------------------------
                                                (Dollars In Thousands)
<S>                             <C>             <C>            <C>               <C>
United States Government         
and federal agency
    obligations                 $   50,290      $       94     $     (129)       $ 50,255
Collateralized
     Mortgage   Obligations          8,776               3           (125)          8,654
                                ----------      ----------     ----------        --------
                                $   59,066      $       97     $     (254)       $ 58,909
                                ==========      ==========     ==========        ========
</TABLE>

      Related maturity data for investment securities, available-
for-sale, is summarized below for the period indicated:
<TABLE>
<CAPTION>

                                                        1997
                                ---------------------------------------------------------
                                                Gross          Gross               
                                Historical      Unrealized     Unrealized          Fair
                                Value           Gains          Losses              Value
                                ---------------------------------------------------------
                                                (Dollars In Thousands)
<S>                             <C>             <C>            <C>                 <C>     
Maturing  within  1 year        $   21,109      $        -     $     (36)          $21,073
Maturing after 1 year
   but  within  5 years             28,342               1          (506)           27,837
                                ----------      ----------     ---------           -------
                                $   49,451      $        1      $   (542)          $48,910
                                ==========      ==========     =========           =======

</TABLE>
               There were no sales of investment securities during 1997,
1996 or 1995.

     Accrued interest on investments was $940,000 and $853,000 at
December 31, 1997 and 1996, respectively.
                                       58
<PAGE>


(3)  Mortgage-backed Securities

      Mortgage-backed  securities,  available-for-sale,  are  due
through  the  year 2035 and are summarized below for the  periods
indicated:
<TABLE>
<CAPTION>

                                                        1997
                                ----------------------------------------------------------
                                                Gross          Gross
                                Historical      Unrealized     Unrealized          Fair
                                Value           Gains          Losses              Value
                                -----------------------------------------------------------
                                                (Dollars In Thousands)
     <S>                        <C>             <C>            <C>                 <C>     
     FNMA                       $   20,934      $       71     $     (101)         $ 20,904
     FHLMC                         655,259              11           (116)          655,154
                                ----------      ----------     ----------          --------      
     Total                      $  676,193      $       82     $     (217)         $676,058
                                ==========      ==========     ==========          ========
</TABLE>


<TABLE>
<CAPTION>

                                                        1996
                                -----------------------------------------------------------
                                                Gross          Gross
                                Historical      Unrealized     Unrealized          Fair
                                Value           Gains          Losses              Value
                                -----------------------------------------------------------
                                                (Dollars In Thousands)

     <S>                         <C>            <C>            <C>                 <C>
     FNMA                        $   22,795     $      93      $      (57)         $ 22,831
     FHLMC                          730,321            90          (7,236)          723,175
                                 ----------     ---------      ----------          --------
     Total                       $  753,116     $     183      $   (7,293)         $746,006
                                 ==========     =========      ==========          ======== 
</TABLE>                                 

     There were no mortgage-backed securities created with loans
originated   by  the  Bank  in  1997   or  1996.   During   1995,
mortgage-backed securities created with loans originated  by  the
Bank  totaled $59,720,000.  There were no sales during 1997, 1996
or 1995.

      Accrued  interest  receivable  related  to  mortgage-backed
securities  outstanding at December 31,  1997  and  1996  totaled
$6,737,000 and $7,042,000, respectively.
                                       59
<PAGE>


(4)  Loans Receivable
     Loans receivable are summarized as follows:
<TABLE>
<CAPTION>

                                                                  1997                     1996
                                                                ----------               ---------
                                                                    (Dollars In Thousands)
<S>                                                             <C>                      <C>
Real estate loans:
  First trust deed residential loans:
   One unit                                                     $1,450,433               $1,279,267
   Two to four units                                               351,175                  342,230
   Five or more units                                            1,217,577                1,277,634
                                                                ----------                ---------      
   Residential loans                                             3,019,185                2,899,131
  Other real estate loans:
   Commercial  and  industrial                                     196,575                  210,953
   Second  trust deeds                                              15,441                   17,497
   Other                                                             6,303                    2,137
                                                                ----------                ---------      
    Real estate loans                                            3,237,504                3,129,718
Non-real estate loans:
    Manufactured housing                                             1,154                    1,480
    Deposit accounts                                                 1,644                    1,042
    Consumer                                                           185                      236
                                                                ----------                ---------      
      Loans receivable                                           3,240,487                3,132,476
Less:
    General loan valuation allowance                                61,237                   54,900
    Valuation allowances for impaired loans                          9,775                   12,350
    Unearned  loan fees                                             24,311                   16,757
                                                                ----------                ---------      
      Subtotal                                                   3,145,164                3,048,469
                                                                ----------                ---------      
Less:
   Loans held-for-sale                                              40,382                    6,195
                                                                ----------               ----------
       Loans  receivable, net                                   $3,104,782               $3,042,274
                                                                ==========               ==========
</TABLE>

     Loans serviced for others totaled $519,353,000, $572,275,000
and   $622,969,000  at  December  31,  1997,   1996   and   1995,
respectively.

      The  Bank  has  loss exposure on certain  loans  sold  with
recourse.  The dollar amount of loans sold with recourse  totaled
$218,149,000  and  $230,836,000 at December 31,  1997  and  1996,
respectively.   The maximum potential recourse liability  totaled
$39,926,000 and $42,398,000 at December 31, 1997 and December 31,
1996,  respectively.  The Bank's allowance for losses related  to
loans  sold  with  recourse, which is recorded  as  a  liability,
totaled $13,029,000 and $8,398,000 at December 31, 1997 and 1996,
respectively.

      The Bank had outstanding commitments to fund $49,986,000 in
real  estate  loans  at  December 31, 1997,  60%  of  which  were
adjustable  rate  mortgages  with  the  balance  in  fixed   rate
mortgages.   The Bank had outstanding commitments  to  sell  real
estate loans of $36,774,000 at December 31, 1997.
                                       60
<PAGE>

4)  Loans Receivable (continued)

      Accrued interest receivable related to loans outstanding at
December  31,  1997 and 1996 totaled $20,119,000 and $22,174,000,
respectively.

     Loans delinquent greater than 90 days or in foreclosure were
$34,117,000  and  $72,579,000  at December  31,  1997  and  1996,
respectively, and the related allowances for delinquent  interest
were $1,819,000 and $4,167,000, respectively.

      Loans  originated  upon  the sale of  real  estate  totaled
$31,649,000, $54,227,000, and $49,303,000 during 1997,  1996  and
1995, respectively.

      See  Note  9  for loans which were pledged as security  for
borrowings.


      The  following is a summary of the activity in general loan
valuation  allowances and impaired valuation allowances  for  the
periods indicated:
<TABLE>
<CAPTION>
                                                            
                                                            General      Impaired       
                                                            Valuation    Valuation
                                                            Allowance    Allowance       Total
                                                            -------------------------------------
                                                                        (Dollars In Thousands)

   <S>                                                      <C>           <C>            <C>
   Balance at December 31, 1994                             $ 55,353      $ 23,887       $ 79,240
   Provision  for loan losses                                  6,958        21,418         28,376
   Charge-offs                                               (24,473)      (19,204)       (43,677)
   Recoveries                                                  5,541             -          5,541
   Transfer of general valuation allowances for loans
    sold with recourse to liability account                     (503)            -           (503)
                                                            --------      --------       --------
   Balance at December 31, 1995                                42,876       26,101         68,977
   Provision  for loan losses                                  23,768       11,387         35,155
   Charge-offs                                                (16,114)     (25,138)       (41,252)
   Recoveries                                                   5,070            -          5,070
   Transfer of general valuation allowance for loans
    to real estate general valuation allowance                   (700)           -           (700)
                                                            ---------     --------       --------
   Balance at December 31, 1996                                54,900       12,350         67,250
   Provision for loan losses                                   13,155        7,345         20,500
   Charge-offs                                                 (9,419)     (10,064)       (19,483)
   Recoveries                                                   6,835          144          6,979
   Transfer of general valuation allowance for loans           
    to  recourse general valuation allowance                   (4,234)           -         (4,234)
                                                             --------     --------       --------
   Balance at December 31, 1997                              $ 61,237     $  9,775       $ 71,012
                                                             ========     ========       ========
</TABLE>
                                       61
<PAGE>






(4)  Loans Receivable (continued)

       Additionally  the  Bank  maintains  a  general   valuation
allowance  for  loans  sold  with recourse.   This  allowance  is
included  in  accrued  expenses  and  other  liabilities  in  the
Consolidated Statements of Financial Condition. The following  is
a  summary  of  the  activity in the allowance  for  the  periods
indicated (dollars in thousands):
<TABLE>
<CAPTION>
             <S>                                              <C>  
             Balance at December 31, 1994                     $  7,948
             Provision for losses                                2,123
             Transfer from general valuation allowance             503
             Charge-offs, net of recoveries                     (1,524)
                                                              --------
             Balance at December 31, 1995                        9,050
             Charge-offs, net of recoveries                       (652)
                                                              --------
             Balance at December 31, 1996                        8,398
             Transfer from general valuation allowance           4,234
             Charge-offs, net of recoveries                        397
                                                              --------
             Balance at December 31, 1997                     $ 13,029
                                                              ========
</TABLE>


      The  following  is  a  summary of impaired  loans,  net  of
valuation allowances for impairment, for the periods indicated:
<TABLE>
<CAPTION>

                                                   1997               1996
                                                ----------------------------
                                                   (Dollars In Thousands)

<S>                                             <C>                <C>     
Non-accrual loans                               $    8,260         $  20,052
Modified loans                                       4,186             5,996
Other impaired loans                                13,239            11,586
                                                ----------         ---------
                                                $   25,685         $  37,634
                                                ==========         =========
</TABLE>


      Pursuant to SFAS No. 114, the Bank considers a loan  to  be
impaired  when management believes that it is probable  that  the
Bank  will  be  unable  to  collect all  amounts  due  under  the
contractual  terms of the loan. Estimated impairment  losses  are
included  in  the Bank's impairment allowances.  At December  31,
1997, the total recorded amount of loans for which impairment had
been  recognized in accordance with SFAS No. 114 was  $25,685,000
(after deducting $9,775,000 of impairment allowances attributable
to such loans).  The Bank's impaired non-accrual loans consist of
single  family loans with an outstanding principal amount greater
than  or  equal  to  $500,000  and  multi-family  loans  with  an
outstanding principal amount greater than or equal to $750,000.

      Impaired loans for which there were no valuation allowances
established  are  included  in  the  above  summary  and  totaled
$2,540,000  and  $4,139,000 as of December  31,  1997  and  1996,
respectively.           
                                       62
<PAGE>

(4)  Loans Receivable (continued)

     The average recorded investment in impaired loans during the
years  ended  December 31, 1997, 1996 and 1995  was  $24,459,000,
$52,725,000 and $91,818,000 respectively.  The amount of interest
income  recognized  for  impaired loans during  the  years  ended
December 31, 1997, 1996 and 1995 was $1,913,000 ,$2,656,000,  and
$6,075,000   respectively,  under  the  cash  basis   method   of
accounting.   Interest income recognized under the accrual  basis
method of accounting for the years ended December 31, 1997,  1996
and   1995   totaled  $1,900,000,  $2,549,000   and   $5,746,000,
respectively.  There were no commitments to lend additional funds
to borrowers whose loan terms have been modified.

 (5) Real Estate

     Real estate consists of the following:

<TABLE>
<CAPTION>
                                                  1997               1996
                                                --------           --------
                                                (Dollars In Thousands)
     <S>                                        <C>                <C>
     Real estate acquired by
      (or deed in lieu of) foreclosure ("REO")  $ 10,718           $ 14,852
     Real estate general valuation                  
     allowance                                      (500)              (521)
                                                --------           --------
                                                  10,218             14,331
     Real estate held-for-investment                  39                114
                                                --------           --------
     Real estate, net                           $ 10,257           $ 14,445
                                                ========           ========
</TABLE>

      The Bank established a general valuation allowance for real
estate  owned  during 1996.  Listed below is  a  summary  of  the
activity in the general valuation allowance for real estate owned
for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>

     <S>                                                <C>
     Balance, December 31, 1995                         $        -
     Provision for losses on REO                               745
     Net transfers from loan general valuation allowance       700
     Charge-offs                                              (924)
     Balance, December 31, 1996                                521
     Provision for losses on REO                             1,639
       Charge-offs                                          (1,660)
     Balance at December 31, 1997                       $      500
</TABLE>

      The  Bank acquired $49,150,000, $74,886,000 and $64,053,000
of real estate in settlement of loans during 1997, 1996 and 1995,
respectively.
                                       63

(6) Office Properties, Equipment and Lease Commitments

      Office  properties and equipment, at cost, less accumulated
depreciation and amortization, are summarized as follows:
<TABLE>
<CAPTION>

                                                  1997              1996
                                                --------------------------
                                                  (Dollars In Thousands)

<S>                                             <C>               <C>
Land                                            $  3,061          $  3,061
Office buildings                                   4,519             4,508
Furniture, fixtures and equipment                 12,507            10,988
Leasehold improvements                             8,720             8,639
Other                                                 44                44
                                                --------          --------
                                                  28,851            27,240
Less accumulated depreciation and amortization    18,983            18,296
                                                --------          --------
                                                $  9,868          $  8,944
                                                ========          ========
</TABLE>

      The  Bank is obligated under noncancelable operating leases
for periods ranging from five to thirty years. The leases are for
certain  of the Bank's office facilities. Approximately  half  of
the  leases  for  office facilities contain  five  and  ten  year
renewal options. Minimum rental commitments at December 31,  1997
under  all  noncancelable  leases  are  as  follows  (dollars  in
thousands):
<TABLE>
<CAPTION>
                      <S>                            <C>
                      1998                           $  3,610
                      1999                              3,690
                      2000                              3,604
                      2001                              3,434
                      2002                              3,421
                      Thereafter                       20,178
                                                     --------
                                                     $ 37,937
                                                     ========
</TABLE>

     Rent payments under these leases were $4,325,000, $4,270,000
and  $4,250,000  for  1997, 1996 and 1995, respectively.  Certain
leases  require  the  Bank to pay property taxes  and  insurance.
Additionally,  certain leases have rent escalation clauses  based
on specified indices.

 (7) Federal Home Loan Bank Stock

     The Bank's investment in FHLB stock at December 31, 1997 and
1996  was  $68,592,000 and $62,400,000, respectively.   The  FHLB
provides a central credit facility for member institutions.  As a
member  of  the FHLB system, the Bank is required to own  capital
stock in the FHLBSF in an amount at least equal to the greater of
1%  of  the aggregate principal amount of its unpaid home  loans,
home  purchase contracts and similar obligations at  the  end  of
each calendar year, assuming for such purposes that at least  30%
of  its  assets were home mortgage loans, or 5% of  its  advances
(borrowings)  from the FHLBSF.  The Bank was in  compliance  with
this  requirement at December 31, 1997. The Bank's investment  in
FHLB  stock was pledged as collateral for advances from the  FHLB
at December 31, 1997 and 1996.  The fair value of the Bank's FHLB
stock approximates book value due to the Bank's ability to redeem
such stock with the FHLB at par value.
                                       64
<PAGE>



(8)  Deposits

     Deposit account balances are summarized as follows:
<TABLE>
<CAPTION>

                                                                1997                           1996
                                                        -----------------              ------------------               
                                                        Amount         %               Amount           %
                                                        -----------------              ------------------
                                                                        (Dollars In Thousands)
<S>                                                     <C>         <C>                <C>           <C>  
Variable rate non-term accounts:
  Money market deposit accounts (weighted
    average  rate of 3.36% and 2.82%)                   $  156,221    8%               $  130,173      7%
  Interest-bearing checking accounts
   (weighted average rate of 1.78% and
    1.01%)                                                 130,765    7                   165,616      8
  Passbook accounts (weighted average
    rate  of 2.04% and 2.04%)                               86,547    4                    94,718      5
   Non-interest  bearing checking accounts                 112,373    6                    40,404      2
                                                        ----------  ---                ----------    ---
                                                           485,906   25                   430,911     22
Fixed-rate term certificate accounts:                   ----------  ---                ----------    ---
  Under six-month term (weighted average
    rate  of 5.07% and 5.11%)                              120,637    6                    160,430     8
  Six-month term (weighted average rate of
    6.00%  and 5.69%)                                      103,901    5                    204,048    10
  Nine-month term (weighted average rate of
    5.64%  and 5.45%)                                      374,259   19                    246,777    13
  One year to 18 month term (weighted
    average  rate of 5.53% and 5.32%)                      348,941   18                    304,532    16
  Two year or 30 month term (weighted
     average  rate of 5.23% and 5.32%)                      30,689    2                     40,498     2
  Over 30-month term (weighted average rate
     of  5.85% and 6.27%)                                  125,971    7                    202,724    10
  Negotiable certificates of $100,000 and
   greater, 30 day to one year terms (weighted
    average  rate of 5.50% and 5.39%)                      353,343   18                    367,528    19
                                                        ----------  ---                -----------   ---
                                                         1,457,741   75                  1,526,537    78
                                                        ----------  ---                -----------   ---
   Total Deposits (weighted average rate of
      4.66  and 4.67%)                                  $1,943,647  100%               $ 1,957,448   100%
                                                        ==========  ===                ===========   ====
</TABLE>
                                       65
<PAGE>

(8)  Deposits (continued)

      Certificates of deposit, placed through five major national
brokerage   firms  totaled  $378,051,000   and  $389,436,000   at
December 31, 1997 and 1996, respectively.

      Cash  payments for interest on deposits (including interest
credited)  totaled  $92,152,000,  $104,269,000  and  $110,357,000
during  1997, 1996 and 1995, respectively.  Accrued  interest  on
deposits  at  December 31, 1997 and 1996 totaled  $7,550,000  and
$7,024,000, respectively, and is included in accrued expenses and
other liabilities in the accompanying Consolidated Statements  of
Financial Condition.

      The  following table indicates the maturities and  weighted
average  interest rates of the Bank's deposits  at  December  31,
1997:
<TABLE>
<CAPTION>
                                Non-Term                                              There-
                                Accounts      1998        1999      2000      2001    After      Total
                                --------------------------------------------------------------------------
                                                        (Dollars In Thousands)
<S>                             <C>         <C>          <C>       <C>       <C>      <C>       <C>
Deposits at
  December 31, 1996             $485,906    $1,345,178   $88,967   $10,123   $2,251   $11,222   $1,943,647
                                ========    ==========   =======   =======   ======   =======   ==========
Weighted average
  interest rates                    1.93%         5.42%     5.84%     5.53%    5.47%     5.79%        4.66%
                                    ====          ====      ====      ====     ====      ====         ==== 
</TABLE>

     Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
                                                  1997          1996          1995
                                                --------      --------      --------
                                                        (Dollars In Thousands)

      <S>                                       <C>           <C>           <C>       
      Passbook accounts                         $  1,750      $  1,933      $  2,289  
      Money market deposits and
       interest-bearing  checking  accounts        5,705         4,869         6,272
       Certificate  accounts                      85,223        94,793       100,590
                                                --------      --------      --------
                                                $ 92,678      $101,595      $109,151
                                                ========      ========      ========
</TABLE>
                                       66
<PAGE>

(9)  Federal Home Loan Bank Advances and Other Borrowings

      Federal  Home Loan Bank (FHLB) advances and other borrowings
consist of the following:
<TABLE>
<CONTENT>

                                                                    1997                1996
                                                                 ----------           ----------
                                                                     (Dollars In Thousands)
      <S>                                                        <C>                  <C>
      Advances from the FHLB of San Francisco with a
       weighted average interest rate of 5.80% and 5.71%,
       respectively, secured by FHLB stock and certain
       real estate loans with unpaid principal balances of
       approximately $2.2 billion at December 31, 1997,
       advances mature through 1998                              $1,310,000           $1,242,000
      Unsecured term funds with a weighted average interest
       rate of 5.85% and 5.49%, maturing within one year              4,000                2,000
      10 Year Senior Unsecured Notes with an interest
         rate of 11.75%, due  2004                                   50,000               50,000
                                                                 ----------           ----------
                                                                 $1,364,000           $1,294,000
                                                                 ==========           ==========
</TABLE>


     At December 31, 1997 and 1996, accrued interest payable on
FHLB  advances  and  other borrowings  totaled  $1,690,000  and
$2,653,000, respectively, which is included in accrued expenses
and   other   liabilities  in  the  accompanying   Consolidated
Statements of Financial Condition.

      The  Bank has a credit facility with the FHLB in the form
of  FHLB  advances and letters of credit which allow borrowings
up  to  40%  of  the Bank's assets, as computed for  regulatory
purposes, or approximately $1,664,000,000 at December 31,  1997
with terms up to 30 years.

      The Company's 10-year senior unsecured notes are governed
by  the  terms  of an indenture dated September 28,  1994  (the
"Indenture").   The Indenture contains financial and  operating
covenants  which, among other things, (i) limit the  incurrence
of debt by the Company, (ii) limit the payment of dividends and
the  making  of certain other distributions by the Company  and
its   subsidiaries,  including  the  Bank,  (iii)   limit   the
disposition of, and the existence of liens on, the stock of the
Company's  subsidiaries, (iv) limit the  existence  of  certain
liens  on other property or assets of the Company and (v) limit
the  ability  of the Company to enter into certain transactions
with affiliates.
                                       67
<PAGE>

(9)   Federal  Home  Loan Bank Advances  and  Other  Borrowings
(continued)

      The  following  is a summary of borrowing  maturities  at
December 31, 1997 (dollars in thousands):
<TABLE>
<CAPTION>

                    <S>              <C>   
                    1998             $1,314,000
                    2004                 50,000
                                     ----------
                                     $1,364,000
                                     ==========
</TABLE>
      Cash  payments  for  interest  on  borrowings  (including
reverse    repurchase    agreements)   totaled    $110,991,000,
$107,559,000  and  $102,611,000 during  1997,  1996  and  1995,
respectively.


      Interest  expense  on  borrowings  is  comprised  of  the
following for the years indicated:
<TABLE>
<CAPTION>

                                                              Year Ended December 31,
                                                --------------------------------------------------
                                                   1997                 1996                1995
                                                --------------------------------------------------
                                                                (Dollars In Thousands)
        <S>                                     <C>                  <C>                  <C>
        FHLB Advances                           $  70,004            $ 57,427             $ 61,591
        Reverse Repurchase Agreements              34,335              37,345               43,295
        10 Year Senior Unsecured Notes              5,875               5,875                5,875
        Other                                       1,334              (4,211)               4,165
                                                 --------             -------             --------
                                                $ 111,548            $ 96,436             $114,926
                                                =========            ========             ========
</TABLE>

      Other  interest expense in 1996 includes the reversal  of
accrued interest due to the IRS.  See Note 11.

(10) Securities Sold Under Agreements to Repurchase

      The Bank enters into sales of securities under agreements
to repurchase (reverse repurchase agreements) which require the
repurchase   of   the  same  securities.   Reverse   repurchase
agreements  are  treated  as financing  arrangements,  and  the
obligation  to  repurchase securities sold is  reflected  as  a
borrowing   in   the  Consolidated  Statements   of   Financial
Condition.   The  mortgage-backed  securities  underlying   the
agreements  were  delivered  to the  dealer  who  arranged  the
transactions or its trustee.

      At  December 31, 1997, $577,670,000 in reverse repurchase
agreements  were  collateralized by mortgage-backed  securities
with  principal balances totaling $603,544,000 and fair  values
totaling  $603,598,000.  At December 31, 1996, $646,482,000  in
reverse   repurchase   agreements   were   collateralized    by
mortgage-backed  securities  with principal  balances  totaling
$689,064,000 and fair values totaling $682,216,000.

      The  weighted average interest rates for borrowings under
reverse   repurchase   agreements   were   5.66%   and   5.42%,
respectively, as of December 31, 1997 and December 31, 1996.

      Securities  sold under agreements to repurchase  averaged
$607,479,000   and   $678,420,000   during   1997   and   1996,
respectively, and the maximum amounts outstanding at any month-
end  during  1997 and 1996 were $634,976,000 and  $715,465,000,
respectively.
                                       68
<PAGE>

(10) Securities Sold Under Agreements to Repurchase (continued)

      The following is a summary of maturities at December  31,
1997 (dollars in thousands):
<TABLE>
<CAPTION>
                    <S>                  <C>
                    Up to 30 days        $  118,651
                    30 to 90 days           294,113
                    Over 90 to 182 days     164,906
                                         ----------
                                         $  577,670
                                         ==========
</TABLE>

      Accrued  interest on securities sold under agreements  to
repurchase  which  is included in accrued  expenses  and  other
liabilities  in  the  accompanying Consolidated  Statements  of
Financial  Condition was $7,353,000 and $6,283,000 at  December
31, 1997 and 1996, respectively.

(11)  Income Taxes

      Income taxes (benefit) consist of the following:

<TABLE>
<CAPTION>

                                          1997          1996          1995
                                        -----------------------------------
                                              (Dollars In Thousands)
      <S>                               <C>           <C>          <C>     
      Current:
       Federal                          $  14,311     $  6,999     $     42
       State                                  231          591          555
                                        ---------     --------     --------
                                           14,542          597          597
                                        ---------     --------     --------
      Deferred:
       Federal                             (1,502)      (1,560)       3,898
       State                                4,421        1,458        1,074
                                        ---------     --------     -------- 
                                            2,919         (102)       4,972
                                        ---------     --------     --------
      Total:
       Federal                             12,809        5,439        3,940
       State                                4,652        2,049        1,629
                                        ---------     --------     --------
                                        $  17,461     $  7,488     $  5,569
                                        =========     ========     ========
</TABLE>


     A reconciliation of the statutory federal corporate income
tax rate to the Company's effective income tax rate follows:
<TABLE>
<CAPTION>

                                                        1997          1996          1995
                                                       ---------------------------------
  <S>                                                   <C>           <C>           <C>
  Statutory federal income tax rate                     35.0%         35.0%         35.0%
  Increase (reductions) in taxes resulting from:
   State franchise tax, net of federal income
   tax benefit                                           7.4           8.5           8.8
  Core deposit intangibles                               0.1           0.5           0.8
  Provision for additional taxes due to audits             -           3.3             -
   Other, net                                            0.5           0.3           1.4
                                                       -----         -----         -----
     Effective rate                                     43.0%         47.6%         46.0%
                                                       =====         =====         =====
</TABLE>
                                       69
<PAGE>



(11)  Income Taxes (continued)

      Cash  payments  for  income  taxes  totaled  $21,310,000,
$6,754,000   and   $154,000  during  1997,   1996   and   1995,
respectively.  In addition, the Company received  cash  refunds
totaling  $1,158,000,  $1,000,000 and $8,267,000  during  1997,
1996 and 1995, respectively.

      Current income taxes receivable at December 31, 1997  and
1996 were $507,000 and $1,113,000, respectively.

      Listed  below are the significant components of  the  net
deferred tax (asset) and liability:
<TABLE>
<CAPTION>

                                                                  1997          1996
                                                                --------      --------
                                                                (Dollars In Thousands)
<S>                                                             <C>           <C>
Components of the deferred tax asset:
  Bad debts                                                     $(29,952)     $(28,146)
  Pension expense.                                                (2,281)       (1,970)
  State taxes                                                     (1,276)          (99)
  IRS interest accrual                                              (633)       (3,965)
Tax effect of unrealized loss on
  securities available-for-sale                                     (284)       (3,077)
  Other                                                           (1,427)       (1,337)
                                                                --------      --------
    Total deferred tax asset                                     (35,853)      (38,594)
Valuation allowance                                                    -             -
                                                                --------      --------
Total deferred tax asset, net of valuation allowance             (35,853)      (38,594)
                                                                --------      --------
Components of the deferred tax liability:                        
Loan fees                                                         19,526        20,194
Loan sales                                                         2,083         2,351
FHLB stock dividends                                              12,386        10,654
Other                                                              3,712         1,905
                                                                --------      --------
  Total deferred tax liability                                    37,707        35,104
                                                                --------      --------
Net deferred tax liability (asset)                              $  1,854      $ (3,490)
                                                                ========      ========
   Net  state deferred tax liability (asset)                    $  2,256      $ (1,446)
   Net federal deferred tax asset                                  ( 402)       (2,044)
                                                                --------      --------
Net deferred tax liability (asset)                              $  1,854      $ (3,490)
                                                                ========      ========
</TABLE>

      The  Company provides for recognition and measurement  of
deductible temporary differences to the extent that it is  more
likely  than not that the deferred tax asset will be  realized.
The  Bank  did not have a valuation allowance for the  deferred
tax  asset at December 31, 1997 and 1996, as it is more  likely
than  not that the deferred tax asset will be realized  through
loss  carrybacks and the timing of future reversals of existing
temporary differences.
                                       70
<PAGE>


(11)  Income Taxes (continued)

       During   1997,  the  Internal  Revenue  Service  ("IRS")
completed its examination of the Company's consolidated federal
income tax returns for tax years up to and including 1992.  The
adjustments  proposed  by  the IRS were  primarily  related  to
temporary differences as to the recognition of certain  taxable
income  and expense items.  While the Company had provided  for
deferred  taxes for federal and state purposes, the  change  in
the  period of recognition of certain income and expense  items
resulted in interest due to the IRS and FTB.  As a result,  the
Company  paid  $7,392,000 in interest to the IRS  and  FTB  and
accrued  an  additional $210,000 in interest during  1997.   In
1996, the Company recorded a $5,135,000 net reversal of accrued
tax  interest.    A  charge of $3,524,000 was recorded  in  the
Consolidated Statements of Operations for 1995 as  interest  on
possible IRS adjustments.  The total amount of accrued interest
payable  for  amended returns, yet to be filed, recorded  as  a
liability   in   the  Consolidated  Statements   of   Financial
Condition, was $1,381,000 as of December 31, 1997.

     The Bank computes its bad debt deduction based upon actual
loan loss experience (the "experience method"). In August 1996,
the  Small  Business Job Protection Act (the "Act") was  signed
into law.  One provision of the Act repealed the reserve method
of  accounting for bad debts for savings institutions effective
for  taxable years beginning after 1995.  The Bank,  therefore,
is  required to use the specific charge-off method beginning in
1996.  The  Consolidated Statements of Financial  Condition  at
December  31,  1997  and 1996 did not include  a  liability  of
$5,356,000  and  $5,342,000,  respectively,  related   to   the
adjusted base year bad debt reserve.

(12) Stockholders' Equity and Earnings Per Share

       The  Company's stock charter authorizes 5,000,000 shares
of serial preferred stock. As of December 31, 1997 no preferred
shares had been issued.

      In  1997,  the  Company  adopted Statement  of  Financial
Accounting  Standards No. 128, "Earnings per Share" ("SFAS  No.
128"),  which  requires the disclosure of two new earnings  per
share   calculations,  "basic  earnings  per  share"  and,   if
applicable, "diluted earnings per share."  Earnings  per  share
for  comparative  years have been restated for  SFAS  No.  128.
Basic  earnings  per  share is based on  the  weighted  average
shares  of common stock while diluted earnings per share  gives
effect  to  all  dilutive  potential common  shares  that  were
outstanding during part or all of the year.
                                       71
<PAGE>


(12) Stockholders' Equity and Earnings Per Share (continued)

      A  reconciliation of basic earnings per share with  diluted
earnings per share follows:
<TABLE>
<CAPTION>


                                                             For the Year Ended December 31.
                                                          --------------------------------------
                                                                           1997
                                                          --------------------------------------
                                                          Net Earnings    Shares       Per-Share
<S>                                                       <C>             <C>          <C>
Basic EPS
 Income available to common stockholders                  $23,100,000     10,569,772   $2.19
                                                                                        ====
Effect of Dilutive Stock Options
  Outstanding stock options                                         -        169,594
  Exercised and forfeited                                           -          7,642
                                                          -----------     ----------
Diluted EPS
  Income applicable to common  stockholders
   and assumed conversion                                 $23,100,000     10,747,008   $2.15
                                                          ===========     ==========   =====

</TABLE>
<TABLE>
<CAPTION>
                                                             For the Year Ended December 31.
                                                          --------------------------------------
                                                                           1996
                                                          --------------------------------------
                                                          Net Earnings    Shares       Per-Share
<S>                                                       <C>             <C>          <C>
Basic EPS
 Income available to common stockholders                  $ 8,244,000     10,551,765   $0.78
                                                                                        ====
Effect of Dilutive Stock Options
  Outstanding stock options                                         -         77,219
  Exercised and forfeited                                           -          7,252
                                                          -----------     ----------
Diluted EPS
  Income applicable to common stockholders
  and assumed conversion                                  $ 8,244,000     10,636,236   $0.78
                                                          ===========     ==========   =====
</TABLE>
<TABLE>
<CAPTION>
                                                             For the Year Ended December 31
                                                          --------------------------------------
                                                                           1995
                                                          --------------------------------------
                                                          Net Earnings    Shares       Per-Share
<S>                                                       <C>             <C>          <C>
Basic EPS
 Income available to common stockholders                  $ 6,535,000     10,605,693   $0.62
                                                                                       =====
Effect of Dilutive Stock Options
 Outstanding stock options                                          -         46,979 
 Exercised and forfeited                                            -          4,191
                                                          -----------     ----------
Diluted EPS
  Income applicable to common stockholders
   and assumed conversion                                 $ 6,535,000     10,656,863   $0.61
                                                          ===========     ==========   =====
</TABLE>

Regulatory Capital

       The   Bank  is  subject  to  various  regulatory   capital
requirements  administered  by  the  federal  banking   agencies.
Failure to meet minimum capital requirements can initiate certain
mandatory  - and possibly additional discretionary -  actions  by
regulators  that,  if undertaken, could have  a  direct  material
effect   on  the  Bank's  financial  statements.   Under  capital
adequacy  guidelines  and  the regulatory  framework  for  prompt
corrective action, the Bank must meet specific capital guidelines
that   involve  quantitative  measures  of  the  Bank's   assets,
liabilities  and  certain off-balance sheet items  as  calculated
under   regulatory  accounting  practices.   The  Bank's  capital
amounts  and  classification  are  also  subject  to  qualitative
judgments  by  the regulators about components, risk  weightings,
and other factors.

      Quantitative measures established by regulation  to  ensure
capital adequacy require the Bank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier I capital
(as  defined  in  the  regulations) to risk weighted  assets  (as
defined).  Management believes, as of December 31, 1997, that the
Bank  meets  all  capital adequacy requirements to  which  it  is
subject.
                                       72
<PAGE>
12) Stockholders' Equity and Earnings Per Share (continued)

      As  of December 31, 1997, the most recent notification from
the  OTS  indicated that the Bank was well capitalized under  the
regulatory framework for prompt corrective action.  There are  no
conditions  or  events  since December 31, 1997  that  management
believes have changed the Bank's category.

The  following table summarizes the Bank's regulatory capital and
required capital for the years indicated (dollars in thousands):
<TABLE>
<CAPTION>

                                                                December 31, 1997
                                                -------------------------------------------------------
                                                                              Tier 1
                                                Tangible        Core        Risk-based       Risk-based
                                                Capital        Capital        Capital         Capital
                                                -------------------------------------------------------

<S>                                             <C>            <C>          <C>              <C>        
Actual Capital:
    Amount                                      $261,099       $261,099     $261,099         $291,106
    Ratio                                           6.28%          6.28%       11.02%           12.29%
FIRREA minimum required capital:
    Amount                                      $ 62,379       $124,757           -          $189,555
    Ratio                                           1.50%          3.00%          -              8.00%
FIDICIA well capitalized required capital:
    Amount                                             -       $207,929     $142,166         $236,943
    Ratio                                              -           5.00%        6.00%           10.00%
</TABLE>

<TABLE>
<CAPTION>
                                                                December 31, 1996
                                                -------------------------------------------------------
                                                                              Tier 1
                                                Tangible        Core        Risk-based       Risk-based
                                                Capital        Capital        Capital          Capital
                                                -------------------------------------------------------
<S>                                             <C>            <C>          <C>              <C>
Actual Capital:
    Amount                                      $239,273       $239,273     $273,323         $266,918
    Ratio                                           5.76%          5.76%       10.13%           11.40%
FIRREA minimum required capital:
    Amount                                      $ 62,324       $124,647            -         $189,336
    Ratio                                           1.50%          3.00%           -             8.00%
FIDICIA well capitalized required capital:
    Amount                                             -       $207,746     $142,849         $236,182
    Ratio                                              -           5.00%        6.00%           10.00%

</TABLE>

      The  payment  of dividends is subject to certain  federal
income  tax consequences. Specifically, the Bank is capable  of
paying  dividends to the Company in any year without  incurring
tax liability only if such dividends do not exceed both the tax
basis  current  year earnings and profits and  accumulated  tax
earnings and profits as of the beginning of the year.

      Thirty  days'  prior notice to the OTS of the  intent  to
declare  dividends  is  required for the  declaration  of  such
dividends  by  the  Bank.  The OTS generally allows  a  savings
institution   which   meets   its   fully   phased-in   capital
requirements to distribute without OTS approval dividends up to
100%  of  the  institution's net income during a calendar  year
plus  the  amount that would reduce the institution's  "surplus
capital  ratio"  (the excess over its fully  phased-in  capital
requirements) to one-half of its surplus capital ratio  at  the
beginning  of  the calendar year.  However,  the  OTS  has  the
authority to preclude the declaration of any dividends or adopt
more stringent amendments to its capital regulations.
                                       73
<PAGE>

12) Stockholders' Equity and Earnings  Per Share (continued)

      The  Company  may loan up to $6,000,000 to  the  Employee
Stock Ownership Plan ("ESOP")  under a line of credit loan.  At
December  31,  1997  and 1996, the loan  to  the  ESOP  totaled
$1,744,000  and  $2,132,000,  respectively.   Interest  on  the
outstanding  loan  balance is due each December  31.   Interest
varies  based on the Bank's monthly cost of funds. The  average
rates   paid  during  1997  and  1996  were  5.18%  and  5.16%,
respectively.

      The Company has a Shareholder Rights Plan ("Rights Plan")
which  is  designed to protect shareholders  from  attempts  to
acquire  control of the Company at an inadequate price.   Under
the  Rights  Plan,  the owner of each share  of  Company  stock
received a dividend of one right ("Right") to purchase one one-
hundredth  share  of a new series of preferred  stock  for  its
estimated  long term value of $54.80.  In the event of  certain
acquisitions  of 15% or more of the voting stock  or  a  tender
offer for 15% or more of the voting stock of the Company,  each
holder  of a Right who exercises such Right will receive shares
of  the  Company  with a market value equal to  two  times  the
exercise  price  of the Right.  Also, in the event  of  certain
business combination transactions following the acquisition  by
a  person  of  15%  or more of the Company stock,  each  Rights
holder  will  have the right to receive upon  exercise  of  the
Right common stock of the surviving company in such transaction
having  a market value of two times the exercise price  of  the
Right.  The Company  may redeem the Rights at any time prior to 
such acquisition  or tender  offer should the Board of Directors
deem redemption  to be in its stockholders' best interests.


(13)  Employee Benefit Plans

      Until August 31, 1996, the Bank maintained a pension plan
("Pension Plan") covering substantially all employees  who  are
employed  on  either  a  full time or a part  time  basis.  The
benefits were based on an employee's years of credited service,
average  annual salary and primary social security benefit,  as
defined in the Pension Plan.

       Effective  August  31,  1996,  the  Pension   Plan   was
discontinued  and  benefits accrued to participants  under  the
Pension  Plan  were distributed to participants  in  accordance
with their instructions during 1997.  The Pension Plan's assets
exceeded  its liabilities by $106,000, which reverted  back  to
the  Bank  and  are included in the Company's 1997 Consolidated
Statement of Operations.
                                       74
<PAGE>

(13)  Employee Benefit Plans (continued)

      Effective January 1, 1997, the Bank made available to its
employees  a  qualified defined contribution  plan  established
under  Section 401 (k) of the Internal Revenue Code, as amended
(the  "401(k)  Plan").   Participants  are  permitted  to  make
contributions on a pre-tax basis, a portion of which is matched
by the Bank.  The 401(k) Plan expense was $392,000 for 1997.

      The  Bank  has a Supplementary Executive Retirement  Plan
("SERP")  which covers any individual employed by the  Bank  as
its  Chief  Executive Officer or Chief Operating Officer.   The
pension  expense  for  the  SERP  was  $628,000,  $506,000  and
$408,000  in  1997, 1996 and 1995, respectively.  The  SERP  is
unfunded.

       The  discount  rate  and  rate  of  increase  in  future
compensation levels used in determining the actuarial value  of
benefit  obligations  were 7.0% and 5.0%, respectively,  as  of
December 31, 1997.   The discount rate and rate of increase  in
future compensation levels used in determining the pension cost
were 7.5% and 5.0%, respectively, as of December 31, 1996.  The
plan had no assets at December 31, 1997.

      The  following  table sets forth the  funded  status  and
amounts  recognized  in the Company's Statements  of  Financial
Condition for the SERP for the years indicated:
<TABLE>
<CAPTION>

                                                           1997          1996
                                                         ----------------------
                                                         (Dollars In Thousands)
<S>                                                      <C>            <C>      
Actuarial present value of benefits obligations:
   Accumulated benefits obligation                       $  3,694       $  3,318
                                                         ========       ========
    Vested benefit obligation                            $  2,910       $  2,858
                                                         ========       ========
Projected benefit obligation for service
  rendered to date                                          5,052          4,157
                                                         --------       --------
Shortage of plan assets over the projected
 benefit obligation                                        (5,052)        (4,157)
Unrecognized net loss (gain) from past ex-
 perience different from that assumed                         797             84
Prior service cost not yet recognized in
 net periodic SERP cost                                       461            558
Additional  minimum  liability                               (150)          (116)
Unrecognized net (asset) obligation at transition.            250            313
                                                         --------       --------
Accrued  SERP liability                                  $ (3,694)      $ (3,318)
                                                         ========       ========
Net SERP cost for the year ended December
 31, 1997 and 1996 included the following
 components:
  Service cost-benefits earned during the period.        $    152       $     87
  Interest cost on projected benefit obligation               316            259
Net amortization                                              160            160
                                                         --------       --------
Net period SERP cost                                     $    628       $    506
                                                         ========       ========
                                       
</TABLE>
                                       75
<PAGE>


(13)  Employee Benefit Plans (continued)

      The  Bank has a profit sharing plan (the "ESOP") for  all
salaried employees and officers who have completed one year  of
continuous service.   At December 31, 1997, the ESOP held 4.89%
of outstanding stock of the Company. Profit sharing expense for
the  years ended December 31, 1997, 1996 and 1995 was $501,000,
$500,000  and  $500,000,  respectively.  The  amount   of   the
contribution made by the Bank is determined each  year  by  the
Board   of  Directors,  but  is  not  to  exceed  15%  of   the
participants' aggregated compensation. The Bank does not  offer
post retirement benefits under this plan.

Stock Compensation Plans

      At  December  31, 1997, the Company had  two  stock-based
compensation programs, which are described below.  The  Company
applies   APB   Opinion  25  and  related  interpretations   in
accounting  for  its plans.  Accordingly, no compensation  cost
has been recognized for its stock compensation plans.

Stock Option Programs

      The  Company has an employee stock option program which  is
comprised  of  two  plans.  One of these plans,  the  1983  Stock
Option  and  Stock  Appreciation Rights Plan (the  "1983  Plan"),
expired in 1993 but some grants issued under that plan are  still
outstanding  and  exercisable.  The 1983 Plan  provided  for  the
issuance  of  up to 1,571,000 million shares of common  stock  to
employees  of  the Bank.  Under the 1994 Stock Option  and  Stock
Appreciation Rights Plan (the "1994 Plan"), the Company may grant
options  to employees of the Bank for up to 1,500,000  shares  of
common  stock,  subject to limitations set forth under  the  1994
Plan.   Under both the 1983 Plan and the 1994 Plan, the  exercise
price  of  each  option equals the market value of the  Company's
stock  on the date of the grant, and an option's maximum term  is
10  years.   Options  typically  begin  to  vest  on  the  second
anniversary date of the grant under both plans.

      The  Company  also  has  a stock option  plan  for  outside
directors,  the  1997 Nonemployee Directors Stock Incentive  Plan
(the  "Directors Stock Plan").  The Directors Stock Plan provides
for  the  issuance  of up to 200,000 shares of  common  stock  to
nonemployee directors of the Company.  The exercise price of each
option equals the market value of the Company's stock on the date
of  the grant, and an option's maximum term is 10 years plus  one
month.   Options typically vest on the one year anniversary  date
of the grant.

     The fair value of each option grant is estimated on the date
of  the  grant using the Black-Scholes option pricing model  with
the  following  weighted average assumptions used for  grants  in
1997,  1996  and 1995, respectively:  no dividend  yield  in  any
year;  expected  volatility of 35, 36 and 35 percent;  risk  free
interest rates of 6.5, 5.8 and 6.3 percent; and expected  average
lives  of  6, 10 and 10 years.  The weighted-average  grant  date
fair  value of options granted during the year are $10.29,  $8.50
and  $9.61 for 1997, 1996 and 1995, respectively. The Company has
elected to recognize forfeitures in the year they occur.

       Had  compensation  cost  for  the  Company's  stock-option
programs  been determined  based on the fair value at  the  grant
dates for awards under those plans consistent with the method  of
Statement   of   Financial   Standards   No.   123,   "Accounting
for  Stock  Based  Compensation,"  the
                                       76
<PAGE>


(13)  Employee Benefit Plans (continued)

Company's  net  income  and earnings per share  would  have  been
reduced to the pro forma amounts indicated below:






<TABLE>
<CAPTION>

                                                           1997          1996          1995
                                                     -----------------------------------------------
                                                     (Dollars in thousands except per share amounts)
        <S>                                                <C>           <C>           <C> 
        Net earnings:
               As reported                                 $23,100       $8,244        $6,535
               Pro forma                                   $22,910       $8,143        $6,491

        Earnings per share:
               Basic
               As reported                                   $2.19         $.78          $.62
               Pro forma                                     $2.16         $.77          $.61
                Diluted
               As reported                                   $2.15         $.78          $.61
               Pro forma                                     $2.12         $.76          $.61
</TABLE>


     Pro forma net earnings and earnings per share reflect only
options  granted in 1997, 1996 and 1995.  Therefore,  the  full
impact of calculating compensation cost for stock options under
SFAS No. 123 is not reflected in the pro forma net earnings per
share  amounts  presented above because  compensation  cost  is
reflected  over  the options' vesting period  and  compensation
cost  for  options  granted prior to January  1,  1995  is  not
considered.


        Information with respect to stock options follows:

<TABLE>
<CAPTION>

                                                         1997          1996          1995
                                                        -----------------------------------
                                                                  (In Shares)
      <S>                                               <C>           <C>           <C>      
      Options Outstanding
       (Average option prices)
      Beginning of year ($13.66, $14.04 and $13.74)     319,531       347,422       347,319
      Granted ($21.75, $14.28 and $15.63)               113,350        34,133        40,789
      Exercised ($15.44, $10.67 and $9.79)              (57,769)      (42,447)      (15,430)
      Canceled ($18.02 $16.17 and $14.99)               (21,155)      (16,230)      (25,256)
      Re-issued grants ($12.88)                               -        30,128             -
      Cancellation of grants re-issued ($20.16)               -       (33,475)            -
                                                        -------       -------       -------
      End of Year  ($15.70,  $13.66  and  $14.04)       353,957       319,531       347,422
                                                        =======       =======       =======
      Shares exercisable at December 31
          ($11.77,   $12.70  and  $12.18)               113,600       160,457       164,252
                                                        =======       =======       =======
</TABLE>
                                       77
<PAGE>



(13)  Employee Benefit Plans (continued)

Restricted Stock Plan

      The  Company also has a restricted stock plan.   Under  the
1991  Restricted  Stock Plan (the "Restricted Stock  Plan"),  the
Company may issue shares of restricted stock to employees of  the
Company  and its subsidiaries, including officers and  directors.
A  total of 500,000 shares have been reserved for issuance  under
the  Restricted  Stock  Plan. As of December  31,  1997,  438,725
shares are available for grant.  The shares consist of previously
issued  shares  reacquired by the Company. The  shares  typically
vest  in  increments  of 25% per year, beginning  on  the  fourth
anniversary of the grant date.  As shares vest, they are released
to  the  recipient,  at which time the recipient  will  recognize
ordinary  income equal to the fair market value of the restricted
stock  at the time the restrictions lapse. No shares were  issued
under  this program in 1997 and 1996 and 792 shares were  granted
under this program in 1995.  Compensation costs related to shares
granted  under  the Restricted Stock Plan have been  recorded  in
previous periods.

(14) Parent Company Financial Information

     The following condensed parent company financial information
should  be  read  in  conjunction with the  other  Notes  to  the
Consolidated Financial Statements.

<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF FINANCIAL CONDITION              December 31,
                                                      ----------------------
                                                        1997          1996
                                                      ----------------------
                                                      (Dollars In Thousands)
<S>                                                    <C>          <C>
Assets:
  Cash                                                 $ 10,600     $  6,570
  Other assets                                            1,567        1,834
  Investment in subsidiary                              262,572      237,786
                                                       --------     --------
                                                       $274,739     $246,190
                                                       ========     ========
Liabilities and Stockholders' Equity:
  Notes payable                                        $ 50,000     $ 50,000
  Other liabilities                                       1,952        1,640
  Stockholders' equity                                  222,787      194,550
                                                       --------     --------
                                                       $274,739     $246,190
                                                       ========     ========
</TABLE>


<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                                        --------------------------------
CONDENSED STATEMENTS OF OPERATIONS                      1997          1996          1995
                                                        --------------------------------
                                                             (Dollars In Thousands)

<S>                                                    <C>            <C>           <C>
Dividends  received from Bank                          $ 5,875        $5,875        $5,875
Equity in undistributed net
 earnings of subsidiary                                 20,987         6,029         4,374
Other expense, net                                      (3,762)       (3,660)       (3,714)
                                                       -------        ------        ------
Net earnings                                           $23,100        $8,244        $6,535
                                                       =======        ======        ======
</TABLE>
                                       78
<PAGE>






(14) Parent Company Financial Information (continued)

<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                                --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS
                                                                   1997          1996          1995
                                                                --------------------------------------
                                                                         (Dollars In Thousands)
<S>                                                             <C>           <C>           <C>              
Net Cash Flows from Operating Activities:
  Net earnings                                                  $   23,100    $   8,244     $    6,535
  Adjustments to reconcile net earnings to
   net cash provided (used) by operating
    activities:
  Equity in undistributed net earnings of subsidiary               (20,987)      (6,029)        (4,374)
  Other                                                                577        2,838         (1,521)
                                                                ----------    ---------     ----------
  Net cash provided (used) by operating activities                   2,690        5,053           (640)
                                                                ----------    ---------     ----------
Cash Flows from Investing Activities:
  Decrease in ESOP loan                                                388          368            342
    Purchase of treasury stock                                           -       (2,053)             -
                                                                ----------    ---------     ----------
  Net cash (used)  provided by investing
   activities                                                          388       (1,685)           342
                                                                ----------    ---------     ----------
Cash Flows from Financing Activities:
Benefit from stock option tax adjustment                                59            -              -
  Other                                                                893          465            102
                                                                ----------    ---------     ----------
Net cash provided by financing activities                              952          465            102
                                                                ----------    ---------     ----------
Net increase  in cash                                                4,030        3,833          1,084
Cash at beginning of period                                          6,570        2,737          1,653
                                                                ----------    ---------     ----------
Cash at end of period                                           $   10,600    $   6,570     $    2,737
                                                                ==========    =========     ==========
</TABLE>
                                       79
<PAGE>



(15) Quarterly Results of Operations: (unaudited)

      Summarized below are the Company's results of operations on
a quarterly basis for 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                                          Basic       Diluted
                                               Provision            Non-       Net        Earnings    Earnings
                         Interest   Interest   For  Loan   Other    Interest   Earnings   (Loss)      (Loss)
                         Income     Expense    Looses      Income   Expense    (Loss)     Per Share   Per Share
                         --------------------------------------------------------------------------------------
                                         (Dollars In Thousands, Except Per Share Data)

<S>                      <C>        <C>        <C>         <C>      <C>        <C>         <C>        <C>
First quarter            
1997                     $  73,685  $ 49,653   $ 6,000     $ 2,902  $ 11,911   $   5,168   $  0.49    $ 0.48
1996                        76,097    52,952     9,000       3,273    11,466       3,368      0.32      0.32
1995                        69,726    53,505     3,000       2,762    11,677       2,357      0.22      0.22
Second quarter
1997                     $  73,946  $ 50,917   $ 5,500     $ 2,890  $ 10,996   $   5,348   $  0.51    $ 0.50
1996                        73,753    50,278     9,000       2,823    11,287       3,400      0.32      0.32
1995                        76,342    57,739     8,203       3,251    11,205       1,346      0.13      0.13
Third quarter
1997                     $ 75,551   $ 51,862   $ 5,000     $ 2,564  $ 10,784   $   5,971   $  0.56    $ 0.55
1996                       73,540     50,280     8,700       2,143    25,561      (5,169)    (0.49)    (0.49)
1995                       78,548     57,183     6,173        (255)   11,342       1,984      0.19      0.19
Fourth quarter
1997                     $ 76,038   $ 51,794   $ 4,000     $ 1,862  $ 10,460   $   6,613   $  0.62    $ 0.61
1996                       73,788     44,521     8,455       2,676    10,861       6,645      0.63      0.62
1995                       77,119     55,650    11,000       2,967    11,679         848      0.08      0.08
Total year
1997                     $299,220   $204,226   $20,500     $10,218  $ 44,151   $  23,100   $  2.19    $ 2.15
1996                      297,178    198,031    35,155      10,915    59,175       8,244      0.78      0.78
1995                      301,735    224,077    28,376       8,725    45,903       6,535      0.62      0.61
</TABLE>

 (16)  Fair Value of Financial Instruments

       Statement  of  Financial  Accounting  Standards  No.  107,
"Disclosures  About  Fair Value of Financial Instruments"  ("SFAS
No.  107"), requires that the Company disclose the estimated fair
value  for its financial instruments as of December 31, 1997  and
1996.   The  following table presents fair value information  for
financial instruments for which a market exists. The fair  values
for  these financial instruments were estimated based upon prices
published  in  financial newspapers or quotations  received  from
national securities dealers.
                                       80
<PAGE>

(16) Fair Value of Financial Instruments (continued)

<TABLE>
<CAPTION>

                                                     1997                          1996
                                           -----------------------      -------------------------
                                           Historical                   Historical
                                             Value      Fair Value        Value        Fair Value
                                           -----------------------      -------------------------
                                                           (Dollars In Thousands)

<S>                                        <C>          <C>             <C>            <C>     
Mortgage-backed  Securities                $676,193     $676,058        $753,116       $746,006
US  Government  Securities                   48,442       47,916          50,290         50,255
Collateralized Mortgage Obligations           1,009          994           8,776          8,654
Loans Held-for-Sale                          40,382       40,800           6,195          6,238
</TABLE>

      The  following  table presents fair value  information  for
financial   instruments  shown  in  the  Company's   Consolidated
Statements  of Financial Condition for which there is no  readily
available market. The fair values for these financial instruments
were  calculated  by  discounting expected cash  flows.   Because
these  financial instruments have not been evaluated for possible
sale  and  because  management does  not  intend  to  sell  these
financial instruments, the Company does not know whether the fair
values  shown  below  represent values at  which  the  respective
financial instruments could be sold.
<TABLE>
<CAPTION>

                                                    1997                                   1996
                                        -----------------------------         ----------------------------
                                                           Calculated                           Calculated
                                        Carrying           Fair Value         Carrying             Fair
                                          Value              Amount            Value              Amount
                                        -----------------------------         ----------------------------
                                                                (Dollars In Thousands)
<S>                                     <C>                <C>                <C>               <C>  
Adjustable Loans:
  Single Family                         $1,763,587         $1,818,629         $1,603,723        $1,615,234
  Multi-Family                           1,204,696          1,231,614          1,165,069         1,175,415
  Commercial                               201,558            211,752            188,156           192,731
Fixed Rate Loans:
  Single Family                             28,557             28,924             13,214            13,723
  Multi-Family                               6,969              7,394             10,529            10,568
  Commercial                                 1,232              1,274              1,830             2,021
Other  Real Estate Loans                     5,771              5,506                696               971
Consumer Loans                               2,099              2,097                  -                 -
Non-Performing  Loans                       29,379             29,379             59,057            59,057
Fixed-Term  Certificate Account          1,457,741          1,458,317          1,526,537         1,529,246
Non-Term  Deposit Accounts                 485,906            485,906            430,911           430,911
Borrowings                               1,941,670          1,942,427          1,940,482         1,940,109
</TABLE>




     SFAS No. 107 specifies that fair values should be calculated
based  on the value of one unit. The estimates do not necessarily
reflect  the price the Company might receive if it were  to  sell
the  entire holding of a particular financial instrument  at  one
time.

      Fair value estimates are based on the following methods and
assumptions, some of which are subjective in nature.  Changes  in
assumptions could significantly affect the estimates.
                                       81
<PAGE>





(16)  Fair Value of Financial Instruments (continued)


 Cash and Cash Equivalents

     The carrying amounts reported in the Consolidated Statements
of Financial Condition for this item approximate fair value.

 Investment Securities and Mortgage-Backed Securities

      Fair  values are based on bid prices published in financial
newspapers  or  bid quotations received from national  securities
dealers.

 Loans Receivable

     The portfolio is segregated into those loans with adjustable
rates  of  interest and those with fixed rates of interest.  Fair
values  are based on discounting future cash flows by the current
rate offered for such loans with similar remaining maturities and
credit risk. The amounts so determined for each loan category are
reduced  by  the Bank's allowance for loans losses which  thereby
takes  into consideration changes in credit risk.  The  Bank  had
outstanding commitments to fund $49,986,000 in real estate  loans
which were substantially at fair value.

 Non-performing Assets

     The carrying amounts reported in the Consolidated Statements
of Financial Condition for this item approximate fair value.

 Deposits

      The  fair  value of deposits with no stated term,  such  as
regular  passbook  accounts, money market accounts  and  checking
accounts,  is  defined  by SFAS No. 107 as the  carrying  amounts
reported  in the Consolidated Statements of Financial  Condition.
The  fair  value  of  deposits with a stated  maturity,  such  as
certificates  of  deposit, is based on  discounting  future  cash
flows  by the current rate offered for such deposits with similar
remaining maturities.

 Borrowings

      For short term borrowings, fair value approximates carrying
value.  The fair value of long term borrowings is based on  their
interest rate characteristics. For variable rate borrowings, fair
value  is  based  on carrying values. For fixed rate  borrowings,
fair  value is based on discounting future contractual cash flows
by the current interest rate paid on such borrowings with similar
remaining maturities.
                                       82
<PAGE>



                      INDEPENDENT AUDITORS' REPORT



The Board of Directors
FirstFed Financial Corp.



       We   have   audited  the  accompanying   consolidated
statements  of  financial condition  of  FirstFed  Financial
Corp. and subsidiary ("Company") as of December 31, 1997 and
1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in
the   three-year  period  ended  December  31,  1997.  These
consolidated financial statements are the responsibility  of
the  Company's management. Our responsibility is to  express
an  opinion on these consolidated financial statements based
on our audits.

      We  conducted our audits in accordance with  generally
accepted  auditing standards.  Those standards require  that
we plan and perform the audit to obtain reasonable assurance
about  whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence  supporting  the amounts  and  disclosures  in  the
financial statements.  An audit also includes assessing  the
accounting principles used and significant estimates made by
management,  as  well  as evaluating the  overall  financial
statement presentation.  We believe that our audits  provide
a reasonable basis for our opinion.

      In  our opinion, the consolidated financial statements
referred  to above present fairly, in all material respects,
the  financial  position  of FirstFed  Financial  Corp.  and
subsidiary as of December 31, 1997 and 1996, and the results
of  their  operations and their cash flows for each  of  the
years  in the three-year period ended December 31, 1997,  in
conformity with generally accepted accounting principles.




                                KPMG Peat Marwick LLP


Los Angeles, California
January 28, 1998
                                       83
<PAGE>

ITEM  9--CHANGES  IN AND DISAGREEMENTS WITH  ACCOUNTANTS  ON
ACCOUNTING AND FINANCIAL DISCLOSURE

  None.

                            PART III

ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information regarding directors and executive officers
appearing  on  pages 3 through 7 of the Proxy Statement  for
the  Annual Meeting of Stockholders dated April 22, 1998  is
incorporated herein by reference.

ITEM 11--EXECUTIVE COMPENSATION

      Information regarding executive compensation appearing
on  pages 8 through 16 of the Proxy Statement for the Annual
Meeting of Stockholders dated April 22, 1998 is incorporated
herein by reference.

ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

      Information  regarding security ownership  of  certain
beneficial owners and management appearing on pages 2 and  3
of   the   Proxy  Statement  for  the  Annual   Meeting   of
Stockholders dated April 22, 1998 is incorporated herein  by
reference.

ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 (a) Certain Relationships:  None.

  (b)  Information  regarding certain  related  transactions
appearing  on page 12 of the Proxy Statement for the  Annual
Meeting of Stockholders dated April 22, 1998 is incorporated
herein by reference.

                            PART IV

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

 (a) 1.Consolidated Financial Statements

      The consolidated financial statements included in this
      Report are listed under Item 8.

      2.Consolidated Financial Statement Schedules

      Schedules  have  been  omitted because  they  are  not
      applicable or the required information is presented in  
      the consolidated financial statements or notes thereto.
                                       84 
                                      
<PAGE>

          FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
 EXHIBIT
 NUMBER
 -------------

    (1)Underwriting  Agreement  filed  as   Exhibit   1   to
     Amendment No. 2 to Form S-3 dated September 7, 1994 and
     incorporated by reference.
  (3.1)   Certificate of Incorporation and By-Laws filed  as
     Exhibit  (1)(a)  to  Form 8-A  dated  June  4,1987  and
     incorporated by reference.
  (4.1)   Shareholders' Rights Agreement filed as Exhibit  1
     to Form 8-A, dated November 2, 1988 and incorporated by
     reference.
  (4.2)   Indenture filed as Exhibit 4 to Amendment No. 3 to
     Form  S-3 dated September 20, 1994 and incorporated  by
     reference.
 (10.1)Deferred Compensation Plan filed as Exhibit  10.3  to
     Form 10-K  for the  fiscal year ended December 31, 1983
     and incorporated by reference.
 (10.2)Bonus Plan filed as Exhibit 10(iii)(A)(2) to Form  10
     dated November 2, 1993 and incorporated by reference.
 (10.3)Supplemental Executive Retirement Plan dated  January
     16,  1986  filed as Exhibit 10.5 to Form 10-K  for  the
     fiscal year ended December 31, 1992 and incorporated by
     reference.
(10.4)Change  of  Control Agreement effective September  26,
     1996 filed as Exhibit 10.4 to Form 10-Q for the Quarter
     ended September 30, 1996 and incorporated by reference.
(10.5)1997 Nonemployee Directors Stock Incentive Plan  filed
      as Exhibit  1  to  Form  S-8  dated  August  12,  1997
      and incorporated by reference.
   (21)Registrant's sole subsidiary is First Federal Bank of
       California, a federal savings bank.
   (24)Power of Attorney (included at page 86).


      This  1997  Annual Report on Form 10-K and  the  Proxy
Statement for the Annual Meeting of Stockholders dated April
22, 1998 have already been furnished to each stockholder  of
record who is entitled to receive copies thereof. Copies  of
these items will be furnished without charge upon request in
writing  by any stockholder of record on March 4,  1998  and
any  beneficial owner of Company stock on such date who  has
not  previously received such material and who so represents
in good faith and in writing to:

                            Corporate Secretary
                            FirstFed Financial Corp.
                            401 Wilshire Boulevard
                            Santa Monica, California 90401

     Other exhibits will be supplied to any such stockholder
at a charge equal to the Company's cost of copying, postage,
and handling.

(b) Reports on Form 8-K

      No  reports  on  Form 8-K were filed during  the  last
quarter of the period covered by this report.
                                       85
<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.

                                FIRSTFED FINANCIAL CORP.,
                                a Delaware corporation

                                By: /s/ Babette E. Heimbuch.
                                    ------------------------
                                     Babette E. Heimbuch
                                     President and
                                     Chief Executive Officer


Date:   February 27, 1998

                       POWER OF ATTORNEY

      Each  person  whose  signature  appears  below  hereby
authorizes Babette E. Heimbuch and Douglas Goddard, and each
of  them  or either of them, as attorney-in-fact to sign  on
his  or  her  behalf as an individual and in every  capacity
stated below, and to file all amendments to the Registrant's
Form  10-K, and the Registrant hereby confers like authority
to sign and file in its behalf.

     Pursuant to the requirements of the Securities Exchange
Act  of  1934,  this  report has been signed  below  by  the
following  persons on behalf of the Registrant  and  in  the
capacities indicated on the 27th day of February, 1998.

         SIGNATURE                                       TITLE

       /s/ Babette E. Heimbuch       Chief Executive Officer (Principal
       --------------------------
         Babette E. Heimbuch         Executive Officer)

       /s/  Douglas J. Goddard       Executive  Vice President and
       --------------------------
            Douglas J. Goddard       Chief  Financial  Officer
                                     (Principal Financial Officer)

       /s/ Brenda J. Battey          Senior Vice President and Controller
       --------------------------
           Brenda  J.  Battey        (Principal Accounting Officer)

       /s/ Christopher M. Harding    Director
       --------------------------
           Christopher M. Harding

       /s/ James L. Hesburgh         Director
       --------------------------
           James L. Hesburgh

       /s/ William S. Mortensen      Chairman of the Board
       --------------------------
           William S. Mortensen

       /s/  William G. Ouchi         Director
       --------------------------
            William G. Ouchi

       /s/ William P. Rutledge       Director
       --------------------------
           William P. Rutledge

       /s/ Charles F. Smith          Director
       --------------------------
           Charles F. Smith

       /s/ Steven L. Soboroff        Director
       --------------------------
           Steven L. Soboroff

       /s/ John R. Woodhull          Director
       --------------------------
           John R. Woodhull


                                       86