<PAGE>
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                            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, 1995
                                 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  15,  1996:
$139,389,004.

The number of shares of Registrant's $0.01 par value common stock
outstanding as of  February 15, 1996:  10,614,402.

                  DOCUMENTS INCORPORATED BY REFERENCE

Portions   of   the  Proxy  Statement  for  Annual   Meeting   of
Stockholders, April 24, 1996 (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. [X]
===================================================================
<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, 1995, the Company had assets totaling $4.1
billion  compared  to  $4.2 billion at  December  31,  1994.  The
Company recorded net earnings of $6.5 million for the year  ended
December 31, 1995. It recorded net  losses of  $24.5 million  and
$2.0 million, respectively, for the years ended December 31, 1994
and 1993.

      The Bank derives its revenues principally from interest  on
loans  and  investments, gain on sale of  loans  originated,  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 15, 1996, the Bank operated 25 retail savings
branches  and 5 loan origination offices, all located in Southern
California.  In  addition to the retail branches,  the  Bank  has
telemarketing programs which expand the geographical scope of its
deposit   activities.  Permission  to  operate  all  full-service
branches  must  be  granted by the Office of  Thrift  Supervision
("OTS").

      The Bank's principal market for loan originations continues
to be Southern California.

      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."  It conducts its loan  origination  business
under the name "FirstFed Mortgage Services."
See "Competition".

 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 has been especially affected by  the
economic  recession  which began in 1990. Many  economists  agree
that  California is now in the second year of its  recovery  from
the recession, although business activity has not yet improved to
pre-recession  levels.  Propelling the recovery  is  job  growth,
particularly   in   the  entertainment  and   personal   services
industries,  increased foreign trade, and  an  improved  business


<PAGE>

climate  in  the state of California. Retail trade  and  consumer
confidence have also shown recent signs of improvement.

      The real estate market is one sector of the economy yet  to
show  any  real signs of recovery, although the extent  by  which
real   estate  values  are  declining  has  decreased   recently.
According   to  the  "UCLA  Business  Forecast  for   California,
December,  1995 Report" ("UCLA Report"), home prices have  fallen
2.5%  since the beginning of 1994. This represents an improvement
from the 11% per annum depreciation rate which prevailed from the
second  quarter of 1992 through the first quarter  of  1994.  The
extent  by  which  the real estate market improves  in  the  near
future  depends  to  a large extent upon the levels  of  interest
rates,  as  well as the amount of problem real estate  loans  and
foreclosed  properties held by financial institutions.  According
to the UCLA Report, continued foreclosures may add to problems in
the  real  estate sector by increasing the supply  of  homes  for
sale,  causing downward pressure on home prices.  Any  additional
price depreciation will add to an already weak situation where  a
homeowners' equity in the property is close to zero or negative.

      Because  the  Bank typically lends less  than  90%  of  the
appraised value of the underlying collateral of loans originated,
borrowers  originally  have equity in their properties.  However,
when  the  value of the underlying collateral declines, borrowers
may   have   little  or  no  remaining  equity  and  consequently
foreclosure  by  the  Bank  becomes  more  likely.  Additionally,
multi-family  property  values have been  impacted  by  decreased
rental  income resulting from increased vacancies and  a  general
lowering  of  market rents. Upon foreclosure, or when foreclosure
becomes likely, the Bank's assets are recorded at fair value less
estimated cost to sell. Consistent with real estate trends in the
greater  Los  Angeles area, non-performing assets were  2.33%  of
total  assets at the end of 1995 compared to 2.23% at the end  of
1994 and 3.23% at the end of 1993.

      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  has added substantial amounts to its general allowance  for
anticipated  loan  losses  as  a  result  of  these  evaluations,
particularly  during  1993 and 1994 at the  height  of  the  real
estate  recession. The provision for loan losses was $28  million
in 1995 compared to $86 million in 1994 and $68 million in 1993.

      The  ratio  of general valuation allowances to  the  Bank's
assets  with loss exposure (the Bank's loan portfolio  plus  real
estate  owned) was 1.35% at the end of 1995 compared to 1.73%  at
the  end  of  1994 and 1.46% at the end of 1993. The decrease  in
general  valuation allowances is consistent with the decrease  in
charge-offs to $40 million in 1995 from $45 million in  1994  and
$49 million in 1993.

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

     Current Interest Rate Environment. The Federal Reserve Board
("FRB")  increased interest rates six times during 1994 and  once
during  1995, due to concerns about inflation while the  national
economy was expanding. However, the FRB decreased interest  rates
twice later during 1995 due to concerns that the national economy
was  slowing down. In a declining interest rate environment,  the
Bank's  interest rate spread increases due to a time lag inherent
in  the  adjustable loan portfolio. 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.
However,  interest  costs on the Bank's short term  deposits  and
borrowings respond immediately to a change in interest rates. See
"Asset-Liability Management" and 

                                  2
<PAGE>

"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. Federal legislation  has  been
proposed  to   merge  the Bank Insurance  Fund  ("BIF")  and  the
Savings  Association Insurance Fund ("SAIF"). Absent this action,
savings  institutions such as the Bank will  face  an  increasing
competitive  disadvantage  in attracting  deposits,  relative  to
commercial  banks,  as  a  result of the  disparity  between  the
insurance assessment rates of the BIF and the SAIF. See  "Summary
of Material Legislation and Regulations - Insurance of Accounts."

      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.

        Through    the    Bank's   mortgage   banking    program,
competitively-priced fixed-rate loans and certain adjustable rate
loans  which the Bank does not typically retain in its  portfolio
are offered. Management believes that this expanded array of loan
products  will allow the Bank to compete more effectively  during
periods in which the Bank's traditional adjustable mortgage loans
are less in demand. These products are sold in the secondary loan
markets.  Loans originated for the mortgage banking program  have
not  yet had a material impact on loan originations, loan  sales,
loan interest income or loan servicing income.

      In  mid-1995,  the  Bank formed FirstFed Mortgage  Services
("FFMS"),  a  division  through  which  it  engages  in  mortgage
origination  and  mortgage  brokering activities.  Through  FFMS,
loans which the Bank cannot originate either for its portfolio or
for sale in the secondary market can be marketed to a variety  of
other  lenders. If a loan brokered by FFMS is funded  by  another
lender,  FFMS  receives  fee income for  its  mortgage  brokerage
activities.  To  date, income from brokered loan originations  by
FFMS has been insignificant.

      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. Liability will  generally
be  imposed on the entity from which an agency can collect. It is
possible  for  the cost of cleanup of environmental  problems  to
exceed  the value of the security property. The Bank has  adopted
stringent    environmental   underwriting    requirements    when
considering  loans  secured by properties which  appear  to  have
environmentally  high  risk  characteristics  (e.g.   commercial,
industrial,  new construction of all types, and older  properties
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.

                                  3
<PAGE>

      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  and
continues  to  be  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."

      Origination  and  Sale  of Loans.  The  Bank  engages  loan
consultants  on  an  incentive  compensation  basis  to   procure
applicants  for loans. The Bank also derives business from  other
sources such as mortgage brokers and borrower referrals.

     Loan originations were $299 million in 1995, $909 million in
1994  and   $746 million in 1993. Loan originations  during  1994
included  $60  million  in loans purchased from  other  financial
institutions.  Loan  originations declined  during  1995  due  to
decreased  real  estate  activity  in  Southern  California   and
consumers' preference for fixed-rate loans.

     Management decided to de-emphasize the origination of multi-
family  loans  in 1994 due to real estate market  conditions  and
governmental   regulations   relating   to   risk-based   capital
requirements for such loans. As a result, multi-family loans were
19% of originations in 1995, 18% of loan originations in 1994 and
32%  of  loan originations in 1993. Multi-family loans originated
during  1994  and 1995 resulted  primarily from the sale  of  the
Bank's foreclosed properties.

      Loans  sold  under  the  Bank's  mortgage  banking  program
decreased to $37 million in 1995 compared $44 million in 1994 and
$77  million in 1993. For the year ended December 31,  1995,  $35
million in loans were originated for sale compared to $49 million
in   1994  and  $87  million  during  1993,  respectively.  Loans
originated  for  resale  totaled  12%,  5%  and  12%    of   loan
originations during 1995, 1994 and 1993, respectively.

     Loans held-for-sale at December 31, 1995, 1994 and 1993 were
$7   million,   $30   million  and  $24  million,   respectively,
constituting 0.24%, 0.99% and 0.87%, respectively, of the  Bank's
total  loans  at  such  dates.  In December  of  1995,  the  Bank
transferred  $19  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 packaging requirements. During  this  time
period  the Bank may be exposed to price adjustments as a  result
of fluctuations in market interest rates.
      
                                  4
<PAGE>      

      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"). $60 million,
$198  million  and  $112  million in loans  were  converted  into
mortgage-backed   securities  during   1995,   1994   and   1993,
respectively.  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 a Special Report issued by the Financial
Accounting Standards Board in November of 1995 to assist  in  the
implementation  and understanding of the Statement  of  Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in  Debt  and  Equity  Securities" ("SFAS  No.  115"),  the  Bank
reclassified  its entire portfolio of mortgage-backed  securities
to  the  available-for-sale  category from  the  held-to-maturity
category.  In  accordance with SFAS No.  115,  the  portfolio  of
mortgage-backed  securities was recorded  at  fair  value  as  of
December  31, 1995. A fair value adjustment of $4.9 million,  net
of taxes, was recorded in stockholders' equity at that date.

      The Bank serviced $623 million in loans for other investors
as  of  December 31, 1995. $248 million of these loans were  sold
under  recourse  arrangements. The Bank  has  an  additional  $23
million in loans that were formed into mortgage-backed securities
with  recourse  but were still owned by the Bank as  of  December
31,1995.  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 the new 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 $248 million at the end of 1995  from
$278  million at the end of 1994 and $318 million at the  end  of
1993 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 can change annually, the maximum annual
change in the payment is limited to 7.5%. Any additional interest
due  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 a maximum interest  rate
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  Bank
enters  into  a  separate  written  agreement  with  the  current
borrower  and  the  qualified borrower to whom  the  property  is
transferred.  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 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 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
rate  immediately.  The  difference in negative  amortization  on
these  two  products  is  minor.  88%  of  the  Bank's  AML  loan
origination volume in 1995 was comprised of these two products.

      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.
      
                                  5
<PAGE>

      The  Bank  requires that borrowers obtain private  mortgage
insurance  on  loans  in excess of 80% of the appraised  property
value. On certain portfolio loans 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,  1995  and  December  31, 1994 loans which  had  co-insurance
totaled  $258 million and $254 million, respectively.  Loans  for
which there is no private mortgage insurance totaled $133 million
at  December  31, 1995 compared to $129 million at  December  31,
1994 and $155 million at December 31, 1993.

      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, 1995,
negative  amortization on all loans serviced by the Bank  totaled
$7 million.

     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. Starting in 1994, the Bank started offering several of  its
loan products based on an amortization period of 40 years.  Loans
with  40-year  terms constituted 20% and 23% of loan originations
during 1995 and 1994, respectively.

       The   following  table  shows  the  contractual  remaining
maturities of the Bank's loans at December 31, 1995:

<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...........................   $3,022,920  $12,511  $ 7,605  $51,320  $122,061  $2,573,763  $255,660
 Fixed-rate loans:
  1st mortgages.................       35,532      191    3,001    7,213    12,259      12,868         -
  2nd mortgages.................          182        3       94       71        14           -         -
  Consumer and other loans......        1,146    1,146        -        -         -           -         -
                                   ----------  -------  -------  -------  --------  ----------  --------
 Total fixed-rate loans.........       36,860    1,340    3,095    7,284    12,273      12,868   255,660
                                   ----------  -------  -------  -------  --------  ----------  --------
                                   $3,059,780  $13,851  $10,700  $58,604  $134,334  $2,586,631  $255,660
                                   ==========  =======  =======  =======  ========  ==========  ========
</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.
      
                                  6
<PAGE>

      The  following is a summary of non-accrual loans as of  the
end  of  each  of  the  periods indicated  for  which  delinquent
interest allowances had been established:

<TABLE>
<CAPTION>
                                    % of            % of             % of            % of            % of
                             1995  Total     1994  Total     1993   Total     1992  Total     1991  Total
                           ------- -----   ------- -----   -------- -----   ------- -----   ------- -----
                                                          (Dollars In Thousands)
<S>                        <C>     <C>     <C>     <C>     <C>      <C>     <C>     <C>     <C>     <C>
Non-accrual Loans:
Single family..........    $25,991   26%   $13,041   14%   $ 25,317   24%   $24,634   35%   $21,441   37%
Multi-family...........     69,579   70     60,213   64      70,207   66     42,481   60     34,347   60
Commercial.............      3,313    4     20,986   22      10,307   10      3,623    5      1,536    3
Other..................        220    -        245    -         245    -        271    -        194    -
  Total Non-accrual        -------  ---    -------  ---    --------  ---    -------  ---    -------  ---
   Loans...............    $99,103  100%   $94,485  100%   $106,076  100%   $71,009  100%   $57,518  100%
                           =======  ===    =======  ===    ========  ===    =======  ===    =======  ===
</TABLE>

      The  allowance for delinquent interest, based on loans past
due  more than 90 days or in foreclosure, totaled $6 million,  $5
million,  $6  million, $4 million and $3 million at December  31,
1995, 1994, 1993, 1992 and 1991, respectively.

     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
monthly  interest payment required under the note.  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  instances,
the  modification period is extended.  As of December  31,  1995,
the  Bank  had modified loans totaling $19 million, net  of  loan
loss  allowances  totaling $5 million.  This  compares  with  $60
million,  net of loan loss allowances totaling $8 million  as  of
December  31,  1994.   No modified loans were  90  days  or  more
delinquent as of December 31, 1995 or 1994.

   The  Bank  adopted Statement of Financial Accounting Standards
No.  114,  "Accounting  by Creditors for Impairment  of  a  Loan"
("SFAS  No.  114"),  effective January  1,  1994.  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 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 material additions  to
the Bank's provision for loan losses.

      The  Bank  adopted  Financial Accounting Standards  Board's
Statement  of Financial Accounting Standards No. 118, "Accounting
by  Creditors for Impairment of a Loan -- Income Recognition  and
Disclosures" ("SFAS No. 118"), on January 1, 1995. SFAS  No.  118
amends  SFAS No. 114 to allow a creditor to use existing  methods
for   recognizing   interest  income   on   an   impaired   loan.
Additionally,   SFAS  No.  118  requires,  among  other   things,
additional  disclosure,  either in  the  body  of  the  financial
statements  or  in  the accompanying notes,  about  the  recorded
investment  in  certain impaired loans and about how  a  creditor
recognizes interest income related to those impaired loans.

      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 as  charge-offs
when  the  loan  is foreclosed or the borrower  is  permitted  to
satisfy  the debt with less than a full repayment of  the  amount
owed.

                                  7
<PAGE>

      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
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 $26 million  as
of  December  31, 1995 and $24 million as of December  31,  1994.
The  following is a summary of impaired loans, net  of  valuation
allowances for impairment, for the periods indicated:

<TABLE>
<CAPTION>
                          December 31, December 31,
                              1995         1994
                            --------     --------
                            (Dollars In Thousands)
<S>                         <C>          <C>
Non-accrual loans......     $ 34,503     $ 38,004
Modified loans.........       16,573       41,635
Other impaired loans...       35,333       28,637
                            --------     --------
                            $ 86,409     $108,276
                            ========     ========
</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 probable of 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.   The following summary details  loans  measured
using  the present value of expected future cash flows discounted
at  the  effective interest rate of the loan and  loans  measured
using the fair value method for the periods indicated:

<TABLE>
<CAPTION>
                          December 31, December 31,
                              1995         1994
                            --------     --------
                            (Dollars In Thousands)
<S>                         <C>          <C>
Present value method....    $ 15,995     $ 31,031
Fair value method.......      70,414       77,245
                            --------     --------
Total impaired loans....    $ 86,409     $108,276
                            ========     ========
</TABLE>     
     
     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.

      Impaired loans for which there were no valuation allowances
established totaled $9 million and $22 million as of December 31,
1995 and December 31, 1994, respectively.
      
                                  8
<PAGE>

      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, 1993.......       $      -
 Provision for loan losses.........         32,528
 Charge-offs, net of recoveries....         (8,641)
                                          --------
Balance at December 31, 1994.......         23,887
 Provision for loan losses.........         21,418
 Charge-offs, net of recoveries....        (19,204)                                  
                                          --------
Balance at December 31, 1995.......       $ 26,101
                                          ========
</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. On certain modified loans where the Bank does not believe
that   it  will  receive  all  amounts  due  under  the  original
contractual  loan  terms,  the  Bank  records  an  allowance  for
interest received.

     The average recorded investment in impaired loans during the
year  ended  December 31, 1995 was $92 million.   The  amount  of
interest  income  recognized for impaired loans during  the  year
ended  December  31, 1995 was $6 million under both  the  accrual
method of accounting and the cash basis method of accounting.

     Prior to SFAS No. 114, the Bank had a policy of establishing
valuation allowances for all loans deemed probable of foreclosure
based on the fair value of the collateral.  As a result, SFAS No.
114  did  not have a material impact on the Bank's allowance  for
loan losses.

      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,
                              1995         1994
                            -------      -------
                            (Dollars In Thousands)
<S>                         <C>          <C>
Single family..........     $ 1,677      $ 2,140
Multi-family...........      32,826       22,696
Commercial.............           -       13,168
                            -------      -------
                            $34,503      $38,004
                            =======      =======
</TABLE>      

      Debt restructurings completed prior to the adoption of SFAS
No.  114  were  accounted  for in accordance  with  Statement  of
Financial  Accounting  Standards No. 15 ("SFAS  No.  15").   Bank
policy  required that when the estimated cash receipts  projected
in accordance with the modified terms were less than the recorded
investment in the loan, the recorded investment would be  reduced
to  an amount equal to these future cash receipts.  The amount of
this  reduction was required to be recognized as a specific  loan
loss  allowance.  Bank policy also required that if  future  cash
receipts  specified  by  the  new  terms  exceeded  the  recorded
investment  in  the  loan,  interest  income  would   have   been
recognized  over  the  restructuring period  using  the  interest
method.   Debt  restructurings that are probable  of  foreclosure
required  loss  recognition  based  on  the  fair  value  of  the
collateral.

      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,  

                                  9
<PAGE>

management's assessment of credit risk inherent in the portfolio, 
historical loss experience and the Bank's underwriting practices.
      
      Based  on  the factors above, the Bank's general  valuation
allowance (including general valuation allowances for loans  sold
with  recourse)  was  1.52% of total assets  with  loss  exposure
(including loans sold with recourse) at December 31, 1995,  1.82%
at December 31, 1994 and 1.48% at December 31, 1993. 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.

      The following table details general valuation allowances by
loan  type  for  the periods indicated, including  the  liability
account  for  general valuation allowances  on  loans  sold  with
recourse:

<TABLE>
<CAPTION>
                                    % of            % of            % of            % of            % of
                             1995  Total     1994  Total     1993  Total     1992  Total     1991  Total
                           ------- -----   ------- -----   ------- -----   ------- -----   ------- -----          
                                                    (Dollars In Thousands)
<S>                        <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Real Estate Loans:
  Single Family.........   $ 8,887   17%   $ 6,938   11%   $ 6,607   14%   $ 3,935   14%   $ 4,084   29%
  Multi-Family..........    35,278   68     50,018   79     37,691   81     20,708   75      7,581   54
  Commercial............     7,529   15      6,170   10      2,551    5      3,154   11      2,194   16
  Non-Real Estate Loans.       232    -        175    -         51    -         57    -         78    1
                           -------  ---    -------  ---    -------  ---    -------  ---    -------  ---
  Total.................   $51,926  100%   $63,301  100%   $46,900  100%   $27,854  100%   $13,937  100%
                           =======  ===    =======  ===    =======  ===    =======  ===    =======  ===
</TABLE>

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

<TABLE>
<CAPTION>
                                   General Valuation Allowances and Loan Charge-Off Activity

                                                    Year Ended December 31,
                                      ----------------------------------------------------
                                        1995       1994       1993       1992       1991
                                      --------   --------   --------   --------   --------
                                                     (Dollars In Thousands)
<S>                                   <C>        <C>        <C>        <C>        <C>
Beginning General Valuation
  Allowances.......................   $ 55,353   $ 46,900   $ 27,854   $ 13,937   $ 11,181
Provisions for Loan Losses.........      6,958     53,172     67,679     41,384     11,833
  Charge-Offs, Net of Recoveries:
  Single Family....................     (6,040)   (16,127)    (8,605)    (4,863)    (1,690)
  Multi-Family.....................    (13,676)   (19,800)   (38,178)   (22,470)    (7,696)
  Commercial.......................        851       (664)    (1,574)         -        440
  Non-Real Estate..................        (67)      (180)      (276)      (134)      (131)
                                      --------   --------   --------   --------   --------
  Total Charge-Offs................    (18,932)   (36,771)   (48,633)   (27,467)    (9,077)
                                      --------   --------   --------   --------   --------
Transfer to Liability Account for
  Loans Sold with Recourse.........       (503)    (7,948)         -          -          -
                                      --------   --------   --------   --------   --------
Ending General Valuation
  Allowances.......................   $ 42,876   $ 55,353   $ 46,900   $ 27,854   $ 13,937
                                      ========   ========   ========   ========   ========
</TABLE>

                                 10
<PAGE>      

      The Bank also has a general valuation  allowance  for loans
sold  with  recourse.  This allowance was included in the general
valuation allowance balance in years prior to 1994.   The  amount
of   this   recourse general valuation  allowance  totaled   $6.2
million,  $5.3 million, and $1.3 million  at December  31,  1993,
1992 and 1991,  respectively.  The  activity   in   the   general
valuation allowance for loans sold with  recourse  for  1994  and
1995 is presented below (dollars in thousands):

<TABLE>
<CAPTION>

<S>                                                <C>
Balance at December 31, 1993...............        $     -
Transfer from general valuation allowance..          7,948
                                                   -------
Balance at December 31, 1994...............          7,948
Provisions for loan losses
  (recorded as loss on sale of loans)......          2,123
Charge-offs................................         (1,524)
Transfer from general valuation allowance..            503
                                                   -------
Balance at December 31, 1995...............        $ 9,050
                                                   =======
</TABLE>

       Total   loan  charge-offs, including charge-offs from  the 
general valuation allowance, impaired allowances and the  general 
valuation  allowances  for  loans  sold  with   recourse  totaled  
$40 million, $45 million, $49 million, $27 million and $9 million 
for 1995, 1994, 1993, 1992  and  1991, respectively, representing 
1.28%,   1.58%,  1.82%,  1.11%  and  0.40%  of  the  average loan 
portfolio at such dates.

      The  high level  of loan charge offs since 1989 is  due  to
recessionary  factors  such  as  increased  vacancies  on  multi-
family properties, decreased real  estate  values,  layoffs   and   
slower rates of real estate  sales.  These  recessionary  factors   
have negatively impacted the  ability of some borrowers  to  make  
loan  payments  on  a  timely  basis  or  sell  their  properties  
prior  to   foreclosure.  Any   increase  in  charge-offs   would  
adversely impact the Company's  future  loan loss provisions  and  
earnings.   Charge-offs  during  1995  and   1994  included  $2.4  
million  and  $13.8 million,  respectively,  in  losses  directly  
attributable to the January 17, 1994 earthquake.

       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.

       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  disposition.  The Bank inspects  the  
property,  using the Bank's appraisal  staff.   After  inspecting  
a  property,  the  Bank  determines  whether  the property may be  
disposed  of  in  its  present condition   or  whether   repairs,   
rehabilitation  or improvements are necessary.

                                 11
<PAGE>      

      The   following  table  provides information  regarding the
Bank's REO activity for the periods indicated:

<TABLE>
<CAPTION>
                                  Real  Estate  Acquired  in  Settlement of Loans Activity
         
                                                  Year Ended December 31,
                                             --------------------------------
                                               1995        1994        1993
                                             --------    --------    --------
                                                  (Dollars In Thousands)
<S>                                          <C>         <C>         <C>
Beginning Balance........................    $ 16,724    $ 26,878    $ 23,858
Additions................................      64,053      67,466      93,010
Sales....................................     (61,076)    (77,620)    (89,990)
                                             --------    --------    --------
Ending Balance...........................    $ 19,701    $ 16,724    $ 26,878
                                             ========    ========    ========
</TABLE>

       The  Bank's Asset Classification Committee meets at  least
monthly 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 weekly to  resolve  delinquent  
loan situations  and  to  initiate  actions enforcing the  Bank's  
rights   in   security   properties   pending   foreclosure   and 
liquidation.

        Other    Interest-Earning   Assets.  The Bank  owned   no
contractually  delinquent  interest-earning   assets  other  than  
loans as of December 31, 1995.

 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, 1995, the regulatory  liquidity
requirement was 5.00% and  the Bank's  liquidity  percentage  was
5.20%.

     It is the Bank's policy to maintain long term 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.

      In November 1995, the Financial Accounting  Standards Board
issued   a   Special   Report  as  an  aid  in  understanding and
implementing Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments and Debt  Securities"   ("SAS
115"). In accordance with the Report, the  Bank reclassified  its
entire   portfolio   of  liquidity-qualifying investments to  the
available-for-sale portfolio from the held-to-maturity portfolio.
Management believes  that  the  reclassification   will   provide
greater flexibility to the Bank in the future.
      
                                 12
<PAGE>

       The  following  table  summarizes  the   total  investment
portfolio (including liquid investments) by type at  the  end  of
the periods indicated:
                                                     
<TABLE>
<CAPTION>
                                                     December  31,
                                   -------------------------------------------------  
                                     1995      1994      1993       1992      1991                               
                                   -------   -------   --------   -------   --------               
                                                  (Dollars In Thousands)
<S>                                <C>       <C>       <C>        <C>       <C>
U.S. Treasury Securities.........  $   301   $ 4,205   $  5,111   $ 7,113   $  7,115
U.S. Agency Securities...........   46,561    36,565     42,600    11,034      6,054
Corporate Bonds..................       -         -          -         -       3,003
Repurchase Agreements............        -         -          -         -     95,000
Collateralized Mortgage                                                     
  Obligations....................   29,874    43,282     56,125    25,589          -
                                   -------   -------   --------   -------   --------
                                    76,736    84,052    103,836    43,736    111,172
Unrealized gain (loss) on
  securities available-for-sale..     (552)        -          -         -          -
                                   -------   -------   --------   -------   --------
                                   $76,184   $84,052   $103,836   $43,736   $111,172
                                   =======   =======   ========   =======   ========
Weighted average yield on
 interest-earnings invest-
  ments end of period............     5.15%     5.08%      5.16%     6.18%      4.90%
                                      ====      ====       ====      ====       ====
 </TABLE>

      The  following is a summary of the maturities of investment
securities at historical value as of December 31, 1995:

 <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..................   $     -      -%    $   301   5.86%    $   301   5.86%      1/8
U.S. Agency Securities........    16,537   5.18      30,024   5.64      46,561   5.48       1/5
Collateralized Mortgage
  Obligations.................    11,360   4.31      18,514   4.81      29,874   4.62       2/1
                                 -------            -------            -------
                                 $27,897   4.83%    $48,839   5.33%    $76,736   5.15%      1/10
                                 =======            =======            =======
</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)  its   telemarketing
department  (phone solicitations by 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

                                 13
<PAGE>

fluctuates from time to time, based on market  rates  of interest  
generally  offered  by the Bank and other depository institutions 
and associated costs, 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 its use of any one of the specific sources of funds
at a given time to be material.

      Deposits  acquired through the telemarketing department are
typically  placed by managers  of pension funds  and  represented
11%,  9% and 12% of total deposits at December 31, 1995, 1994 and
1993,  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  23%, 26% and 23% of total deposits  at December  31,
1995,   1994  and  1993,  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. The Bank accepted brokered
deposits  during the first nine months of 1994, as an adequately-
capitalized institution, pursuant to  a waiver obtained from  the
Federal  Deposit Insurance Corporation ("FDIC"). Well-capitalized
institutions are not required to obtain a  waiver from the  FDIC.
See "Management's Discussion and Analysis - Capital Resources and
Liquidity."

     Retail deposits were $1.5 billion at December 31, 1995, 1994
and  1993.  Retail deposits comprised  66%  of  total deposits at
December 31, 1995  and 65% of total deposits at December 31, 1994
and 1993.  The level  of deposits has decreased slightly over the
last three years due to the competitive market for retail savings
deposits  in Southern California.  The Bank operated  25   retail
branches at the end of 1995.
      
                                 14     
<PAGE>                                 

      The interest rates paid on deposits are a major determinant
of the average cost of lendable funds. 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,
                                             ---------------------------------------------------------
                                                    1995               1994                 1993
                                             -----------------   -----------------   -----------------
                                               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 2.52%,
   2.55% and 2.40%)......................    $  125,352    6%    $  161,147    7%    $  196,467    9%
  Interest-bearing checking accounts
   (weighted average rate of 1.20%,
    2.14% and 2.18%).....................       145,801    7        169,416    7        148,460    6
  Passbook accounts (2.04%, 2.29%
   and 2.29%)............................        96,948    4        114,075    5        118,455    5
  Non-interest bearing checking
   accounts..............................        54,876    2         36,773    2         44,868    2
                                             ----------  ---     ----------  ---     ----------  ---
                                                422,977   19        481,411   21        508,250   22
  Fixed term rate certificate accounts:      ----------  ---     ----------  ---     ----------  ---
  Under six month term (weighted
   average rate of 5.21%, 4.64%
    and 2.77%)...........................       126,599    6         89,763    4         69,132    3
  Six month term (weighted average
   rate of 5.42%, 4.99% and 3.13%).......       417,855   19        282,130   12        299,368   13
  Nine month term (weighted average of
   5.98%, 4.90% and 3.36%)...............       144,308    6        104,962    5        200,269    9
  One year to 18 month  term (weighted
   average rate of 5.57%, 4.76% and
    3.67%)...............................       235,164   11        512,846   22        474,853   20
  Two year or 30 month term (weighted
   average rate of 5.55%, 5.22% and
    4.67%)...............................       239,411   11        315,223   14        148,993    7
  Over 30 month term (weighted
   average rate of 6.31%, 6.20%
    and 5.80%)...........................       238,742   11        285,438   12        307,513   13
  Negotiable certificates of $100,000
   and greater, 30 day to one year terms
    (weighted average rate of 5.66%,
     4.79% and 3.43%)....................       379,980   17        227,141   10        297,102   13
                                             ----------  ---     ----------  ---     ----------  ---
                                              1,782,059   81      1,817,503   79      1,797,230   78
  Total deposits (weighted average           ----------  ---     ----------  ---     ----------  ---
   rate of 4.89%, 4.49% and 3.60%).......    $2,205,036  100%    $2,298,914  100%    $2,305,480  100%
                                             ==========  ===     ==========  ===     ==========  ===
</TABLE>

                                 15
<PAGE>

<TABLE>
<CAPTION>
                                                         During the Year Ended December 31,
                                           -------------------------------------------------------------
                                                   1995                1994                 1993
                                           -------------------  -------------------  -------------------
                                             Average   Average   Average    Average   Average   Average
                                             Balance    Rate     Balance     Rate     Balance     Rate
                                           ----------  -------  ----------  -------  ----------  -------
                                                               (Dollars In Thousands)
<S>                                        <C>          <C>     <C>          <C>     <C>         <C>
Passbook Accounts........................  $  103,737   2.20%   $  118,776   2.26%   $  105,780   2.25%
Money Market Deposit Accounts............     137,099   2.59       188,663   2.35       191,023   2.34
Interest-bearing Checking Accounts.......     195,920   1.39       204,882   1.66       178,640   1.73
Fixed term Certificate Accounts..........   1,808,422   5.56     1,760,744   4.37     1,590,424   4.25
                                           ----------   ----    ----------   ----    ----------   ----
                                           $2,245,178   4.86%   $2,273,065   3.85%   $2,065,867   3.76%
                                           ==========   ====    ==========   ====    ==========   ====
</TABLE>

     The following table shows the maturity distribution of jumbo
certificates of deposit ($100,000 and greater) as of December 31,
1995 (dollars in thousands):

<TABLE>
<CAPTION>
                   
     Maturing in:
                   <S>                            <C>
                   1  month or less............   $ 71,697
                   Over 1 month to 3 months....     93,908
                   Over 3 months to 6 months...     97,286
                   Over 6 months to 12 months..    117,089
                                                  --------
                   Total.......................   $379,980
                                                  ========
</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.  In granting advances, the FHLBSF also  considers  a
member's creditworthiness and other relevant factors.

     Total advances from the FHLBSF were $890 million at December
31,  1995 at a weighted average rate of 6.12%. This compares with
advances of $863 million at December 31, 1994 and $515 million at
December  31, 1993 at weighted average rates of 5.96% and  4.70%,
respectively. These advances were often the most available source
of  funds to the Bank during 1995 and 1994.  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, 1995.

     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  $725 million at December 31, 1995 at a weighted  average
rate of 5.68% and were secured by mortgage-backed securities with
principal  balances  totaling  $766  million.  Borrowings   under
reverse  repurchase agreements totaled $691 million  at  December
31,  1994  and  $549  million at December 31,  1993  at  weighted
average rates of 5.81% and 3.32%, 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 will impair the Bank's 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  $1.7  billion,  $1.6
billion  and  $1.1 billion at weighted average  rates  of  6.11%,
6.04%   and   3.99%  at  December  31,  1995,  1994   and   1993,
respectively.   Due  to  increased  competition  at  the   retail
branches,  the Bank increased its use of borrowings in  1995  and
1994 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 for Period
                                                    ------------------                ------------------
                                                                          During the
                                                    Outstanding   Rate      Period    Outstanding  Rate
                                                    -----------  -----    ----------  ------------ -----
                                                                     (Dollars In Thousands)
<S>                                                 <C>          <C>      <C>         <C>          <C>
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
1994
Short term variable rate credit advances..........      39,000   7.33       215,000      78,231    5.13
Short term FHLB Advances..........................     500,000   6.22       525,000     179,231    5.58
Securities sold under agreements to repurchase....     691,121   5.81       691,121     602,681    4.55
Other short term borrowings.......................         500   5.60        39,800      16,835    3.72
1993
Short term variable rate credit advances..........      30,000   3.94       245,000     116,538    3.56
Short term FHLB Advances..........................           -      -        40,000      18,462    3.44
Securities sold under agreements to repurchase....     548,649   3.32       650,033     594,314    3.06
Other short term borrowings.......................      29,800   3.95        76,650      48,473    3.38

</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, 1995 the Bank had invested an aggregate
of  $233  thousand (primarily equity) in Seaside,  Oceanside  and
SMCG.  Revenues  and  operating  results  of  these  subsidiaries
accounted  for less than 1% of consolidated operating results  in
1995, 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
four  years  and  there  are  no plans  for  future  real  estate
projects.   Therefore,  no  gains  or  losses  on   real   estate
development activities were recorded during 1995, 1994, or 1993.

      Seaside  continues to hold two condominium units which  are
rented  to the Bank for use by its employees.  In 1995, a  house,
previously  rented to the Bank, was sold. At December  31,  1995,
Seaside's  investment in the units totaled $120  thousand.  There
were no loans outstanding against the properties at December  31,
1995. Both units are located in California.

      Trustee  Activities. Seaside acts as trustee on the  Bank's
loans.  Trustee fees for this activity amounted to $462 thousand,
$403   thousand  and  $612  thousand  in  1995,  1994  and  1993,
respectively. The amount of trustee fees earned by Seaside varies
based on foreclosure activity by the Bank.

       Insurance  Brokerage  Activities.   Oceanside  engages  in
limited insurance brokerage activities.  Income to date from this
source has been insignificant.  Beginning in 1996, Oceanside will
act as a licensed life insurance agent solely for the purpose  of
receiving  commissions on the sale of fixed rate annuities  by  a
third  party vendor with sales facilities located in  the  Bank's
branch offices.

 Employees

      As  of December 31, 1995, the Bank had a total of 455  full
time equivalent employees, including 90 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  pension  plan,  and a profit  sharing  employee  stock
ownership plan. The Bank considers its employee relations  to  be
excellent.

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.

                                 18
<PAGE>

      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  $59
million in FHLBSF stock at December 31, 1995.

      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,  1995,  the  Bank's
advances from the FHLBSF amounted to $890 million, or 23% of  the
Bank's total funding sources (deposits and borrowings).

      As  a result of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA"), 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,  1995,
dividends  paid  by the FHLBSF to the Bank totaled  approximately
$2.9 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 QTL test.  See "Qualified Thrift Lender
Test."

     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.  FIRREA and  the  capital
regulations  of  the  OTS  promulgated thereunder  (the  "Capital
Regulations") established three capital requirements for  savings
institutions.   These 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   (including  supervisory   goodwill),   less
unrealized  gains  and  losses  on  certain  "available-for-sale"
securities,   plus  purchased  mortgage  servicing   rights   and

                                 19
<PAGE>

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, 1995.  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, general  loan
valuation  allowances  and  impairment  allowances,  subject   to
certain  limitations.  The general loan valuation  allowance  and
the  impaired  valuation allowance may generally be  included  in
supplementary  capital up to 1.25% of risk-weighted  assets.   At
December  31, 1995, $29.7 million of the Bank's $69.0 million  in
general  valuation  allowances  and  impairment  allowances  were
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 exceeded all three capital requirements at December
31, 1995, as indicated by the chart below:

<TABLE>
<CAPTION>
                                               December 31,
                                                   1995
                                             ----------------
                                              Amount      %
                                             --------   -----
                                         (Dollars In Thousands)
<S>                                          <C>        <C>
Tangible capital requirement...........      $ 61,933    1.50%
Bank's tangible capital................       232,329    5.63
                                             --------   -----
  Excess tangible capital..............      $170,396    4.13%
                                             ========   =====

Core capital requirement...............      $123,867    3.00%
Bank's core capital....................       232,329    5.63
                                             --------   -----
  Excess core (tangible) capital.......      $108,462    2.63%
                                             ========   =====

Risk-based capital requirement.........      $189,123    8.00%
Bank's risk-based capital..............       259,502   10.98
                                             --------   -----
  Excess risk-based capital............      $ 70,379    2.98%
                                             ========   =====
</TABLE>

      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, the Bank has not been active  in  such
loan  sales.  At December 31, 1995, the Bank had loans sold  with
recourse or subordination totaling $248 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 $13 million.

      In  August 1993, the OTS adopted a final rule incorporating
an  interest-rate  risk  component into  the  risk-based  capital
regulation.   Under the rule (implementation of  which  has  been
temporarily  suspended)  an  institution  with  a  greater   than
"normal"  level  of  interest rate risk  will  be  subject  to  a
deduction  of an interest rate risk component from total  capital
for  purposes  of calculating its risk-based capital requirement.

                                 20
<PAGE>

As  a  result, such an institution will be required  to  maintain
additional capital in order to comply with such requirement.   An
institution  with a greater than "normal" interest rate  risk  is
defined  as  an  institution that would  suffer  a  loss  of  net
portfolio value exceeding 2.0% of the estimated market  value  of
its  assets in the event of an immediate and sustained 200  basis
point  increase  or decrease (with certain minor  exceptions)  in
interest  rates.   The  interest  rate  risk  component  will  be
calculated,  on a quarterly basis, as one-half of the  difference
between  an institution's measured interest rate risk  and  2.0%,
multiplied  by  the market value of its assets.   The  rule  also
authorizes  the  OTS to waive or defer an institution's  interest
rate  risk  component on a case-by-case basis.   The  final  rule
became  effective  January 1, 1994, subject, however, to a  "lag"
time between the reporting date of the data used to calculate  an
institution's interest rate risk and the effective date  of  each
quarter's   interest  rate  risk  component.     The   regulatory
calculation  for  determining  the  Bank's  interest  rate  risk,
measured  as  of  June 30, 1995, as required by the  regulations,
resulted  in  an  interest  rate risk  measurement  of  0.39%  at
December  31, 1995, compared to the 2.0% regulatory threshold  at
which additional capital would be required.

      FIRREA  requires a savings institution which fails to  meet
its capital standards to 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  BIF  insures  the  deposits  of
commercial banks and other institutions which were insured by the
FDIC  prior  to  the enactment of FIRREA.  The 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 Federal Deposit Insurance Corporation Improvement Act of
1991  ("FDICIA")  required  the FDIC to  implement  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.  The FDIC adopted  a  final  risk-based
assessment system effective January 1, 1994.

       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:
Group  A,  financially  sound with only a few  minor  weaknesses;
Group B, demonstrated weaknesses that could result in significant
deterioration;  and Group C, poses a substantial  probability  of
loss  to  the SAIF.  The capital ratios used by the FDIC are  the
same  as  those  defined in the OTS's "prompt corrective  action"
regulation.  A schedule detailing the FDIC assessment  rates  for
SAIF-insured institutions as a percentage of deposits follows:

<TABLE>
<CAPTION>
                                         Group A  Group B  Group C
                                         -------  -------  -------
    <S>                                  <C>      <C>      <C>
    Well Capitalized..................    0.23%    0.26%    0.29%
    Adequately Capitalized............    0.26     0.29     0.30
    Undercapitalized..................    0.29     0.30     0.31

</TABLE>

                                 21   
<PAGE>                                 

      In addition to the above deposit insurance assessments, the
OTS  has  imposed  assessments and examination  fees  on  savings
institutions.   OTS  assessments for the Bank increased  to  $603
thousand in 1995, from $547 thousand in 1994 and $531 thousand in
1993.

      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.

      Federal legislation has been proposed which would merge the
BIF  and  SAIF  funds.  If this occurs, it is expected  that  the
premiums  paid by thrifts would decrease substantially  after  an
initial one-time assessment.  However, it is not known if or when
such legislation may be enacted.

      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 5% of the  average
daily  balance  of its net withdrawable accounts  and  short-term
borrowings  during the preceding calendar month.  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.  Federal regulations also  require
each  member  institution  to maintain a  monthly  average  daily
balance  of  short-term  liquid assets  (generally  those  having
maturities  of  12 months or less) equal to at least  1%  of  the
average daily balance of its net withdrawable accounts and short-
term  borrowings  during the preceding calendar month.   Monetary
penalties  may  be  imposed for failure to meet  these  liquidity
ratio   requirements.   The  Bank's  liquidity   and   short-term
liquidity  ratios for the calculation period ended  December  31,
1995  were  5.2%  and  3.6%,  respectively,  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 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  savings  and  loan holding company  acquisitions.   An
unsatisfactory  CRA rating may be the basis for denying  such  an
application  and  community  groups have  successfully  protested
applications  on  CRA grounds.  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  1994.    New   CRA
regulations  which  were enacted in late 1995  will  take  effect
starting  in 1996.  Under the new regulations, institutions  will
be  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.

      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.

                                 22
<PAGE>

      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
of  FDICIA.   At  December 31, 1995, 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, limited to 10%  of
assets;  loans on the security of liens upon nonresidential  real
property, limited to 400% of capital except when the Director  of
the OTS permits an association to exceed such limits; investments
in  personal  property, limited to 10% of assets; consumer  loans
and  certain  securities such as commercial paper  and  corporate
debt,  limited  to 35% of assets; and construction loans  without
security,  which  may not exceed the greater of an  association's
capital or 5% of its assets.

      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, 1995.

      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.  In 1995, the OTS  enacted
regulations containing "safety and soundness" standards  covering
various   aspects  of  the  operations  of  savings  institutions
pursuant  to  a  requirement of FDICIA  that  such  standards  be
adopted  by the federal banking agencies.  The guidelines include
standards relating 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.
A  savings  institution not meeting one or more of such standards
is  required 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>

      FDICIA  contains 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  with  insufficient
capital or inadequate operational and managerial standards.   The
Bank's   annual   management  report  on  the  effectiveness   of
compliance  with these measures and the  independent accountants'
attestation  as  to  the  effectiveness of  the  Bank's  internal
controls will be made available in March of 1996.

       Prompt   Corrective  Action.   FDICIA   contains   "prompt
corrective   action"  provisions  pursuant   to   which   insured
depository  institutions are to be classified into  one  of  five
categories  based primarily upon capital adequacy,  ranging  from
"well  capitalized"  to "critically undercapitalized"  and  which
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."    These
provisions expand the powers and duties of the OTS and  the  FDIC
and  expressly  authorize,  or in many cases  direct,  regulatory
intervention at an earlier state than was previously the case.

      Pursuant to FDICIA and implementing regulations adopted  by
the   FDIC,  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 1995 and was eligible
to accept brokered deposits without a waiver.

      Qualified  Thrift Lender Test.  In general,  the  Qualified
Thrift  Lender ("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, 1995, with 95.5% 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, 1995 was 3% of the  first
$47.7 million (increasing to $49.8 million as of January 1, 1996)
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%.

      The  Bank can elect annually one of two methods to  compute
its additions to the bad debt reserve on qualifying real property
loans:   (i) the percentage of taxable income method or (ii)  the
experience method.  Qualifying real property loans are  generally
loans secured by an interest in real property, and non-qualifying
loans  are all other loans.  The deduction with respect  to  non-
qualifying  loans  must be computed under the experience  method.
The Bank intends to compute its annual bad debt reserve deduction
for qualifying real property loans under the method which permits
the maximum allowable deduction.

     In  1995, 1994 and 1993, 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 generally may maintain
the  balance  of its tax reserve at the December 31, 1987  level,
even  if  the  result would be less using the experience  method;
however, if the amount of the Bank's loans outstanding at the end
of a particular year is less than the Bank's loans outstanding on
December  31, 1987, then for such year the Bank may maintain  the
balance  of its tax reserve at a level equal to the amount  which
bears  the same ratio to loans outstanding at the close  of  such
year as the balance of the reserve on December 31, 1987 bears  to
the  amount  of loans outstanding on December 31, 1987.   If  the
Bank  were  to fail the 60% qualifying asset test,  it  would  no
longer  be  permitted to calculate its bad debt deductions  under
the  reserve  method.  In that case, the Bank would  be  required
generally  to  change  to  the  specific  charge-off  method   of
accounting  for  bad debts and would be required to  include  the
amount of its reserve in income over a six-year period.

      Proposed legislation pertaining primarily to the merger  of
the  BIF and SAIF insurance funds also contains provisions  which
would eliminate the tax bad debt deduction for the year beginning
January  1,  1996.   However,  existing  tax  bad  debt  reserves
established prior to 1987 would be permitted to be carried  under
a  proposed "grandfathering" treatment.  Post-1987 reserves would
have  to  be eliminated over a period of several years (presently
proposed to be six years).  The Company cannot predict if  or  in
what form such legislation may be enacted or any potential effect
on its Consolidated Statements of Operations.

      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, 1995, the  Bank's
excess  bad  debt reserve was zero.  At December  31,  1995,  the

                                 25
<PAGE>

Bank's  earnings and profits (as computed for federal income  tax
purposes) were approximately $128 million.

     At December 31, 1995, the Bank had $36.2 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 $42.8 million at December 31, 1995.

      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 1995, 1994 or 1993.

      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 higher rate than that
applicable  to  non-financial corporations because of  exemptions
from  certain  state  and local taxes.  Under  present  law,  the
California   franchise   tax   rate   applicable   to   financial
corporations  may vary each year.  The tax rates for  1995,  1994
and 1993 were 11.300%, 11.469% and 11.107%, respectively.

      The Internal Revenue Service ("IRS") is currently examining
tax  years  1991 and 1992.   During 1994, the IRS  completed  its
examination  of  the  Company's consolidated federal  income  tax
returns  for tax years 1984 through 1986 and, in 1995,  completed
its examination of tax returns for 1987 and 1988.  In early 1996,
the  IRS  completed its examination of tax returns for  1989  and
1990.   The  IRS  has proposed adjustments primarily  related  to
temporary  differences as to the recognition of  certain  taxable
income  and expense items.  The Company has filed formal protests
with   the  IRS  to  take  exception  to  most  of  the  proposed
adjustments for all examinations.  In addition, the Franchise Tax
Board  ("FTB") is examining tax years 1989 and 1990.   While  the
Company  has  provided for deferred taxes for federal  and  state
purposes, a change in the period of recognition of certain income
and  expense  items could result in interest due to the  IRS  and
FTB.   Although  the outcome of the exams is not  known  at  this
time,  and  it  may  take several years to resolve  any  disputed
matters,  the Company has recorded charges of $3.5 million,  $3.2
million and $1.8 million in 1995, 1994 and 1993, respectively, as
interest on possible tax adjustments.  At December 31, 1995,  the
Company had $14.1 million of accrued interest payable recorded as
a   liability   on  the  Consolidated  Statements  of   Financial
Condition.   The  amount of interest accrued is  based  upon  the
proposed  adjustments and is management's best  estimate  of  the
liability as of this date.

                                 26
<PAGE>

ITEM 2--PROPERTIES

      At  December 31, 1995, 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, loan offices in Los Angeles County 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.


                                 27
<PAGE>

                             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."  Prior  to  the Company's acquisition of  all  the  Bank's
common  stock in September, 1987, the Bank's stock was traded  in
the  national  over-the-counter market under the  symbol  "FFSB."
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 15, 1996,  the  Company  had
10,614,402  shares of its common stock outstanding,  representing
approximately  1,189 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 dividends to the Company totaling $5.9
million,  $5.0 million and $3.0 million in 1995, 1994  and  1993,
respectively.

      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."

                                 28
<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
                  
                                                1995         1994         1993         1992         1991
                                               ------       ------       ------       ------       ------
                                                    (Dollars In Thousands, Except For Share Data)
<S>                                         <C>          <C>          <C>          <C>          <C>
For the Year Ended December 31:
   Interest income......................    $  301,735   $  235,424   $  229,445   $  255,612   $  296,530
   Interest expense.....................       224,077      157,655      131,616      151,510      195,756
   Net interest income..................        77,658       77,769       97,829      104,102      100,774
   Provision for loan losses............        28,376       85,700       67,679       41,384       11,833
   Other income.........................         8,725       11,264       12,054       12,634        7,059
  Non-interest expense..................        45,903       45,496       45,298       46,125       40,482    
  Earnings (loss) before income
   taxes (benefit) and cumulative
   effect of change in accounting
       principle........................        12,104      (42,163)      (3,094)      29,227       55,518
     Income taxes (benefit).............         5,569      (17,699)      (1,046)      11,198       27,091
  Earnings (loss) before
   cumulative effect of change
      in accounting principle...........         6,535      (24,464)      (2,048)      18,029       28,427
     Net earnings (loss)................         6,535      (24,464)      (2,048)      22,104       28,427
  Earnings (loss) per share
   before cumulative effect of
   change in accounting princi-
       ple..............................          0.61        (2.32)       (0.20)        1.66         2.61
    Earnings (loss) per share  1........          0.61        (2.32)       (0.20)        2.04         2.61
End of Year:
   Loans receivable.....................     3,059,780    3,072,309    2,715,663    2,496,700    2,368,796
   Mortgage-backed securities...........       835,448      821,317      708,283      769,155      644,264
   Investment securities................        76,184       84,052      103,836       43,736      111,172
    Total assets........................     4,139,737    4,157,414    3,661,117    3,446,573    3,287,059
     Deposits...........................     2,205,036    2,298,914    2,305,480    1,982,745    1,740,103
     Borrowings.........................     1,666,943    1,604,821    1,093,149    1,196,241    1,280,372
    Liabilities.........................     3,943,446    3,972,727    3,452,825    3,239,062    3,096,883
   Stockholders' equity.................       196,291      184,687      208,292      207,511      190,176
   Book value per share 1...............         18.49        17.42        19.78        19.98        18.28
Selected Ratios:
     Return on average assets...........          0.16%       (0.64)%      (0.06)%       0.65%        0.90%
     Return on average equity...........          3.47%      (12.78)%      (1.01)%      11.09%       16.09%
  Ratio of non-performing
     assets to total assets.............          2.33%        2.23%        3.23%        2.62%        1.83%
Other Data:
  Number of Bank full service
     branches...........................            25           25           25           24           18
</TABLE>
----------
1  Adjusted for the five-for-four stock split declared September 26, 1991.

      Also  see  summarized results of operations on a  quarterly
basis  for  1995,  1994  and 1993 in note  15  of  the  Notes  to
Consolidated Financial Statements.

                                 29
<PAGE>

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


OVERVIEW

      The  Company's  results of operations are 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  $6.5 million or  $0.61  per  share  were
recorded  in  1995. Net losses of $24.5 million and $2.0  million
were  reported  in 1994 and 1993, respectively. On  a  per  share
basis,  the  losses during 1994 and 1993 were  $2.32  and  $0.20,
respectively.  The Company's results over the  last  three  years
have  been  impacted  by  the  prolonged  economic  recession  in
Southern  California. Loan charge-offs were $39.7 million,  $45.4
million,   and  $48.6  million  during  1995,  1994   and   1993,
respectively.   The  Company also transferred $21.4  million  and
$32.5  million to valuation allowances for impaired loans  during
1995  and  1994,  respectively.   Loan  charge-offs  during  1994
include  $13.8  million in losses directly  attributable  to  the
January  17, 1994 earthquake in Southern California.  Charge-offs
related to the 1994 earthquake during 1995 were $2.4 million.

      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>
1995.................................       16%       3.47%      4.49%
1994.................................     (.64)     (12.78)      4.97
1993.................................     (.06)      (1.01)      5.61
1992.................................      .65       11.09       5.86
1991.................................      .90       16.09       5.63

</TABLE>
      
      Core  earnings  reflect the Company's  results  from  basic
operations and were $45.6 million in 1995, $46.5 million in  1994
and  $62.2  million  in 1993. 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 decreased in 1995 compared to 1994
primarily  as a result of decreased loan servicing  fees  due  to
payoffs of loans serviced for others. Core earnings decreased  in
1994  compared to 1993 primarily due to a decline in net interest
income.

      Non-performing assets (primarily loans 90 days past due  or
in foreclosure plus foreclosed real estate) were $96.6 million or
2.33%  of total assets at December 31, 1995. This figure compares
to  $92.6  million or 2.23% of total assets at December 31,  1994
and $118.2 million or 3.23% of total assets at December 31, 1993.
The  increase  in  non-performing  assets  during  1995  was  due
primarily  to  growth  in  foreclosed real  estate  and  a  small
increase  in  non-performing  loans.  The  decrease  during  1994
compared to 1993 was due to a bulk sale of $29.6 million in  non-
performing  loans  and  $2.3 million in foreclosed  real  estate.
Increased   delinquencies   and   foreclosures   resulting   from
unemployment  and  decreased  real  estate  values  in   Southern
California have impacted the level of non-performing assets  over
the last four years.

     The Company issued $50 million in 10-year Notes during 1994.
The  net  proceeds were contributed to the Bank  as  capital.  At
December 31, 1995, the Bank's regulatory risk-based capital ratio
increased  to  10.98%  and the tangible and core  capital  ratios
increased to 5.63%. The Bank met the regulatory capital standards
to be deemed "well-capitalized" at December 31, 1995.

                                 30
<PAGE>

      The Bank's deposits are insured by the SAIF up to a maximum
of  $100,000  for each insured depositor. The FDIC administers  a
separate  fund, BIF, applicable to commercial banks  and  certain
other  non-SAIF  insured institutions. Legislation  is  currently
under   consideration  by  Congress  which  includes  a  one-time
assessment  for SAIF members such as the Bank. Should legislation
be  enacted  in its currently contemplated form, the Bank's  one-
time  assessment would be approximately $11 million, net of  tax,
based  on  the Bank's insured deposits at March 31, 1995  and  an
assumed  assessment  rate of 85 basis points. Additionally,  once
the  SAIF has been recapitalized through the one-time assessment,
the Bank's deposit insurance premium assessments would be reduced
from  the  current rate. The currently proposed  legislation  has
evolved  significantly over recent months  and  may  continue  to
change  until  final legislation is enacted, if  ever.  Moreover,
there can be no assurance that a premium reduction will occur.

     Assuming the proposed one-time special assessment became law
in 1996 and was immediately charged against the Company's results
of  operations,  the one-time assessment would  have  a  material
adverse effect on the Bank's 1996 results of operations. However,
the  Bank  has  sufficient regulatory capital to continue  to  be
classified as "well-capitalized" by its regulators following such
an  assessment.   In  addition,  the  Bank  would  not  face  any
liquidity issues as a result of such an assessment.

      Proposed  legislation is currently under  consideration  by
Congress which would significantly change the federal income  tax
law affecting the bad debt reserves of savings institutions. This
proposed  legislation  would eliminate  the  reserve  method  for
computing bad debt deductions beginning
in  1996  and  might require the recapture of bad  debt  reserves
established  after  1987  under varying factual  situations.  The
proposed  legislation is currently under review  and  may  change
significantly before final legislation is enacted, if ever.

  Risks and Uncertainties

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

      There  are three main components of economic risk: interest
rate risk, credit risk and market risk. The Company is subject to
interest  rate risk when its interest-earning assets  reprice  in
different  time  frames,  or  on  a  different  basis  than   its
interest-bearing liabilities. (See "Asset-Liability Management.")
Credit  risk  is  the  risk  of default  on  the  Company's  loan
portfolio  that  results from the borrowers'  inability  to  make
contractually required payments. (See "Loan Loss Provisions"  and
"Non-performing  Assets.") Market risk reflects  changes  in  the
value  of  the  collateral underlying loans  receivable  and  the
valuation of real estate held by the Company.

      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, 1995 was adequate based on information
available  at  that time. A continuation of the current  economic
climate   could increase the likelihood of losses due  to  credit
and market risks. This could create the need for  additional loan
loss provisions.

      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.

                                 31
<PAGE>

 Other Risks

      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. The outcome of the lawsuits cannot be predicted but
the Bank intends to vigorously defend the actions.

      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.
                                
                                
                     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 $63.1 million in 1995, $53.9 million in 1994  and
$90.8  million in 1993. The improvement in 1995 compared to  1994
was  due  to increased average earning assets, as a result  of  a
decline in average non-performing assets. The compression in 1994
was due to the Company's net loss in that year, offset by a small
decrease in average non-performing assets.

      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.)

                                 32
<PAGE>

      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>
                                                 1995          1994          1993
                                              ----------    ----------    ----------
                                                      (Dollars In Thousands)
<S>                                           <C>           <C>           <C>
Average loans and mortgage-backed
  securities 1............................    $3,940,247    $3,598,561    $3,331,352
Average investment securities.............       176,131       149,907       134,986
                                              ----------    ----------    ----------
Average interest-earning assets...........     4,116,378     3,748,468     3,466,338
                                              ----------    ----------    ----------

Average savings deposits..................     2,245,178     2,273,065     2,065,867
Average borrowings........................     1,808,072     1,421,522     1,309,658
                                              ----------    ----------    ----------
Average interest-bearing liabilities......     4,053,250     3,694,587     3,375,525
Excess of interest-earning assets over        ----------    ----------    ----------
  interest-bearing liabilities............    $   63,128    $   53,881    $   90,813
                                              ==========    ==========    ==========
Yields earned on average interest
   earning assets.........................          7.23%         6.20%         6.56%
Rates paid on average interest-
  bearing liabilities.....................          5.51          4.27          3.89
Net interest rate spread..................          1.72          1.93          2.67
Effective net spread......................          1.80          1.99          2.77
                                          
Total interest income 2...................    $  297,683    $  232,368    $  227,521
Total interest expense 2..................       223,501       157,625       131,325
                                              ----------    ----------    ----------
Net interest income.......................    $   74,182    $   74,743    $   96,196
                                              ==========    ==========    ==========
</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.


      The  net interest spread decreased in 1995 compared to 1994
primarily due to higher interest rates paid during 1995. Although
the  FRB  decreased its Federal Funds rate by 0.25% in  July  and
December  of  1995,  these  adjustments  only  offset  the  0.50%
increase  that  occurred in February of the same  year.  The  FRB
increased  interest  rates  six times  during  1994  (by  2.50%);
however,  interest rates were at their lowest  point  in  several
years at the beginning of 1994.

      The dollar amount of net interest income remained virtually
unchanged during 1995 compared to 1994 because the impact of  the
lower  net  interest spread during 1995 was offset by  growth  in
average interest-earning assets. Average interest-earning  assets
increased  during  1995 compared to 1994 due to  substantial  new
loan originations which occurred late in 1994.  Average interest-
earning assets also increased during 1995 compared to 1994 due to
improvement  in average non-performing assets which decreased  to
2.29% in 1995 from 3.02% in 1994.
      
                                 33
<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, 1995                December 31, 1994
                                                  Versus                           Versus
                                            December 31, 1994                December 31, 1993
                                      -----------------------------    --------------------------------
                                              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..................      $40,373    $22,651    $63,024    $17,139    $(13,445)    $  3,694
  Investments...................          891      1,400      2,291        730         423        1,153
                                      -------    -------    -------    -------    --------     --------
    Total interest income.......       41,264     24,051     65,315     17,869     (13,022)       4,847
                                      -------    -------    -------    -------    --------     --------
Interest Expense:
  Deposits......................       22,698     (1,087)    21,611      7,947       1,851        9,798
  Borrowings....................       22,572     21,693     44,265      4,850      11,652       16,502
                                      -------    -------    -------    -------    --------     --------
    Total interest expense......       45,270     20,606     65,876     12,797      13,503       26,300
Net change in                         -------    -------    -------    -------    --------     --------
  interest income (expense).....      $(4,006)   $ 3,445    $  (561)   $ 5,072    $(26,525)    $(21,453)
                                      =======    =======    =======    =======    ========     ========
</TABLE>

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  expense on borrowings includes accruals  of  $3.5
million,  $3.2  million and $1.8 million, during 1995,  1994  and
1993,  respectively, for amounts potentially due as a  result  of
IRS  and  California  Franchise Tax Board  audits.   The  Company
provides for interest on the disputed items based on relevant tax
rulings  and case law as well as the progression of the audit  at
the Appeals Office of the IRS.

                                 34
<PAGE>

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


                                                                    Year Ended December 31,
                                    ---------------------------------------------------------------------------------------
                                         1995              1994              1993              1992              1991
                                    ---------------   ---------------   ---------------   ---------------   ---------------
                                    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...............    7.31%    7.63%    6.25%    6.50%    6.64%    6.20%    7.92%    7.25%    9.96%    9.20%
Weighted average yield
  on investment portfolio 1......    5.56     5.15     5.00     5.08     4.70     5.16     4.24     6.18     6.03     4.90
Weighted average yield
 on all interest-earning
  assets.........................    7.23     7.59     6.20     6.47     6.56     6.17     7.78     7.24     9.82     9.05
Weighted average rate
  paid on deposits...............    4.86     4.89     3.85     4.49     3.76     3.60     4.66     3.97     6.70     5.74
Weighted average rate
 paid on borrowings and
  FHLB advances..................    6.32     6.11     4.93     6.04     4.09     3.99     5.10     4.48     7.08     5.47
Weighted average rate
 paid on all interest-
  bearing liabilities............    5.51     5.41     4.27     5.12     3.89     3.73     4.83     4.16     6.85     5.63
Effective net spread2............    1.80              1.99              2.77              3.16              3.29
Interest rate spread3............    1.72%    2.18%    1.93%    1.35%    2.67%    2.44%    2.95%    3.08%    2.97%    3.42%
</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.

Loss Provisions

      The Company recorded $28.4 million in loan loss  provisions
during 1995 due to continued weakness in the Southern  California
real  estate  markets.  Another  $2.1 million in loss  provisions  
were recorded as  an adjustment to gain (loss) on  sale of loans.  
This compares  with  $85.7  million  recorded in  1994 and  $67.7  
million in 1993.  The Company recorded its largest provisions for  
loan losses during  1994  and 1993  in  response to  the economic  
recession  in  Southern   California.  The  1994  provision  also  
includes   amounts  provided  for   losses  resulting  from   the  
earthquake  which  occurred in Southern California on January 17, 
1994.

      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.  General valuation allowances totaled $42.9
million and $55.4 million at December 31, 1995  and December  31,
1994, respectively.  The decrease in general valuation allowances
from 1994 to 1995 is consistent with the decrease in  charge-offs
from  1.58% of average loans  outstanding  in  1994  to  1.28% of
average loans outstanding in 1995.  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 $39.7 million in  1995  from  $45.4
million in 1994 and  $48.6 million in 1993.  Charge-offs for 1995
include $2.4 million directly  related to  the  1994  earthquake.
Charge-offs for 1994 include 13.8 million directly related to the
earthquake.  Charge-offs are due primarily to  declines  in   the
estimated value of the underlying collateral of the Bank's loans.
The Southern California  area  has  experienced  declines in real
estate  values  and other economic problems for  the past several

                                 35
<PAGE>

years   resulting   from   increased  unemployment, reductions in
defense  spending and natural disasters.  Multi-family properties
have  been  particularly affected in  the current recession.  The
Bank's loan portfolio (excluding  mortgage-backed securities) 43%
of which is secured  by  multi-family  properties,  has  required
additional loss provisions primarily  due  to these  recessionary
factors.

  Non-interest Income

       Loan and other fees  decreased  to  $6.1  million  in 1995
compared  to  $7.0  million  in  1994  and  $6.5  million in 1993
primarily as  a  result  of  decreased  servicing  income  due to
prepayments in the portfolio  of  loans  serviced  for others and
decreased miscellaneous  loan  fees  due  to  the decline in loan
originations in 1995 compared to 1994 and 1993.

      Gain (loss) on sale of loans and mortgage-backed securities
decreased to  a  loss of $1.6 million in 1995  from gains of $319
thousand in 1994 and $4.3 million in 1993. The 1995 loss includes
a   $2.1  million  provision for  loans that had  been sold  with
recourse in  prior years.  The 1993 gain includes a $2.0  million
gain on the sale of a mortgage-backed security  from  the  Bank's
available-for-sale portfolio.  Loans originated for sale declined
during  1995  and   1994  due  to  increased  mortgage    banking
competition in the current economic environment.

       Real estate operations resulted in  a  net gain  of   $2.0
million in 1995 compared to a net gain of  $2.3 million  in  1994
and a net loss of  $437 thousand in 1993. The gains  recorded  in
1995   and 1994 resulted primarily from the  recovery  of  excess
valuation  allowances upon  the  sale  of  foreclosed properties.
Losses recorded in 1993 resulted primarily from  the operation of
foreclosed properties prior to  sale.  The  Bank normally   sells
foreclosed properties within a  few  months  after   acquisition,
usually after the properties have been rehabilitated.

      Other operating income, which increased to $2.2 million  in
1995 from $1.6 million in 1994 and $1.7 million in 1993, consists
primarily of fees  earned for  services  provided  by  the retail
savings branches.  Fees earned   by   retail   savings   branches
increased 44% in 1995 compared to 1994 directly  as  a  result of
management efforts to improve fee income.  Other operating income
during 1993 includes additional trustee fees earned  due  to  the
high level of foreclosures in that year.

 Non-interest Expense

       Non-interest expense decreased to 1.10%  of average  total
assets  in  1995 from  1.18% of average total assets in 1994  and
1.26%  of total assets in 1993.  The  decreasing  trend  in  non-
interest  expense  over  the last  three   years   resulted  from
management's ongoing cost control programs.

      Salary and benefit costs increased only 1% in 1995 compared
to 1994.  Decreased  salary  and  related  payroll   and  benefit
insurance   costs  caused by attrition  were  offset by  year-end
performance  bonuses and  an increase in the contribution to  the
Employee Stock Ownership Plan  ("ESOP").   The  decrease in  1994
compared to 1993 was due to  lower  amounts  contributed  to  the
bonus and profit sharing plans in 1994.

      Occupancy expense decreased 6% in 1995 compared to 1994 due
to  decreased  maintenance  and   equipment   costs    and    the
consolidation  of existing   loan   offices.   Occupancy  expense
increased by 2% in  1994 compared to 1993 due  to rent escalation
clauses.  One loan office  was closed  and consolidated  with  an
existing  loan  office in 1995. Two loan offices were closed  and
consolidated with existing loan offices during 1994.

      Other operating expenses decreased 7% in 1995  compared  to
1994 due  primarily to  lower insurance, legal  and  contribution
expenses.  The 5% increase in 1994 compared to 1993 was primarily
due to increased data processing, goodwill and insurance costs.

                                 36
<PAGE>

      Advertising expense decreased by 7% in 1995 and 21% in 1994
due  to  cost containment efforts and the realignment of costs to
reflect business activity in 1995 and 1994.

      Federal deposit insurance increased by 24% in 1995 compared
to  1994 due to a higher average assessment rate in 1995 compared
to 1994.  The increase of 11% in 1994 compared to 1993 was due to
growth in average savings deposits.

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

<TABLE>
<CAPTION>
                                                            Non-Interest Expense
                                                            Year Ended December 31,                                
                                             ---------------------------------------------------
                                               1995       1994       1993       1992       1991
                                             -------    -------    -------    -------    -------
                                                            (Dollars In Thousands)
<S>                                          <C>        <C>        <C>        <C>        <C>
Salaries and Employee Benefits:
  Salaries..............................     $16,436    $16,887    $16,557    $15,387    $13,055
  Incentive compensation................         899      1,363      1,425      1,635      1,426
  Payroll taxes.........................       1,400      1,498      1,388      1,225        994
  Employee benefit insurance............       1,180      1,225      1,332      1,244      1,230
  Bonus compensation....................       1,001        300        633      1,751      2,385
  Profit sharing........................         500        200        200      1,007      1,510
  Pension...............................         436        481        468        475        350
  Other salaries and benefits...........       1,193        780        877        729        595
                                             -------    -------    -------    -------    -------
                                              23,045     22,734     22,880     23,453     21,545
Occupancy:                                   -------    -------    -------    -------    -------
  Rent..................................       4,250      4,246      3,898      3,390      2,942
  Equipment.............................         885      1,246      1,285      1,522      1,290
  Maintenance  costs....................         460        594        741        690        542
  Other occupancy.......................         663        600        892      1,040        940
                                             -------    -------    -------    -------    -------
                                               6,258      6,686      6,816      6,642      5,714
Other Operating Expense:                     -------    -------    -------    -------    -------                              
  Insurance.............................         528        748        570        556        537
  Goodwill..............................         996        996        650        531        269
  Data processing.......................       1,012      1,094        895      2,213      1,160
  Contributions.........................         341        412        591        751        761
  Professional services.................         777        732        799        709        636
  Supervisory exam......................         603        547        531        482        433
  Other operating costs.................       4,110      4,424      4,458      4,397      3,806
                                             -------    -------    -------    -------    -------
                                               8,367      8,953      8,494      9,639      7,602
                                             -------    -------    -------    -------    -------
  Federal deposit insurance.............       6,400      5,151      4,622      4,156      3,890
  Advertising...........................       1,833      1,972      2,486      2,235      1,731
                                             -------    -------    -------    -------    -------
    Total...............................     $45,903    $45,496    $45,298    $46,125    $40,482
                                             =======    =======    =======    =======    =======
  Non-interest expense as                              
  % of average assets.................        1.10%        1.18%      1.26%      1.36%      1.28%
                                                ====       ====       ====       ====       ====
</TABLE>                     

                                 37
<PAGE>

                     BALANCE SHEET ANALYSIS

      Consolidated assets at the end of 1995 were  $4.1  billion,
slightly  less than $4.2 billion at the end of 1994.  The decline
in  consolidated  assets  during 1995 was the result of sales  of
loans  and  a reduction in investment  securities.   Also,   loan
originations  during  1995  were substantially  offset  by   loan
payoffs during the year. Assets increased 14% in 1994 compared to
1993 due to growth in the loan portfolio.

 Loan Portfolio

      At the end of 1995, 97% of the Bank's  loan  portfolio  was
adjustable based on monthly  changes  in  the  Eleventh  District
Federal   Home   Loan  Bank  Cost  of  Funds Index.  The Bank has
maintained the level of adjustable loans in its portfolio at over
90% for the last several 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 rates. (See "Asset  -  Liability
Management.")

      The Board of Directors authorized the origination of fixed-
rate  loans 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.  The initial interest rate is fixed
for  3, 5 or 7 years.  At  the  end  of  the  fixed  period,  the
interest rate becomes adjustable based upon changes in  the  one-
month  LIBOR.  Loans originated under this program in  1995  were
insignificant.

      The  Bank began a mortgage banking program near the end  of
1993 to take advantage of  borrower  demand  for  fixed rate  and
other  loan products not kept in its loan portfolio.  Under  this
program, competitively priced loans are originated  for immediate
sale in the secondary market. To date, no significant amounts  of
loans  have been originated for this  program  due  to  decreased
borrower demand for real estate loans in  the current  recession.
Loans   sold  under  the mortgage banking program   totaled   $37
million,  $44 million  and  $77 million  in 1995, 1994 and  1993,
respectively.

     Loans originated and purchased totaled $299 million in 1995,
$909 million in 1994 and $746 million in 1993.  Included  in  the
1994   amount  is $59 million in single family  adjustable   rate
mortgages purchased from other financial institutions.  In  1995,
loans made on the security of single family  properties  (one  to
four units) comprised 79%  of  the  dollar  amount  of  new  loan
originations;   loans  made  on  the   security   of multi-family
properties comprised 19% of new originations; and loans  made  on
the security of commercial real estate properties  comprised less
than   1%   of  new  originations.  No  construction loans and an
insignificant amount of consumer loans were originated  in  1995.
Adjustable  rate mortgages comprised  90% of new  loan   activity
during 1995 compared to 97% in 1994.

      The following table details loan originations by loan  type
for the periods indicated:

<TABLE>
<CAPTION>

                                                       Loan Originations by Type
                                                        Year Ended December 31,                              
                                          --------------------------------------------------------
                                            1995        1994        1993        1992        1991
                                          --------    --------    --------    --------    --------
                                                            (Dollars In Thousands)
<S>                                       <C>         <C>         <C>         <C>         <C>
Single Family (one to four units)......   $237,508    $734,438    $499,560    $590,152    $357,906
Multi-Family...........................     55,832     164,788     236,211     237,720     273,194
Commercial.............................      4,881       9,858       9,638       9,104      14,462
Other..................................      1,031         230         419       3,779       1,692
                                          --------    --------    --------    --------    --------
  Total................................   $299,252    $909,314    $745,828    $840,755    $647,254
                                          ========    ========    ========    ========    ========
</TABLE>

                                 38
<PAGE>

      Loans originated upon the sale  of the Bank's  real  estate
owned were $49.3 million or 16% of total  originations  in  1995.
$3.7 million of these loans were originated based on the security
of single family properties, $42.7 million were originated  based
on the security of multi-family properties and $2.9  million were
based on the security of commercial properties.

       The  Bank  converted  $59.7  million of  its  loans   into
mortgage-backed  securities  in 1995  for  use   in   securitized
borrowings   (reverse  repurchase  agreements).  In  1994, $198.1
million in loans were securitized compared with $111.7 million in
1993.   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.

      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 $6.7 million at  December  31,1995  compared   to   $889
thousand at December 31,  1994 and $602 thousand at December  31,
1993.

      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 and there is no  initial
below-market interest rate.  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  $133
million at December 31, 1995 compared to $129 million at December
31, 1994 and $155 million at December 31, 1993.  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, 1995, approximately 60% of
the loan and  mortgage-backed  securities  portfolio consisted of
first   liens   on   single   family  properties.  First liens on
multi-family   properties  comprised  approximately  34%  of  the
portfolio, and first liens on commercial  properties  represented
approximately 6% 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.  Due to inadequate market pricing, management  elected  to  
de-emphasize the  origination of multi-family  loans  starting in  
1994  and   continuing  in  1995.  Approximately   19%   of  loan  
originations in  1995 were  multi-family loans compared with  18%  
during  1994. Multi-family  loans  originated  upon the  sale  of  
real  estate  were  approximately  14%  and  5%  of  total   loan  
originations  during  1995 and   1994,   respectively.  The  Bank   
has   not   emphasized  the origination of commercial real estate 
loans for several years.

      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  $248
million as of December 31, 1995, $278 million as  of December 31,

                                 39
<PAGE>

1994, and $318 million as of  December  31,  1993.  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.

     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, 
                                         ------------------------------------------------------------------
                                            1995          1994          1993          1992          1991
                                         ----------    ----------    ----------    ----------    ----------
                                                                (Dollars In Thousands)
<S>                                      <C>           <C>           <C>           <C>           <C>
REAL ESTATE LOANS:
 First trust deed residential loans:
  One unit.............................  $1,221,927    $1,192,251    $  862,340    $  769,367    $  760,903
  Two to four units....................     351,942       350,718       340,035       296,550       258,825
  Five or more units...................   1,344,866     1,357,251     1,298,794     1,181,098     1,078,159
                                         ----------    ----------    ----------    ----------    ----------
    Residential loans..................   2,918,735     2,900,220     2,501,169     2,247,015     2,097,887
OTHER REAL ESTATE LOANS:
  Commercial and industrial............     221,982       246,340       245,387       256,474       263,183
  Second trust deeds...................       2,213        20,401        24,606        29,441        35,245
  Other................................       3,157         4,793         5,861        10,733         4,193
                                         ----------    ----------    ----------    ----------    ----------
    Real estate loans..................   3,146,087     3,171,754     2,777,023     2,543,663     2,400,508
NON-REAL ESTATE LOANS:
  Manufactured housing.................       1,938         2,439         2,763         3,481         4,031
  Deposit accounts.....................       1,104         1,301         1,086         1,184         1,615
  Consumer.............................         359           506           964         1,494         2,705
                                         ----------    ----------    ----------    ----------    ----------
    Loans receivable...................   3,149,488     3,176,000     2,781,836     2,549,822     2,408,859
LESS:
  Allowance for loan losses............      42,876        55,353        46,900        27,854        13,937
  Valuation allowances -
   impaired loans......................      26,101        23,887             -             -             -
  Unrealized  loan  fees...............      20,731        24,451        19,273        25,268        26,126
                                         ----------    ----------    ----------    ----------    ----------
    Net loans receivable...............   3,059,780     3,072,309     2,715,663     2,496,700     2,368,796
FHLMC AND FNMA MORT-
 GAGE-BACKED SECURITIES:
  Secured by single family
   dwellings...........................     810,980       794,126       678,884       660,673       524,969
  Secured by multi-family
   dwellings...........................      24,468        27,191        29,399       108,482       119,295
                                         ----------    ----------    ----------    ----------    ----------
    Mortgage-backed securities.........     835,448       821,317       708,283       769,155       644,264
                                         ----------    ----------    ----------    ----------    ----------
      TOTAL............................  $3,895,228    $3,893,626    $3,423,946    $3,265,855    $3,013,060
                                         ==========    ==========    ==========    ==========    ==========
</TABLE>

                                 40
<PAGE>

                            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,
                                                     ----------------------------------------------
                                                      1995      1994      1993      1992      1991
                                                     ------    ------    ------    ------    ------
<S>                                                  <C>       <C>       <C>       <C>       <C>
Non-performing Loans to Loans Receivable 1.......     2.44%     2.39%     3.28%     2.61%     2.16%
Non-performing Assets to Total Assets 2..........     2.33%     2.23%     3.23%     2.62%     1.83%
Loan Loss Allowances to Non-performing
  Loans 3........................................    65.62%    78.27%    52.23%    37.54%    31.31%
General Loss Allowances to Assets
  with Loss Exposure 4...........................     1.35%     1.73%     1.46%     0.88%     0.53%
General Loss Allowances to Total Assets with
  Loss Exposure 5................................     1.52%     1.82%     1.48%     0.93%     0.49%
</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   before 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.

                                 41
<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 and the percentage of total  non-performing
assets.  Also  shown  is  the  ratio  of non-performing assets to 
total assets.

<TABLE>
<CAPTION>

                                                                    Non-Performing Assets
                                                                         December 31,
                           -----------------   -----------------   -----------------    -----------------    ----------------
                                   1995                 1994                 1993                 1992                 1991
                           -----------------   -----------------   -----------------    -----------------    ----------------
                               $         %          $         %          $         %          $         %          $        %
                           --------  -------   --------  -------   --------  -------    --------  -------    -------- -------
                                                                   (Dollars In Thousands)
<S>                        <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>        <C>      <C>
Real Estate Owned:
Single Family............  $  7,252    7.50%   $  5,711    6.17%   $ 10,052    8.50%    $  8,268    9.16%    $  3,015   5.00%
Multi-Family.............     9,827   10.17      10,647   11.50      16,015   13.55       15,590   17.27        4,881   8.10
Commercial...............     2,544    2.63         366    0.39         327    0.28            -       -          276   0.46
Other....................        78    0.08           -       -         484    0.41            -       -            -      -
Total Real Estate          --------  ------    --------  ------    --------  ------     --------  ------     -------- ------
  Owned..................    19,701   20.38      16,724   18.06      26,878   22.74       23,858   26.43        8,172  13.56
                           --------  ------    --------  ------    --------  ------     --------  ------     -------- ------
Non-Performing Loans:
Single Family............    25,991   26.89      13,041   14.08      25,317   21.41       24,634   27.28       21,441  35.57
Multi-Family.............    69,579   72.00      60,213   65.02      70,207   59.39       42,481   47.05       34,347  56.99
Commercial...............     3,313    3.43      20,986   22.66      10,307    8.72        3,623    4.01        1,536   2.55
Other....................       220    0.23         245    0.26         245    0.20          271    0.30          194   0.33
Less Valuation
  Allowances.............   (22,159) (22.93)    (18,596) (20.08)    (14,732) (12.46)      (4,582)  (5.07)      (5,422) (9.00)
Total Non-Performing       --------  ------    --------  ------    --------  ------     --------  ------     -------- ------
Loans....................    76,944   79.62      75,889   81.94      91,344   77.26       66,427   73.57       52,096  86.44
                           --------  ------    --------  ------    --------  ------     --------  ------     -------- ------
Total....................  $ 96,645  100.00%   $ 92,613  100.00%   $118,222  100.00%    $ 90,285  100.00%    $ 60,268 100.00%
                           ========  ======    ========  ======    ========  ======     ========  ======     ======== ======

Ratio of Non-Performing
  Assets To Total Assets:              2.33%               2.23%               3.23%                2.62%               1.83%
                                       ====                ====                ====                 ====                ====
</TABLE>

      The  increase in non-performing loans in 1995  compared  to
1994  was  due  primarily  to growth in multi-family  and  single
family  delinquent  loans  offset by  a  decrease  in  delinquent
commercial  real  estate  loans. The decrease  in  non-performing
loans  in  1994  compared to 1993 was due primarily  to  a  $29.6
million bulk sale of non-performing loans.

      The  increase in real estate owned in 1995 compared to 1994
was   due  to  additional  foreclosures  on  single  family   and
commercial  real estate loans. The decrease in real estate  owned
in  1994  compared  to 1993 was due to a decline  in  foreclosure
activity.  Also, $2.3 million in foreclosed real estate was  sold
as part of a bulk sale in 1994.

      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.

      The  Bank implemented Statement of Financial Standards  No.
114,  "Accounting by Creditors for Impairment of a  Loan"  ("SFAS
No.  114"),  as  of  January 1, 1994 and Statement  of  Financial
Standards No. 118, "Accounting by Creditors for Impairment  of  a
Loan-Income Recognition and Disclosures" ("SFAS No. 118"), as  of
January  1,  1995.  Impaired loans totaled $86 million  and  $108

                                 42
<PAGE>

million, net of related allowances of $26 million and $24 million
as  of December 31, 1995 and 1994, respectively. See "Business  -
Risk Elements" for a further discussion of impaired loans.

     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,  1995,  the
Bank  had  modified loans totaling $19 million, net of loan  loss
allowances.  This compares with $60 million, net, as of  December
31,  1994.  Modified loans included in the impaired  loan  totals
above  totaled  $17  million, net, and $22 million,  net,  as  of
December 31, 1995 and 1994, respectively. No modified loans  were
90 days or more delinquent as of December 31, 1995 or 1994.

 Allowances for Loan Losses

      For an analysis of the changes in the loan loss allowances,
see  "Business  -  Risk  Elements."  At December  31,  1995,  the
general allowance for loan losses was $43 million or 1.35% of the
Bank's  assets with loss exposure. This compares to 1.73% at  the
end  of  1994  and 1.46% at the end of 1993. In addition  to  the
general  allowance for loan losses and the allowance for impaired
loans  mentioned above, the Bank also maintains an allowance  for
loans  sold  with recourse. These allowances amounted  to  3.65%,
2.86% and 1.96% of loans sold with recourse at December 31, 1995,
1994  and  1993, 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

      OTS regulations require a savings association to maintain a
specified  ratio of cash and short-term United States  government
and  other  specified investment securities to  net  withdrawable
deposits  and  borrowings payable in  one  year  or  less.   This
liquidity  requirement is based upon average  liquidity  balances
maintained  during  each month and may vary from  time  to  time,
depending  upon  economic  conditions  and  deposit  flows.   The
liquidity  requirement is currently 5%.  For  the  periods  ended
December  31,  1995  and  1994, the Bank's  regulatory  liquidity
ratios were 5.20% and 5.23%, respectively.

 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  sources  used
most often during 1995 were FHLB advances and reverse repos.

      Deposits  obtained from national brokerage firms ("brokered
deposits")  are  considered  a  source  of  funds  similar  to  a
borrowing.  Since the Bank achieved the capital ratios  necessary
to  be  deemed "well-capitalized" during 1994, brokered  deposits
can  be  obtained at the Bank's discretion as long as  applicable
capital standards are met. Previously, the Bank obtained brokered
deposits pursuant to a waiver of regulatory requirements from the
FDIC.  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 $502 million at
December 31, 1995.  This compares to $597 million at December 31,
1994 and $519 million at December 31, 1993.
      
                                 43
<PAGE>

      Deposits at retail savings offices have remained steady  at
$1.5  billion for the last three years. The Bank experienced $103
million in deposit outflows from savings offices during 1995  due
to  the  availability  of  alternate  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,  principally  from  pension   funds.
Telemarketing  deposits increased by 19% to $239 million  at  the
end  of  1995 from $201 million at the end of 1994. The level  of
telemarketing deposits varies based on the availability of higher
yielding  investments to investors, who are usually  managers  of
pension  funds. The availability of telemarketing  deposits  also
varies   based  on  the  investors'  perception  of  the   Bank's
creditworthiness. Telemarketing deposits were $286 million at the
end of 1993.

       Reverse  repos  are  short  term  borrowings  secured   by
mortgage-backed securities. These borrowings increased 5% to $725
million at the end of 1995 from $691 million at the end of  1994.
Reverse  repos at the end of 1993 were $549 million. $60  million
in   loans   were  securitized  during  1995  to   increase   the
availability of this type of borrowing.

      FHLB advances increased to $890 million at the end of  1995
from $863 million at the end of 1994. Advances at the end of 1993
totaled  $515  million.  Advances increased during  1995  because
these were often the most available source to the Bank.

      Sales of loans were $37 million during 1995.  This compares
to $44 million during 1994 and $153 million sold during 1993. The
volume  of  loans sold varies with the amount of  saleable  loans
originated.  Loans  originated for sale in the  secondary  market
decreased during 1995 consistent with the overall decline in loan
originations.  The Bank sold $30 million in non-performing  loans
under a bulk sale arrangement during 1994.  The 1993 sales figure
includes the sale of a $76 million mortgage-backed security.


 Internal Sources of Funds

      Internal  sources of funds include scheduled loan principal
payments,  loan payoffs, and positive cash flows from operations.
Principal  payments were $162 million in 1995 compared with  $183
million  in  1994  and $355 million in 1993.  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.

      Effective  January 1, 1994, institutions whose exposure  to
interest-rate risk as determined by the OTS is deemed to be above
normal may be required to hold additional risk-based capital.  As
of  December  31,  1995,  the  Bank  was  not  required  to  hold
additional capital as a result of this regulation.

                                 44
<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.  In September  of
1994,  the  Company  issued $50 million in  10-year  Notes.   The
proceeds  from  these  Notes  were contributed  to  the  Bank  as
capital. See "Business - Borrowings." The Bank met the regulatory
capital standards to be deemed "well-capitalized" at December 31,
1995.

      The  Bank met all three capital requirements at the end  of
1995 as indicated by the chart below:

<TABLE>
<CAPTION>
                                    Regulatory      Capital
                                    Requirement      Ratio
                                    -----------    ----------
<S>                                 <C>            <C>
Tangible Capital.................      1.50%          5.63%
Core Capital.....................      3.00%          5.63%
Risk-based Capital...............      8.00%         10.98%

</TABLE>

                    ASSET-LIABILITY MANAGEMENT

      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 Federal Home Loan Bank of San Francisco  Eleventh
District   Cost   of  Funds  Index  ("Index").  These   mortgages
constitute  over 97% of the loan portfolio at the  end  of  1995.
Comparisons over the last several years show that changes in  the
Bank's  cost  of  funds generally correlate 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 mismatch 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.

      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,
1995,  the Company's one-year GAP was a positive $348 million  or
8.4%  of total assets. This compares with positive GAP ratios  of
13.8% and 14.8% of total assets at December 31, 1994 and December
31, 1993, respectively.

                                 45
<PAGE>

      The  following chart shows the interest sensitivity of  the
Company's assets and liabilities by repricing period at  December
31,  1995  and  the consolidated GAP position as a percentage  of
total assets at that time:

<TABLE>
<CAPTION>

                                      INTEREST-SENSITIVITY GAP


                                                       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:
  Investment Securities...............    $   76,184   $    6,243   $    19,763    $   50,178    $        -
  MBS.................................       835,448      828,722           888         3,377         2,461
  Loans Receivable:
  Interest Rate Sensitive Loans.......     3,021,582    3,021,582             -             -             - 
  Fixed Rate Loans....................        38,198        2,677         4,581        17,179        13,761
    Total Interest-Earning                ----------   ----------   -----------    ----------    ----------
      Assets..........................    $3,971,412   $3,859,224   $    25,232    $   70,734    $   16,222
                                          ==========   ==========   ===========    ==========    ==========
Interest-Bearing Liabilities:
  Demand Accounts.....................    $  422,977   $  422,976   $         -    $        -    $        -
  Fixed Rate Term Certificate.........     1,782,059      652,700       894,105       223,014        12,241
  Borrowings:
   FHLB Advances......................       890,000      426,000       414,000        50,000             -
   Reverse Repurchase
     Agreements.......................       724,643      373,037       351,606             -             -
   Other Borrowings...................        52,300        2,300             -             -        50,000
    Total Interest-Bearing                ----------   ----------   -----------    ----------    ----------
      Liabilities.....................    $3,871,979   $1,877,013   $ 1,659,711    $  273,014    $   62,241
                                          ==========   ==========   ===========    ==========    ==========
Interest-Sensitivity Gap..............    $   99,433   $1,982,211   $(1,634,479)   $ (202,280)   $  (46,019)
                                          ==========   ==========   ===========    ==========    ==========
Interest-Sensitivity Gap as a
 Percentage of Total Assets...........                      47.88%       (39.48)%       (4.89)%       (1.11)%
                                                            =====        ======         =====         =====

Cumulative Interest-Sensitivity Gap...                 $1,982,211   $   347,732    $  145,452    $   99,433
                                                       ==========   ===========    ==========    ==========
Cumulative Interest-Sensitivity
 Gap as a Percentage of Total
  Assets..............................                      47.88%         8.40%         3.51%         2.40%
                                                            =====          ====          ====          ====
</TABLE>                          

                                 46
<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  and  period-end  price information  
presented below  is  based  on information  supplied  by  the New  
York  Stock Exchange.  All prices  have been  adjusted  for stock 
splits.

        The Company has  never declared or paid  a cash dividend.  
In  1987   the   Company's  Board  of  Directors  authorized  the  
repurchase of 10% of the Company's outstanding  shares  of stock.   
No  shares were repurchased  during 1995 or 1994.  As of December  
31,  1995,  a total  of  796,520 shares  had been repurchased  at  
an  average  cost of  $12.34  per  share.  Based on the number of  
shares  outstanding  at December 31, 1987, 264,000  shares remain  
eligible  for  repurchase under this program.
  
<TABLE>
<CAPTION>
  
                                                 PRICE RANGE OF COMMON STOCK
                                                  (Adjusted for Stock Split)
  
                           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>
  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
  1992...............     26       22        24 1/2   19 1/2    21 3/4   13 7/8    19 1/2   13 1/2
  1991...............     19 7/8   12 1/4    24 1/4   19 7/8    26 5/8   21 1/8    24       18 1/4
  
</TABLE>  

                                 47
<PAGE>


ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>

            FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                   DECEMBER 31, 1995 AND 1994
         (Dollars In Thousands, Except per Share Data)


                                                                      1995            1994
                                                                   ----------      ----------
<S>                                                                <C>             <C>
ASSETS                                                             
Cash and cash equivalents.................................         $   36,878      $   35,853
Investment securities, available-for-sale
  (at fair value ) (Note 2)...............................             76,184               -
Investment securities, held-to-maturity (fair value of
  $79,316) (Note 2).......................................                  -          84,052
Mortgage-backed securities, available-for-sale
  (at fair value) (Notes 3 and 10)........................            835,448               -
Mortgage-backed securities, held-to-maturity
  fair value of $791,930 ) (Notes 3 and 10)...............                  -         821,317
Loans receivable, held-for-sale (fair value of $7,464
  and $30,399) (Note 4)...................................              7,377          30,399
Loans receivable (Note 4).................................          3,052,403       3,041,910
Accrued interest and dividends receivable.................             28,620          24,420
Real estate (Note 5)......................................             19,821          17,081
Office properties and equipment, net (Note 6).............              8,686           9,211
Investment in Federal Home Loan Bank (FHLB)
  stock, at cost (Note 7).................................             58,935          56,061
Other assets (Notes 1 and 11).............................             15,385          37,110
                                                                   ----------      ----------
                                                                   $4,139,737      $4,157,414
                                                                   ==========      ==========
LIABILITIES
Deposits (Note 8).........................................         $2,205,036      $2,298,914
FHLB advances and other borrowings (Note 9)...............            942,300         913,700
Securities sold under agreements to repurchase
  (Note 10)...............................................            724,643         691,121
Accrued expenses and other liabilities....................             71,467          68,992
                                                                   ----------      ----------
                                                                    3,943,446       3,972,727
                                                                   ----------      ----------
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 11,410,922 and
  11,395,492 shares, outstanding 10,614,402 and
  10,598,972 shares.......................................                114             114
Additional paid-in capital................................             28,212          28,061
Retained earnings-substantially restricted................            175,721         169,186
Loan to employee stock ownership plan.....................             (2,500)         (2,842)
Treasury stock, at cost, 796,520 shares...................             (9,832)         (9,832)
Unrealized gain on securities
  available-for-sale, net of taxes........................              4,576               -
                                                                   ----------      ----------
                                                                      196,291         184,687
                                                                   ----------      ----------
                                                                   $4,139,737      $4,157,414
                                                                   ==========      ==========
</TABLE>
See accompanying notes to consolidated financial statements.

                                 48
<PAGE>

<TABLE>
<CAPTION>
         
            FIRSTFED FINANCIAL CORP.  AND SUBSIDIARY
             CONSOLIDATED STATEMENTS OF OPERATIONS
          YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
         (Dollars In Thousands, Except per Share Data)


                                                         1995        1994        1993
                                                       --------    --------    --------
<S>                                                    <C>         <C>         <C>
Interest income:
 Interest on loans.............................        $233,648    $188,665    $181,223
 Interest on mortgage-backed securities........          54,389      36,207      39,954
 Interest and dividends on investments.........          13,698      10,552       8,268
                                                       --------    --------    --------
   Total interest income.......................         301,735     235,424     229,445
                                                       --------    --------    --------
Interest expense:
 Interest on deposits (Note 8).................         109,151      87,545      77,741
 Interest on borrowings (Note 9)...............         114,926      70,110      53,875
                                                       --------    --------    --------
   Total interest expense......................         224,077     157,655     131,616
                                                       --------    --------    --------
Net interest income............................          77,658      77,769      97,829
 Provision for loan losses (Note 4)............          28,376      85,700      67,679
Net interest income (loss) after provision for         --------    --------    --------
  loan losses..................................          49,282      (7,931)     30,150
Other income :                                         --------    --------    --------
 Loan servicing and other fees.................           6,126       7,044       6,530
 Gain (loss) on sale of loans and
   mortgage-backed securities..................          (1,581)        319       4,257
 Real estate operations, net...................           2,015       2,327        (437)
 Other operating income........................           2,165       1,574       1,704
                                                       --------    --------    --------
   Total other income..........................           8,725      11,264      12,054
                                                       --------    --------    --------
Non-interest expense:
 Salaries and employee benefits (Note 13)......          23,045      22,734      22,880
 Occupancy (Note 6)............................           6,258       6,686       6,816
 Advertising...................................           1,833       1,972       2,486
 Federal deposit insurance.....................           6,400       5,151       4,622
 Other operating expense.......................           8,367       8,953       8,494
                                                       --------    --------    --------
   Total non-interest expense..................          45,903      45,496      45,298
                                                       --------    --------    --------
Earnings (loss) before income taxes (benefit)..          12,104     (42,163)     (3,094)
Income taxes (benefit) (Note 11)...............           5,569     (17,699)     (1,046)
                                                       --------    --------    --------
Net earnings (loss)............................        $  6,535    $(24,464)   $ (2,048)
                                                       ========    ========    ========
Earnings (loss) per share (Notes 12 and 15)....        $   0.61    $  (2.32)   $  (0.20)
                                                       ========    ========    ========
</TABLE>
See accompanying notes to consolidated financial statements.

                                 
                                 49
<PAGE>

<TABLE>
<CAPTION>

           FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
          YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
                     (Dollars In Thousands)

                                                                                                       Unrealized
                                                                                                        Gain 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, 1992...............     $112     $24,524     $195,698     $(2,991)     $(9,832)     $    -     $207,511
Exercise of employee stock options.......        1         400            -           -            -           -          401
Net decrease in loan to employee stock
  ownership plan.........................        -           -            -          73            -           -           73
Benefit from stock option tax
  adjustment.............................        -       2,355            -           -            -           -        2,355
Net loss 1993............................        -           -       (2,048)          -            -           -       (2,048)
                                              ----     -------     --------     -------      -------      ------     --------
Balance, December 31, 1993...............      113      27,279      193,650      (2,918)      (9,832)          -      208,292
Exercise of employee stock options.......        1         273            -           -            -           -          274
Net decrease in loan to employee stock
  ownership plan.........................        -           -            -          76            -           -           76
Benefit from stock option tax
  adjustment.............................        -         509            -           -            -           -          509
Net loss 1994............................        -           -      (24,464)          -            -           -      (24,464)
                                              ----     -------     --------     -------      -------      ------     --------
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
                                              ====     =======     ========     =======      =======      ======     ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                 
                                 50
<PAGE>

<TABLE>
<CAPTION>


             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF CASH FLOWS
           YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
                   (Dollars In Thousands)

                                                                1995           1994            1993
                                                             ---------      ---------       ---------
<S>                                                          <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)...................................       $   6,535      $ (24,464)      $  (2,048)
Adjustments to reconcile net earnings (loss) to              ---------      ---------       ---------
 net cash provided (used) by operating activities:
   Net change in loans held-for-sale..................          23,022        (10,155)         (8,153)
   Depreciation and amortization......................             739          1,977           1,710
   Provision for losses on loans......................          28,376         85,700          67,679
   Valuation adjustments on real estate sold..........           2,711         (5,876)         (1,151)
   Amortization of fees and discounts.................          (1,753)        (2,690)           (763)
   Decrease in deferred premium on sale of loans......             865          1,154           3,079
   (Increase) decrease in negative amortization.......          (5,044)          (243)         (2,008)
   Decrease (increase) in taxes payable...............           8,807        (16,366)         (5,367)
   Increase in interest and dividends
    receivable........................................          (4,200)        (4,711)          1,998
   Increase in interest payable.......................           2,714          6,050           2,242
   (Increase) decrease in other assets................           1,573         (3,868)         (3,458)
   Increase (decrease) in accrued expenses and
    other liabilities.................................           1,761          4,257            (521)
                                                             ---------      ---------       ---------
    Total adjustments.................................          59,571         55,229          55,287
                                                             ---------      ---------       ---------
     Net cash provided by operating activities........          66,106         30,765          53,239
                                                             ---------      ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans made to customers and principal collections
 on loans.............................................        (129,393)      (624,728)       (335,534)
Loans purchased.......................................            (115)       (59,191)            (95)
Loans repurchased.....................................         (27,212)       (21,506)        (55,093)
Proceeds from sales of real estate....................          58,586         83,498          96,120
Proceeds from sales of non-performing loans...........               -         17,674               -
Proceeds from maturities and principal payments
 of investment securities.............................          20,267         21,946          11,710
Principal reductions of mortgage-backed securities....          53,973         85,052          76,084
Purchases of investment securities....................         (13,095)        (2,347)        (71,682)
Purchases of FHLB stock...............................               -        (15,785)         (2,415)
Other.................................................           6,324           (614)          1,007
                                                             ---------      ---------       ---------
     Net cash used by investing activities............         (30,665)      (516,001)       (279,898)
                                                             ---------      ---------       --------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                       
Net increase (decrease) in deposits...................         (93,878)        (6,566)        209,488
Acquisitions of branches, net.........................               -              -         113,247
Net increase (decrease) in short term borrowings......         327,322        622,172         (73,292)
Proceeds from long term borrowings....................               -        100,000               -
Repayment of long term borrowings.....................        (265,200)      (210,500)        (29,800)
Other.................................................          (2,660)        (1,508)            522
                                                             ---------      ---------       ---------
     Net cash provided (used) by financing activities.         (34,416)       503,598         220,165
Net increase (decrease) in cash and cash                     ---------      ---------       --------- 
equivalents..........................................            1,025         18,362          (6,494)
Cash and cash equivalents at beginning of year........          35,853         17,491          23,985
                                                             ---------      ---------       ---------
Cash and cash equivalents at end of year..............       $  36,878      $  35,853       $  17,491
                                                             =========      =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                 51
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(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
25  full-service savings branches and 5 loan offices 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 1994 and  1993  consolidated
financial  statements have been reclassified to  conform  to  the
1995 presentation.

Statement of Cash Flows

      For  purposes  of reporting cash flows in  accordance  with
Statement of Financial Accounting Standards No. 95, 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

                                 52
<PAGE>
             
             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

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 their loan
agreement,  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 risks 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 ("COFI"). The repricing of COFI 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 currently
focuses  on the origination of single family loans (one  to  four
units)  although,  prior to October of 1994, the  Bank's  lending
strategy also included the origination of multi-family loans. 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.
In  accordance  with Statement of Financial Accounting  Standards
No.  115, "Accounting for Certain Investments in Debt and  Equity
Securities"

                                 53
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

("SFAS   No.  115"),  the  Bank  classifies  its  investment   in
securities as "held-to-maturity" securities, "trading" securities
and  "available-for-sale" securities as applicable.  The Bank did
not hold any trading securities at December 31, 1995 or 1994.

     In November of 1995, the Financial Accounting Standard Board
issued   a  Special  Report  as  an  aid  in  understanding   and
implementing  SFAS No. 115. The Special Report included  guidance
that  allowed  the  Bank  to review the  appropriateness  of  the
classifications of all securities held.

     Any reclassifications must be accounted for at fair value in
accordance  with  SFAS No. 115.  In accordance with  the  Special
Report,  the  Bank  redesignated its  entire  portfolio  of  U.S.
treasury and agency securities and mortgage-backed securities  as
"available-for-sale" from "held-to-maturity"  during  the  fourth
quarter of 1995.

Available-for-Sale Securities

     The Bank classified all of its securities as "available-for-
sale" as of December 31, 1995. The Bank classifies securities  as
available-for-sale   based  upon  a   determination   that   such
securities  may  be  sold  at  a future  date  or  if  there  are
foreseeable  circumstances under which the Bank would  sell  such
securities.

      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  income  in  the  Consolidated  Statements   of
Operations.  Unrealized  gains  or losses  on  available-for-sale
securities are computed on a specific identification basis.

Securities Held-to-Maturity

      The  Bank  classified  all of its securities  as  "held-to-
maturity"  as of December 31, 1994. Securities are designated  as
held-to-maturity  if  the Bank has the positive  intent  and  the
ability  to  hold  the  securities to maturity.  Held-to-maturity
securities  are  carried  at amortized  cost,  adjusted  for  the
amortization  of  any related premiums or the  accretion  of  any
related discounts into interest income using the interest  method
over  the  estimated remaining period until maturity.  Unrealized
losses,  on  held-to-maturity securities reflecting a decline  in
value judged to be other than temporary, are charged to income in
the Consolidated Statements of Operations.

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). Since 1994, the Bank has not actively
sought  to  originate multi-family loans, except to  finance  the
sale  of  the Bank's foreclosed real estate. Loans are  generally
recorded  at  the  contractual amounts owed  by  borrowers,  less
deferrals, unearned interest and the allowances for loan losses.

                                 54
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

Loans Held-for-Sale

     The Bank identifies loans that foreseeably may be sold prior
to  maturity  and  classifies  them as  held-for-sale.  They  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  the  current
market investor yield requirement.

Impaired Loans

      The  Bank  implemented  Statement of  Financial  Accounting
Standards No. 114, "Accounting by Creditors for Impairment  of  a
Loan"  ("SFAS No. 114"), as of January 1, 1994. 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, 1995, the total recorded  amount  of
loans for which impairment has been recognized in accordance with
SFAS  No.  114  was $86,409,000 (after deducting  $26,101,000  of
impairment  allowances attributable to such loans).   The  Bank's
impaired  loans at December 31, 1995 were composed of non-accrual
major  loans  (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) of $34,503,000, modified loans of $16,573,000 and major
loans  less  than  90 days delinquent in which  full  payment  of
principal and interest is not expected of $35,333,000.

      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.   On  certain  modified loans where  the  Bank  does  not
believe  that it will receive all amounts due under the  original
contractual  loan  terms,  the  Bank  records  an  allowance  for 
interest received.

    Because the Bank's policy is to establish loss allowances for 
all loans  deemed probable of foreclosure based on the fair value 
of the collateral, the  adoption of  SFAS  No. 114 did not have a 
material impact on the Bank's  allowance for loan losses.

      The  Bank adopted  Financial  Accounting Standards  Board's
Statement   of   Financial   Accounting   Standards    No.   118,
"Accounting  by  Creditors  for  Impairment of a Loan  --  Income
Recognition  and Disclosures"  ("SFAS No. 118"),  on  January  1,
1995. SFAS No. 118 amends SFAS No. 114 to allow a creditor to use  
existing methods for recognizing interest income  on  an impaired  
loan.  Additionally, SFAS No.  118 requires,  among other things, 
additional  disclosure,  either  in the  body  of  the  financial  
statements or in  the  accompanying  notes,  about  the  recorded  
investment in

                                 55
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

certain  impaired loans  and  about  how  a  creditor  recognizes 
interest income related to those impaired loans.

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 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.

     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 believes  that  as  of  December  31,  
1995  and 1994, the general allowance for loan losses is adequate  
based  on  current  economic and market conditions.  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.

 Allowance for Delinquent Interest

       The  Bank  provides  an  allowance  for  accrued  interest
receivable  on  delinquent loans when  such  interest  is  deemed
uncollectible which is generally at the time the loan is 90  days
past   due.  Any  addition  to  the  allowance  reduces  interest
receivable and interest income for financial statement purposes.

      The Bank applies cash received on delinquent loans first to
delinquent interest, then to delinquent principal only  when  the
entire principal balance of the loan is expected to be recovered.

 Gain or Loss on Sale of Loans

      The  Bank sells mortgage loans and loan participations with
yield  rates  to  the buyer based upon the current  market  rates
which may differ from the contractual rate of the loans sold.   A
gain  or loss is recognized and a premium or discount is recorded
at  the  time of sale based upon the net present value of amounts
expected  to  be  received or paid resulting from the  difference
between the

                                 56
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

contractual interest rates and the yield to the buyer,  excluding
a normal servicing fee to be earned for continuing to service the
loans.   Amortization  of  discount  or  premium  represents   an
adjustment  of  yield  and is reflected  as  an  addition  to  or
reduction of interest income using the interest method  over  the
life  of  such  loans adjusted for estimated prepayments.  Excess
service fees are written down for impairment if the present value
of  the  estimated remaining future excess service  fee  revenue,
using  the  same discount factor used to calculate  the  original
excess service fee receivable, exceeds the recorded amount.

     Excess servicing arising from the sale of loans are included
in  other  assets and were $5,719,000 and $6,584,000 at  December
31, 1995 and 1994, respectively.

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.

 Depreciation and Amortization

      Depreciation of 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 accordance  with  Statement  of
Financial  Accounting Standards No. 109, "Accounting  for  Income
Taxes"   ("SFAS  No.  109").  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.

                                 57
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

      In  May  of  1995, the FASB issued Statement  of  Financial
Accounting Standards No. 122, "Accounting for Mortgage  Servicing
Rights" ("SFAS No. 122"), an amendment of FASB Statement  No.  65
"Accounting for Certain Mortgage Banking Activities"  ("SFAS  No.
65").  SFAS  No. 122 amends SFAS No. 65 to remove the distinction
in  accounting  for  mortgage  servicing  rights  resulting  from
originated  loans  and  those  resulting  from  purchased  loans.
Additionally,  SFAS  No.  122 requires that  a  mortgage  banking
enterprise  assess its capitalized mortgage servicing rights  for
impairment based on the fair value of those rights. SFAS No.  122
is  to  be applied prospectively to fiscal years beginning  after
December  15,  1995.  It is not expected that SFAS No.  122  will
have  a  material  adverse  effect  on  the  Company's  financial
position or results of operations.

      In  November of 1995 the FASB issued Statement of Financial
Accounting   Standards  No.  123,  "Accounting  for   Stock-Based
Compensation"  ("SFAS  No.  123").  This  statement   establishes
financial   accounting   standards   for   stock-based   employee
compensation  plans. SFAS No. 123 permits the Company  to  choose
either  a new fair-value-based method or the current APB  Opinion
25 intrinsic value-based method of accounting for its stock-based
compensation  arrangements.   SFAS No.  123  requires  pro  forma
disclosures of net earnings and earnings per share computed as if
the   fair-value-based  method  had  been  applied  in  financial
statements of companies that continue to follow current  practice
in  accounting for such arrangements under Opinion 25.  SFAS  No.
123  applies  to all stock-based employee compensation  plans  in
which  an  employer grants shares of its stock  or  other  equity
instruments  to  employees  except for employee  stock  ownership
plans.   SFAS No. 123 also applies to plans in which the employer
incurs liabilities to employees in amounts based on the price  of
the  employer's  stock, i.e. stock option plans,  stock  purchase
plans,  restricted  stock plans, and stock  appreciation  rights.
The recognition provisions of SFAS No. 123 for companies choosing
to adopt the new fair-value-based method of accounting for stock-
based  compensation arrangements may be adopted  immediately  and
will apply to all transactions entered into in fiscal  years that
begin  after   December 15, 1995.  The  disclosure provisions  of
SFAS  No.  123  are  effective for fiscal years  beginning  after
December 15, 1995.

Proposed Legislation

      The Bank's deposits are insured by the SAIF up to a maximum
of  $100,000  for each insured depositor. The FDIC administers  a
separate  fund, BIF, applicable to commercial banks  and  certain
other  non-SAIF  insured institutions. Legislation  is  currently
under   consideration  by  Congress  which  includes  a  one-time
assessment  for SAIF members such as the Bank. Should legislation
be  enacted  in its currently contemplated form, the Bank's  one-
time  assessment would be approximately $11,378,000, net of  tax,
based  on  the Bank's insured deposits at March 31, 1995  and  an
assumed  assessment  rate of 85 basis points. Additionally,  once
the  SAIF has been recapitalized through the one-time assessment,
the Bank's deposit insurance premium assessments would be reduced
from  the  current rate. The currently proposed  legislation  has
evolved  significantly over recent months  and  may  continue  to
change  until  final legislation is enacted, if  ever.  Moreover,
there can be no assurance that a premium reduction will occur.

                                 58
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies (continued)

     Assuming the proposed one-time special assessment became law
in 1996 and was immediately charged against the Company's results
of  operations, the one-time assessment would   have  a  material
adverse effect on the Bank's 1996 results of operations. However,
the  Bank  has  sufficient regulatory capital to continue  to  be
classified as "well-capitalized" by its regulators following such
an  assessment.   In  addition,  the  Bank  would  not  face  any
liquidity issues as a result of such an assessment.

      Proposed  legislation is currently under  consideration  by
Congress which would significantly change the federal income  tax
law affecting the bad debt reserves of savings institutions. This
proposed  legislation  would eliminate  the  reserve  method  for
computing bad debt deductions beginning in 1996 and might require 
the recapture of bad  debt  reserves established after 1987 under 
varying factual situations. The proposed legislation is currently 
under  review  and   may  change   significantly   before   final 
legislation is enacted, if ever.

(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 no agreements
to  resell securities at December 31, 1995 or December 31,  1994.
Securities   purchased  under  agreements  to   resell   averaged
$88,859,000 and $54,400,000 during 1995 and 1994, and the maximum
amounts  outstanding at any month end during 1995 and  1994  were
$112,000,000 and $26,000,000, respectively.

      As  permitted  by the Financial Standards  Board's  Special
Report,  the Bank reclassified its entire portfolio of investment
securities from "held-to-maturity" to "available-for-sale" during
the fourth quarter of 1995.

      Investment securities,  available-for-sale, are recorded at
fair value and summarized below for the period indicated:

<TABLE>
<CAPTION>

                                                     1995
                                --------------------------------------------
                                               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................    $46,862     $  22      $ (193)    $ 46,691
Collateralized
  Mortgage Obligations........     29,874         9        (390)      29,493
                                  -------     -----      ------     --------
                                  $76,736     $  31      $ (583)    $ 76,184
                                  =======     =====      ======     ========
</TABLE>

                                 59
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  (2)  Investment Securities (continued)
                                                               
         Related  maturity   data   for   investment  securities,  
available-for-sale, is summarized below for the period indicated:

<TABLE>
<CAPTION>
                                                     1995
                                -------------------------------------------
                                               Gross      Gross
                                Historical  Unrealized  Unrealized    Fair
                                   Value      Gains       Losses     Value
                                ----------  ----------  ----------  --------
                                            (Dollars In Thousands)
<S>                             <C>          <C>        <C>         <C>
Maturing within 1 year......      $27,897     $   4      $  (48)    $27,853
Maturing after 1 year
  but within 5 years........       48,839        27        (535)     48,331
                                  -------     -----      ------     -------
                                  $76,736     $  31      $ (583)    $76,184
                                  =======     =====      ======     =======
</TABLE>

      Investment  securities,  held-to-maturity,  are  summarized
below for the period indicated:

<TABLE>
<CAPTION>

                                                     1994
                                --------------------------------------------
                                              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................    $40,770     $  28      $(2,439)   $38,359
Collateralized
  Mortgage Obligations........     43,282         -       (2,325)    40,957
                                  -------     -----      -------    -------
                                  $84,052     $  28      $(4,764)   $79,316
                                  =======     =====      =======    =======
</TABLE>

                                 60
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(3)  Mortgage-backed Securities

      As  permitted  by the Financial Standards  Board's  Special
Report,  the Bank reclassified its entire portfolio of  mortgage-
backed securities from "held-to-maturity" to "available-for-sale"
during the fourth quarter of 1995.

      Mortgage-backed securities, available-for-sale, at December
31,  1995  are  due through the year 2035 and are  summarized  as
follows:

<TABLE>
<CAPTION>
                                                  1995                         
                             --------------------------------------------
                                           Gross       Gross
                             Historical  Unrealized  Unrealized    Fair
                               Value       Gains       Losses     Value
                             ----------  ----------  ----------  --------
                                         (Dollars In Thousands)
     <S>                     <C>           <C>        <C>        <C>
     FNMA..............      $ 27,221      $   533    $    -     $ 27,754
     FHLMC.............       799,843        7,854        (3)     807,694
                             --------      -------    ------     --------
     Total.............      $827,064      $ 8,387    $   (3)    $835,448
                             ========      =======    ======     ========
</TABLE>


      Mortgage-backed securities, held-to-maturity,  at  December
31, 1994 are summarized as follows:

<TABLE>
<CAPTION>
                                                  1994
                             --------------------------------------------
                                           Gross       Gross
                             Historical  Unrealized  Unrealized    Fair
                               Value       Gains       Losses     Value
                             ----------  ----------  ----------  --------
                                         (Dollars In Thousands)
     <S>                     <C>          <C>        <C>         <C>
     FNMA..............      $ 30,844      $     -    $   (829)  $ 30,015
     FHLMC.............       790,473        7,762     (36,320)   761,915
                             --------      -------    --------   --------
     Total.............      $821,317      $ 7,762    $(37,149)  $791,930
                             ========      =======    ========   ========
</TABLE>

      Mortgage-backed securities created with loans originated by
the  Bank  totaled  $59,720,000, $198,085,000  and  $111,701,000,
during 1995, 1994, and 1993, respectively. Proceeds from the sale
of mortgage-backed securities totaled $72,453,000 in 1993.  There
were no sales during 1995 or 1994.

      Accrued  interest  receivable  related  to  mortgage-backed
securities  outstanding at December 31,  1995  and  1994  totaled
$7,746,000 and $6,376,000, respectively.

                                 61
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4)  Loans Receivable

     Loans receivable are summarized as follows:

<TABLE>
<CAPTION>

                                                     1995            1994
                                                  ----------      ----------
                                                    (Dollars In Thousands)
<S>                                               <C>             <C>
Real Estate Loans:
  First trust deed residential loans:
    One unit................................      $1,221,927      $1,192,251
    Two to four units.......................         351,942         350,718
    Five or more units......................       1,344,866       1,357,251
                                                  ----------      ----------
    Residential loans.......................       2,918,735       2,900,220
  Other real estate loans:
    Commercial and industrial...............         221,982         246,340
    Second trust deeds......................           2,213          20,401
    Other...................................           3,157           4,793
                                                  ----------      ----------
      Real estate loans.....................       3,146,087       3,171,754
  Non-real estate loans:
    Manufactured housing....................           1,938           2,439
    Deposit accounts........................           1,104           1,301
    Consumer................................             359             506
                                                  ----------      ----------
      Loans receivable......................       3,149,488       3,176,000
  Less:
    General loan valuation allowances.......          42,876          55,353
    Valuation allowances for impaired loans.          26,101          23,887
    Unearned loan fees......................          20,731          24,451
                                                  ----------      ----------
      Subtotal..............................       3,059,780       3,072,309
  Less:                                           ----------      ----------
    Loans held-for-sale.....................           7,377          30,399
                                                  ----------      ----------
    Loans receivable, net...................      $3,052,403      $3,041,910
                                                  ==========      ==========
</TABLE>      

      During  the  fourth quarter of 1995, the Bank  reclassified
$19,154,000 from loans "held-for-sale" to loans receivable.

     Loans serviced for others totaled $622,969,000, $699,538,000
and   $786,809,000  at  December  31,  1995,   1994   and   1993,
respectively.

      The  Bank  has  loss exposure on certain  loans  sold  with
recourse.   These  loans  are  combined  with  the  Bank's   loan
portfolio  for purposes of computing general valuation allowances
and  measuring credit risk exposure.  The dollar amount of  loans
sold  with  recourse  totaled $248,139,000  and  $277,877,000  at
December  31, 1995 and 1994, respectively.  The maximum potential
recourse   liability  totaled  $47,424,000  and  $56,342,000   at
December  31,  1995  and  December 31, 1994,  respectively.   The
Bank's  allowance for losses related to loans sold with recourse,
which  is  recorded  as  a  liability,  totaled  $9,050,000   and
$7,948,000 at December 31, 1995 and 1994, respectively.

     At December 31, 1995 the Bank had outstanding commitments to
fund  $18,417,000  in  real estate loans,  which  were  primarily
adjustable rate mortgages.  The Bank's outstanding commitments to
sell real estate loans totaled $7,685,000  at December 31, 1995.

                                 62
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4)  Loans Receivable (continued)

      Accrued interest receivable related to loans outstanding at
December  31,  1995 and 1994 totaled $24,767,000 and $21,652,000,
respectively.

     Loans delinquent greater than 90 days or in foreclosure were
$99,103,000  and  $94,485,000  at December  31,  1995  and  1994,
respectively, and the related allowances for delinquent  interest
were $5,557,000 and $5,182,000, respectively.

      Loans  originated  upon  the sale of  real  estate  totaled
$49,303,000, $54,561,000, and $69,808,000 during 1995,  1994  and
1993, respectively.

      See  Note  9 for a summary of 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
                                                           Allowances   Allowances     Total
                                                           ----------   ----------    --------
                                                                  (Dollars In Thousands)
<S>                                                        <C>          <C>           <C>
Balance at December 31, 1992.........................       $ 27,854     $      -     $ 27,854
Provisions for loan losses...........................         67,679            -       67,679
Charge-offs, net of recoveries.......................        (48,633)           -      (48,633)
                                                            --------     --------     --------
Balance at December 31, 1993.........................         46,900            -       46,900
Provisions for loan losses...........................         53,172       32,528       85,700
Charge-offs, net of recoveries.......................        (36,771)      (8,641)     (45,412)
Transfer of general valuation allowances for loans
 sold with recourse to liability account.............         (7,948)           -       (7,948)
                                                            --------     --------     --------
Balance at December 31, 1994.........................         55,353       23,887       79,240
Provisions for loan losses...........................          6,958       21,418       28,376
Charge-offs, net of recoveries.......................        (18,932)     (19,204)     (38,136)
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
                                                            ========     ========     ========
</TABLE>

                                 63
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(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, 1993.......................      $     -
Transfer from general valuation allowance..........        7,948
                                                         -------
Balance at December 31, 1994.......................        7,948
Provisions for loan losses
  (recorded as loss on sale of loans)..............        2,123
Transfer from general valuation allowance..........          503
Charge-offs, net of recoveries.....................       (1,524)
                                                         -------
Balance at December 31, 1995.......................      $ 9,050
                                                         =======
</TABLE>      

      The  following  is  a  summary of impaired  loans,  net  of
valuation allowances for impairment, for the periods indicated:
                               
<TABLE>
<CAPTION>
                               December 31,   December 31,
                                  1995           1994
                                --------       --------
                                 (Dollars In Thousands)
<S>                             <C>            <C>
Non-accrual loans..........     $ 34,503       $ 38,004
Modified loans.............       16,573         41,635
Other impaired loans.......       35,333         28,637
                                --------       --------
                                $ 86,409       $108,276
                                ========       ========
</TABLE>      
      
      Impaired loans for which there were no valuation allowances
established  are  included  in  the  above  summary  and  totaled
$9,261,000 and $21,833,000  as of December 31, 1995 and  December
31, 1994, respectively.

     The average recorded investment in impaired loans during the
year  ended  December 31, 1995 was $91,818,000.   The  amount  of
interest  income  recognized for impaired loans during  the  year
ended  December  31,  1995 was $6,075,000 under  the  cash  basis
method  of  accounting.   Interest income  recognized  under  the
accrual  basis  method of accounting for the year ended  December
31,  1995 totaled $5,746,000. There were no commitments  to  lend
additional funds to borrowers whose terms have been modified.

                                 64
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(5) Real Estate

      Real  estate, net of allowances,  consists of the following
for the periods indicated:

<TABLE>
<CAPTION>

                                                                    1995       1994
                                                                   -------    -------
                                                                 (Dollars In Thousands)
<S>                                                                <C>        <C>
Real estate held-for-investment.................................   $   120    $   357
Real estate acquired by (or deed in lieu of) foreclosure, net...    19,701     16,724
                                                                   -------    -------
                                                                   $19,821    $17,081
                                                                   =======    =======
</TABLE>      
      
      The  Bank acquired $64,053,000, $67,466,000 and $93,010,000
of  real  estate  in settlement of loans during 1995,  1994,  and
1993, respectively.


(6) Office Properties, Equipment and Lease Commitments

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

<TABLE>
<CAPTION>
                                                        1995          1994
                                                       -------       -------
                                                       (Dollars In Thousands)
<S>                                                    <C>           <C>
Land..............................................     $ 3,061       $ 3,061
Office buildings..................................       4,458         4,449
Furniture, fixtures and equipment.................      10,057         9,943
Leasehold improvements............................       8,650         8,571
Other.............................................          44            44
                                                       -------       -------
                                                        26,270        26,068
Less accumulated depreciation and amortization....      17,584        16,857
                                                       -------       -------
                                                       $ 8,686       $ 9,211
                                                       =======       =======
</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,  1995
under  all  noncancelable  leases  are  as  follows  (dollars  in
thousands):

<TABLE>
<CAPTION>
           <S>                                      <C>
           1996..............................       $ 4,297
           1997..............................         4,071
           1998..............................         3,214
           1999..............................         1,175
           2000..............................         1,107
           Thereafter.......................          5,452
                                                    -------
                                                    $19,316
                                                    =======
</TABLE>

       Rent   payments   under  these  leases  were   $4,250,000,
$4,246,000, and $3,898,000 for 1995, 1994 and 1993, respectively.
Certain  leases  require  the Bank  to  pay  property  taxes  and
insurance.  Additionally,  certain leases  have  rent  escalation
clauses based on specified indices.

                                 65
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(7) Federal Home Loan Bank Stock

     The Bank's investment in FHLB stock at December 31, 1995 and
1994  was  $58,935,000 and $56,061,000, 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 FHLB of San Francisco 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 FHLB of San Francisco.  The  Bank
was in compliance with this requirement at December 31, 1995. The
Bank's  investment  in FHLB stock was pledged  as  collateral  on
advances  from the FHLB at December 31, 1995 and 1994.  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.


(8)  Deposits

     Deposit account balances are summarized as follows:

<TABLE>
<CAPTION>

                                                                1995                   1994
                                                         ------------------     ------------------
                                                           Amount       %         Amount       %
                                                         ----------   -----     ----------   -----
                                                                  (Dollars In Thousands)
<S>                                                      <C>          <C>       <C>          <C>
Variable rate non-term accounts:
  Money market deposit accounts (weighted
   average rate of 2.52% and 2.55%)................      $  125,352     6%      $  161,147     7%
  Interest-bearing checking accounts                
   (weighted average rate of 1.20% and
    2.14%).........................................         145,801     7          169,416     7
  Passbook accounts (weighted average
   rate of 2.04% and 2.29%)........................          96,948     4          114,075     5
  Non-interest bearing checking accounts...........          54,876     2           36,773     2
                                                         ----------   ---       ----------   ---
                                                            422,977    19          481,411    21
Fixed-rate term certificate accounts:                    ----------   ---       ----------   ---
  Under six-month term (weighted average
   rate of 5.21% and 4.64%)........................         126,599     6           89,763     4
  Six-month term (weighted average rate of
   5.42% and 4.99%)................................         417,855    19          282,130    12
  Nine-month term (weighted average rate of
   5.98% and 4.90%)................................         144,308     6          104,962     5
  One year to 18 month term (weighted
   average rate of 5.57% and 4.76%)................         235,164    11          512,846    22
  Two year or 30 month term (weighted
   average rate of 5.55% and 5.22%)................         239,411    11          315,223    14
  Over 30-month term (weighted average rate
   of 6.31% and 6.20%).............................         238,742    11          285,438    12
  Negotiable certificates of $100,000 and
   greater, 30 day to one year terms (weighted
    average rate of 5.66% and 4.79%)...............         379,980    17          227,141    10
                                                         ----------   ---       ----------   ---
                                                          1,782,059    81        1,817,503    79
  Total Deposits (weighted average rate of               ----------   ---       ----------   ---
   4.89% and 4.49%)................................      $2,205,036   100%      $2,298,914   100%
                                                         ==========   ===       ==========   ===
</TABLE>  

                                 66
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(8)  Deposits (continued)

      Certificates of deposit, placed through five major national
brokerage firms, totaled $502,013,000 in 1995 and $597,249,000 in
1994.

      Cash payments for interest on deposits (including  interest
credited)  totaled  $110,357,000,  $84,842,000,  and  $75,810,000 
during 1995,  1994  and  1993, respectively.  Accrued interest on 
deposits at December 31, 1995  and  1994  totaled $9,698,000  and  
$10,904,000, 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, 
1995:

<TABLE>
<CAPTION>
                           Non-Term                                                           There-
                           Accounts       1996         1997         1998         1999         After        Total
                          ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                                            (Dollars In Thousands)
<S>                       <C>          <C>          <C>          <C>          <C>          <C>          <C>
Deposits at
 December 31, 1995.....   $  422,977   $1,546,804   $  113,714   $   30,476   $   72,102   $   18,963   $2,205,036
Weighted average          ==========   ==========   ==========   ==========   ==========   ==========   ==========
 interest rates........         1.63%        5.58%        6.45%        5.79%        5.96%        5.78%        4.89%
                                ====         ====         ====         ====         ====         ====         ====
</TABLE>     

     Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>

                                                                    1995          1994          1993
                                                                  --------      --------      --------
                                                                          (Dollars In Thousands)
     <S>                                                          <C>           <C>           <C>
     Passbook accounts..................................          $  2,289      $  2,726      $  2,580
     Money market deposits and
      interest-bearing checking accounts................             6,272         7,960         7,918
     Certificate accounts...............................           100,590        76,859        67,243
                                                                  --------      --------      --------
                                                                  $109,151      $ 87,545      $ 77,741
                                                                  ========      ========      ========
</TABLE>

(9)  Federal Home Loan Bank Advances and Other Borrowings

      Federal Home Loan Bank (FHLB) Advances and other borrowings
consist of the following:

<TABLE>
<CAPTION>

                                                                       1995          1994
                                                                     --------      --------
                                                                     (Dollars In Thousands)
     <S>                                                             <C>           <C>
     Advances from the FHLB of San Francisco with a
      weighted average interest rate of 6.12% and 5.96%,
      respectively, secured by FHLB stock and certain
      real estate loans with unpaid principal balances of
      approximately $1,787,461,000 at December 31, 1995,
      advances mature through 1997...............................    $890,000      $863,200
     Unsecured term funds with a weighted average interest
      rate of 5.82% and 5.60%, maturing within one year..........       2,300           500
     10 Year Senior Unsecured Notes with an interest
      rate of 11.75%, due 2004...................................      50,000        50,000
                                                                     --------      --------
                                                                     $942,300      $913,700
                                                                     ========      ========
</TABLE>                                 

                                 67
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

      At December 31, 1995 and 1994, accrued interest  payable on
FHLB   advances   and  other  borrowings  totaled  $6,010,000 and
$5,614,000, respectively, which is included in  accrued  expenses 
and other liabilities in the accompanying Consolidated Statements  
of Financial Condition.

      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.   The  amount  of annual 
interest due on the Notes is $5,875,000. 
      
      The Bank entered into an agreement in 1994 with the City of
Los  Angeles  Housing Department to guarantee $5 million of bonds 
for  the   acquisition  and  renovation  of  earthquake  stricken  
properties  with  a  standby letter of credit from the FHLB.  The 
bonds  will  be used  to  fund low  interest rate loans  made  by 
participating lenders to owners of earthquake-damaged properties.  
As  of  December  31, 1995, the Bank has not originated any loans 
under this program. 
      
      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,  or approximately $1,654,884,000 at
December 31, 1995 with terms up to 30 years.

     The  following  is  a   summary  of  borrowing maturities at 
December 31, 1995 (dollars in thousands):

<TABLE>
<CAPTION>
                    <S>                           <C>
                    1996...........               $842,300
                    1997...........                 50,000
                    Thereafter.....                 50,000
                                                  --------
                                                  $942,300
                                                  ========
</TABLE>      

      Cash payments for interest on borrowings (including reverse
repurchase agreements) totaled  $102,611,000,  $61,945,000,   and
$53,531,000 during 1995, 1994, and 1993, respectively.

                                 68
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

     Interest expense on borrowings is comprised of the following
for the years indicated:

<TABLE>
<CAPTION>

                                              Year Ended December 31,
                                          --------------------------------
                                            1995        1994        1993
                                          --------    --------    --------
                                               (Dollars In Thousands)
<S>                                       <C>         <C>         <C>
FHLB Advances........................     $ 61,591    $ 38,162    $ 30,589
Reverse Repurchase Agreements........       43,295      26,430      19,793
10 Year Senior Unsecured Notes.......        5,875       1,568           -
Other................................        4,165       3,950       3,493
                                          --------    --------    --------
                                          $114,926    $ 70,110    $ 53,875
                                          ========    ========    ========
</TABLE>

(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
Statement 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, 1995, $724,643,000 in reverse  repurchase
agreements were collateralized by mortgage-backed securities with
principal  balances  totaling  $765,792,000  and  market   values 
totaling $773,295,000.  At  December  31,  1994,  $691,121,000 in   
reverse repurchase agreements  were  collateralized  by mortgage-
backed  securities  with principal balances totaling $750,052,000 
and market values totaling $722,971,000.

      The weighted average interest rates  for  borrowings  under
reverse repurchase agreements were 5.68% and 5.81%, respectively,
as of December 31, 1995 and December 31, 1994.

      Securities  sold  under  agreements  to  repurchase  averaged
$718,057,000  and $602,681,000 during 1995 and 1994,  respectively,
and  the  maximum amounts outstanding at any month end during  1995
and 1994 were $749,546,000 and $691,121,000, respectively.

      The following is a summary of maturities at December 31, 1995
(dollars in thousands):

<TABLE>
<CAPTION>
                    <S>                      <C>
                    Up to 30 days......      $ 90,406
                    30 to 90 days......       282,631
                    Over 90 days.......       351,606
                                             --------
                                             $724,643
                                             ========
</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 $8,940,000 and $5,410,000  for the years
ended December 31, 1995 and 1994, respectively.

                                 69
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(11)  Income Taxes

      Income taxes (benefit) consist of the following:

<TABLE>
<CAPTION>

                                             1995        1994          1993
                                            ------     ---------     -------
                                                 (Dollars In Thousands)
      <S>                                   <C>        <C>           <C>
      Current:                           
        Federal......................       $   42     $ (7,169)     $ 4,317
        State........................          555         (488)         120
                                            ------     --------      -------
                                               597       (7,657)       4,437
      Deferred:                             ------     --------      -------
        Federal......................        3,898       (4,464)      (5,114)
        State........................        1,074       (5,578)        (369)
                                            ------     --------      -------
                                             4,972      (10,042)      (5,483)
      Total:                                ------     --------      -------
        Federal......................        3,940      (11,633)        (797)
        State........................        1,629       (6,066)        (249)
                                            ------     --------      -------
                                            $5,569     $(17,699)     $(1,046)
                                            ======     ========      =======
</TABLE>

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

<TABLE>
<CAPTION>
 
                                                               1995        1994        1993
                                                              ------      -------     -------
      <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....................................        8.8        (7.2)       (6.4)
        Core deposit intangibles........................        0.8         0.1         7.4
        Other, net......................................        1.4         0.1         0.2
                                                               ----       -----       -----
         Effective rate.................................       46.0%      (42.0)%     (33.8)%
                                                               ====       =====       =====
</TABLE>      

      Cash payments for income taxes totaled  $154,000,  $254,000
and  $2,158,000 during 1995, 1994, and  1993,  respectively.   In
addition, the Company received cash  refunds  totaling $8,267,000
during 1995.

      Current income taxes receivable  at  December 31, 1995  and
1994 were $2,276,000 and $11,337,000, respectively.

                                 70
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
(11)  Income Taxes (continued)
                                         
      Listed  below are the  significant  components of  the  net
deferred  tax liability (1994  has been  restated for prior  year
tax returns filed through 1995):

<TABLE>
<CAPTION>
                                                                      1995          1994
                                                                    ---------     ---------
                                                                     (Dollars In Thousands)
<S>                                                                 <C>           <C>
Components of the deferred tax asset:
  Bad debts..................................................       $(25,419)     $(29,308)
  Pension expense............................................         (1,941)       (1,765)
  State taxes................................................           (370)            -
  IRS interest accrual.......................................         (6,535)       (4,948)
  Other......................................................         (1,887)       (3,035)
                                                                    --------      --------
    Total deferred tax asset.................................        (36,152)      (39,056)
Valuation allowance..........................................              -             -
                                                                    --------      --------
    Total deferred tax asset, net of valuation allowance.....        (36,152)      (39,056)
Components of the deferred tax liability:                           --------      --------
  Loan fees..................................................         27,134        26,766
  Tax effect of unrealized gain on
   securities available-for-sale.............................          3,257             -
  Loan sales.................................................          2,914         3,283
  FHLB stock dividends.......................................          8,947         6,316
  State taxes................................................              -           586
  Other......................................................            585           561
                                                                    --------      --------
    Total deferred tax liability.............................         42,837        37,512
                                                                    --------      --------
Net deferred tax liability (asset)...........................       $  6,685      $ (1,544)
                                                                    ========      ========
  Net state deferred tax asset...............................       $   (188)     $ (1,499)
  Net federal deferred tax liability (asset).................          6,873           (45)
                                                                    --------      --------
Net deferred tax liability (asset)...........................       $  6,685      $ (1,544)
                                                                    ========      ========
</TABLE>

      SFAS  No.  109 allows for recognition  and  measurement  of
deductible  temporary differences  (including  general  valuation
allowances) 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,  
1995  and  1994, 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.

      The Internal Revenue Service ("IRS") is currently examining  
tax  years  1991 and 1992.   During  1994,  the IRS completed its 
examination  of  the  Company's  consolidated federal income  tax  
returns for tax years 1984 through  1986  and, in 1995, completed 
its examination of tax returns for 1987 and 1988.  In early 1996, 
the IRS completed its examination of  tax  returns  for  1989 and 
1990.  The IRS has proposed  adjustments  primarily   related  to  
temporary  differences  as to  the recognition of certain taxable  
income and expense items.  The Company has filed  formal protests
with the IRS to take  exception to  the proposed adjustments  for
all  examinations.  In  addition, the Franchise Tax Board ("FTB") 
is  examining tax years  1989  and 1990.  While the  Company  has
provided  for deferred taxes  for federal  and state purposes,  a
change  in  the  period  of  recognition of  certain  income  and
expense items could result in  interest  due to the IRS and  FTB.
Although the outcome of the  exams is  not known  at   this time, 
and it may take  several  years to resolve  any

                                 71
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(11)  Income Taxes (continued)

disputed   matters,  the   Company   has  recorded   charges   of
$3,524,000, $3,239,000  and  $1,776,000 in 1995, 1994  and  1993,
respectively,  as  interest  on  possible  tax  adjustments.   At
December  31,  1995,  the  Company  had  $14,114,000  of  accrued
interest  payable recorded  as  a liability on the   Consolidated
Statements of Financial Condition. The amount of interest accrued 
is  based  upon  the  proposed  adjustments and management's best 
estimate of liability as of this date.

     The Bank computes its bad  debt  deduction based upon actual
loan   loss   experience   (the  "experience  method").   Savings
institutions  may  utilize the experience method to "fill-up"  to
their  adjusted base  year  bad debt reserve.  The adjusted  base
year bad debt reserve is the  tax  bad debt reserve amount at the
end  of  1987.   The  base year  reserve  may be  proportionately
decreased  by any reduction in  qualifying  loans at the  end  of
the current year relative  to  the end of 1987. The Bank utilized
the fill-up method for computing  its  bad debt deduction for all
years presented.

     The consolidated financial  statements  at December 1995 and
1994  did not include a liability  of  $5,164,000 related to  the
adjusted  base year bad debt  reserve  since these  reserves  are
not  expected  to reverse until  indefinite  future periods,  and
may never reverse.  Circumstances  that  would require an accrual
for  a  portion or all of this  unrecorded  tax liability  are  a
further   significant   reduction   in  qualifying  loan   levels
relative  to  1987,  failure  to  meet the tax  definition  of  a
savings  institution, dividend  payments  in  excess  of  current
year   or  accumulated   tax  earnings   and  profits,  or  other
distributions in dissolution or liquidation.

      Proposed legislation pertaining primarily to the merger  of
the BIF and SAIF insurance funds  contains provisions which would
eliminate  the  tax  bad debt deduction for  the  year  beginning
January  1,  1996.   However,  existing  tax  bad  debt  reserves
established prior to 1987 would be permitted to be carried  under
proposed  "grandfathering" treatment.  Post-1987  reserves  would
have  to  be eliminated over a period of several years (presently
proposed to be six years).  The Company cannot predict if  or  in
what  form  such  legislation may be enacted.  The  Company  also
cannot predict any impact on its results of operations.

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

       The Company's stock charter authorizes 5,000,000 shares of 
serial  preferred  stock.  As of  December 31, 1995 no  preferred 
shares have been issued.

      The computation of net earnings  (loss) per share  is based
on  the  weighted average shares of  common  stock  and  dilutive
common  stock equivalents  (employee  stock options)  outstanding
during   the   year  which   were  10,655,577,   10,552,963   and
10,460,145 for 1995, 1994 and 1993 respectively.

      The  Office  of  Thrift  Supervision  ("OTS")  has  adopted
regulations   that   contain   capital  standards   for   savings
institutions.   The  Bank  was in compliance with  these  capital
standards at December 31, 1995.

      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

                                 72
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

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 issued a  regulation  in  1990
which  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.

      For  federal  income  tax  purposes,  savings  institutions
meeting  certain  requirements are  allowed  a special  bad  debt
reserve deduction for  qualifying loans  computed as a percentage
of   taxable   income    before   such  deduction.   If   amounts
appropriated  to these  tax  bad debt reserves in excess  of  the
amount  allowable  under   the  experience  method  ("excess  tax
bad  debt  reserves")  are  used  for the payment  of  return  of
capital   dividends  or   other   distributions  to  stockholders
(including   distributions   in   dissolution,   liquidation   or
redemption of stock), an  amount  will generally be includable in
taxable  income.  The  amount  includable in  taxable  income  is
equal   to  the   distribution   plus  the  federal  income   tax
attributable thereto, up  to  the aggregate amount of excess  tax
bad  debt  reserves.  At  December 31, 1995 and 1994 the  Company
had no excess  bad  debt reserves.

      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,  1995  and  1994  the  loan  to  the  ESOP  totaled
$2,500,000  and   $2,842,000,   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  1995   and   1994  were  5.44%  and  4.16%,
respectively.

      In  1988,  the  Company  adopted 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 (subsequently
adjusted  for  a  stock   split).   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.

                                 73
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(13)  Employee Benefit Plans

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

       Pension  expense  including   administration   costs   was
$436,000,  $481,000  and  $468,000  for  1995,  1994   and  1993,
respectively. The Bank uses  the  projected unit credit actuarial
method  and  bases its  funding  policy on the entry  age  normal
method.

       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, 1995.   The  discount  rate and rate of increase  in
future compensation levels used  in  determining the pension cost
were 8.5% and 6.0%, respectively,  as of  December 31, 1994.  The
expected  long-term  rates of return  on   assets  were  8.5%  at
December 31, 1995 and 7.5% at December 31, 1994.

      The  Bank  has  a  Supplementary Executive Retirement  Plan
("SERP")  which covers  any  individual employed by the  Bank  as
its  President  or Chairman  of  the Board.  The pension  expense
for  the SERP was $408,000,  $471,000 and  $434,000 in 1995, 1994
and  1993,  respectively.   The  SERP  uses  the  same  actuarial
assumptions as the Pension Plan. The SERP is unfunded.

                                 74
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(13)  Employee Benefit Plans (continued)

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

<TABLE>
<CAPTION>

                                                             Pension Plan                SERP
                                                          -------------------     -------------------
                                                           1995        1994        1995        1994
                                                          -------     -------     -------     -------
                                                                    (Dollars In Thousands)
<S>                                                       <C>         <C>         <C>         <C>
Actuarial present value of benefits obligations:
  Accumulated benefits obligation...................      $ 2,943     $ 2,631     $ 3,167     $ 2,265
                                                          =======     =======     =======     =======
  Vested benefit obligation.........................      $ 2,725     $ 2,482     $ 2,678     $ 2,573
                                                          =======     =======     =======     =======
Plan assets at fair value...........................      $ 2,979     $ 2,642     $     -     $     -
Projected benefit obligation for service
 rendered to date...................................        4,491       3,887       3,738       2,952
Shortage of plan assets over the projected                -------     -------     -------      ------
 benefit obligation.................................       (1,512)     (1,245)     (3,738)     (2,952)
Unrecognized net loss (gain) from past ex-
 perience different from that assumed...............          959         387         (75)       (698)
Prior service cost not yet recognized in
 net periodic pension cost..........................          149         180         655         752
Additional minimum liability........................            -           -        (384)       (112)
Unrecognized net (asset) obligation at
 transition.........................................          (41)       (130)        375         437
                                                          -------     -------     -------     -------
Accrued pension liability...........................      $  (445)    $  (808)    $(3,167)    $(2,573)
Net pension cost for the year ended December              =======     =======     =======     =======
 31, 1995 and December 31, 1994 in-
 cluded the following components:
  Service cost-benefits earned during the
   period...........................................      $   412     $   441     $    62     $    76
  Interest cost on projected benefit obligation.....          320         269         237         236
  Actual return on plan assets......................         (223)        (19)          -           -
  Net amortization..................................          (58)        (32)        109         159
  Deferral of asset gains...........................          (46)       (173)          -           -
                                                          -------     -------     -------     -------
  Net period pension cost...........................      $   405     $   486     $   408     $   471
                                                          =======     =======     =======     =======
</TABLE>      

      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, 1995 the ESOP held 7.17% of 
outstanding stock of  the Company. Profit sharing expense for the  
years  ended  December 31,  1995,  1994  and  1993  was $500,000,
$200,000  and   $200,000,   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.

      The Company has issued options pursuant  to  the 1983 Stock
Option  and  Stock  Appreciation Rights  Plan  which  expired  in
August  1993  as   well  as  the  1994  Stock  Option  and  Stock
Appreciation  Rights Plan.  Options  prices are  based  upon  the
market value of the common stock on the date of grant.

                                 75
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(13)  Employee Benefit Plans (continued)

     Information with respect to stock options follows:

<TABLE>
<CAPTION>
                                                                1995         1994
                                                              ---------    --------
                                                                   (In Shares)
<S>                                                           <C>          <C>
Options Outstanding
(Average option prices)
Beginning of year ($13.74 and $11.70)....................     347,319      342,375
Granted ($15.90 and $14.58)..............................      35,384      102,906
Exercised ($9.79 and $3.95)..............................     (15,430)     (69,301)
Canceled ($14.99 and $16.11).............................     (25,256)     (28,661)
                                                              -------      -------
End of Year ($14.04 and $13.74)..........................     342,017      347,319
                                                              =======      =======
Shares exercisable at December 31 ($12.18 and $11.76)....     164,252      164,322
                                                              =======      =======
</TABLE>

(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,
                                                    ----------------------
                                                      1995          1994
                                                    --------      --------
                                                    (Dollars In Thousands)
<S>                                                 <C>           <C>
Assets:
  Cash.........................................     $  2,737      $  1,653
  Other assets.................................        2,036         2,210
  Investment in subsidiary.....................      240,523       231,573
                                                    --------      --------
                                                    $245,296      $235,436
                                                    ========      ========
Liabilities and Stockholders' Equity:
  Notes payable................................     $ 50,000      $ 50,000
  Other liabilities............................         (995)          749
  Stockholders' equity.........................      196,291       184,687
                                                    --------      --------
                                                    $245,296      $235,436
                                                    ========      ========
</TABLE>

<TABLE>
<CAPTION>

                                                            Years Ended December 31,
                                                    -------------------------------------
CONDENSED STATEMENTS OF OPERATIONS                    1995          1994          1993
                                                    ---------     ---------     ---------
                                                    (Dollars In Thousands)
<S>                                                 <C>           <C>           <C>
Other expense, net.............................     $ (3,714)     $ (1,061)     $    (78)
Equity in net earnings (loss) of
 subsidiary....................................       10,249       (23,403)       (1,970)
                                                    --------      --------      --------
Net earnings (loss)............................     $  6,535      $(24,464)     $ (2,048)
                                                    ========      ========      ========
</TABLE>

                                 76
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(14)  Parent Company Information (continued)

<TABLE>
<CAPTION>

                                                                   Years Ended December 31,
 CONDENSED STATEMENTS OF CASH FLOWS                          ------------------------------------
                                                               1995          1994          1993
                                                             --------      --------      --------
                                                                   (Dollars In Thousands)
<S>                                                          <C>           <C>           <C>
Net Cash Flows from Operating Activities:
  Net earnings (loss)..................................      $  6,535      $(24,464)     $ (2,048)
  Adjustments to reconcile net earnings (loss) to
   net cash provided (used) by operating activi-
   ties:
  Equity in net (earnings) loss of subsidiary..........       (10,249)       23,403         1,970
  Other................................................        (1,521)           39           (10)
                                                             --------      --------      --------
  Net cash used by operating activities................        (5,235)       (1,022)          (88)
Cash Flows from Investing Activities:                        --------      --------      --------
  Decrease in ESOP loan................................           342            76            73
  Increase in other assets.............................             -        (2,225)            -
  Net cash (used) provided by investing activ-               --------      --------      --------
   ities...............................................           342        (2,149)           73
Cash Flows from Financing Activities:                        --------      --------      --------
  Dividend from subsidiary.............................         5,875         5,000         3,000
  Capital contribution to subsidiary...................             -       (47,750)       (7,355)
  Increase (decrease) in short term notes payable......             -        (5,000)        2,000
  Proceeds from long term borrowings...................             -        50,000             -
  Benefit from stock option tax adjustment.............             -           510         2,355
  Other................................................           102         1,141           352
                                                             --------      --------      --------
  Net cash provided by financing activities............         5,977         3,901           352
                                                             --------      --------      --------
  Net increase in cash.................................         1,084           730           337
  Cash at beginning of period..........................         1,653           923           586
                                                             --------      --------      --------
  Cash at end of period................................      $  2,737      $  1,653      $    923
                                                             ========      ========      ========
</TABLE>

                                 77
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(15) Quarterly Results of Operations: (unaudited)

      Summarized below are the Company's results of operations on
a quarterly basis for 1995, 1994 and 1993:

<TABLE>
<CAPTION>
                                                                                    Net
                                       Provision   Other      Non-        Net     Earnings
                 Interest   Interest   For Loan   Income    Interest    Earnings   (Loss)
                  Income     Expense    Losses   (Expense)   Expense     (Loss)   Per Share
                 --------   --------   --------  ---------  --------   ---------  ---------
                               (Dollars In Thousands, Except Per Share Data)
<S>              <C>        <C>        <C>       <C>        <C>        <C>        <C>
First quarter
  1995........   $ 69,726   $ 53,505   $  3,000  $  2,762   $ 11,677   $  2,357   $  .22
  1994........     55,725     32,106     24,670     2,810     12,133     (6,115)    (.58)
  1993........     58,247     33,198     44,123     2,718     11,454    (16,402)   (1.57)
Second quarter
  1995........   $ 76,342   $ 57,739   $  8,203  $  3,251   $ 11,205   $  1,346   $  .13
  1994........     54,380     34,562     55,030     2,755     11,711    (25,553)   (2.42)
  1993........     56,526     32,918      1,849     4,023     11,443      8,328      .78
Third quarter
  1995........   $ 78,548   $ 57,183   $  6,173  $   (255)  $ 11,342   $  1,984   $  .19
  1994........     59,542     40,918      3,000     3,474     11,653      4,158      .39
  1993........     58,875     32,586     11,590     2,964     11,453      3,629      .34
Fourth quarter                                                                        
  1995........   $ 77,119   $ 55,650   $ 11,000  $  2,967   $ 11,679   $    848   $  .08
  1994........     65,777     50,069      3,000     2,225      9,999      3,046      .29
  1993........     55,797     32,914     10,117     2,349     10,948      2,397      .23
Total year
  1995........   $301,735   $224,077   $ 28,376  $  8,725   $ 45,903   $  6,535   $  .61
  1994........    235,424    157,655     85,700    11,264     45,496    (24,464)   (2.32)
  1993........    229,445    131,616     67,679    12,054     45,298     (2,048)    (.20)

</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, 1995  and
1994.   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.

                                 78
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(16) Fair Value of Financial Instruments (continued)

<TABLE>
<CAPTION>
                                                       1995                     1994
                                              -----------------------   -----------------------
                                              Historical                Historical       
                                                 Value     Fair Value      Value     Fair Value
                                              ----------   ----------   ----------   ----------
                                                            (Dollars In Thousands)
<S>                                           <C>          <C>          <C>          <C>
Mortgage-backed Securities...............      $827,064     $835,448     $821,317     $791,930
Investment Securities....................        46,862       46,691       40,770       38,359
Collateralized Mortgage Obligations......        29,874       29,493       43,282       40,957
Loans Held-for-Sale......................         7,377        7,464       30,399       30,399
</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>

                                                    1995                        1994
                                           ------------------------    ------------------------
                                                         Calculated                  Calculated
                                            Carrying     Fair Value     Carrying     Fair Value 
                                             Value         Amount        Value         Amount
                                           ----------    ----------    ----------    ----------
                                                          (Dollars In Thousands)
<S>                                        <C>           <C>           <C>           <C>
Adjustable Loans:
  Single Family......................      $1,556,368    $1,569,324    $1,471,156    $1,378,258
  Multi-Family.......................       1,191,852     1,188,435     1,244,990     1,070,107
  Commercial.........................         188,623       192,488       195,506       179,631
Fixed Rate Loans:
  Single Family......................          20,867        22,050        14,535        13,814
  Multi-Family.......................          11,714        12,360        12,701        12,212
  Commercial.........................           2,147         2,443         3,087         3,161
Other Real Estate Loans..............           3,135         3,582        20,297        20,921
Non-Real Estate Loans................             753           475         3,749         2,686
Non-Performing Loans.................          76,944        76,944        75,889        75,889
Fixed-Term Certificate Accounts......       1,782,059     1,788,581     1,817,503     1,808,165
Non-Term Deposit Accounts............         422,977       422,977       481,411       481,411
Borrowings...........................       1,666,943     1,667,953     1,604,821     1,602,130

</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.

                                 79
<PAGE>

             FIRSTFED FINANCIAL CORP. AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(16)  Fair Value of Financial Instruments (continued)


 Cash

     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 $18,417,000 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  accounts
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.

 Excess Servicing Arising from the Sale of Loans

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

                                 80
<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, 1995 and 1994, 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,  1995. 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  at
December  31, 1995 and 1994, and the results of their  operations
and  their  cash  flows for each of the years in  the  three-year
period  ended  December  31, 1995, in conformity  with  generally
accepted accounting principles.

      As  discussed  in  note  1  of the  consolidated  financial
statements,  FirstFed Financial Corp. and subsidiary adopted  the
provisions   of   the  Financial  Accounting  Standards   Board's
Statement  of Financial Accounting Standards No. 115,  Accounting
for Certain Investments in Debt and Equity Securities, in 1994.

                             KPMG Peat Marwick LLP


Los Angeles, California
January 23, 1996

                                 81
<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 4 through 8 of the Proxy Statement  for  the
Annual   Meeting  of  Stockholders  dated  April  24,   1996   is
incorporated herein by reference.

ITEM 11--EXECUTIVE COMPENSATION

      Information  regarding executive compensation appearing  on
pages  8 through 13 of the Proxy Statement for the Annual Meeting
of  Stockholders dated April 24, 1996 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 24, 1996 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 10 of  the Proxy Statement for the Annual Meeting of 
     Stockholders dated April 24, 1996  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.

                                 82
<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 and filed as Exhibit 10.5 to Form 10-K for the  fiscal
       year ended December 31, 1992 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 84).


     This 1995 Annual Report on Form 10-K and the Proxy Statement
for  the Annual Meeting of Stockholders dated April 24, 1996 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, 1996 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.

                                 83
<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/ William  S. Mortensen
                                      -------------------------                
                                        William S. Mortensen,
                                  Chairman and Chief Executive Officer

Date:   February 22, 1996

                           POWER OF ATTORNEY

      Each person whose signature appears below hereby authorizes  
William S. Mortensen and James P. Giraldin,  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 22nd day of February, 1996. 
              
           SIGNATURE                      TITLE
 
 /s/ William S. Mortensen      Chairman of the Board (Principal
----------------------------      
     William S. Mortensen      Executive Officer)

 /s/ James P. Giraldin         Executive Vice President (Principal
----------------------------          
     James P. Giraldin         Financial Officer)

 /s/ Ruben H. Valle            Senior Vice President and Controller
----------------------------            
     Ruben H. Valle            (Principal Accounting Officer)

 /s/ Samuel J. Crawford, Jr.   Director
----------------------------       
     Samuel J. Crawford, Jr.

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

 /s/ Babette E. Heimbuch       Director
----------------------------         
     Babette E. Heimbuch

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

 /s/ June Lockhart             Director
----------------------------            
     June Lockhart
     
 /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


                                 84