[LETTERHEAD]

                                       FOR MORE INFORMATION CALL:

                                       PALFED, INC.
                                       107 Chesterfield Street S.
                                       Aiken, South Carolina  29801

                                       Darrell R. Rains
                                       Executive Vice President and CFO
                                       (803) 642-1328

                                       April 10, 1997

                                       FOR IMMEDIATE RELEASE

            PALFED, INC. ANNOUNCES 21% INCREASE IN FIRST QUARTER EARNINGS

AIKEN, South Carolina, April 10, 1997 -- PALFED, INC. (NASDAQ:PALM) ("PALFED")
announced net earnings of $1,350,000 ($0.25 per common share) for the first
quarter of 1997 compared to net earnings of $1,092,000 ($0.21 per common share)
in the first quarter of 1996, a 21.0% increase over the prior year.

John C. Troutman, PALFED's President and Chief Executive Officer said, "Our
outstanding first quarter is a clear indication that our strategic plan of
growth and expansion is working to enhance shareholder value. We opened our
second full-service banking center on Hilton Head Island on March 24, 1997 and
intend to take advantage of other opportunities as they present themselves. We
have an excellent franchise that will be more and more valuable as other banks
are sold and we strengthen our claim as South Carolina's Bank."

PALFED, INC. is a South Carolina corporation whose principal subsidiary,
Palmetto Federal Savings Bank of South Carolina, operates twenty-two banking and
seven mortgage lending offices in South Carolina and one mortgage lending office
in Georgia.  At March 31, 1997 PALFED had $655.7 million in total assets and
deposits of $551.4 million. PALFED'S common stock is traded in the Nasdaq
National Market System under the symbol "PALM".