AMENDMENT TO ADDITIONAL COMPENSATION AGREEMENT

     This   Amendment  to  that  certain   Additional   Compensation   Agreement
("Amendment")  is entered into as of this 28th day of June,  2000 by and between
Downey  Savings  and Loan  Association,  F. A.  ("Downey")  successor  to Downey
Savings and Loan Association,  a California corporation and Maurice L. McAlister
("McAlister") to amend and modify that certain Additional Compensation Agreement
("Agreement")  that was made and  entered  into as of  December  21, 1989 by and
between  Downey  Savings and Loan  Association,  a  California  corporation  and
McAlister.  Unless otherwise specifically defined herein, capitalized terms used
in this  Amendment  which are  defined in the  Agreement  are used  herein as so
defined.

     WHEREAS,  the Agreement provides for Downey to pay and McAlister to receive
certain  Compensation  payments  upon  McAlister's  retirement as an employee of
Downey, and

     WHEREAS,  McAlister  after having  completed more than thirty (30) years of
service has retired as an employee of Downey and of its wholly owned subsidiary,
DSL Service Company, and

     WHEREAS,  McAlister  has  continued  to ably serve and  actively  guide the
growth and  profitability  of Downey Financial  Corp.,  Downey,  and DSL Service
Company  as its  Chairman  of the  respective  Boards  of  Directors,  of Downey
Financial Corp. Downey and DSL Service Company and

     WHEREAS,  Downey  Financial  Corp.  and Downey's  Boards of Directors  have
reviewed  and agreed and  authorized  Downey to enter into this  Amendment  with
McAlister on the terms and conditions set forth in this Amendment, and

     WHEREAS,  Downey Financial Corp.,  Downey and DSL Service Company desire to
continue to receive the benefit of McAlister's advice, counsel and service.

     NOW  THEREFORE,  in  consideration  of  the  foregoing,   the  receipt  and
sufficiency of which consideration is hereby acknowledged,  Downey and McAlister
agree as follows:

1.   Paragraph 1 of the  Agreement  is amended to read  effective as of June 28,
     2000 in its entirety as follows:

     In  consideration  of  McAlister's  continuous  years of  service to Downey
     Financial Corp.,  Downey and DSL Service Company,  as a founder,  employee,
     director  and as Chairman of the  respective  Boards of Directors of Downey
     Financial  Corp.,  Downey and DSL Service  Company  until the  Compensation
     Termination Date, (as defined herein below),  Downey shall pay to McAlister
     or  to   McAlister's   Beneficiary   the   additional   compensation   (the
     "Compensation") as provided below.


                                       1



2.   Paragraph 2 of the  Agreement  is amended to read  effective as of June 28,
     2000 in its entirety as follows:

     Subject to adjustments  that may be made in accordance  with Paragraph 4 of
     the Agreement,  effective as of June 28, 2000 the amount of Compensation to
     be paid to McAlister shall be $35,688.27 per month.

3.   Paragraph 3 of the  Agreement  is amended to read  effective as of June 28,
     2000 in its entirety as follows:

     The Compensation  shall be paid to McAlister for so long as McAlister lives
     but not less than a term of one hundred  twenty  (120) months from June 28,
     2000.  The date upon  which  Compensation  shall  cease to be paid shall be
     referred  to in this  Amendment  and  the  Agreement  as the  "Compensation
     Termination  Date".  In  the  event  of  McAlister's  death  prior  to  the
     expiration of 120 months from June 28, 2000,  Downey shall  continue to pay
     the Compensation  (until the Compensation  Termination  Date) to the person
     last  designated  by  McAlister  as  McAlister's  Beneficiary  to Downey in
     writing.  For example,  if McAlister  receives the Compensation for two (2)
     years  after  the  date  hereof,  and  then  dies,  Downey  shall  pay  the
     Beneficiary the Compensation for an additional eight (8) years.

4.   Except as expressly amended and modified by this Amendment,  the provisions
     of the Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day
     and year first above written.

     "Downey"       Downey Savings and Loan Association, F.A.

                    By:/s/ Daniel D. Rosenthal
                    --------------------------
                       Daniel D. Rosenthal
                       Director, President and Chief Executive Officer

                    By:/s/ Donald E. Royer
                    ----------------------
                       Donald E. Royer,
                       Executive Vice President, General Counsel,
                       Corporate Secretary

     "McAlister"    /s/ Maurice L. McAlister
                   -------------------------
                        Maurice L. McAlister