AMENDMENT NO. 1
                    DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
                          EMPLOYEE STOCK PURCHASE PLAN
                  (AMENDED AND RESTATED AS OF JANUARY 1, 1996)

                                AMENDMENT NO. 1,
                     EFFECTIVE AND ADOPTED JANUARY 22, 1997

WHEREAS,  the Board of Directors  of Downey  Savings has been advised by counsel
that,  in order  to be more  fully  assured  that the  Downey  Savings  and Loan
Association,  F.A.,  Employee  Stock  Purchase Plan (the "Plan") is eligible for
exemption from  registration  under the Securities Act of 1933, as amended,  the
Plan should be amended to provide  that  participants  vote all shares of Downey
Financial Corp. Common Stock acquired pursuant to the Plan, whether  distributed
or undistributed; and

WHEREAS,  the Board of Directors has determined  that it is in the best interest
of Downey Savings to so amend the Plan;

NOW, THEREFORE,  BE IT HEREBY RESOLVED,  that Section 8.1 of the Plan be amended
to read in its entirety as follows (the "Amendment"):

     "Section 8.1 Rights of Stockholder.  Each Participant  shall be entitled to
direct the voting of all shares of Downey Financial Corp. Common Stock purchased
on his behalf under the Plan."

BE IT  FURTHER  RESOLVED,  that  the  officers  of  Downey  Savings  hereby  are
authorized,  empowered  and directed to take such further  actions as they shall
deem necessary or appropriate to permit the Amendment to become  effective or to
otherwise  carry out and  fulfill  the  purposes  and  intent  of the  foregoing
resolutions.

IN WITNESS WHEREOF,  Downey Savings and Loan  Association,  F.A. has caused this
Amendment No. 1 to be executed by its duly authorized officers.

Sponsoring Employer:

Downey Savings and Loan Association, F.A.

  /s/ Stephen W. Prough
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Stephen W. Prough

  /s/ Thomas E. Prince
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Thomas E. Prince

   /s/ JoLene Bryant
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JoLene Bryant