AMENDMENT NO. 1
                   DOWNEY SAVINGS AND LOAN ASSOCIATION, F. A.
                     EMPLOYEES' RETIREMENT AND SAVINGS PLAN
                          (October 1, 1997 Restatement)

                                AMENDMENT NO. 1,
                     EFFECTIVE AND ADOPTED JANUARY 28, 1998

WHEREAS,  the Board of Directors of Downey Savings and Loan Association,  F. A.,
has been advised that Article XII, of the Downey  Savings and Loan  Association,
F. A.  Employees'  Retirement  and Savings  Plan  (herein  the  "401(k)  Plan"),
provides special rules applicable to all loans made to Eligible  Employees under
the 401(k) Plan; and

WHEREAS,  Section 12.6 (c) provides  that a  Participant  may not apply for more
than one loan during the Plan Year, and;

WHEREAS,  Section 12.6 (c), provides that a Participant with an outstanding loan
may not apply for another loan until the  existing  loan is paid in full and may
not refinance an existing loan or attain a second loan for the purpose of paying
off an existing loan obtained under the 401(k) Plan.

WHEREAS,  the Board of Directors has determined  that it is in the best interest
of  Participants  to permit  Participants to obtain more than one loan in a Plan
Year,  provided a  Participant  may not apply for more than two (2) loans during
the Plan Year and may not have more than one loan outstanding at any time during
the Plan Year and provided further that the second loan obtained during the Plan
Year may not be for the purpose of paying off an existing  loan  obtained  under
the 401(k) Plan.

NOW, THEREFORE,  BE IT HEREBY RESOLVED, that Section 12.6 (c) of the 401(k) Plan
be amended to read in its entirety as follows (the Amendment):

Section 12.6 - Special Rules Applicable to Loans

     (c) Maximum Number of Outstanding  Loans: A Participant with an outstanding
loan may not apply for another loan until the existing  loan is paid in full and
may not  refinance  an existing  loan or attain a second loan for the purpose of
paying off the existing loan. A Participant  may not apply for more than two (2)
loans during the Plan Year. The provisions of this paragraph  shall not apply to
any loans made prior to the effective  date of this  amendment and  restatement;
provided,  however,  that a Participant  may not apply for a new loan  hereunder
until all outstanding  loans made to the Participant prior to the effective date
of this amendment and restatement have been paid in full.

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

Sponsor
Downey Savings and Loan Association, F. A.

By:             /s/ Jolene M. Wryn
       -------------------------------------
Title: JoLene M. Wryn, Senior Vice President, Director of Human Resources