SCHEDULE 14A INFORMATION
 
                  Proxy Statement Pursuant to Section 14(a) of
            the Securities Exchange Act of 1934 (Amendment No.    )
 
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    / /  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 
         240.14a-12
                              PALFED, INC.
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                (Name of Registrant as Specified In Its Charter)
 
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    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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[LOGO]


PALFED, INC.

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              MID-ATLANTIC UNDERVALUES PALFED'S POTENTIAL
                        VOTE AGAINST PROPOSAL #2
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                                                                  April 3, 1997


Dear Fellow Shareholders:

    At PALFED's April 22 Annual Meeting, you have an opportunity to 
send a clear message to Mid-Atlantic Investors by voting AGAINST its 
"Sell the Company" proposal. We urge you to join us in our effort to put 
a stop to the type of opportunism represented by Mid-Atlantic's 
campaign against PALFED.

    Shareholder value is PALFED's number one priority. Here are the 
reasons we think you should vote AGAINST Mid-Atlantic's proposal.

    -  MID-ATLANTIC'S STATEMENTS CANNOT BE TRUSTED. Mid-Atlantic's 
       March 25 letter to PALFED shareholders deliberately misrepresents 
       the historical performance of our company.  Mid-Atlantic knows just 
       as well as you do that in 1993 PALFED was recapitalized and that 
       significant changes were made in our management and business 
       strategy.  1993 was the starting point for the strategic plan that 
       has produced impressive results during the past four years.  Measured 
       from 1993, PALFED has outperformed industry and market 
       averages, as outlined in our Annual Report.

       Mid-Atlantic not only distorts our performance, it also fails 
       to point out that PALFED's market capitalization has grown from 
       approximately $5 million in 1992, when the stock traded as low 
       as $3.50, to more than $85 million at the end of the first 
       quarter of 1997, at a stock price of $16.25.

       Mid-Atlantic is flat wrong and seriously misleads PALFED 
       shareholders when it states that PALFED "has missed opportunities to 
       sell the company at a higher price than the current market price." No 
       such offer has ever been made for PALFED.

       In contrast to the statements in his letter, Jerry Shearer told 
       us in documented personal discussions on March 14, 1996 that 
       Mid-Atlantic had a target price for PALFED between $15 and $16.  Even 
       though we have already exceeded its goal, Mid-Atlantic now ignores 
       that performance.

    -  MID-ATLANTIC DOES NOT REPRESENTED THE INTERESTS AND GOALS OF ALL 
       PALFED SHAREHOLDERS.  Mid-Atlantic is a professional "destabilizer" 
       -- an opportunist that buys into companies, regardless of their 
       performance, solely for the purpose of putting them "in play" 
       and generating short term profit through a sale or buyout.  
       Mid-Atlantic's activities produce no long-term value and certainly 
       do not help the companies who are victimized, the employees



       whose jobs are sacrificed, the customers and communities whose services 
       are affected, or the shareholders who are deprived of future value.

    -  MID-ATLANTIC UNDERVALUES OUR COMPANY. Because Mid-Atlantic is playing an 
       investment game, it lacks understanding of PALFED's fundamentals, its 
       growth potential, and the business opportunities available in community 
       banking. Our management has a very different vision of both the company 
       and the potential of our industry. We think the past few years have 
       clearly demonstrated that our vision is right and that Mid-Atlantic's 
       narrow, short-term strategy is wrong.

    -  MID-ATLANTIC'S APPROACH TO SELLING PALFED IS ILLOGICAL AND COULD REDUCE 
       THE VALUE OF A FUTURE SALE OR MERGER. No one seriously interested in 
       maximizing value through the sale of a business would simply hoist a 
       "for sale" sign. Sales negotiations are a complex process and should 
       reflect the needs and opportunities of the buyer as much as the value 
       of the seller. PALFED's board and management believe that our strategy 
       for building value through growth is also the correct path to 
       obtaining maximum value through a sale or merger of the company if 
       such an opportunity were to arise.

     Your board has not chosen a path of independence just for the sake of 
independence. We are always willing to consider any legitimate offer for the 
company at a meaningful premium. Our shareholders know this; Mid-Atlantic 
knows this. There is nothing to be gained from a proposal that can only 
interfere with a business strategy that has already demonstrated its 
effectiveness. We urge you to support us and send a message to Mid-Atlantic 
by voting AGAINST their proposal.


                                                 Sincerely,


                                                 /s/ John C. Troutman
                                                 ------------------------------
                                                 John C. Troutman
                                                 President and
                                                 Chief Executive Officer


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               If your shares of Common Stock are held in the name
                   of a bank or brokerage firm, only that firm
                    can execute a proxy card on your behalf.
              Please contact the person responsible for your account
             and give instructions for a WHITE proxy card to be voted
                     FOR Proposal 1 and AGAINST Proposal 2.

   If you have questions or need assistance in voting your shares, please
       contact the firm assisting us in the solicitation of proxies:

                           GEORGESON & COMPANY INC.
                              WALL STREET PLAZA
                             NEW YORK, NY 10005

                          TOLL-FREE: 1-800-223-2064
                     BANKS & BROKERS CALL: 212-440-8600

                     Internet: http://www.georgeson.com
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                           HOW TO VOTE YOUR PROXY CARD
                  IN SUPPORT OF PALFED'S BOARD AND MANAGEMENT
                  -------------------------------------------


1.  Sign and date your proxy and check the boxes FOR item #1, the 
    election of directors, and AGAINST item #2, the Mid-Atlantic 
    proposal.
                                     OR
2.  Simply sign and date the proxy.  If you do not check any of the 
    boxes, your shares will be voted as management recommends.




                             TO CHANGE YOUR VOTE,
                  SIMPLY EXECUTE, SIGN, DATE AND MAIL THIS PROXY,
     IT WILL REVOKE ANY PRIOR PROXY YOU SENT TO PALFED OR TO MID-ATLANTIC.


                                 PALFED, INC.


Dear Shareholder:

Please accept our thanks for sending in your WHITE Proxy Card.

To avoid the possibility of the validity of your WHITE Proxy Card being 
challenged or disqualified for the reason(s) indicated below, we are 
requesting that you sign, date and mail the enclosed new WHITE Proxy Card 
with the correction indicated below in the self-addressed envelope provided  
for your convenience. This WHITE Proxy Card will automatically revoke any 
previous WHITE Proxy Card when it is returned to us.

/ / Your previous WHITE Proxy was unsigned. (If signing as attorney, 
    executor, administrator, personal representative of the estate, corporate 
    officer, partner, trustee, custodian or guardian, please sign and give your 
    full title as such.)

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    new proxy in the enclosed envelope.)

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    attorney, executor, administrator, personal representative of the estate, 
    corporate officer, partner, trustee, custodian or guardian, please sign and 
    give your full title as such such.)

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/ / Other ____________________________________________________________________

    __________________________________________________________________________

Since time is of the essence, we would greatly appreciate your signing, 
dating and mailing the enclosed WHITE Proxy Card as soon as possible. Please 
mail it in the envelope provided for your convenience. Once again, we greatly 
appreciate your support.


Sincerely,



PALFED, INC.