SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
(Mark One)

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the quarterly period ended March 31, 1999

                                       OR

[    ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

     For the transition period from            to           .
                                    ----------    ----------

                           Commission File No. 0-24621


                            Farnsworth Bancorp, Inc.
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as Specified in Its Charter)


         New Jersey                                             22-3591051     
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation                 (I.R.S. Employer
 or Organization)                                            Identification No.)

               789 Farnsworth Avenue, Bordentown, New Jersey 08505
               ---------------------------------------------------
                    (Address of Principal Executive Offices)


                                 (609) 298-0723
--------------------------------------------------------------------------------
                 Issuer's Telephone Number, Including Area Code

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                        YES      X                NO            
                               -----                   -----

   Number of shares of Common Stock outstanding as of April 20, 1999: 379,858
                                                                      -------

Transitional Small Business Disclosure Format (check one)

                        YES                       NO     X     
                               -----                   -----

<PAGE>


                            FARNSWORTH BANCORP, INC.

                                    Contents
                                    --------
<TABLE>
<CAPTION>

                                                                                                            Page(s)
                                                                                                            -------
PART I - FINANCIAL INFORMATION

<S>                                                                                                             <C>
     Item 1.  Financial Statements................................................................................3

          Consolidated Statements of Financial Condition at March 31, 1999
          (unaudited) and September 30, 1998......................................................................3

          Consolidated  Statements  of Income and  Comprehensive  Income for the
          three months ended March 31, 1999 and March 31, 1998 (unaudited) and
          for the six months ended March 31, 1999 and March 31, 1998 (unaudited)..................................4

          Consolidated Statements of Cash Flows for the six months ended
          March 31, 1999 and March 31, 1998 (unaudited)...........................................................5

     Item 2.  Management's Discussion and Analysis of Financial Condition and
                Results of Operations.............................................................................8


PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings..................................................................................12

     Item 2.  Changes in Securities and Use of Proceeds..........................................................12

     Item 3.  Defaults upon Senior Securities....................................................................12

     Item 4.  Submission of Matters to a Vote of Security Holders................................................12

     Item 5.  Other Information..................................................................................13

     Item 6.  Exhibits and Reports on Form 8-K...................................................................13

     Signatures..................................................................................................13

</TABLE>


                                      -2-
<PAGE>
                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                            FARNSWORTH BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                       March 31,   September 30,
                                                         1999            1998
                                                      ------------    ------------
                                                      (UNAUDITED)      (AUDITED)
<S>                                                   <C>             <C>         
ASSETS
Cash and due from banks                               $    420,879    $  3,928,077
Securities available for sale                            6,132,335         134,187
Securities held to maturity:
  Mortgage-backed                                        1,498,027       1,890,642
  Other                                                  2,264,291       2,761,367
Loans receivable, net                                   35,841,575      31,041,552
Accrued interest receivable                                363,820         227,318
Federal Home Loan Bank of New York
  stock at cost substantially restricted                   296,800         261,300
Premises and equipment                                   1,542,603       1,468,846
Others assets                                               48,379          60,458
                                                      ------------    ------------
  Total assets                                        $ 48,408,709    $ 41,773,747
                                                      ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                              $ 39,468,963    $ 35,777,855
Borrowings from FHLB                                     3,000,000
Advances by borrowers for taxes and insurance              192,835         214,884
Accrued and deferred income taxes                           95,342         183,698
Accrued interest payable                                    85,993          38,692
Accounts payable and other accrued expenses                 47,812         115,890
                                                      ------------    ------------

  Total liabilities                                     42,890,945      36,331,019
                                                      ------------    ------------

Preferred stock $.10 par value, 1,000,000 shares
  authorized; none issued and outstanding
Common stock $.10 par value, 5,000,000 shares
  authorized; 379,858 shares issued and outstanding         37,985          37,985
Additional paid in capital                               3,396,262       3,396,262
Retained earnings substantially restricted               2,305,564       2,227,363
Unreleased common stock and related additional
  paid in capital acquired by employee stock
  ownership plan (ESOP)                                   (303,880)       (303,880)
Net unrealized appreciation on available for sale
  securities net of income taxes                            81,833          84,998
                                                      ------------    ------------
  Total stockholders' equity                             5,517,764       5,442,728
                                                      ------------    ------------
  Total liabilities and stockholders' equity          $ 48,408,709    $ 41,773,747
                                                      ============    ============
</TABLE>

The accompanying notes to unaudited  consolidated  interim financial  statements
are an integral part of these statements.

                                      -3-



<PAGE>



                                       FARNSWORTH BANCORP, INC. AND SUBSIDIARY
                                          CONSOLIDATED STATEMENTS OF INCOME
                                              AND COMPREHENSIVE INCOME
                                                     (UNAUDITED)


<TABLE>
<CAPTION>

                                                       Three Months ended            Six Months ended
                                                            March 31,                    March 31,
                                                        1999         1998           1999           1998
                                                  ------------   -------------  --------------  ------------
<S>                                                <C>            <C>           <C>            <C>        
Interest income:
  Loans receivable                                   $   652,376    $   571,837   $ 1,269,639    $ 1,106,434
  Securities                                             120,923         95,115       217,331        188,623
    Federal funds sold                                     6,526         13,087        33,221         37,459
                                                     -----------    -----------   -----------    -----------
    Total interest income                                779,825        680,039     1,520,191      1,332,516

Interest expense:
  Deposits                                               352,404        329,326       703,024        676,511
  Federal Home Loan Bank advances                         39,449         44,690           500
                                                     -----------    -----------   -----------    -----------
    Total interest expense                               391,853        329,326       747,714        677,011
                                                     -----------    -----------   -----------    -----------
Net interest income                                      387,972        350,713       772,477        655,505
Provision for loan losses                                  9,000         57,000        14,000         59,000
                                                     -----------    -----------   -----------    -----------

  Net interest income after provision for loan
     losses                                              378,972        293,713       758,477        596,505
                                                     -----------    -----------   -----------    -----------

Noninterest income:
  Fees and other service charges                          64,494         33,900       126,324         77,913
  Net realized Gains on Sale of Available-for-Sale
    Securities                                             1,484            933         1,484            933


  Collection on deficiency judgment                         --             --            --           54,024
                                                     -----------    -----------   -----------    -----------

    Total noninterest income                         $    65,978    $    34,833   $   127,808    $   132,870
                                                     -----------    -----------   -----------    -----------

Noninterest expense:
  Compensation and benefits                          $   184,928    $   123,207   $   347,250    $   258,952
  Occupancy and equipment                                 78,265         52,707       141,396        114,274
  Federal insurance premiums and assessments               5,376         11,750        10,694         17,205
  Other                                                  133,003        109,093       254,944        187,219
                                                     -----------    -----------   -----------    -----------
    Total noninterest expense                            401,572        296,757       754,284        577,650

Income before provision for income taxes                  43,378         31,789       132,001        151,725
Provision for income taxes                                18,240         13,513        53,800         38,045
                                                     -----------    -----------   -----------    -----------
    Net income                                       $    25,138    $    18,276   $    78,201    $   113,680
                                                     -----------    -----------   -----------    -----------
Other Comprehensive Income, net of taxes:
  Unrealized Gain (Loss) on Securities
    Available for Sale                               $   (22,848)   $    24,078   $    (1,681)   $    24,078
Reclassification adjustment for gains
  included in net income                                  (1,484)          (933)       (1,484)          (933)
                                                     -----------    -----------   -----------    ----------- 
Comprehensive Income                                 $       806    $    41,421   $    75,036    $   136,825
                                                     ===========    ===========   ===========    ===========
                                                                                                         806

Net income per common share:  Basic                  $      0.07    $      0.05   $      0.22    $      0.33

Shares used in computing basic income per share          349,470        349,470       349,470        349,470

</TABLE>

The accompanying notes to unaudited  consolidated  interim financial  statements
are an integral part of these statements.

                                      -4-
<PAGE>



                     FARNSWORTH BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                      Six months ended March 31,
                                                                                         1999            1998
                                                                                     ------------    ------------

<S>                                                                                 <C>             <C>         
Cash flows from operating activities:
  Net income                                                                         $     78,201    $    113,680
                                                                                     ------------    ------------
   Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                                            33,557          27,159
  Provision for loan losses                                                                14,000          59,000
  Net (gain) on sale of assets                                                             (1,484)           (933)
  (Increase) decrease in accrued interest receivable                                     (136,502)          9,694
  Increase (decrease) in other assets                                                      12,079         (56,494)
  (Decrease) increase in advances from borrowers                                          (22,049)          6,841
  (Decrease) increase in accrued income taxes and
      deferred income taxes                                                               (86,727)         43,530
  Increase in accrued interest payable                                                     47,301           2,973
  (Decrease) in other accrued liabilities                                                 (68,078)        (15,272)
                                                                                     ------------    ------------
    Total adjustments                                                                    (207,903)         76,498
                                                                                     ------------    ------------
    Net cash provided (used) by operating activities                                     (129,702)        190,178
                                                                                     ------------    ------------
Cash flows from investing activities:
  Net increase in loans receivable                                                     (4,814,023)     (1,930,738)
  Redemption of securities, held to maturity                                              895,685       1,464,384
  Purchase of Federal Home Loan Bank stock                                                (35,500)        (27,000)
  Proceeds from sale of securities available for sale                                     492,344         997,808
  Purchase of securities, available for sale                                           (6,497,140)     (2,364,490)
  Purchase of premises and equipment                                                     (109,970)        (29,438)
                                                                                     ------------    ------------
    Net cash used in investing activities                                             (10,068,604)     (1,889,474)
                                                                                     ------------    ------------
Cash flows from financing activities:
  Net increase in deposits                                                              3,691,108         891,605
  Increase in Federal Home Loan Bank Borrowings                                         3,000,000            --
                                                                                     ------------    ------------
    Net cash provided by financing activities                                           6,691,108         891,605
                                                                                     ------------    ------------

Net decrease in cash and due from banks                                                (3,507,198)       (807,691)
Cash at beginning of period                                                             3,928,077       1,282,390
                                                                                     ------------    ------------
Cash at end of period                                                                $    420,879    $    474,699
                                                                                     ============    ============
Supplemental disclosure:
  Cash paid during the period for:
    Interest                                                                         $    700,413    $    674,038
                                                                                     ============    ============
    Income taxes                                                                     $     15,000    $      6,500
                                                                                     ============    ============
Unrealized gain (loss) on securities available for sale,
  net of deferred income taxes                                                       $     (3,165)   $     82,460
                                                                                     ============    ============

</TABLE>

The accompanying notes to unaudited  consolidated  interim financial  statements
are an integral part of these statements.

                                      -5-
<PAGE>



                     FARNSWORTH BANCORP, INC. AND SUBSIDIARY
          NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS


NOTE 1.  Presentation of Financial Information
         -------------------------------------

         The accompanying  unaudited  consolidated  interim financial statements
include  the  accounts of  Farnsworth  Bancorp,  Inc.  (the  "Company")  and its
subsidiary  Peoples  Savings  Bank  (the  "Bank").  The  accompanying  unaudited
consolidated  interim financial statements have been prepared in accordance with
the  instructions  to Form 10-QSB.  Accordingly,  they do not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.  The accounting and reporting policies of the
Company  conform in all  material  respects  to  generally  accepted  accounting
principles and to general  practice within the savings bank industry.  It is the
opinion of  management  that the  accompanying  unaudited  consolidated  interim
financial  statements reflect all adjustments which are considered  necessary to
report  fairly the  financial  position as of March 31, 1999,  the  Consolidated
Statements of Income and Comprehensive Income for the six months ended March 31,
1999 and 1998, and the Consolidated  Statements of Cash Flows for the six months
ended March 31,  1999 and 1998.  The  results of  operations  for the six months
ended March 31,  1999,  are not  necessarily  indicative  of results that may be
expected for the entire year ending  September 30, 1999 or for any other period.
The accompanying  unaudited  consolidated interim financial statements should be
read in conjunction with the Company's September 30, 1998 consolidated financial
statements  including  the notes  thereto,  which are included in the  Company's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 1998.

In preparing the financial statements,  management is required to make estimates
and assumptions that affect the reported amount of assets and  liabilities,  the
disclosure of contingent  assets and liabilities  and the reported  revenues and
expenses.  Actual results could differ  significantly  from those estimates.  In
addition,  various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses and foreclosed
real estate.  Such  agencies may require the Bank to recognize  additions to the
allowance  for loan losses or additional  writedowns  on foreclosed  real estate
based on their  judgments  about  information  available  to them at the time of
their examination.

Cash Equivalents
----------------

For the purpose of  presentation in the  Consolidated  Statements of Cash Flows,
cash  and  cash  equivalents  are  defined  as  those  amounts  included  in the
balance-sheet  caption  "cash and due from  banks."  The Company  considers  all
highly liquid investments with original  maturities of three months or less when
purchased as cash equivalents.

Nature of Operations
--------------------

The  Company is a  non-operating  savings  and loan  holding  company.  The Bank
operates  two  branches  in  Burlington  County,  New  Jersey.  The Bank  offers
customary  banking  services,  including  accepting  checking,  savings and time
deposits  and the making of  commercial,  real  estate and  consumer  loans,  to
customers  who  are  predominantly   small  and  middle-market   businesses  and
middle-income individuals.


                                      -6-
<PAGE>



NOTE 2.  Net Income Per Common Share
         ---------------------------

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement No. 128, "Earnings Per Share".  Statement No. 128 is effective for the
years  ended after  December  15, 1997 and  requires  that prior  period data be
restated. Per share amounts are reported in accordance with Statement No. 128.

         Basic net income per common share is  calculated by dividing net income
by  the  number  of  shares  of  common  stock  outstanding,  adjusted  for  the
unallocated  portion of shares held by the Company's  Employee  Stock  Ownership
Plan  ("ESOP").  Diluted net income per share is  calculated  by  adjusting  the
number of shares of common  stock  outstanding  to  include  the effect of stock
options,  stock-based  compensation  grants and other  securities,  if dilutive,
generally,  using the  treasury  stock  method.  The Company has no  potentially
dilutive securities.

         Per share  amounts for the quarters  ended March 31, 1999 and 1998 have
been  calculated  based on the net  income  for the  entire  year and assume the
common stock issued has been outstanding since October 1, 1996.

<TABLE>
<CAPTION>
                                                            For the three months ended March 31,
                                 -----------------------------------------------------------------------------------  
                                                 1999                                     1998(1)
                                 ---------------------------------------- ------------------------------------------ 
                                                Weighted       Per-                      Weighted         Per-
                                                Average        Share                     Average          Share       
                                   Income        Shares        Amount       Income        Shares          Amount
                                 ------------ -------------- ------------ ------------ -------------- --------------
<S>                                <C>           <C>           <C>          <C>           <C>            <C>   
Basic EPS
Net income available to Common
Shareholders                       $25,138       349,470       $ 0.07       $18,276       349,470        $ 0.05
                                    ======       =======         ====        ======       =======          ====

</TABLE>

<TABLE>
<CAPTION>
                                                            For the six months ended March 31,
                                 -----------------------------------------------------------------------------------  
                                                 1999                                     1998(1)
                                 ---------------------------------------- ------------------------------------------ 
                                                Weighted       Per-                      Weighted         Per-
                                                Average        Share                     Average          Share       
                                   Income        Shares        Amount       Income        Shares          Amount
                                 ------------ -------------- ------------ ------------ -------------- --------------
<S>                                <C>           <C>           <C>          <C>           <C>            <C>   
Basic EPS
Net income available to Common
Shareholders                       $78,201       349,470       $ 0.22       $113,680      349,470        $ 0.33
                                    ======       =======         ====        =======      =======          ====

</TABLE>

There were no dilutive effects as of March 31, 1999 or 1998.


--------------------
(1)      1998 shown for comparison only.

NOTE 3.  Recent Accounting Pronouncements
         --------------------------------

         In June 1997, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards No. 130,  Reporting  Comprehensive
Income and its  components  in financial  statements.  Statement 130 states that
comprehensive  income  includes  reported net income of a company,  adjusted for
items that are currently  accounted for as direct entries to equity, such as the
net unrealized gain or loss on securities  available for sale,  foreign currency
items, and minimum pension  liability  adjustments. 

                                      -7-
<PAGE>

This statement is effective for both interim and annual periods  beginning after
December 15, 1997. As required,  the Company adopted  Statement 130 in the first
quarter of fiscal 1999, and reported comprehensive income in accordance with the
new statement.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Financial Condition

         Total assets increased $6.6 million or 15.79% to $48.4 million at March
31, 1999 from $41.8  million at September  30, 1998.  The increase was primarily
attributable to a $4.8 million increase in the Bank=s loans receivable, net, and
a $6.0 million increase in securities  available for sale, partially offset by a
decrease  in cash and  equivalents  of $3.5  million,  as well as a decrease  in
mortgage-backed  securities of $393,000.  The Bank=s total liabilities increased
$6.6 million or 18.06%, to $42.9 million at March 31, 1999 from $36.3 million at
September 30, 1998.  The increase was primarily  attributable  to a $3.7 million
increase  in  deposits  and an  increase  in  borrowings  from  the FHLB of $3.0
million.

         Stockholders=  equity  increased  $75,000  to $5.5  million or 11.4% of
total  assets at March 31,  1999,  as compared to $5.4 million or 13.0% of total
assets at September 30, 1998. The increase in stockholders=  equity is primarily
attributable to net income for the six months ended March 31, 1999.

Results of Operations

         Net  Income.  Net income was $25,000 or $0.07 per share for the quarter
ended  March 31,  1999  compared  to $18,000 or $0.05 per share for the  quarter
ended  March 31,  1998.  For the six months  ended March 31, 1999 net income was
$78,000 or $.22 per share  compared  to  $114,000  or $.33 per share for the six
months  ended  March  31,  1998.  The  decrease  was  attributable  to a $54,000
collection of a deficiency judgement in the first quarter of 1998 compared to no
such  collection  in 1999.  The  decrease in net income for the six months ended
March 31, 1999 was  partially  offset by an increase in net  interest  income of
$117,000, and a decrease in the provision for loan losses of $45,000,  partially
offset by an increase  in  non-interest  expense of $177,000  and an increase in
income taxes of $16,000.

         Net  Interest  Income.  Net  interest  income  is the most  significant
component  of the Bank=s  income from  operations.  Net  interest  income is the
difference  between interest the Bank received on its  interest-earning  assets,
primarily loans,  investment and  mortgage-backed  securities,  and interest the
Bank  pays  on  its   interest-bearing   liabilities,   primarily  deposits  and
borrowings.  Net  interest  income  depends on the volume of and rates earned on
interest-earning  assets and the  volume of and rates  paid on  interest-bearing
liabilities.

         Net interest  income after  provision  for the loan losses was $379,000
for the quarter  ended March 31, 1999 compared to $294,000 for the quarter ended
March 31, 1998. Net interest  income after  provision for loan losses  increased
$162,000 or 27.2%,  to $758,000  for the six months  ended  March 31,  1999,  as
compared to the six months ended March 31, 1998.  The increase was primarily due
to the  growth in  interest-earning  assets to $46.5  million in 1999 from $36.8
million in 1998.

         Provision for Loan Losses. Provision for loan losses was $9,000 for the
quarter  ended March 31, 1999 as compared to $57,000 for the quarter ended March
31,  1998.  The higher  provision in 1998 was to bring the  allowances  for loan
losses to a level that is  adequate to provide for  estimated  losses. 

                                      -8-
<PAGE>

However,  there can be no assurance  that further  additions will not be made to
the allowance and that such losses will not exceed the estimated amount. For the
six months  ended March 31,  1999 the  provision  for loan  losses were  $14,000
compared to $59,000 for the six months ended March 31, 1998.

         Non-Interest  Income.  Non-interest  income was $66,000 for the quarter
ended  March 31, 1999  compared to $35,000 for the same period in 1998.  For the
six months ended March 31, 1999  non-interest  income was  $128,000  compared to
$133,000 for the same period in 1998.  This decrease in the Bank=s  non-interest
income was due to the collection of a $54,000  deficiency  judgment in the first
quarter  of 1998  offset by an  increase  in fees and other  service  charges of
$48,000.

         Non-Interest Expense. Non-interest expense was $402,000 for the quarter
ended March 31, 1999  compared to $297,000 for the same period of 1998.  For the
six months ended March 31, 1999 non-interest  expenses  increased by $177,000 to
$754,000 from $577,000 for the six months ended March 31, 1998.  The increase is
attributed  to an increase of $88,000 in the Bank=s  compensation  and  benefits
partly due to the  increase in  personnel  needed to  accommodate  the growth in
assets  especially in the lending area. Also an increase in office occupancy and
equipment  of $27,000 and an increase of $68,000 in other  non-interest  expense
which include  additional  legal,  professional and printing expenses related to
the  costs of being a public  company,  as well as higher  loan and NOW  account
processing fees.

         Income Tax Expense.  Income tax expense  increased $16,000 from $38,000
in the first six months of 1998 to $54,000 in 1999.  This increase in income tax
expense is due to permanent differences.

Liquidity and Capital Resources

         The Bank is  required to maintain  minimum  levels of liquid  assets as
defined by OTS  regulations.  This  requirement,  which varies from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of the Bank's deposits and short-term  borrowings.  The required ratio currently
is 4.0% and the Bank's regulatory  liquidity ratio average was 12.52% and 11.14%
at March 31, 1999 and 1998, respectively.

         The Bank's  primary  sources of funds are deposits,  repayment of loans
and  mortgage-backed   securities,   maturities  of  investment  securities  and
interest-bearing  deposits with other banks, advances from the FHLB of New York,
and funds  provided from  operations.  While  scheduled  repayments of loans and
mortgage-backed   securities  and   maturities  of  investment   securities  are
predictable  sources of funds,  deposit flows,  and loan prepayments are greatly
influenced  by the general  level of interest  rates,  economic  conditions  and
competition.  The Bank uses its liquidity resources principally to fund existing
and future loan commitments, maturing certificates of deposit and demand deposit
withdrawals,  to invest in other interest-earning assets, to maintain liquidity,
and meet operating expenses.

         Net cash used by the Bank's  operating  activities (the cash effects of
transactions  that  enter  into the Bank's  determination  of net  income  e.g.,
non-cash items,  amortization and  depreciation,  provision for loan losses) for
the six months ended March 31, 1999 was  $130,000,  an increase of $320,000,  as
compared to the same period in 1998. The increase in 1999 was primarily due to a
$36,000  decrease in the Bank's net income, a decrease in the accrued income tax
and deferred income taxes of $87,000, and a decrease in non-deposit  liabilities
of $68,000, as well as an increase in accrued interest receivable of $137,000.


                                      -9-
<PAGE>



         Net  cash  used  by  the  Bank's  investing   activities   (i.e.,  cash
disbursements,  primarily for the purchase of the Bank's  investment  securities
and mortgage-backed securities portfolios and the Bank's loan portfolio) for the
six months ended March 31, 1999,  totalled  $10.1  million,  an increase of $8.2
million  from the  same  period  in 1998.  The  decrease  in cash was  primarily
attributable  to funding net loan growth of $4.8  million in 1999 as compared to
$1.9  million in 1998 as well as  investment  purchases  of $6.5 million in 1999
compared to $2.3 million in 1998.  The decrease in cash was partially  offset by
redemption  of  securities  of $896,000  in 1999 as compared to $1.5  million in
1998.

         Net cash  provided  in the  Bank's  financing  activities  (i.e.,  cash
receipts  primarily  from net  increases in deposits  and net  increases in FHLB
advances) for the six months ended March 31, 1999,  totalled  $6.7  million,  an
increase of $5.8 million as compared to the six months ended March 31, 1998.

         Office of Thrift Supervision ("OTS") capital regulations  applicable to
the Bank require  savings  institutions  to meet three  capital  standards:  (1)
tangible  capital equal to 1.5% of total adjusted  assets,  (2) a leverage ratio
(core  capital)  equal  to at  least  3% of  total  adjusted  assets,  and (3) a
risk-based capital requirement equal to 8.0% of total  risk-weighted  assets. In
addition,  the OTS prompt corrective  action regulation  provides that a savings
institution  that  has a  leverage  capital  ratio  of  less  than  4%  (3%  for
institutions  receiving  the highest  examination  rating)  will be deemed to be
"undercapitalized"  and may be subject to certain restrictions.  The Bank was in
compliance with these  requirements  at March 31, 1999, with tangible,  core and
risk based capital ratios of 9.58%, 9.58% and 19.54%, respectively.

Year 2000 Issues

         The  approaching  millennium is causing  organizations  of all types to
review their computer  systems for the ability to properly  accommodate the year
2000.  When  computer  systems  were first  developed,  two digits  were used to
designate the year in date calculations and "19" was assumed for the century. As
a result,  there is  significant  concern about the integrity of date  sensitive
calculations  when the calendar  rolls over to January 1, 2000.  An older system
could interpret  01/01/00 as January 1, 1900 potentially  causing major problems
calculating interest, payment, delinquency or maturity dates.

         The following  discussion of the  implications of the Year 2000 problem
for the Bank contains  numerous  forward-looking  statements based on inherently
uncertain  information.  The cost of the  project and the date on which the Bank
plans to complete the internal Year 2000 modifications are based on management's
best estimates,  which were derived  utilizing a number of assumptions of future
events including the continued  availability of internal and external resources,
third party modifications and other factors.  However, there can be no assurance
that these estimates will be achieved and actual results could differ. Moreover,
although management believes it will be able to make the necessary modifications
in advance,  there can be no guarantee  that failure to modify the systems would
not have a material adverse affect on the Bank.

         In  addition,  the Bank  places a high  degree of  reliance on computer
systems of third parties, such as customers,  suppliers, and other financial and
governmental institutions. Although the Bank is assessing the readiness of these
third parties and preparing  contingency  plans,  there can be no assurance that
the failure of these third  parties to modify their  systems in advance of March
31, 1999 would not have a material adverse affect on the Company.


                                      -10-
<PAGE>



         The Bank's  internal Year 2000 Working  Committee,  comprised of senior
management was formed to address the potential risk that Year 2000 poses for the
Bank.  This  committee  reports to the board of  directors.  In June  1997,  the
committee  compiled a written  Year 2000  Action  Plan to promote  awareness  of
pertinent  issues  and to  provide  for  evaluation  and  testing  of the Bank's
electronic systems, programs and processes.

         Accurate data  processing is essential to the Bank's  operations  and a
lack of  accurate  processing  by the Bank's  vendor or by the Bank could have a
significant  adverse  impact on the Bank's  financial  condition  and results of
operations. The Bank has been advised by its data processing service bureau that
their  computer  services will  function  properly on and after January 1, 2000.
Additional  testing of the system was conducted in August 1998. If by the end of
this year, the Bank's  primary data  processing  service bureau has  encountered
unforseen problems and, as a result,  will not be year 2000 compliant within the
necessary  timeframe,  the Bank will seek a secondary  data  processing  service
provider  to  complete  the  task.  If the Bank is  unable  to do this,  it will
identify those steps  necessary to minimize the negative  impact this could have
on us. The Bank has upgraded its teller  equipment to be year 2000  compliant as
of October 27, 1998.

         In October  1998,  the Bank  purchased  new  equipment and upgraded Y2K
compliant  software from NCR, for the teller stations and operations.  All other
PCs have been tested and replaced, if necessary, as of March 31, 1999.

                                      -11-
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

          The  Company is not  engaged in any legal  proceedings  at the present
          time.  From time to time, the Company is a party to legal  proceedings
          within the normal course of business  wherein it enforces its security
          interests in loans made by it, and other similar matters.

Item 2.  Changes in Securities and Use of Proceeds
         -----------------------------------------

                  Not applicable.

Item 3.  Defaults Upon Senior Securities
         -------------------------------

                  Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

         The annual meeting of  stockholders of the Company was held on April 6,
1999 and the following matters were voted upon:

                  Proposal I - Election of directors:

                                            FOR                        WITHHELD
                                            ---                        --------

Edgar N. Peppler                           311,482                        750
Gary N. Pelehaty                           311,422                        810
Charles E. Adams                           304,482                      7,750
William H. Wainwright, Jr.                 311,482                        750
George G. Aaronson, Jr.                    304,482                      7,750
Herman Gutstein                            304,482                      7,750
G. Edward Koenig, Jr.                      311,482                        810

Proposal II - The ratification of the amendment to the Farnsworth Bancorp,  Inc.
1999 Stock Option Plan:

                  FOR:                214,966
                  AGAINST:             16,183
                  ABSTAIN:              5,285

             Proposal  III  - The  ratification  of  the  Peoples  Savings  Bank
Management Stock Bonus Plan:

                  FOR:                215,821
                  AGAINST:             16,028
                  ABSTAIN:              4,585



                                      -12-
<PAGE>



Item 5.      Other Information
             -----------------

                  Not applicable.

Item 6.      Exhibits and Reports on Form 8-K
             --------------------------------

             (a)  None.


                                      -13-



<PAGE>



                                   SIGNATURES


             In accordance with the requirements of the Securities  Exchange Act
of 1934, as amended,  the  registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                    FARNSWORTH BANCORP, INC.



Date: May 6, 1999          By:      /s/Gary N. Pelehaty                    
                                    --------------------------------------------
                                    Gary N. Pelehaty
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)
                                    (Duly Authorized Officer)



Date: May 6, 1999          By:      /s/Charles Alessi                        
                                    --------------------------------------------
                                    Charles Alessi
                                    Vice President, Secretary and Treasurer
                                    (Principal Financial and Accounting Officer)




                                      -14-