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 June 30, 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                               (I.R.S. Employer
Incorporation 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 July 21, 1999: 379,858

Transitional Small Business Disclosure Format (check one)

                                YES       NO X
                                   ---      ---


                                       1

<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 June 30, 1999
          (unaudited) and September 30, 1998 (audited)............................................................3

          Consolidated  Statements  of Income and  Comprehensive  Income for the
          three months ended June 30, 1999 and June 30, 1998 (unaudited)
          and for the nine months ended June 30, 1999 and June 30, 1998 (unaudited)...............................4

          Consolidated Statement of Changes in Stockholders' Equity for the
          year ended September 30, 1998 (audited)
          and the nine months ended June 30, 1999 (unaudited).....................................................5

          Consolidated Statements of Cash Flows for the nine months ended
          June 30, 1999 and June 30, 1998 (unaudited).............................................................6

     Item 2.  Management's Discussion and Analysis of Financial Condition and
                Results of Operations.............................................................................7


PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings..................................................................................13

     Item 2.  Changes in Securities and Use of Proceeds..........................................................13

     Item 3.  Defaults upon Senior Securities....................................................................13

     Item 4.  Submission of Matters to a Vote of Security Holders................................................13

     Item 5.  Other Information..................................................................................14

     Item 6.  Exhibits and Reports on Form 8-K...................................................................14

     Signatures..................................................................................................15

</TABLE>

                                       2

<PAGE>
                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements

                            FARNSWORTH BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>

                                                                            June 30,                    September 30,
                                                                              1999                          1998
                                                                           ----------                   ------------
                                                                           (UNAUDITED)                    (AUDITED)
<S>                                                                     <C>                           <C>
ASSETS
Cash and due from banks                                                   $ 1,328,789                   $ 3,928,077
Securities available for sale                                               6,814,519                       134,187
Securities held to maturity:
  Mortgage-backed                                                           1,852,705                     1,890,642
  Other                                                                     2,265,755                     2,761,367
Loans receivable, net                                                      37,232,416                    31,041,552
Real Estate Owned, net                                                         88,804
Accrued interest receivable                                                   345,543                       227,318
Federal Home Loan Bank of New York
  stock at cost substantially restricted                                      296,800                       261,300
Premises and equipment                                                      1,538,908                     1,468,846
Others assets                                                                 40,147                         60,458
                                                                           ----------                    ----------
  Total assets                                                            $51,804,386                   $41,773,747
                                                                           ==========                    ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                  $41,564,112                   $35,777,855
Borrowings from FHLB                                                        4,490,803
Advances by borrowers for taxes and insurance                                 211,144                       214,884
Accrued and deferred income taxes                                              30,621                       183,698
Accrued interest payable                                                       89,221                        38,692
Accounts payable and other accrued expenses                                    72,489                       115,890
                                                                           ----------                    ----------
  Total liabilities                                                        46,458,390                    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                                  2,368,400                     2,227,363
Unreleased common stock and related additional
  paid in capital acquired by employee stock
  ownership plan (ESOP)                                                     (303,880)                     (303,880)
Treasury stock                                                               (83,591)
Net unrealized (depreciation) appreciation on available
  for sale securities net of income taxes                                    (69,180)                        84,998
                                                                           ----------                    ----------
  Total stockholders' equity                                                5,345,996                     5,442,728
                                                                           ----------                    ----------
  Total liabilities and stockholders' equity                              $51,804,386                   $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            Nine Months ended
                                                       June 30,                       June 30,
                                                        1999            1998           1999           1998
                                                       --------       --------       ---------     ---------
<S>                                                 <C>            <C>            <C>           <C>
Interest income:
  Loans receivable                                    $ 691,600      $ 591,977      $1,961,239    $1,698,411
  Securities                                            171,434         83,115         388,765       257,213
  Federal funds sold                                     13,684         20,278          46,905        57,737
                                                       --------       --------       ---------     ---------
    Total interest income                               876,718        695,370       2,396,909     2,013,361
                                                       --------       --------       ---------     ---------
Interest expense:
  Deposits                                              365,302        352,479       1,068,326     1,028,990
  Federal Home Loan Bank advances                        52,963             --          97,653           500
                                                       --------       --------       ---------     ---------
    Total interest expense                              418,265        352,479       1,165,979     1,029,490
                                                       --------       --------       ---------     ---------
Net interest income                                     458,453        342,891       1,230,930       983,871

Provision for loan losses                                17,000          5,000          31,000        64,000
                                                       --------       --------       ---------     ---------
  Net interest income after provision for loan
     losses                                             441,453        337,891       1,199,930       919,871
                                                       --------       --------       ---------     ---------
Noninterest income:
  Fees and other service charges                         53,473         52,256         179,797       145,853
  Net realized Gains on Sale of
Available-for-Sale Securities                             1,875             --           3,359           933
  Collection on deficiency judgment                          --             --              --        54,024
                                                       --------       --------       ---------     ---------
    Total noninterest income                          $  55,348      $   2,258      $  183,156    $  200,810
                                                       --------       --------       ---------     ---------
Noninterest expense:
  Compensation and benefits                           $ 200,985      $ 157,592      $  548,235    $  440,796
  Occupancy and equipment                                74,018         36,869         215,414       153,584
  Federal insurance premiums and assessments             10,561          8,651          21,255        25,856
  Other                                                 119,901        109,978         374,845       270,504
                                                       --------       --------       ---------     ---------
    Total noninterest expense                           405,465        313,090       1,159,749       890,740

Income before provision for income taxes                 91,336         77,057         223,337       229,941
Provision for income taxes                               28,500         29,500          82,300        67,545
                                                       --------       --------       ---------     ---------
    Net income                                        $  62,836      $  47,557      $  141,037    $  162,396
                                                       ========       ========       =========     =========
Other Comprehensive Income, net of taxes:
  Unrealized Gain (Loss) on Securities
    Available for Sale                                $(154,178)     $  (4,391)     $ (170,722)   $   18,754
Reclassification adjustment for gains included
   in net income                                         (1,875)            --          (3,359)         (933)
                                                       --------       --------       ---------     ---------
Comprehensive (Loss) Income                           $ (93,217)     $  43,166      $  (33,044)   $  180,217
                                                       ========       ========       =========     =========

Net income per common share:  Basic                   $    0.18      $    0.14      $     0.41    $     0.46

Shares used in computing basic income per share         343,973        349,470         347,637        349,470

</TABLE>

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

                                       4
<PAGE>

                             FARNSWORTH BANCORP INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 THE YEAR ENDED SEPTEMBER 30, 1998 (AUDITED)AND
               FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>


                                                                               NET UNREALIZED
                                                                                APPRECIATION
                                                                               (DEPRECIATION)
                                                                   RETAINED     ON SECURITIES     COMMON
                                                  ADDITIONAL       EARNINGS       AVAILABLE       STOCK
                                         COMMON     PAID IN     SUBSTANTIALLY     FOR SALE     ACQUIRED BY   TREASURY
                                         STOCK      CAPITAL       RESTRICTED     NET OF TAXES      ESOP        STOCK      TOTAL
                                         -----      -------       ----------     ------------  -----------   --------     -----
<S>                                   <C>         <C>           <C>            <C>            <C>           <C>       <C>
 Balance at September 30, 1997          $     -    $        -     $2,029,176     $  59,315       $       -   $      -   $2,088,491


 Net Income for the Year Ended
   September 30, 1998                         -             -        198,187             -               -          -      198,187

 Net Proceeds from Issuance of
   Common Stock                          37,985     3,396,262              -             -               -          -    3,434,247

 Acquisition of Common Stock by ESOP          -             -              -             -        (303,880)         -     (303,880)

 Change in Unrealized Appreciation
   on Securities Available for Sale,
   Net of Tax                                 -             -              -        25,683               -          -       25,683
                                         ------     ---------      ---------       -------         -------    -------    ---------


 Balance at September 30, 1998           37,985     3,396,262      2,227,363        84,998        (303,880)         -    5,442,728


 Net Income for the Nine Months
   Ended June 30, 1999                        -             -        141,037             -               -          -      141,037

 Acquisition of Treasury Stock
   Change in Unrealized
   Depreciation on Securities                 -             -              -             -               -    (83,591)     (83,591)

 Change in Unrealized
   Depreciation on Securities
   Available for Sale, Net of Tax             -             -              -      (154,178)              -          -     (154,178)
                                         ------     ---------      ---------       -------         -------    -------    ---------


 Balance at June 30, 1999               $37,985    $3,396,262     $2,368,400     $ (69,180)      $(303,880)  $(83,591)  $5,345,996
                                         ======     =========      =========       =======        ========    =======    =========

</TABLE>

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Nine months ended June 30,
                                                                          1999                     1998
                                                                   -------------------      -----------------
<S>                                                                 <C>                       <C>
Cash flows from operating activities:
  Net income                                                          $    141,037              $   162,397
                                                                      ------------              -----------
  Adjustments  to  reconcile  net  income  to net
  cash  provided  by  operating activities:
  Depreciation and amortization                                             53,238                   48,818
  Provision for loan losses                                                 31,000                   64,000
  Net gain on sale of assets                                                (3,359)                    (933)
  Increase in accrued interest receivable                                 (118,225)                 (10,116)
  Increase (decrease) in other assets                                        20,311                (121,836)
  (Decrease) increase in advances from borrowers                            (3,740)                  33,514
  (Decrease) increase in accrued income taxes and
      deferred income taxes                                               (108,697)                  68,104
  Increase in accrued interest payable                                      50,529                   (5,525)
  (Decrease) in other accrued liabilities                                  (43,401)                  (2,991)
                                                                      ------------             ------------
    Total adjustments                                                     (122,344)                  73,035
                                                                      ------------             ------------
    Net cash provided by operating activities                               18,693                  235,432
                                                                      ------------             ------------
Cash flows from investing activities:
  Net increase in loans receivable                                      (6,310,668)              (3,673,294)
  Purchase of securities held to maturity                                 (503,574)
  Redemption of securities, held to maturity                             1,042,165                2,289,616
  Purchase of Federal Home Loan Bank stock                                 (35,500)                 (27,000)
  Proceeds from sale of securities available for sale                    1,464,532                  997,808
  Purchase of securities, available for sale                            (8,341,107)                (997,835)
  Purchase of premises and equipment                                      (127,298)                 (48,241)
                                                                      ------------             ------------
    Net cash used in investing activities                              (12,811,450)              (1,458,946)
                                                                      ------------             ------------
Cash flows from financing activities:
  Net increase in deposits                                               5,786,257                1,845,500
  Increase in Federal Home Loan Bank Borrowings                          4,490,803                       --
  Purchase of Treasury Stock                                               (83,591)                      --
                                                                      ------------             ------------
    Net cash provided by financing activities                           10,193,469                1,845,500
                                                                      ------------             ------------
Net (decrease) increase in cash and due from banks                      (2,599,288)                 621,986
Cash at beginning of period                                              3,928,077                2,364,541
                                                                      ------------             ------------
Cash at end of period                                                 $  1,328,789             $  2,986,527
                                                                      ============             ============
Supplemental disclosure:
  Cash paid during the period for:
    Interest                                                          $  1,082,096             $  1,032,229
                                                                      ============             ============
    Income taxes                                                      $     64,000             $      6,500
                                                                      ============             ============
Unrealized gain (loss) on securities available for sale,
net of
   Deferred income taxes                                              $    (69,180)            $     78,069
                                                                      ============             ============
Non cash items:
   Acquisition of  real estate in settlement of loans                 $     88,804             $         --
                                                                      ============             ============


</TABLE>

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

                                       6

<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 June 30, 1999, the Consolidated  Statements
of Income and  Comprehensive  Income for the nine months ended June 30, 1999 and
1998,  and the  Consolidated  Statements of Cash Flows for the nine months ended
June 30, 1999 and 1998. The results of operations for the nine months ended June
30, 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  write-downs  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.

                                       7

<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 June 30, 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, 1997.

<TABLE>
<CAPTION>
                                                        For the three months ended June 30,
                                                        -----------------------------------
                                                  1999                                    1998(1)
                                               ----------                               ----------
                                                Weighted                                 Weighted
                                                 Average      Per-Share                   Average      Per-Share
                                   Income        Shares        Amount        Income        Shares        Amount
                                   ------        ------        ------        ------        ------        ------
<S>                               <C>           <C>           <C>          <C>           <C>           <C>
Basic EPS
Net income available to Common
Shareholders                       $62,836       343,973       $ 0.18       $47,557       349,470        $ 0.14
                                    ======       =======         ====        ======       =======          ====
</TABLE>

<TABLE>
<CAPTION>
                                                        For the nine months ended June 30,
                                                        ----------------------------------
                                                  1999                                     1998(1)
                                               ----------                                ----------
                                                Weighted                                  Weighted
                                                 Average      Per-Share                    Average     Per-Share
                                   Income        Shares        Amount        Income        Shares        Amount
                                   ------        ------        ------        ------        ------        ------
<S>                              <C>           <C>           <C>          <C>           <C>           <C>
Basic EPS
Net income available to Common
Shareholders                      $141,037       347,637       $ 0.41       $171.864      349,470        $ 0.46
                                  ========       =======         ====        =======      =======          ====
</TABLE>


There were no dilutive effects as of June 30, 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.  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.

                                       8
<PAGE>

NOTE 4.   Management Stock Bonus Plan
          ---------------------------

         On April 6, 1999 the stockholders of Farnsworth  Bancorp Inc. voted for
the  ratification of the Peoples Savings Bank Management  Stock Bonus Plan. This
plan was subsequently  approved by The Office of Thrift Supervision and the Bank
began to  repurchase  15,194  shares  of  Farnsworth  Bancorp  Stock on the open
market. At June 30 there were 8,350 shares repurchased.

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

Financial Condition

         Total assets increased $10.0 million or 23.97% to $51.8 million at June
30, 1999 from $41.8  million at September  30, 1998.  The increase was primarily
attributable to a $6.2 million increase in the Bank's loans receivable, net, and
a $6.7 million increase in securities  available for sale, partially offset by a
decrease  in cash and  equivalents  of $2.6  million,  as well as a decrease  in
mortgage-backed  securities of $38,000.  The Bank's total liabilities  increased
$10.11 million or 27.9%, to $46.5 million at June 30, 1999 from $36.3 million at
September 30, 1998.  The increase was primarily  attributable  to a $5.8 million
increase  in  deposits  and an  increase  in  borrowings  from  the FHLB of $4.5
million.

         Stockholders'  equity  decreased  $91,000  to $5.4  million or 10.3% of
total  assets at June 30,  1999,  as compared to $5.4  million or 13.0% of total
assets at September 30, 1998. The decrease in stockholders'  equity is primarily
attributable  to the  purchase of  restricted  stock plan  shares of $84,000,  a
change  in the  unrealized  appreciation  of  securities  available  for sale of
$170,000 offset by net income of $141,000.

         Results of Operations

         Net  Income.  Net income was $63,000 or $0.18 per share for the quarter
ended June 30, 1999 compared to $48,000 or $0.14 per share for the quarter ended
June 30,  1998.  For the nine months ended June 30, 1999 net income was $141,000
or $.41 per share  compared  to  $162,000  or $.46 per share for the nine months
ended June 30, 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 nine months ended June 30, 1999 was
partially  offset by an  increase  in net  interest  income of  $247,000,  and a
decrease in the  provision  for loan losses of $33,000,  partially  offset by an
increase in non-interest  expense of $270,000 and an increase in income taxes of
$15,000.

         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 $441,000
for the quarter  ended June 30, 1999  compared to $338,000 for the quarter ended
June 30, 1998.  Net interest  income after  provision for loan losses  increased
$280,000 or 30.4%,  to  $1,200,000  for the nine months ended June 30, 1999,  as
compared to the nine months ended June 30, 1998.  The increase was primarily due
to the  growth in  interest-earning  assets to $49.8  million in 1999 from $37.8
million in 1998.

         Provision  for Loan Losses.  Provision  for loan losses was $17,000 for
the quarter ended June 30, 1999 as compared to $5,000 for the quarter ended June
30 1998.  The increase in 1999 is to bring the  allowances  for loan losses to a
level that is adequate to provide for  estimated  losses,  given the increase in
loans.

                                        9

<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
nine months  ended June 30,  1999 the  provision  for loan  losses were  $31,000
compared to $64,000 for the nine months ended June 30, 1998.

         Non-Interest  Income.  Non-interest  income was $55,000 for the quarter
ended June 30, 1999  compared  to $52,000  for the same period in 1998.  For the
nine months ended June 30, 1999  non-interest  income was  $183,000  compared to
$201,000 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
$34,000 and a gain on sale of available for sale securities of $2,000.

         Non-Interest Expense. Non-interest expense was $405,000 for the quarter
ended June 30, 1999  compared to $313,000  for the same period of 1998.  For the
nine months ended June 30, 1999 non-interest  expenses  increased by $270,000 to
$1,160,000  from $890,000 for the nine months ended June 30, 1998.  The increase
is attributed to an increase of $107,000 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 $62,000 and an increase of $104,000 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 lending and NOW account
processing fees.

         Income Tax Expense.  Income tax expense increased  $14,000 from $68,000
in the first nine months of 1998 to $82,000 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 12.82% and 10.86%
at June 30, 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 provided 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 nine months  ended June 30, 1999 was  $19,000,  a decrease of  $216,000,  as
compared  to the same  period  in 1998.  The  decrease  in cash used in 1999 was
primarily due to a $31,000  decrease in the Bank's net income, a decrease in the
accrued  income tax and deferred  income  taxes of  $173,000,  and a decrease in
non-deposit  liabilities of $46,000,  as well as an increase in accrued interest
receivable  of $108,000  offset by an increase  in accrued  interest  payable of
$51,000 and a decrease in other assets of $20,000.

         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
nine months ended June 30, 1999,  totaled  $12.8  million,  an increase of $11.3
million from the same

                                       10

<PAGE>


period in 1998. The increase in cash used was primarily  attributable to funding
net loan growth of $6.2  million in 1999 as compared to $3.6  million in 1998 as
well as investment purchases of $8.8 million in 1999 compared to $1.0 million in
1998.  The decrease in cash was  partially  offset by  redemptions  and sales of
securities of $2.5 million in 1999 as compared to $3.3 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 nine months ended June 30, 1999,  totaled $10.2  million,  an
increase of $8.3 million as compared to the nine months ended June 30, 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 June 30, 1999,  with tangible,  core and
risk based capital ratios of 8.88%, 8.88% and 18.15%, respectively.

Year 2000 Readiness Disclosure

         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 is based on  management's  best
estimate,  which was 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
the estimate will not be exceeded 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 Company.

         The Company  places a high  degree of  reliance on computer  systems of
third  parties,   such  as  customers,   suppliers,   and  other  financial  and
governmental  institutions.  Although the Company 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
December 31, 1999 would not have a material adverse affect on the Company.

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

         Accurate data processing is essential to the Company's operations and a
lack of accurate processing by the Company's vendor or by the Company could have
a significant adverse impact on the Company's

                                       11

<PAGE>


financial  condition and results of operations.  The Company 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. The Company has performed  significant  testing of the
software utilized by its data processing service bureau with successful results.
If the Company's primary data processing  service bureau  encounters  unforeseen
problems  and, as a result,  fails to maintain its system in compliant  state or
incurs other obstacles  prior to Year 2000, the Company would likely  experience
significant data processing delays, mistakes or failures. These delays, mistakes
or  failures  could  have a  significant  adverse  impact  on  the  consolidated
financial statements of the Company.

         The Company will  monitors its Year 2000  readiness  by  continuing  to
request an update on all critical and important vendors throughout the remainder
of 1999.  If the  Company  identifies  any  concern  related to any  critical or
important vendor, the contingency plans will be implemented immediately.

         All costs to replace certain  non-compliant  software and hardware have
been  expended  as of June 30,  1999.  The  Company  has  upgrade  of its teller
equipment  to be year  2000  compliant.  All  other  PCs have  been  tested  and
replaced, if necessary, as of June 30, 1999.

         No assurance can be given that the Plan will be completed  successfully
by the Year 2000,  in which event the Company  could  incur  significant  costs.
Successful  and  timely  completion  of the Plan is based on  management's  best
estimates  derived  from  various  assumptions  of  future  events,   which  are
inherently  uncertain,  including the progress and results of the Company's data
processing  service  bureau,   and  all  vendors',   suppliers'  and  customers'
readiness.

         Despite the best efforts of management to address this issue,  the vast
number of external entities that have direct and indirect business relationships
with the Company, such as customers, vendors, payment system providers and other
financial  institution,  makes it impossible to assure that a failure to achieve
compliance  by one or more of these  entities  would not have  material  adverse
impact on the operations of the Company.

                                       12
<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

                                       13

<PAGE>



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

                  Not applicable.

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

             (a)  None.










                                       14
<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: August 13, 1999         By:   /s/Gary N. Pelehaty
                                    --------------------------------------------
                                    Gary N. Pelehaty
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)
                                    (Duly Authorized Officer)



Date: August 13, 1999         By:   /s/Charles Alessi
                                    --------------------------------------------
                                    Charles Alessi
                                    Vice President, Secretary and Treasurer
                                    (Principal Financial and Accounting Officer)