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, 2006
                                    -------------

                                       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
                        ----                ----

     Indicate by check mark whether the registrant is a shell company as defined
in Rule 12b-2 of the Exchange Act

                   YES                  NO    X
                        ----                ----

    Number of shares of Common Stock outstanding as of July 31, 2006: 650,530
                                                                      -------

            Transitional Small Business Disclosure Format (check one)


                   YES                  NO    X
                        ----                ----


<PAGE>
                                    CONTENTS
                                    --------

<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION                                                                    Page(s)
                                                                                                  -------
<S>        <C>                                                                                      <C>
Item 1.    Financial Statements
           Consolidated Statements of Financial Condition at June 30, 2006
           (unaudited) and September 30, 2005 (audited)............................................   1

           Consolidated Statements of Income and Comprehensive Income for the three
           and nine months ended June 30, 2006, and 2005 (unaudited)...............................   2

           Consolidated Statements of Cash Flows for the nine months ended
           June 30, 2006 and 2005 (unaudited)......................................................   3

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations...................................................................   5

Item 3.    Controls and Procedures.................................................................   9

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.......................................................................  10

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.............................  10

Item 3.    Defaults upon Senior Securities.........................................................  10

Item 4.    Submission of Matters to a Vote of Security Holders.....................................  10

Item 5.    Other Information.......................................................................  10

Item 6.    Exhibits ...............................................................................  10

Signatures ........................................................................................  11

Certifications.....................................................................................  12
</TABLE>


<PAGE>

                    FARNSWORTH BANCORP INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
                                                               JUNE 30,        SEPTEMBER 30,
                                                                 2006               2005
                                                              -------------       -------------
ASSETS                                                        (UNAUDITED)         (AUDITED)

<S>                                                           <C>                 <C>
Cash and due from banks                                       $   8,946,270       $  10,278,409
Securities available for sale                                    19,699,623          19,418,925
Securities held to maturity                                         663,291             969,864
Loans receivable, net                                            73,955,490          70,005,215
Accrued interest receivable                                         448,086             438,935
Federal Home Loan Bank of New York (FHLB) stock
  at cost substantially restricted                                  206,800             520,200
Deferred income taxes                                               795,986             216,990
Premises and equipment                                            2,139,544           2,211,706
Other assets                                                        382,296              85,247
                                                              -------------       -------------
         Total assets                                         $ 107,237,386       $ 104,145,491
                                                              =============       =============


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                      $  96,834,354       $  93,583,060
Borrowings from FHLB                                                532,045             654,696
Advances by borrowers for taxes and insurance                       301,115             404,956
Accrued income taxes                                                189,386              26,586
Accrued interest payable                                            111,483              84,606
Accounts payable and other accrued
  expenses                                                          365,012             154,816
                                                              -------------       -------------
         Total liabilities                                       98,333,395          94,908,720
                                                              -------------       -------------

Preferred stock $.10 par value, 1,000,000
  shares authorized; none issued and
  outstanding
Common stock $.10 par value, 5,000,000 shares authorized;
  662,693 shares issued, at June 30 2006 and September
  30, 2005; shares outstanding 650,530 and 650,316 at
  June 30, 2006 and September 30, 2005 respectively                  66,270              66,270
Additional paid in capital                                        8,483,529           8,481,669
Retained earnings substantially restricted                        1,484,222           1,339,579
Treasury stock at cost 12,163 shares at June 30, 2006
 and 12,382 shares at September 30, 2005                           (118,521)           (120,658)
Common stock aquired by
 employee stock ownership plan (ESOP)                              (222,896)           (240,021)
Accumulated other comprehensive income , unrealized
 depreciation on available for sale securities,
 net of taxes                                                      (788,613)           (290,068)
                                                              -------------       -------------
         Total stockholders' equity                               8,903,991           9,236,771
                                                              -------------       -------------
         Total liabilities and
          stockholders' equity                                $ 107,237,386       $ 104,145,491
                                                              =============       =============

</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

                                       1
<PAGE>
                    FARNSWORTH BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                             AND COMPREHENSIVE LOSS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED          NINE MONTHS ENDED
                                                          JUNE 30,                 JUNE  30,
                                                  2006           2005          2006           2005
                                                ----------     ----------    ----------     ----------
<S>                                             <C>            <C>           <C>            <C>
Interest income:
  Loans receivable                              $1,249,417     $1,158,299    $3,736,233     $3,448,205
  Securities                                       242,051        222,702       738,141        646,107
  Federal funds sold                                76,485         48,194       198,878        118,171
                                                ----------     ----------    ----------     ----------
        Total interest income                    1,567,953      1,429,195     4,673,252      4,212,483
                                                ----------     ----------    ----------     ----------

Interest expense:
  Deposits                                         653,532        484,168     1,827,422      1,357,119
  Federal Home Loan Bank advances                    8,068         10,456        26,027         33,086
                                                ----------     ----------    ----------     ----------
        Total interest expense                     661,600        494,624     1,853,449      1,390,205
                                                ----------     ----------    ----------     ----------
Net interest income                                906,353        934,571     2,819,803      2,822,278

Provision for loan losses                           28,146          8,930       118,146         75,821
                                                ----------     ----------    ----------     ----------
        Net interest income after
          provision for loan losses                878,207        925,641     2,701,657      2,746,457
                                                ----------     ----------    ----------     ----------
Noninterest income:
  Fees and other service charges                    52,540         57,473       185,733        203,095
  Net realized gain on available for sale:
   Loans                                                 -          7,838         1,526         16,146
   Securities                                            -          4,162         5,859         15,921
                                                ----------     ----------    ----------     ----------
        Total noninterest income                    52,540         69,473       193,118        235,162
                                                ----------     ----------    ----------     ----------

Noninterest expense:
  Compensation and benefits                        513,524        464,882     1,455,786      1,363,497
  Occupancy and equipment                          112,062        116,270       364,481        391,951
  Professional fees                                 41,857         72,901       191,736        184,073
  Service fees                                      76,078         75,759       222,514        163,478
  Other                                             81,364        113,534       283,762        365,359
                                                ----------     ----------    ----------     ----------
        Total noninterest expense                  824,885        843,346     2,518,279      2,468,358
                                                ----------     ----------    ----------     ----------

Income  before provision for income
  tax expense                                      105,862        151,768       376,496        513,261
Provision for income tax expense                    51,000         63,000       166,800        207,800
                                                ----------     ----------    ----------     ----------
        Net income                                  54,862         88,768       209,696        305,461

Other Comprehensive (loss) Income, net of taxes
  Unrealized loss on Securities
   Available for Sale                             (183,683)       283,146      (495,030)        (9,793)
  Reclassification adjustments for gains
    included in net income                               -         (2,497)       (3,515)        (9,553)
                                                ----------     ----------    ----------     ----------
Comprehensive (loss) income                     $ (128,821)    $  369,417    $ (288,849)    $  286,115
                                                ==========     ==========    ==========     ==========

Net income  per common share:
  Basic                                         $     0.09     $     0.14    $     0.33     $     0.52
  Diluted                                       $     0.08     $     0.13    $     0.31     $     0.50

Weighted average number of shares
 outstanding during the period:
 basic                                             627,732        621,317       627,732        585,217
 diluted                                           672,003        659,440       669,622        616,969
</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

                                       2
<PAGE>
                    FARNSWORTH BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                          NINE MONTHS ENDED JUNE 30
                                                                     --------------------------------------
                                                                         2006                      2005
                                                                     ------------              ------------
<S>                                                                  <C>                       <C>
Cash flows from operating activities:
  Net income                                                         $    209,696              $    305,461
                                                                     ------------              ------------
  Adjustments to reconcile net income
   to net cash provided by operating activities
    Depreciation and amortization                                         111,773                   127,818
    Stock compensation                                                     21,122                    83,770
    Provision for loan losses                                             118,146                    75,821
    Net gain on sale of AFS securities                                     (5,859)                  (15,921)
    Net gain loans sold                                                    (1,526)                  (16,146)
 Change in:
   Accrued interest receivable                                             (9,151)                   33,463
   Other assets                                                          (297,049)                   26,628
   Advances from borrowers                                               (103,841)                   82,441
   Accrued and deferred income taxes                                      (83,832)                 (146,194)
   Accrued interest payable                                                26,877                    14,468
   Other accrued liabilities                                              210,196                     2,080
                                                                     ------------              ------------
         Total adjustments                                                (13,144)                  268,228
                                                                     ------------              ------------

         Net cash provided by operating
          activities                                                      196,552                   573,689
                                                                     ------------              ------------

Cash flows from investing activities:

  Net increase in loans receivable                                     (4,068,421)               (3,405,424)
  Redemption of securities, held to maturity                            1,787,947                   537,268
  Redemption of securities, available for sale                            872,418                 2,208,617
  Purchase of securities, held to maturity                             (1,481,374)               (1,997,517)
  Proceeds from sale of securities available for sale                   4,926,328                10,365,596
  Purchase of securities, available for sale net                       (6,902,968)              (12,444,661)
  Redemption of FHLB stock                                                313,400                   (22,710)
  Purchase of premises and equipment                                      (39,611)                  (30,000)
                                                                     ------------              ------------
         Net cash used in investing
           activities                                                  (4,592,281)               (4,788,831)
                                                                     ------------              ------------

Cash flows from financing activities:
  Net increase  in deposits                                             3,251,294                 6,423,058
  Repayment of  Federal Home Loan Bank Borrowings                        (122,651)                 (115,626)
  Proceeds from sale of stock, net                                                                1,785,691
  Dividends paid                                                          (65,053)                  (65,030)
                                                                     ------------              ------------

         Net cash provided by financing
           activities                                                   3,063,590                 8,028,093
                                                                     ------------              ------------

Net change in cash                                                     (1,332,139)                3,812,951

Cash at beginning of period                                            10,278,409                 6,009,330
                                                                     ------------              ------------
Cash at end of period                                                $  8,946,270              $  9,822,281
                                                                     ============              ============

Supplemental disclosure:
  Cash paid during the period for:
    Interest                                                         $  1,880,326              $  1,375,737
                                                                     ============              ============
    Income taxes                                                     $    250,750              $    285,000
                                                                     ============              ============
  Unrealized loss  on securities available
    for sale, net of deferred income taxes                           $   (498,545)             $    (19,346)
                                                                     ============              ============
Non cash items
  Common stock aquired by Restricted Stock Plan                                                $     20,131
                                                                                               ============
   Loan to ESOP                                                                                $    172,500
                                                                                               ============

</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

                                       3
<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  subsidiaries
Peoples  Savings  Bank (the  "Bank") and Peoples  Financial  Services,  Inc. 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
thrift 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,
2006, the  Consolidated  Statements of Income and  Comprehensive  Income for the
three  and nine  months  ended  June 30,  2006 and  2005,  and the  Consolidated
Statements  of Cash Flows for the nine months ended June 30, 2006 and 2005.  The
results of operations  for the three and nine months ended June 30, 2006 are not
necessarily  indicative  of results  that may be  expected  for the entire  year
ending September 30, 2006, or for any other period.  The accompanying  unaudited
consolidated interim financial statements should be read in conjunction with the
Company's September 30, 2005 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, 2005.

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.

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

The Company is a unitary  savings and loan holding  company.  The Bank  operates
four  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.

The Company also offers  brokerage,  investment  advisory services and insurance
services to the general  public  through  Peoples  Financial  Services,  Inc., a
subsidiary  organized for the sale of mutual funds and insurance through a third
party networking agreement.

NOTE 2.  NET INCOME PER COMMON SHARE
         ---------------------------

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 Bank's  Employee Stock Ownership Plan ("ESOP") and
the  Bank's  restricted  stock  plan  ("RSP").  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.
<TABLE>
<CAPTION>

                                          For the three months ended June 30
                            ------------------------------------------------------------------------
                                         2006                                2005
                                         ----                                ----

                                       Weighted      Per-                  Weighted         Per-
                                       Average       Share                 Average          Share
                            Income     Shares        Amount     Income       Shares         Amount
                            ------     ------        ------     ------       ------         ------
<S>                        <C>         <C>           <C>        <C>          <C>            <C>
Net income available
To common shareholders      $54,862    650,530                  $88,768      650,311

ESOP Shares, not
Committed to be released               (22,798)                              (27,508)

RSP Shares                                                                    (1,486)
                            -----------------------------------------------------------------------
Basic earnings per share    54,862     627,732       $0.09      $88,768      621,317          $0.14
Common Stock equivalents                44,271                                38,123
                            -----------------------------------------------------------------------
Diluted earnings per share  $54,862    672,003       $0.08      $88,768      659,440          $0.13
                            ========================================================================
</TABLE>
                                       4
<PAGE>

NOTE 3. INVESTMENT SECURITIES
        ---------------------

The Bank's  investments  in  securities  are  classified in two  categories  and
accounted for as follows:

SECURITIES HELD TO MATURITY.  Mortgage backed  securities for which the Bank has
the  positive  intent and  ability to hold to  maturity  are  reported  at cost,
adjusted  for  amortization  of premiums and  accretion  of discounts  which are
recognized  in  interest  income  using the  interest  method over the period to
maturity.

SECURITIES  AVAILABLE  FOR SALE.  Securities  available for sale are reported at
market value and consist of certain debt and equity securities not classified as
trading or securities to be held to maturity.

Declines in the fair value of individual held to maturity and available for sale
securities  below  their  cost  that are other  than  temporary  will  result in
write-downs  of the  individual  securities  to their fair  value.  The  related
write-downs will be included in earnings as realized losses.

Unrealized  holding gains and losses,  net of tax, on  securities  available for
sale are  reported  as a net  amount in a  separate  component  of equity  until
realized.

Gains and losses on the sale of  securities  available  for sale are  determined
using the specific-identification method.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The  Company  may from time to time make  written or oral  "forward-looking
statements,"  including  statements  contained in the Company's filings with the
Securities and Exchange  Commission  (including  this  Quarterly  Report on Form
10-QSB),  in its  reports to  stockholders  and in other  communications  by the
Company,  which  are made in good  faith by the  Company  pursuant  to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.

     These forward-looking  statements involve risks and uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economy in which the Company conducts  operations;
the effects of, and changes in,  trade,  monetary and fiscal  policies and laws,
including  interest  rate  policies  of the board of  governors  of the  Federal
Reserve System, inflation, interest rate, market and monetary fluctuations;  the
impact of changes in financial  services' laws and  regulations  (including laws
concerning taxes, banking securities and insurance);  technological changes; and
the success of the Company at managing the risks involved in the foregoing.

     The Company  cautions that the foregoing  list of important  factors is not
exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

                                       5

<PAGE>

RECENT DEVELOPMENTS

     On June 23, 2006, the Company,  Sterling  Banks,  Inc. and Sterling Bank, a
New Jersey chartered commercial bank ("Sterling"), entered into an Agreement and
Plan of Merger (the  "Agreement").  Under the Agreement,  the Company will merge
with and into Sterling Banks, Inc. (In Organization),  the proposed bank holding
company for  Sterling  (the  "Merger"),  in exchange for 2.25 shares of Sterling
Bank's,  Inc.,  common stock,  or $27.50 in cash,  or a combination  of cash and
stock, and at the election of the Company's Farnsworth stockholders,  subject to
an overall mix of 50 percent stock and 50 percent cash.  The Merger is valued at
approximately $19.1 million.  Sterling will be the surviving bank in the Merger.
The  Agreement  and the  transactions  contemplated  thereby  are subject to the
approval of the  stockholders  of the  Company,  and the receipt of all required
regulatory  approvals,  as well as other  customary  conditions.  The  Merger is
expected to be completed during the fourth quarter of 2006. For more information
regarding the Agreement  and the Merger,  please refer to the Company's  Current
Report on Form 8-K, dated June 23, 2006, as filed with the SEC on June 26, 2006.


FINANCIAL CONDITION

         Total assets were $107.2  million at June 30, 2006, an increase of $3.1
million  compared to $104.1  million at September 30, 2005. The increase was due
to an  increase  in loans  receivable,  net of $4.0  million  and an increase in
deferred taxes of $579,000,  partially offset by a decrease in cash and due from
banks of $1.3 million. The Company's total liabilities increased by $3.4 million
to $98.3  million at June 30, 2006  compared to $94.9  million at September  30,
2005, the increase was primarily due to an increase in deposits.

         Stockholders'  equity was $8.9  million or 8.3% of total assets at June
30, 2006,  as compared to $9.2 million or 8.9% of total assets at September  30,
2005.  The  decrease in  stockholders'  equity is primarily  attributable  to an
increase in the unrealized  depreciation on available for sale securities net of
taxes of $498,000 and dividends paid of $65,000,  partially offset by net income
of $210,000.


RESULTS OF OPERATIONS

         NET INCOME.  The Company's net income decreased $34,000 for the quarter
ended June 30, 2006 to $55,000 from $89,000 for the quarter ended June 30, 2005.
The decrease in net income was mostly attributable to a decrease in net interest
income  after  provision  for  loan  losses  of  $48,000,   and  a  decrease  in
non-interest  income of $16,000  partially  offset by a decrease in non-interest
expense of $18,000 and a decrease in provision for income taxes of $12,000.  For
the nine months ended June 30, 2006,  net income  decreased  $95,000 to $210,000
from net  income of  $305,000  for the same  period in 2005.  The  decrease  was
attributable  to a decrease in net  interest  income  after  provision  for loan
losses of $45,000, a decrease in non-interest  income of $42,000 and an increase
in non-interest  expense of $113,000,  partially  offset by a decrease in income
taxes of $41,000.

                                       6

<PAGE>

         NET  INTEREST  INCOME.  Net  interest  income  is the most  significant
component of the Company's  income from  operations.  Net interest income is the
difference between interest the Company receives on its interest earning assets,
primarily  loans  and  investments,   and  interest  the  Company  pays  on  its
interest-bearing  liabilities,  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 loan losses decreased  $48,000,
or 5.2%, to $878,000 for the quarter ended June 30, 2006 as compared to $926,000
for the quarter ended June 30, 2005.  The decrease  resulted from an increase in
interest  expenses of $167,000 and an increase in the  provision for loan losses
of $9,000  partially  offset by an increase in interest income of $138,000.  Net
interest  income after  provision for loan losses for the nine months ended June
30, 2006 decreased by $45,000 to was $2.7 million.

         PROVISION  FOR LOAN LOSSES.  The  provision for loan losses was $28,000
for the three  months  ended  June 30,  2006,  compared  to $9,000 for the three
months ended June 30, 2005. The increase reflects management's assessment of the
credit  risks  in  the  loan  portfolio  and  the  level  of   charge-offs   and
non-performing  loans. For the six months ended June 30, 2006, the provision for
loan losses was $118,000 compared to $76,000 for the same period in 2005.

         Management believes the allowance for loan losses is at a level that is
adequate to provide for  estimated  losses.  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.

         NON-INTEREST INCOME.  Non-interest income decreased $16,000 or 23.2% to
$53,000 for the quarter ended June 30, 2006 from $69,000 for the same quarter in
2005.  The decrease was partially due to a decrease in fees and other charges of
$5,000 and a decrease in gains on sale of  securities  and loans  available  for
sale of $11,000  compared to the same period in 2005.  For the nine months ended
June 30, 2006, non-interest income decreased $42,000 compared to the same period
in 2005 with the decrease due to the same factors.

         NON-INTEREST   EXPENSE.   Non-interest  expense  decreased  $18,000  to
$825,000  for the  quarter  ended June 30, 2006  compared  to  $843,000  for the
quarter  ended June 30, 2005.  The decrease was  primarily  due to a decrease in
professional  fees of  $31,000  and a  decrease  in other  expenses  of  $33,000
partially offset by an increase in compensation and benefits of $48,000. For the
nine  months  ended June 30, 2006  non-interest  expense  increased  by $500,000
compared to the same period in 2005.  The increase in the nine months was due to
an increase  in  compensation  and  benefits of $93,000 an increase of $8,000 in
professional fees and an increase of $62,000 in service fees partially offset by
a  decrease  in  occupancy  and  equipment  of $28,000  and a decrease  in other
expenses of $81,000.

         INCOME TAX  EXPENSE.  Income tax expense  decreased  by $12,000 for the
quarter  ended June 30, 2006  compared to $63,000 for the quarter ended June 30,
2005. This decrease attributed to the decrease in pretax income of $46,000.  For
the nine months ended June 30, 2006, income tax expense decreased by $41,000 due
to the decrease in pretax income.

                                       7

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         The Bank is  required to maintain  levels of liquid  assets  considered
necessary for its safe and sound operations.

         The Company'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  Company  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  Company's  operating  activities  (the cash
effects  of  transactions  that enter into the  Company's  determination  of net
income e.g., non-cash items,  amortization and depreciation,  provision for loan
losses) for the nine  months  ended June 30,  2006 was  $197,000,  a decrease of
$377,000 compared to the same period in 2005. The decrease in 2006 was primarily
due to a decrease in net income of $95,000,  a change in advances from borrowers
of  $185,000,  a change in other  assets of  $324,000  and a  decrease  in stock
compensation of $63,000.

         Net  cash  used  by the  Company's  investing  activities  (i.e.,  cash
disbursements,   primarily  for  the  purchase  of  investment   securities  and
mortgage-backed  securities  and for the  funding of loans) for the nine  months
ended June 30, 2006,  totaled $4.6 million compared to $4.8 million for the same
period in 2005.  The use of funds is mainly  attributed  to an increase in loans
receivable, net of $4.1 million and an increase in investments of $796,000.

                                       8

<PAGE>

         Net cash  provided  for  Company's  financing  activities  (i.e.,  cash
receipts  primarily  from net  increases in deposits  and net  decreases in FHLB
advances)  for the nine  months  ended  June 30,  2006,  totaled  $3.1  million,
compared to net cash  provided by financing  activities  of $8.2 million for the
same period in 2005. The change is attributed to an increase in deposits of $3.2
million  for the nine months  ending  June 30,  2006  compared to an increase in
deposits of $6.4 million for the same period in 2005 and the  proceeds  from the
sale of common stock of $1.8 million net in 2005 versus none in 2006.

         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, 2006,  with tangible,  core and
risk based capital ratios of 7.85%, 7.85% and 13.18%, respectively.


ITEM 3.  CONTROLS AND PROCEDURES

         (a) Evaluation of disclosure  controls and  procedures.  Based on their
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange Act")),
the Company's  principal  executive officer and principal financial officer have
concluded that as of the end of the period  covered by this Quarterly  Report on
Form 10-QSB such disclosure controls and procedures are effective to ensure that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

         (b) Changes in internal  control over financial  reporting.  During the
quarter under report, there was no change in the Company's internal control over
financial  reporting that has materially  affected,  or is reasonably  likely to
materially affect, the Company's internal control over financial reporting.


                                       9
<PAGE>

                           PART II. OTHER INFORMATION

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

         The  Registrant  was not engaged in any material  legal  proceedings at
June  30,  2006.  From  time to time,  the Bank 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
------------------------------------------------------------

         Not Applicable

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

         Not applicable.

Item 6.  Exhibits
-----------------

     (a)  Exhibits:

          31   Certifications  pursuant to Section 302 of the Sarbanes-Oxley Act
               of 2002

          32   Certification  pursuant to Section 906 of the  Sarbanes-Oxley Act
               of 2002

                                       10
<PAGE>

                                   SIGNATURES


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


                                FARNSWORTH BANCORP, INC.


Date: August 14, 2006           By:/s/ Gary N. Pelehaty
                                       -----------------------------------------
                                       Gary N. Pelehaty
                                       President and Chief Executive Officer
                                       (Principal Executive Officer)




Date: August 14, 2006           By: /s/ Charles Alessi
                                    --------------------------------------------
                                    Charles Alessi
                                    Vice President, Chief Financial Officer,
                                    Secretary and Treasurer
                                    (Principal Financial and Accounting Officer)