SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
(Mark One)

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


                  For the quarterly period ended March 31, 2004
                                 --------------

                                       OR

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

                  For the transition period from __________to__________.

                           Commission File No. 0-24621

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

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

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


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

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES  X   NO     .
                                                              ----    ----

     Number of shares of Common Stock outstanding as of May 7, 2004: 527,569
                                                                     -------

            Transitional Small Business Disclosure Format (check one)

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



<PAGE>

                                    Contents
                                    --------

<TABLE>
<CAPTION>


<S>    <C>                                                                            <C>
PART 1 - FINANCIAL INFORMATION                                                           Page(s)
                                                                                          -------


Item 1.  Financial Statements

         Consolidated  Statements  of  Financial  Condition  at March  31,  2004
         (unaudited) and September 30, 2003 (audited).........................................1

         Consolidated  Statements  of Income  and  Comprehensive  Income for the
         three and six months ended March 31, 2004, and 2003 (unaudited)......................2

         Consolidated  Statements  of Cash Flows for the six months  ended March
         31, 2004 and 2003 (unaudited)........................................................3

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations................................................................6

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

PART II - OTHER INFORMATION


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

Item 2.  Changes in Securities and Small Business Issuer Purchases of Equity Securities.......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 and Reports on Form 8-K.....................................................10

Signatures....................................................................................12

Certifications
</TABLE>


<PAGE>
                    FARNSWORTH BANCORP INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<CAPTION>


                                                                MARCH 31         SEPTEMBER 30,
                                                                  2004                2003
                                                           ------------------  ------------------
ASSETS                                                        (UNAUDITED)          (AUDITED)

<S>                                                          <C>                 <C>
Cash and due from banks                                         $ 10,209,943        $ 11,539,886
Securities available for sale                                     16,901,858          15,003,778
Securities held to maturity                                          346,290             461,443
Loans receivable, net                                             65,170,012          61,462,266
Accrued interest receivable                                          454,364             415,259
Federal Home Loan Bank of New York (FHLB) stock
  at cost substantially restricted                                   507,400             507,400
Deferred income taxes                                                260,181             125,667
Premises and equipment                                             2,268,290           2,232,650
Other assets                                                          77,798              81,219
                                                           ------------------  ------------------

         Total assets                                           $ 96,196,136        $ 91,829,568
                                                           ==================  ==================


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                        $ 87,642,213        $ 83,713,971
Borrowings from FHLB                                                 884,304             956,436
Advances by borrowers for taxes and insurance                        384,038             328,379
Accrued income taxes                                                 220,045              97,788
Accrued interest payable                                              26,712              23,122
Accounts payable and other accrued
  expenses                                                           108,456             146,405
                                                           ------------------  ------------------

         Total liabilities                                        89,265,768          85,266,101
                                                           ------------------  ------------------

Preferred stock $.10 par value, 1,000,000
  shares authorized; none issued and
  outstanding
Common stock $.10 par value,  5,000,000 shares
  authorized;  539,951 and  452,023 shares issued for 2004
  and 2003 respectively and 527,569 and 433,031 shares
  outstanding for 2004 and 2003 respectively                          53,994              45,202
Additional paid in capital                                         6,495,446           4,688,162
Retained earnings substantially restricted                           746,721           2,260,041
Treasury stock at cost 12,382 and 18,992 shares
  for 2004 and 2003 respectively                                    (120,658)           (185,172)
Common stock aquired by
  employee stock ownership plan (ESOP)                              (128,874)           (144,054)
Common stock aquired by restricted stock plan                       (110,285)             (3,645)
Accumulated other comprehensive income , unrealized
  appreciation on available for sale securities,
  net of taxes.                                                       (5,976)            (97,067)
                                                           ------------------  ------------------

         Total stockholders' equity                                6,930,368           6,563,467
                                                           ------------------  ------------------

         Total liabilities and
          stockholders' equity                                  $ 96,196,136        $ 91,829,568
                                                           ==================  ==================

</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED            SIX MONTHS ENDED
                                                        MARCH 31                      MARCH 31
                                                  2004           2003           2004           2003
                                              -------------  -------------  -------------  -------------
<S>                                         <C>             <C>           <C>            <C>
Interest income:
  Loans receivable                             $ 1,127,415     $1,128,261    $ 2,208,788    $ 2,228,151
  Securities                                       189,116        167,125        383,073        357,670
  Federal funds sold                                14,566         28,562         29,385         47,802
                                              -------------  -------------  -------------  -------------
        Total interest income                    1,331,097      1,323,948      2,621,246      2,633,623
                                              -------------  -------------  -------------  -------------

Interest expense:
  Deposits                                         366,898        433,459        733,889        890,984
  Federal Home Loan Bank advances                   13,250         15,341         27,534         31,685
                                              -------------  -------------  -------------  -------------
        Total interest expense                     380,148        448,800        761,423        922,669
                                              -------------  -------------  -------------  -------------
Net interest income                                950,949        875,148      1,859,823      1,710,954

Provision for loan losses                           63,000         19,820         83,000         49,820
                                              -------------  -------------  -------------  -------------

        Net interest income after
          provision for loan losses                887,949        855,328      1,776,823      1,661,134
                                              -------------  -------------  -------------  -------------

Noninterest income:
  Fees and other service charges                    83,553         66,877        149,379        141,236
  Net realized gain on available for sale:
   Loans                                            11,514          9,820         19,967         28,453
   Securities                                       28,022         28,229         47,609         38,777
                                              -------------  -------------  -------------  -------------
        Total noninterest income                   123,089        104,926        216,955        208,466
                                              -------------  -------------  -------------  -------------

Noninterest expense:
  Compensation and benefits                        426,490        416,361        885,259        769,005
  Occupancy and equipment                          129,634        138,094        252,377        237,803
  Federal insurance premiums and
    assessments                                      4,138          3,126          7,168          6,095
  Other                                            209,655        212,240        425,353        424,868
                                              -------------  -------------  -------------  -------------
        Total noninterest expense                  769,917        769,821      1,570,157      1,437,771
                                              -------------  -------------  -------------  -------------

Income  before provision for income
  tax expense                                      241,121        190,433        423,621        431,829
Provision for income tax expense                    91,700         68,853        164,700        162,553
                                              -------------  -------------  -------------  -------------
        Net income                                 149,421        121,580        258,921        269,276

Other Comprehensive Income, net of taxes
  Unrealized gain (loss) on Securities
   Available for Sale                              177,569          6,027        119,691         (3,873)
  Reclassification adjustments for gains
    included in net income                         (16,813)       (16,937)       (28,600)       (23,266)
                                              -------------  -------------  -------------  -------------

Comprehensive Income                           $   310,177     $  110,670    $   350,012    $   242,137
                                              =============  =============  =============  =============

Net income  per common share:
  Basic                                        $      0.31     $     0.25       $   0.53    $      0.56
  Diluted                                      $      0.28     $     0.24       $   0.49    $      0.54

Weighted average number of shares
 outstanding during the period:
 Basic                                             486,761        483,048        486,761        483,048
 Diluted                                           535,082        502,707        527,721        497,860

</TABLE>

                        SEE NOTES TO FINANCIAL STATEMENTS

                                       2

<PAGE>
                    FARNSWORTH BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                            SIX MONTHS ENDED MARCH 31

<TABLE>
<CAPTION>

                                                         2004             2003
                                                    ---------------  ---------------
<S>                                                 <C>              <C>
Cash flows from operating activities:
  Net income                                          $    258,921        $ 269,276
                                                    ---------------  ---------------
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Depreciation and amortization                           75,974           69,668
    Stock compensation                                      40,740           40,742
    Provision for loan losses                               83,000           49,820
    Net gain on sale of AFS securities                     (47,609)         (38,777)
    Net gain loans sold                                    (19,967)         (28,453)

Change in:
   Accrued interest receivable                             (39,105)          36,262
   Other assets                                              3,421           (1,627)
   Advances from borrowers                                  55,659           66,629
   Accrued and deferred income taxes                       (72,920)          15,919
   Accrued interest payable                                  3,590           (9,547)
   Other accrued liabilities                               (37,949)         (61,077)
                                                    ---------------  ---------------

         Total adjustments                                  44,834          139,559
                                                    ---------------  ---------------

         Net cash provided by operating
          activities                                       303,755          408,835
                                                    ---------------  ---------------

Cash flows from investing activities:

  Net increase in loans receivable                      (3,799,232)        (646,332)
  Redemption of securities, held to maturity               115,153          311,441
  Redemption of securities, available for sale             558,123        2,524,675
  Proceeds from sale of securities available for sale    6,716,257        7,789,593
  Purchase of securities, available for sale net        (8,946,843)     (12,414,977)
  Purchase of premises and equipment                      (111,614)        (232,108)
                                                    ---------------  ---------------

         Net cash used in investing
           activities                                   (5,468,156)      (2,667,708)
                                                    ---------------  ---------------


Cash flows from financing activities:
  Net increase  in deposits                              3,928,242        3,048,965
  Repayment of  Federal Home Loan Bank Borrowings          (72,132)         (67,997)
  Dividends paid                                           (21,652)         (18,045)
                                                    ---------------  ---------------

         Net cash provided by financing
           activities                                    3,834,458        2,962,923
                                                    ---------------  ---------------

Net increase (decrease) increase in cash                (1,329,943)         704,050

Cash at beginning of period                             11,539,886        9,161,801
                                                    ---------------  ---------------
Cash at end of period                                 $ 10,209,943      $ 9,865,851
                                                    ===============  ===============

Supplemental disclosure:
  Cash paid during the period for:
    Interest                                          $    757,833      $   932,216
                                                    ===============  ===============
    Income taxes                                      $    241,250      $   239,336
                                                    ===============  ===============

  Unrealized gain (loss) on securities available
    for sale, net of deferred income taxes            $     91,091      $   (27,139)
                                                    ===============  ===============

Non cash items
  Stock dividend                                      $  1,750,589
  Common stock aquired by Restricted Stock Plan       $    132,200
  Treasury Stock                                      $    (64,514)
  Additional paid in capital                          $    (67,686)


</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 March 31,
2004, the  Consolidated  Statements of Income and  Comprehensive  Income for the
three and six  months  ended  March  31,  2004 and  2003,  and the  Consolidated
Statements  of Cash Flows for the six months ended March 31, 2004 and 2003.  The
results of operations  for the three and six months ended March 31, 2004 are not
necessarily  indicative  of results  that may be  expected  for the entire  year
ending September 30, 2004, or for any other period.  The accompanying  unaudited
consolidated interim financial statements should be read in conjunction with the
Company's September 30, 2003 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, 2003.

         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.

         The Board of  Directors  declared a 20% stock  dividend  in fiscal year
2003 and a 20% stock  dividend in the quarter  ended March 31,  2004.  Basic and
diluted  earnings  per share have been  restated  for all periods  presented  to
reflect the stock dividend.

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.


                                       4
<PAGE>

         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 Banks'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 March 31
                                                -----------------------------------

                                                2004                                   2003
                                              --------                               --------
                                              Weighted      Per                      Weighted       Per
                                               Average     Share                      Average      Share
                                  Income       Shares      Amount        Income       Shares       Amount
                                  ------      --------     ------        ------       ------       ------
<S>                        <C>             <C>                      <C>           <C>          <C>
Net income available
  to common shareholders      $  149,421      520,959                  $ 121,580     519,647

ESOP shares, not
  committed to be released                    (21,805)                               (26,260)

RSP shares                                    (12,393)                                            (10,339)
                               ---------     --------     ------       ---------   ---------       ------
Basic earnings per share         149,421      486,761       0.31       $ 121,580     483,048       $ 0.25

Common stock equivalents                       48,321                                 19,659
                              ----------     --------     ------       ---------   ---------       ------
Diluted earnings per share    $  149,421      535,082       0.28       $ 121,580     502,707       $ 0.24
                              ==========     ========     ======       =========   =========       ======


</TABLE>


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  intend and  ability to hold to  maturity  are  reported  at cost,
adjusted  for  amortization  of premiums




                                       5
<PAGE>

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 of 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 in
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.


                                       6

<PAGE>
Financial Condition

         Total assets  increased  $4.4 million or 4.8% to $96.2 million at March
31, 2004 from $91.8  million at September  30, 2003.  The increase was primarily
attributable to a $1.9 million increase in the Bank's  securities  available for
sale and an increase of $3.7 million in loans  receivable net,  partially offset
by a  decrease  of $1.3  million in cash and due from  banks.  The  increase  in
securities  available  for  sale  was  primarily  due  to the  additional  funds
available to invest.  The Bank's  total  liabilities  increased  $4.0 million or
4.7%,  to $89.2  million at March 31, 2004 from $85.2  million at September  30,
2003. The increase in total  liabilities  was primarily  attributable  to a $4.0
million increase in deposits attributable in part to the continued growth of the
branch office located in Marlton, New Jersey.

         Stockholder's  equity  increased  $367,000  to $6.9  million or 7.2% of
total  assets at March 31,  2004,  as compared to $6.6  million or 7.1% of total
assets at September 30, 2003. The increase in stockholders'  equity is primarily
attributable  to net  income of  $259,000  and to a change in the fair  value of
available for sale securities net of taxes of $91,000.

Results of Operations

         Net Income.  The Company's net income increased $27,000 for the quarter
ended March 31, 2004 to $149,000  from  $122,000 for the quarter ended March 31,
2003. The increase in net income was  attributable  to an increase in the Bank's
net interest income after provisions for loan losses of $33,000, and an increase
in non-interest income of $18,000,  partially offset by an increase in provision
for income taxes of $23,000. For the six months ended March 31, 2004, net income
decreased $10,000 to $259,000 from net income of $269,000 for the same period in
2003.

         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,  investments 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 loan losses increased  $33,000,
or 3.8%,  to  $888,000  for the  quarter  ended  March 31,  2004 as  compared to
$855,000 for the quarter ended March 31, 2003. The increase was primarily due to
the increased  interest  income of $7,000 and a decrease in interest  expense of
$69,000 due to the  decrease  in cost of funds and an increase in the  provision
for loan losses of $43,000. The increase in interest income was partially due to
the growth of the residential  and commercial  loan portfolio  attributable to a
high  demand for real estate  purchases  in the Bank's  lending  area as well as
mortgage  loan  refinancing  and home equity  loans.  Net interest  income after
provision for loan losses increased  $116,000 for the six months ended March 31,
2004  compared to the same period in 2003  primarily due to the decrease in cost
of funds.

                                       7
<PAGE>

         Provision  for Loan Losses.  Provision  for loan losses was $63,000 for
the three months  ended March 31, 2004  compared to $20,000 for the three months
ended March 31,  2003.  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 March 31, 2004 the provision for
loan losses was $83,000 compared to $50,000 for the same period in 2003.

         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 or that such losses
will not exceed the estimated amount.

         Non-Interest Income.  Non-interest income increased $18,000 or 17.0% to
$123,000 for the quarter ended March 31, 2004 from $105,000 for the same quarter
in 2003 partially due to an increase in fees and other charges of $17,000 due to
increase in deposits.  Non-interest  income for 2004  included a gain on sale of
securities  available for sale of $28,000  compared to a gain of $28,000 for the
same  period in 2003 and gain on sale of loans of $12,000  compared to a gain of
$10,000 in the prior year. For the six months ended March 31, 2004, non-interest
income  increased  $8,000,  compared to the same period in 2003, this included a
gain in the 2004 period on securities  available for sale of $48,000 compared to
a gain in 2003 of $39,000 partially offset by a gain on sale of loans of $20,000
compared to a gain of $28,000 in 2003.

         Non-Interest  Expense.  Non-interest  expense was unchanged at $770,000
for the quarter  ended March 31,  2004.  For the six months ended March 31, 2004
non-interest  expense increased by $132,000 compared to the same period in 2003.
The increase was due to an increase of $116,000 in compensation and benefits and
$14,000 in office  occupancy and  equipment.  The increase in  compensation  and
benefits is mostly due to establishing the Bank's commercial loan department and
the new branch office.

         Income Tax Expense  Income tax expense  increased by $23,000 to $92,000
for the quarter  ended March 31, 2004  compared to $69,000 for the quarter ended
March 31, 2003. The increase was  attributable  to the increase in pretax income
of $50,000.

Liquidity and Capital Resources

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

         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.

                                       8
<PAGE>

         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 six months  ended  March 31,  2004 was  $304,000,  a decrease  of  $104,000,
compared to the same period in 2003.  The decrease in 2004 was  primarily due to
the change in accrued  and  deferred  income  taxes of $90,000 and the change in
accrued  interest  receivable  of $75,000  partially  offset by an  increase  in
provisions for loan losses of $33,000.

         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
six months ended March 31, 2004  totaled  $5.5 million  compared to $2.7 million
for the same period in 2003. The increase in use of funds is mainly attributable
to an increase in loans  receivable  net,  of $3.8  million in 2004  compared to
$600,000 in 2003.

         Net cash provided the Bank's financing  activities (i.e., cash receipts
primarily from net increases in deposits and net increases in FHLB advances) for
the six months ended March 31, 2004, totaled $3.8 million,  compared to net cash
provided by  financing  activities  of $3.0 million for the same period in 2003.
The  increase is  attributable  to a net increase in deposits of $3.9 million in
2004, versus an increase of $3.0 million in 2003.

         Office of Thrift Supervision ("OTS") capital regulations  applicable to
the Bank require  savings  institutions  to meet three  capital  standards:  (1)
tangible  capital equal to 1.5% of total adjusted  assets,  (2) a leverage ratio
(core  capital)  equal  to at  least  3% of  total  adjusted  assets,  and (3) a
risk-based capital requirement equal to 8.0% of total  risk-weighted  assets. In
addition,  the OTS prompt corrective  action regulation  provides that a savings
institution  that  has a  leverage  capital  ratio  of  less  than  4%  (3%  for
institutions  receiving  the highest  examination  rating)  will be deemed to be
"undercapitalized"  and may be subject to certain restrictions.  The Bank was in
compliance with these  requirements  at March 31, 2004, with tangible,  core and
risk based capital ratios of 6.61%, 6.61% and 12.60%, 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 Company was not engaged in any material  legal  proceedings  during
         the quarter ended March 31, 2004.  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 Small  Business  Issuer  Purchases of
         Equity Securities
         -----------------------------------------------------------------------

         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  February
         18,  2004,  and  stockholders  elected  Gary N.  Pelehaty and  Edgar N.
         Peppler to new terms as  directors  and  ratified  the  appointment  of
         auditors.

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

         Not applicable.

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

         (a)   Exhibits:

               31   Certification  pursuant to section 302 of Sarbanes-Oxley Act
                    of 2002

               32   Certification pursuant to 18 U.S.C.ss.1350.


                                       10
<PAGE>


          (b)  Current  Reports on Form 8-K filed during the quarter ended March
               31, 2004:

               During the quarter  ended  March 31,  2004,  the Company  filed a
               Current  Report on Form 8-K dated  February  3,  2004,  to report
               earnings for the quarter ended December 31, 2003 (Items 7 & 12).

               During the quarter  ended  March 31,  2004,  the Company  filed a
               Current  Report on Form 8-K dated March 15,  2004,  to report the
               issuance of a 20% stock dividend (Items 5 and 7).


                                       11

<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: May 11, 2004            By:/s/Gary N. Pelehaty
                                 -------------------------------------
                                 Gary N. Pelehaty
                                 President and Chief Executive Officer
                                 (Principal Executive Officer)
                                 (Duly Authorized Officer)



Date: May 11, 2004            By:/s/Charles Alessi
                                 -------------------------------------
                                 Charles Alessi
                                 Vice President, Chief Financial Officer
                                 Secretary and Treasurer
                                 (Principal Financial and Accounting Officer)

                                       12