FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                          OF THE SECURITIES ACT OF 1934



For Quarter Ended:  June 30, 1997

Commission File Number:  2-95465-S 

                     WESTAR FINANCIAL SERVICES INCORPORATED
                                  successor to
                         REPUBLIC LEASING INCORPORATED                          
             (Exact name of registrant as specified in its charter)

              Washington                             91-1715252
    (State or other jurisdiction of     (IRS Employer Identification Number)    
     Incorporation or organization)

            The Republic Building;  Olympia, WA               98501
          (Address of principal executive office)          (Zip Code)

Registrant's telephone number, including area code:  (360) 754-6227


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.

                       Yes:  X          No     
                            ---             ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:

             Common Stock                              1,765,300
                Class              Number of Shares Issued at July 31, 1997




PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Westar Financial Services Incorporated and Subsidiaries
Consolidated Balance Sheet
as of June 30, 1997 and March 31, 1997


                                                        June 30       March 31
                                                      (Unaudited)
                                                       ---------      --------
Cash                                                $    282,386   $   191,380
Accounts receivable, net of allowance 
  for credit losses                                      176,918       333,497
Credit enhancement receivable, net of 
  allowance for credit losses                          1,009,215     1,066,015
Net investment in direct finance leases, net of
  allowance for credit losses                         12,472,378     7,962,805
Deferred tax asset                                     2,479,801     2,263,075
Other assets                                             408,283       475,144
                                                      ----------     ---------
                                                    $ 16,828,981   $12,291,916
                                                      ==========    ==========


Accounts payable                                    $    514,740   $   560,356
Notes payable - bank                                  11,832,195     8,287,619
Notes payable - subordinated                           1,861,636     1,027,048
Other liabilities                                        504,036       259,076
                                                       ---------     ---------
                                                      14,712,607    10,134,099
                                                      ----------    ----------

Redeemable preferred stock                             4,248,000     4,248,000
                                                       ---------     ---------

Common stock, no par value                             2,980,795     2,874,795
Paid in capital - stock warrants                         371,495              
Accumulated deficit                                   (5,483,916)   (4,964,978)
                                                      ----------     ---------
                                                      (2,131,626)   (2,090,183)
                                                      ----------     ---------
                                                    $ 16,828,981   $12,291,916
                                                      ==========    ==========

See accompanying notes to consolidated financial statements.


Westar Financial Services Incorporated and Subsidiaries
Consolidated Statement of Operations
For the three months ended June 30, 1997 and 1996
(Unaudited)

                                                            1997         1996 
                                                            ----         ---- 
Revenues:
Earned income-direct financing
  leases                                                 $ 214,457    $ 149,580 
Revenues from sales and 
  securitizations                                          133,366      756,344 
Administrative fee income                                   52,938              
Service fee income                                          23,870              
Other income                                                 5,939       26,581 
                                                        ----------    --------- 
Total revenues                                             430,570      932,505 
                                                        ----------    --------- 
Direct Costs:
Interest                                                   221,743      149,072 
Costs related to sales and
  securitizations                                          118,582      756,210 
Provision for credit losses                                 25,315       23,889
Other                                                       39,494        6,044 
                                                        ----------    --------- 
Total direct costs                                         405,134      935,215 
                                                        ----------    --------- 
                                                            25,436      (2,710) 

General and administrative expenses                        508,583      540,457 
                                                        ----------      ------- 
Operating loss before other expense
   and income tax benefit                                 (483,147)    (543,167)

Non-cash interest expense                                 (154,282)             
                                                          --------      ------- 
Loss before income tax benefit                            (637,429)    (543,167)

Income tax benefit                                         216,726      178,058 
                                                           -------      ------- 
Net Loss                                                  (420,703)    (365,109)

Dividends on redeemable
  preferred stock                                          (98,235)     (98,235)
                                                           -------      ------- 
Net loss applicable to                                
  common stock                                           $(518,938)   $(463,344)
                                                         =========     ======== 

Net loss per common share                                  $ ( .30)      $ (.32)
                                                               ===          === 

Weighted average number of shares                        1,736,633     1,450,000
                                                         =========     =========

See accompanying notes to consolidated financial statements.

Westar Financial Services Incorporated and Subsidiaries
Consolidated Statement of Cash Flows
For the three months ended June 30, 1997 and 1996
(Unaudited)

                                                           1997          1996   
                                                           ----          ----   

Net cash provide by (used in) operating activities  $       4,823    $ (201,364)
                                                       -----------     ---------

Cash flows from investing activities:
Recovery of equipment costs and residual
   interests                                              337,559       952,575 
Purchases of equipment for lease                       (4,872,131)   (4,152,252)
Other                                                      16,613       (38,519)
                                                        ---------       ------- 
Net cash used in investing activities                  (4,517,959)   (3,238,196)
                                                        ---------     --------- 

Cash flows from financing activities:
Proceeds from issuance of common stock                    106,000         7,600 
Additions to notes payable to banks                     4,624,733     4,104,462 
Payments on notes payable to banks                     (1,080,157)     (661,528)
Additions to notes payable - subordinated               1,515,690               
Payments on notes payable - subordinated                 (463,889)              
Increase in advances from affiliate                                     168,119 
Dividends paid on preferred stock                         (98,235)      (91,217)
                                                        ---------     --------- 
Net cash provided by financing activities               4,604,142     3,527,436 
                                                        ---------     --------- 
Net increase in cash                                       91,006        87,876 

Cash:
Beginning of period                                       191,380       190,841 
                                                        ---------       ------- 
End of period                                         $   282,386     $ 278,717 
                                                        =========       ======= 


See accompanying notes to consolidated financial statements.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  The Company's consolidated annual financial statements presented in the 1997
Annual Report on Form 10-K of the Company includes a summary of significant 
accounting policies and should be read in conjunction with this Form 10-Q.  
The consolidated financial statements include the accounts of Westar Auto
Holding Co., Inc. ("WestAH"), a 100%-owned subsidiary of the Company, Westar
Auto Finance L.L.C. ("WestAF"), a limited liability company owned 99% by the
Company and 1% by WestAH, and Westar Lease Origination Trust, a Washington
business trust whose beneficiary is WestAF.  The statements for the three 
months ended June 30, 1997 and 1996, are unaudited, condensed and do
not contain all information required by generally accepted accounting principles
to be included in a full set of annual financial statements.  In the opinion of
Management, all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the results of operations for such periods have been
included.  All significant inter-company balances and transactions have been
eliminated.  The results of operations for the three months ended June 30,
1997, are not necessarily indicative of the results of operations for the 
entire year.

2.  The Company paid cash for interest of $122,101 and $8,937 for the three
months ended June 30, 1997 and 1996, respectively.

3.  During April of 1997, the Company entered into an agreement to borrow
$1,500,000 from a Preferred Shareholder/Director.  The loan is to be repaid
no later than October 20, 1997 and bears interest at the rate of 6%.  The 
borrowings are subordinated to bank borrowings, guaranteed by one of the 
Company's executive officers and are secured by certain Company assets.  The
agreement grants the lender warrants exercisable for five years to purchase
3.75% of the Company's common stock for $.01 a share.  The Company recorded 
a discount for the fair value of the warrants, which is the difference between
the fair value of the common stock and the exercise price.  This is amortized 
over the life of the note and charged to non-cash interest expense.

4.  During the three months ended June 30, 1997, the Company issued 53,000 
shares in various option transactions for $106,000

5.  Earnings per share are computed using the weighted-average number of common
shares outstanding for the three months ended June 30, 1997 and 1996,
respectively.  Net loss used in the computation of earnings per share has
been increased to include the redeemable preferred stock dividends.  The
outstanding shares used in the earnings per share calculation have been adjusted
for the 2-for-1 stock split paid in June 1996.  Earnings per share does not
include common stock warrants or common stock options as the effect is anti-
dilutive.



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



RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION


Three months ended June 30, 1997 compared to three months ended June 30, 1996
-----------------------------------------------------------------------------
Net sales decreased by approximately $502,000, from $933,000 to $431,000. 
The decrease was caused by a reduction in revenues from sales and 
securitizations of $623,000 offset by an increase of earned income from direct 
financing leases of $65,000 and an increase of other income of $56,000. 
The decrease in revenues from sales and securitizations is due primarily to
fewer miscellaneous assets sold.  The increase in direct financing lease 
income is due to the increased volume of leases written.  Other revenues 
increased primarily due to the increased revenues generated by administrative 
and service fee income.

Direct costs decreased by $530,000, from $935,000 to $405,000.  The decrease
was attributable to a decrease of costs related to sales and securitizations of 
approximately $638,000 and to an increase of direct interest of approximately
$73,000. The decrease in costs related to sales and securitizations is explained
in the preceding paragraph. Interest costs related to warehousing leases prior 
to securitization increased due to the increased volume of leases written.

General and administrative expenses decreased by approximately $32,000, from
$540,000 to $508,000.  

The Company incurred a non-cash interest charge of $154,282 due to the 
realization of a discount related to subordinated debt issued with warrants. 
The warrants are convertible into common stock at a discount from market price 
of the common stock.  The difference is recorded as non-cash interest and is 
amortized over the term of the note and, when fully amortized, will have no 
effect on stockholder's equity and operating income.


LIQUIDITY AND CAPITAL RESOURCES

The Company's business requires substantial cash to implement its business
strategy, including cash to: (i) acquire vehicles, (ii) pay securitization
costs, including amounts required for credit enhancement (iii) satisfy working
capital requirements (iv) pay operating expenses, (v) satisfy debt service and
(vi) pay preferred stock dividends. Many of these cash requirements increase as
the Company's volume of leases increases. A substantial portion of the 
Company's revenues in any period is represented by revenues from 
securitizations of leases in such period but a portion of the cash 
underlying such revenues is received over the life of the leases. The 
Company expects to continue to have a negative cash flow as long as the volume
of leases continues to grow. The Company has historically funded 
negative operating cash flows principally through borrowings from financial
institutions and sales of equity and debt securities.

The Company completed securitizations in both the second and third quarter of 
fiscal year 1997 and has approximately $18.6 million of leases securitized as
of June 30, 1997. As the Company retains the servicing of leases securitized,
it receives servicing income from the securitized pools.  The Company intends 
to have its securitization transactions in larger denominations in fiscal 
year 1998.

The revolving credit facility provided by Bank One is the primary source of 
cash to finance the acquisition of vehicle leases until they are securitized 
through the facility made available by the Industrial Bank of Japan (IBJ). 
During the third quarter of fiscal year ended 1997, Bank One agreed to increase
the revolving warehouse line of credit, subject to certain conditions, from 
$12,000,000 to $25,000,000. Final documents related to this increase are 
currently being completed. After repayment of the related borrowings from Bank
One, the net proceeds from the IBJ securitizations provide a source of cash for
future acquisition of vehicle leases and general and administrative expenses.

The Company records a deferred tax asset related to its operating losses as it
believes that it has the ability to provide funding for the lease volumes 
necessary to generate sufficient taxable income for realization of the deferred
tax asset.

During the three months ended June 30, 1997, the Company issued 53,000 shares
in various option transactions for $106,000.

In April 1997, the Company entered into an agreement to borrow $1,500,000 of
subordinated debt from a Preferred Shareholder/Director. The agreement grants
the lender warrants exercisable for five years to purchase 3.75% of the 
Company's common stock for $.01 a share.  The proceeds of the note were used
primarily to reduce notes payable - banks and notes payable - subordinated debt.

In August 1997, the Company reached an agreement in principle to sell Secured 
Subordinated Notes ("Notes") with an initial $10 million face value, due 2002,
plus warrants, (collectively referred to as the "Securities") to an unrelated 
third party (the "Buyer").  The Notes will bear interest at a fixed rate of the 
greater of 10.5% or the bid side yield of U.S. Treasury Securities with a 
average life plus 4.5% or at a variable rate of three month LIBOR 
plus 4.25%.  The Buyer will elect which rate applies and interest will be 
payable quarterly.  The Notes will be secured by a subordinated lien on the 
Company's assets.

The Warrants will provide the Buyer an option to purchase 49.9% of the 
Company's common stock on a fully diluted basis at an exercise price of $.01
per share (exercise price not to exceed $100 in the aggregate). These warrants
will expire 20 years from issuance.

The sale of these Securities is subject to, among other things, the Company and 
the Buyer reaching final agreement upon specific terms of the related documents,
the completion of certain due diligence procedures by the Buyer, the Company 
issuing an additional $3 million of common stock and the Buyer's satisfaction
with the Company's business plan for 1998, 1999 and 2000. This agreement in
principle expires October 1, 1997, unless extended by the Buyer.

It is the opinion of management that, as of June 30, 1997, the liquidity sources
discussed above are sufficient to meet the Company's immediate cash flow needs
for operations and for the acquisition of leases in the normal course of 
business. It will be necessary, however, to obtain additional capital through 
both private and public financing to provide for the Company's planned growth
over the next several years.


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None

ITEM 2.  CHANGES IN SECURITIES

In May of 1997 the Company issued 20,000 shares of common stock in an option
transaction for $40,000 and in June of 1997 the Company issued 33,000 shares 
of common stock in various option transactions for $66,000.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Index to Exhibits

              2.  Plan of acquisition, reorganization, arrangement, liquidation
                  or succession

                  2.1  Plan and Agreement of Merger between Westar Financial
                       Services Incorporated and Republic Leasing Incorporated
                       incorporated by reference to the Exhibit to Form 10-K
                       dated June 11, 1996.

              3.  Articles of Incorporation and Bylaws

                  3.1  The Articles of Incorporation of Westar Financial
                       Services Incorporated filed on February 13, 1996
                       incorporated by reference to the Exhibit to Form 10-K
                       dated June 11, 1996.

                  3.2  The Bylaws of Westar Financial Services Incorporated
                       adopted on February 21, 1996 incorporated by reference to
                       the Exhibit to Form 10-K dated June 11, 1996.

              4.  Instruments defining the rights of security holders, including
                  indentures.

                  4.1  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 1 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated
                       June 11, 1996.

                  4.2  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 2 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated
                       June 11, 1996.

                  4.3  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 3 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated
                       June 11, 1996.

                  4.4  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 4 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated
                       June 11, 1996.

             10.  Material Contracts.

                  10.1  Republic Leasing Incorporated 1994 Stock Option Plan
                        incorporated by reference to the Exhibit to Form 10-K
                        dated June 11, 1996.

                  10.2  The Letter Agreement between Republic Leasing
                        Incorporated and The Industrial Bank of Japan, Limited
                        dated March 3, 1995 incorporated by reference to the
                        Exhibit to Form 10-K dated June 11, 1996.

                  10.3  Revolving Credit Agreement among Westar Auto Finance,
                        L.L.C. as Borrower, Republic Leasing Incorporated as
                        Guarantor and Bank One, Columbus, N.A., as Lender dated
                        July 12, 1995 incorporated by reference to the Exhibit
                        to Form 10-K dated June 11, 1996.

                  10.4  Amendment, dated February 15, 1996, to the Revolving
                        Credit Agreement with Bank One, Columbus, N.A., dated
                        July 12, 1995 incorporated by reference to the Exhibit
                        to Form 10-K dated June 11, 1996.

                  10.5  The Promissory Note between Westar Financial Services
                        Incorporated and Mud Bay Holdings Ltd., as a lender
                        dated January 15, 1997 incorporated by reference to the
                        Exhibit to Form 10-K dated September 9, 1997.

                  10.6  The Promissory Note between Westar Financial Services
                        Incorporated and & Capital Inc., as the lender dated
                        April 15, 1997.


             27.  Financial Data Schedule

        (b)  Reports on Form 8-K

             None

                              SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Regi-
strant has duly caused this Report to be signed on its behalf by the under-
signed, thereunto duly authorized.

                                       WESTAR FINANCIAL SERVICES INCORPORATED




September 22, 1997                       R. W. Christensen, Jr., President
(Date)                                  (Signature)


September 22, 1997                       T. M. Foley, Vice President, Finance
(Date)                                  (Signature)