<PAGE> 1

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                   FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 1997
                               -----------------
                        or

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

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

Commission File Number: 0-18126
                        -------

                            FINANCIAL BANCORP, INC.
                            -----------------------
            (Exact name of registrant as specified in its charter)

       Delaware                                         06-1391814
       --------                                         ----------
(State or other jurisdiction of             (I.R.S. Employer identification No.)
incorporation or organization)

               42-25 Queens Boulevard, Long Island City, NY  11104
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                  (718) 729-5002
                                   -------------
                  (Registrant's telephone number, including area code)

                                  Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed from last report)

      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  (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.          (1)  X    Yes        No
                                                      ------      ----- 
                                                   (2)   X  Yes         No
                                                      ------      -----


                       APPLICABLE ONLY TO CORPORATE ISSUERS:

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

      There were 1,709,700 shares of the Registrant's  common stock  outstanding
as of February 13, 1998.
      -----------------



<PAGE> 2



                             FINANCIAL BANCORP, INC.
                                   Form 10-Q
                                     Index

Part I - Financial Information                                          Page
------------------------------                                          ----

Item 1.    Financial Statements

           Consolidated Statements of Financial Condition
           as of December 31, 1997 (Unaudited) and September 30, 1997    3


           Consolidated Statements of Income for the
           Three Months ended December 31, 1997 and 1996 (Unaudited)     4

           Consolidated Statement of Changes in
           Stockholders' Equity for the Three Months
           ended December 31, 1997 (Unaudited)                           5

           Consolidated Statements of Cash Flows for the
           Three Months ended December 31, 1997 and 1996 (Unaudited)     6-7

           Notes to Consolidated Financial Statements                    8-12

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                 13-17

Item 3.    Quantitative and Qualitative Disclosures About Market Risk    18

Part II - Other Information
---------------------------

Item 1.    Legal Proceedings                                             19

Item 2.    Changes in Securities
             Not applicable.                                             19

Item 3.    Defaults Upon Senior Securities
             Not applicable.                                             19

Item 4.    Submission of Matters to a Vote of Security
           Holders
             Not applicable.                                             19

Item 5.    Other Information                                             19


Item 6.    Exhibits and Reports on Form 8-K                              19

           Signature Page                                                20

           Exhibits
           Exhibit 11:  Computation of per share earnings                
  
           Exhibit 27:  Financial Data Schedule





<PAGE> 3

<TABLE>
<CAPTION>
                                          Financial Bancorp, Inc.
                                              And Subsidiaries
                               Consolidated Statements of Financial Condition

                                                                                       December 31,   September 30,
                                                                                           1997           1997
                                                                                     -------------- ---------------
                                                                                        (Unaudited)
Assets
------

<S>                                                                                      <C>            <C>       
Cash and amounts due from depository institutions                                        $2,546,481     $2,738,392
Federal funds sold                                                                       13,250,000     10,650,000
                                                                                     -------------- --------------
    Total cash and cash equivalents                                                      15,796,481     13,388,392

Investment securities available for sale                                                    736,000        730,750
Investment securities held to maturity, net; estimated fair value of $54,959,000 and
  $69,223,000 at December 31, 1997 and September 30, 1997, respectively                  54,872,376     69,410,103
Mortgage-backed securities available for sale                                            30,018,650      9,357,048
Mortgage-backed securities held to maturity, net; estimated fair value of $36,751,000
  and $39,129,000 at December 31, 1997 and September 30, 1997, respectively              36,222,302     38,521,050
Loans receivable, net                                                                   158,610,973    153,291,828
Real estate owned, net                                                                      600,423        471,417
Investments in real estate, net                                                           3,560,397      3,543,453
Premises and equipment, net                                                               2,372,731      2,431,570
Federal Home Loan Bank of New York stock, at cost                                         1,845,000      1,845,000
Accrued interest receivable, net                                                          2,049,275      2,248,578
Other assets                                                                              1,562,981      1,716,727
                                                                                     -------------- --------------
    Total assets                                                                       $308,247,589   $296,955,916
                                                                                     ============== ==============

Liabilities and stockholders' equity
------------------------------------

Deposits                                                                               $219,640,479   $213,394,282
Advance payments by borrowers for taxes and insurance                                     1,128,004      1,267,896
Advances from Federal Home Loan Bank of New York                                          6,000,000      8,000,000
Securities sold under agreements to repurchase                                           32,000,000     25,000,000
Treasury tax and loan account and other short term borrowings                            18,792,712     20,000,000
Other liabilities                                                                         3,155,642      2,437,504
                                                                                     -------------- --------------
    Total liabilities                                                                   280,716,837    270,099,682
                                                                                     -------------- --------------
Stockholders' equity
Preferred stock, $0.01 par value, 2,500,000 shares authorized; none issued
Common stock, $0.01 par value, 6,000,000 shares authorized; 2,185,000 shares issued,
   1,709,700 shares outstanding at December 31, 1997 and
   at September 30, 1997                                                                     21,850         21,850
Additional paid-in capital                                                               20,296,007     20,239,758
Retained earnings - substantially restricted                                             14,651,260     14,111,882
Common stock acquried by Employee Stock Ownership Plan (ESOP)                              (971,102)    (1,011,566)
Common stock acquired by Recognition & Retention Plan (RRP)                                (283,888)      (317,955)
Unrealized gain on securities available for sale, net of income taxes                        95,964         91,604
Treasury stock, at cost; 475,300 shares at December 31, 1997 and 
   at September 30, 1997                                                                 (6,279,339)    (6,279,339)
                                                                                     -------------- --------------
  Total stockholders' equity                                                             27,530,752     26,856,234
                                                                                     -------------- --------------
  Total liabilities and stockholders' equity                                           $308,247,589   $296,955,916
                                                                                     ============== ==============
</TABLE>

See accompanying notes to consolidated financial statements
    

<PAGE> 4
<TABLE>
<CAPTION>

                                     Financial Bancorp, Inc.
                                        And Subsidiaries
                                Consolidated Statements of Income
                                           (Unaudited)

                                                                              Three Months Ended
                                                                         ----------------------------
                                                                                  December 31,
                                                                         ----------------------------
                                                                              1997            1996
                                                                         ------------    ------------

<S>                                                                        <C>             <C> 
Interest income:
   Loans                                                                   $3,200,084      $2,899,293
   Mortgage-backed securities                                                 983,736         955,509
   Investments and other interest-earning assets                            1,051,546       1,041,882
   Federal funds sold                                                          82,954          15,789
                                                                         ------------    ------------
          Total interest income                                             5,318,320       4,912,473
                                                                         ------------    ------------

Interest expense:
   Deposits                                                                 2,196,188       1,981,214
   Borrowings                                                                 605,994         476,765
                                                                         ------------    ------------
          Total interest expense                                            2,802,182       2,457,979

Net interest income                                                         2,516,138       2,454,494
Provision for loan losses                                                     109,650          99,600
                                                                         ------------    ------------
Net interest income after provision for loan losses                         2,406,488       2,354,894
                                                                         ------------    ------------

Non-interest income (loss):
   Fees and service charges                                                   149,634         131,280
   Gain on sale of investment securities                                            0          26,353
   Gain (loss) from real estate operations                                     13,824         (28,053)
   Miscellaneous                                                               19,242          10,629
                                                                         ------------    ------------
          Total non-interest income                                           182,700         140,209
                                                                         ------------    ------------

Non-interest expenses:
   Salaries and employee benefits                                             705,350         742,047
   Net occupancy expense of premises                                          122,129         132,511
   Equipment                                                                  169,380         150,346
   Advertising                                                                 38,867           9,587
   Loss from real estate owned                                                 16,422          18,384
   Federal insurance premium                                                   30,403          81,772
   Miscellaneous                                                              273,102         250,043
                                                                         ------------    ------------
          Total non-interest expenses                                       1,355,653       1,384,690
                                                                         ------------    ------------

Income before income taxes                                                  1,233,535       1,110,413
Income taxes                                                                  533,982         516,974
                                                                         ------------    ------------

Net income                                                                   $699,553        $593,439
                                                                         ============    ============

Net income per common share:
   Basic                                                                        $0.43           $0.36
                                                                         ============    ============
   Diluted                                                                      $0.42           $0.35
                                                                         ============    ============
</TABLE>




See accompanying notes to consolidated financial statements.



<PAGE> 5

<TABLE>
<CAPTION>

                                                Financial Bancorp, Inc.
                                                   And Subsidiaries
                                Consolidated Statements of Changes in Stockholder Equity
                                                      (Unaudited)


                                                                                                Unrealized
                                                                                                 Gain on  
                                                           Retained       Common       Common   Securities
                                            Additional    Earnings -      Stock        Stock   Available For   
                                   Common     Paid-in    Substantially   Acquired     Acquired Sale, Net of   Treasury
                                   Stock      Capital     Restricted     By ESOP       By RRP  Income Taxes    Stock       Total
                                  --------  ----------   -------------   --------     -------- ------------    -----     --------

<S>                               <C>       <C>           <C>          <C>           <C>          <C>      <C>          <C> 
Balance at September 30, 1997     $21,850   $20,239,758   $14,111,882  $(1,011,566)   $(317,955)  $91,604  $(6,279,339) $26,856,234

Net Income for the three months
     ended December 31, 1997            -             -       699,553            -            -         -            -      699,553

Amortization relating to 
   allocation of ESOP stock and
   earned portion of RRP stock          -        56,249             -       40,464       34,067         -            -     $130,780

Unrealized gain on
  securities available for sale         -             -             -            -            -     4,360            -       $4,360

Cash dividends paid on common           -             -      (160,175)           -            -         -            -     (160,175)
stock

Balance at December 31, 1997      $21,850   $20,296,007   $14,651,260    $(971,102)   $(283,888)  $95,964  $(6,279,339) $27,530,752
                                =========  ============  ============   ==========   ==========  ========  ============  ===========
</TABLE>




See accompanying notes to consolidated financial statements.




<PAGE> 6

<TABLE>
<CAPTION>

                                   Financial Bancorp, Inc.
                                       And Subsidiaries
                            Consolidated Statements of Cash Flows
                                        (Unaudited)

                                                                              Three Months Ended
                                                                          --------------------------
                                                                                  December 31,
                                                                          --------------------------
                                                                             1997           1996
                                                                          -----------     ----------

<S>                                                                        <C>             <C>     
Cash flow from operating activities:
  Net income                                                               $699,553        $593,439
  Adjustments to reconcile net income to net cash
    provided by operating activities
  (Gain) on sale of investment securities                                         0         (26,353)
  Net accretion of discounts on investment securities                       (52,273)        (49,779)
  Net amortization of premiums on mortgage-backed securities                 18,594           8,559
  Accretion of deferred loan fees and discounts                             (25,768)        (23,136)
  Amortization of intangibles                                                 4,261           4,261
  Depreciation                                                               72,890          75,877
  Provision for loan losses                                                 109,650          99,600
  Provision for losses on real estate owned                                       0          15,482
  Cost of ESOP and RRP                                                      130,780          92,496
  Deferred income taxes                                                           0         127,426
  Decrease in accrued interest receivable, net                              199,303         139,003
  Increase in income taxes payable                                          418,463         206,276
  (Increase) decrease in other assets                                       (71,894)       (342,869)
  Increase (decrease) in other liabilities                                  517,628      (1,578,772)
                                                                      -------------    ------------
   Net cash provided by operating activities                              2,021,187        (658,490)
                                                                      -------------    ------------

Cash flows from investing activities:
  Purchases of investment securities available for sale                           0      (8,840,000)
  Purchases of investment securities held to maturity                    (7,250,000)              0
  Proceeds from sales of investment securities available for sale                 0       2,947,031
  Proceeds from maturities of investment securities                      21,840,000      15,000,000
  Purchases of mortgage-backed securities available for sale            (21,719,234)              0
  Proceeds from principal repayments on mortgage-backed securities        3,340,322       2,156,126
  Loan originations, net of repayments                                   (5,532,033)     (5,244,006)
  Additions to premises and equipment                                       (10,995)        (43,837)
  Proceeds from sale of and insurance recoveries
   on real estate owned                                                           0         143,928
  Purchase of Federal Home Loan Bank of N.Y. stock                                0         (14,000)
  Net (increase)  decrease in investments in real estate                    (20,000)         25,000
                                                                      -------------    ------------
   Net cash provided by investing activities                             (9,351,940)      6,130,242
                                                                      -------------    ------------
</TABLE>






See accompanying notes to consolidated financial statements.




<PAGE> 7

<TABLE>
<CAPTION>

                                   Financial Bancorp, Inc.
                                      And Subsidiaries
                      Consolidated Statements of Cash Flows (Continued)
                                        (Unaudited)

                                                                              Three Months Ended
                                                                        ----------------------------
                                                                                 December 31,
                                                                        ----------------------------
                                                                             1997            1996
                                                                        ------------     -----------

<S>                                                                      <C>               <C>     
Cash flows from financing activities:
  Net increase in deposits                                               $6,246,197        $616,049
  Proceeds from FHLB of NY advances                                               0       2,800,000
  Repayments of FHLB of NY advances                                      (2,000,000)              0
  Net (decrease) increase in short-term borrowings from FHLB of NY                0       (525,000)
  Proceeds from reverse repurchase agreements                             7,000,000               0
  Repayments of reverse repurchase agreements                                     0               0
  Net (decrease) increase in treasury tax account borrowings             (1,207,288)     (8,920,102)
  (Decrease) increase in advance payments by
   borrowers for taxes and insurance                                       (139,892)       (191,699)
  Dividends paid                                                           (160,175)       (123,982)
  Reissuance of treasury stock                                                    0          38,365
  Purchase of treasury stock                                                      0        (663,938)
                                                                        -----------    ------------
     Net cash provided by financing activities                            9,738,842      (6,970,307)


Net increase (decrease) in cash and cash equivalents                      2,408,089      (1,498,555)
Cash and cash equivalents - beginning                                    13,388,392       5,102,223
                                                                        -----------    ------------
Cash and cash equivalents - ending                                      $15,796,481      $3,603,668
                                                                        ===========    ============

Supplemental schedule of noncash investing and
  financing activities:
  Loans transferred to real estate owned                                   $129,006              $0
                                                                        ===========    ============


 Unrealized (loss) gain on securities available for sale                     $7,786         $61,906
 Deferred income taxes                                                       (3,426)        (27,238)
                                                                        -----------    ------------
                                                                             $4,360         $34,668
                                                                        ===========    ============

Supplemental  disclosures  of cash flow  information:
  Cash paid (net of refunds received) during the year for:
    Federal, state and city income taxes                                    115,519         156,034
                                                                        ===========    ============
   Interest paid on deposits and borrowed funds                          $2,801,826      $2,441,301
                                                                        ===========    ============
</TABLE>




See accompanying notes to consolidated financial statements.



<PAGE> 8



                  FINANCIAL BANCORP, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


BASIS OF PRESENTATION
The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts of Financial  Bancorp,  Inc. (the  "registrant" or the "Company"),  its
wholly  owned  subsidiaries,  842  Manhattan  Avenue  Corp.  which  manages real
property,  and Financial Federal Savings Bank (the "Bank") a federally chartered
stock association, and the Bank's wholly owned subsidiaries,  Finfed Development
Corp.,  which  participates  in a joint venture for the  development of land and
sale of lots,  Finfed  Funding  Ltd.,  which  serves  as a conduit  for  funding
investments in Finfed  Development Corp., and F.S. Agency Inc., which is engaged
in the sale of annuities. All significant intercompany accounts and transactions
have been eliminated in consolidation.

Certain information and footnote  disclosures  required under generally accepted
accounting  principles  have  been  condensed  or  omitted  from  the  following
consolidated  financial  statements pursuant to the rules and regulations of the
Securities and Exchange  Commission.  The Company  believes that the disclosures
presented  are  adequate  to  assure  that  the  information  presented  is  not
misleading  in  any  material  respect.  It  is  suggested  that  the  following
consolidated  financial  statements  be read in  conjunction  with the  year-end
consolidated financial statements and notes thereto included in the registrant's
Annual Report on Form 10-K for the year ended September 30, 1997.

The results of operations  for the three months ended  December 31, 1997 are not
necessarily indicative of the results that may be expected for the entire fiscal
year.

Certain  amounts  for the  three  months  ended  December  31,  1996  have  been
reclassified to conform with the current period's presentation.

RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income". SFAS No. 130 requires that all items that are components
of "comprehensive income" be reported in a financial statement that is displayed
with the same prominence as other financial statements.  Comprehensive income is
defined as the "change in equity [net assets] of a business  enterprise during a
period  from  transactions  and other  events and  circumstances  from  nonowner
sources.  It  includes  all  changes  in  equity  during a period  except  those
resulting from  investments by owners and  distributions  to owners".  Companies
will be required to (a) classify  items of other  comprehensive  income by their
nature in the financial  statements and (b) display the  accumulated



<PAGE> 9



balance of other comprehensive  income  separately  from  retained  earnings and
additional  paid-in  capital in the equity  section of a statement  of financial
position.  SFAS No. 130 is effective for fiscal years  beginning  after December
15,  1997 and  requires  reclassification  of prior  periods  presented.  As the
requirements of SFAS No. 130 are  disclosure-related,  its  implementation  will
have no impact on the Company's financial condition or results of operations.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  About Segments of an
Enterprise  and Related  Information"  ("SFAS No.  131").  SFAS No. 131 requires
disclosures  for each segment that are similar to those  required  under current
standards  with the addition of quarterly  disclosure  requirements  and a finer
partitioning  of geographic  data by country,  as opposed to broader  geographic
regions as permitted  under  current  standards.  SFAS No. 131 is effective  for
fiscal  year  beginning  after  December  15,  1997  with  earlier   application
permitted.  As the  requirements  of SFAS No.  131 are  disclosure-related,  its
implementation  will have no  impact on the  Company's  financial  condition  or
results of operations.

The foregoing does not  constitute a  comprehensive  summary of all  anticipated
material changes or developments affecting the manner in which the Company keeps
its books and records and performs its financial accounting responsibilities. It
is intended only as a summary of some of the recent  pronouncements  made by the
FASB which are of particular interest to financial institutions.

EARNINGS PER SHARE
Basic EPS is computed by dividing net income by the weighted  average  number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised  or  converted  into common stock or resulted in the issuance of
common stock that then shares in the earnings of the entity.  Earnings per share
data for the quarter ended  December 31, 1996 has been restated as the result of
the implementation of FAS 128. 

INVESTMENT SECURITIES
The following  table sets forth certain  information  regarding the carrying and
estimated fair value of the Company's investment securities at December 31, 1997
and September 30, 1997, respectively.
<TABLE>
<CAPTION>
                                                                  December 31, 1997      September 30, 1997
                                                                  -----------------      ------------------

                                                                Carrying       Fair     Carrying     Fair
                                                                 Value         Value      Value      Value
                                                              -----------   ---------  ----------   --------
                                                                               (in thousands)

<S>                                                                 <C>         <C>        <C>        <C> 
Investment Securities:
Available for sale
    Corporate preferred stock                                       $701        $736       $701       $731
    Less: Unrealized gain                                             35           -         30          -
                                                                --------     -------    -------    -------
       Total investment securities available for sale               $736        $736       $731       $731
                                                                ========     =======    =======    =======
 Held to maturity

    U.S. Government and agency obligations                       $54,872       $54,959    $69,410    $69,223
                                                                --------       -------    -------    -------
        Total investment securities held to maturity             $54,872       $54,959    $69,410    $69,223
                                                                ========       =======    =======    =======
</TABLE>

<PAGE> 10

MORTGAGE-BACKED SECURITIES
The following  table sets forth certain  information  regarding the carrying and
estimated  fair value of the  Company's  mortgage-backed  security  portfolio at
December 31, 1997 and September 30, 1997, respectively.

<TABLE>
<CAPTION>
                                                                    December 31, 1997    September 30, 1997
                                                                    -----------------    ------------------

                                                                   Carrying     Fair     Carrying     Fair
                                                                     Value      Value      Value     Value
                                                                   ---------  ---------  --------   --------
                                                                                  (in thousands)

<S>                                                                  <C>        <C>        <C>        <C>   
Mortgage-backed securities:

  Available for sale
    FHLMC certificates                                               $17,203    $17,291    $4,422     $4,510
    FNMA certificates                                                 12,680     12,728     4,801      4,847
    Add: Unrealized gain                                                 136          -       134          -
                                                                   ---------  ---------  --------  ---------
      Total mortgage-backed securities available for sale            $30,019    $30,019    $9,357     $9,357
                                                                   =========  =========  ========  =========

  Held to maturity
    GNMA certificates                                                $22,075    $22,437   $23,335    $23,752
    FHLMC certificates                                                10,377     10,540    11,299     11,480
    FNMA certificates                                                  1,881      1,885     1,988      1,998
    Other pass-through certificates                                    1,889      1,889     1,899      1,899
                                                                   ---------  ---------  --------  ---------

      Total mortgage-backed securities held to maturity              $36,222    $36,751   $38,521    $39,129
                                                                   =========  =========  ========  =========
</TABLE>

<PAGE> 11

<TABLE>
<CAPTION>

LOANS RECEIVABLE, NET
The following  table sets forth the  composition of the Company's loan portfolio at December 31, 1997
and September 30, 1997, respectively.


                                                  December 31,    September 30,
                                                     1997             1997
                                                  ------------    -------------
                                                         (in thousands)

<S>                                                 <C>              <C>     
Real estate mortgages:
     One-to-four family                             $129,120         $126,440
     Equity and second mortgages                       2,577            2,637
     Multi-family                                     13,537           11,779
     Commercial                                       14,427           13,217
                                                 -----------      -----------
                                                     159,661          154,073
                                                 -----------      -----------

Construction/land                                        275              574
                                                 -----------      -----------
Consumer:

     Passbook or certificate                             201              176
     Home improvement                                      3                4
     Student education guaranteed by
       the State of New York                             222              214
     Personal                                             22               23
                                                 -----------      -----------

                                                         448              417
Commercial, including lines of credit                     80               77
                                                 -----------      -----------

          Total loans                                160,464          155,141
                                                 -----------      -----------

Less:  Loans in process                                  109              201
          Allowance for loan losses                    1,526            1,405
          Deferred loan fees and discounts               218              243
                                                 -----------      -----------
                                                       1,853            1,849
                                                 -----------      -----------

          Total loans receivable, net               $158,611         $153,292
                                                 ===========      ===========
</TABLE>



ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB")
As a member  of the FHLB,  the Bank has an  available  overnight  line of credit
subject to the terms and conditions of the lender's overnight advance program in
the amount of $29,657,700  at December 31, 1997. The following  table sets forth
the  composition  of the  Bank's  FHLB  advances  as of  December  31,  1997 and
September 30, 1997, respectively.

<TABLE>
<CAPTION>


                                                            December 31,         September 30,
                                                                1997                 1997
                                                            ------------         ------------
                                                                      (in thousands) 

<S>                                                                 <C>              <C> 
FHLB advances:
     Fixed rate:
        5.597% due December 1997                                    $0               $2,000
        5.670% due December 1998                                 6,000                6,000
                                                             ---------            ---------
              Total fixed rate                                   6,000                8,000
                                                             ---------            ---------

      Overnight line of credit                                       0                    0
                                                             ---------            ---------

Total FHLB advances                                             $6,000               $8,000
                                                             =========            =========

</TABLE>



<PAGE> 12



SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities   sold  under   agreements  to   repurchase   consist  of  borrowings
collateralized  by investment  securities.  The  following  table sets forth the
composition of the Company's borrowings  collateralized by securities sold under
agreements  to  repurchase  as of December  31,  1997 and  September  30,  1997,
respectively.

<TABLE>
<CAPTION>

                                                                  December 31,     September 30,
                                                                     1997              1997
                                                                  ------------     -------------
                                                                          (in thousands)

<S>                                                                   <C>              <C>   
Securities sold under agreements to repurchase:

           5.291% due December 2001, callable December 1997                $0           $5,000
           5.813% due May 2002, callable May 1998                      10,000           10,000
           5.62% due August 2002, callable August 1999                 10,000           10,000
           5.963% due November 2004, callable October 2002              5,000                -
           5.93% due December 2004, callable December 2002              7,000                -
                                                                 ------------      -----------


Total securities sold under agreements to repurchase                  $32,000          $25,000
                                                                 ============      ===========

</TABLE>


<PAGE> 13



Item 2.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

GENERAL

Financial  Bancorp,  Inc. is the holding  company for Financial  Federal Savings
Bank,  which  converted to a federally  chartered  stock savings  association on
August 17, 1994 and to a federally  chartered  stock savings bank on October 20,
1994. The Bank is  headquartered in Long Island City, New York and operates five
full service branches, four in Queens and one in Brooklyn.  Deposits of the Bank
are  insured  up to the  applicable  limits  of the  Federal  Deposit  Insurance
Corporation ("FDIC").  The Bank is subject to regulation by the Office of Thrift
Supervision  ("OTS")  and the FDIC.  The  Company is listed on The Nasdaq  Stock
Market under the symbol "FIBC".

The Company's  results of operations  are generally  dependent on the Bank.  The
Bank's sources of earnings  primarily  consist of net interest income,  which is
the  difference  between the income  earned on interest  earning  assets and the
expenses paid on interest  bearing  liabilities.  The results of operations  are
also affected,  to a lesser extent, by non-interest  income, which includes loan
servicing  fees and  charges,  and  other  miscellaneous  income.  In  addition,
operations are impacted by non-interest  expenses such as employee  salaries and
benefits,  office  occupancy,  data  processing  and federal  deposit  insurance
premiums.

The  Bank  is  primarily  engaged  in  the  origination  of  one-to-four  family
residential  mortgage  loans,  multi-family  and commercial real estate mortgage
loans,   and  to  a  lesser  extent   residential   construction   loans.  As  a
community-oriented  institution,  the Bank is  generally  engaged in  attracting
retail deposits from the areas surrounding its branch offices. In addition,  the
Bank may borrow funds from the FHLB or through  reverse  repurchase  agreements.
These funds are then generally concentrated in lending activities throughout the
New York City metropolitan area.

FINANCIAL CONDITION

As of December  31,  1997,  the  Company's  total  assets  were $308.3  million,
representing  an $11.3  million,  or a 3.8%,  increase from $297.0 million as of
September 30, 1997.  Loans  receivable  increased by $5.3  million,  or 3.5%, to
$158.6 million at December 31, 1997,  from $153.3 million at September 30, 1997.
Mortgage-backed securities,  inclusive of available for sale, increased by $18.3
million,  or 38.4%, to $66.2 million at December 31, 1997, from $47.9 million at
September 30, 1997.  The increase in total assets was offset by a $14.5 million,
or a 20.7% decreased in investment securities,  inclusive of available for sale,
to $55.6 million at December 31, 1997, from $70.1 million at September 30, 1997.
Asset growth was funded by a $6.2  million,  or a 2.9%,  increase in deposits to
$219.6 million at December 31, 1997,  from $213.4 million at September 30, 1997.
Furthermore,  securities sold under  agreements to repurchase  increased by $7.0
million,  or 28.0%, to $32.0 million at December 31, 1997, from $25.0 million at
September 30, 1997, while  advances  from the FHLB  decreased  by $2.0  million,



<PAGE> 14


or 25.0%, to $6.0 million,  at December 31, 1997, as compared to $8.0 million at
September 30, 1997.  The treasury tax and loan account  borrowings  decreased by
$1.2 million, or 6.0%, to $18.8 million at December 31, 1997, from $20.0 million
at September 30, 1997. The increase in deposits and borrowings  enabled the Bank
to fund new loan  originations and to purchase  adjustable rate  mortgage-backed
securities.

Total stockholders' equity was $27.5 million at December 31, 1997,  reflecting a
$674,518,  or 2.5%,  increase  from $26.8  million at September  30,  1997.  The
increase in stockholders' equity was the result of earnings, partially offset by
the payment of the Company's quarterly cash dividend.  At December 31, 1997, the
Company  had,   exclusive  of  shares   repurchased,   1,709,700  common  shares
outstanding.  During the three months ended  December  31, 1997,  the  Company's
tangible and stated book value per share of common stock  increased by $0.40 and
$0.39, respectively, to $16.03 and $16.10, from $15.63 and $15.71, respectively,
at September 30, 1997.


Non-performing  loans totaled $2.8 million,  or 1.75% of total loans at December
31, 1997, as compared to $2.6 million,  or 1.69% of total loans at September 30,
1997. At December 31, 1997,  non-performing  assets  totalled  $6.8 million,  or
2.20% of total assets, as compared to $6.4 million,  or 2.17% of total assets as
of September  30, 1997.  The Company's  allowance for loan losses  totalled $1.5
million at December 31,  1997,  which  represents a ratio of allowance  for loan
losses  to  non-performing  assets  and to total  loans  of  22.52%  and  0.95%,
respectively,  as compared to 21.8% and 0.91%, respectively, as of September 30,
1997.

ANALYSIS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996

Net income for the three months ended December 31, 1997,  totalled $699,553,  or
diluted  earnings per share of $0.42, as compared to net income of $593,439,  or
diluted  earnings  per share of $0.35 for the three  months  ended  December 31,
1996. The $106,114, or 17.9% increase,  was primarily attributable to a $61,644,
or a 2.5%  increase in net  interest  income,  a $42,491,  or 30.3%  increase in
non-interest income, and a $29,037, or 2.1% decrease in non-interest expense.

The return on average  assets  equalled 0.94% for the quarter ended December 31,
1997, as compared to 0.90% for the  comparable  period in 1996.  For the quarter
ended December 31, 1997, the Company's return on average equity equalled 10.30%,
as compared to 9.21% for the same period in 1996.

Net interest income increased by $61,644, or 2.5%, to $2,516,138 for the quarter
ended  December 31, 1997,  from  $2,454,494  for the quarter ended  December 31,
1996.  The increase in net interest  income for the three months ended  December
31, 1997 was primarily  attributable to the continued  leveraging of the balance
sheet,  utilizing low cost  borrowings  and deposit growth to fund mortgage loan
originations and the purchase of mortgage-backed securities.

As a result,  for the quarter ended December 31, 1997,  average interest earning
assets  increased



<PAGE> 15

 
by $28.1  million,  or 11.1%,  to $281.6  million,  from $253.5  million for the
quarter ended December 31, 1996. The increase in average interest-earning assets
was  partially  offset  by a  $21.4  million,  or a  9.3%  increase  in  average
interest-bearing  liabilities  to $251.6  million for the quarter ended December
31, 1997, as compared to $230.2 million for the quarter ended December 31, 1996.
The average yield on  interest-earnings  assets was 7.55%, for the quarter ended
December  31,  1997,  as compared to 7.75% for the same period in 1996,  and the
average cost of  interest-bearing  liabilities was 4.44%,  for the quarter ended
December 31, 1997, as compared to 4.23%, for the same period in 1996.

The Company's net interest margin  decreased by 28 basis points to 3.59% for the
quarter  ended  December  31, 1997,  as compared to 3.87% for the quarter  ended
December 31, 1996. The net interest rate spread  decreased by 41 basis points to
3.11% for the quarter ended  December 31, 1997,  from 3.52% from the same period
in  1996.  The  significant  decrease  in the net  interest  margin  and the net
interest rate spread reflects the costs associated with the continued leveraging
of the balance sheet and deposit  growth in higher cost  certificate  of deposit
accounts.  In addition,  the  declining  interest rate  environment  and overall
flattening  of the  yield  curve  contributed  to $21.8  million  of  investment
securities  being called . These callable  investment  securities  were replaced
with lower yielding adjustable rate mortgage-backed securities.

The Company's provision for loan losses for the quarter ended December 31, 1997,
increased by $10,050,  to $109,650,  from $99,600 for the quarter ended December
31, 1996.  The increase in provisions  for loan losses  reflects the increase in
loan  originations  and  management's   on-going  effort  to  maintain  adequate
allowances.

Non-interest  income,  for the quarter  ended  December 31,  1997,  increased by
$42,491,  or 30.3%,  to $182,700,  as compared to $140,209 for the quarter ended
December  31,  1996.  This  increase  is  primarily  attributable  to an $18,354
increase in income realized from  additional  service fee income from additional
demand deposit  accounts and automated  teller machines  (ATM's) related service
fees. In addition, the increase in non-interest income is primarily attributable
to a decrease in provisions for losses on investments in real estate, in which a
subsidiary of the Bank has a one-third  interest.  The increase in  non-interest
income  was  partially  offset  by a  $26,353  decrease  in the  gain on sale of
investment securities to zero for the quarter ended December 31, 1997.

Non-interest  expenses decreased $29,037, or 2.1%, to $1,355,653 for the quarter
ended  December 31, 1997, as compared to $1,384,690 for the same period in 1996.
Salaries and employee  benefits  decreased by $36,697,  or 4.9%, to $705,350 for
the quarter ended December 31, 1997, from $742,047 for the corresponding  period
in  1996.   The  decrease  in  salaries  and  employee   benefits  is  primarily
attributable  to a reduction  in costs  associated  with the Bank's  pension and
medical plans, offset in part by costs  associated with the Company's ESOP plan.
For the quarter ended December 31, 1997, occupancy expense decreased by $10,382,
or 7.8%, to $122,129, from $132,511 for the quarter ended December 31, 1996. The
decrease in occupancy expense is primarily attributable to the additional rental
income  collected  on Bank owned  properties.  Equipment  expense  increased  by
$19,034,  or 12.7%,  to $169,380 for the quarter ended  December 31, 1997,  from
$150,346  for the same  period  in  1996.  The  increase  in  equipment  expense
represents costs associated with the Company's data processing service,



<PAGE> 16



deposit and check processing  servicing fees,  automobile and equipment  related
services and contracts. Advertising expense increased by $29,280, or 305.4%%, to
$38,867  for  the  quarter  ended  December  31,  1997,   from  $9,587  for  the
corresponding  period in 1996. The increase in advertising  expense is primarily
attributable  to costs  associated  with an increase in  marketing  efforts,  in
addition to the Bank's 50th anniversary and related gift campaign.  The ratio of
operating  expenses to average assets decreased 27 basis points to 1.80% for the
quarter  ended  December 31, 1997, as compared to 2.07% for the same period last
year. The Company has been  successful in  controlling  operating  expenses,  as
evidenced by the efficiency ratio 49.9% for the quarter ended December 31, 1997,
as compared to 52.6% for the same period in 1996. For the quarter ended December
31, 1997, income tax expense increased by $17,008,  to $533,982,  as compared to
$516,974  for the same  quarter in 1996,  as a result of the  increase in income
before taxes.

LIQUIDITY AND CAPITAL RESOURCES

The Bank is required to maintain an average  daily  balance of specified  liquid
assets (as defined in the  regulations)  equal to a monthly  average of not less
than the specified  percentage  of its net  withdrawable  deposit  accounts plus
short-term borrowings. This liquidity requirement was 5% for fiscal 1997, but is
subject to change from time to time by the OTS to any amount within the range of
4% to 10%  depending  upon economic  conditions  and the savings flows of member
institutions. In 1997, OTS regulations also required each savings institution to
maintain an average daily balance of short-term  liquid assets of at least 1% of
the total of its net withdrawable deposit accounts and borrowings payable in one
year or less.  Monetary  penalties  may be  imposed  for  failure  to meet these
liquidity  requirements.  The OTS has recently lowered the liquidity requirement
from 5% to 4% and  eliminated  the 1% short term liquid asset  requirement.  The
Bank's  liquidity  ratio for  December 31, 1997 was 25.50%,  which  exceeded the
applicable  requirements.  The Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.

The primary  investment  activities of the Bank are the  origination of mortgage
loans and the purchase of investment securities and mortgage-backed  securities.
The Company's primary sources of funds are the Bank's deposit accounts, proceeds
from principal and interest  payments on loans and investments,  and to a lesser
extent,  advances and  overnight  borrowings  from the FHLB,  as well as reverse
repurchase  agreements.  While  maturities and scheduled  amortization of loans,
mortgage-backed  securities and investment securities are predictable sources of
funds, deposit flows,  mortgage  prepayments and callable investment  securities
are greatly influenced by market interest rates, general economic conditions and
competition within the financial industry.

At December 31, 1997,  the Bank had  outstanding  loan  commitments to originate
mortgage  loans  of $6.0  million.  Management  anticipates  that  it will  have
sufficient  funds  available and  borrowing  capability to meet its current loan
originations and loan purchase commitments.  Certificates of deposit,  which are
scheduled to mature in one-year or less from  December 31, 1997  totalled  $78.5
million,  of which  $17.2  million  represent  "Silver  Certificate  of Deposit"
accounts,  which allow one withdrawal of principal per quarter  without an early
withdrawal



<PAGE> 17


penalty for direct deposit customers 62 years of age or older.

Although the OTS capital regulations require savings institutions to meet a 1.5%
tangible  capital ratio and a 3.0% leverage  (core)  capital  ratio,  the prompt
corrective  action standards also establish,  in effect, a minimum 2.0% tangible
capital  standard,  a 4.0% leverage (core) capital ratio (3.0% for  institutions
receiving the highest rating on the CAMEL financial  institution rating system).
The capital  rules also  require each savings  institution  to maintain  capital
equal to at least 8.0% of its risk weighted assets.  The Bank's tangible capital
and core capital  totalled $20.0  million,  or 6.6% at December 31, 1997, far in
excess of the regulatory requirements. The Bank's risk-based capital ratio as of
December  31,  1997 was  $21.4  million,  or  17.9%,  also well in excess of the
regulatory capital requirement of 8.0%.

YEAR 2000 COMPLIANCE

      As the year  2000  approaches,  a  critical  business  issue  has  emerged
regarding how existing  application  software programs and operating systems can
accommodate  this date  value.  In brief,  many  existing  application  software
products in the marketplace  were designed to only  accommodate a two digit date
position  which  represents  the year  (E.G.,  '95 is stored on the  system  and
represents  the year  1995).  The Company is in the  process of  implementing  a
program  designed  to  ensure  that all  software  used in  connection  with the
Company's business will manage and manipulate data involving the transition with
data  from 1999 to 2000  without  functional  or data  abnormality  and  without
inaccurate results related to such data. To the extent the Company's systems are
not fully year 2000 compliant,  there can be no assurance that potential systems
interruptions or the cost necessary to update software would not have a material
adverse effect on the Company's business.


<PAGE> 18



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY ANALYSIS

The Bank does not purchase derivative  financial  instruments or other financial
instruments  for  trading  purposes.  Further,  the Bank is not  subject  to any
foreign currency exchange rate risk,  commodity price risk or equity price risk.
The Bank is,  however,  subject to  interest  rate risk to the  extent  that its
interest-bearing  liabilities reprice or mature more or less frequently than its
interest-earning  assets.  The Bank's interest rate risk management  policy has
been structured to monitor and maintain the Bank's interest rate  sensitivity to
within Board prescribed limits while attempting to maximize net interest income.
In a connection with its interest rate risk management strategy,  management has
emphasized the  origination of  shorter-term  fixed-rate one- to four-family and
mixed-use mortgage loans and the purchase of adjustable  rate-mortgage loans, or
mortgage-backed   securities,   along  with  limiting  investment  purchases  to
securities  with a final maturity of 5 years or less.  However,  there can be no
assurances  that the Bank will be able to  originate  adjustable  rate  loans or
acquire mortgage-backed  securities with terms and characteristics which conform
with the Bank's  underwriting  standards,  investment  criteria or interest rate
risk  policies.  This  strategy is  necessary  to reduce the Bank's  exposure to
interest rate risk. On the liability side, management has closely  monitored the
pricing  of its  deposit  products,  and has made a  conscious  effort to extend
deposit maturities,  and secure fixed-rate  borrowings when market condition are
favorable.

The actual duration of mortgage loans,  mortgage-backed  securities and callable
investment  securities  can be  significantly  impacted  by changes in  mortgage
prepayment and market interest rates. Mortgage prepayment rates will vary due to
a number of  factors,  including  the  regional  economy  in the area  where the
underlying mortgages were originated,  seasonal factors,  demographic  variables
and  the  assumability  of  the  underlying  mortgages.   However,  the  largest
determinants  of  prepayment  rates are  prevailing  interest  rates and related
mortgage   refinancing   opportunities.   Management   monitors   interest  rate
sensitivity  so that  adjustments  in the asset and  liability  mix, when deemed
appropriate, can be made on a timely basis.

At December 31, 1997, $108.0 million,  or 36.5%, of the Bank's interest- earning
assets were in adjustable-rate loans and mortgage-backed  securities. The Bank's
mortgage loan portfolio  totalled  $158.6  million,  of which $62.2 million,  or
39.2%, were  adjustable-rate  loans and $96.5 million,  or 60.8% were fixed-rate
loans. At December,  31, 1997, the mortgage-backed  securities  held-to-maturity
portfolio  totalled  $36.2  million,  of which  $19.8  million,  or 54.6% of the
mortgage-backed  portfolio was adjustable-rate  securities and $16.4 million, or
45.4%,  was fixed-rate  securities.  The  mortgage-backed  securities  portfolio
classified  as  available-  for-sale  totalled  $30.0  million,  of which  $26.0
million,  or 86.8%, were adjustable rate securities and $4.0 million,  or 13.2%,
were fixed-rate securities. During the quarter ended December 31, 1997, the Bank
purchased   approximately   $21.7  million  of  adjustable  rate   mortgage-back
securities.


<PAGE> 19

                                FINANCIAL BANCORP, INC.


Part II. OTHER INFORMATION

Item 1. Legal Proceedings
          The Company is not presently  engaged in any legal
          proceeding of a  material nature.

Item 2. Changes in Securities
          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

        On January 20, 1998, the  Holding Company  declared  its quarterly  cash
        dividend  for  the  period  ended  December  31,  1997,  of  $0.125  per
        share,  payable  on  February  19, 1998  to  stockholders  of  record on
        February 5, 1998.

Item 6. (A) Exhibits

      3.1  Certificate of Incorporation of Financial Bancorp, Inc.*
      3.2  Bylaws of Financial Bancorp, Inc.*
      4.0  Stock Certificate of Financial Bancorp, Inc.*
     10.1  Financial Federal Savings Bank Recognition and Retention Plan**
     10.2  Financial Bancorp, Inc. 1995 Incentive Stock Option Plan***
     10.3  Financial Bancorp, Inc. 1995 Stock Option Plan for Outside
           Directors**
     10.4  Financial Savings and Loan Association Employee Stock Ownership Plan
           and Trust*
     10.5  Amended and Restated Salary and Benefits Continuation Agreement
           between Financial Bancorp, Inc., Financial Federal Savings Bank and
           Frank S. Latawiec*****
     10.6  Salary and Benefits Continuation Agreement between Financial Bancorp,
           Inc., Financial Federal Savings Bank and Valerie M. Swaya *****
     10.7  Employment Agreement between Financial Federal Savings and Loan
           Association and P. James O'Gorman****
     10.8  Employment Agreement between Financial Federal Savings and Loan
           Association and Robert E. Adamec****
     10.9  Employment Agreement between Financial Bancorp, Inc. and
           P. James O'Gorman****
     10.10 Employment Agreement between Financial Bancorp, Inc. and
           Robert E. Adamec****
     10.11 Financial Federal Savings and Loan Association Outside Directors'
           Consultation and Retirement Plan*
     11.0  Computation of earnings per share (filed herewith)
     27.0  Financial Data Schedule (filed herewith)


      --------------------
      *     Incorporated  herein  by  reference  into  this  document  from  the
            Exhibits to Form S-1, Registration Statement and amendments thereto,
            initially filed on March 18, 1994, Registration No. 33-76664.

      **    Incorporated  herein by reference  into this document from the Proxy
            Statement  for the January 17, 1996 Annual  Meeting of  Stockholders
            filed on December 18, 1995.

      ***   Incorporated  herein by reference  into this document from the Proxy
            Statement  for the January 26, 1995 Annual  Meeting of  Stockholders
            filed on December 15, 1994.

      ****  Incorporated  herein by reference into this document from the Annual
            Report on Form 10-K for the fiscal  year ended  September  30,  1994
            filed with the SEC on December 20, 1994.

      ***** Incorporated  herein by reference into this document from the Annual
            Report on Form 10-K for the fiscal  year ended  September  30,  1997
            filed with the SEC on December 29, 1997.

            (B)   Reports on Form 8-K.
                  None


<PAGE> 20


                               SIGNATURES


Pursuant  to the  requirements  of The  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                          Financial Bancorp, Inc.
                                          (Registrant)





Date: February 17, 1998             By:   /s/ Frank S. Latawiec
                                          -------------------------
                                          Frank S. Latawiec
                                          President and Chief
                                          Executive Officer




Date: February 17, 1998             By:   /s/ P. James O'Gorman
                                          ----------------------------
                                          P. James O'Gorman
                                          Executive Vice President and
                                          Chief Financial Officer