<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, 1996
                               -----------------

                        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 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 1,747,686 shares of the Registrant's  common stock  outstanding
as of February 13, 1997.
      -----------------


                                       1

<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, 1996 (Unaudited) and September 30, 1996      3

         Consolidated Statements of Income for the
         Three Months ended December 31, 1996 and 1995 (Unaudited)       4

         Consolidated Statement of Changes in
         Stockholders' Equity for the Three Months
         ended December 31, 1996 (Unaudited)                             5

         Consolidated Statements of Cash Flows for
         the Three Months ended December 31, 1996 and 1995 (Unaudited)   6-7

         Notes to Consolidated Financial Statements                      8-11

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                   12-16

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

Item 1.  Legal Proceedings                                                17

Item 2.  Changes in Securities
           Not applicable.                                                17

Item 3.  Defaults Upon Senior Securities
           Not applicable.                                                17

Item 4.  Submission of Matters to a Vote of Security
           Holders
             Not applicable.                                              17

Item 5.  Other Information                                                17

Item 6.  Reports on Form 8-K
             Not applicable.                                              17

         Exhibits
         Exhibit 11:  Computation of per share earnings                   18

         Signature Page                                                   19


                                       2

<PAGE> 3


<TABLE>
<CAPTION>

                                               FINANCIAL BANCORP, INC.
                                                  AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                    (UNAUDITED)

                                                                                          DECEMBER 31,         SEPTEMBER 30,
                                                                                             1996                  1996
                                                                                         -------------       ----------------
<S>                                                                                      <C>                   <C>
Assets
------

Cash and amounts due from depository institutions                                        $  1,603,668          $  2,917,223
Federal funds sold and securities purchased under agreements to resell                      2,000,000             2,185,000
                                                                                         ------------          ------------   
  Total cash and cash equivalents                                                           3,603,668             5,102,223  

Investment securities available for sale                                                      701,750             3,608,125
Investment securities held to maturity, net; estimated fair value of $44,058,000 and
 $49,903,000 at December 31, 1996 and September 30, 1996, respectively                     45,010,382            51,122,128
Mortgage-backed securities available for sale                                               5,002,458             5,016,112
Mortgage-backed securities held to maturity, net; estimated fair value of $48,149,000
 and $49,901,000 at December 31, 1996 and September 30, 1996, respectively                 47,734,831            49,836,734
Loans receivable, net                                                                     145,481,700           140,314,158
Real estate owned, net                                                                        218,500               377,910
Investments in real estate, net                                                             3,468,494             3,493,153
Premises and equipment, net                                                                 2,489,883             2,522,264
Federal Home Loan Bank of New York stock, at cost                                           1,689,800             1,675,800
Accrued interest receivable, net                                                            1,649,967             1,788,970
Other assets                                                                                2,052,549             1,904,945
                                                                                         ------------          ------------
  Total assets                                                                           $259,103,982          $266,762,522
                                                                                         ============          ============ 
Liabilities and stockholders' equity
------------------------------------
Deposits                                                                                 $203,499,815          $202,883,766
Advance payments by borrowers for taxes and insurance                                         871,337             1,063,036
Advances from Federal Home Loan Bank of New York                                           12,000,000             9,725,000
Securities sold under agreements to repurchase                                              5,000,000            14,046,000
Treasury tax and loan account and other short term borrowings                              10,006,868             9,880,970
Other liabilities                                                                           1,967,716             3,376,552
                                                                                         ------------          ------------
  Total liabilities                                                                       233,345,736           240,975,324
                                                                                         ------------          ------------
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,
  1,747,686 and 1,790,622 shares outstanding at December 31, 1996
  and September 30, 1996, respectively                                                         21,850                21,850
Additional paid-in capital                                                                 20,156,882            20,151,858
Retained earnings - substantially restricted                                               12,688,064            12,218,607
Common stock acquried by Employee Stock Ownership Plan (ESOP)                              (1,132,958)           (1,173,422)
Common stock acquired by Recognition & Retention Plan (RRP)                                  (420,154)             (454,221)
Unrealized gain (loss) on securities available for sale, net of income taxes                   34,180                  (488)
Treasury stock, at cost; 437,314 and 394,378 shares at December 31, 1996 and
  at September 30, 1996, respectively                                                      (5,589,618)           (4,976,986)
                                                                                         ------------          -------------
  Total stockholders' equity                                                               25,758,246             25,787,198
                                                                                         ------------          -------------
  Total liabilities and stockholders' equity                                             $259,103,982          $ 266,762,522
                                                                                         ============          =============
See accompanying notes to consolidated financial statements
</TABLE>


                                                                      3

<PAGE> 4

<TABLE>
<CAPTION>
  
                                   FINANCIAL BANCORP, INC.
                                      AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF INCOME
                                       (UNAUDITED)

                                                                                  Three Months Ended
                                                                        -----------------------------------
                                                                                     December 31,
                                                                        -----------------------------------
                                                                             1996                   1995
                                                                        ------------            -----------
<S>                                                                       <C>                    <C>  
Interest income:
   Loans                                                                  $2,899,293             $2,338,631
   Mortgage-backed securities                                                955,509              1,070,231
   Investments and other interest-earning assets                           1,041,882                791,956
   Federal funds sold and securities purchased
        under agreements to resell                                            15,789                 11,003
                                                                        ------------            -----------
               Total interest income                                       4,912,473              4,211,821
                                                                        ------------            -----------
Interest expense:
   Deposits                                                                1,981,214              1,909,176
   Borrowings                                                                476,765                161,653
                                                                        ------------            -----------
               Total interest expense                                      2,457,979              2,070,829
                                                                        ------------            -----------
Net interest income                                                        2,454,494              2,140,992
Provision for loan losses                                                     99,600                 54,000
                                                                        ------------            -----------
Net interest income after provision for loan losses                        2,354,894              2,086,992
                                                                        ------------            -----------
Non-interest income (loss):
   Fees and service charges                                                  131,280                 88,072
   Gain on sale of investment securities                                      26,353                      0
   (Loss) from real estate operations                                        (28,053)               (22,610)
   Miscellaneous                                                              10,629                 11,698
                                                                        ------------            -----------
               Total non-interest income                                     140,209                 77,160
                                                                        ------------            -----------
Non-interest expenses:
   Salaries and employee benefits                                            742,047                646,505
   Net occupancy expense of premises                                         132,511                112,480
   Equipment                                                                 150,346                137,650
   Advertising                                                                 9,587                 25,049
   Loss from real estate owned                                                18,384                 29,216
   Federal insurance premium                                                  81,772                 89,145
   Miscellaneous                                                             250,043                261,410
                                                                        ------------            -----------
               Total non-interest expenses                                 1,384,690              1,301,455
                                                                        ------------            -----------
Income before income taxes                                                 1,110,413                862,697
Income taxes                                                                 516,974                378,939
                                                                        ------------            -----------

Net income                                                                  $593,439               $483,758
                                                                        ============            ===========
Net income per common share & common stock equivalents                         $0.35                  $0.26
                                                                        ============            ===========

Weighted average number of common shares & common
   stock equivalents                                                       1,688,000              1,894,600
                                                                        ============            ===========

See accompanying notes to consolidated financial statements
</TABLE> 

                                                              4

<PAGE> 5
        
<TABLE>
<CAPTION>
         
                                                   Financial Bancorp. Inc.
                                                    And Subsidiaries
                              Consolidated Statements of Changes in Stockholders' Equity
                                                      (Unaudited)

                                                                                          Unrealized Gain
                                                                                           on Investment
                                                     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, 1996                   $21,850   $20,151,858  $12,218,607   ($1,173,422)($454,221)       ($488)     ($4,976,986) $25,787,198

Net Income for the 
  three months
  ended December 31, 1996         -             -        593,439          -         -              -             -          593,439

Purchase of 47,000 shares
  of treasury stock               -             -                         -         -              -          (663,938)   ($663,938)

Amortization relating to        
  allocation of ESOP stock
  and earned portion of RRP                                              
  stock                           -          17,965          -          40,464    34,067           -             -           92,496

Adjustment to valuation
  reserve on securities
  available for sale              -             -            -            -         -          34,668            -          $34,668

Stock issued upon exercise
  of stock options                -         (12,941)         -            -         -             -             51,306      $38,365

Cash dividends paid on
  common stock                    -             -       (123,982)         -         -             -              -         (123,982)
                             ---------   -----------  -----------   ----------- ---------   -------------  ------------ ------------
Balance at December 31, 1996   $21,850   $20,156,882  $12,688,064  ($1,132,958) ($420,154)    $34,180      ($5,589,618) $25,758,246
                             =========   ===========  ===========   =========== ==========  =============  ============ ============


See accompanying notes to consolidated financial statements.

</TABLE>




                                                        5 
<PAGE> 6

<TABLE>
<CAPTION>
  
                                    Financial Bancorp, Inc.
                                      And Subsidiaries
                             Consolidated Statements of Cash Flows
                                        (Unaudited)

                                                                                   Three Months Ended
                                                                     -------------------------------------------
                                                                                     December 31,
                                                                     -------------------------------------------
                                                                           1996                      1995
                                                                     ------------------       ------------------

<S>                                                                       <C>                      <C>     
Cash flow from operating activities:
  Net income                                                              $593,439                 $483,758
  Adjustments to reconcile net income to net cash used
    by operating activities
  (Gain) on sale of investment securities                                  (26,353)
  Loss on write-down of investment securities                                    0                        0
  (Gain) on sale of real estate owned                                            0                   (1,100)
  Net amortization of premiums and accretion
    of discounts on investment securities                                  (49,779)                   6,537
  Net amortization of premiums and accretion
    of discounts on mortgage-backed securities                               8,559                   (5,913)
  Accretion of deferred loan fees and discounts                            (23,136)                 (20,339)
  Amortization of intangibles                                                4,261                    5,705
  Depreciation and amortization of premises
   and equipment                                                            75,877                   74,641
  Provision for loan losses                                                 99,600                   54,000
  Provision for losses on real estate owned                                 15,482                        0
  Cost of ESOP and RRP                                                      92,496                   88,696
  Deferred income taxes                                                    127,426                   28,947
  Decrease (increase) in accrued interest receivable, net                  139,003                  (97,115)
  Increase in income taxes payable                                         206,276                  170,435
  (Increase) decrease in other assets                                     (342,869)                 124,809
  (Decrease) increase in other liabilities                              (1,578,772)                 148,985
                                                                     -----------------        ------------------
   Net cash (used in) provided by operating activities                    (658,490)               1,062,046
                                                                     ------------------       ------------------
Cash flows from investing activities:
  Purchases of investment securities                                    (8,840,000)             (15,000,000)
  Proceeds of maturities of investment securities                       15,000,000                8,430,000
  Proceeds from sale of investment securities
    available for sale                                                   2,947,031
  Purchases of mortgage-backed securities                                        0                        0
  Purchases of mortgage loans                                                    0               (5,647,072)
  Proceeds from principal repayments on
   mortgage-backed securities                                            2,156,126                3,091,499
  Loan originations, net of repayments                                  (5,244,006)              (4,783,120)
  Additions to premises and equipment                                      (43,837)                (920,940)
  Purchase of Federal Home Loan Bank of N.Y. stock                         (14,000)                       0
  Proceeds from sale of and insurance recoveries
   on real estate owned                                                    143,928                   81,100
  Capitalized expenses on real estate owned                                      0                   (1,476)
  Net (increase) in investments in real estate                              25,000                        0
                                                                     ------------------       ------------------
   Net cash provided by (used in) investing activities                    6,130,242             (14,750,009)
                                                                     ------------------       ------------------

See accompanying notes to consolidated financial statements.
</TABLE>

                                                              6

<PAGE> 7

<TABLE>
<CAPTION>


                                  FINANCIAL BANCORP, INC.
                                     AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                       (UNAUDITED)


                                                                                        Three Months Ended
                                                                           -----------------------------------------
                                                                                           December 31,
                                                                           -----------------------------------------
                                                                                 1996                    1995
                                                                           -----------------      ------------------
<S>                                                                              <C>                     <C>       
Cash flows from financing activities:
  Net increase in deposits                                                         $616,049              $3,068,764
  Advances from FHLB of NY                                                        2,800,000               7,825,000
  Net change in short-term borrowings  from FHLB N.Y.                              (525,000)                      0
  Net change in other borrowings                                                 (8,920,102)              2,937,500
 (Decrease) increase in advance payments by
   borrowers for taxes and insurance                                               (191,699)                142,473
  Dividends paid                                                                   (123,982)                (91,315)
  Reissuance of treasury stock                                                       38,365                       0
  Purchase of treasury stock                                                       (663,938)               (133,750)
                                                                           -----------------      ------------------
     Net cash (used in) provided by financing activities                         (6,970,307)             13,748,672
                                                                           -----------------      ------------------


Net (decrease) increase in cash and cash equivalents                             (1,498,555)                 60,709
Cash and cash equivalents - beginning                                             5,102,223               7,853,316
                                                                           -----------------      ------------------
Cash and cash equivalents - ending                                               $3,603,668              $7,914,025
                                                                           =================      ==================

Supplemental schedule of noncash investing and financing activities:
  Loans transferred to real estate owned                                                 $0                 $47,360
                                                                           =================      ==================

  Property transferred to investment in real estate                                      $0                $195,724
                                                                           =================      ==================

  Transfer to investment securities available for sale
    Investment securities                                                                $0              $1,989,839
                                                                           =================      ==================
     Unrealized gain on investment securities available for sale                    $61,906                 $15,791
     Deferred income taxes                                                          (27,238)                 (6,948)
                                                                           -----------------      ------------------
                                                                                    $34,668                  $8,843
                                                                           =================      ==================

Supplemental  disclosures  of cash flow  information:  
  Cash paid (net of refunds received) during the year for:
   Federal, state and city income taxes                                             156,034                $185,000
                                                                           =================      ==================
   Interest on deposits and borrowed funds                                       $2,441,301              $2,049,572
                                                                           =================      ==================

See Accompanying notes to consolidated financial statements.
</TABLE>


                                                                 7

<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  "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. Financial Bancorp, Inc. (the "registrant" or
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, 1996.

The  results  of  operations  for the  three  ended  December  31,  1996 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,  1995  have  been
reclassified to conform with the current period's presentation.

RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial  Accounting  Standards  Board (the "FABS") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 123  "Accounting for
Stock-Based  Compensation,"  effective for fiscal years beginning after December
15, 1995. The Company has elected to continue to measure compensation cost using
the  intrinsic  value-based  method of accounting  prescribed by the  Accounting
Principles  Board  ("APB")  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees." Pro forma  disclosures  required for entities that elect to continue
to measure  compensation  cost using APB Opinion No. 25 must include the effects
of all awards  granted  in fiscal  years that begin  after  December  15,  1994.
Management will implement the pro forma disclosure required by SFAS No. 123 with
the  preparation of the annual  financial  statement for the fiscal years ending
September 30, 1997.



                                       8


<PAGE> 9



EARNINGS PER SHARE
Net income per common share and common stock equivalents is computed by dividing
net income by the weighted average number of shares of common stock  outstanding
adjusted for the unallocated  shares held by the ESOP.  Stock options ranted are
considered in earnings per share as common stock equivalents, if dilutive, using
the treasury stock method.


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, 1996
and September 30, 1995, respectively.

<TABLE>
<CAPTION>


                                                                    December 31, 1996           September 30, 1996
                                                                 -----------------------    -------------------------

                                                                  Carrying        Fair      Carrying         Fair
                                                                    Value         Value      Value           Value
                                                                 ------------  ---------   ------------   -----------
                                                                                     (in thousands)
<S>                                                               <C>           <C>           <C>           <C>   
Investment Securities:
Available for sale
    U.S. Treasury securities                                           $0            $0        $2,919        $2,908
    Corporate preferred stock                                         700           702           700           700
    Less: Unrealized gain (loss)                                        2             -          (11)             -
                                                                 ------------  ---------   ------------   -----------
       Total investment securities available for sale                $702          $702        $3,608        $3,608
                                                                 ============  =========   ============   ===========
 Held to maturity
    U.S. Treasury securities and other government agencies        $45,010       $44,058       $51,122       $49,903
                                                                 ------------  ---------   ------------   -----------
        Total investment securities held to maturity              $45,010       $44,058       $51,122       $49,903
                                                                 ============  =========   ============   ===========
</TABLE>

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, 1996 and September 30, 1996, respectively.

<TABLE>
<CAPTION>
                                                                  December 31, 1996      September 30, 1996
                                                                ---------------------   --------------------

                                                                 Carrying      Fair     Carrying       Fair
                                                                   Value       Value      Value       Value
                                                                ----------   --------   ----------   -------
                                                                              (in thousands)
<S>                                                               <C>        <C>          <C>        <C>    
Mortgage-backed securities:

  Available for sale
    FHLMC certificates                                             $4,943     $5,002       $5,006     $5,016
    Add: Unrealized gain                                               59          -           10          -
                                                                ----------   --------   ----------   --------
          Total mortgage-backed securities available for sale      $5,002     $5,002       $5,016     $5,016
                                                                ==========   ========   ==========   ========
  Held to maturity
    GNMA certificates                                             $26,269    $26,595      $27,106    $27,198
    FHLMC certificates                                             17,011     17,103       17,999     17,960
    FNMA certificates                                               2,450      2,446        2,697      2,708
    Other pass-through certificates                                 2,005      2,005        2,035      2,035
                                                                ----------  ---------   ----------   --------
          Total mortgage-backed securities held to maturity       $47,735    $48,149      $49,837    $49,901
                                                                ==========  =========   ==========   ========
</TABLE>


                                                            9


<PAGE> 10


LOANS RECEIVABLE, NET
The following  table sets forth the  composition of the Company's loan portfolio
at December 31, 1996 and September 30, 1996, respectively.

<TABLE>
<CAPTION>
                                                                    December 31,            September 30,
                                                                        1996                     1996
                                                                  -----------------        -----------------
                                                                                (in thousands)
<S>                                                                       <C>                      <C>     
Real estate mortgages:
     One-to-four family                                                   $117,752                 $115,500
     Equity and second mortgages                                             2,841                    2,780
     Multi-family                                                            6,127                    5,622
     Commercial                                                             17,651                   15,301
                                                                  -----------------        -----------------
                                                                           144,371                  139,203
                                                                  -----------------        -----------------
Construction/land                                                            4,594                    4,920
                                                                  -----------------        -----------------
Consumer:
     Passbook or certificate                                                   163                      171
     Home improvement                                                            6                        7
     Student education guaranteed by
       the State of New York                                                   210                      202
     Personal                                                                   38                       21
                                                                  -----------------        -----------------
                                                                               417                      401

Commercial, including lines of credit                                          143                      168
                                                                  -----------------        -----------------
          Total loans                                                      149,525                  144,692
                                                                  -----------------        -----------------

Less:  Loans in process                                                      2,104                    2,509
       Allowance for loan losses                                             1,672                    1,573
       Deferred loan fees and discounts                                        267                      296
                                                                  -----------------        -----------------
                                                                             4,043                    4,378
                                                                  -----------------        -----------------

          Total loans receivable, net                                     $145,482                 $140,314
                                                                  =================        =================
</TABLE>


                                                      10

<PAGE> 11


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 $26,398,500  at December 31, 1996. The following  table sets forth
the  composition  of the  Bank's  FHLB  advances  as of  December  31,  1996 and
September 30, 1996, respectively.

<TABLE>
<CAPTION>

                                                                    December 31,            September 30,
                                                                        1996                     1996
                                                                  -----------------        -----------------
                                                                                (in thousands)
<S>                                                                        <C>                       <C> 
FHLB advances:
          Fixed rate:
                5.133% due February 1997                                    $1,200                   $1,200
                5.597% due December 1997                                     2,000                    2,000
                5.670% due December 1998                                     6,000                    6,000
                                                                  -----------------        -----------------
                          Total fixed rate                                   9,200                    9,200

          Overnight line of credit:
                6.125% due October 1996                                          -                      525
                6.875% due January 1997                                      2,500                        -
                7.375% due January 1997                                        300                        -
                                                                  -----------------        -----------------
                          Total overnight line of credit                     2,800                      525
                                                                  -----------------        -----------------

Total FHLB advances                                                        $12,000                   $9,725
                                                                  =================        =================
</TABLE>



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
agrrements  to  repurchase  as of December  31,  1996 and  September  30,  1996,
respectively.

<TABLE>
<CAPTION>

                                                                    December 31,            September 30,
                                                                        1996                     1996
                                                                  -----------------        -----------------
                                                                               (in thousands)
<S>                                                                        <C>                      <C>     
Securities sold under agreements to repurchase:
                5.44% due December 1995                                         $0                  $14,046
                5.291% due December 2001, callable December 1997             5,000                        -
                                                                  -----------------        -----------------

Total securities sold under agreements to repurchase                        $5,000                  $14,046
                                                                  =================        =================
</TABLE>


                                                       11

<PAGE> 12



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 four
full service  branches 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 and commercial  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,  1996,  the  Company's  total  assets  were $259.1  million,
representing  a $7.7  million,  or a 2.9%,  decrease  from $266.8  million as of
September  30,  1996.   The  $7.7  million   decrease  in  assets  is  primarily
attributable to the sale of a $3.0 million U.S. Treasury security, classified as
available  for sale,  in  addition  to a $6.1  million  decrease  in  investment
securities and $2.1 million decrease in  mortgage-backed  securities,  which was
partially  offset by the $5.2 million increase in loans  receivable.  During the
same period,  securities sold under  agreements to repurchase  decreased by $9.0
million to $5.0 million at December 31,  1996,  from $14.0  million at September
30, 1996. This was partially  offset by an increase in deposits of $616,049,  or
0.3%,  to $203.5  million as of December  31,  1996,  from $202.9  million as of
September  30, 1996.  In addition,  FHLB  advances  increased by $2.3 million to
$12.0 million, at December 31, 1996, from $9.7 million at September 30, 1996.


                                       12
<PAGE> 13




As of December 31, 1996,  investment  securities,  including available for sale,
consisted  primarily of medium-term U.S.  Government  Agency  obligations,  with
features  such as calls  and/or  interest  rate  "step-ups,"  decreased  by $9.0
million, or 16.5%, to $45.7 million from $54.7 million as of September 30, 1996.
As of December 31, 1996,  mortgage-backed  securities,  including  available for
sale, decreased by $2.1 million, or 3.9%, to $52.7 million from $54.8 million as
of September 30, 1996. Loans receivable  increased by $5.2 million,  or 3.7%, to
$145.5  million as of December 31, 1996 from $140.3  million as of September 30,
1996.

Non-performing  loans totaled $5.1 million,  or 3.43% of total loans at December
31, 1996 as compared to $4.6  million,  or 3.15% of total loans at September 30,
1996.  Of the $5.1  million  in  non-performing  loans,  $528,00  represents  an
increase in delinquencies in the one-to-four family mortgage loan portfolio.  In
addition,  $2.5 million of the  non-performing  loans consists of the balance of
Thrift Association Service Corporation ("TASCO") pass-through securities. In May
1996, the FDIC stated that they would not continue the scheduled pass-through of
principal and interest payments whether or not collected.  At December 31, 1996,
non-performing  assets  totalled  $8.6  million,  or 3.33% of total  assets,  as
compared to $8.2 million,  or 3.09% of total assets at September  30, 1996.  The
Company's allowance for loan losses to non-performing  assets and to total loans
equals  19.37%  and  1.12%,  respectively,  as  compared  to 19.08%  and  1.09%,
respectively, at September 30, 1996.

Total deposits at December 31, 1996,  increased by $616,049,  or 0.3%, to $203.5
million from $202.9  million at September 30, 1996.  In addition,  advances from
the FHLB,  increased by $2.3 million, or 23.4%, to $12.0 million at December 31,
1996.  Securities sold under agreements to repurchase decreased by $9.0 million,
or 64.4%,  to $5.0 million at December 31, 1996, as compared to $14.0 million at
September 30, 1996. The decrease in securities  sold under  agreements to resell
was attributable to the proceeds  realized from the maturity of $15.0 million in
investment securities.

Total stockholders' equity was $25.8 million at December 31, 1996,  reflecting a
$28,952,  or 0.1%,  decrease  from $25.8  million at  September  30,  1996.  The
decrease in stockholders' equity was primarily attributable to the repurchase of
the Company's common stock,  partially offset by earnings retained.  At December
31, 1996,  the Company had,  exclusive of shares  repurchased  1,747,686  common
shares outstanding. As of December 31, 1996, the Company's stated book value per
share of common stock  increased by $0.34,  or 2.4%,  to $14.74,  from $14.40 at
September 30, 1996.

ANALYSIS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995

Net income for the three months ended December 31, 1996,  totalled $593,439,  or
$0.35 per share as  compared to net income of  $483,758,  or $0.26 per share for
the three months ended December 31, 1995. The $109,681,  or 22.7% increase,  was
primarily  attributable  to a $700,652,  or 16.6%  increase in interest  income,
offset in part by a $387,150 increase in interest expense and a $83,235 increase
in non-interest expenses.


                                       13
<PAGE> 14



The return on average  assets  equalled 0.90% for the quarter ended December 31,
1996,  as compared to 0.84% for the same quarter in 1995.  For the quarter ended
December 31, 1996, the Company's  return on average equity  equalled  9.21%,  as
compared to 7.07% for the same period in 1995.

The  Company's  net interest  income  increased by $313,502,  or 14.6%,  to $2.5
million for the quarter  ended  December  31,  1996,  from $2.1  million for the
quarter  ended  December 31, 1995.  The increase in net interest  income for the
three months ended December 31, 1996 was primarily attributable to the continued
leveraging  of the balance  sheet,  utilizing  low cost  borrowings  and deposit
growth to fund mortgage loan originations.

As a result,  for the quarter ended December 31, 1996,  average interest earning
assets were $253.5  million,  which  represents a $32.8  million  increase  from
$220.7  million for the quarter ended  December 31, 1995.  For the quarter ended
December 31, 1996, average interest-bearing  liabilities were $230.3 million, as
compared to $193.8  million for the  quarter  ended  December  31,  1995,  which
represents a $36.5 million increase.

For the current quarter,  the net interest rate spread increased 10 basis points
to 3.52% from 3.42% for the corresponding  period in 1995. For the quarter ended
December 31, 1996,  the average yield on  interest-earning  assets was 7.75% and
the average cost of interest-bearing liabilities was 4.23%, as compared to 7.63%
and 4.21%,  respectively,  for the quarter ended December 31, 1995. The increase
in the net interest  spread is the result of a 67 basis  points  increase in the
investment  securities  portfolio and higher yields  realized from the growth in
loans  receivable.  Despite  the $36.5  million  increase  in  interest  bearing
liabilities to $230.5 million, the cost of interest bearing liabilities remained
stable at 4.23%.  The net interest  margin  equalled 3.87% for the quarter ended
December 31, 1996, which represents a slight decline from 3.88% realized for the
corresponding period in 1995.

The Company's provision for loan losses for the quarter ended December 31, 1996,
increased by $45,600,  to $99,600,  from $54,000 for the quarter ended  December
31, 1995.  The increase in provisions  for loan losses  reflects the increase in
non-performing  loans and  management's  on-going  effort to  maintain  adequate
allowances.

Non-interest  income,  for the quarter  ended  December 31,  1996,  increased by
$63,049,  or 81.7%,  to $140,209,  as compared to $77,160 for the quarter  ended
December 31, 1995. This increase is primarily attributable to a $43,208 increase
in income  realized  from  additional  service fee income and  automated  teller
machines  (ATM's)  related service fees and a $26,353 net gain in sale of a $3.0
million U.S. Treasury security classified as available for sale.

Non-interest  expenses increased $83,235, or 6.4%, to $1,384,690 for the quarter
ended  December 31, 1996, as compared to $1,301,455 for the same period in 1995.
Salaries and employee benefits  increased by $95,542,  or 14.8%, to $742,047 for
the quarter ended December 31, 1996, from $646,505 for the corresponding  period
in  1995.   The  increase  in  salaries  and  employee   benefits  is  primarily
attributable to the  reinstatement  of the Company's  bonus accrual,  additional
commissions  paid and other benefit related costs for the quarter ended December
31, 1996. For the quarter ended December 31, 1996,  occupancy  expense increased
by $20,031, or


                                       14
<PAGE> 15



17.8%,  to $132,511,  from $112,480 for the quarter ended December 31, 1995. The
increase in  occupancy  expense is  primarily  attributable  to the  increase in
rental  payments  for a branch  office and a  corresponding  decrease  in rental
income from a Bank owned property.  Equipment expense  increased by $12,696,  or
9.2%, to $150,346 for the quarter ended December 31, 1996, from $137,650 for the
same  period  in 1995.  The  increase  in  equipment  expense  represents  costs
associated with the Company's demand deposit and check processing servicing fees
and other vendor related services and contracts.  Advertising  expense decreased
by $15,462,  or 61.7%,  to $9,587 for the quarter ended December 31, 1996,  from
$25,049 for the corresponding period in 1995. Presently, the Company is limiting
its  advertising   campaigns  in  an  effort  to  bolster   earnings.   Although
non-interest expenses have increased, the ratio of operating expenses to average
assets  decreased  13 basis points to 2.07% for the quarter  ended  December 31,
1996,  as compared to 2.20% for the same period last year.  The Company has been
successful in  controlling  operating  expenses,  as evidenced by the efficiency
ratio 52.6% for the quarter  ended  December 31, 1996,  as compared to 56.8% for
the same period in 1995.

For the  quarter  ended  December  31,  1996,  income tax expense  increased  by
$138,035, to $593,439, as compared to $378,939, for the same quarter in 1995, as
a result of a $247,716 increase in income before taxes.

LIQUIDITY AND CAPITAL RESOURCES

The Bank is required to maintain an average  daily  balance of 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 is currently 5%. OTS  regulations  also
require each member savings  institution to maintain an average daily balance of
short-term liquid assets at a specified  percentage  (currently 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  liquidity of the Bank at December  31, 1996 was 6.6%,  which
exceeded the then applicable 5% liquidity requirement. It's short-term liquidity
ratio at December 31, 1996, was 2.5%.

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, 1996,  the Bank had  outstanding  loan  commitments to originate
mortgage loans and purchase mortgage-backed  securities of $3.7 million and $5.0
million, respectively. 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, 1996 totalled $69.2 million, of

                                       15

<PAGE> 16


which $16.5 million represent "Silver  Certificate of Deposit"  accounts,  which
allow one  withdrawal  of  principal  per  quarter  without an early  withdrawal
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 Bank's tangible capital and core capital totalled $18.9 million,  or 7.5% at
December  31, 1996,  far in excess of the  regulatory  requirements.  The Bank's
risk-based  capital ratio as of December 31, 1996 was $20.1  million,  or 18.8%,
also well in excess of the regulatory capital requirement of 8.0%.


                                       16


<PAGE> 17





                                  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 September 27, 1996, the Company announced that it received regulatory
        approval  from the Office of Thrift  Supervision  to commence  its fifth
        repurchase  program.  The Company is authorized to purchase up to 89,531
        or 5% of its common stock outstanding through open-market  transactions,
        subject to the availability of stock,  prior to August 17, 1997.  During
        the quarter  ended  December 31, 1996,  the company  repurchased  47,000
        shares at an average price of $14.13.

        On January 15, 1997,  the Holding  Company  declared its quarterly  cash
        dividend  for the period ended  December  31, 1996,  of $0.10 per share,
        which represents an increase of $0.025,  payable on February 18, 1997 to
        stockholders of record on February 4, 1997.

Item 6. (A)  Exhibits

        Exhibit 3.1  Certificate of Incorportion of Financial Bancorp, Inc.*
        Exhibit 3.2  Bylaws of Financial Bancorp, Inc.*
        Exhibit 11   Earnings Per Share
        Exhibit 27   Financial Data Schedule

        (B) Reports on Form 8-K
        
             None      

 *Incorporated herein by reference to Form S-1, Registration Statement, as 
  amended, filed on March 18, 1994, Registration Number 33-76664


                                       17

<PAGE> 18


                                   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 14, 1997           By:  /s/ Frank S. Lataweic
                                       ----------------------
                                       Frank S. Latawiec
                                       President and Chief
                                       Executive Officer




Date: February 14, 1997           By:  /s/ P. James O'Gorman
                                       --------------------------
                                       P. James O'Gorman
                                       Senior Vice President and
                                       Chief Financial Officer



                                       19