<PAGE>

                                  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 June 30, 2001

                                       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 1-14671


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

<TABLE>
<S>                                                                <C>
Delaware                                                                    04-3444269
--------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)        (I.R.S. Employer
                                                                   Identification No.)
</TABLE>


31 Court Street, Westfield, Massachusetts                                  01085
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


                                 (413) 568-9141
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


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


     Indicate by check mark whether the registrant has (1) 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.
Yes [X]    No [_]


     The issuer had 3,917,218 shares of common stock, par value $0.01 per share,
outstanding as of August 3, 2001.

<PAGE>

                             WORONOCO BANCORP, INC.
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
PART I.      FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)

           Consolidated Balance Sheets at
           June 30, 2001 and December 31, 2000.................................     1

           Consolidated Income Statements for the Three
           and Six Months Ended June 30, 2001 and 2000.........................     2

           Consolidated Statements of Changes in Stockholders' Equity
           for the Six Months Ended June 30, 2001 and 2000.....................     3

           Consolidated Statements of Cash Flows for the
           Six Months Ended June 30, 2001 and 2000.............................     4

           Notes to Unaudited Consolidated Financial Statements................     5

Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations...............................     9

Item 3.    Quantitative and Qualitative Disclosures About Market Risk..........    27

PART II:     OTHER INFORMATION

Item 1.    Legal Proceedings...................................................    28
Item 2.    Changes in Securities and Use of Proceeds...........................    28
Item 3.    Defaults Upon Senior Securities.....................................    28
Item 4.    Submission of Matters to a Vote of Security Holders.................    28
Item 5.    Other Information...................................................    29
Item 6.    Exhibits and Reports on Form 8-K....................................    29

SIGNATURES.....................................................................    30
</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

                     WORONOCO BANCORP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars In Thousands)

<TABLE>
<CAPTION>
                                                                              Unaudited
                                                                               June 30,      December 31,
Assets                                                                           2001             2000
                                                                              ---------      ------------
<S>                                                                           <C>            <C>
Cash and due from banks                                                       $  19,165        $  13,414
Interest-bearing balances                                                         4,036           11,954
                                                                              ---------        ---------
         Total cash and cash equivalents                                         23,201           25,368

Securities available for sale, at fair value                                    167,613          176,733
Federal Home Loan Bank stock, at cost                                            13,750           13,750
Loans held for sale                                                                  -            14,313
Loans, net of allowance for loan losses ($2,646 at
   June 30, 2001 and $2,590 at December 31, 2000)                               409,340          391,286
Other real estate owned, net                                                        277               61
Premises and equipment, net                                                      11,130           11,131
Accrued interest receivable                                                       3,125            3,374
Goodwill                                                                            659              698
Net deferred tax asset                                                            1,060            1,791
Cash surrender value of life insurance                                            2,326            2,238
Other assets                                                                        183            1,717
                                                                              ---------        ---------
         Total assets                                                         $ 632,664        $ 642,460
                                                                              =========        =========

Liabilities and Stockholders' Equity

Deposits                                                                      $ 327,562        $ 325,255
Short-term borrowings                                                            53,515          136,031
Long-term debt                                                                  175,000          105,000
Mortgagors' escrow accounts                                                         809              871
Accrued expenses and other liabilities                                            5,346            4,544
                                                                              ---------        ---------
         Total liabilities                                                      562,232          571,701
                                                                              ---------        ---------

Commitments and contingencies

Stockholders' Equity:
    Preferred stock ($.01 par value; 2,000,000 shares
      authorized; no shares issued and outstanding)                                   -                -
    Common stock ($.01 par value; 16,000,000 shares authorized;
      shares issued: 5,998,860 at June 30, 2001 and December 31,
      2000; shares outstanding: 3,927,518 at June 30, 2001 and
      4,154,464 at December 31, 2000)                                                60               60
    Additional paid-in capital                                                   58,051           57,954
    Unearned compensation                                                        (5,307)          (5,742)
    Retained earnings                                                            39,533           38,311
    Accumulated other comprehensive income - net unrealized
      gain on securities available-for-sale, net of tax effects                   1,626              365
    Treasury stock, at cost (2,071,342 shares at June 30, 2001
      and 1,844,396 shares at December 31, 2000)                                (23,531)         (20,189)
                                                                              ---------        ---------
         Total stockholders' equity                                              70,432           70,759
                                                                              ---------        ---------
         Total liabilities and stockholders' equity                           $ 632,664        $ 642,460
                                                                              =========        =========
</TABLE>

See accompanying notes to unaudited consolidated financial statements


                                       1

<PAGE>

                     WORONOCO BANCORP, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
                 (Dollars In Thousands Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                     Unaudited                     Unaudited
                                                                Three Months Ended             Six Months Ended
                                                                      June 30,                     June 30,
                                                            --------------------------   --------------------------
                                                                2001           2000          2001           2000
                                                            -----------    -----------   -----------    -----------
<S>                                                         <C>            <C>           <C>            <C>
Interest and dividend income:
    Interest and fees on loans                              $     7,372    $     6,531   $    14,813    $    12,492
    Interest and dividends on securities:
      Interest                                                    2,226          2,406         4,645          4,584
      Dividends                                                     825            780         1,645          1,510
    Interest on federal funds sold                                   27             24           188             24
    Other interest income                                            63             89           182            126
                                                            -----------    -----------   -----------    -----------
          Total interest and dividend income                     10,513          9,830        21,473         18,736
                                                            -----------    -----------   -----------    -----------

Interest expense:
    Interest on deposits                                          2,809          2,437         5,779          4,508
    Interest on borrowings                                        2,990          3,233         6,565          5,753
                                                            -----------    -----------   -----------    -----------
          Total interest expense                                  5,799          5,670        12,344         10,261
                                                            -----------    -----------   -----------    -----------

Net interest income                                               4,714          4,160         9,129          8,475
Provision for loan losses                                            85             40            85             60
                                                            -----------    -----------   -----------    -----------

Net interest income, after provision for loan losses              4,629          4,120         9,044          8,415
                                                            -----------    -----------   -----------    -----------

Other income:
    Fee income                                                      611            542         1,184          1,026
    Insurance commissions                                           113            122           244            239
    Gain on sales and disposition of securities, net                228            321           343            639
    Gain on sales of loans, net                                       -              -            70              -
    Loss on derivative instruments and hedging activities          (311)             -           (68)             -
    Other income                                                     50             77            97            114
                                                            -----------    -----------   -----------    -----------
          Total other income                                        691          1,062         1,870          2,018
                                                            -----------    -----------   -----------    -----------

Other expenses:
    Salaries and employee benefits                                2,092          1,925         4,098          3,881
    Occupancy and equipment                                         532            460         1,093            947
    Marketing                                                       223            236           373            382
    Professional services                                           270            235           506            427
    Data processing                                                 218            191           445            394
    Other general and administrative                                751            608         1,471          1,265
                                                            -----------    -----------   -----------    -----------
          Total other expenses                                    4,086          3,655         7,986          7,296
                                                            -----------    -----------   -----------    -----------

Income before income tax expense                                  1,234          1,527         2,928          3,137
Income tax expense                                                  427            528         1,045          1,093
                                                            -----------    -----------   -----------    -----------
Net income before cumulative effect of change in
   accounting principle                                             807            999         1,883          2,044
Cumulative effect of change in accounting principle,
   net of tax benefit of $92                                          -              -          (161)             -
                                                            -----------    -----------   -----------    -----------
          Net income                                        $       807    $       999   $     1,722    $     2,044
                                                            ===========    ===========   ===========    ===========

Earnings per share:
     Basic                                                  $      0.23    $      0.22   $      0.48    $      0.42
     Diluted                                                $      0.22    $      0.22   $      0.45    $      0.41

Weighted average shares outstanding:
     Basic                                                    3,542,026      4,568,297     3,615,386      4,923,695
     Diluted                                                  3,718,299      4,597,900     3,785,373      4,936,317
</TABLE>

See accompanying notes to unaudited consolidated financial statements


                                       2

<PAGE>

                     WORONOCO BANCORP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     Six Months Ended June 30, 2001 and 2000
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                               Additional                             Other
                                                       Common    Paid-in    Unearned    Retained  Comprehensive  Treasury
                                                        Stock    Capital  Compensation  Earnings  Income (Loss)    Stock      Total
                                                      -------- ---------- ------------ ---------- -------------- --------  ---------
<S>                                                   <C>      <C>        <C>          <C>        <C>            <C>       <C>
Balance at December 31, 2000                           $    60  $ 57,954    $ (5,742)   $ 38,311    $    365    $(20,189)  $ 70,759
                                                                                                                           --------

Comprehensive income:
Net income                                                   -         -           -       1,722           -           -      1,722
Change in net unrealized gain on securities
   available for sale, net of reclassification
   adjustment and tax effects                                -         -           -           -       1,261           -      1,261
                                                                                                                           --------
           Total comprehensive income                                                                                         2,983
                                                                                                                           --------

Decrease in unearned compensation                            -        97         435           -           -           -        532

Cash dividends declared                                      -         -           -        (500)          -           -       (500)

Treasury stock purchased (227,446 shares)                    -         -           -           -           -      (3,348)    (3,348)

Treasury stock reissued in connection with Company's
    stock-based incentive plan (500 shares)                  -         -           -           -           -           6          6
                                                       -------  --------    --------    --------    --------    --------   --------
Balance at June 30, 2001                               $    60  $ 58,051    $ (5,307)   $ 39,533    $  1,626    $(23,531)  $ 70,432
                                                       =======  ========    ========    ========    ========    ========   ========


Balance at December 31, 1999                           $    60  $ 57,874    $ (6,604)   $ 35,230    $ (3,875)   $ (1,790)  $ 80,895
                                                                                                                           --------

Comprehensive income:
Net income                                                   -         -           -       2,044           -           -      2,044
Change in net unrealized loss on securities
   available for sale, net of reclassification
   adjustment and tax effects                                -         -           -           -        (491)          -       (491)
                                                                                                                           --------
           Total comprehensive income                                                                                         1,553
                                                                                                                           --------

Decrease in unearned compensation                            -         6         428           -           -           -        434

Cash dividends declared                                      -         -           -        (509)          -           -       (509)

Treasury stock purchased (1,010,342 shares)                  -         -           -           -           -     (10,340)   (10,340)
                                                       -------  --------    --------    --------    --------    --------   --------

Balance at June 30, 2000                               $    60  $ 57,880    $ (6,176)   $ 36,765    $ (4,366)   $(12,130)  $ 72,033
                                                       =======  ========    ========    ========    ========    ========   ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements


                                       3

<PAGE>

                     WORONOCO BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>


                                                                                           Unaudited
                                                                                   Six Months Ended June 30,
                                                                                        2001        2000
                                                                                  ------------- ------------
<S>                                                                               <C>           <C>
Cash flows from operating activities:
    Net income                                                                        $  1,722    $  2,044
    Adjustments to reconcile net income to net cash provided by operating
       activities:
          Provision for loan losses                                                         85          60
          Net accretion of investments                                                      (1)        (35)
          Depreciation and amortization                                                    485         448
          Employee stock ownership plan expense                                            289         202
          Stock-based incentive plan expense                                               243         232
          Gain on sales and disposition of securities, net                                (343)       (639)
          Gain on sale of loans held for sale                                              (70)          -
          Gain on sale of other real estate owned                                           (4)         (5)
          Amortization of goodwill                                                          39          39
          Changes in operating assets and liabilities:
               Loans held for sale                                                      14,383           -
               Accrued interest receivable                                                 249        (533)
               Accrued expenses and other liabilities                                      750      (1,648)
               Other, net                                                                1,431         234
                                                                                      --------    --------
                          Net cash provided by operating activities                     19,258         399
                                                                                      --------    --------

Cash flows from investing activities:
    Proceeds from sales of securities available for sale                                 2,631       4,072
    Purchases of securities available for sale                                          (3,734)    (41,620)
    Principal payments on mortgage-backed investments                                   12,574       5,743
    Purchases of Federal Home Loan Bank stock                                                -      (3,308)
    Loans originated/purchased, net of loan payments received                          (18,364)    (50,503)
    Purchases of banking premises and equipment                                           (484)       (178)
    Proceeds from sales of foreclosed real estate                                           65         853
    Payment to purchase Agan Insurance Agency, Inc.                                          -        (800)
                                                                                      --------    --------
                          Net cash used in investing activities                         (7,312)    (85,741)
                                                                                      --------    --------

Cash flows from financing activities:
    Net increase in deposits                                                             2,307      48,352
    Net (decrease) increase in short-term borrowings                                   (82,516)     46,666
    Proceeds from issuance of long-term debt                                            70,000           -
    Net decrease in mortgagors' escrow accounts                                            (62)       (100)
    Cash dividends paid                                                                   (500)       (509)
    Treasury stock purchased                                                            (3,348)    (10,340)
    Treasury stock reissued in connection with stock-based incentive plan                    6           -
                                                                                      --------    --------
                          Net cash (used in) provided by financing activities          (14,113)     84,069
                                                                                      --------    --------

Net decrease in cash and cash equivalents                                               (2,167)     (1,273)

Cash and cash equivalents at beginning of period                                        25,368      16,185

                                                                                      --------    --------
Cash and cash equivalents at end of period                                            $ 23,201    $ 14,912
                                                                                      ========    ========

Supplemental cash flow information:
    Interest paid on deposits                                                         $  3,283    $  4,559
    Interest paid on borrowings                                                          3,193       5,641
    Income taxes paid                                                                    1,079       1,040
    Transfers from loans to other real estate owned                                        225          51
</TABLE>

See accompanying notes to unaudited consolidated financial statements


                                       4

<PAGE>

                     WORONOCO BANCORP, INC. AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements
                  At and for the Six Months Ended June 30, 2001

1. Unaudited Consolidated Financial Statements
The Unaudited Consolidated Financial Statements of Woronoco Bancorp, Inc. and
its subsidiaries (the "Company") included herein are unaudited, and in the
opinion of management all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the financial condition,
results of operations and cash flows, as of and for the periods covered herein,
have been made. Certain information and note disclosures normally included in
the Consolidated Financial Statements have been omitted as they are included in
the most recent Securities and Exchange Commission ("SEC") Form 10-K and
accompanying Notes to the Consolidated Financial Statements (the "Form 10-K")
filed by the Company for the year ended December 31, 2000. Management believes
that the disclosures contained herein are adequate to make a fair presentation.

These unaudited consolidated financial statements should be read in conjunction
with the Form 10-K.

The results for the three and six month interim periods covered hereby are not
necessarily indicative of the operating results for a full year.

2. New Accounting Pronouncements
On June 30, 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. With the adoption of SFAS No. 142, effective
January 1, 2001, goodwill is no longer subject to amortization over its
estimated useful life. Goodwill will be subject to at least an annual assessment
for impairment by applying a fair value based test. Additionally, under SFAS No.
142, acquired intangible assets should be separately recognized if the benefit
of the intangible asset is obtained through contractual or other legal rights,
or if the intangible asset can be sold, transferred, licensed, rented, or
exchanged, regardless of intent to do so. Management is evaluating the impact of
the adoption of this statement. At a minimum, after December 31, 2001 the
Company will not recognize goodwill amortization of $78,000 per year. In
addition management will be required to determine if at December 31, 2001 the
remaining goodwill is impaired.

In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which, as amended by SFAS No. 137 and SFAS No. 138, is
effective for fiscal years beginning after June 15, 2000. This Statement
establishes accounting and reporting standards for derivative instruments and
hedging activities, including certain derivative instruments embedded in other
contracts, and requires that an entity recognize those items as assets or
liabilities in the balance sheet and measure them at fair value. If certain
conditions are met, an entity may elect to designate a derivative as a hedging
instrument. The Statement generally provides for matching the timing of the
recognition of the gain or loss on derivatives designated as hedging instruments
with the recognition of the changes in the fair value of the item being hedged.
Depending on the type of hedge, such recognition will be in either net income or
other comprehensive income. For derivatives not designated as hedging
instruments, changes in fair value will be recognized in net income in the
period of change. The Company adopted this Statement on January 1, 2001.


                                       5

<PAGE>

As part of the interest rate risk management, the Company entered into interest
rate swap agreements with a notional amount of $30 million at June 30, 2001.
These swap agreements are used to hedge a portfolio of brokered certificates of
deposit. All of the swaps are designated as a fair value hedge since they are
used to convert the cost of the certificates of deposit from a fixed to variable
rate. Since the hedge relationship is estimated to be 100 percent effective
(gain or loss on the swap agreements will completely offset the gain or loss on
the certificates of deposit) there will be no impact on the statement of income
or on comprehensive income. The application of SFAS No. 133 results in the
grossing up of the balance sheet to reflect the swap and the certificates of
deposit at fair value. At June 30, 2001 the fair value loss of these swap
agreements was approximately $645,055. Under SFAS No. 133, the Company
recognized a reduction of $645,055 in other assets and other liabilities.

In the first quarter of 2000, the Company entered into a swap agreement with a
notional amount of $10 million to hedge fixed rate retail certificates of
deposit. This swap agreement was designated a cash flow hedge since it converted
a portion of the retail certificates of deposit from a fixed rate to a variable
rate. Because the hedged retail certificates of deposit were not perfectly
correlated, the Company recognized the increase in fair value of the swaps as
current income. As of January 1, 2001, the cumulative effect from the adoption
of SFAS 133 related to these swaps was a fair value gain of $117,166. During the
first quarter of 2001 the Company recognized an additional gain in fair value of
$174,698. Since this swap agreement terminated in the second quarter of 2001,
the Company recognized a loss of $291,864 for the three months ended June 30,
2001 to offset the cumulative gain.

The Company also has interest rate protection agreements (caps) with a notional
amount of $150 million at June 30, 2001. These caps are used to limit the
Company's exposure to rising interest rates on its borrowings. Under these
agreements the Company paid premiums of $480,000 for the right to receive cash
flow payments in excess of the predetermined cap rate; thus, effectively
"capping" its interest rate cost for the duration of the agreements. In
accordance with SFAS No. 133, management designates these caps as cash-flow
hedges. As such, the interest rate cap is carried on the balance sheet at fair
value with the time and option volatility value changes reflected in the current
statement of income. Any intrinsic value will be recorded in other comprehensive
income and recognized in future statements of income as an offset to related
future borrowing costs. As of January 1, 2001, the cumulative effect from the
adoption of FAS 133, related to these caps as well as caps which expired in the
second quarter of 2001, was a fair value loss of $350,618. During the second
quarter of 2001 the Company recognized a fair value loss of $2,691.

The Company had interest rate protection agreements (floors) with a notional
amount of $10 million which expired during the second quarter of 2001. These
floors were used to limit the Company's exposure to falling interest rates on
its interest sensitive assets. Under these agreements the Company paid up front
premiums of $134,000 for the right to receive cash flow payments below the
predetermined floor rate; thus, effectively flooring its interest income for the
duration of the agreements. In accordance with SFAS No. 133, management
designated these caps as cash-flow hedges. As such, the interest rate floor was
carried on the balance sheet at fair value with the time and option volatility
value changes reflected in the current statement of income. Any intrinsic value
would have been recorded in other comprehensive income and recognized in future
statements of income as an offset to related future borrowing costs. As of
January 1, 2001, the cumulative effect from the adoption of FAS 133 related to
these floors was a fair value loss of $10,668. During the second quarter of 2001
the Company recognized a fair value gain of $4,467 to offset the cumulative
loss.


                                       6

<PAGE>

The Company has written call options for stocks held in its portfolio or that
are purchased simultaneous to the sale of the option. The Company receives a
premium for selling the call and may be obligated to sell the underlying stock
if the strike price is reached. The call premium is classified as a liability
until the option expires. If the strike price for the stock is reached, the
Company may be required to sell the stock to the option holder. The Company
would record a gain on the sale of the stock, including the option premium.
Should the strike price not be reached, the option holder would not exercise the
option to purchase the stock and the Company would record the premium as
ordinary income. The Company uses call options to enhance the short-term
earnings of its equity portfolio. In accordance with SFAS No. 133, management
designates these call options as cash-flow hedges. For a qualifying cash flow
hedge, a call option will be carried on the balance sheet at fair value with the
time and option volatility value changes reflected in the current statement of
income. As of January 1, 2001, the cumulative effect from the adoption of FAS
133 related to these call options was a fair value loss of $9,055. During the
second quarter of 2001 the Company recognized a fair value loss of $20,438.

In September of 2000, SFAS No. 140 was issued replacing SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." This Statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
based on a financial-components approach that focuses on control. Under that
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. In addition, this Statement requires
certain disclosures regarding securitization of financial assets. This Statement
is effective for transfers and servicing of financial assets and extinguishments
of liabilities occurring after March 31, 2001. The adoption of this Statement
did not have a material effect on the Company's consolidated financial
statements.


                                       7

<PAGE>

3. Earnings Per Share
Basic earnings per share represents net income divided by the weighted-average
number of common shares outstanding during the period. Diluted earnings per
share reflects additional common shares that would have been outstanding if
potential dilutive shares, such as stock options, had been issued. However,
options will have a dilutive effect only when the average market price of the
common stock exceeds the exercise price of the options.

The following table sets forth the calculation of basic and diluted earnings per
share for the periods indicated (dollars in thousands except share amounts and
per share amounts).

<TABLE>
<CAPTION>
                                                           Unaudited                          Unaudited
                                                  Three Months Ended June 30,         Six Months Ended June 30,
                                                      2001           2000                2001           2000
                                                  -----------    ------------        -----------    ------------
<S>                                               <C>            <C>                 <C>            <C>
Net income                                        $       807    $       999         $     1,722    $      2,044

Weighted average shares outstanding:
     Weighted average shares outstanding            5,998,860      5,998,860           5,998,860       5,998,860
     Less: unearned ESOP shares                      (389,816)      (429,808)           (394,842)       (434,862)
     Less: treasury shares                         (2,067,018)    (1,000,755)         (1,988,632)       (640,303)
                                                  -----------    -----------         -----------    ------------
         Basic                                      3,542,026      4,568,297           3,615,386       4,923,695

               Effect of dilutive stock options       176,273         29,603             169,987          12,622

                                                  -----------    -----------         -----------    ------------
         Diluted                                    3,718,299      4,597,900           3,785,373       4,936,317
                                                  ===========    ===========         ===========    ============
Net income per share:
     Basic                                        $      0.23    $      0.22         $      0.48    $       0.42
     Diluted                                      $      0.22    $      0.22         $      0.45    $       0.41

</TABLE>

4. Dividends
On July 18, 2001, the Company declared a cash dividend of $0.08 per share
payable on August 23, 2001 to shareholders of record as of the close of business
on August 3, 2001.

5. Loan commitments
Outstanding loan commitments totaled $33.9 million at June 30, 2001 compared to
$7.3 million at December 31, 2000. At June 30, 2001 and December 31, 2000, the
Company had no commitments to purchase loans.


                                       8

<PAGE>

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

The following analysis discusses changes in the financial condition and results
of operations at and for the three and six months ended June 30, 2001 and 2000,
and should be read in conjunction with the Company's Unaudited Consolidated
Financial Statements and the notes thereto, appearing in Part I, Item 1 of this
document.

Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations of the Company include, but are not limited to: changes in interest
rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury
and the Federal Reserve Board, the quality or composition of the loan or
investment portfolios, demand for loan products, deposit flows, competition,
demand for financial services in the Company's market area and accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.

Except as required by applicable law and regulation, the Company does not
undertake - and specifically disclaims any obligation - to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.


                                       9

<PAGE>

Comparison of Financial Condition at June 30, 2001 and December 31, 2000

Total assets decreased $9.8 million, or 1.5%, to $632.7 million at June 30,
2001, from $642.5 million at December 31, 2000, largely due to the sale of $14.3
million in loans held for sale, a decrease of $9.1 million in securities
available for sale balances mainly related to principal payments on
mortgage-backed securities and the use of $7.9 million in interest-bearing
balances to pay down FHLB advances, partially offset by an increase of $18.1
million in net loans. The reduction in assets and stable deposit base allowed
the Company to reduce its outstanding FHLB advances by $12.6 million for the six
months ended June 30, 2001. Total stockholders' equity declined $327,000 to
$70.4 million at June 30, 2001 reflecting share repurchases totaling $3.3
million, offset by net income of $1.7 million and an increase of $1.3 million in
the net unrealized gain on securities available for sale, net of taxes.

Investments

At June 30, 2001, the Company's securities portfolio totaled $167.6 million, or
26.5% of assets, all of which was categorized as available-for-sale. The
following table sets forth information regarding the amortized cost and market
values of the Company's investment securities.

<TABLE>
<CAPTION>
                                                     June 30, 2001        December 31, 2000
                                                  -------------------- ----------------------
                                                  Amortized      Fair   Amortized      Fair
                                                     Cost       Value      Cost       Value
                                                  ---------- --------- -----------  ---------
                                                              Dollars In Thousands
<S>                                               <C>        <C>       <C>          <C>
Equity securities:
   Preferred stock                                 $  3,478   $  3,458   $  3,243   $  2,916
   Common stock                                      12,740     13,080     11,654     12,063
   Trust preferred                                   19,590     19,681     19,455     18,191
                                                   --------   --------   --------   --------
      Total equity securities                        35,808     36,219     34,352     33,170
                                                   --------   --------   --------   --------

Mortgage-backed and mortgage-related securities:
   Freddie Mac                                       23,641     24,060     25,730     26,017
   Fannie Mae                                        66,669     68,816     72,992     75,052
   Ginnie Mae                                        32,977     32,307     36,833     36,031

   REMICS                                             5,958      6,211      6,272      6,463
                                                   --------   --------   --------   --------
      Total mortgage-backed securities              129,245    131,394    141,827    143,563
                                                   --------   --------   --------   --------
        Total securities(1)                        $165,053   $167,613   $176,179   $176,733
                                                   ========   ========   ========   ========
</TABLE>

(1) Does not include $13.8 million of FHLB-Boston stock held at June 30, 2001
    and December 31, 2000.

Securities available for sale decreased $9.1 million, or 5.2%, primarily due to
principal payments on mortgage-backed securities totaling $12.6 million offset
by an increase of $2.0 million in the net unrealized gain on securities
available for sale.


                                       10

<PAGE>

Lending Activities

At June 30, 2001, the Company's gross loan portfolio was $423.0 million, or
66.9%, of total assets. The following table sets forth the composition of the
Company's loan portfolio in dollar amounts and as a percentage of the respective
portfolio.

<TABLE>
<CAPTION>
                                           June 30, 2001              December 31, 2000
                                      ----------------------     ---------------------------
                                                    Percent                         Percent
                                        Amount     of Total        Amount          of Total
                                      ---------   ----------     ---------        ----------
                                                    (Dollars In Thousands)
<S>                                   <C>         <C>            <C>              <C>
Real estate loans

    One- to four-family               $ 241,035      56.98%      $ 225,144           55.92%
    Multi-family                         32,652       7.72%         33,529            8.33%
    Commercial                           30,533       7.22%         29,257            7.27%
    Construction and development         12,445       2.94%         11,361            2.82%
                                      ---------     ------       ---------          ------
          Total real estate loans       316,665      74.86%        299,291           74.34%
                                      ---------     ------       ---------          ------

Consumer loans

    Home equity loans                    82,163      19.43%         81,888           20.34%
    Automobile                           13,307       3.15%         12,941            3.21%
    Other                                 3,617       0.86%          3,550            0.88%
                                      ---------     ------       ---------          ------
          Total consumer loans           99,087      23.44%         98,379           24.43%
                                      ---------     ------       ---------          ------

Commercial loans                          7,207       1.70%          4,936            1.23%
                                      ---------     ------       ---------          ------

          Total loans                   422,959     100.00%        402,606          100.00%
                                                    ======                          ======

Less:
    Unadvanced loan funds (1)           (11,699)                     (9,537)
    Deferred loan origination costs         726                         807
    Allowance for loan losses            (2,646)                     (2,590)
                                      ---------                  ----------
          Net loans                   $ 409,340                  $  391,286
                                      =========                  ==========
</TABLE>

(1) Includes committed but unadvanced loan amounts.

Total gross loans rose $20.4 million, or 5.1%, during the six months ended June
30, 2001 largely attributable to loan origination and refinancing activity,
partially offset by prepayments and amortization of the existing portfolio.


                                       11

<PAGE>

Non-performing Assets
The following table sets forth information regarding nonaccrual loans, real
estate owned and restructured loans.

                                             June 30,  December 31,
                                               2001        2000
                                            --------- -------------
                                             (Dollars in Thousands)

Nonaccruing loans:
    Real estate:
       One- to four- family                    $ 117       $   4
       Commercial                                  -         235
    Home equity loans                             22          22
    Commercial loans                              74           -
                                               -----       -----
       Total                                     213         261
Other real estate owned, net (1)                 277          61
                                               -----       -----
    Total non-performing assets                  490         322
Troubled debt restructurings                       -           -
                                               -----       -----
Troubled debt restructurings and
    total non-performing assets                $ 490       $ 322
                                               =====       =====
Total non-performing loans and
    troubled debt restructurings as a
    percentage of total loans (2) (3)           0.05%       0.07%
Total non-performing assets and
    troubled debt restructurings as a
    percentage of total assets (3)              0.08%       0.05%

(1) Other real estate owned balances are shown net of related allowances.
(2) Total loans includes loans, less unadvanced loan funds, plus net deferred
    loan costs.
(3) Non-performing assets consist of nonperforming loans and other real estate
    owned, net. Nonperforming loans consist of nonaccruing loans and all loans
    90 days or more past due and other loans which have been identified by the
    Company as presenting uncertainty with respect to the collectibility of
    interest or principal.

During the second quarter of 2001, the Company foreclosed on a commercial
mortgage with an outstanding loan balance of approximately $225,000. The
property was transferred to OREO from the commercial real estate nonaccruing
loan category. The Company has a contract to sell the property in the third
quarter of 2001 and does not anticipate a material financial impact.


                                       12

<PAGE>

Allowance for Loan Losses

Management completes a loan loss allowance sufficiency analysis on a monthly
basis based upon the loan portfolio composition, asset classifications,
loan-to-value ratios, impairments in the loan portfolio and other factors. The
analysis is compared to actual losses, peer group data and economic conditions.
The allowance for loan losses is maintained through provisions for loan losses
which are charged to operations. Loan losses are charged against the allowance
when management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at an amount management considers
adequate to cover estimated losses in its loan portfolio based on management's
on-going evaluation of the risks inherent in its loan portfolio, consideration
of the trends in the Company's loan portfolio, the national and regional
economies and the real estate market in the Company's primary lending area. The
Company's loan loss allowance determinations also incorporate factors and
analyses which consider the potential principal loss associated with the loan.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

The allowance for loan losses consists of allocated, general and unallocated
loss components. The allocated loss component relates to loans classified as
doubtful, substandard, or special mention. These classified loans are assigned a
reserve percentage based upon historical data which considered the relationship
between estimated realizable value and outstanding principal balance for each
product type. The reserve percentage is multiplied by the outstanding balance
for each product type to determine the allocated allowance. For classified loans
in which management determines that a loss is inevitable, the potential loss
will be realized and charged-off.

For non-performing loans also classified as impaired, an allocated allowance is
established when the discounted cash flows (or collateral value or observable
market value) of the impaired loan is lower than the carrying value of that
loan. Larger groups of smaller balance homogeneous consumer and residential
mortgage loans are collectively evaluated for impairment. Commercial and
commercial mortgage loans are handled on an individual basis.

The general loss component covers non-classified loans and is based on
historical loss experience for each product type, adjusted for qualitative
factors. For such loans, a reserve percentage is assigned for each product type
which is multiplied by the outstanding balances to determine the allowance. Each
category of non-classified loans is assigned a reserve percentage, which is
multiplied by the outstanding balances to determine the unallocated allowances
to be maintained. The unallocated component of the allowance reflects the margin
of imprecision inherent in the underlying assumptions used in the methodologies
for estimating allocated losses and general losses in the portfolio.


                                       13

<PAGE>

The following table sets forth activity in the allowance for loan losses for the
periods set forth in the table.

                                                      At or for the Six Months
                                                           Ended June 30,
                                                     --------------------------
                                                         2001          2000
                                                     -----------  -------------
                                                       (Dollars in Thousands)

Allowance for loan losses, beginning of period         $  2,590      $  2,309

Charged-off loans:
    Real estate                                               -             -
    Consumer                                                 52            56
                                                       --------      --------
       Total charged-off loans                               52            56
                                                       --------      --------

Recoveries on loans previously charged-off:
    Real estate                                               9            14
    Consumer                                                 14            20
                                                       --------      --------
       Total recoveries                                      23            34
                                                       --------      --------
Net loans charged off                                        29            22
Provision for loan losses                                    85            60
                                                       --------      --------
Allowance for loan losses, end of period               $  2,646      $  2,347
                                                       ========      ========
Net loans charged-off to average
    interest-earning loans                                 0.01%         0.01%
Allowance for loan losses to total loans (1)               0.64%         0.65%
Allowance for loan losses to non-performing
    loans and troubled debt restructurings (2)          1242.25%      1778.03%
Net loans charged-off to allowance for loan losses         2.19%         1.87%
Recoveries to charge-offs                                 44.23%        60.71%

(1) Total loans includes loans, less unadvanced loan funds, plus deferred loan
    costs (fees), net.
(2) Nonperforming loans consist of nonaccruing loans and all loans 90 days or
    more past due and other loans which have been identified by the Company as
    presenting uncertainty with respect to the collectibility of interest or
    principal.


                                       14

<PAGE>

Deposits

The following table sets forth the distribution of deposit accounts for the
periods indicated.

                                  June 30, 2001          December 31, 2000
                            ------------------------ ------------------------
                                           Percent                  Percent
                                          of Total                 of Total
                              Balance     Deposits     Balance     Deposits
                            ----------- ------------ ----------- ------------
                                         (Dollars In Thousands)

Demand deposits              $ 19,291        5.89%    $ 16,165        4.97%
Savings                        69,336       21.17%      65,250       20.06%
Money market                   29,484        9.00%      27,034        8.31%
NOW                            61,285       18.71%      48,217       14.82%
Brokered deposits              30,000        9.16%      49,857       15.33%
Certificates of deposit       118,166       36.07%     118,732       36.52%
                             --------      ------     --------      ------
    Total deposits           $327,562      100.00%    $325,255      100.00%
                             ========      ======     ========      ======

Core deposits, which excludes brokered deposits and certificates of deposit,
increased $22.7 million, or 14.5%, to $179.4 million at June 30, 2001 from
$156.7 million at December 31, 2000, primarily as a result of the active
promotion of our products, the opening of our new branch in East Longmeadow and
the relocation of our Ludlow branch.

During the six months ended June 30, 2001, the Company redeemed $20.0 million of
brokered certificates of deposit because the interest rate paid on such deposits
was significantly higher than the prevailing market rate for similar deposits.
The Company from time to time utilizes brokered deposits as an alternate source
of funding and to reduce dependence on FHLB advances when such brokered deposits
have competitive interest rates.


                                       15

<PAGE>

Comparison of Operating Results for the Three Months Ended June 30, 2001 and
2000

General
The Company reported net income of $807,000 or $0.22 per diluted share for the
quarter ended June 30, 2001 compared to $999,000, or $0.22 per diluted share for
the same period last year. The quarterly results for 2001 include a $311,000
loss recognized as a result of the Company's adoption of Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," effective January 1, 2001. Excluding the SFAS No. 133
loss and the related tax benefit of $108,000, the Company's net income for the
second quarter of 2001 was $1.0 million, or $0.27 per diluted share. The most
significant factors influencing the operating results in the second quarter of
2001 were lower rates paid on FHLB advances, loan growth, increases in brokered
deposits and FHLB advances to fund balance sheet expansion and the repurchase of
stock, the impact of share repurchases and higher operating expenses.

Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
on the relative amounts of interest-earning assets and interest-bearing
liabilities and the interest rate earned or paid on them.

The following table sets forth, for the periods indicated, average balances,
interest income and expense and yields earned or rates paid on the major
categories of assets and liabilities. The average yields and costs are derived
by dividing interest income or expense by the average balance of
interest-earning assets or interest-bearing liabilities, respectively, for the
periods shown. The yields and costs are annualized. Average balances are derived
from average daily balances. The yields and costs include fees which are
considered adjustments to yields. Loan interest and yield data does not include
any accrued interest from nonaccruing loans.

                                       16

<PAGE>

<TABLE>
<CAPTION>
                                                                         For the Three Months Ended June 30,
                                                    -------------------------------------------------------------------------
                                                                      2001                                2000
                                                    ------------------------------------- -----------------------------------
                                                                                Average                             Average
                                                      Average                    Yield/     Average                  Yield/
                                                      Balance       Interest      Rate      Balance      Interest     Rate
                                                    -----------   ------------  --------  -----------  ------------ ---------
                                                                          (Dollars in Thousands)
<S>                                                 <C>           <C>           <C>       <C>          <C>          <C>
Interest-earning assets: (1)
   Investments:
     Mortgage-backed securities                      $ 136,601      $ 2,226      6.52%    $ 135,974     $ 2,406      7.08%
     Equity securities                                  35,485          579      6.53%       36,882         630      6.83%
   FHLB stock                                           13,750          246      7.16%       10,337         150      5.80%
   Loans: (2)
     Residential real estate loans                     256,991        4,672      7.27%      219,058       4,017      7.34%
     Commercial real estate loans                       32,456          739      9.11%       29,676         610      8.22%
     Consumer loans                                     99,057        1,844      7.47%       90,534       1,795      7.97%
     Commercial loans                                    6,132          117      7.55%        5,269         109      8.18%
                                                     ---------      -------               ---------     -------
       Loans, net                                      394,636        7,372      7.48%      344,537       6,531      7.59%
   Other                                                 9,906           90      3.59%        8,561         113      5.22%
                                                     ---------      -------               ---------     -------
       Total interest-earning assets                   590,378       10,513      7.12%      536,291       9,830      7.34%
                                                                    -------                             -------
Noninterest-earning assets                              38,507                               33,801
                                                     ---------                            ---------

         Total assets                                $ 628,885                            $ 570,092
                                                     =========                            =========

Interest-bearing liabilities:
   Deposits:
     Money market accounts                           $  28,905      $   207      2.87%    $  27,811     $   213      3.08%
     Savings accounts (3)                               70,066          331      1.89%       68,496         339      1.99%
     NOW accounts                                       58,393          257      1.77%       42,121         119      1.14%
     Certificates of deposit (4)                       161,074        2,014      5.02%      136,696       1,766      5.20%
                                                     ---------      -------               ---------     -------
       Total interest-bearing deposits                 318,438        2,809      3.54%      275,124       2,437      3.56%
   Borrowings                                          217,280        2,990      5.44%      203,913       3,233      6.27%
                                                     ---------      -------               ---------     -------
       Total interest-bearing liabilities              535,718        5,799      4.31%      479,037       5,670      4.72%
                                                                    -------   -------                   -------   -------
   Demand deposits                                      18,226                               12,784
   Other noninterest-bearing liabilities                 4,412                                4,017
                                                     ---------                            ---------
       Total liabilities                               558,356                              495,838
   Total stockholders' equity                           70,529                               74,254
                                                     ---------                            ---------

       Total liabilities and stockholders' equity    $ 628,885                            $ 570,092
                                                     =========                            =========

   Net interest-earning assets                       $  54,660                            $  57,254
                                                     =========                            =========

   Net interest income/interest
      rate spread (5)                                               $ 4,714      2.81%                  $ 4,160      2.62%
                                                                    =======   =======                   =======   =======

   Net interest margin as a percentage
      of interest-earning assets (6)                                             3.19%                               3.10%
                                                                              =======                             =======
   Ratio of interest earning assets
      to interest-bearing liabilities                                          110.20%                             111.95%
                                                                              =======                             =======
</TABLE>

(1)  Includes related assets available-for-sale and unamortized discounts and
     premiums.
(2)  Amount is net of deferred loan origination fees, unadvanced loan funds,
     allowance for loan losses and includes nonaccrual loans. The Company
     records interest income on nonaccruing loans on a cash basis.
(3)  Savings accounts include mortgagors' escrow deposits.
(4)  Certificates of deposit includes brokered certificates of deposit.
(5)  Net interest rate spread represents the difference between the weighted
     average yield on interest-earning assets and the weighted average cost of
     interest-bearing liabilities.
(6)  Net interest margin represents net interest income divided by average
     interest-earning assets.

                                       17

<PAGE>

The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to: (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
                                                          Three Months Ended June 30,
                                                             2001 compared to 2000
                                                    -------------------------------------
                                                      Increase (Decrease)
                                                            Due to
                                                    --------------------------
                                                      Volume          Rate          Net
                                                    ----------    ------------    -------
                                                                 (In Thousands)
<S>                                                 <C>           <C>             <C>
Interest-earning assets:
    Mortgage-backed securities                        $  11          $(191)        $(180)
    Equity securities                                   (24)           (27)          (51)
    FHLB stock                                           56             40            96
    Loans:
       Residential real estate loans                    690            (35)          655
       Commercial real estate loans                      60             69           129
       Consumer loans                                   153           (104)           49
       Commercial loans                                  14             (6)            8
                                                      -----          -----         -----
          Total loans                                   917            (76)          841
    Other                                                24            (47)          (23)
                                                      -----          -----         -----
          Total interest-earning assets               $ 984          $(301)        $ 683
                                                      -----          -----         -----

Interest-bearing liabilities:

    Deposits:

         Money market accounts                        $   8          $ (14)        $  (6)
         Savings accounts (1)                             8            (16)           (8)
         NOW accounts                                    57             81           138
         Certificates of deposit (2)                    309            (61)          248
                                                      -----          -----         -----
               Total deposits                           382            (10)          372
    Borrowings                                          240           (483)         (243)
                                                      -----          -----         -----
               Total interest-bearing liabilities       622           (493)          129
                                                      -----          -----         -----
Change in net interest income                         $ 362          $ 192         $ 554
                                                      =====          =====         =====
</TABLE>

(1)      Includes interest on mortgagors' escrow deposits.
(2)      Includes interest on brokered certificates of deposit.

                                       18

<PAGE>

Net interest income totaled $4.7 million for the three months ended June 30,
2001, an increase of $554,000, or 13.3%, from $4.2 million in the second quarter
of 2000 reflecting growth in average interest-earning assets and expansion in
the net interest margin. Net interest margin improved 9 basis points to 3.19% in
the second quarter of 2001 from the same period in 2000 primarily as a result of
lower rates paid on FHLB advances and loan growth, partially offset by increases
in average FHLB advances and brokered deposits to support incremental asset
growth and share repurchases as well as a decrease in the yield on
interest-earning assets.

Interest and dividend income increased $683,000, or 6.9%, to $10.5 million for
the three months ended June 30, 2001 as compared to $9.8 million for the same
period in 2000 resulting from growth in average loans, partially offset by a
decrease of 22 basis points in the yield on interest-earning assets. Average
loans increased $50.1 million, or 14.5%, to $394.6 million for the second
quarter of 2001 primarily due to originations of residential real estate and
home equity loans and purchases of residential real estate loans, partially
offset by amortization and prepayments of the existing loan portfolio. The yield
on interest-earning assets declined mainly as a result of the lower interest
rate environment, which led to reduced yields on new assets as well as the
repricing of a portion of the Company's existing assets.

Total interest expense increased $129,000, or 2.3%, to $5.8 million for the
three months ended June 30, 2001 from $5.7 million in the comparable 2000 period
resulting primarily from an increase in average interest-bearing liabilities
offset by a reduction in the rates paid on borrowings. The average balance of
interest-bearing liabilities was $535.7 million for the quarter ended June 30,
2001 as compared to $479.0 million for the same period in 2000, an increase of
$56.7 million, or 11.8%, due to growth in core deposits, brokered deposits and
borrowings. Average interest-bearing core deposits, which include money market,
savings and NOW accounts, rose $19.0 million, or 13.7% to $157.4 million in the
second quarter of 2001 from $138.4 million for the same period in 2000
reflecting the active promotion of our products which has contributed to growth
in the account base. During the second quarter of 2001, average brokered
certificates of deposit balances increased $29.7 million and average borrowings
expanded $13.4 million as compared to the second quarter of 2000 to fund share
repurchases and incremental asset growth. Rates paid on borrowings fell 83 basis
points as a result of the lower interest rate environment, which resulted in the
repricing of a portion of the Company's outstanding FHLB advances.

Provision for Loan Losses
The Company's provision for loan losses in the second quarter of 2001 was
$85,000 compared to $40,000 for the same period in 2000. Management determined
that an increase in the provision for loan losses was warranted based upon an
analysis of the adequacy of the balance in the allowance for loan losses.
Management believes that, based on information available at June 30, 2001, the
Company's allowance for loan losses was sufficient to cover losses inherent in
its loan portfolio at that time. Based upon the Company's plan to increase its
emphasis on non-one- to four-family mortgage lending, the Company may further
increase its allowance for loan losses over future periods as conditions
dictate. However, no assurances can be given that the Company's level of
allowance for loan losses will be sufficient to cover future loan losses
incurred by the Company or that further future adjustments to the allowance for
loan losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions used by management to
determine the current level of the allowance for loan losses. In addition, the
FDIC and the Massachusetts Commissioner of Banks, as an integral part of their
examination processes, periodically review the Company's allowance for loan
losses. Such agencies may require the Company to make additional provisions for
estimated loan losses based upon judgments different from those of management.

                                       19

<PAGE>

Other Income
Excluding the SFAS No. 133 loss of $311,000, total other income decreased
$60,000, or 5.6%, to $1.0 million for the three months ended June 30, 2001 as
compared to the second quarter of last year as a result of lower gains on sales
of securities offset by growth in fee income. Fee income increased $69,000, or
12.7%, for the second quarter of 2001 mainly due to higher fees associated with
solid growth in core deposit accounts, and to a lesser extent, the introduction
of an ATM fee for customers of other financial institutions in the third quarter
of 2000.

Other Expenses
Other expenses increased $431,000, or 11.8%, to $4.1 million for the second
quarter of 2001 compared to $3.7 million for the 2000 period. Salaries and
benefits increased $167,000, or 8.7%, to $2.1 million for the three months ended
June 30, 2001 as a result of standard wage increases, staffing costs of the new
branch opened in the first quarter of 2001 and higher employee stock ownership
plan expenses related to an increase in the Company's average share price.
Occupancy and equipment expenses grew $72,000, or 15.7%, primarily reflecting
costs associated with the purchase of two new branch facilities and the
establishment of a free-standing ATM located in Holyoke, Massachusetts during
the fourth quarter of 2000. Other general and administrative expenses increased
$143,000, or 23.5%, largely as a result of the Company's larger account base,
investor-related expenses, costs associated with the new branches as well as the
free-standing ATM and purchased loan servicing fees.

Comparison of Operating Results for the Six Months Ended June 30, 2001 and 2000

General
The Company reported net income of $1.7 million, or $0.45 per diluted share,
compared to net income of $2.0 million, or $0.41 per diluted share, for the same
period last year. Excluding the SFAS No. 133 loss of $311,000 and the related
tax benefit of $108,000 recognized during the second quarter of 2001, the
Company's net income for the six months ended June 30, 2001 was $1.9 million, or
$0.51 per share. The most significant factors affecting the operating results
for the first six months of 2001 were growth in earning assets, increases in
FHLB advances and brokered deposits to fund the expanded asset base and the
repurchase of common stock, the impact of share repurchases, lower rates paid on
FHLB advances, reduced gains on sales of securities and higher operating
expenses.

Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
on the relative amounts of interest-earning assets and interest-bearing
liabilities and the interest rate earned or paid on them.

The following table sets forth, for the periods indicated, average balances,
interest income and expense and yields earned or rates paid on the major
categories of assets and liabilities. The average yields and costs are derived
by dividing interest income or expense by the average balance of
interest-earning assets or interest-bearing liabilities, respectively, for the
periods shown. The yields and costs are annualized. Average balances are derived
from average daily balances. The yields and costs include fees which are
considered adjustments to yields. Loan interest and yield data does not include
any accrued interest from nonaccruing loans.

                                       20

<PAGE>

<TABLE>
<CAPTION>
                                                                            For the Six Months Ended June 30,
                                                       -------------------------------------------------------------------------
                                                                         2001                                2000
                                                       ------------------------------------- -----------------------------------
                                                                                   Average                             Average
                                                         Average                    Yield/     Average                  Yield/
                                                         Balance       Interest      Rate      Balance      Interest     Rate
                                                       -----------   ------------  --------  -----------  ------------ ---------
                                                                             (Dollars in Thousands)
<S>                                                    <C>           <C>           <C>       <C>          <C>          <C>
Interest-earning assets: (1)
   Investments:
     Mortgage-backed securities                          $ 139,732      $ 4,645       6.65%   $ 130,117      $ 4,584      7.05%
     Equity securities                                      34,712        1,140       6.57%      36,117        1,241      6.87%
   FHLB stock                                               13,750          505       7.35%       9,485          269      5.67%
   Loans: (2)
     Residential real estate loans                         255,171        9,394       7.36%     208,884        7,645      7.32%
     Commercial real estate loans                           32,576        1,411       8.66%      27,996        1,183      8.45%
     Consumer loans                                         99,105        3,774       7.68%      87,717        3,450      7.91%
     Commercial loans                                        5,674          234       8.20%       5,241          214      8.08%
                                                         ---------      -------               ---------      -------
       Loans, net                                          392,526       14,813       7.56%     329,838       12,492      7.58%
    Other                                                   15,936          370       4.62%       6,502          150      4.56%
                                                         ---------      -------               ---------      -------
       Total interest-earning assets                       596,656       21,473       7.21%     512,059       18,736      7.32%
                                                                        -------                              -------
Noninterest-earning assets                                  36,083                               33,215
                                                         ---------                            ---------
       Total assets                                      $ 632,739                            $ 545,274
                                                         =========                            =========
Interest-bearing liabilities:

   Deposits:
     Money market accounts                               $  27,819      $   413       2.99%   $  28,987      $   445      3.09%
     Savings accounts (3)                                   68,582          645       1.90%      67,977          655      1.94%
     NOW accounts                                           53,920          473       1.77%      38,629          172      0.90%
     Certificates of deposit (4)                           162,691        4,248       5.27%     128,289        3,236      5.07%
                                                         ---------      -------               ---------      -------
       Total interest-bearing deposits                     313,012        5,779       3.72%     263,882        4,508      3.44%
   Borrowings                                              227,094        6,565       5.75%     187,925        5,753      6.06%
                                                         ---------      -------               ---------      -------
       Total interest-bearing liabilities                  540,106       12,344       4.58%     451,807       10,261      4.53%
                                                                        -------    -------                   -------   -------
   Demand deposits                                          17,288                               12,358
   Other noninterest-bearing liabilities                     4,016                                3,862
                                                         ---------                            ---------
        Total liabilities                                  561,410                              468,027
   Total stockholders' equity                               71,329                               77,247
                                                         ---------                            ---------
        Total liabilities and stockholders' equity       $ 632,739                            $ 545,274
                                                         =========                            =========
   Net interest-earning assets                           $  56,550                            $  60,252
                                                         =========                            =========
   Net interest income/interest
      rate spread (5)                                                   $ 9,129       2.63%                  $ 8,475      2.79%
                                                                        =======    =======                   =======   =======
   Net interest margin as a percentage
      of interest-earning assets (6)                                                  3.06%                               3.31%
                                                                                   =======                             =======
   Ratio of interest earning assets
      to interest-bearing liabilities                                               110.47%                             113.34%
                                                                                   =======                             =======
</TABLE>


(1)  Includes related assets available-for-sale and unamortized discounts and
     premiums.
(2)  Amount is net of deferred loan origination fees, unadvanced loan funds,
     allowance for loan losses and includes nonaccrual loans. The Company
     records interest income on nonaccruing loans on a cash basis.
(3)  Savings accounts include mortgagors' escrow deposits.
(4)  Certificates of deposit includes brokered certificates of deposit.
(5)  Net interest rate spread represents the difference between the weighted
     average yield on interest-earning assets and the weighted average cost of
     interest-bearing liabilities.
(6)  Net interest margin represents net interest income divided by average
     interest-earning assets.

                                       21

<PAGE>

The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to: (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
                                                                   Six Months Ended June 30,
                                                                     2001 compared to 2000
                                                            -------------------------------------
                                                              Increase (Decrease)
                                                                    Due to
                                                            --------------------------
                                                              Volume          Rate          Net
                                                            ----------    ------------    -------
                                                                     (Dollars in Thousands)
<S>                                                         <C>           <C>             <C>
Interest-earning assets:
      Mortgage-backed securities                            $   258          $ (197)      $    61
      Equity securities                                         (47)            (54)         (101)
      FHLB stock                                                143              93           236
      Loans:
           Residential real estate loans                      1,704              45         1,749
           Commercial real estate loans                         197              31           228
           Consumer loans                                       417             (93)          324
           Commercial loans                                      17               3            20
                                                            -------          ------       -------
                 Total loans                                  2,335             (14)        2,321
      Other                                                     218               2           220
                                                            -------          ------       -------
                 Total interest-earning assets              $ 2,907          $ (170)      $ 2,737
                                                            -------          ------       -------

Interest-bearing liabilities:
      Deposits:

           Money market accounts                            $   (19)         $  (13)      $   (32)
           Savings accounts (1)                                   8             (18)          (10)
           NOW accounts                                          87             214           301
           Certificates of deposit (2)                          886             126         1,012
                                                            -------          ------       -------
                 Total deposits                                 962             309         1,271
      Borrowings                                              1,072            (260)          812
                                                            -------          ------       -------
                 Total interest-bearing liabilities           2,034              49         2,083
                                                            -------          ------       -------
Increase in net interest income                             $   873          $ (219)      $   654
                                                            =======          ======       =======
</TABLE>

(1)  Includes interest on mortgagors' escrow deposits.
(2)  Includes interest on brokered certificates of deposit.

                                       22

<PAGE>

Net interest income totaled $9.1 million for the six months ended June 30, 2001,
an increase of $654,000, or 7.8%, compared to $8.5 million for the same period
in 2000 as a result of growth in average interest-earning assets offset by net
interest margin compression. Net interest margin contracted by 25 basis points
to 3.06% for the first six months of 2001 from the same period in 2000 primarily
attributable to higher rates paid on interest-bearing deposits, increases in
average FHLB advances and brokered deposits to support incremental asset growth
and share repurchases and a lower yield on interest-earning assets, partially
offset by reduced rates paid on FHLB advances.

Interest and dividend income increased $2.7 million, or 14.6%, to $21.5 million
for the six months ended June 30, 2001 compared to the same period last year
reflecting growth in average interest-earning assets, partially offset by a
decrease of 11 basis points in the yield on interest-earning assets. Average
interest-earning assets totaled $596.7 million for the first six months of 2001
compared to $512.1 million for the same period last year, representing an
increase of $84.6 million, or 16.5%. Average loans increased $62.7 million, or
19.0%, primarily due to originations of residential real estate, commercial real
estate and home equity loans as well as purchases of residential real estate
loans, partially offset by amortization and prepayments of the existing loan
portfolio. Mortgage-backed securities balances rose $9.6 million, or 7.4%,
largely resulting from purchases executed in 2000 and an increase in the
unrealized gain, partially offset by principal payments. Other earning assets
grew $9.4 million principally attributable to the investment of accelerated
mortgage-backed securities prepayments in interest-bearing deposit accounts. The
yield on interest-earning assets fell 11 basis points to 7.21% in the six months
ended June 30, 2001 mainly as a result of the lower interest rate environment
which led to reduced yields on new assets as well as the repricing of a portion
of the Company's existing assets.

Total interest expense increased $2.1 million, or 20.3%, to $12.3 million for
the six months ended June 30, 2001 from the same period in 2000 resulting
primarily from growth in average interest-bearing liabilities and higher rates
paid on interest-bearing deposits, offset by reduced rates paid on borrowings.
The average balance of interest-bearing liabilities was $540.1 million for the
six months ended June 30, 2001 as compared to $451.8 million for the same period
in 2000, an increase of $88.3 million, or 19.5%, due to growth in
interest-bearing core deposits, brokered deposits and borrowings. Average
interest-bearing core deposits, which include money market, savings and NOW
accounts, rose $14.7 million, or 10.9% to $150.3 million for the six months
ended June 30, 2001 from $135.6 million for the same period in 2000 reflecting
the active promotion of our products which has contributed to growth in the
account base. For the six months ended June 30, 2001 compared to the same period
last year, the Company used increases of $39.0 million in average brokered
certificates of deposit and $39.2 million in average borrowings to fund share
repurchases and incremental asset growth. The higher rates paid on
interest-bearing deposits were largely due to increased balances in the premium
investment account and brokered deposits. Both products are priced at a premium
to the rates normally paid to depositors for similar instruments. Rates paid on
borrowings fell 31 basis points as a result of the lower interest rate
environment, which led to the repricing of a portion of the Company's
outstanding FHLB advances.

Provision for Loan Losses
The Company's provision for loan losses for the first six months of 2001 totaled
$85,000 compared to $60,000 for the same period in 2000. Management determined
that an increase in the provision for loan losses was warranted based upon an
analysis of the adequacy of the balance in the allowance for loan losses.
Management believes that, based on information available at June 30, 2001, the
Company's allowance for loan losses was sufficient to cover losses inherent in
its loan portfolio at that time.

                                       23

<PAGE>

Other Income
Excluding the $68,000 SFAS No. 133 loss included in other income, total other
income decreased $80,000, or 4.0%, to $1.9 million for the six months ended June
30, 2001 as compared to the same period last year as a result of lower gains on
sales of securities offset by growth in fee income and a $70,000 gain from the
sale of mortgages held for sale. Fee income increased $158,000, or 15.4%, for
the first six months of 2001 mainly due to higher fees associated with solid
growth in core deposit accounts, and to a lesser extent, the introduction of an
ATM fee for customers of other financial institutions in the third quarter of
2000.

Other Expenses
Other expenses increased $690,000, or 9.5%, to $8.0 million for the six months
ended June 30, 2001 compared to $7.3 million for the 2000 period. Salaries and
benefits increased $217,000, or 5.6%, to $4.1 million for the first six months
of 2001 as a result of standard wage increases, staffing costs of the new branch
opened in the first quarter of 2001 and higher employee stock ownership plan
expenses related to an increase in the Company's average share price. Occupancy
and equipment expenses grew $146,000, or 15.4%, primarily reflecting costs
associated with the purchase of two new branch facilities and the establishment
of a free-standing ATM located in Holyoke, Massachusetts during the fourth
quarter of 2000. Professional service expenses rose $79,000, or 18.5%, mainly
due to higher costs associated with legal, audit and accounting and consulting
projects. Other general and administrative expenses increased $206,000, or
16.3%, largely as a result of the Company's larger account base,
investor-related expenses, costs associated with the new branches and the
free-standing ATM and purchased loan servicing fees.

Liquidity
Liquidity and funding strategies are the responsibility of the Asset/Liability
Management Committee (the "ALCO"). The ALCO is responsible for establishing
liquidity targets and implementing strategies to meet desired goals. Liquidity
is measured by the Company's ability to raise cash within 30 days at a
reasonable cost and with a minimum of loss. The Company's primary sources of
funds are deposits, principal and interest payments on loans and investment
securities and borrowings from the FHLB-Boston. While maturities and scheduled
amortization of loans and securities are predictable sources of funds, deposit
outflows and mortgage prepayments are greatly influenced by general interest
rates, economic conditions and competition.

The primary investing activities of the Company are the origination of
residential one-to four-family mortgage loans and consumer loans, primarily home
equity loans and lines of credit, and, to a lesser extent, multi-family and
commercial real estate loans, construction and development loans, commercial
business loans and other types of consumer loans, the purchase of adjustable
rate one-to four-family residential mortgage loans and the investment in
mortgage-backed and equity securities. These activities are funded primarily by
principal and interest payments on loans and investment securities, deposit
growth and the utilization of FHLB advances. During the six months ended June
30, 2001, the Company's loan originations totaled $68.1 million. At June 30,
2001, the Company's investments in mortgage-backed and equity securities totaled
$167.6 million. During the six months ended June 30, 2001, total deposits
increased $2.3 million. Deposit flows are affected by the overall level of
interest rates, the interest rates and products offered by the Company and its
local competitors and other factors. The Company closely monitors its liquidity
position on a daily basis. If the Company requires funds beyond its ability to
generate them internally, additional sources of funds are available through FHLB
advances. At June 30, 2001, the Company had $228.4 million of FHLB borrowings.

Outstanding loan commitments totaled $33.9 million at June 30, 2001. Management
of the Company anticipates that it will have sufficient funds available to meet
its current loan commitments. Certificates of deposit, which are scheduled to
mature in one year or less from June 30, 2001, totaled $94.6 million. The
Company relies primarily on competitive rates, customer service, and
long-standing relationships with customers to retain deposits. From time to
time, the Company will also offer competitive special products to

                                       24

<PAGE>

its customers to increase retention and to attract new deposits. Based upon the
Company's experience with deposit retention and current retention strategies,
management believes that, although it is not possible to predict future terms
and conditions upon renewal, a significant portion of such deposits will remain
with the Company.

Regulatory Capital
The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and the Bank must meet specific capital guidelines that
involve quantitative measures of the Company's and the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors. Prompt corrective action provisions are not applicable to savings
and loan holding companies.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital to risk weighted assets
and to average assets. Management believes, as of June 30, 2001, the Company and
the Bank met all capital adequacy requirements to which they were subject. As of
June 30, 2001, the most recent notification from the Federal Deposit Insurance
Corporation categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1
leverage ratios as set forth in the following table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.

                                       25

<PAGE>

The Company's and Bank's actual capital amounts and ratios as of June 30, 2001
and December 31, 2000 are also presented in the table.

<TABLE>
<CAPTION>
                                                                                                           Minimum
                                                                                                          to be Well
                                                                                                       Capitalized Under
                                                                            Minimum for Capital        Prompt Corrective
                                                          Actual             Adequacy Purposes         Action Provisions
                                                  ---------------------   -----------------------    ---------------------
                                                   Amount        Ratio     Amount          Ratio      Amount        Ratio
                                                  --------      -------   --------        -------    --------      -------
                                                                           (Dollars In Thousands)
<S>                                               <C>           <C>       <C>             <C>        <C>           <C>
As of June 30, 2001:
--------------------

Total Capital to Risk Weighted Assets
  Company                                          $70,937       18.0%     $31,539          8.0%          N/A          N/A
  Bank                                             $58,167       14.8%     $31,350          8.0%      $39,187         10.0%

Tier 1 Capital to Risk Weighted Assets
  Company                                          $68,147       17.3%     $15,770          4.0%          N/A          N/A
  Bank                                             $55,377       14.1%     $15,675          4.0%      $23,512          6.0%

Tier 1 Capital to Average Assets
  Company                                          $68,147       10.7%     $25,384          4.0%          N/A          N/A
  Bank                                             $55,377        8.9%     $18,713          3.0% -    $31,188          5.0%
                                                                           $31,188          5.0%


As of December 31, 2000:
------------------------

Total Capital to Risk Weighted Assets
  Company                                          $71,104       17.7%     $32,067          8.0%          N/A          N/A
  Bank                                             $60,815       15.2%     $31,966          8.0%      $39,958         10.0%

Tier 1 Capital to Risk Weighted Assets
  Company                                          $68,514       17.1%     $16,034          4.0%          N/A          N/A
  Bank                                             $58,225       14.6%     $15,983          4.0%      $23,975          6.0%

Tier 1 Capital to Average Assets
  Company                                          $68,514       10.8%     $25,363          4.0%          N/A          N/A
  Bank                                             $58,225        9.3%     $18,840          3.0% -    $31,400          5.0%
                                                                           $31,400          5.0%
</TABLE>

                                       26

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

Information regarding quantitative and qualitative disclosure about market risk
is presented in the Securities and Exchange Commission Form 10-K filed by the
Company for the year ended December 31, 2000. There have been no material
changes in the Company's market risk since December 31, 2000.

                                       27

<PAGE>

PART II.  OTHER INFORMATION

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

The Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business. Such routine
legal proceedings, in the aggregate, are believed by management to be immaterial
to the financial condition and results of operations of the Company.

Item 2.  Changes in Securities and Use of Proceeds.
         -----------------------------------------

None.

Item 3.  Defaults Upon Senior Securities.
         -------------------------------

None.

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

         a.   An annual meeting of shareholders of the Company was held on
              April 25, 2001 (the "Annual Meeting").

         b.   Not applicable.

         c.   There were 4,058,318 shares of Common Stock of the Company
              eligible to be voted at the Annual Meeting and 3,475,912 shares
              were represented at the meeting by the holders thereof, which
              constituted a quorum. The items voted upon at the Annual Meeting
              and the vote for each proposal were as follows:

              1.  Election of directors for a three-year term

                  Director Nominees Elected
                  For Three Year Term:               For              Withheld
                  --------------------            ---------           --------

                  Joseph P. Keenan                3,424,841            51,071
                  Carmen J. Mascaro               3,423,487            52,425
                  Richard L. Pomeroy              3,425,815            50,097
                  Ann V. Schultz                  3,425,815            50,097

              2.   The ratification and approval of the Woronoco Bancorp, Inc.
                   2001 Stock Option Plan

                     For         Against      Abstain      Broker Non-Votes
                  ---------      -------      -------      ----------------

                  3,320,042      120,790       35,080            0

              3.   The ratification of the appointment of Wolf & Company, P.C.
                   as independent auditors of Woronoco Bancorp, Inc. for the
                   fiscal year ending December 31, 2001.

                     For         Against      Abstain
                  ---------      -------      -------

                  3,424,023       33,567       18,322

                                       28

<PAGE>

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

None.

Item 6.  Exhibits and Reports on Form 8-K ((S)249.308 of this Chapter).
         -------------------------------------------------------------

        (a)    Exhibits

               3.1  Certificate of Incorporation of Woronoco Bancorp, Inc. (1)
               3.2  Amended Bylaws of Woronoco Bancorp, Inc. (2)
               4.0  Stock Certificate of Woronoco Bancorp, Inc. (1)
               10.1 Woronoco Bancorp, Inc. 2001 Stock Option Plan (3)
               11.0 Statement Re: Computation of Per Share Earnings
                    (Incorporated Herein By Reference to Part 1 - Earnings Per
                    Share)

        -----------------------------
               (1)  Incorporated by reference into this document from the
                    Exhibits filed with the Registration Statement on Form S-1,
                    and any amendments thereto, Registration No. 333-67255.
               (2)  Incorporated by reference into this document from the
                    Exhibit filed with the Company's Form 10-Q on May 15, 2000.
               (3)  Incorporated by reference into this document from the
                    appendix to the Proxy Statement as filed with the Securities
                    and Exchange Commission on March 12, 2001.

        (b)    Reports on Form 8-K

               On June 27, 2001, Woronoco Bancorp, Inc. filed an 8-K relating to
               a press release which announced that the Company's subsidiary,
               Woronoco Savings Bank, executed a letter of intent to acquire
               Keyes & Mattson Insurance Agency, Inc., West Springfield,
               Massachusetts. A press release announcing the execution of the
               letter of intent was filed by exhibit.

                                       29

<PAGE>

                                   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 hereunto duly authorized.

                                    WORONOCO BANCORP, INC.


Dated:  August 14, 2001       By:   /s/ Cornelius D. Mahoney
                                    ---------------------------------------
                                    Cornelius D. Mahoney
                                    Chairman of the Board, President and
                                    Chief Executive Officer
                                    (principal executive officer)

Dated:  August 14, 2001       By:   /s/ Debra L. Murphy
                                    -------------------------------------
                                    Debra L. Murphy
                                    Senior Vice President and
                                    Chief Financial Officer
                                    (principal financial and accounting officer)

                                       30