<PAGE> 1
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                            FORM 10-Q



 X  Quarterly report pursuant to Section 13 or 15(d) of the       
    Securities Exchange Act of 1934

For the quarterly period ended September 30, 1996 or

    Transition report pursuant to Section 13 or 15(d) of the      
    Securities Exchange Act of 1934

For the transition period from _________ to __________

Commission file number            2-77519-LA                

                     SARATOGA BANCORP                       
      (Exact name of registrant as specified in its charter)

            California                      94-2817587     
(State or other jurisdiction of          (I.R.S. Employer
incorporation or organization)          Identification No.)

     12000 Saratoga-Sunnyvale Road
     Saratoga, California                       95070  
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number including area code (408) 973-1111 

                             NONE                               
(Former name, former address and former fiscal year, if changed
since last report)

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

                                 Yes  X     No     

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

       CLASS           SHARES OUTSTANDING AT OCTOBER 29, 1996
   Common Stock                     1,035,820

             The Index to Exhibits appears on Page 18
 
                       Page 1 of 19 pages
<PAGE> 2
                                

                  PART I - FINANCIAL INFORMATION

Item 1. Consolidated Condensed Financial Statements

                 SARATOGA BANCORP AND SUBSIDIARY
              CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                  September 30,    December 31,
                                      1996             1995*   
                                   (Unaudited)
<S>                              <C>              <C>
ASSETS
Cash and due from banks           $  3,077,000     $  5,239,000
Federal funds sold                  20,500,000       17,700,000

Total cash and equivalents          23,577,000       22,939,000

Interest-bearing deposits
 in other banks                        200,000          200,000
Investments available-for-sale      14,430,000       15,286,000
Investments held-to-maturity        22,664,000       20,348,000
Loans, net                          43,957,000       36,759,000
Other real estate owned              1,202,000        1,745,000
Premises and equipment               2,163,000        1,988,000
Other assets                         1,512,000        1,232,000
                                  
TOTAL ASSETS                      $109,705,000     $100,497,000
                                  ============     ============
LIABILITIES
Deposits:
  Non-interest bearing            $ 17,610,000     $ 20,410,000
  Interest bearing                  65,625,000       54,539,000
Total deposits                      83,235,000       74,949,000
Federal funds purchased                   -           1,500,000
Other borrowings                    14,062,000       12,087,000
Accrued expenses and 
  other liabilities                    901,000          904,000

TOTAL LIABILITIES                   98,198,000       89,440,000
                                  
SHAREHOLDERS' EQUITY
Common stock, no par value;
 Authorized: 20,000,000 shares;    
 Issued and outstanding:
 1,035,820 and 1,030,972 shares      4,458,000        4,427,000
Retained earnings                    7,342,000        6,797,000
Unrealized loss on investments
 available for sale                   (293,000)        (167,000)  
                                    
TOTAL SHAREHOLDERS' EQUITY          11,507,000       11,057,000
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY            $109,705,000     $100,497,000
                                  ============     ============
</TABLE>


*Derived from the December 31, 1995 audited balance sheet included
in the Company's 1995 Annual Report on Form 10-K.

See notes to consolidated condensed financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
                      SARATOGA BANCORP AND SUBSIDIARY
            CONSOLIDATED CONDENSED INCOME STATEMENTS (Unaudited)

                             Three Months Ended      Nine Months Ended
                                September 30,          September 30,
                              1996        1995        1996        1995  
<S>                       <C>         <C>         <C>         <C>    
INTEREST INCOME:
  Loans                    $1,179,000  $  950,000  $3,151,000  $2,801,000
  Investment securities       655,000     572,000   1,982,000   1,814,000
  Federal funds sold          232,000     134,000     518,000     215,000
Total interest income       2,066,000   1,656,000   5,651,000   4,830,000
 
INTEREST EXPENSE:    
  Deposits                    714,000     640,000   1,982,000   1,822,000
  Other                       218,000      94,000     603,000     228,000

Total interest expense        932,000     734,000   2,585,000   2,050,000

NET INTEREST INCOME BEFORE
  CREDIT FOR CREDIT LOSSES  1,134,000     922,000   3,066,000   2,780,000  
Credit for credit losses         -           -        (50,000)       -    

Net interest income after 
  credit for credit losses  1,134,000     922,000   3,116,000   2,780,000
Other income                   88,000     182,000     239,000     505,000
Other expenses                735,000     793,000   2,184,000   2,316,000

INCOME BEFORE INCOME TAXES    487,000     311,000   1,171,000     969,000
Provision for income taxes    185,000     125,000     445,000     388,000

NET INCOME                   $302,000    $186,000    $726,000    $581,000
                           ==========  ==========  ==========  ==========

NET INCOME PER COMMON
  AND EQUIVALENT SHARE          $0.26       $0.17       $0.63       $0.54
                           ==========  ==========  ==========  ==========
</TABLE>


See notes to consolidated condensed financial statements.


<PAGE> 4
                       SARATOGA BANCORP AND SUBSIDIARY
        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                    Nine Months Ended
                                                       September 30,
                                                   1996           1995   
<S>                                           <C>           <C>
OPERATIONS:
 Net income                                    $   726,000   $   581,000
 
 Adjustments to reconcile net income to
   net cash provided by operating
   activities:
   Credit for credit losses                        (50,000)         -    
   Depreciation and amortization                   125,000       204,000
   Provision for OREO losses                          -           35,000
   Other, net                                     (283,000)      693,000    
      
Net cash provided by operating
   activities                                      518,000     1,513,000

INVESTING ACTIVITIES:
   Proceeds from sale of investments 
    available-for-sale                           2,496,000     2,624,000
   Proceeds from maturities of investments
    available-for-sale                           6,558,000          -       
  Proceeds from maturities of investments
    held-to-maturity                             3,411,000     4,537,000 
  
   Purchase of securities available-for-sale    (9,913,000)   (2,639,000)
   Purchase of securities held-to-maturity      (4,136,000)         -   
   Net increase in loans                        (7,228,000)   (1,788,000)
   Purchases of premises and equipment            (433,000)      (39,000)
   Sale of premises and equipment                  133,000          -
   Proceeds from sale of OREO                      652,000       735,000
   Increase in other assets                           -         (238,000)

Net cash (used in)provided by investing
   activities                                   (8,460,000)    3,192,000 

FINANCING ACTIVITIES:
  Net increase(decrease) in deposits             8,286,000    (1,741,000)
  Payment of dividends                            (181,000)     (103,000)
  Increase in other borrowings                   1,975,000     5,586,000
  Decrease in federal funds purchased           (1,500,000)   (1,500,000)

Net cash provided by financing
   activities                                    8,580,000     2,242,000
                                              
NET INCREASE IN CASH AND EQUIVALENTS               638,000     6,947,000  
Cash and equivalents at beginning of period     22,939,000    10,264,000

Cash and equivalents at end of period          $23,577,000   $17,211,000
                                               ===========   ===========
</TABLE>

See notes to consolidated condensed financial statements.

<PAGE> 5

                 SARATOGA BANCORP AND SUBSIDIARY
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                
           QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995

1.  The unaudited consolidated condensed financial statements
reflect all adjustments (which include only normal recurring
adjustments) which are, in the opinion of management, necessary
to state fairly the results for the periods presented.  The
results for the periods are not necessarily indicative of the
results to be expected for the full fiscal year.

2.  Per share amounts are calculated using the weighted average
shares outstanding plus the dilutive effect of shares issuable
under stock options.  The number of shares used to compute income
per share was 1,158,932 shares and 1,157,060 shares for the three 
and nine month periods ended September 30, 1996 (1,075,230 shares
and 1,060,254 shares for the comparable periods in 1995).

3.  For the nine months ended September 30, 1996 and 1995, cash
paid for taxes was $636,000 and $75,000, respectively.  For the
nine months ended September 30, 1996 and 1995, cash paid for
interest was $3,112,000 and $1,763,000, respectively.

4.  The Company classifies debt and equity securities into one of
three categories at acquisition: held-to-maturity, trading or
available-for-sale.  Investments in debt securities shall be
classified as held-to-maturity and measured at amortized cost
only if the Company has the positive intent and ability to hold
such securities to maturity.  All other investments in debt and
equity securities that have readily determinable fair values
shall be classified either as trading securities, which are
bought and held principally for the purpose of selling them in
the near term and are carried at market value with a
corresponding recognition of unrealized holding gain or loss in
results of operations, or as available-for-sale securities, which
are all other securities and are carried at market value with a
corresponding recognition of the unrealized holding gain or loss,
net of income taxes, as a net amount in a separate component of
shareholders' equity until realized. 
                                 
5.  The Company measures impaired loans based upon the present
value of expected future cash flows discounted at the loan's
effective interest rate, except as a practical expedient, a
creditor may measure impairment based on a loan's observable
market price, or the fair value of the collateral if the loan is
collateral dependent.  A loan is impaired when, based upon
current information and events, it is probable that a creditor
will be unable to collect all amounts due according to the
contractual terms of the loan agreement. 

<PAGE> 6
                 SARATOGA BANCORP AND SUBSIDIARY


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


Summary of financial results

At September 30, 1996, total assets were $109,705,000, a 9.2%
increase from $100,497,000 at December 31, 1995.  Net loans
increased $7,198,000 (19.6%) from $36,759,000 at December 31,
1995 to $43,957,000 at September 30, 1996. The increase was
primarily in the longer term real estate loan portfolio.  Total
deposits increased $8,286,000 (11.1%) from $74,949,000 at
December 31, 1995 to $83,235,000 at September 30, 1996.  

Net income for the third quarter of 1996 was $302,000 or $.26 per
share compared to $186,000 ($.17 per share) for the comparable
period in 1995.  Net income for the first nine months of 1996 was
$726,000 or $.63 per share compared to $581,000 or $.54 per share
for the comparable period in 1995.

The increase in income resulted primarily from an increase in the
volume of earning assets, offset in part by a decrease in the
yield on earning assets and an increase in interest expense due
to the increased volume of interest-bearing liabilities.



RESULTS OF OPERATIONS



THIRD QUARTER OF 1996 AND 1995


An analysis of the results of operations of the Company for the
third quarter of 1996 compared to the third quarter of 1995 is
presented below:

<PAGE> 7
Net interest income

Net interest income, the difference between interest earned on
loans and investments and interest paid on deposits, is the
principal component of the Bank's earnings.  The components of
net interest income are as follows:
<TABLE>
<CAPTION>
                               Three months ended September 30,

                               1996                        1995           
                      Average           Average  Average           Average
                      Balance  Interest Yield(1) Balance  Interest Yield(1)
                                (In thousands, except percentages)
<S>                  <C>        <C>    <C>      <C>        <C>    <C>
Assets:
Earning assets:
  Loans (2)           $43,291    $1,179 10.9%    $34,371    $ 950  11.1%
  Investment 
    securities         39,535       655  6.6%     35,882      572   6.4%
  Federal funds sold   17,636       232  5.3%      9,336      134   5.7%
  Total interest
    earning assets    100,462     2,066  8.2%     79,589    1,656   8.3%
Cash and due from 
  banks                 4,088                      3,584
Other assets (3)        3,798                      5,232
                     $108,348                    $88,405
                      =======                    =======
Liabilities and 
  Shareholders'
  Equity:
Interest-bearing 
  liabilities:
  Demand deposits     $34,212       281  3.3%    $28,637       218  3.0%
  Time deposits        29,920       433  5.8%     27,675       422  6.1%
  Other borrowings     14,024       218  6.2%      5,088        94  7.4% 
  Total interest-
    bearing
    liabilities        78,156       932  4.8%     61,400       734  4.8%
Demand deposits        18,042                     15,509
Other liabilities         896                      1,015
Total liabilities      97,094                     77,924
Shareholders' equity   11,254                     10,481
                     $108,348                    $88,405
                      =======                    =======

Net interest income and margin   $1,134  4.5%                 $922  4.6%
                                 ======                     ======
</TABLE>
(1)  Annualized.
(2)  Loan interest income includes loan fee income of $122,000
     and $86,000 for the quarters ended September 30, 1996 and
     1995, respectively.
(3)  Includes the average allowance for credit losses of $716,000
     and $768,000 and deferred loan fees of $344,000 and $242,000
     for the quarters ended September 30, 1996 and 1995,
     respectively. 

<PAGE> 8

PROVISION FOR CREDIT LOSSES

The Bank maintains an allowance for possible credit losses which
is based, in part, on the Bank's historical loss experience, the
impact of forecasted economic conditions within the Bank's market
area, and, as applicable, the State of California, the value of
the underlying collateral, loan performance and inherent risks in
the loan portfolio.  The allowance is reduced by charge-offs and
increased by provisions for credit losses charged to operating
expense and recoveries of previously charged-off loans.  During
the third quarter of 1996 and 1995 the Bank did not record a
provision for credit losses.  There were no loans charged-off and
$9,000 in recoveries in the third quarter of 1996, as compared to
$9,000 in loans charged-off and $13,000 in recoveries in the
third quarter of 1995.  
  
At September 30, 1996, the allowance for credit losses was
$720,000 or 1.6% of total loans, compared to $776,000 or 2.1% at
December 31, 1995.  There were no nonaccrual loans at September
30, 1996 or December 31, 1995.

At September 30, 1996 and December 31, 1995, there were no loans
past due 90 days or more as to principal or interest and still
accruing interest.  There was one loan at September 30, 1996 in
the amount of $192,000 which was a troubled debt restructuring as
defined in Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt
Restructuring."  At September 30, 1996, there were four potential
problem loans having a combined principal balance of $1,022,000
($1,161,000 at December 31, 1995).  Potential problem loans are
loans which are generally current as to principal and interest
but have been identified by the Company as potential problem
loans due either to a decrease in the underlying value of the
property securing the credit or some other deterioration in the
creditworthiness of the borrower.  All of the four loans
identified as potential problem loans are secured by real estate
and personal property.  At September 30, 1996, there were no loan
concentrations other than Real Estate loans which represents
approximately 64% of the portfolio.

OREO totalled $1,202,000 at September 30, 1996 ($1,745,000 at
December 31, 1995).  OREO at September 30, 1996 consisted of a 12
lot subdivision with an appraised value in excess of the Bank's
carrying value.  The Company is actively marketing the property.
<PAGE>
Nonperforming loans and other real estate owned are summarized
below:
<PAGE> 9

                           September 30, 1996   December 31, 1995
Nonperforming loans:
  Past due 90 days or more      $     -          $     -   
  Nonaccrual                          -                -   
    
    Total                             -                -   

Other real estate owned          1,202,000        1,745,000

Total nonperforming loans and
  other real estate owned       $1,202,000       $1,745,000
                                ==========       ==========

Management is of the opinion that the allowance for credit losses
is maintained at an adequate level for known and currently
anticipated future risks inherent in the loan portfolio. 
However, the Bank's loan portfolio, which includes approximately
$28,000,000 in real estate loans representing approximately 64%
of the portfolio, could be adversely affected if California
economic conditions and the real estate market in the Bank's
market area were to weaken.  The effect of such events, although
uncertain at this time, could result in an increase in the level
of nonperforming loans and OREO and the level of the allowance
for loan losses which could adversely affect the Company's and
the Bank's future growth and profitability.

NONINTEREST INCOME

Other income consists of service charges on deposit accounts,
income from assets acquired for lease and fees for other
miscellaneous services.  Total other income decreased from
$182,000 in the third quarter of 1995 to $88,000 in the third
quarter of 1996.  This decrease is primarily attributable to a
gain on sale of OREO of $55,000 realized in the third quarter of
1995 and a decrease in rental income on OREO property.

NONINTEREST EXPENSES

Other expenses decreased from $793,000 in the third quarter of
1995 to $735,000 in the third quarter of 1996.  This decrease is
primarily attributable to a decrease in legal expense and OREO
expense.  As a percentage of average earning assets, other
expenses for the third quarter, on an annualized basis, decreased
from 4.0% in 1995 to 2.9% in 1996. 

<PAGE> 10

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

An analysis of the results of operations of the Company for the
nine month period ended September 30, 1996 compared to the
comparable period in 1995 is as follows:

NET INTEREST INCOME

Net interest income, the difference between interest earned on
loans and investments and interest paid on deposits, is the
principal component of the Bank's earnings.  The components of
net interest income are as follows:
<TABLE>
<CAPTION>
                                Nine months ended September 30,

                               1996                        1995           
                      Average           Average  Average           Average
                      Balance  Interest Yield(1) Balance  Interest Yield(1)
                                (In thousands, except percentages)    
<S>                  <C>        <C>    <C>      <C>        <C>    <C>
Assets:                                  
Earning assets:
  Loans (2)           $39,495    $3,151 10.6%    $33,596    $2,801 11.1%
  Investment 
    securities         40,751     1,982  6.5%     37,689     1,814  6.4%
  Federal funds sold   13,239       518  5.2%      5,022       215  5.7%
  Total interest
    earning assets     93,485     5,651  8.1%     76,307     4,830  8.4%
Cash and due from 
  banks                 4,094                      3,631
Other assets (3)        4,007                      5,315
                     $101,586                    $85,253
                      =======                    =======
Liabilities and 
  Shareholders'
  Equity:
Interest-bearing 
  liabilities:
  Demand deposits    $ 30,756       748  3.2%    $28,534       644  3.0%
  Time deposits        28,505     1,234  5.8%     26,789     1,178  5.9%
  Other borrowings     12,557       603  6.4%      3,981       228  7.6%
  Total interest-
    bearing
    liabilities        71,818     2,585  4.8%     59,304     2,050  4.6%
Demand deposits        17,678                     14,930
Other liabilities         852                        906
Total liabilities      90,348                     75,140
Shareholders' equity   11,238                     10,113
                     $101,586                    $85,253
                     ========                    =======

Net interest income and margin   $3,066  4.4%               $2,780  4.9%
                                 ======                     ======
</TABLE>
(1)  Annualized.
(2)  Loan interest income included loan fee income of $268,000
     and $245,000 for the nine months ended September 30, 1996
     and 1995, respectively.
(3)  Includes the average allowance for loan losses of $730,000
     and $768,000, and deferred loan fees of $309,000 and 
     $232,000 for the nine months ended September 30, 1996 and   
     1995, respectively. 
<PAGE> 11
PROVISION FOR CREDIT LOSSES

During the first nine months of 1996, the Bank reversed $50,000
from the allowance for credit losses.  During the first nine
months of 1995, the Bank did not record a provision for credit
losses. There were $38,000 in loans charged off and $32,000 in
recoveries for the nine months ending September 30, 1996,
compared to $45,000 charged off and $73,000 in recoveries for the
first nine months of 1995.

NONINTEREST INCOME

Other income consists of service charges on deposit accounts,
income on assets acquired for lease and fees for other
miscellaneous services.  Total other income decreased from
$505,000 in the first nine months of 1995 to $239,000 in the
first nine months of 1996. The decrease is primarily attributable
to a gain on sale of securities of $42,000 and a gain on sale of
OREO of $55,000 realized during 1995 and a decrease in rental
income on OREO property of $78,000.

NONINTEREST EXPENSES

Other expenses decreased from $2,316,000 in the first nine months
of 1995 to $2,184,000 in the first nine months of 1996.  The
decrease is primarily attributable to a decrease in OREO expense,
legal expense and FDIC insurance expense.  As a percentage of
average earning assets, other expenses, on an annualized basis,
decreased from 4.0% in 1995 to 3.1% in 1996.

<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES

The Bank manages its liquidity to provide adequate funds at an
acceptable cost to support borrowing requirements and deposit
flows of its customers.  At September 30, 1996 liquid assets as a
percentage of deposits were 37% (48% at December 31, 1995).  In
addition to cash and due from banks, liquid assets include short-
term time deposits with other banks, Federal funds sold and
investment securities available for sale.  The Bank has $10.0
million in Federal funds lines of credit available with
correspondent banks to meet liquidity needs.

Management regularly reviews general economic and financial
conditions, both external and internal, and determines whether
the positions taken with respect to liquidity and interest rate
sensitivity continue to be appropriate.  The Bank also utilizes a
monthly "Gap" report which identifies rate sensitivity over the
short- and long-term.

The following table sets forth the distribution of repricing
opportunities, based on contractual terms, of the Company's
earning assets and interest-bearing liabilities at September 30,
1996, the interest rate sensitivity gap (i.e. interest rate
sensitive assets less interest rate sensitive liabilities), the
cumulative interest rate sensitivity gap, the interest rate
sensitivity gap ratio (i.e. interest rate sensitive assets
divided by interest rate sensitive liabilities) and the
cumulative interest rate sensitivity gap ratio.

Based on the contractual terms of its assets and liabilities, the
Bank is currently liability sensitive in terms of its short-term
exposure to interest rates.  In other words, the Bank's
liabilities reprice faster than its assets in the short-term.

<PAGE> 13
DISTRIBUTION OF REPRICING OPPORTUNITIES
At September 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
                         After Three  After Six   After One
                Within   Months But   Months But  Year But    After 
                Three    Within Six   Within One    Within    Five 
                Months     Months        Year     Five Years  Years      Total 

<S>            <C>       <C>        <C>           <C>        <C>      <C>  
Federal funds 
  sold          $20,500   $   -       $   -        $   -      $   -    $20,500
Interest 
  bearing
  deposits in
  other banks       200       -           -            -          -        200
Municipal 
  securities        -         -           230        2,616        536    3,382
U.S. Treasury 
  and agency                                                   
  securities      2,912       -           591        9,733     17,788   31,024 
FRB stock           -         -           -            -        2,688    2,688
Loans            24,100     2,893       1,783        6,142     10,115   45,033 


Total earning 
  assets        $47,712   $ 2,893     $ 2,604      $18,491    $31,127 $102,827


Interest
  bearing demand
  deposits      $32,017   $   -       $   -        $  -       $   -    $32,017 
Savings 
  accounts        4,426       -           -           -           -      4,426 
Time 
  certificates 
  of deposit
  of $100,000
  or more         4,970     1,701       3,127        2,737        -     12,535 
Other time 
  deposits        4,630     3,233       4,605        4,178        -     16,646
Other 
  borrowings        -         -           -          4,872      9,190   14,062
                    
Total interest-
  bearing
  liabilities   $46,043    $4,934     $ 7,732      $11,787     $9,190  $79,686 


Interest rate
  sensitivity 
  gap           $ 1,669   $(2,041)    $(5,128)     $ 6,704    $21,937  $23,141 
                =======   =======     =======      =======    =======  ======= 

Cumulative
  interest rate
  sensitivity
  gap           $ 1,669   $  (372)    $(5,500)    $ 1,204     $23,141
                =======   =======     =======     =======     =======
Interest rate
  sensitivity 
  gap ratio       1.04%     0.59%       0.34%       1.57%       N/A

Cumulative 
  interest rate
  sensitivity
  gap ratio       1.04%     0.99%       0.91%       1.02%      1.29%
</TABLE>

<PAGE> 14
The Company and the Bank are subject to capital adequacy
guidelines issued by the Board of Governors of the Federal
Reserve System (the "BGFRS") and the Office of the Comptroller of
the Currency ("OCC"). The Company and the Bank are required to
maintain total capital equal to at least 8% of assets and
commitments to extend credit, weighted by risk, of which at least
4% must consist primarily of common equity including retained
earnings (Tier 1 capital) and the remainder may consist of
subordinated debt, cumulative preferred stock or a limited amount
of loan loss reserves.  Certain assets and commitments to extend
credit present less risk than others and will be assigned to
lower risk-weighted categories requiring less capital allocation
than the 8% total ratio.  For example, cash and government
securities are assigned to a 0% risk-weighted category, most home
mortgage loans are assigned to a 50% risk-weighted category
requiring a 4% capital allocation and commercial loans are
assigned to a 100% risk-weighted category requiring an 8% capital
allocation.  As of September 30, 1996, the Company's total risk-
based capital ratio was approximately 20.1% (approximately 19.3%
for the Bank) compared to approximately 22.0% (approximately
21.7% for the Bank) at December 31, 1995.

The BGFRS adopted a 3% minimum leverage ratio for banking
organizations as a supplement to the risk-weighted capital
guidelines.  The minimum leverage ratio is intended to limit the
ability of banking  organizations to leverage their equity
capital base by increasing assets and liabilities without
increasing capital proportionately.  The 3% minimum leverage
ratio constitutes a minimum ratio for well-run banking
organizations.   Organizations experiencing or anticipating
significant growth or failing to meet certain BGFRS standards
will be required to maintain a minimum leverage ratio ranging
from 100 to 200 basis points in excess of the 3% ratio.  

The following table reflects the Company's leverage, Tier 1 and
total risk-based capital ratios for the quarter ended September
30, 1996 and the year ended December 31, 1995.

                            September 30, 1996  December 31, 1995
Leverage ratio                        10.5%             11.7%
Tier 1 capital ratio                  18.9%             20.8% 
Total risk-based capital ratio        20.1%             22.0%

On December 19, 1991, the President signed the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA").  The
FDICIA, among other matters, substantially revised banking
regulations and established a framework for determination of
capital adequacy of financial institutions.  Under the FDICIA,
financial institutions are placed into one of five capital
adequacy catagories as follows: (1) "Well capitalized" -
consisting of institutions with a total risk-based capital ratio
of 10% or greater, a Tier 1 risk-based capital ratio of 6% or

<PAGE> 15
greater and a leverage ratio of 5% or greater, and the
institution is not subject to an order, written agreement,
capital directive or prompt corrective action directive; (2)
"Adequately capitalized" - consisting of institutions with a
total risk-based capital ratio of 8% or greater, a Tier 1 risk-
based capital ratio of 4% or greater and a leverage ratio of 4%
or greater, and the institution does not meet the definition of a
"well capitalized" institution; (3) "Undercapitalized" -
consisting of institutions with a total risk-based capital ratio
less than 8%, a Tier 1 risk-based capital ratio of less than 4%,
or a leverage ratio of less than 4%; (4) "Significantly
undercapitalized" - consisting of institutions with a total risk-
based capital ratio of less than 6%, a Tier 1 risk-based capital
ratio of less than 3%, or a leverage ratio of less than 3%; (5)
"Critically undercapitalized" - consisting of an institution with
a ratio of tangible equity to total assets that is equal to or
less than 2%.

Financial institutions classified as undercapitalized or below
are subject to various limitations including, among other
matters, certain supervisory actions by bank regulatory
authorities and restrictions related to (i) growth of assets,
(ii) payment of interest on subordinated indebtedness, (iii)
payment of dividends or other capital distributions, and (iv)
payment of management fees to a parent holding company.  The
FDICIA requires bank regulatory authorities to initiate
corrective action regarding financial institutions which fail to
meet minimum capital requirements.  Such action may result in
orders to, among other matters, augment capital and reduce total
assets.  Critically undercapitalized financial institutions may
also be subject to appointment of a receiver or implementation of
a capitalization plan.

OTHER MATTERS

From time to time, the Company's Board of Directors reviews and
consults with advisors, including investment banking, accounting
and legal advisors, regarding banking industry trends and
developments, as well as internal and external opportunities to
maximize shareholder value.  Such reviews and consultations
include evaluating and comparing internal results of operations
projections and external opportunities for mergers, acquisitions,
reorganizations, or other transactions with third parties which
may be in the interests of the Company's shareholders.  The
Company's Board of Directors considers such periodic review and
consultation to be important as part of their analysis of the
Company's value and prospects in the changing banking environment
and in view of the current consolidation activity within the
banking industry.
<PAGE> 16
                   PART II - OTHER INFORMATION

Item 1. Legal Proceedings

          Not applicable

Item 2. Changes in Securities
          
          Not applicable

Item 3. Defaults upon Senior Securities

          Not applicable

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

          Not applicable

Item 5. Other Information

          Not applicable

Item 6. Exhibits and Reports on Form 8-K

(a)  (3)  Exhibits

   
            (3.1) Articles of Incorporation, as amended,
                  are incorporated by reference herein to
                  Exhibit 3.1 of Registrant's Annual Report
                  on Form 10-K for the fiscal year ended
                  December 31, 1988, as filed with the 
                  Securities and Exchange Commission on 
                  March 27, 1989.

            (3.2) By-laws, as amended, are incorporated by
                  reference herein to Exhibit 3.2 of
                  Registant's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993, as
                  filed with the Securities and Exchange 
                  Commission on March 29, 1994.                       

           (27.1) Financial Data Schedule

<PAGE> 17      
                           SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.


                               SARATOGA BANCORP


                               MARY PAGE ROURKE
Date: November 8, 1996       -------------------------
                               Mary Page Rourke, Treasurer
                               (Principal Financial and 
                               Accounting Officer) 

<PAGE> 18                               
                        INDEX TO EXHIBITS

                                             Sequentially
                                               Numbered
Number                   Exhibits                Page

 27.1          Financial Data Schedule             19