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 June 30, 1997 or

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

For the transition period from _________ to __________

Commission file number            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 JULY 28, 1997
   Common Stock                     1,059,144

                     Exhibit Index at 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>
     
                               June 30,       December 31,
                                       1997             1996*   
                                   (Unaudited)
<S>                               <C>              <C>
ASSETS
Cash and due from banks            $ 4,352,000      $ 4,543,000
Federal funds sold                   7,200,000       18,300,000
Total cash and equivalents          11,552,000       22,843,000

Securities available for sale       19,075,000       17,949,000
Securities held to maturity         36,095,000       24,111,000
Loans, net                          52,653,000       52,033,000
Other real estate owned                   -           1,252,000
Premises and equipment               2,070,000        2,135,000
Other assets                         1,775,000        1,461,000
                                  
TOTAL ASSETS                      $123,220,000     $121,784,000
                                  ============     ============
LIABILITIES
Deposits:
  Non-interest bearing            $ 21,873,000     $ 22,823,000
  Interest bearing                  64,508,000       66,621,000
Total deposits                      86,381,000       89,444,000
Federal funds purchased                 -             1,500,000
Other borrowings                    23,094,000       18,201,000
Accrued expenses and 
  other liabilities                  1,174,000          687,000

TOTAL LIABILITIES                  110,649,000      109,832,000
                                  
SHAREHOLDERS' EQUITY
Common stock, no par value;
 Authorized: 20,000,000 shares;    
 Issued and outstanding:
 1,059,144 and 1,036,392 shares      4,509,000        4,461,000
Retained earnings                    8,215,000        7,717,000
Net unrealized loss on investments
 available for sale                   (153,000)        (226,000)  
                                    
TOTAL SHAREHOLDERS' EQUITY          12,571,000       11,952,000
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY            $123,220,000     $121,784,000
                                  ============     ============
</TABLE>


*Derived from the December 31, 1996 audited balance sheet included
in the Company's 1996 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       Six Months Ended
                                  June 30,                June 30,
                              1997        1996        1997        1996 
INTEREST INCOME:
<S>                       <C>         <C>         <C>         <C>
  Loans                    $1,331,000  $  989,000  $2,634,000  $1,972,000
  Investment securities       853,000     724,000   1,445,000   1,327,000
  Federal funds sold          107,000     131,000     331,000     286,000
Total interest income       2,291,000   1,844,000   4,410,000   3,585,000
 
INTEREST EXPENSE:    
  Deposits                    697,000     650,000   1,428,000   1,268,000
  Other                       358,000     189,000     638,000     385,000

Total interest expense      1,055,000     839,000   2,066,000   1,653,000

NET INTEREST INCOME BEFORE
 CREDIT FOR CREDIT LOSSES   1,236,000   1,005,000   2,344,000   1,932,000  
Credit for credit
 losses                          -            -          -        (50,000)

Net interest income after 
  credit for credit losses  1,236,000   1,005,000   2,344,000   1,982,000
Other income                  111,000      81,000     233,000     151,000
Other expenses                824,000     727,000   1,604,000   1,449,000

INCOME BEFORE INCOME TAXES    523,000     359,000     973,000     684,000
Provision for income taxes    199,000     137,000     370,000     260,000

NET INCOME                 $  324,000  $  222,000  $  603,000  $  424,000
                           ==========  ==========  ==========  ==========

NET INCOME PER COMMON
  AND EQUIVALENT SHARE     $     0.27 $      0.20  $     0.51  $     0.38
                           ==========  ==========  ==========  ==========

</TABLE>

See notes to consolidated condensed financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
                       SARATOGA BANCORP AND SUBSIDIARY
        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

                                                    Six Months Ended
                                                        June 30,
                                                   1997           1996   
<S>                                           <C>           <C>
OPERATIONS:
 Net income                                    $   603,000   $   424,000
 
 Adjustments to reconcile net income to
   net cash provided by (used in)operating
   activities:
   Credit for credit losses                           -          (50,000)
   Depreciation and amortization                    89,000        84,000
   Other, net                                      253,000      (544,000)   
      
Net cash provided by (used in)operating
   activities                                      945,000       (86,000)

INVESTING ACTIVITIES:
   Proceeds from sale of investments 
    available for sale                           8,084,000          -   
   Proceeds from maturities of investments
    available for sale                           1,434,000     4,794,000
   Proceeds from maturities of investments
    held to maturity                             1,571,000     1,787,000 
   Purchase of securities available for sale   (10,814,000)   (9,838,000)
   Purchase of securities held to maturity     (13,450,000)   (3,986,000)
   Net increase in loans                          (620,000)   (1,854,000)
   Purchases of premises and equipment             (24,000)     (328,000)
   Sale of premises and equipment                     -           50,000
   Proceeds from sale of OREO                    1,311,000       652,000 

Net cash used in investing activities          (12,509,000)   (8,723,000)

FINANCING ACTIVITIES:
  Net (decrease) increase in deposits           (3,063,000)    6,550,000 
  Exercise of stock options                         48,000          -
  Payment of dividends                            (105,000)      (77,000)
  Increase in other borrowings                   4,893,000     1,362,000
  Decrease in federal funds purchased           (1,500,000)   (1,500,000)

Net cash provided by financing activities          273,000     6,335,000
                                              
NET DECREASE IN CASH AND EQUIVALENTS           (11,291,000)   (2,474,000) 
Cash and equivalents, beginning of period       22,843,000    22,939,000

Cash and equivalents, end of period            $11,552,000   $20,465,000
                                               ===========   ===========

</TABLE>
See notes to consolidated condensed financial statements.
<PAGE> 5
                 SARATOGA BANCORP AND SUBSIDIARY
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

             QUARTERS ENDED JUNE 30, 1997 AND 1996
 
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 1,048,447 shares and 1,042,453 shares for the three
and six month periods ended June 30, 1997 (1,113,064 shares for
the comparable three and six month periods in 1996).  In February
1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128).  Earlier application is not permitted.

SFAS 128 replaces current EPS reporting requirements and requires
a dual presentation of basic and diluted EPS.  Basic EPS excludes
dilution and is computed by dividing net income by the weighted
average common shares outstanding for the period.  Diluted EPS
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted
into common stock.

If SFAS 128 had been in effect during the current and prior year
periods, basic EPS would have been $0.31 and $0.58 for the three
and six month periods ended June 30, 1997, respectively ($0.22
and $0.41 for the comparable prior year periods).  Diluted EPS
under SFAS 128 would not have been significantly different than
EPS currently reported for the periods.


3. During the six months ended June 30, 1997 and 1996, cash paid
for income taxes was $155,000 and $367,000, respectively.  For
the six months ended June 30, 1997 and 1996, cash paid for
interest was $2,056,000 and $1,263,000, respectively.

<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 June 30, 1997, total assets were $123,220,000, a 1.2% increase
from $121,784,000 at December 31, 1996.  Net loans increased
$620,000 (1.2%) from $52,033,000 at December 31, 1996 to
$52,653,000 at June 30, 1997.  Total deposits decreased
$3,063,000 (3.4%) from $89,444,000 at December 31, 1996 to
$86,381,000 at June 30, 1997.  

Net income for the second quarter of 1997 was $324,000 or $.27
per share compared to $222,000 or $.20 per share for the
comparable period in 1996.  Net income for the first six months
of 1997 was $603,000 or $.51 per share compared to $424,000 or
$.39 per share for the comparable period in 1996.

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



RESULTS OF OPERATIONS



SECOND QUARTER OF 1997 AND 1996


Certain matters discussed or incorporated by reference in this
Quarterly Report on Form 10-Q are forward-looking statements that
are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.  Such risks
and uncertainties include, but are not limited to, matters
described in Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."  Therefore, the
information set forth therein should be carefully considered when
evaluating the business prospects of the Company and the Bank.

An analysis of the results of operations of the Company for the
second quarter of 1997 compared to the second quarter of 1996 is
presented below:
<PAGE>
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:
<PAGE> 6
<TABLE>
<CAPTION>
                                 Three months ended June 30,

                               1997                        1996           
                      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)          $ 53,224    $1,331 10.0%   $ 37,651    $ 989  10.5%
  Investment 
    securities         54,419       853  6.3      44,795      724   6.5 
  Federal funds sold    7,340       107  5.8      10,152      131   5.2 
  Total interest
    earning assets    114,983     2,291  8.0      92,598    1,844   8.0 
Cash and due from 
  banks                 4,697                      4,257
Other assets (3)        3,993                      3,977
                     $123,673                   $100,832
                     ========                   ========
Liabilities and 
  Shareholders'
  Equity:
Interest-bearing 
  liabilities: 
  Demand deposits    $ 37,173       315  3.4    $ 30,197       265  3.5  
  Time deposits        28,981       382  5.3      28,281       385  5.4 
  Other borrowings     22,694       358  6.3      11,537       189  6.6  
  Total interest-
    bearing
    liabilities        88,848     1,055  4.7      70,015       839  4.7 
Demand deposits        21,448                     18,768
Other liabilities       1,054                        777
Total liabilities     111,350                     89,560
Shareholders' equity   12,323                     11,272
                     $123,673                   $100,832
                      =======                    =======

Net interest income and margin   $1,236  4.3%               $1,005  4.3%
                                 ======                     ======
</TABLE>
(1)  Annualized.
(2)  Loan interest income includes loan fee income of $83,000 and
     $78,000 for the quarters ended June 30, 1997 and 1996,
     respectively.
(3)  Net of the average allowance for loan losses of $625,000 and
     $714,000 and deferred loan fees of $330,000 and $289,000
     for the quarters ended June 30, 1997 and 1996, 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 second quarter of 1997 and 1996 the Bank did not record a  
provision for credit losses. There were $5,000 in loans charged-
off and $10,000 in recoveries in the second quarter of 1997, as
compared to $9,000 in loans charged-off and $12,000 in recoveries
in the second quarter of 1996.  
  
At June 30, 1997, the allowance for credit losses was $625,000 or
1.2% of total loans, compared to $628,000 or 1.2% at December 31,
1996.  There were no nonaccrual loans at June 30, 1997 or
December 31, 1996.

At June 30, 1997 and December 31, 1996, there were no loans past
due 90 days or more as to principal or interest and still
accruing interest.  There was one loan at June 30, 1997 in the
amount of $106,000 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 June 30, 1997, there were four potential
problem loans having a combined principal balance of $757,000
($1,140,000 at December 31, 1996).  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 June 30, 1997, there was no Other Real Estate Owned
("OREO")($1,252,000 at December 31, 1996).

<PAGE> 9
Nonperforming loans and other real estate owned are summarized
below:
                               June 30, 1997   December 31, 1996
Nonperforming loans:
  Past due 90 days or more      $     -          $     -   
  Nonaccrual                          -                -   
    
    Total                             -                -   

Other real estate owned               -           1,252,000

Total nonperforming loans and
  other real estate owned       $     -          $1,252,000
                                ==========       ==========

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
$32,000,000 in real estate loans representing approximately 61%
of the portfolio, could be adversely affected if California
economic conditions and the real estate market in the Bank's
market area continue to weaken.  The effect of such events 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 increased from
$81,000 in the second quarter of 1996 to $111,000 in the second
quarter of 1997.  This increase is primarily attributable to a
gain on sale of OREO of $7,000, an increase in rental income on
assets acquired for lease of $12,000 and an increase of $19,000
in service charges assessed on deposit accounts.

NONINTEREST EXPENSES

Other expenses increased from $727,000 in the second quarter of
1996 to $824,000 in the second quarter of 1997.  The increase is
primarily attributable to a loss on sale of securities of $35,000
and an increase in salary expense of $16,000 and in advertising and 
public relations expenses of $29,000.  As a percentage of average earning
assets, other expenses for the second quarter, on an annualized basis,
decreased from 3.1% in 1996 to 2.9% in 1997.  

<PAGE> 10
SIX MONTHS ENDED JUNE 30, 1997 AND 1996

An analysis of the results of operations of the Company for the
six month period ended June 30, 1997 compared to the comparable
period in 1996 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>
                                 Six months ended June 30,

                               1997                        1996           
                      Average           Average  Average           Average
                      Balance  Interest Yield(1) Balance  Interest Yield(1)
                                (In thousands, except percentages)     
Assets:                                   (Unaudited)
<S>                 <C>         <C>     <C>     <C>        <C>    <C>
Earning assets:
  Loans (2)          $ 53,138    $2,634  9.9%    $37,599    $1,972 10.5%
  Investment 
    securities         48,024     1,445  6.0      41,365     1,327  6.4 
  Federal funds sold   12,529       331  5.3      11,016       286  5.2 
  Total interest
    earning assets    113,691     4,410  7.8      89,980     3,585  8.0 
Cash and due from 
  banks                 4,573                      4,097
Other assets (3)        3,999                      4,107
                     $122,263                    $98,184
                     ========                    =======
Liabilities and 
  Shareholders'
  Equity:
Interest-bearing 
  liabilities:
  Demand deposits    $ 37,095       626  3.4     $29,072       467  3.2 
  Time deposits        30,340       802  5.3      27,789       801  5.8 
  Other borrowings     20,459       638  6.2      11,816       385  6.5 
  Total interest-
    bearing
    liabilities        87,875     2,066  4.7      68,677     1,653  4.8 
Demand deposits        21,249                     17,529
Other liabilities         927                        827
Total liabilities     110,050                     87,033 
Shareholders' equity   12,193                     11,151
                     $122,263                    $98,184
                     ========                    =======

Net interest income and margin   $2,344  4.1%               $1,932  4.3%
                                 ======                     ======
</TABLE>
(1)  Annualized.
(2)  Loan interest income includes loan fee income of $166,000
     and $146,000 for the six months ended June 30, 1997 and
     1996, respectively.
(3)  Net of the average allowance for loan losses of $624,000 and
     $738,000, and deferred loan fees of $325,000 and $292,000
     for the six months ended June 30, 1997 and 1996, 
     respectively. 

<PAGE> 11
PROVISION FOR CREDIT LOSSES

During the first six months of 1997, the Bank did not provide any
additional funds to the provision for credit losses.  During the
first six months of 1996, the Bank reversed $50,000 from the
allowance for credit losses.  There were $23,000 in loans charged
off and $20,000 in recoveries for the six months ended June 30,
1997, compared to $33,000 in loans charged off and $23,000 in
recoveries for the first six months of 1996.

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 increased from
$151,000 in 1996 to $233,000 in 1997. The increase is primarily
attributable to an increase in service charges assessed on
deposit accounts of $51,000, a gain on sale of loans of $12,000
and a gain on sale of OREO of $7,000.

NONINTEREST EXPENSES

Other expenses have increased from $1,449,000 in 1996 to
$1,604,000 in 1997 due primarily to a loss on sale of securities
of $35,000 and an increase in salary expense of $62,000 and legal
expenses of $35,000.  As a percentage of average earning assets,
other expenses, on an annualized basis, decreased from 3.2% in
1996 to 2.8% in 1997.

<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 June 30, 1997 liquid assets as a
percentage of deposits were 35% (46% at December 31, 1996).  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 $11.0
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 June 30, 1997,
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 exposure to
interest rates through the next five years.  In other words, the
Bank's liabilities reprice faster than its assets in the short-term.

<PAGE> 13
DISTRIBUTION OF REPRICING OPPORTUNITIES
At June 30, 1997
(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   $ 7,200       -           -            -          -    $ 7,200
Municipal 
securities       405       -      $    200      $ 2,009    $ 2,651    5,265  
U.S. Treasury
 and agency                                             
  securities   3,347       -         2,993       17,765     21,485   45,590 
FRB stock       -          -          -            -         4,315    4,315
Loans         29,250     1,188       2,943        7,858     12,398   53,637  

Total
 earning
 assets      $40,202   $ 1,188    $  6,136      $27,632    $40,849  116,007  

Interest
 bearing
 demand
 accounts    $33,240       -           -           -           -     33,240  
Savings
 accounts      4,257       -           -           -           -      4,257  
Time 
certificates
 of deposit 
 of $100,000
 or more       6,809   $ 1,800    $  2,140     $ 2,169         -     12,918 
Other time 
 deposits      3,487     4,275       4,076       2,255         -     14,093
Other 
 borrowings     -         -          5,000       7,082     $11,012   23,094
                    
Total interest
 -bearing
 liabilities $47,793   $ 6,075    $ 11,216     $11,506     $11,012   87,602  

Interest rate
  sensitivity
  gap        $(7,591)  $(4,887)   $ (5,080)    $16,126     $29,837   $28,405    
             =======   =======    ========     =======     =======   =======  
Cumulative
 interest rate
 sensitivity
 gap         $(7,591) $(12,478)   $(17,558)    $(1,432)    $28,405
             =======   =======     ========    =======     =======
Interest rate
  sensitivity
  gap ratio    0.84%     0.20%       0.55%       2.40%       N/A

Cumulative
 interest rate
 sensitivity
 gap ratio     0.84%     0.77%       0.73%       0.98%      1.32%
</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 June 30, 1997, the Company's total risk-based
capital ratio was approximately 19.6% (approximately 18.6% for
the Bank) compared to approximately 18.0% (approximately 17.1%
for the Bank) at December 31, 1996.

The BGFRS and the OCC 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 June 30,
1997 and the year ended December 31, 1996.

                                 June 30, 1997  December 31, 1996
Leverage ratio                        10.3%             10.5%
Tier 1 capital ratio                  18.7%             17.1% 
Total risk-based capital ratio        19.6%             18.0%

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 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 

         The shareholders of Saratoga Bancorp took the following  
         action at the Annual Meeting of Shareholders held on May 
         22, 1997 at the Company's main office located at
         12000 Saratoga-Sunnyvale Road, Saratoga, California:

     
     1.  Approved the election of management's slate of nominees  
         for directors, each of whom were incumbent directors, as 
         follows:
                                            Votes
                                    For             Withheld

         Victor Aboukhater       605,907              None
         Robert G. Egan          605,907              None 
         William D. Kron         605,907              None 
         John F. Lynch, III      605,907              None 
         V. Ronald Mancuso       605,907              None 
         Richard L. Mount        605,907              None  
   
     2.  Ratified appointment of Deloitte & Touche LLP as
         independent auditors of the Company for the fiscal
         year ending December 31, 1997.

                                    VOTES 
         FOR                       768,449
          
         AGAINST                    23,838

         ABSTAIN                    30,447

<PAGE> 17
Item 5.  Other Information

           Not applicable

Item 6.  Exhibits and Reports on Form 8-K

        (a)  (3)  Exhibits

                (27.1) Financial Data Schedules
         
        (b)       Reports on Form 8-K

                    On May 28, 1997, Registrant filed a Current
                    Report on Form 8-K, dated May 28, 1997
                    reporting under Item 5 (Other Events)
                    detailing actions taken at the Annual Meeting
                    of Shareholders of Registrant held on May 22,
                    1997.  See Item 4 herein for additional  
                    information.


                            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


                               Richard L. Mount
Date: July 29, 1997           -------------------------
                               Richard L. Mount, President
                              (Principal Executive Officer)

<PAGE> 18
                        INDEX TO EXHIBITS

                                             Sequentially
                                               Numbered
Number                   Exhibits                Page

 27.1          Financial Data Schedule             19