FORM 10-QSB


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended December 31, 1996

                                       OR

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

For the transition period from ______________ to _______________

Commission file number 0-27910

                                 Washington Bancorp
         (Exact name of small business issuer as specified in its charter)

             Iowa                                   42-1446740
(State or other jurisdiction of                 (I.R.S. Employer
incorporation or organization)                 Identification No.)

                  102 East Main Street, Washington, Iowa 52353
               (Address of principal executive offices)(Zip Code)

        Registrant's telephone number, including area code: (319)653-7256

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  act of 1934 during the past 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 has been subject to such filing requirements since
March 11, 1996.

State the number of shares  outstanding of each of the issuers classes of common
equity, as of the latest practicable date.

Common Stock, $.01 par value 657,519 shares outstanding as to February 7, 1997

Transitional Small Business Disclosure Format (check one): Yes[ ] No[X]
<PAGE>







                                      INDEX


Part I.  Financial Information

         Item 1. Consolidated Financial Statements

               Consolidated  Statements  of Financial  Condition at December 31,
               1996 (unaudited) and June 30, 1996

               Unaudited Consolidated  Statements of Income for the three months
               ended  December  31,  1996 and 1995 and for the six months  ended
               December 31, 1996 and 1995

               Unaudited  Consolidated  Statements  of  Cash  Flows  for the six
               months ended December 31, 1996 and 1995

               Notes to Consolidated Financial Statements

         Item 2. Management's Discussion and Analysis

Part II. Other Information

          Items 1 through 6

          Signatures






<PAGE>






                        Washington Bancorp and Subsidiary
                 Consolidated Statements of Financial Condition

<TABLE>

                                                                 December 31,     June 30,
                                                                    1996            1996*
                                                                 ------------   -------------
<S>                                                              <C>            <C>  

ASSETS                                                                   (unaudited)
Cash and cash equivalents:
         Interest-bearing....................................    $ 4,103,137    $  1,109,583
         Noninterest-bearing ................................        296,624         793,769
                                                                 -----------    ------------
                                                                   4,399,761       1,903,352
Investment securities, available for sale ...................     11,193,327      14,628,089
Loans receivable, net .......................................     47,523,117      42,905,699
Accrued interest receivable .................................        525,196         465,789
Federal Home Loan Bank stock ................................        433,200         369,100
Premises and equipment, net .................................        529,477         543,606
Foreclosed real estate ......................................         29,174            --
Other assets ................................................         28,092          75,308
                                                                 -----------    ------------
         Total assets........................................    $64,661,344    $ 60,890,943
                                                                 ===========    ============
LIABILITIES
Deposits ....................................................    $45,648,023    $ 44,176,448
Borrowed funds ..............................................      7,654,227       5,504,742
Advance from borrowers for
         taxes and insurance ................................        179,963         218,506
Accrued expenses and other liabilities ......................        501,323         443,082
                                                                 -----------    ------------
         Total liabilities ..................................     53,983,536      50,342,778
                                                                 -----------    ------------
STOCKHOLDERS' EQUITY Common stock:
         Common stock .......................................          6,575           6,575
         Additional paid-in capital .........................      6,180,292       6,172,680
Retained earnings ...........................................      5,010,050       4,941,449
Unrealized (loss) on investment securities,
         available for sale, net of income taxes ............        (36,459)        (68,209)
Unearned shares,
         employee stock ownership plan ......................       (482,650)       (504,330)
                                                                 -----------    ------------
         Total stockholders' equity .........................     10,677,808      10,548,165
                                                                 -----------    ------------
         Total liabilities and
           stockholders' equity..............................    $64,661,344    $ 60,890,943
                                                                 ===========    ============
</TABLE>
*Condensed from audited financial statements

See Notes to Consolidated Financial Statements
<PAGE>



                        Washington Bancorp and Subsidiary
                   Unaudited Consolidated Statements of Income

<TABLE>

                                                                       Three Months                 Six Months
                                                                     Ended December 31,          Ended December 31,
                                                                     1996          1995          1996          1995
                                                                  ------------------------    ------------------------
<S>                                                               <C>           <C>           <C>           <C>
Interest income:
         Loans receivable:
             First mortgage loans ............................    $  867,905    $  735,510    $1,684,667    $1,470,137
         Consumer and other loans ............................       156,382       116,331       294,049       221,198
         Investment securities:
                  Taxable ....................................       235,065       171,424       467,440       349,747
                  Nontaxable .................................         5,433        19,547        10,867        34,814
                                                                  ----------    ----------    ----------    ----------
                  Total interest income ......................     1,264,785     1,042,812     2,457,023     2,075,896
                                                                  ----------    ----------    ----------    ----------
Interest expense:
         Deposits ............................................       552,349       569,581     1,104,851     1,132,812
         Borrowed funds ......................................        88,727        95,694       163,201       169,995
                                                                  ----------    ----------    ----------    ----------
                  Total interest expense .....................       641,076       665,275     1,268,052     1,302,807
                                                                  ----------    ----------    ----------    ----------
                  Net interest income ........................       623,710       377,537     1,188,971       773,089

Provision for loan loss ......................................         3,000         6,000         6,000         9,000
                                                                  ----------    ----------    ----------    ----------
                  Net interest income after
                    provision for loan loss ..................       620,710       371,537     1,182,971       764,089
                                                                  ----------    ----------    ----------    ----------
Noninterest income:
         Security gains, net .................................          --          18,907           388        18,907
         Loan origination - commitment fees ..................           903         4,845         2,116
         Service charges and fees ............................        26,373        18,879        57,353        30,777
         Insurance commissions ...............................        34,116        18,890        47,511        26,437
         Other ...............................................         9,642         1,378        19,207         2,833
                                                                  ----------    ----------    ----------    ----------
                  Total noninterest income ...................        72,725        58,957       129,304        81,070
                                                                  ----------    ----------    ----------    ----------
Noninterest expense:
         Compensation and benefits ...........................       199,853       135,693       359,566       279,341
         Occupancy and equipment .............................        36,857        46,571        71,905        78,693
         SAIF deposit insurance premium.......................        30,435        28,039       357,153        57,187
         Data processing .....................................        23,901        17,226        37,561        42,329
         Other ...............................................        97,649        64,643       228,158       113,629
                                                                  ----------    ----------    ----------    ----------
                  Total noninterest expense ..................       388,695       292,172     1,054,343       571,179
                                                                  ----------    ----------    ----------    ----------
                  Income before income taxes .................       304,740       138,322       257,932       273,980
Income tax expense ...........................................       109,991        45,258        92,545        92,183
                                                                  ----------    ----------    ----------    ----------
                  Net income .................................    $  194,749    $   93,064    $  165,387    $  181,797
                                                                  ==========    ==========    ==========    ==========

Earnings per common share
         subsequent to conversion                                 $     0.32          n/a     $     0.27           n/a
                                                                  ==========    =========     ==========    ==========

Dividends per common share                                        $     0.10          n/a     $     0.18           n/a
                                                                  ==========    =========     ==========    ==========

Weighted average common shares                                       608,712          n/a        608,170           n/a
                                                                  ==========    =========     ==========    ===========

</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>




                        Washington Bancorp and Subsidiary
                 Unaudited Consolidated Statements of Cash Flows
<TABLE>

                                                                       Six Months
                                                                   Ended December 31,

                                                                  1996           1995
                                                              -------------------------
<S>                                                           <C>            <C> 
Cash Flows from Operating Activities
         Net income .......................................   $   165,387    $   181,797
         Adjustments to reconcile net income to net cash
         provided by operating activities:
         Amortization of premiums and
              discounts on debt securities ................        36,392         57,065
         Provision for loan loss ..........................         6,000          9,000
         (Gain) on sale of investment securities ..........          (388)       (18,907)
         (Gain) on sale of foreclosed real estate .........       (13,585)          --

         Depreciation .....................................        28,285         45,196
         ESOP contribution expense ........................        29,292           --
         Deferred income taxes ............................       (16,798)        16,347
         (Increase)decrease in accrued
                  interest receivable .....................       (59,407)        23,260
         (Increase)decrease in other assets ...............        47,216       (152,944)
         Increase(decrease) in accrued expenses
                  and other liabilities ...................        55,988        (18,984)
                                                              -----------    -----------
         Net cash provided by operating activities ........       278,382        141,830
                                                              -----------    -----------
Cash Flows from Investing Activities
  Held to maturity securities:
         Maturities and calls .............................          --          166,988

  Available for sale securities:
         Sales ............................................           911      2,904,617
         Maturities and calls .............................     8,593,648      1,143,374
         Purchases ........................................    (5,145,000)          --
  Loans made to customers, net ............................    (4,639,007)      (708,607)

  Purchase of FHLB Stock ..................................        (7,200)       (64,100)
  Purchase of premises and equipment ......................       (14,156)       (14,921)
                                                              -----------    -----------
         Net cash provided by(used in) investing activities    (1,267,704)     3,484,251
                                                              -----------    -----------
</TABLE>
<PAGE>




                        Washington Bancorp and Subsidiary
           Unaudited Consolidated Statements of Cash Flows (Continued)
<TABLE>

                                                                                              Six Months
                                                                                          Ended December 31,
                                                                                     ---------------------------
                                                                                         1996            1995
                                                                                     ---------------------------
<S>                                                                                  <C>             <C>
Cash Flows From Financing Activities
         Net increase in deposits................................................    $ 1,471,575     $ 1,602,093
         Proceeds from Federal Home Loan Bank advances...........................     41,900,000      14,820,000
         Principal payments on
                  Federal Home Loan Bank advances ...............................    (39,750,514)    (18,996,834)
         Net(decrease) in advances from borrowers for
                  taxes and insurance ...........................................        (38,543)         (2,190)
         Payment of cash dividends ..............................................        (96,787)           --
                                                                                    ------------    ------------
                  Net cash provided by(used in)
                           financing activities .................................      3,485,731      (2,576,931)
                                                                                    ------------    ------------

                  Net increase in cash
                           and cash equivalents .................................      2,496,409       1,049,150

Cash and cash equivalents:
         Beginning ..............................................................      1,903,352       1,658,043
                                                                                    ------------    ------------

         Ending .................................................................   $  2,707,193    $  4,339,761
                                                                                    ============    ============


Supplemental Disclosures of Cash Flow Information
         Cash payments for:
                  Interest paid to depositors....................................   $    872,644    $    900,605
                  Interest paid on other obligations ............................        163,201         169,995
                  Income taxes, net of refunds ..................................         78,100         134,400

Supplemental Schedule of Noncash Investing
         and Financing Activities
         Transfer from loans to foreclosed real estate...........................   $    106,289    $       --
         Contract sales of foreclosed real estate ...............................         90,700            --

</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>



                        Washington Bancorp and Subsidiary

                   Notes to Consolidated Financial Statements


Basis of presentation.  Interim Financial Information (unaudited): The financial
statements  and notes related  thereto for the three month periods and six month
periods ended December 31, 1996 and 1995,  are unaudited,  but in the opinion of
management  include  all  adjustments,   consisting  only  of  normal  recurring
adjustments,  necessary for a fair  presentation  of the financial  position and
results of  operations.  The operating  results for the interim  periods are not
indicative of the operating  results to be expected for a full year or for other
interim periods.  Not all disclosures  required by generally accepted accounting
principles  necessary  for a complete  presentation  have been  included.  It is
recommended that these consolidated  condensed  financial  statements be read in
conjunction  with the Annual  Report on Form  10-KSB for the year ended June 30,
1996 and all related amendments and exhibits (including all financial statements
and notes  therein),  filed by the  Company  with the  Securities  and  Exchange
Commission.

Principles of consolidation.  The accompanying consolidated financial statements
include  the  accounts of  Washington  Bancorp("Washington"  or the  "Company"),
Washington  Federal Savings Bank(the  "Bank"),  and its wholly-owned  subsidiary
Washington  Financial  Services,  Inc., which is a discount  brokerage firm. All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Organization.  On March 11, 1996,  Washington  Bancorp  sold  604,917  shares of
common stock at $10.00 per share and simultaneously  invested $3,089,356 for all
the  outstanding   common  shares  of  Washington  Federal  Savings  Bank  in  a
transaction accounted for like a pooling of interests.

Prior to March 11, 1996, the Bank was a federally chartered mutual savings bank.
After a  reorganization,  effective  March 11, 1996, the Bank became a federally
chartered  stock  savings  bank and 100% of the Bank's  common stock is owned by
Washington Bancorp.

Recapture of Bad Debt Reserves.  Prior to the enactment,  on August 20, 1996, of
the Small  Business Job  Protection  Act of 1996 (the "1996  Act"),  for federal
income tax purposes,  thrift  institutions  such as the Bank,  which met certain
definitional  tests  primarily  relating to their assets and the nature of their
business,  were  permitted to establish  tax reserves for bad debt,  and to make
annual additions thereto,  which additions could, within specified  limitations,
be deducted  in arriving at their  taxable  income.  The Bank's  deduction  with
respect to  "qualifying  loans,"  which are  generally  loans secured by certain
interests  in real  property,  could  be  computed  using an  amount  based on a
six-year moving average of the Bank's actual loss  experience  (the  "Experience
Method"),  or a percentage  equal to 8% of the Bank's  taxable income ( the "PTI
Method"),  computed  without  regard  to  this  deduction  and  with  additional
modifications  and  reduced  by the  amount  of any  permitted  addition  to the
non-qualifying reserve.

Under the 1996 Act, the PTI Method was repealed and the Bank will be required to
use the  Experience  Method of  computing  additions to its bad debt reserve for
taxable years  beginning with the Banks taxable year beginning  January 1, 1996.
In  addition,  the Bank will be required to recapture  (i.e.,  take into income)
over a six-year period, beginning with the Bank's taxable year beginning January
1, 1996,  the excess of the  balance of its bad debt  reserves  (other  than the
supplemental  reserve)  as of  December  31,  1995 over the  greater  of (a) the
balance of such reserves as of December 31, 1987 (or over a lesser amount if the
Bank's portfolio  decreased since December 31, 1987) or (b) an amount that would
have been the  balance of such  reserves  as of  December  31, 1995 had the Bank
always  computed the additions to its reserves using the six-year moving average
Experience Method. However, under the 1996 Act, such recapture requirements will
be suspended for each of the two successive  taxable years beginning  January 1,
1996 in which the Bank originates a minimum amount of certain  residential loans
during such years that is not less than the average of the principal  amounts of
such loans made by the Bank during its six taxable  years  preceding  January 1,
1996. This  legislation will result in the Bank's recapture of reserves with the
aggregate tax liability of  approximately  $156,000.  Since the Bank has already
provided a deferred income tax liability of this amount for financial  reporting
purposes,  there will be no adverse impact to the Bank's financial  condition or
results of operations from the enactment of this legislation.
<PAGE>



Deposit  Insurance  Funds Act of 1996.  In response to the  SAIF/BIF  assessment
disparity, the Deposit Insurance Funds Act of 1996 (the "Funds Act") was enacted
into law on  September  30,  1996.  The Funds Act amended  the  Federal  Deposit
Insurance Act (the "FDIA") in several ways to  recapitalize  the SAIF and reduce
the disparity in the  assessment  rates for the BIF and the SAIF.  The Funds Act
authorized  the FDIC to impose a special  assessment  on all  institutions  with
SAIF-assessable  deposits in the amount  necessary to recapitalize  the SAIF. As
implemented  by the FDIC,  institutions  with  SAIF-assessable  deposits  paid a
special assessment,  subject to adjustment,  of 65.7 basis points on the Savings
Association Insurance Fund (SAIF) deposits held as of March 31, 1995. Washington
Federal Savings Bank's assessment totalled $294,310. The Funds Act provides that
the amount of special  assessment  will be  deductible  for  federal  income tax
purposes for the taxable year in which the special assessment is paid.

The  SAIF-assessable  base for the fourth quarter of 1996 was assessed at a rate
of 23 to 31  basis  points  as  part of the  regular  annual  deposit  insurance
assessment.  In view of the  recapitalization  of the SAIF,  the FDIC proposed a
reduction of the assessment  rate for the  SAIF-assessable  deposits for periods
beginning  October  1,  1996.  Overpayment  of the  fourth  quarter  assessments
totalling  $5,806 was  refunded  or credited  using  regular  quarterly  payment
procedures. Beginning January 1, 1997 the SAIF-assessable base will range from 0
to 27 basis points, the same risk-based assessment as BIF members. The Funds Act
expanded the base of the payments on the bonds (the "FICO bonds")  issued in the
late 1980s by the Financing  Corporation to recapitalize the now defunct Federal
Savings and Loan Insurance Corporation to include the deposits of both SAIF- and
BIF-insured deposits beginning January 1, 1997. Until December 31, 1999, or such
earlier date on which the last savings  association ceases to exist, the rate of
assessment for BIF-assessable  deposits will be one-fifth of the rate imposed on
SAIF-assessable  deposits.  The anticipated FICO assessments of 6.4 basis points
on SAIF members and 1.3 basis points on BIF members will be added to the regular
assessment.

The Funds Act also  provides  for the  merger of the SAIF and BIF on  January 1,
1999,  with such merger  being  conditioned  upon the prior  elimination  of the
thrift charter.  The Secretary of the Treasury is required to conduct a study of
relevant  factors with respect to the  development  of a common  charter for all
insured depository institutions and abolition of separate charters for banks and
thrifts and to report the  Secretary's  conclusions and findings to the Congress
on or before March 31, 1997.

Earnings per common  share.  The earnings per common share amounts were computed
using the  weighted  average  number of shares  outstanding  during the  periods
presented.  In accordance  with Statement of Position 93-6,  shares owned by the
ESOP that have not been committed to be released are not considered  outstanding
for the purpose of computing earnings per share.  Earnings per share information
for the three months ended  December 31, 1996 and six months ended  December 31,
1996 is  calculated  by dividing  net income by the weighted  average  number of
shares  outstanding.  Earnings per share is not  applicable for the three months
ended  December 31, 1995 nor the six months ended  December 31, 1995 because the
Bank was a mutual association at that time.
<PAGE>



Regulatory capital  requirements.  Pursuant to the Financial Information Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"),  savings institutions must meet
three  separate  minimum  capital-to-asset  requirements.  The  following  table
summarizes,  as of December 31, 1996 the capital  requirements of the Bank under
FIRREA  and its  actual  capital  ratios.  As of  December  31,  1996  the  Bank
substantially exceeded all current regulatory capital requirement standards.


                                             At December 31,  1996
                                             ---------------------
                                             Amount       Percent
                                             ------       --------
                                            (Dollars in thousands)
                                                 (unaudited)

Tangible Capital:
         Capital Level ..............        $8,251         12.8%
         Requirement ................           970         1.5%
                                             ------         ----
         Excess .....................        $7,281         11.3%
                                             ======         ====

Core Capital:
         Capital Level ..............        $8,251         12.8%
         Requirement ................         1,941          3.0%
                                             ------         ----
         Excess .....................        $6,158          9.8%
                                             ======         ====

Risk-Based Capital:
         Capital Level ..............        $8,447         21.1%
         Requirement ................         3,195          8.0%
                                             ------         ----
         Excess .....................        $5,252         13.1%
                                             ======         ====

<PAGE>




                         Part I - Financial Information

Item 2.  Management's Discussion and Analysis

General

         Washington   Bancorp   ("Washington"  or  the  "Company")  is  an  Iowa
corporation  which was organized in October 1995 by Washington  Federal  Savings
Bank ("Washington  Federal" or the "Bank") for the purpose of becoming a savings
and loan holding company.  Washington  Federal is a federally  chartered savings
bank headquartered in Washington,  Iowa.  Originally chartered in 1934, the Bank
converted to a federal  savings bank in 1994. Its deposits are insured up to the
applicable limits by the Federal Deposit Insurance Corporation ("FDIC").

         In March 1996,  the Bank  converted  to the stock form of  organization
through the sale and issuance of its common stock to the Company.  The principal
asset of the  Company is the  outstanding  stock of the Bank,  its  wholly-owned
subsidiary.  The Company  presently has no separate  operations and its business
consists  primarily of the business of the Bank.  All references to the Company,
unless otherwise indicated at or before March 11, 1996 refer to the Bank.

         Washington  attracts  deposits  from the  general  public  in its local
market area and uses such  deposits  primarily to invest in one- to  four-family
residential  loans  secured by owner  occupied  properties  and  non-residential
properties,  as well as construction  loans on such properties.  Washington also
makes commercial loans,  consumer loans,  automobile loans, and has occasionally
been a purchaser of fixed-rate mortgage-backed securities.

         In anticipation of possible federal legislation that may inhibit future
branching  opportunities  for savings  associations,  Washington  Federal  filed
applications with the Office of Thrift  Supervision  ("OTS") on October 20, 1995
for three branch offices.  These  applications  have been approved and are valid
through February 1997.  Although management has not made a determination to open
any branch  offices,  the purpose of the  applications  is to possibly  preserve
Washington Federal's branching opportunities. No assurance can be given that the
applications will satisfy the legislation nor that Washington  Federal will open
any branch offices.

         Under the Deposit  Insurance  Funds Act of 1996 the Bank was assessed a
65.7 basis-point,  one-time SAIF fee which totalled  $294,310.  Until October 1,
1996 the Bank was  assessed at a rate of 23 basis points for the  protection  of
FDIC insurance. Effective October 1, 1996 the annual assessment rate was reduced
and a $5,806 credit for the fourth  quarter  overpayment  was applied toward the
first quarter 1997 assessment  billing.  The Bank will be charged an annual SAIF
assessment rate of 6.4 basis points beginning January 1, 1997.

Financial Condition

Total assets.  Total  consolidated  assets have  increased from $60.9 million at
June 30,  1996 to $64.7  million at  December  31,  1996.  This net  increase is
primarily  due an  increase  in net loans  receivable  funded by a  decrease  in
available-for-sale investment securities and an increase in borrowed funds.

Loans receivable. Loans receivable, net increased from $42.9 million at June 30,
1996 to $47.6  million at December 31, 1996.  This  increase is primarily due to
the Bank's  continued  emphasis on serving the mortgage  needs of our customers.
The average  first  mortgage  loan balance rose from $34,510 at June 30, 1996 to
$36,266  at  December  31,  1996.  There  was also a $1.5  million  increase  in
commercial  lending as a result of an active  solicitation  program,  the Bank's
reputation  within  the  community  and  current   commercial  credit  customers
recommending the Bank's services to others.
<PAGE>



Investment  securities.   Available-for-sale  securities  decreased  from  $14.6
million at June 30, 1996 to $11.2 million at December 31, 1996. This decrease is
primarily  due to the  maturity  or call of $8.6  million in  available-for-sale
securities  which  were  partially  used to fund  loan  activity  and  partially
reinvested in available-for-sale securities. The portfolio of available-for-sale
securities  is  comprised  primarily of  investment  securities  carrying  fixed
interest  rates.  The fair  value of these  securities  is subject to changes in
interest rates. The fair value of these securities was less on December 31, 1996
than  their  carrying  value due to an  increase  in  interest  rates  since the
purchase   date  of  the   securities.   Therefore,   the   total   balance   of
available-for-sale  securities  is offset by the gross effect of the  unrealized
loss.

Accrued interest receivable. Accrued interest receivable increased from $466,000
at June 30, 1996 to $525,000 at December 30, 1996. The increase is primarily due
to the increase in loans receivable, net.

Deposits.  Deposits  increased  from  $44.2  million  at June 30,  1996 to $45.6
million at December 31, 1996.  Interest  credited to customer  accounts totalled
$873,000,  while  deposits  exceeded  withdrawals by $527,000.  Transaction  and
savings deposits  increased as a percentage of total deposits from $13.9 million
or 31.4% at June 30, 1996 to $15.0  million or 32.8% at December 31, 1996.  As a
result of the increase in  transaction  and savings  deposits,  certificates  of
deposit  decreased as a percentage of total deposits from 68.6% ($30.3  million)
at June 30, 1996 to 67.2% ($30.7 million) at December 31, 1996.

FHLB Borrowings.  The total principal  balance in advances from the Federal Home
Loan Bank of Des Moines (FHLB)  increased  from $5.5 million at June 30, 1996 to
$7.7  million at  December  31,  1996.  The  increase  is  primarily  due to the
increased need to borrow to fund loan activity.

Advances from borrowers for taxes and  insurance.  The total balance in advances
from borrowers for taxes and insurance  decreased from $219,000 at June 30, 1996
to $180,000 at December  31, 1996.  The decrease is primarily  due to the annual
escrow  analysis on the Bank's  mortgage  loans which was processed in December,
1996.

Total stockholders'  equity.  Total stockholders' equity increased $130,000 when
comparing  December 31, 1996 to June 30, 1996.  The increase is primarily due to
the $165,387 net income for the six months ended December 31, 1996 offset by the
$96,787 cash dividend paid to  shareholders  on August 15, 1996 and November 15,
1996. The increase in equity was also due to the decrease in unearned  shares of
the ESOP and the decrease in unrealized loss on available-for-sale securities.

Results of  Operations - Six Months  Ended  December 31, 1996 As Compared To The
Six Months Ended December 31, 1995

Performance  summary.  Net  earnings  decreased  $17,000 to $165,000 for the six
months ended  December 31, 1996 from $182,000 for the six months ended  December
31, 1995. The decrease is primarily due to the $294,000 one-time SAIF assessment
included in the $483,000  increase in  noninterest  expense.  This was partially
offset by an increase of $381,000  in  interest  income,  a $35,000  decrease in
interest  expense and a $48,000  increase  in  noninterest  income.  For the six
months ended December 31, 1996 the annualized return on average assets was 0.53%
compared  to 0.66%  for the six  months  ended  December  31,  1995,  while  the
annualized  return on average equity was 3.13% for the six months ended December
31, 1996  compared to 8.21% for the six months  ended  December  31,  1995.  The
decrease in the  annualized  return on average  equity is due to the increase in
stockholders' equity from the conversion in March of 1996.

Net interest income.  Net interest income increased $416,000 to $1.2 million for
the six months ended  December  31, 1996 from  $773,000 for the six months ended
December 30, 1995.  The increase is primarily due to the increase of $381,000 in
interest  income to $2.5 million for the six months ended December 31, 1996 from
$2.1  million for the six months  ended  December  31,  1995.  Interest  expense
decreased  $35,000 when  comparing the six months ended December 31, 1996 to the
six months ended December 31, 1995.

For the six months ended December 31, 1996 the average yield on interest-earning
assets was 8.22%  compared to 7.78% for the six months ended  December 31, 1995.
The average cost of  interest-bearing  liabilities  was 5.21% for the six months
ended  December 31, 1996 compared to 5.31% for the six months ended December 31,
1995. The average balance of  interest-earning  assets increased $6.4 million to
$59.7 million for the six months ended  December 31, 1996 from $53.3 million for
the six months ended  December 31,  1995.  During this same period,  the average
balance of interest-bearing  liabilities decreased $344,000 to $48.7 million for
the six months  ended  December  31, 1996 from $49.0  million for the six months
ended December 31, 1995.
<PAGE>





Due to the increase in yield on the interest-earning  assets and the decrease in
rates paid on the interest-bearing liabilities, the average interest rate spread
was 3.01% for the six months ended  December 31, 1996  compared to 2.47% for the
six months ended December 31, 1995. The average net interest margin  (annualized
net  interest  income  divided by total  average  assets)  was 3.79% for the six
months  ended  December  31,  1996  compared  to 2.82% for the six months  ended
December 31, 1995.

Noninterest income. Noninterest income increased $48,000 to $129,000 for the six
months ended  December  31, 1996 from $81,000 for the six months ended  December
31, 1995. The $27,000  increase in service  charges and fees is primarily due to
the increase in overdraft  fees when comparing the six months ended December 31,
1996 to the six months  ended  December  31, 1995 as a result of more  stringent
guidelines on overdrawn accounts.  The $21,000 increase in insurance commissions
to $48,000  for the six months  ended  December  31,  1996 from  $26,000 for the
period  ended  December  31, 1995 is a result of the  increased  sales of credit
insurance  products  on the  loan  portfolio.  The  $17,000  increase  in  other
noninterest income is primarily due to the increase in gains on real estate sold
when  comparing  the six months  ended  December  31,  1996 to six months  ended
December 31, 1995.  There was a $2,000  increase in loan fees when comparing the
six months ended  December 31, 1996 to December 31, 1995.  These  increases were
offset by a decrease  of  $19,000  in gains from the sale of  available-for-sale
securities  when  comparing  the six months  ended  December 31, 1996 to the six
months ended December 31, 1995.

Noninterest expense.  Noninterest expense increased $483,000 to $1.1 million for
the six months ended  December  31, 1996 from  $571,000 for the six months ended
December 31, 1995. The $300,000  increase in SAIF deposit  insurance  premium is
primarily due to the $294,000 one-time SAIF assessment. Compensation and benefit
expense increased $80,000 to $359,000 for the six months ended December 31, 1996
from  $279,000  for the six months  ended  December  31,  1995.  The increase is
compensation  is partially due to a $13,000  increase in fees paid to the credit
insurance  brokers to $29,000 for the six months  ended  December  31, 1996 from
$16,000 for the six months  ended  December  31,  1995 as a result of  increased
credit insurance sales. Also there were normal salary increases and increases in
other employee  benefits  totalling $64,000 which includes a $25,000 expense for
the Recognition and Retention Plan approved on October 15, 1996 at the Company's
annual meeting. Other noninterest expense increased $114,000 to $228,000 for the
six months  ended  December  31,  1996 from  $114,000  for the six months  ended
December 31, 1995 primarily as a result of the increase in operating costs since
the formation of Washington  Bancorp.  Also,  this was partially a result of the
$12,000 increase in cost of real estate sold to $13,000 for the six months ended
December  31, 1996 from $1,000 for the six months ended  December  31, 1995,  as
well as a $9,000  increase in legal  services to $11,000 for the six months from
$1,000 for the six months  ended  December  31,  1995 and a $36,000  increase in
auditing and  accounting  to $38,000 for the six months ended  December 31, 1996
from $2,000 for the six months  ended  December  31, 1995.  The  increases  were
offset by a $7,000  decrease in  occupancy  and  equipment  expense and a $5,000
decrease in data processing expense when comparing the six months ended December
31, 1996 to December 31, 1995.

Results of Operations - Three Months Ended  December 31, 1996 As Compared To The
Three Months Ended December 31, 1995 Performance summary. Net earnings increased
$102,000 to $195,000 for the three  months ended  December 31, 1996 from $93,000
for the three months ended  December 31, 1995.  The increase is primarily due to
the increase of $222,000 in interest  income,  a decrease of $24,000 in interest
expense,  and an increase of $14,000 in noninterest  income.  This was partially
offset by an  increase  of $96,000 in  noninterest  expense  and an  increase of
$65,000 in income tax expense.  For the three months ended December 31, 1996 the
annualized  return on average  assets was 1.22%  compared  to .68% for the three
months ended December 31, 1995,  while the  annualized  return on average equity
was 7.36% for the three months ended December 31, 1996 compared to 8.14% for the
three months ended December 31, 1995.
<PAGE>



Net interest income.  Net interest income increased $246,000 to $624,000 for the
three  months ended  December 31, 1996 from  $378,000 for the three months ended
December 30, 1995.  The increase is primarily due to the increase of $222,000 in
interest  income to $1,265,000 for the three months ended December 31, 1996 from
$1,043,000 for the three months ended December 31, 1995.  Interest  expense fell
$24,000 to $641,000 for the three months ended  December 31, 1996 from  $665,000
for the three months ended December 31, 1995.

For  the  three   months  ended   December   31,  1996  the  average   yield  on
interest-earning  assets was 8.28%  compared to 7.83% for the three months ended
December 31, 1995. The average cost of  interest-bearing  liabilities  was 5.14%
for the three  months ended  December  31, 1996  compared to 5.45% for the three
months ended December 31, 1995. The average balance of  interest-earning  assets
increased  $7.8 million to $61.0 million for the three months ended December 31,
1996 from $53.2  million for the three  months ended  December 31, 1995.  During
this same period, the average balance of interest-bearing  liabilities increased
$1.1 million to $49.9 million for the three months ended  December 31, 1996 from
$48.8 million for the three months ended December 31, 1995.

Due to the increase in yield on the interest-earning  assets and the decrease in
rates paid on the interest-bearing liabilities, the average interest rate spread
was 3.14% for the three months ended December 31, 1996 compared to 2.38% for the
three  months  ended  December  31,  1995.  The  average  net  interest   margin
(annualized  net interest  income divided by total average assets) was 3.92% for
the three months ended  December 31, 1996 compared to 2.77% for the three months
ended December 31, 1995.

Noninterest  income.  Noninterest  income  increased  $14,000 to $73,000 for the
three  months  ended  December  31, 1996 from $59,000 for the three months ended
December 31, 1995. The $7,000  increase in service charges and fees is primarily
due to the  increase in  overdraft  fees when  comparing  the three months ended
December  31, 1996 to the three  months  ended  December 31, 1995 as a result of
more  stringent  guidelines  on  overdrawn  accounts.  The  $15,000  increase in
insurance  commissions  to $34,000 for the three months ended  December 31, 1996
from $19,000 for the period ended December 31, 1995 is a result of the increased
sales of credit  insurance  products on the loan  portfolio.  Other  noninterest
income  increased  $8,000  primarily as a result of an increase in gains on real
estate sold when comparing the three months ended December 31, 1996 to the three
months ended December 31, 1995.  Loan fees  increased  $2,000 when comparing the
three  months ended  December  31, 1996 to the three  months ended  December 31,
1995.  These  increases  were  offset by a decrease of $19,000 in gains from the
sale of  available-for-sale  securities  when  comparing  the three months ended
December 31, 1996 to the three months ended December 31, 1995.

Noninterest  expense.  Noninterest expense increased $96,000 to $388,000 for the
three  months ended  December 31, 1996 from  $292,000 for the three months ended
December  31,  1995.  Compensation  and  benefit  expense  increased  $64,000 to
$200,000  for the three months  ended  December  31, 1996 from  $136,000 for the
three months ended  December 31, 1995.  The increase  represents  normal  salary
increases,  a $9,000  increase in fees paid to the credit  insurance  brokers to
$22,000 for the three months ended  December 31, 1996 from $13,000 for the three
months ended  December  31,  1995,  and  increases  in other  employee  benefits
including the $25,000 expense for the Recognition and Retention Plan approved on
October 15, 1996 at the Company's  annual  meeting.  Other  noninterest  expense
increased  $33,000 to $97,000 for the three months ended  December 31, 1996 from
$64,000 for the three months  ended  December 31, 1995 as a result of the $5,000
increase in cost of real  estate  sold when  comparing  the three  months  ended
December  31, 1996 to the three months  ended  December  31, 1995,  as well as a
$7,000 increase in legal services to $8,000 for the three months from $1,000 for
the three months ended December 31, 1995 and an $8,000  increase in auditing and
accounting  when comparing the three months ended December 31, 1996 to the three
months ended December 31, 1995.

Liquidity  and  capital  resources.  The Bank's  principal  sources of funds are
deposits,  amortization  and prepayment of loan principal,  borrowings,  and the
sale and maturities of investment  securities.  While  scheduled loan repayments
and maturing  investments  are relatively  predictable,  deposit flows and early
loan  repayments  are  more  influenced  by  interest  rates,  general  economic
conditions, and competition, and, most recently, the restructuring of the thrift
industry.  The Bank generally  manages the pricing of its deposits to maintain a
steady  deposit  balance,  but has from time to time  decided not to pay deposit
rates  that are as high as  those of its  competition,  and when  necessary,  to
supplement deposits with alternative sources of funds.
<PAGE>



Federal  regulations  historically  have  required the Bank to maintain  minimum
levels of liquid  assets.  The required  percentage has varied from time to time
based upon  economic  conditions  and savings  flows and is  currently 5% of net
withdrawable  savings deposits and borrowings payable upon demand or in one year
or less during the proceeding  calendar month.  Liquid assets for the purpose of
this ratio include cash,  certain time  deposits,  U.S.  Government,  government
agency,  and  corporate  securities  and  other  obligations   generally  having
remaining  maturities  of less  than  five  years.  The  Bank  has  historically
maintained  its  liquidity  ratio at  levels in  excess  of those  required.  At
December 31, 1996, the Bank's liquidity ratio was 9.91%.

Liquidity management is both a daily and long-term responsibility of management.
The Bank  adjusts  its  investments  in liquid  assets  based upon  management's
assessment  of (i) expected  loan demand,  (ii) expected  deposit  flows,  (iii)
yields  available on  interest-bearing  deposits,  and (iv) the objective of its
asset/liability  management  program.  Excess liquidity is invested generally in
interest-bearing  overnight deposits and other short-term  government and agency
obligations.  If the Bank  requires  funds  beyond its ability to generate  them
internally, it has additional borrowing capacity with the FHLB of Des Moines and
collateral eligible for reverse repurchase agreements.

The Bank  anticipates  that it will  have  sufficient  funds  available  to meet
current  loan  commitments.  At  December  31,  1996,  the Bank had  outstanding
commitments to extend credit which amounted to $1,535,250.




<PAGE>




                           Part II - Other Information


Item 1.  Legal Proceedings.

                  None

Item 2.  Changes in Securities.

                  None

Item 3.  Defaults Upon Senior Securities.

                  None

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

                  None

Item 5.  Other Information.

         At  December  31,  1996 the ESOP held  52,602  shares of the  Company's
common  stock,  4,337 of which were  released for  allocation  and the remaining
48,265 were  unreleased  (unearned)  shares.  The 48,265  unreleased  (unearned)
shares had a fair market value of approximately $615,379 at December 31, 1996.

Item 6.  Exhibits and Reports on Form 8-K

                  (a)     Exhibits (listed by numbers corresponding to
                          the Exhibit Table of Item 601 on Regulation S-B)

                          11       Computation of Earnings Per Share

                          27       Financial Data Schedule

                  (b)     Reports on Form 8-K

                  No reports in Form 8-K have been filed  during the quarter for
                  which this report was filed.


<PAGE>








                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                         Washington Bancorp
            (Registrant)

Date February 7, 1997           /s/ Stan Carlson
     ----------------           ---------------------------------
                                Stan Carlson, President and Chief
                                Executive Officer

Date February 7, 1997           /s/ Leisha A. Linge
     ----------------           ---------------------------------
                                Leisha A. Linge, Controller