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 September 30, 1998
                                       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 0-25076

                               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.

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 598,006 shares outstanding as to November 12, 1998

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


<PAGE>




                                      INDEX

Part I.  Financial Information

         Item 1.  Consolidated Financial Statements

                  Consolidated Balance Sheets at September 30,
                  1998 (unaudited) and June 30, 1998

                  Unaudited Consolidated Statements of Income for the
                  three months ended September 30, 1998 and 1997

                  Unaudited Consolidated Statements of Comprehensive  
                  Income for the three months ended September 30, 
                  1998 and 1997

                  Unaudited Consolidated Statements of Cash Flows 
                  for the three months ended September 30, 1998 and 1997

                  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>

                                                                  September 30, 
                                                                       1998           June 30,
                                                                   (Unaudited)          1998  
                                                                  -------------    -------------
<S>                                                               <C>              <C>  
Assets Cash and cash equivalents:
                Interest-bearing ..............................   $   1,261,380    $   1,858,527
                Noninterest-bearing ...........................       1,108,096        1,447,847
                                                                  -------------    ------------- 
                                                                      2,369,476        3,306,374
Investment securities
                Held-to-maturity securities ...................       1,130,766        1,131,478
                Available-for-sale securities .................      22,516,624       19,122,283
Federal funds sold ............................................       1,534,260          659,497
Loans receivable, net .........................................      68,901,979       65,884,941
Accrued interest receivable ...................................       1,200,393          959,664
Federal Home Loan Bank stock ..................................         860,000          812,400
Premises and equipment, net ...................................         814,628          799,806
Foreclosed real estate ........................................         100,079             --
Goodwill ......................................................       1,351,447        1,375,087
Other assets ..................................................         268,970          275,416
                                                                  -------------    -------------
                    Total assets ..............................   $ 101,048,623    $  94,326,945
                                                                  =============    =============

Liabilities
Deposits ......................................................   $  73,265,973    $  66,595,476
Borrowed funds ................................................      16,333,836       15,724,071
Advance payments from borrowers for
    taxes and insurance .......................................         116,353          221,911
Accrued expenses and other liabilities ........................         662,728          660,492
                                                                  -------------    ------------- 
                    Total liabilities .........................      90,378,890       83,201,950
                                                                  -------------    -------------
Redeemable common stock held by Employee
                Stock Ownership Plan (ESOP) ...................         148,907          153,788
                                                                  -------------    -------------
Stockholders' Equity
Common stock:
                Common stock ..................................           6,511            6,511
                Additional paid-in capital ....................       6,131,174        6,122,664
Retained earnings .............................................       5,943,340        5,825,363
Accumulated other comprehensive income, unrealized
    gain (loss) on securities available for sale, net .........          71,964             (507) 
Less:
Cost of common shares acquired for treasury ...................        (985,069)        (300,944)
Deferred compensation .........................................         (85,493)        (104,962)
Maximum cash obligation related to ESOP shares ................        (148,907)        (153,788)
Unearned ESOP shares ..........................................        (412,695)        (423,130)
                                                                  -------------    -------------
                    Total stockholders' equity ................      10,520,825       10,971,207
                                                                  -------------    -------------
                    Total liabilities and
                      stockholders' equity ....................   $ 101,048,623    $  94,326,945
                                                                  =============    =============
</TABLE>
See Notes to Consolidated Financial Statements 
<PAGE>


Washington Bancorp and Subsidiaries
Unaudited Consolidated Statements of Income
Three months ended September 30, 1998 and 1997
<TABLE>

                                                                              1998          1997
                                                                            ----------   ----------
<S>                                                                         <C>          <C>   
Interest income:
     Loans receivable:
         First mortgage loans ...........................................   $1,017,251   $  876,027
         Consumer and other loans .......................................      479,159      263,518
     Investment securities:
         Taxable ........................................................      308,491      139,864
         Non-taxable ....................................................       19,644        5,313
                                                                            ----------   ----------
             Total interest income ......................................    1,824,544    1,284,722
                                                                            ----------   ----------
Interest expense:
     Deposits ...........................................................      801,132      548,677
     Borrowed funds .....................................................      228,776      132,830
                                                                            ----------   ----------
             Total interest expense .....................................    1,029,908      681,507
                                                                            ----------   ----------
             Net interest income ........................................      794,636      603,215
Provision for loan losses ...............................................       22,000       25,000
                                                                            ----------   ----------
             Net interest income after
               provision for loan losses ................................      772,636      578,215
                                                                            ----------   ----------
Noninterest income:
     Loan origination and commitment fees ...............................          600        2,525
     Service charges and fees ...........................................       85,522       39,262
     Insurance commisions ...............................................        7,479        8,892
     Other ..............................................................          985        1,454
                                                                            ----------   ----------
             Total noninterest income ...................................       94,586       52,133
                                                                            ----------   ----------
Noninterest expense:
     Compensation and benefits ..........................................      290,491      206,751
     Occupancy and equipment ............................................       53,464       38,144
     SAIF/BIF deposit insurance premium .................................       14,196       12,176
     Data processing ....................................................       23,136       21,259
     Other ..............................................................      150,710       91,007
                                                                            ----------   ----------
             Total noninterest expense ..................................      531,998      369,337
                                                                            ----------   ----------
             Income before income taxes .................................      335,224      261,011
Income tax expense ......................................................      140,061      103,791
                                                                            ----------   ----------
             Net income .................................................   $  195,163   $  157,220
                                                                            ==========   ==========

Earnings per common share
     Basic ..............................................................   $     0.34   $     0.26
                                                                            ==========   ==========
     Diluted ............................................................   $     0.33   $     0.25
                                                                            ==========   ==========
Weighted average common shares for:
     Basic earnings per share ...........................................      574,072      605,283
     Diluted earnings per share .........................................      590,800      621,123

Dividends per common share ..............................................   $     0.12   $     0.10
                                                                            ==========   ==========
</TABLE>

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



Washington Bancorp and Subsidiaries
Unaudited  Consolidated  Statements of  Comprehensive  Income 
Three months ended September 30, 1998 and 1997
<TABLE>

                                                                                   1998         1997
                                                                                 ---------    ---------
<S>                                                                              <C>          <C> 
Net income ...................................................................   $ 195,163    $ 157,220
Gross unrealized gains (losses) on
     securities available for sale ...........................................     115,953       22,423
Less reclassification adjustments for
     gains included in net income ............................................          --           --
Income tax expense related to items
     of other comprehensive income ...........................................     (43,482)      (8,409)
                                                                                 ---------    ---------
Comprehensive income .........................................................   $ 267,634    $ 171,234
                                                                                 =========    =========
</TABLE>
<PAGE>

Washington Bancorp and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
Three months ended September 30, 1998 and 1997

<TABLE>
                                                                       1998           1997
                                                                   ------------    ------------
<S>                                                                <C>             <C> 
Cash Flows from Operating Activities
        Net income ..............................................   $    195,163    $    157,220
        Adjustments to reconcile net income to
               net cash provided by operating activities:
               Amortization of premiums and discounts
                 on debt securities ............................          1,964           2,360
               Amortization of goodwill ........................         23,640            --
               Provision for loan losses .......................         22,000          25,000
               Depreciation ....................................         13,878          15,704
               Compensation under stock awards .................         19,469          25,785
               ESOP contribution expense .......................         18,945          15,939
               (Increase) in accrued interest receivable .......       (240,730)       (112,193)
               (Increase)decrease in other assets ..............          6,446          (3,703)
               Increase(decrease) in accrued expenses
                 and other liabilities .........................        (41,246)         28,232
                                                                   ------------    ------------
                       Net cash provided by operating activities         19,529         154,344
                                                                   ------------    ------------
Cash Flows from Investing Activities
        Available for sale securities:
               Sales ...........................................             --              --
               Maturities and calls ............................      6,320,359       2,600,000
               Purchases .......................................     (9,600,000)        (50,000)
        Federal funds sold, net ................................       (874,763)             --
        Purchase of Federal Home Loan Bank stock ...............        (47,600)        (29,500)
        Loans made to customers, net ...........................     (3,139,117)     (2,184,195)
        Purchase of premises and equipment .....................        (28,700)         (5,179)
                                                                   ------------    ------------
                       Net cash (used in) investing activities .     (7,369,821)        331,126
                                                                   ------------    ------------

Cash Flows from Financing Activities
        Net increase in deposits ...............................      6,670,497       1,528,985
        Proceeds from Federal Home Loan Bank advances ..........      6,510,900      22,200,000
        Principal payments on Federal Home Loan Bank advances ..     (5,901,136)    (22,526,984)
        Net increase (decrease) in advances from borrowers
               for taxes and insurance .........................       (105,558)       (116,349)
        Acquisition of common stock ............................       (684,125)             --
        Dividends paid .........................................        (77,184)        (64,270)
                                                                   ------------    ------------
                       Net cash provided by financing activities      6,413,394       1,021,382
                                                                   ------------    ------------
                       Net increase(decrease) in cash and cash
                            equivalents ........................       (936,898)      1,506,852

Cash and cash equivalents:
                       Beginning ...............................      3,306,374         807,805
                                                                   ------------    ------------
                       Ending ..................................   $  2,369,476    $  2,314,657
                                                                   ============    ============

Supplemental Disclosures of Cash Flow Information
        Cash payments for:
               Interest paid to depositors .....................   $    799,151    $    541,942
               Interest paid on other obligations ..............        228,776         132,830
               Income taxes, net of refunds ....................        169,100          62,700

Supplemental Schedule of Noncash Investing
        and Financing Activities
        Transfers from loans to foreclosed
               real estate .....................................   $    100,079    $         --
        Contract sales of foreclosed real estate ...............             --              --
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>



Washington Bancorp and Subsidiary
Notes to Consolidated Financial Statements



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

Basis of presentation.  Interim Financial Information (unaudited): The financial
statements and notes related  thereto for the three month period ended September
30,  1998,  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,  1998 and all related
amendments and exhibits (including all financial  statements and notes therein),
filed by the Company with the Securities and Exchange Commission.

Goodwill.  Goodwill  resulting from the Company's  acquisition of Rubio is being
amortized by the  straight-line  method over 15 years.  Goodwill is periodically
reviewed for impairment based upon an assessment of future  operations to ensure
that it is appropriately valued.

Foreclosed real estate. Real estate properties acquired through loan foreclosure
are initially recorded at the lower of cost or fair value less estimated selling
expenses  ate  the  date of  foreclosure.  Costs  relating  to  development  and
improvement  of property  are  capitalized,  whereas  costs  relating to holding
property are expensed.

Earnings per common share.  In 1997, the Financial  Accounting  Standards  Board
issued Statement No. 128,  "Earnings Per Share."  Statement No. 128 replaced the
calculation  of  primary  and fully  diluted  earnings  per share with basic and
diluted earnings per share. Basic per-share amounts are computed by dividing net
income by the  weighted-average  number of common  shares  outstanding.  Diluted
per-share  amounts assume the conversion,  exercise or issuance of all potential
common stock  instruments  unless the effect is to reduce a loss or increase the
income per common share from continuing operations. 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. The Company  initially  applied  Statement No. 128 for the year ended
June 30, 1998 and has restated all per share  information for the prior years to
conform to Statement No. 128.

Unearned ESOP shares and expense.  The  receivable  from the Company=s  ESOP has
been treated as a reduction of equity. This amount is reduced as the ESOP shares
are allocated. Compensation expense for the ESOP is based upon the fair value of
shares allocated to participants.

Stock  awards.  Expense  for  common  stock to be  issued  under  the  Company=s
recognition and retention plan is based upon the fair value of the shares at the
date of grant, allocated over the period of vesting.

Redeemable  common stock held by ESOP.  The  Company=s  maximum cash  obligation
related to these shares is classified outside  stockholders=  equity because the
shares are not  readily  traded and could be put to the  Company  for cash.  The
maximum cash obligation represents the approximate market value of the allocated
ESOP shares at the end of the reporting period.

Comprehensive  Income. In 1997, the Financial  Accounting Standards Board issued
Statement  No.  130,  "Reporting   Comprehensive   Income."  Statement  No.  130
establishes  standards for reporting and display of comprehensive income and its
components   (revenue,   expenses,   gains,   and  losses)  in  a  full  set  of
general-purpose  financial  statements.  The Company initially applied Statement
No. 130 for the three  months  ended  September  30, 1998 and the  statement  of
comprehensive income has been added to the accompanying financial statements.
<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 September  30, 1998 the capital  requirements  of  Washington
Federal  under FIRREA and its actual  capital  ratios.  As of September 30, 1998
Washington  Federal  substantially   exceeded  all  current  regulatory  capital
requirement standards.

                                                         At September 30, 1998
                                                         ----------------------
                                                         Amount         Percent
                                                         ------         -------
                                                         (Dollars in thousands)
                                                               (unaudited)
Tangible Capital:
         Capital Level .......................           $6,813          8.85%
         Requirement .........................            1,154          1.50%
                                                         ------          -----
         Excess ..............................           $5,659          7.35%

Core Capital:
         Capital Level .......................           $6,813          8.85%
         Requirement .........................            3,078          4.00%
                                                         ------          -----
         Excess ..............................           $3,735          4.85%


Risk-Based Capital:
         Capital Level .......................           $7,108         12.82%
         Requirement .........................            4,436          8.00%
                                                         ------          -----
         Excess ..............................           $2,672          4.82%

The following table summarizes the capital requirements of Rubio Savings Bank of
Brighton.  As of  September  30, 1998 Rubio  substantially  exceeded all current
regulatory capital requirement standards.

                                                         At September 30, 1998
                                                         ----------------------
                                                         Amount         Percent
                                                         ------         -------
                                                         (Dollars in thousands)
                                                               (unaudited)
Tier 1 or Leverage Capital:
         Capital Level .........................          $2,588         11.27%
         Requirement ...........................             689          3.00%
                                                          ------         -----
         Excess ................................          $1,899          8.27%


Tier 1 Risk-based Capital:
         Capital Level .........................          $2,588         22.90%
         Requirement ...........................             452          4.00%
                                                          ------         -----
         Excess ................................          $2,136         18.90%


Risk-Based Capital:
         Capital Level .........................          $2,687         23.78%
         Requirement ...........................             904          8.00%
                                                          ------         -----
         Excess ................................          $1,783         15.78%


Financial Information
<PAGE>


Item 2.  Management's Discussion and Analysis

Forward-Looking Statements

         When used in this Form 10-QSB or future filings by the Company with the
Securities  and Exchange  Commission,  in the Company=s  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases Awill likely
result,@ Aare  expected  to,@ Awill  continue,@  Ais  anticipated,@  Aestimate,@
Aproject,@   Abelieve@   or  similar   expressions   are  intended  to  identify
Aforward-looking  statements@  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995.  The  Company  wishes to caution  readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and to advise readers that various factors, including regional
and national  economic  conditions , changes in levels of market interest rates,
credit risks of lending  activities,  and  competitive  and regulatory  factors,
could affect the Company=s  financial  performance and could cause the Company=s
actual results for future periods to differ materially from those anticipated or
projected.

         The  Company  does  not  undertake,   and  specifically  disclaims  any
obligations,  to revise any forward-looking statements to reflect the occurrence
of anticipated or unanticipated  events or circumstances  after the date of such
statements.

Impact of the Year 2000

         The Banks  have  conducted  a  comprehensive  review of their  computer
systems to  identify  applications  that could be  affected  by the "Year  2000"
issue,  and have developed  implementation  plans to address the issue.  Rubio's
data processing in performed by an in-house  system.  Washington  Federal's data
processing  is  out-sourced.  The Banks have  already  contacted  each vendor to
request time table for Year 2000  compliance and expected  costs,  if any, to be
passed  along to the Banks.  To date,  the Banks have been  informed  that their
primary  service  providers  anticipate that all  reprogramming  efforts will be
completed by December 31, 1998,  allowing the Banks  adequate  time for testing.
Testing on the  Washington  Federal's  data  processing  system was performed on
November 8, 1998.  Testing on Rubio's data  processing  system was  performed on
October 12, 1998. The testing was successful for the Banks with few applications
requiring  additional  attention.  Management  does  not  expect  the  costs  of
preparing  for the Year 2000 to have a  significant  impact  on their  financial
position or results of operations,  however,  there can be no assurance that the
vendors systems will by Year 2000 compliant,  consequently the Banks could incur
incremental  costs to  convert  to another  vendor.  The Banks  have  identified
certain of their  hardware  and  software  equipment  that will not be Year 2000
compliant and have already  purchased  new  equipment and software.  The capital
expenditures to date were  approximately  $91,000 and are not expected to exceed
$100,000.

General

         Washington   Bancorp   ("Washington"  or  the  "Company")  is  an  Iowa
corporation  which was organized in October 1995 by Washington  Federal  Savings
Bank  ("Washington  Federal")  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,  Washington
Federal 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,  Washington  Federal  converted  to the  stock  form of
organization  through the sale and  issuance of its common stock to the Company.
On June 24, 1997,  Washington  entered into a merger  agreement to acquire Rubio
Savings Bank of Brighton, Iowa ("Rubio"). Rubio is held as a separate subsidiary
of Washington.  In January 1998,  Washington  became a bank holding company upon
the completion of its acquisition of Rubio.  The principal assets of the Company
are  Washington  Federal  and Rubio  (collectively,  the  "Banks").  The Company
presently has no separate  operations and its business consists primarily of the
business of the Banks. All references to the Company, unless otherwise indicated
at or before March 11, 1996 refer to Washington Federal.

         Washington  Federal  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  Federal also makes  commercial  loans,  consumer  loans,  automobile
loans,  and has  occasionally  been a purchaser  of  fixed-rate  mortgage-backed
securities.
<PAGE>


         Washington  Federal  filed  applications  with  the  Office  of  Thrift
Supervision  (the  "OTS")  on  August  19,  1998  for two  branch  offices.  The
applications to branch into Wellman, Iowa and Richland, Iowa have been approved.
Washington  Federal has received  requests from its  customers  residing in both
communities to assist in the restoration of an active local banking relationship
by opening  branches.  Washington  Federal intends to open the Wellman branch in
1998 and the Richland branch in 1999.

         Rubio  attracts  deposits  from the general  public in its local market
area and the  businesses  in the  Brighton  area.  The  deposits  are  primarily
invested  in  United  States  Treasury  bonds,   agricultural  operating  loans,
commercial loans,  one- to- four family  residential real estate loans, and farm
real estate loans.  Rubio also makes  commercial  real estate loans,  automobile
loans and other consumer loans.

         The executive office of the Company is located at 102 East Main Street,
Washington, Iowa 52353, telephone (319)653-7256.

Financial Condition

Total  assets.  Total  consolidated  assets  increased  $6.7  million from $94.3
million at June 30, 1998 to $101.0  million at September 30, 1998.  The increase
was primarily due to a $3.4 million increase in investment securities and a $3.0
million  increase  in loans  receivable  funded by a $6.7  million  increase  in
deposits.

 Loans  receivable.  Loans  receivable,  net  increased  $3.0 million from $65.9
million at June 30, 1998 to $68.9 million at September  30, 1998.  This increase
is primarily  due to increased  loan demand in the  Company=s  market area.  The
Company's  non-performing  assets  were  $328,000  or 0.32 % of total  assets at
September  30, 1998 as  compared to $89,000 or .09% of total  assets at June 30,
1998.

Investment securities. Available-for-sale securities increased $3.4 million from
$19.1  million at June 30, 1998 to $22.5  million at  September  30,  1998.  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
more on  September  30,  1998 than  their  carrying  value  due to a decline  in
interest yields since the purchase date of the securities.  Therefore, the total
balance  of  available  for sale  securities  includes  the gross  effect of the
unrealized gain.

Accrued interest receivable. Accrued interest receivable increased $241,000 from
$960,000 at June 30, 1998 to $1.2 million at September 30, 1998. The increase is
primarily due to the increase in loans receivable,  net and the level of accrued
interest on available-for-sale securities with semi-annual interest payments.

Deposits. Deposits increased $6.7 million from $66.6 million at June 30, 1998 to
$73.3  million at September  30, 1998.  Interest  credited to customer  accounts
totalled $799,000,  while deposits exceeded withdrawals by $5.9 million. This is
primarily  due to  Washington  Federal's  certificate  of deposit  rates and the
seasonal  fluctuation  in the  cash  position  of a local  governmental  agency.
Transaction  and savings  deposits  decreased as a percentage of total  deposits
from  $24.3  million  or  36.4% at June 30,  1998 to $24.5  million  or 33.4% at
September 30, 1998.  Certificates of deposit  increased as a percentage of total
deposits  from $42.3 million or 63.6% at June 30, 1998 to $48.8 million or 66.6%
at September 30, 1998.

FHLB Borrowings.  The total principal  balance in advances from the Federal Home
Loan Bank of Des Moines (FHLB) increased $610,000 from $15.7 million at June 30,
1998 to $16.3  million at September  30, 1998.  The increase is primarily due to
the increased need to borrow to fund loan activity and investment activity.  The
borrowings are primarily long-term advances.

Advances from borrowers for taxes and  insurance.  The total balance in advances
from borrowers for taxes and insurance  decreased $106,000 from $222,000 at June
30, 1998 to $116,000 at September 30, 1998. The decrease is primarily due to the
payment of the first installment of the 1998-99 county real estate tax bills due
September 30, 1998.
<PAGE>


Total stockholders'  equity.  Total stockholders' equity decreased $450,000 from
$11.0  million at June 30, 1998 to $10.5  million at  September  30,  1998.  The
decrease is primarily  due to the payment of $684,000  for 37,000  shares of the
Company's common stock and dividends paid of $77,000. The decrease was offset by
net  income of  $195,000,  the net  unrealized  gain in the  available  for sale
securities  of $72,000,  the  amortization  of deferred  compensation  under the
Recognition  and  Retention  Plan of $19,000,  the  allocation  of shares in the
Employee Stock  Ownership Plan of $19,000,  and the change in redeemable  common
stock of $5,000.  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 and the fair value
of these  securities  is greater than their  carrying  value as of September 30,
1998.

Results of Operations - Three Months Ended September 30, 1998 As Compared To The
Three Months Ended September 30, 1997

Performance  summary.  Net earnings  increased $38,000 to $195,000 for the three
months  ended  September  30,  1998 from  $157,000  for the three  months  ended
September  30, 1997.  The  increase is primarily  due to an increase in interest
income of $540,000, an increase in noninterest income of $42,000, and a decrease
in  provision  for loan  loss of  $3,000,  partially  offset by an  increase  in
interest  expense of $348,000,  an increase in noninterest  expense of $163,000,
and an increase in income tax expense of $36,000. For the three months September
30, 1998 the annualized return on average assets was 0.83% compared to 0.96% for
the three  months  ended  September  30, 1997,  while the  annualized  return on
average equity was 7.26% for the three months ended  September 30, 1998 compared
to 5.81% for the three months ended September 30, 1997.

Net interest income.  Net interest income increased $191,000 to $795,000 for the
three months ended  September  30, 1998 from $603,000 for the three months ended
September 30, 1997. The increase is primarily due to the increase of $540,000 in
interest  income to $1.8 million for the three months ended  September  30, 1998
from $1.3  million for the three months  ended  September  30, 1997 offset by an
increase in interest  expense of $348,000 to $1.0  million for the three  months
ended  September 30, 1998 from $682,000 for the three months ended September 30,
1997.

For  the  three  months  ended   September   30,  1998  the  average   yield  on
interest-earning  assets was 8.13%  compared to 8.07% for the three months ended
September 30, 1997. The average cost of  interest-bearing  liabilities was 5.14%
for the three months ended  September  30, 1998  compared to 5.18% for the three
months ended September 30, 1997. The average balance of interest  earning assets
increased  $26.1 million to $89.8  million for the three months ended  September
30, 1998 from $63.7  million for the three  months  ended  September  30,  1997.
During this same period,  the average  balance of  interest-bearing  liabilities
increased  $27.4 million to $80.0  million for the three months ended  September
30, 1998 from $52.6 million for the three months ended September 30, 1997.

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 2.98% for the three months ended  September  30, 1998  compared to 2.89% for
the  three  months   ended   September   30,  1997.   Due  to  the  increase  in
interest-bearing  liabilities as a percentage of  interest-earning  assets,  the
average net interest  margin was 3.54% for the three months ended  September 30,
1998 compared to 3.79% for the three months ended September 30, 1997.

Provision for loan loss. Provision for loan loss decreased $3,000 to $22,000 for
the three  months  ended  September  30, 1998 from  $25,000 for the three months
ended  September 30, 1997.  Washington=s  loan portfolio  consists  primarily of
residential   mortgage  loans  and  it  has  experienced  a  minimal  amount  of
charge-offs  in the past three years.  The allowance for loan losses of $415,000
or .60% of loans  receivable,  net at September 30, 1998 compares to $247,000 or
 .46% of loans receivable, net at September 30, 1997. The allowance for loan loss
as a percentage  of  non-performing  assets was 126.62% at  September  30, 1998,
compared to 177.69% at September 30, 1997.

Noninterest  income.  Noninterest  income  increased  $42,000 to $95,000 for the
three  months ended  September  30, 1998 from $52,000 for the three months ended
September  30, 1997.  The increase is primarily  due an increase in bank service
charges of $46,000 offset by a decrease in loan  origination and commitment fees
of $2,000, and a decrease in insurance commissions of $2,000.
<PAGE>


Bank service charges and fees increased  $46,000 to $85,000 for the three months
ended  September 30, 1998 from $39,000 for the three months ended  September 30,
1997  primarily  due to a $35,000  increase in overdraft fee income and a $7,000
increase in checking account service charges and stop payments. Loan origination
and  commitment  fees  decreased  $2,000 to $1,000  for the three  months  ended
September  30, 1998 from $3,000 for the three  months ended  September  30, 1997
primarily due a decreased  number of loans originated with the intent to be sold
on secondary market.  The Company does not charge origination or commitment fees
on loans held in portfolio. Insurance commissions decreased $2,000 to $7,000 for
the three months ended September 30, 1998 from $9,000 for the three months ended
September 30, 1997 primarily due to the  fluctuations  in the volume of sales of
credit life and disability products.

Noninterest expense.  Noninterest expense increased $163,000 to $532,000 for the
three months ended  September  30, 1998 from $369,000 for the three months ended
September  30,  1997.  The increase is  primarily  due to a $84,000  increase in
compensation and benefits,  a $60,000 increase in other noninterest  expense,  a
$15,000 increase in occupancy and equipment, a $2,000 increase in FDIC insurance
premium, and a $2,000 increase in data processing.

Compensation  and  benefits  increased  $84,000 to $290,000 for the three months
ended  September 30, 1998 from $206,000 for the three months ended September 30,
1997 primarily due to the increase in full-time equivalent employees as a result
of the acquisition of Rubio.

Other  noninterest  expense  increased  $60,000 to $151,000 for the three months
ended  September 30, 1998 from $91,000 for the three months ended  September 30,
1997  primarily due to the increased cost of operating a second office since the
acquisition  of Rubio.  The increase is  primarily  due to the  amortization  of
goodwill  of $24,000,  the  increase  in  supplies  of $7,000,  the  increase in
auditing  and  accounting  fees of $6,000,  the increase in postage and delivery
charges of $5,000, expenses related to the Year 2000 issue and computer software
of $5,000,  the increase in fees paid to SHAZAM for ATM and debit card  services
of  $4,000,  the  increase  in  fees  paid  for  services  provided  by  outside
contractors of $3,000, the increase in fees paid to federal examiners of $2,000,
the  increase  of fees for the  promotion  of the  checking  account  program of
$2,000, and the increase in other miscellaneous fee of $2,000.

Occupancy  and  equipment  expense  increased  $15,000 to $53,000  for the three
months  ended  September  30,  1998  from  $38,000  for the three  months  ended
September  30,  1997  primarily  due to the  increased  cost of a second  office
building  since the  acquisition  of Rubio.  The increase is primarily due to an
increase in real estate taxes of $8,000,  the increase in equipment  maintenance
of $3,000,  the  increase in building  maintenance  of $2,000,  the  increase in
telephone expense of $1,000 and the increase in utilities of $1,000.

FDIC insurance  premiums  increased $2,000 to $14,000 for the three months ended
September  30, 1998 from $12,000 for the three months ended  September  30, 1997
primarily due to the increase in deposits since the  acquisition of Rubio.  Data
processing  increased $2,000 to $23,000 for the three months ended September 30,
1998 from  $21,000 for the three months  ended  September  30, 1997 due to extra
service requested from the Company's data processor.

Liquidity  and  capital  resources.  The Banks'  principal  sources of funds are
deposits,  amortization  and prepayment of loan principal,  borrowings,  and the
sale and maturity 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 Banks  generally  manage the  pricing of the  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 the  competition,  and when  necessary,  to  supplement
deposits with alternative sources of funds.

Federal  regulations  historically have required  Washington Federal 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 4% 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.   Washington   Federal  has
historically  maintained  its  liquidity  ratio at  levels  in  excess  of those
required.  At September 30, 1998, the Washington  Federal's  liquidity ratio was
15.77%.
<PAGE>


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  Banks  anticipate  that it will have  sufficient  funds  available  to meet
current  loan  commitments.  At  September  30,  1998,  Washington  Federal  had
outstanding  commitments  to extend  credit  which  amounted to $1.8 million and
Rubio Savings Bank had  outstanding  commitments to extend credit which amounted
to $566,000.


<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.

Employee  Benefit  Plans.  In  conjunction  with the Bank's  conversion to stock
ownership,  the Company  established an Employee Stock Ownership Plan (ESOP) for
eligible  employees.  The plan was  established  by amending the Savings  Bank's
existing profit sharing plan.  Employees of the Bank are eligible to participate
after they attain age 21 and complete one year of service during which they work
at least 1,000 hours.  The Company  issued  52,602 shares of common stock to the
ESOP on the date of the conversion and reorganization.

                  At  September  30,  1998 the ESOP  held  52,602  shares of the
Company's  common  stock,  8,202 of which  were  allocated,  3,131 of which were
released for  allocation  and the remaining  41,269 were  unreleased  (unearned)
shares.  The 45,367  unreleased  (unearned)  shares had a fair  market  value of
approximately $733,000 at September 30, 1998.

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     November 12, 1998               /s/ Stan Carlson                  
                                         ---------------------------------------
                                         Stan Carlson, President and Chief
                                         Executive Officer

Date     November 12, 1998               /s/ Leisha A. Linge               
                                         ---------------------------------------
                                         Leisha A. Linge,Controller