Exhibit 13












                               Washington Bancorp

                               2000 Annual Report


<PAGE>



                               WASHINGTON BANCORP






                                TABLE OF CONTENTS

Letter to Stockholders................................
Selected Consolidated Financial Information...........
Management's Discussion and Analysis of
 Financial Condition and Results of Operations........
Report of Independent Auditors........................
Consolidated Financial Statements.....................
Directors and Executive Officers......................
Stockholder Information...............................






                       CONSOLIDATED FINANCIAL HIGHLIGHTS

                                 June 30, 2000
                             (Dollars in Thousands)

Total assets.................................................          $115,422
Total loans, net.............................................            83,988
Investment securities and other
  earning assets.............................................            26,076
Deposits.....................................................            73,297
Borrowings...................................................            30,193
Net income...................................................             1,016
Stockholders' equity.........................................            10,821
Stockholders' equity as a percent of
  assets.....................................................             9.38%





                                 ANNUAL MEETING

                The Annual Meeting of Stockholders of Washington
              Bancorp will be held on October 17, 2000 at 4:00 P.M.
                at the office of the Company, located at 102 East
                         Main Street, Washington, Iowa.

<PAGE>



                               WASHINGTON BANCORP

                              102 East Main Street
                             Washington, Iowa 52353

                               September 20, 2000



Dear Stockholders:

         On July 18, 2000, the Board of Directors of Washington Bancorp declared
a $.50 per share annual cash dividend on the outstanding shares of common stock.
This cash dividend was paid on August 15, 2000 to all  shareholders of record on
July 31, 2000.

         The Board of  Directors  believes  that the present  stock  price,  the
financial condition of the Company and its subsidiaries and the current earnings
warrant the payment of a cash dividend.  The payment of future dividends will be
subject to the Board's periodic review of financial condition, earnings, capital
requirements and future prospects.

         The  continuation  of the payment of cash dividends may or may not be a
prudent  use  of  the  income   generated  by  Washington   Bancorp.   Potential
alternatives  may be to retain  earnings  in an effort to  increase  the capital
position of the Company,  to take advantage of growth  opportunities or to enter
into another stock repurchase program.

         Each of these  alternatives may be advantageous to the long-term growth
of Washington Bancorp.  The Board of Directors has not determined to discontinue
a  dividend   payment  to  shareholders  at  this  time,  but  does  invite  all
shareholders  to express to bank  management  their  opinions  on the payment of
dividends.

         At the invitation of local  citizens,  Washington  Federal Savings Bank
has opened a new branch in Richland,  Iowa.  Richland Federal Savings is located
in a remodeled  existing  brick  building on the square and will offer  complete
banking  services,  including safe deposit boxes. This expands the customer base
of the banks of Washington Bancorp into Keokuk County.

         We  sincerely  appreciate  and want to thank  you,  our  customers  and
stockholders, for your continued support.

                                                     Sincerely,


                                                     /s/ Stan Carlson
                                                     ---------------------------
                                                     Stan Carlson
                                                     President & CEO


<PAGE>



                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

         The following consolidated financial information does not purport to be
complete and is  qualified  in its  entirety by  reference to the more  detailed
consolidated financial information contained elsewhere herein.
<TABLE>
                                                                               At June 30,
                                                          -----------------------------------------------------------
                                                            2000        1999         1998        1997         1996
                                                          -----------------------------------------------------------
                                                                                (Dollars in Thousands)
<S>                                                       <C>         <C>           <C>          <C>         <C>
Selected Financial Condition Data:

Total assets.........................................     $115,422    $102,984      $94,327      $64,875     $60,891
Loans receivable, net................................       83,988      72,779       65,885       52,530      40,906
Cash and cash equivalents............................        2,849       2,557        3,306          808       1,903
Investment securities................................       22,377      21,456       20,254        9,850      14,628
Investment in Federal Home Loan Bank ("FHLB")  Stock.        1,729         860          812          466         369
Goodwill, net........................................        1,186       1,281        1,375          ---         ---
Deposits.............................................       73,297      75,689       66,595       44,754      44,176
Borrowed funds.......................................       30,193      15,706       15,724        8,652       5,505
Stockholders' equity.................................       10,821      10,711       10,971       10,675      10,548
</TABLE>
<TABLE>
                                                                               Year Ended June 30,
                                                             --------------------------------------------------------------
                                                              2000          1999         1998          1997         1996
                                                             --------------------------------------------------------------
                                                                                    (Dollars in Thousands)
<S>                                                          <C>           <C>          <C>           <C>           <C>
Selected Operations Data:

Total interest income................................        $8,260        $7,455       $6,034        $4,990        $4,207
Total interest expense...............................         4,706         4,295        3,259         2,553         2,499
                                                            -------------------------------------------------------------
  Net interest income................................         3,554         3,160        2,775         2,437         1,708
Provision for loan losses............................           187           112           89            40            15
                                                           ---------------------------------------------------------------
                                                              3,367         3,048        2,686         2,397         1,693
Total noninterest income.............................           511           392          320           231           197
Total noninterest expense............................         2,149         2,077        1,744         1,712         1,206
                                                           --------------------------------------------------------------

Income before income taxes...........................         1,729         1,363        1,262           916           684
Income tax expense...................................           713           532          439           351           243
                                                           ---------------------------------------------------------------
Net income...........................................        $1,016       $   831      $   823       $   565       $   441
                                                             =============================================================

Earnings per common share:
  Basic..............................................       $  1.86       $  1.48      $  1.36       $  0.92      $  0.25*
                                                            =============================================================
  Diluted............................................       $  1.83       $  1.44      $  1.33       $  0.91      $  0.25*
                                                            =============================================================
Earnings per common share:
  Tangible(1)........................................       $  2.00       $  1.60      $  1.40       $  0.91      $  0.25*
                                                            =============================================================
<FN>
*    Earnings  per  share  information  for the  year  ended  June  30,  1996 is
     calculated  by  dividing  net  income,  subsequent  to the  mutual to stock
     conversion,  by the  weighted  average  number of shares  outstanding.  Net
     income subsequent to the conversion was $150,832 for the 3 1/2 month period
     ended June 30, 1996.

(1)  Tangible earnings per share is calculated by dividing the total of goodwill
     expense plus net income by the weighted  average  number of diluted  common
     shares outstanding.
</FN>
</TABLE>
<PAGE>


<TABLE>
                                                                              Year Ended June 30,
                                                                 ---------------------------------------------------------------
                                                                  2000         1999          1998          1997          1996
                                                                 ---------------------------------------------------------------
<S>                                                              <C>           <C>          <C>           <C>           <C>
Selected Financial Ratios and Other Data:

Performance Ratios:
  Return on assets (ratio of  net  earnings to
    average total assets)............................             0.93%         0.83%        1.06%         0.90%         0.78%
Interest rate spread information:
  Average during period..............................             2.94          2.81         2.95          3.09          2.55
  End of period......................................             2.92          3.21         2.95          3.09          2.96
  Net interest margin(1).............................             3.41          3.31         3.70          3.97          3.13
  Ratio of operating expense to  average total assets             1.96          2.18         2.24          2.72          2.15
  Return on equity (ratio of net  income to average
    equity) .........................................             9.44          7.79         7.56          5.34          6.94

Quality Ratios:
  Non-performing assets to total  assets at end of
    period(2) .......................................             0.57          0.15         0.09          0.35          0.07
  Allowance for loan losses to non-performing loans..            72.33        304.64       435.99         98.52        475.00

Capital Ratios:
  Equity to total assets at end of period............             9.38         10.40        11.63         16.45         17.32
  Average equity to average assets..................              9.81         10.62        13.99         16.80         11.31
  Ratio of average interest-earning assets to average
   interest-bearing liabilities......................           110.35        111.04       117.22        121.22        112.79

Number of full service offices.......................                3             3            2             1             1
---------------------
<FN>
(1)  Net interest income divided by average interest-earning assets.

(2)  Non-performing assets consist of nonaccruing loans, accruing loans past-due
     90 or more days and foreclosed assets.
</FN>
</TABLE>

         Capital  Requirements.   The  following  table  sets  forth  Washington
Federal's compliance with its capital requirements at June 30, 2000.

                                                            Capital Level
                                   OTS Requirement       at June 30, 2000(1)
                                   ---------------------------------------------
                                    % of               % of              Amount
                                   Assets    Amount   Assets   Amount  of Excess
                                   ---------------------------------------------
                                               (Dollars in Thousands)
Capital Standard

Tangible Capital.............      1.50%    $1,387     7.97%   $7,370    $5,983
Core Capital.................      4.00%     3,698     7.97%    7,370     3,672
Risk-based Capital...........      8.00%     5,071    12.32%    7,810     2,739
-----------------

(1)   Tangible  and core  capital  figures are  determined  as a  percentage  of
      adjusted  total assets;  risk-based  capital  figures are  determined as a
      percentage of  risk-weighted  assets in  accordance  with Office of Thrift
      Supervision ("OTS") regulations.

         The following table sets forth Rubio Savings Bank's compliance with its
capital requirements at June 30, 2000.

                                                            Capital Level
                                   OTS Requirement         at June 30, 2000
                                   ---------------------------------------------

                                    % of              % of               Amount
                                   Assets   Amount   Assets   Amount   of Excess
                                   ---------------------------------------------
                                             (Dollars in Thousands)

Tier 1 or Leverage Capital....     3.00%   $   685   10.56%   $2,409     $1,724
Tier 1 Risk-based Capital.....     4.00%       624   15.44%    2,409      1,784
Risk-based Capital............     8.00%     1,248   16.63%    2,595      1,347
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

         Washington  Bancorp  ("Washington",  and  with  its  subsidiaries,  the
"Company"),  an Iowa  corporation,  became the  holding  company  of  Washington
Federal  Savings  Bank  ("Washington  Federal")  on March 11,  1996.  Washington
Federal is a federally chartered stock savings bank headquartered in Washington,
Iowa. On June 24, 1997,  Washington  entered into a merger  agreement to acquire
Rubio Savings Bank of Brighton,  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.  In December
1998,  Washington  Federal opened a branch office,  Wellman Federal Savings,  in
Wellman, Iowa. In September 2000, Washington Federal has opened a branch office,
Richland Federal Savings, in Richland, Iowa. 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  only of the
business  of  the  Banks.  All  references  to  the  Company,  unless  otherwise
indicated, at or before March 11, 1996 refer to Washington Federal.

         The  earnings  of the  Company  depend  primarily  on its  level of net
interest   income,   which  is  the  difference   between   interest  earned  on
interest-earning  assets,  consisting primarily of mortgage loans and investment
securities,  and the interest paid on interest-bearing  liabilities,  consisting
primarily of deposits and FHLB borrowings.  Net interest income is a function of
the  Company's  "interest  rate  spread,"  which is the  difference  between the
average  yield  earned on  interest-earning  assets and the average rate paid on
interest-  bearing  liabilities.   The  interest  rate  spread  is  affected  by
regulatory, economic and competitive factors that influence interest rates, loan
demand and deposit flows.  The Company,  like other financial  institutions,  is
subject to  interest-rate  risk to the degree that its  interest-earning  assets
mature  or  reprice  at  different  times,  or on a  different  basis,  than its
interest-bearing  liabilities.  To a  lesser  extent,  the  Company's  operating
results are also affected by the amount of its  non-interest  income,  including
service charges and loan fees, and other income which includes  commissions from
sales of insurance by Washington  Federal's  service  corporation.  Non-interest
expense  consists   primarily  of  compensation  and  benefits,   occupancy  and
equipment,  federal  insurance  premiums,  data  processing and other  operating
expenses.  The Company's operating results are significantly affected by general
economic  conditions,  in  particular,  the  changes  in market  interest  rate,
government policies and actions by regulatory authorities.

         The Company's  basic mission is to maximize  shareholder  value through
the  origination of mortgage loans on a profitable  basis to the  communities it
serves.  In seeking to  accomplish  this  mission,  the Board of  Directors  and
management  have  adopted a  business  strategy  designed  (i) to  maintain  the
Company's capital level in excess of regulatory  requirements;  (ii) to maintain
the Company's asset quality; (iii) to control operating expenses; (iv) to manage
the Company's  exposure to changes in interest rates.  The Company has attempted
to achieve  these goals by focusing on  originating  first  mortgage home loans,
consumer  loans and  commercial  loans and by  offering  a full range of deposit
products.

Forward-Looking Statements

         This document,  including  information  included in or  incorporated by
reference to, contains,  and future filings by the Company on Form 10-KSB,  Form
10-QSB and Form 8-K and future  oral and written  statements  by the Company and
its management may contain, forward-looking statements about the Company and its
subsidiaries  which we believe are within the meaning of the Private  Securities
Litigation Reform Act of 1995. These forward-looking statements include, without
limitation,   statements  with  respect  to  anticipated  future  operating  and
financial  performance,  growth opportunities,  interest rates,  acquisition and
divestiture opportunities, and synergies, efficiencies, cost savings and funding
advantages  expected to be realized  from our prior  acquisition.  Words such as
"may,"  "could,"  "should,"  "would,"   "believe,"   "anticipate,"   "estimate,"
"expect,"  "intend,"  "plan" and similar  expressions  are  intended to identify
these forward-looking statements.  Forward-looking statements by the Company and
its management are based on beliefs,  plans,  objectives,  goals,  expectations,
anticipations,  estimates and intentions of management and are not guarantees of
future performance. The Company disclaims any obligation to update or revise any
forward-looking statements based on the occurrence of future events, the receipt
of new  information,  or otherwise.  The important  factors we discuss below and
elsewhere in this document, as well as other factors discussed under the caption
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  in this  document  and  identified  in our filings with the SEC and
those  presented  elsewhere  by our  management  from time to time,  could cause
actual results to differ materially from those indicated by the  forward-looking
statements made in this document.
<PAGE>


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 of the American Institute of Certified Public Accountants,  shares
owned by the Company's employee stock ownership plan ("ESOP") that have not been
committed  to be  released  are not  considered  outstanding  for the purpose of
computing earnings per share.

         In addition to disclosing earnings per share ("EPS")  information,  the
Company has also provided  "tangible" EPS information as an alternative  measure
for evaluating  the Company's  ability to grow tangible  capital.  The Company's
tangible  earnings  per share is  calculated  by dividing  the total of goodwill
expense plus net income by the weighted  average number of diluted common shares
outstanding.

Financial Condition

         Total  Assets.  Total assets  increased  from $94.3 million at June 30,
1998 to $103.0  million at June 30, 1999 and to $115.4 million at June 30, 2000.
The net increase from 1998 to 1999 was primarily due to a $6.9 million  increase
in loans receivable,  net, a $1.2 million increase in investment securities, and
a  $681,000  increase  in federal  funds  sold,  partially  offset by a $749,000
decrease in cash and cash  equivalents.  The net increase  from 1999 to 2000 was
primarily due to a $11.2 million increase in loans  receivable,  net, a $921,000
increase  in  investment  securities  and an  $870,000  increase  in FHLB stock,
partially offset by a $1.2 million decrease in fed funds sold.

         Loans receivable. Loans receivable, net increased from $65.9 million at
June 30, 1998 to $72.8 million at June 30, 1999 and to $84.0 million at June 30,
2000.  The  increase  from  1998 to  1999,  and from  1999 to  2000,  was due to
continued  mortgage  loan demand in the  Company's  market  area,  as well as an
increase in commercial and agriculture  loan demand.  The majority of commercial
loan growth is in the agriculture sector.  These loans provide for a higher rate
of  return  to the  Company,  but  also  carry  some  increased  risk  over  our
traditional  residential  loan products.  We believe that we follow  appropriate
underwriting guidelines in order to reduce this potential risk. In addition, the
Company obtains  guarantees  through the Farm Service Agency Guarantee  Lender's
Program  when  possible,  to  further  manage  portfolio  risk.  Commercial  and
agriculture loans increased $4.8 million from June 30, 1999 to June 30, 2000.

         The  Company's  non-performing  assets were  $648,000 or 0.57% of total
assets at June 30, 2000 as  compared  to  $155,000 or 0.15% of totals  assets at
June  30,  1999.  Non-performing  assets  have  increased  primarily  due to the
acquisition of two real estate properties which were voluntarily  deeded back to
the Company and one real estate  property  deeded  in-lieu of  foreclosure.  The
Company is in the process of liquidating the assets and no losses are expected.

         Deposits.  Deposits increased $9.1 million or 13.7% to $75.7 million at
June 30,  1999 from $66.6  million at June 30,  1998.  Transaction  and  savings
deposits decreased as a percentage of total deposits from $24.3 million or 36.4%
at June 30, 1998 to $25.7  million or 34.0% at June 30,  1999.  Certificates  of
deposit  increased as a percentage of total deposits from $42.3 million or 63.6%
at June 30, 1998 to $50.0  million or 66.0% at June 30,  1999.  The  increase in
certificates  of deposit was primarily due to Washington  Federal  offering more
competitive rates on certain of its certificate of deposit products.

         Deposits  decreased  $2.4 million or 3.2% to $73.3  million at June 30,
2000 from $75.7  million at June 30,  1999.  Transaction  and  savings  deposits
increased as a percentage of total  deposits from $25.7 million or 34.0% at June
30, 1999 to $26.6  million or 36.3% at June 30,  2000.  Certificates  of deposit
decreased as a percentage of total  deposits from $50.0 million or 66.0% at June
30, 1999 to $46.7 million or 63.7% at June 30, 2000.  This decrease was a result
of increased local competition in a rising interest rate environment.

         Stockholders' Equity.  Stockholders' equity decreased from$11.0 million
at June  30,  1998 to $10.7  million  at June 30,  1999 and  increased  to $10.8
million at June 30, 2000.  The decrease  from June 30, 1998 to June 30, 1999 was
primarily due to $684,000 in payments for the repurchase of 37,000 shares of the
Company's  common  stock,  dividends  paid  of  $272,000  and  the  increase  in
unrealized losses on available for sale securities of $235,000, partially offset
by net income of $831,000  and the  allocation  of ESOP  shares of $73,000.  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 was
less than their carrying value as of June 30, 1999.
<PAGE>


         The increase  from June 30, 1999 to June 30, 2000 was  primarily due to
net income of $1.0  million,  the  allocation  of ESOP shares of $64,000 and the
amortization of deferred  compensation of $29,000,  partially offset by $680,000
in payments for the  repurchase of 50,710 shares of the Company's  common stock,
the increase in unrealized  losses on available for sale securities of $212,000,
dividends paid of $67,000,  and the increase in maximum cash  obligation on ESOP
shares of $39,000.

Net Interest Income Analysis

         The following table presents for the periods indicated the total dollar
amount of interest income from average interest-earning assets and the resultant
yields,  as well as the total  dollar  amount of  interest  expense  on  average
interest-bearing   liabilities  and  the  resultant  rates.  No  tax  equivalent
adjustments were made. All average balances are monthly average balances.
<TABLE>
                                                                      Year Ended June 30,
                                     -----------------------------------------------------------------------------------------------
                                                    2000                       1999                            1998
                                     ----------------------------- ---------------------------- ------------------------------------
                                        Average   Interest           Average   Interest           Average    Interest
                                      Outstanding  Earned/  Yield/ Outstanding  Earned/  Yield/ Outstanding  Earned/    Yield/
                                        Balance     Paid     Rate    Balance     Paid     Rate    Balance     Paid       Rate
                                     -----------------------------------------------------------------------------------------------
                                                                       (Dollars in Thousands)
<S>                                  <C>          <C>       <C>    <C>         <C>       <C>    <C>          <C>        <C>
Interest-earning assets:
  Loans receivable(1)...............    $  78,148  $6,688    8.56%    $69,013   $5,979     8.66%   $59,089    $5,138     8.69%
  Investment securities.............       23,058   1,412    6.12      21,692    1,253     5.78     13,622       800     5.87
  FHLB stock........................        1,198      78    6.53         851       55     6.43        596        40     6.77
  Other interest-earning assets.....        1,866      82    4.41       3,897      168     4.32      1,654        56     3.40
                                        -----------------             ----------------             -----------------
    Total interest-earning assets(1)      104,270   8,260    7.92      95,453    7,455     7.81     74,961     6,034     8.05
                                        -----------------             ----------------             -----------------

Interest-bearing liabilities:
  Certificates of deposit...........       48,785   2,629    5.39      48,250    2,712     5.62     35,753     2,060     5.76
  NOW, money market and passbook
    savings.........................       22,263     696    3.13      21,991      700     3.18     16,508       558     3.38
  Advances from borrowers for taxes
    and insurance...................          ---     ---     ---         185        1     0.46        167         2     1.02
  FHLB advances.....................       23,441   1,381    5.89      15,537      882     5.68     11,519       639     5.55
                                         ----------------             ----------------             -----------------
    Total interest-bearing liabilities     94,489   4,706    4.98      85,963    4,295     5.00     63,947     3,259     5.10
                                         ----------------             ----------------             -----------------

Net interest income.................              $ 3,554                      $ 3,160                       $ 2,775
                                                  =======                      =======                       =======
Net interest rate spread(2).........                         2.94%                         2.81%                         2.95%
                                                             ====                          ====                          ====

Net interest-earning assets.........     $ 9,781                      $ 9,490                      $11,014
                                         =======                      =======                      =======
Net yield on average interest-earning
  assets............................                         3.41%                         3.31%                        3.70%
                                                             ===                           ====                         ====
Average interest-earning assets to                110.35%                       111.04%                      117.22%
  average interest-earning liabilities            ======                        ======                       ======

---------------------
<FN>

(1)  Calculated net of deferred loan fees, loan discounts,  loans in process and
     loss reserves.

(2)  Net interest  rate spread  represents  the  difference  between the average
     yield on  interest-earning  assets and the average rate on interest-bearing
     liabilities.
</FN>
</TABLE>
<PAGE>


         The  following  table  presents the weighted  average  yields on loans,
investments and other interest-  earning assets,  and the weighted average rates
paid on deposits and borrowings  and the resultant  interest rate spreads at the
dates indicated.

                                                               At June 30,
                                                       -------------------------
                                                       2000      1999      1998
                                                       -------------------------

Weighted average yield on:
  Loans receivable ............................        8.57%     8.44%     8.61%
  Investment securities .......................        6.23      5.92      5.94
  Other interest-earning assets ...............        6.41      5.50      5.86
Combined weighted average yield on interest- ..
 earning assets ...............................        8.04      7.81      7.93

Weighted average rate paid on:
  Passbook savings accounts ...................        3.29      1.55      2.36
  NOW accounts ................................        1.82      1.50      2.32
  Money market accounts .......................        4.35      3.47      3.87
  Certificates of deposit .....................        5.47      5.40      5.73
  Advances from borrowers for taxes & .........
   insurance ..................................          --        --      2.30
  FHLB advances ...............................        6.38      5.66      5.54
Combined weighted average rate paid on ........
 interest-bearing liabilities .................        5.12      4.60      4.98
Spread ........................................        2.92      3.21      2.95

Rate/Volume Analysis

         The  following  schedule  presents  the  dollar  amount of  changes  in
interest income and interest  expense for major  components of  interest-earning
assets and interest-bearing  liabilities.  It distinguishes  between the changes
due to  changes in  outstanding  balances  and those due to changes in  interest
rates.  For  each  category  of  interest-earning  assets  and  interest-bearing
liabilities,  information is provided on changes  attributable to (i) changes in
volume  (i.e.,  changes in volume  multiplied by prior  interest  rate) and (ii)
changes in rate (i.e., changes in rate multiplied by prior volume). For purposes
of this table,  changes  attributable  to both rate and volume,  which cannot be
segregated, have been allocated proportionately to the changes due to the volume
and the changes due to rate.
<TABLE>
                                                                  Year Ended June 30,
                                         -------------------------------------------------------------------
                                                 2000 vs. 1999                         1999 vs. 1998
                                         --------------------------------   --------------------------------
                                                Increase                     Increase
                                               (Decrease)        Total      (Decrease)              Total
                                                 Due to         Increase      Due to              Increase
                                         --------------------------------   --------------------------------
                                            Volume     Rate    (Decrease)     Volume      Rate    (Decrease)
                                         --------------------------------   --------------------------------
                                                                   (In Thousands)
<S>                                       <C>         <C>      <C>           <C>         <C>         <C>
Interest-earning assets:
  Loans receivable..................        $  779    $  (70)     $ 709      $  859      $ (18)      $ 841
  Investment securities.............            82        77        159         465        (12)        453
  FHLB stock........................            22         1         23          17         (2)         15
  Other interest-earning
   assets...........................           (90)        4        (86)         94         18         112
                                            -----------------------------    ------------------------------
Total interest-earning
  assets............................        $  793    $   12      $ 805      $1,435     $  (14)     $1,421
                                            =============================    ==============================

Interest-bearing liabilities:
 Certificates of Deposit............        $   30     $(113)     $   30     $   704     $ (51)     $  704
 NOW, money market, and
  passbook savings..................             8       (12)         (4)        177       (35)        142
 Advances from borrowers for
  taxes and insurance...............           ---        (1)         (1)        ---        (1)         (1)
  FHLB advances.....................           465        34         499         227        15         242
                                            -----------------------------    -----------------------------
Total interest-bearing
 liabilities........................        $  503    $  (92)      $ 411     $ 1,108    $   72     $ 1,036
                                            =============================    =============================
Net interest income.................                               $ 394                           $   385
                                                                   ======                          =======
</TABLE>
<PAGE>


Comparison of Operating Results For The Years Ended June 30, 2000 and 1999

         Performance  Summary.  Net income  for the year  ended  June 30,  2000,
increased by $185,000 or 22.26% to $1.0 million from $831,000 for the year ended
June 30, 1999.  The increase  was  primarily  due to an increase in net interest
income of $394,000 and an increase in non-interest income of $118,000, partially
offset by an  increase  in income  tax  expense  of  $181,000,  an  increase  in
provision  for loan loss of $74,000 and an increase in  non-interest  expense of
$72,000.  For the years  ended  June 30,  2000 and 1999,  the  return on average
assets was 0.93% and 0.83%, respectively, while the return on average equity was
9.44% and 7.79%, respectively.

         Net Interest  Income.  For the year ended June 30,  2000,  net interest
income  increased  by $394,000 to $3.5  million  from $3.1  million for the year
ended June 30, 1999.  Interest income increased $805,000 to $8.2 million for the
year ended June 30,  2000 from $7.4  million  for the year ended June 30,  1999,
partially offset by a $411,000  increase in interest expense to $4.7 million for
the year ended June 30, 2000 from $4.3 million for the year ended June 30, 1999.
The net increase was  primarily  due to the  increase in net  interest-  earning
assets.

         For the year ended June 30, 2000, the average yield on interest-earning
assets was 7.92% compared to 7.81% for the year ended June 30, 1999. The average
cost of interest-bearing  liabilities was 4.98% for the year ended June 30, 2000
compared  to 5.00% for the year  ended June 30,  1999.  The  average  balance of
interest-earning assets increased by $8.8 million to $104.3 million for the year
ended June 30, 2000 from $95.5 million for the year ended June 30, 1999.  During
the same time  period,  the  average  balance  of  interest-bearing  liabilities
increased by $8.5 million to $94.5 million for the year ended June 30, 2000 from
$86.0 million for the year ended June 30, 1999.

         The average  interest rate spread was 2.94% for the year ended June 30,
2000  compared to 2.81% for the year ended June 30, 1999,  primarily  due to the
increase in the percentage of loans  receivable,  which carry a higher  interest
rate than other interest earning assets.

         Provision  for  Loan  Loss.  For the year  ended  June  30,  2000,  the
provision for loan loss increased $74,000 to $187,000 from $113,000 for the year
ended June 30, 1999.  The primary  reason for the increase in the  provision was
the  increased  size of the  loan  portfolio,  particularly  in  commercial  and
agriculture  loans which are  considered  to carry a higher risk of default than
residential loans.  Despite this increase,  the Company's loan portfolio remains
primarily  residential  mortgage  loans and has  experienced a minimal amount of
charge-offs  in the past three years.  The allowance for loan losses of $648,000
or 0.77% of loans receivable,  net at June 30, 2000 is an increase when compared
to $472,000 or .65% of loans receivable, net at June 30, 1999. The allowance for
loan losses as a percentage of non-performing assets was 72.33% at June 30, 2000
compared to 304.64% at June 30, 1999.

         Management  will continue to monitor the  Company's  allowance for loan
losses and will make  additions to the allowance  through the provision for loan
losses as  economic  conditions  dictate.  Although  the Company  maintains  its
allowance for loan losses at a level which  management  considers to be adequate
to provide for loan losses,  there can be no assurance  that future  losses will
not exceed estimated amounts or that additional  provisions for loan losses will
not be required in the future.

         Non-interest  Income.  For the year ended June 30,  2000,  non-interest
income increased  $119,000 to $511,000 from $392,000 for the year ended June 30,
1999.  The  increase  was  primarily  due to a $95,000  increase in bank service
charges and fees, a $29,000 increase in investment  commissions,  and an $18,000
increase in insurance  commissions,  partially  offset by a $25,000  decrease in
securities gain, net.

         Bank  service  charges and fees  increased  $95,000 to $387,000 for the
year ended June 30, 2000 from  $292,000  for the year ended June 30,  1999.  The
increase was  primarily due to a $78,000  increase in overdraft  fees, a $14,000
increase in credit card  related  fees,  and a $3,000  increase in ATM and debit
card income.  The investment center opened in July of 1999 and generated $29,000
in commissions during fiscal 2000.  Insurance  commissions  increased $18,000 to
$70,000  for the year ended June 30,  2000 from  $52,000 for the year ended June
30, 1999.  This  increase was primarily due to increases in the volume of credit
life and disability  sales.  Security gains, net decreased  $25,000 to a loss of
$9,000  for the year ended  June 30,  2000 from a gain of  $15,000  for the year
ended June 30, 1999 due to the sale of two available-for-sale  agency securities
which contained call options.  These  instruments were sold to reduce Washington
Federal's interest rate risk exposure.
<PAGE>


         Non-interest  Expense.  For the year ended June 30, 2000,  non-interest
expense  increased  $72,000 to $2.1 million from $2.1 million for the year ended
June  30,  1999.  The  increase  was  primarily  due to a  $55,000  increase  in
compensation and benefits,  a $15,000 increase in data processing expenses and a
$15,000 increase in other non-interest  expenses,  partially offset by an $8,000
decrease in occupancy  and  equipment  expense and a $5,000  decrease in deposit
insurance premiums.

         Compensation  and  benefits  increased  $55,000 to $1.1 million for the
year ended June 30,  2000 from $1.1  million  for the year ended June 30,  1999.
This increase was  primarily  due to the increased  level of staffing to prepare
for the opening of Washington Federal's branch office, Richland Federal Savings,
in Richland,  Iowa. Data processing  increased  $15,000 to $102,000 for the year
ended June 30, 2000 from $87,000 for the year ended June 30, 1999. This increase
was  primarily  due to the expense of  upgrading  communication  systems.  Other
non-interest  expenses increased $15,000 to $564,000 for the year ended June 30,
2000 from $549,000 for the year ended June 30, 1999. This increase was primarily
due to the increase in examination and auditing fees.

         Occupancy and equipment  expenses  decreased $8,000 to $217,000 for the
year ended June 30, 2000 from  $225,000 for the year ended June 30,  1999.  This
decrease was primarily due to a decrease in the accrual of real estate taxes and
a decrease in the cost of equipment maintenance, partially offset by an increase
in depreciation  expense.  FDIC deposit insurance  premiums  decreased $5,000 to
$51,000  for the year ended June 30,  2000 from  $56,000 for the year ended June
30,  1999.  This  decrease  was  primarily  due to the  decrease  in  Washington
Federal's regulatory assessment rate.

         Income Tax Expense.  Income tax expense increased  $181,000 to $713,000
for the year ended June 30, 2000 from $532,000 for the year ended June 30, 1999.
The increase was  primarily  due to the increase in income  before income taxes.
The  effective  income tax rates for the years ended June 30, 2000 and 1999 were
41.2% and 39.0%, respectively.

Comparison of Operating Results For The Years Ended June 30, 1999 and 1998

         Performance  Summary.  Net  income  for the year  ended  June 30,  1999
increased  by $8,000 or 0.9% to $831,000  from  $823,000 for the year ended June
30, 1998.  The increase was primarily due to an increase in net interest  income
of $385,000 and an increase in non-interest income of $72,000,  partially offset
by an increase in  non-interest  expense of $333,000,  an increase in income tax
expense of $92,000 and an increase in  provision  for loan loss of $24,000.  For
the years  ended June 30,  1999 and 1998 the return on average  assets was 0.83%
and 1.06%  respectively,  while the return on average equity was 7.79% and 7.56%
respectively.

         Net Interest  Income.  For the year ended June 30,  1999,  net interest
income  increased  by $385,000 to $3.1  million  from $2.7  million for the year
ended June 30, 1998.  Interest income increased $1.4 million to $7.4 million for
the year ended June 30, 1999 from $6.0  million for the year ended June 30, 1998
partially  offset by a $1.0 million increase in interest expense to $4.3 for the
year ended June 30, 1999 from $3.3 million for the year ended June 30, 1998. The
net increase was primarily due to the increase in net interest- earning assets.

         For the year ended June 30, 1999, the average yield on interest-earning
assets was 7.81% compared to 8.05% for the year ended June 30, 1998. The average
cost of interest-bearing  liabilities was 5.00% for the year ended June 30, 1999
compared  to 5.10% for the year  ended June 30,  1998.  The  average  balance of
interest-earning assets increased by $20.5 million to $95.5 million for the year
ended June 30, 1999 from $75.0 million for the year ended June 30, 1998.  During
the same time  period,  the  average  balance  of  interest-bearing  liabilities
increased  by $22.1  million to $86.0  million  for the year ended June 30, 1999
from $63.9 million for the year ended June 30, 1998.

         Due to the lower returns on  interest-earning  assets,  and despite the
lower rates on  interest-bearing  liabilities,  the average interest rate spread
was 2.81% for the year ended June 30, 1999  compared to 2.95% for the year ended
June 30,  1998.  In  addition,  the lower  ratio of  interest-earning  assets to
interest-bearing  liabilities,  as a result of market  pricing,  has  caused the
average net interest  margin to be reduced by 29 basis points,  to 3.31% for the
year ended June 30, 1999 compared to 3.70% for the year ended June 30, 1998.
<PAGE>


        Provision for Loan Loss. For the year ended June 30, 1999, the provision
for loan loss increased $24,000 to $113,000 from $89,000 for the year ended June
30, 1998.  The primary  reason for the provision  was the increased  size of the
loan  portfolio,  particularly  in commercial  and  agriculture  loans which are
considered  to  carry a higher  risk of  default  than  residential  loans.  The
Company's loan portfolio  remains primarily  residential  mortgage loans and has
experienced  a minimal  amount  of  charge-offs  in the past  three  years.  The
allowance for loan losses of $472,000 or .65% of loans  receivable,  net at June
30, 1999 is an increase when  compared to $388,000 or .59% of loans  receivable,
net at June  30,  1998.  The  allowance  for  loan  losses  as a  percentage  of
non-performing  assets was 304.64% at June 30, 1999  compared to 435.99% at June
30, 1998.

         Management  will continue to monitor the  Company's  allowance for loan
losses and will make  additions to the allowance  through the provision for loan
losses as  economic  conditions  dictate.  Although  the Company  maintains  its
allowance for loan losses at a level which  management  considers to be adequate
to provide for loan losses,  there can be no assurance  that future  losses will
not exceed estimated amounts or that additional  provisions for loan losses will
not be required in the future.

         Non-interest  Income.  For the year ended June 30,  1999,  non-interest
income  increased  $72,000 or 22.6% to $392,000 from $320,000 for the year ended
June 30,  1998.  The increase was  primarily  due to a $75,000  increase in bank
service charges and fees, a $13,000 increase in other non-interest income, and a
$10,000 increase in gain on securities, available-for-sale,  partially offset by
a $25,000  decrease  in  insurance  commissions  and a $1,000  decrease  in loan
origination and commitment fees.

         Bank  service  charges and fees  increased  $75,000 to $284,000 for the
year ended June 30, 1999 from  $209,000  for the year ended June 30,  1998.  The
increase is primarily  due to a $46,000  increase in  overdraft  fees, a $17,000
increase in checking account  charges,  a $6,000 increase in credit card related
fees, and a $3,000 increase in late fees assessed.

         Other  non-interest  income  increased  $13,000 to $33,000 for the year
ended June 30,1999  from $20,000 for the year ended June 30, 1998.  The increase
is primarily due to an increase in gain realized on foreclosed properties.  Gain
on the sale of available- for- sale securities  increased $10,000 to $15,000 for
the year ended  June 30,  1999 from  $5,000  for the year  ended  June 30,  1998
primarily due to the sale of U.S.  Treasury  securities.  Insurance  commissions
decreased  $25,000 to $51,000 for the year ended June 30, 1999 from  $76,000 for
the year ended June 30,  1998  primarily  due to  fluctuations  in the volume of
sales of credit life and disability insurance products.

         Non-interest  expense.  For the year ended June 30, 1999,  non-interest
expense increased  $333,000 to $2.1 million from $1.7 million for the year ended
June  30,  1998.  The  increase  is  primarily  due to a  $136,000  increase  in
compensation  and  benefits,  an $88,000  increase in other  expense,  a $51,000
increase in goodwill,  a $42,000 increase in occupancy and equipment,  an $8,000
increase  in  deposit  insurance  premiums,   and  a  $7,000  increase  in  data
processing.

         Compensation  and benefits  increased  $136,000 to $1.1 million for the
year ended June 30, 1999 from  $929,000  for the year ended June 30,  1998.  The
increase  was  primarily  due to the  addition  of  three  full-time  equivalent
employees as a result of Washington  Federal's new branch in Wellman,  Iowa, and
to a lesser extent, normal salary increases.

         Other  non-interest  expense increased $88,000 to $549,000 for the year
ended June 30, 1999 from $460,000 for the year ended June 30, 1998 primarily due
to the increased cost of operating  additional  offices since the acquisition of
Rubio and the  opening of  Washington  Federal's  branch in Wellman,  Iowa.  The
increase was primarily due to a $34,000 increase in supplies, a $22,000 increase
in fees paid for services provided by outside contractors, a $14,000 increase in
ATM and debit card processing  fees, a $12,000  increase in postage and delivery
expense,  a $12,000 increase in real estate owned expense, a $10,000 increase in
checking accounts, and a $9,000 increase in non-capitalized  expenses related to
the Year 2000 issue, partially offset by a $25,000 decrease in professional fees
paid.
<PAGE>


        Goodwill  expense  increased  $51,000 to $95,000 for the year ended June
30, 1999 from $43,000 for the year ended June 30, 1998 due to the acquisition of
Rubio.  Occupancy and equipment  expense  increased  $42,000 to $225,000 for the
year  ended  June 30,  1999  from  $183,000  for the year  ended  June 30,  1998
primarily due to the addition of Washington  Federal's  branch in Wellman,  Iowa
and the Rubio's office  building.  FDIC insurance  premiums  increased $8,000 to
$57,000  for the year ended June 30,  1999 from  $48,000 for the year ended June
30, 1998  primarily  due to the increase in deposits.  Data  processing  expense
increased  $7,000 to $87,000 for the year ended June 30,  1999 from  $80,000 for
the year ended June 30, 1998.

         Income tax expense.  Income tax expense  increased  $92,000 to $532,000
for the year ended June 30, 1999 from $440,000 for the year ended June 30, 1998.
The  effective  income tax rates for the years ended June 30, 1999 and 1998 were
39.0% and  34.8%,  respectively.  The  increase  was  primarily  due to the non-
deductible goodwill expense.

Asset/Liability Management

         One of the  Company's  principal  financial  objectives  is to  achieve
long-term  profitability while reducing its exposure to fluctuations in interest
rates.  The Company has sought to reduce  exposure of its earnings to changes in
market  interest  rates by managing the  mismatch  between  asset and  liability
maturities and interest rates. The principal element in achieving this objective
has been to increase the  interest-rate  sensitivity of the Company's  assets by
originating loans with interest rates subject to periodic  adjustments to market
conditions.  Accordingly, the Company's primary one- to four-family loan product
has been a 3 year balloon loan. Balloon loans accounted for $33.6 million of its
$84.0 million loan portfolio,  or 40.0% at June 30, 2000.  Adjustable rate loans
account for an additional $12.3 million of its $84.0 million loan portfolio,  or
14.6% at June 30, 2000.

         The Company has historically relied upon retail deposit accounts as its
primary  source of funds and will  continue to do so.  Management  believes that
retail deposit  accounts and long term borrowings as sources of funds,  compared
to brokered deposits,  reduce the effects of interest rate fluctuations  because
these deposits and borrowings generally represent more stable sources of funds.

         Net Portfolio  Value.  In order to encourage  savings  associations  to
reduce  their  interest  rate  risk,  the OTS  adopted a rule  incorporating  an
interest rate risk ("IRR") component into the risk-based  capital rules. The IRR
component is a dollar  amount that will be deducted  from total  capital for the
purpose of calculating an institution's  risk-based  capital  requirement and is
measured  in terms of the  sensitivity  of its net  portfolio  value  ("NPV") to
changes in interest rates.  NPV is the difference  between incoming and outgoing
discounted cash flows from assets, liabilities, and off-balance sheet contracts.
An  institution's  IRR is  measured  as the  change  to its NPV as a  result  of
hypothetical  200 basis  point  ("bp")  changes  in  market  interest  rates.  A
resulting  change in NPV of more than 2% of the  estimated  market  value of its
assets  will  require  the  institution  to deduct  from its capital 50% of that
excess  change.  The rules provide that the OTS will calculate the IRR component
quarterly for each institution.  The Company, based on asset size and risk-based
capital, has been informed by the OTS that it is exempt from this rule.
<PAGE>


         Presented on the following  table,  as of June 30, 2000, is an analysis
of  Washington  Federal's  interest  rate risk as measured by changes in NPV for
instantaneous  and sustained  parallel  shifts in the yield curve,  in 100 basis
point  increments,  up  and  down  300  basis  points  in  accordance  with  OTS
regulations.  For example,  a 300 basis point  increase in interest  rates would
decrease  Washington  Federal's NPV by $1.3 million or 18% and a 300 basis point
decrease in interest rates would increase Washington Federal's NPV by $69,000 or
1%. As previously mentioned,  the OTS has informed Washington Federal that it is
not subject to the IRR component as discussed  above.  Further,  were Washington
Federal  subject to the IRR  component at June 30, 2000,  it would not have been
considered to have had a greater than normal level of interest rate exposure and
a deduction  from  capital  would not have been  required,  although it is still
subject to interest rate risk and, as can be seen below,  increasing rates could
reduce Washington Federal's NPV.

                               At June 30, 2000
--------------------------------------------------------------------------
                Net Portfolio Value               NPV as % of PV of Assets
-----------------------------------               ------------------------
Change in
  Rates        $ Amount    $ Change     % Change    NPV Ratio     Change
-------------------------------------------------------------------------

                        (Dollars in Thousands)
+300 bp          5,941      -1,290         -18%        6.77%      -126 bp
+200 bp          6,395        -837         -22%        7.20%       -73 bp
+100 bp          6,811        -400          -6%        7.59%       -34 bp
0 bp             7,232                                 7.93%
-100 bp          7,459         226           3%        8.09%       -15 bp
-200 bp          7,317          85           1%        7.87%        -6 bp
-300 bp          7,301          69           1%        7.78%       -16 bp


         Management  of  interest  sensitivity  of Rubio has  historically  been
accomplished  by  matching  the  maturities  of   interest-earning   assets  and
interest-bearing    liabilities.    The   following   table    illustrates   the
asset/(liability)  funding  gaps for  selected  maturity  periods as of June 30,
2000.
<TABLE>
                                              Maturing Within
                                     ------------------------------    ------------------
                                       0-6         6-12       1-2         2-3
                                      Months      Months     Years       Years     Total
                                     ----------------------------------------------------
                                                    (Dollars in Thousands)
<S>                                  <C>         <C>        <C>        <C>        <C>
Assets
  Loans receivable ...............   $ 3,113     $ 2,588    $ 1,763    $ 1,894    $ 9,358
  Securities .....................       300       1,213      1,154      1,450      4,117
                                     ----------------------------------------------------
     Total interest-earning assets     3,413       3,801      2,917      3,344     13,475

Liabilities
  Interest-bearing deposits ......     6,964       3,508      1,564        211     12,247
                                     ----------------------------------------------------
Asset/(Liability) funding GAP ....   $(3,551)    $   293    $ 1,353    $ 3,133    $ 1,228
                                     ====================================================

GAP ratio (assets/liabilities) ...        49%        108%       187%     1,585%       110%
</TABLE>

         Certain  shortcomings are inherent in the method of analysis  presented
 in the  computation of NPV.  Although  certain assets and  liabilities may have
 similar maturities or periods within which they will reprice,

they may react  differently to changes in market  interest  rates.  The interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes  in market  rates.  Additionally,  the  Company's  primary  loan
products,  the  three-year  balloon and  adjustable  rate loans,  may permit the
Company to adjust to changes in  interest  rates on a short- term basis and over
the life of the asset. The proportion of three-year  balloon and adjustable rate
loans could be reduced in future  periods if market  interest rates decrease and
remain at lower  levels  for a  sustained  period,  due to  increased  refinance
activity.  Further,  in the event of a change in interest rates,  prepayment and
early withdrawal levels would likely deviate significantly from those assumed in
the table.  Finally,  the ability of many borrowers to service their  three-year
balloon  and  adjustable  rate  mortgage  loans may  decrease  in the event of a
sustained interest rate increase.
<PAGE>


Liquidity and Capital Resources

         The  Company's  primary  sources  of  funds  are  deposits,   long-term
borrowings from the FHLB,  repayments and prepayments of loans,  the maturity of
investment  securities  and interest  income.  Although  maturity and  scheduled
amortization of loans are relatively predictable sources of funds, deposit flows
and prepayments on loans are influenced significantly by general interest rates,
economic conditions and competition.

         The primary investing  activity of the Company is originating  mortgage
loans to be held to maturity.  For the fiscal  years ended June 30, 2000,  1999,
and 1998, the Company  originated loans for its portfolio in the amount of $42.6
million, $42.1 million, and $32.1 million,  respectively.  These activities were
funded primarily by deposits, principal repayments of loans and FHLB borrowings.
FHLB borrowings have been less costly than new certificates of deposit, and less
than other financing sources available.

         For  investment  and  liquidity  purposes,   the  Company  maintains  a
portfolio of investment  securities  including U.S.  Treasury  securities,  U.S.
government  agencies,   state  and  political  subdivisions,   mortgage-  backed
securities and corporation and other securities.

         Washington  Federal is required to  maintain  minimum  levels of liquid
assets under OTS regulations.  Savings  institutions are required to maintain an
average daily balance of liquid assets  (including cash,  certain time deposits,
and specified U.S. government,  state or federal agency obligations) of not less
than  4.0%  of its  average  daily  balance  of  net  withdrawal  accounts  plus
short-term  borrowings.  It is  Washington  Federal's  policy  to  maintain  its
liquidity portfolio in excess of regulatory  requirements.  Washington Federal's
liquidity ratios were 17.21%, 18.84% and 13.17%, respectively, at June 30, 2000,
1999 and 1998.

         Cash was generated by the  Company's  operating  activities  during the
years ended June 30, 2000,  1999 and 1998,  primarily as a result of net income.
The  adjustments  to  reconcile  net income to net cash  provided by  operations
during the periods presented consisted primarily of amortization of premiums and
discounts on debt securities,  depreciation  expense,  amortization of goodwill,
deferred  income  taxes and  increases  and  decreases in other assets and other
liabilities. The primary investing activities of the Company are the origination
of loans and the purchase of investment  securities,  which are funded with cash
provided  from  operations  and financing  activities,  as well as proceeds from
amortization  and  prepayments  on existing  loans and  proceeds  from sales and
maturities of securities. The Company's primary financing activities (other than
the IPO in 1996) have  consisted of deposits and  borrowing/repayments  with the
FHLB of Des Moines.

         The Company's most liquid assets are cash and cash  equivalents,  which
include  unpledged  U.S.  Government  agency  securities  and  other  short-term
investments.  At June 30, 2000,  1999 and 1998, cash and cash  equivalents  were
$2.8 million, $2.6 million and $3.3 million, respectively.

         Liquidity  management  for the Company is both an ongoing and long-term
function of the  Company's  asset/liability  management  strategy.  Excess funds
generally  are  invested in  overnight  deposits at the FHLB of Des Moines or at
other  financial  institutions.  Should the  Company  require  funds  beyond its
ability to generate them internally,  additional  sources of funds are available
through FHLB of Des Moines  advances.  The Company  would pledge its FHLB of Des
Moines stock and certain other assets as collateral  for such  advances.  During
fiscal 2000,  1999 and 1998,  the Company  used FHLB  advances to meet cash flow
requirements  and finance loan  growth.  The FHLB  advances  are  generally at a
higher rate of interest than transaction and savings deposit accounts.

         At June 30, 2000, the Company had outstanding  loan commitments of $3.9
million  and  undisbursed  loans  in  process  of  $1.8  million.   The  Company
anticipates  it will have  sufficient  funds  available to meet its current loan
commitments,  including loan  applications  received and in process prior to the
issuance of firm  commitments.  Certificates  of deposit  which are scheduled to
mature in one year or less at June 30,  2000 were $30.5  million.  Based on past
experience, management believes that a significant portion of such deposits will
remain with the Company.

         Under  federal law,  the Banks are  required to meet certain  tangible,
core  and  risk  based  capital  requirements.  For  information  regarding  the
Company's regulatory capital compliance,  see "Selected  Consolidated  Financial
Information."
<PAGE>


Recent Accounting Developments

         In June 1998, the Financial Accounting Standards Board issued Statement
No. 133,  "Accounting for Derivative  Instrument and Hedging  Activities."  This
statement   establishes   accounting  and  reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging activities.  This statement must be adopted no later
than June 30, 2002, although earlier  application is permitted.  The adoption of
Statement 133 is not expected to have a material impact on the Company.

Impact of Inflation and Changing Prices

         The  Consolidated  Financial  Statements  and Notes  thereto  presented
herein have been  prepared in  accordance  with  generally  accepted  accounting
principles,  which generally  requires the measurement of financial position and
operating results in terms of historical dollars without  considering the change
in the relative purchasing power of money over time due to inflation. The impact
of inflation is reflected in the  increased  cost of the  Company's  operations.
Nearly all the assets and liabilities of the Company are financial,  unlike most
industrial  companies.  As a  result,  the  Company's  performance  is  directly
impacted  by changes in  interest  rates,  which are  indirectly  influenced  by
inflationary   expectations.   The  Company's  ability  to  match  the  interest
sensitivity of its financial assets to the interest sensitivity of its financial
liabilities in its asset/liability management may tend to minimize the effect of
change in interest rates on the Company's performance. Changes in interest rates
do not necessarily  move to the same extent as changes in the price of goods and
services.  The liquidity and the maturity  structure of the Company's assets and
liabilities are critical to the maintenance of acceptable performance levels.


<PAGE>



                                AUDITORS' REPORT

                                  [INSERT HERE]

                                       19


<PAGE>



                          AUDITED FINANCIAL STATEMENTS

                                  [INSERT HERE]

                                       20


<PAGE>



                               WASHINGTON BANCORP


                        DIRECTORS AND EXECUTIVE OFFICERS

Directors

Stan Carlson                                 Rick R. Hofer
President and Chief Executive                Personnel Manager,
Officer, Washington, Washington              Sitler Electric Supply

 Federal and President, Rubio

James D. Gorham                              Mary Levy
Sales Agent, Northwestern Mutual             Treasurer and co-owner, Mose Levy
 Life Insurance Co.                          Steel Company

Myron L. Graber                              Richard L. Weeks
Co-owner, Graber Home                        Owner, Sitler Electric Supply, Inc.
 Improvement, Inc.

J. Richard Wiley                             Dean Edwards
Chairman of the Board, Washington            Past President, Rubio Savings Bank
  and Washington Federal                     of Brighton
  Owner, Wiley Computer

Executive Officers

Stan Carlson                                 Leisha Linge
President and Chief Executive Officer        Executive Vice President and
                                             Treasurer

Jeff Johnson                                 Chris Davies
Vice President                               Vice President and Chief Executive
                                             Officer, Rubio Savings Bank of
                                             Brighton

<PAGE>



                             STOCKHOLDER INFORMATION

Corporate Profile

         The  Company  is an Iowa  corporation  which was  organized  in 1995 by
Washington  Federal  for the purpose of  becoming a thrift  institution  holding
company.  Washington  Federal was  organized in 1934 and  converted to a federal
savings bank in 1994. In March 1996,  Washington  Federal converted to the stock
form of organization  and  concurrently  became the  wholly-owned  subsidiary of
Washington  through the sale and issuance of common stock. Rubio was acquired in
January 1998.  Washington  Federal opened a branch in Wellman,  Iowa in December
1998.  Washington  Federal opened a branch in Richland,  Iowa in September 2000.
The principal assets of the Company are the outstanding  stock of the Banks, its
wholly owned subsidiaries.  The Company presently has no separate operations and
its  business  consists  only of the business of the Banks.  The Banks'  primary
business consists of attracting deposits from the general public and using these
deposits to provide  financing for the purchase and  construction of residential
and, to a lesser extent, other properties.

Washington Federal Savings Bank          Washington Federal Savings Bank
Main Office                              Drive-thru Office

102 East Main Street                     220 East Washington Street
Washington, Iowa 52353                   Washington, Iowa 52353

Richland Federal Savings                 Wellman Federal Savings
Branch Office of Washington Federal      Branch office of Washington Federal

107 Richland Street                      801 Sixth Street
Richland, Iowa 52585                     Wellman, Iowa 52356

Rubio Savings Bank of Brighton
Main Office

122 East Washington Street
Brighton, Iowa 52540

Independent Auditors                     Local Counsel

McGladrey & Pullen, LLP                  Tindal, Erdahl, Goddard & Nestor, PLC
Town Centre, Suite 300                   Attorneys at Law
221 Third Avenue, SE                     305 West Main Street - Suite A
Cedar Rapids, Iowa 52401                 Washington, Iowa 52353

Transfer Agent                           Special Counsel

Registrar & Transfer Co.                 Silver, Freedman & Taff, L.L.P.
10 Commerce Drive                        1100 New York Avenue, N.W.
Cranford, New Jersey  07016              Washington, D.C.  20005


<PAGE>



Form 10-KSB Report

         A copy of the  Company's  Annual  Report on Form  10-KSB for the fiscal
year ended June 30, 2000 including financial statements,  as filed with the SEC,
will be furnished  without  charge to  stockholders  of the Company upon written
request to the Secretary,  Washington Bancorp, 102 East Main Street, Washington,
Iowa 52353.

Stock Listing

         The Company's  common stock is reported on the National Daily Quotation
Service by the National  Quotation Bureau under the symbol "WBIO".  As of August
31, 2000,  the Company had 391  stockholders  of record and 540,034  outstanding
shares of common stock.

Price Range of Common Stock

         The table  below shows the range of high and low  inter-dealer  prices.
These prices do not include retail markups, markdowns or commissions and may not
represent actual transactions.  The table below also shows dividends paid by the
Company.

                                               High        Low       Dividend
                                              -------------------------------


1997

First quarter..........................       $11.38     $10.63       $.08
Second quarter.........................       $12.63     $10.88       $.08
Third quarter..........................       $15.00     $12.88       $.10
Fourth quarter.........................       $15.35     $13.75       $.10

1998

First quarter..........................       $17.00     $15.50       $.10
Second quarter.........................       $17.75     $17.00       $.10
Third quarter..........................       $18.50     $18.00       $.12
Fourth quarter.........................       $18.675    $18.125      $.12

1999

First quarter..........................       $18.125    $17.00       $.12
Second quarter.........................       $17.00     $15.00       $.12
Third quarter..........................       $17.00     $15.00       $.12
Fourth quarter.........................       $15.50     $14.50       $.12

2000

First quarter..........................       $15.50     $13.25       $.12
Second quarter.........................       $13.25     $13.00       $---*
Third quarter..........................       $13.00     $12.75       $---*
Fourth quarter.........................       $13.75     $12.75       $---*


* As of July 1999 the Company announced its intention to pay dividends from time
  to  time,  as  deemed  appropriate,  but in any  event no more frequently than
  annually.
<PAGE>








                               Washington Bancorp

                                 and Subsidiary

                          Consolidated Financial Report

                                  June 30, 2000


<PAGE>




                                    Contents

--------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
--------------------------------------------------------------------------------

FINANCIAL STATEMENTS

   Consolidated  statements of financial condition
   Consolidated  statements of income
   Consolidated  statements  of  comprehensive  income
   Consolidated statements of stockholders' equity
   Consolidated  statements of cash flows
   Notes to financial statements

--------------------------------------------------------------------------------

<PAGE>





                          Independent Auditor's Report

To the Board of Directors
Washington Bancorp
Washington, Iowa

We have audited the accompanying  consolidated statements of financial condition
of Washington Bancorp and its subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of income,  comprehensive income,  stockholders'
equity and cash flows for each of the three  years in the period  ended June 30,
2000.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Washington Bancorp
and  subsidiaries  as of June  30,  2000  and  1999,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
June 30, 2000 in conformity with generally accepted accounting principles.



/s/ McGLADREY & PULLEN, LLP




Cedar Rapids, Iowa
August 14, 2000


<PAGE>


Washington Bancorp and Subsidiaries

Consolidated Statements of Financial Condition
June 30, 2000 and 1999
<TABLE>

ASSETS                                                                           2000             1999
------------------------------------------------------------------------------------------------------
<S>                                                                       <C>              <C>
Cash and cash equivalents (Note 2):
   Interest-bearing ...................................................   $  1,859,278     $   901,346
   Noninterest-bearing ................................................        990,107       1,656,084
Investment securities (Notes 2 and 3):
   Held to maturity (fair value approximates $774,629 at June 30, 2000)        774,629         760,520
   Available-for-sale .................................................     21,602,351      20,695,366
Federal funds sold ....................................................        110,000       1,340,000
Loans receivable, net of allowance for loan losses of $647,605
   in 2000 and $472,187 in 1999 (Notes 4, 8 and 15) ...................     83,988,473      72,779,177
Accrued interest receivable (Note 5) ..................................      1,463,838       1,190,600
Federal Home Loan Bank stock ..........................................      1,729,600         860,000
Foreclosed real estate ................................................        271,302         235,914
Premises and equipment, net (Note 6) ..................................        818,228         874,551
Goodwill ..............................................................      1,185,964       1,280,526
Other assets ..........................................................        628,668         409,996
                                                                          -----------------------------
              Total assets ............................................   $115,422,438     $102,984,080
                                                                          =============================

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------
Liabilities
   Deposits (Note 7):

      Noninterest-bearing .............................................   $  4,225,007    $  3,068,058
      Interest-bearing ................................................     69,072,090      76,621,408
                                                                          ----------------------------
              Total deposits ..........................................     73,297,097      75,689,466
   Borrowed funds (Notes 3 and 8) .....................................     30,193,250      15,706,290
   Advances from borrowers for taxes and insurance ....................        249,683         223,033
   Accrued expenses and other liabilities .............................        632,003         464,638
                                                                          ----------------------------
              Total liabilities .......................................    104,372,033      92,083,427
                                                                          ----------------------------
Commitments and Contingencies (Note 13)
Redeemable Common Stock Held by Employee Stock
   Ownership Plan (ESOP) (Note 9) .....................................        228,947         189,972
                                                                          ----------------------------
Stockholders' Equity (Note 12)
   Preferred stock, $.01 par value, authorized 1,000,000 shares;
      none issued and outstanding .....................................            - -             - -
   Common stock, $.01 par value, authorized 4,000,000 shares;
      issued 2000 and 1999 651,133 shares .............................          6,511           6,511
   Additional paid-in capital .........................................      6,169,796       6,150,310
    Retained earnings .................................................      7,333,909       6,384,863
   Accumulated other comprehensive (loss) .............................       (447,899)       (235,778)
                                                                          ----------------------------
                                                                            13,062,317      12,305,906
   Less:
      Cost of common shares acquired for the treasury
        2000 103,399 shares; 1999 50,935 shares .......................     (1,658,017)       (946,435)
      Deferred compensation (Note 9) ..................................        (21,060)        (79,098)
      Maximum cash obligation related to ESOP shares (Note 9) .........       (228,947)       (189,972)
      Unearned ESOP shares (Note 9) ...................................       (332,835)       (379,720)
                                                                          ----------------------------
              Total stockholders' equity ..............................     10,821,458      10,710,681
                                                                          ----------------------------
              Total liabilities and stockholders' equity ..............   $115,422,438    $102,984,080
                                                                          ============================
</TABLE>
See Notes to Financial Statements.
<PAGE>


Washington bancorp and Subsidiaries

Consolidated Statements of Income
Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                2000          1999         1998
----------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>
Interest and dividend income:
   Loans, including fees:
      First mortgage loans ...............   $4,301,666    $4,662,591   $4,156,209
      Consumer and other loans ...........    2,386,385     1,316,663      981,498
   Investment securities:
      Taxable ............................    1,428,419     1,342,164      806,851
      Nontaxable .........................       65,418        79,037       49,330
   Federal Home Loan Bank stock ..........       78,192        54,762       40,364
                                             -------------------------------------
              Total interest income ......    8,260,080     7,455,217    6,034,252
                                             -------------------------------------
Interest expense:
   Deposits (Note 7) .....................    3,325,496     3,413,212    2,619,618
   Borrowed funds ........................    1,380,504       881,818      639,162
                                             -------------------------------------
              Total interest expense .....    4,706,000     4,295,030    3,258,780
                                             -------------------------------------
              Net interest income ........    3,554,080     3,160,187    2,775,472
Provision for loan losses (Note 4) .......      186,500       112,500       89,000
                                             -------------------------------------
              Net interest income after
                 provision for loan losses    3,367,580     3,047,687    2,686,472
                                             -------------------------------------
Noninterest income:
   Securities gains (losses), net (Note 3)       (9,456)       15,205        5,383
   Service charges and fees ..............      387,345       292,013      217,871
   Insurance commissions .................       69,931        51,750       76,295
   Investment commissions ................       29,132           - -          - -
   Other .................................       33,923        33,348       20,404
                                             -------------------------------------
              Total noninterest income ...      510,875       392,316      319,953
                                             -------------------------------------
Noninterest expense:
   Compensation and benefits (Note 9) ....    1,120,107     1,064,847      929,224
   Occupancy and equipment ...............      217,059       224,963      183,009
   SAIF deposit insurance premium ........       50,788        56,699       48,365
   Data processing .......................      102,226        86,907       79,507
   Goodwill amortization .................       94,562        94,561       43,341
   Other .................................      564,034       548,804      460,463
                                             -------------------------------------
              Total noninterest expense ..    2,148,776     2,076,781    1,743,909
                                             -------------------------------------
              Income before income taxes .    1,729,679     1,363,222    1,262,516
Income tax expense (Note 10) .............      713,437       532,022      439,680
                                             -------------------------------------
              Net income .................   $1,016,242    $  831,200   $  822,836
                                             =====================================

Earnings per common share (Note 11):
   Basic .................................   $     1.86    $     1.48   $     1.36
                                             =====================================

   Diluted ...............................   $     1.83    $     1.44   $     1.33
                                             =====================================

Weighted average common shares for:

   Basic earnings per share ..............      545,963       563,303      603,589
                                             =====================================
   Diluted earnings per share ............      555,606       578,115      620,266
                                             =====================================
</TABLE>
See Notes to Financial Statements.
<PAGE>


Washington bancorp and Subsidiaries

Consolidated Statements of comprehensive income
Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                            2000         1999         1998
---------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>
Net income ...........................................   $1,016,242   $  831,200   $  822,836
                                                         ------------------------------------

Other comprehensive income, net of income taxes:
   Unrealized holding gains (losses) arising during
      the year, net of income taxes 2000 $148,513;
      1999 $135,393; 1998 $(3,688) ...................     (218,059)    (225,737)       6,175
   Reclassification adjustments for net losses (gains)
      realized in net income, net of income taxes
      2000 $(3,518); 1999 $5,671; 1998 $2,008 ........        5,938       (9,534)      (3,375)
                                                         ------------------------------------
              Other comprehensive income (loss) ......     (212,121)    (235,271)       2,800
                                                         ------------------------------------

              Comprehensive income ...................   $  804,121   $  595,929   $  825,636
                                                         ====================================
</TABLE>
See Notes to Financial Statements.
<PAGE>


Washington Bancorp and Subsidiaries

Consolidated Statements of Stockholders' Equity
(Notes 9, 12 and 17)
Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                                                                                  Cost Of
                                                                                                                  Common
                                                                                                   Accumumated    Shares
                                                                         Additional                  Other        Acquired
                                                   Preferred    Common    Paid-In     Retained    Comprehensive   For The
                                                     Stock       Stock    Capital     Earnings       Income       Treasury
----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>      <C>          <C>         <C>            <C>
Balance, June 30, 1997                             $     - -    $6,575   $6,150,032   $5,292,419  $   (3,307)    $  (85,827)
   Net income                                            - -       - -          - -      822,836         - -            - -
   Dividends ($0.44 per share)                           - -       - -          - -     (267,925)        - -            - -
   Acquisition of 16,500 shares of common stock
     for the treasury                                    - -       - -          - -          - -         - -       (307,938)
   Forfeiture of 1,754 shares under stock awards         - -       - -        3,507          - -         - -        (23,240)
     program
   Issuance of 2,127 shares under stock awards           - -       - -       10,051          - -         - -         30,234
     program
   Retire 6,386 shares of common stock from the          - -       (64)     (63,796)     (21,967)        - -         85,827
     treasury
   Stock options exercised for 1,096 shares              - -        11       12,319          - -         - -            - -
   Amortization of compensation under stock award        - -       - -          - -          - -         - -            - -
     program
   Allocation of ESOP shares                             - -       - -       31,501          - -         - -            - -
   Acquisition of 1,096 shares of common stock           - -       (11)     (20,950)         - -         - -            - -
     for retirement
   Other comprehensive income                            - -       - -          - -          - -       2,800            - -
   Change related to ESOP shares                         - -       - -          - -          - -         - -            - -
                                                   ------------------------------------------------------------------------
Balance, June 30, 1998                                   - -     6,511    6,122,664    5,825,363        (507)      (300,944)
   Net income                                            - -       - -          - -      831,200         - -            - -
   Dividends ($0.48 per share)                           - -       - -          - -     (271,700)        - -            - -
   Acquisition of 37,000 shares of common stock
      for the treasury                                   - -       - -          - -          - -         - -       (684,125)
   Issuance of 2,192 shares under stock awards           - -       - -       (2,181)         - -         - -         38,634
     program
   Amortization of compensation under stock award        - -       - -          - -          - -         - -            - -
     program
   Allocation of ESOP shares                             - -       - -       29,827          - -         - -            - -
   Other comprehensive income                            - -       - -          - -          - -    (235,271)           - -
   Change related to ESOP shares                         - -       - -          - -          - -         - -            - -
                                                   ------------------------------------------------------------------------
Balance, June 30, 1999                                   - -     6,511    6,150,310    6,384,863    (235,778)      (946,435)
   Net income                                            - -       - -          - -    1,016,242         - -            - -
   Dividends ($0.12 per share)                           - -       - -          - -      (67,196)        - -            - -
   Acquisition of 50,710 shares of common stock
      for the treasury                                   - -       - -          - -          - -         - -       (680,232)
   Forfeiture of 1,754 shares under stock awards         - -       - -        2,181          - -         - -        (31,350)
     program
   Amortization of compensation under stock award        - -       - -          - -          - -         - -            - -
     program
   Allocation of ESOP shares                             - -       - -       17,305          - -         - -            - -
   Other comprehensive income                            - -       - -          - -          - -    (212,121)           - -
   Change related to ESOP shares                         - -       - -          - -          - -         - -            - -
                                                   ------------------------------------------------------------------------
Balance, June 30, 2000                             $     - -    $6,511   $6,169,796   $7,333,909   $(447,899)   $(1,658,017)
                                                   ========================================================================

(Continued...)
</TABLE>
See Notes to Financial Statements.
<PAGE>

Washington Bancorp and Subsidiaries

Consolidated Statements of Stockholders' Equity (Notes 9, 12 and 17)
Years Ended June 30, 2000, 1999 and 1998
(Continued)
<TABLE>

                                                                 Maximum
                                                                  Cash
                                                                Obligation    Unearned       Total
                                                    Deferred    Related to      ESOP      Stockholders'
                                                  Compensation  ESOP Shares    Shares        Equity
-------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>           <C>          <C>
Balance, June 30, 1997                             $(151,739)    $(69,392)    $(463,330)   $10,675,431
   Net income                                            - -          - -           - -        822,836
   Dividends ($0.44 per share)                           - -          - -           - -       (267,925)
   Acquisition of 16,500 shares of common stock
     for the treasury                                    - -          - -           - -       (307,938)
   Forfeiture of 1,754 shares under stock awards      19,733          - -           - -            - -
     program
   Issuance of 2,127 shares under stock awards       (40,285)         - -           - -            - -
     program
   Retire 6,386 shares of common stock from the          - -          - -           - -            - -
     treasury
   Stock options exercised for 1,096 shares              - -          - -           - -         12,330
   Amortization of compensation under stock award     67,329          - -           - -         67,329
     program
   Allocation of ESOP shares                             - -          - -        40,200         71,701
   Acquisition of 1,096 shares of common stock           - -          - -           - -        (20,961)
     for retirement
   Other comprehensive income                            - -          - -           - -          2,800
   Change related to ESOP shares                         - -      (84,396)          - -        (84,396)
                                                   ----------------------------------------------------
Balance, June 30, 1998                              (104,962)    (153,788)     (423,130)    10,971,207
   Net income                                            - -          - -           - -        831,200
   Dividends ($0.48 per share)                           - -          - -           - -       (271,700)
   Acquisition of 37,000 shares of common stock
      for the treasury                                   - -          - -           - -       (684,125)
   Issuance of 2,192 shares under stock awards       (36,453)         - -           - -            - -
     program
   Amortization of compensation under stock award     62,317          - -           - -         62,317
     program
   Allocation of ESOP shares                             - -          - -        43,410         73,237
   Other comprehensive income                            - -          - -           - -       (235,271)
   Change related to ESOP shares                         - -      (36,184)          - -        (36,184)
                                                   ---------------------------------------------------
Balance, June 30, 1999                               (79,098)    (189,972)     (379,720)    10,710,681
   Net income                                            - -          - -           - -      1,016,242
   Dividends ($0.12 per share)                           - -          - -           - -        (67,196)
   Acquisition of 50,710 shares of common stock
      for the treasury                                   - -          - -           - -       (680,232)
   Forfeiture of 1,754 shares under stock awards      29,169          - -           - -            - -
     program
   Amortization of compensation under stock award     28,869          - -           - -         28,869
     program
   Allocation of ESOP shares                             - -          - -        46,885         64,190
   Other comprehensive income                            - -          - -           - -       (212,121)
   Change related to ESOP shares                         - -      (38,975)          - -        (38,975)
                                                   ---------------------------------------------------
Balance, June 30, 2000                             $ (21,060)   $(228,947)    $(332,835)   $10,821,458
                                                   ===================================================
</TABLE>
<PAGE>


Washington Bancorp and subsidiaries

Consolidated Statements of Cash Flows
Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                                                         2000             1999             1998
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>              <C>              <C>
Cash Flows from Operating Activities
   Net income ..................................................................     $ 1,016,242      $   831,200      $   822,836
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Amortization of premiums and discounts on
        debt securities ........................................................          19,835          (58,188)          48,049
      Amortization of goodwill .................................................          94,562           94,561           43,341
      Provision for loan losses ................................................         186,500          112,500           89,000
      (Gain) loss on sale of investment securities .............................           9,456          (15,205)          (5,383)
      (Gain) on sale of foreclosed real estate .................................          (7,606)         (21,424)         (10,573)
      Depreciation .............................................................          88,106           77,289           70,548
      Compensation under stock awards ..........................................          28,869           62,317           67,329
      ESOP contribution expense ................................................          64,190           73,237           71,701
      Deferred income taxes ....................................................          14,000          (76,153)         (31,383)
      (Increase) in accrued interest receivable ................................        (273,238)        (230,936)         (87,398)
      (Increase) decrease in other assets ......................................          67,690         (134,582)        (171,664)
      Increase (decrease) in accrued expenses and
        other liabilities ......................................................          11,997           21,363         (140,901)
                                                                                     ---------------------------------------------
               Net cash provided by operating activities .......................       1,320,603          735,979          765,502
                                                                                     ---------------------------------------------
Cash Flows from Investing Activities
   Held-to-maturity securities:
      Maturities and calls .....................................................         198,750          368,250          153,250
      Purchases ................................................................        (215,000)             - -          (65,000)
   Available-for-sale securities:
      Sales ....................................................................       1,250,000        1,800,000        1,416,719
      Maturities ...............................................................       2,358,750       22,336,682       12,054,554
      Purchases ................................................................      (4,900,000)     (26,010,000)     (12,250,000)
   Federal funds sold, net .....................................................       1,230,000         (680,503)         527,272
   Purchase of Federal Home Loan Bank stock ....................................        (869,600)         (47,600)        (346,800)
   Loans made to customers, net ................................................     (11,423,578)      (7,221,225)      (5,584,292)
   Purchase of premises and equipment ..........................................         (31,783)        (152,033)         (93,489)
   Purchase of stock of Rubio Savings Bank of Brighton,
      net of cash and cash equivalents received (Note 16) ......................             - -              - -       (2,466,021)
                                                                                    ----------------------------------------------
              Net cash (used in) investing activities ..........................     (12,402,461)      (9,606,429)      (6,653,807)
                                                                                    ----------------------------------------------

Cash Flows from Financing Activities
   Net increase (decrease) in deposits .........................................    $ (2,392,369)    $  9,093,990     $  1,881,828
   Proceeds from Federal Home Loan Bank advances ...............................     524,350,000        9,500,000       50,450,000
   Principal payments on Federal Home Loan Bank
      advances .................................................................    (509,863,040)      (9,517,781)     (43,377,694)
   Net increase in advances from borrowers for taxes
      and insurance ............................................................          26,650            1,122           17,234
   Proceeds from issuance of common stock ......................................             - -              - -           12,330
   Acquisition of common stock .................................................        (680,232)        (684,125)        (328,899)
   Dividends paid ..............................................................         (67,196)        (271,700)        (267,925)
                                                                                    ----------------------------------------------
               Net cash provided by financing activities .......................      11,373,813        8,121,506        8,386,874
                                                                                    ----------------------------------------------

              Net increase (decrease) in cash and
                    cash equivalents ...........................................         291,955         (748,944)       2,498,569

Cash and cash equivalents:
   Beginning ...................................................................       2,557,430        3,306,374          807,805
                                                                                    ----------------------------------------------
   Ending ......................................................................    $  2,849,385     $  2,557,430     $  3,306,374
                                                                                    ==============================================
</TABLE>
<PAGE>

Washington Bancorp and subsidiaries

Consolidated Statements of Cash Flows
Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                                                         2000             1999             1998
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>              <C>              <C>
Supplemental Disclosures of Cash Flow Information
   Cash payments for:

      Interest paid to depositors ..............................................    $  3,292,959     $  3,434,349     $  2,562,216
      Interest paid on other obligations .......................................       1,371,867          881,818          639,162
      Income taxes, net of refunds .............................................         701,222          558,300          684,779

Supplemental Schedule of Noncash Investing and
   Financing Activities

   Transfers from loans to foreclosed real estate ..............................    $    114,811     $    485,722     $    110,427
   Contract sales of foreclosed real estate ....................................          72,250          271,233          121,000
   Stock issued under stock awards program .....................................             - -           36,453           40,285

   Acquisition of assets and  liabilities  from Rubio  Savings  Bank of Brighton
      (Note 16): Assets acquired:
        Cash and cash equivalents ..............................................                                      $  2,331,668
        Federal funds sold .....................................................                                         1,186,769
        Investment securities, held to maturity ................................                                         1,221,156
        Investment securities, available for sale ..............................                                        10,530,323
        Loans ..................................................................                                         7,848,923
        Premesis and equipment .................................................                                           226,634
        Goodwill ...............................................................                                         1,418,428
        Other assets ...........................................................                                           304,762
                                                                                                                      -------------
                                                                                                                        25,068,663
      Liabilities assumed:
        Deposits ...............................................................                                       (19,959,320)
        Other liabilities ......................................................                                          (311,654)
                                                                                                                      ------------
      Cash purchase price ......................................................                                      $  4,797,689
                                                                                                                      ============
</TABLE>
See Notes to Financial Statements.
<PAGE>


WASHINGTON BANCORP AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies

Nature of activities:  Washington Bancorp is a multibank holding company engaged
in the business of banking. The Company's two wholly-owned  subsidiary banks are
Washington  Federal  Savings  Bank,  Washington,  Iowa and Rubio Savings Bank of
Brighton,  Brighton,  Iowa.  The Banks are full service  banks  extending  their
services  to  individuals,  businesses,  governmental  units  and  institutional
customers  primarily in the  communities  of  Washington,  Wellman and Brighton,
Iowa.

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

Accounting estimates: The preparation of financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect the reported  amount of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Certain  significant  estimates:  The allowance for loan losses,  fair values of
securities and other financial instruments, and stock-based compensation expense
involve certain  significant  estimates made by management.  These estimates are
reviewed  by  management   routinely   and  it  is   reasonably   possible  that
circumstances that exist at June 30, 2000 may change in the near-future and that
the effect could be material to the consolidated financial statements.

Cash equivalents: Cash equivalents consist of FHLB-daily time, cash on hand, and
funds due from  banks.  For  purposes  of  reporting  cash  flows,  the  Company
considers all highly liquid debt instruments  purchased with a maturity of three
months  or less to be  equivalents.  Cash  flows  from  loans and  deposits  are
reported net.

Acquisition of a business: On January 15, 1998, the Company purchased all of the
outstanding stock of Rubio in a transaction accounted for as a purchase.

Investment  securities:  Held-to-maturity  securities  consist  solely  of  debt
securities  which the Banks  have the  positive  intent  and  ability to hold to
maturity and are stated at amortized cost.

Available-for-sale  securities  consist of debt  securities  not  classified  as
trading or held to maturity.  Available-for-sale  securities  are stated at fair
value, and unrealized  holding gains and losses, net of the related deferred tax
effect, are reported as a separate component of stockholders' equity. There were
no trading securities as of June 30, 2000 and 1999.

Stock of the Federal Home Loan Bank is carried at cost.

Premiums and discounts on debt  securities  are amortized  over the  contractual
lives of those  securities.  The  method of  amortization  results in a constant
effective yield on those  securities (the interest  method).  Realized gains and
losses on investment securities are included in income,  determined on the basis
of the cost of the specific securities sold.

Loans receivable:  Loans receivable are stated at unpaid principal balances less
the allowance for loan losses.

Interest  on loans is  accrued  daily on the  outstanding  balances.  Accrual of
interest is discontinued on a loan when management  believes,  after considering
collection efforts and other factors, that the borrower's financial condition is
such that collection of interest is doubtful.

Loan origination and commitment fees and certain direct loan  origination  costs
are deferred and the net amount is  amortized  as an  adjustment  to the related
loans yield.

The allowance  for loan losses is increased by provisions  charged to income and
reduced by charge-offs,  net of recoveries.  Management's periodic evaluation of
the adequacy of the allowance is based on the Banks' past loan loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the borrower's ability to repay,  estimated value of any underlying  collateral,
and current economic conditions.
<PAGE>


Loans are considered impaired when, based on all current information and events,
it is  probable  the Banks  will not be able to collect  all  amounts  due.  The
portion of the allowance for loan losses  applicable to impaired  loans has been
computed  based on the  present  value of the  estimated  future  cash  flows of
interest and principal  discounted at the loan's  effective  interest rate or on
the fair value of the  collateral  for collateral  dependent  loans.  The entire
change in present value of expected cash flows on impaired  loans is reported as
bad debt expense in the same manner in which impairment initially was recognized
or as a reduction  in the amount of bad debt  expense  that  otherwise  would be
reported. Interest income on impaired loans is recognized on the cash basis.

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  at  the  date  of  foreclosure.  Costs  relating  to  development  and
improvement  of property  are  capitalized,  whereas  costs  relating to holding
property are expensed.

Valuations are periodically performed by management.  If the carrying value of a
property  exceeds its  estimated  fair value less  estimated  selling  expenses,
either an allowance for losses is established,  or the property's carrying value
is reduced by a charge to income.

Credit related financial  instruments:  In the ordinary course of business,  the
Banks have entered into  commitments  to extend  credit,  including  commitments
under commercial letters of credit and standby letters of credit. Such financial
instruments are recorded when they are funded.

Transfers of financial  assets:  Transfers of financial assets are accounted for
as sales,  when  control  over the assets  has been  surrendered.  Control  over
transferred  assets is deemed to be  surrendered  when (1) the assets  have been
isolated from the Bank, (2) the transferee obtains the right (free of conditions
that constrain it from taking advantage of that right) to pledge or exchange the
transferred assets and (3) the Bank does not maintain effective control over the
transferred  assets  through  an  agreement  to  repurchase  them  before  their
maturity.

Premises and  equipment:  Premises  and  equipment  are carried at cost,  net of
accumulated  depreciation.  Depreciation  is computed by the  straight-line  and
declining-balance methods over the estimated useful lives of the assets.

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.

Income taxes: Deferred taxes are provided on a liability method whereby deferred
tax assets are  recognized for deductible  temporary  differences  and operating
loss and tax credit  carryforwards  and deferred tax  liabilities are recognized
for taxable  temporary  differences.  Temporary  differences are the differences
between  the  reported  amounts of assets and  liabilities  and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management,  it is more likely than not that some portion or all of the deferred
tax  assets  will not be  realized.  Deferred  tax assets  and  liabilities  are
adjusted  for the  effects  of  changes  in tax  laws  and  rates on the date of
enactment.

Earnings per common share:  Basic per-share amounts are computed by dividing net
income  (the  numerator)  by  the  weighted-average   number  of  common  shares
outstanding (the denominator).  Diluted per-share amounts assume the conversion,
exercise or  issuance  of all  potential  common  stock  unless the effect is to
reduce  the loss or  increase  the  income  per  common  share  from  continuing
operations. Shares owned by the ESOP that have not been committed to be released
are not considered to be outstanding  for the purpose of computing  earnings per
share.

Unearned ESOP shares and expense:  The unearned ESOP shares have 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.
<PAGE>


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.

Stock options  issued to employees:  The Company  adopted the provisions of SFAS
No. 123,  "Accounting for Stock-Based  Compensation,"  which  establishes a fair
value based  method for the  financial  reporting  of its  stock-based  employee
compensation plans. However, as allowed by the standard, the Company has elected
to continue to measure  compensation  using the intrinsic  value based method as
prescribed by Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to  Employees."  Under  this  method,  compensation  is  measured  as the
difference  between the market  value of the stock on the grant  date,  less the
amount required to be paid for the stock. The difference,  if any, is charged to
expense over the periods of service.

Recently issued accounting  standards:  The Financial Accounting Standards Board
has issued Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities,"  which  is  effective  for all  fiscal  quarters  of  fiscal  years
beginning  June 15, 2000.  This Statement  establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other  contracts  and for hedging  activities.  It requires  that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement of financial position and measure those instruments at fair value. The
accounting for changes in the fair value of a derivative depends on the intended
use of the derivative and the resulting  designation.  Management  believes that
adoption of this  Statement  will not have an effect on the Company's  financial
statements.

Fair value of financial instruments:  FASB Statement No. 107, "Disclosures About
Fair  Value  of  Financial  Instruments,"  requires  disclosure  of  fair  value
information  about  financial  instruments,  whether  or not  recognized  in the
balance  sheet,  for which it is  practicable  to estimate that value.  In cases
where quoted market prices are not available, fair values are based on estimates
using  present  value  or  other  valuation  techniques.  Those  techniques  are
significantly  affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate  settlement of the instrument.  Statement No.
107 excludes certain financial instruments and all nonfinancial instruments from
its  disclosure  requirements.  Accordingly,  the  aggregate  fair value amounts
presented do not represent the underlying value of the Company.

The  following  methods and  assumptions  were used by the Company in estimating
fair value of its financial instruments:

   Cash and cash equivalents: The carrying amounts reported in the balance sheet
   for cash and cash equivalents approximate their fair values.

   Investment  securities:  Fair values for  investment  securities are based on
   quoted  market  prices,  where  available.  If quoted  market  prices are not
   available,  fair  values  are based on  quoted  market  prices of  comparable
   instruments.

   Federal funds sold:  The carrying  amounts  reported in the balance sheet for
   federal funds sold approximate their fair values.

   Loans and accrued interest  receivable:  For variable-rate loans that reprice
   frequently and have no significant change in credit risk, the fair values are
   based on carrying values. The fair values of other loans are determined using
   estimated future cash flows, discounted at the interest rates currently being
   offered  for loans  with  similar  terms to  borrowers  with  similar  credit
   quality. The carrying amount of accrued interest receivable  approximates its
   fair value.

   Deposits:  The fair values of demand  deposits equal their  carrying  amounts
   which represent the amount payable on demand.  The carrying amounts for money
   market and passbook  savings  accounts  approximate  their fair values at the
   reporting  date.  Fair  values for  fixed-rate  certificates  of deposit  are
   estimated  using a discounted  cash flow  calculation  that applies  interest
   rates  currently  being offered on  certificates  to a schedule of aggregated
   expected monthly maturities on time deposits.  The carrying amount of accrued
   interest payable approximates its fair value.

   Borrowed  funds:  Fair  values  for  borrowed  funds  are  estimated  using a
   discounted cash flow  calculation that applies interest rates currently being
   charged for borrowed funds of similar maturities.

   Off-balance  sheet  instruments:  Fair values for the  Company's  off-balance
   sheet  instruments  are  valued  based upon the  current  fee  structure  for
   outstanding letters of credit. Unfunded loan commitments are not valued since
   the loans are generally priced at market at the time of funding.
<PAGE>


Note 2.  Restrictions on Cash Due from Banks and Investments

Washington is required to maintain  reserve  balances in cash or on deposit with
Federal  Reserve Banks.  The total of those reserve  balances was  approximately
$25,000 at June 30,  2000 and 1999.  In  addition,  Washington  is  required  to
maintain a minimum balance of unpledged cash and investment  securities totaling
approximately   $3,010,000  and  $2,228,000  as  of  June  30,  2000  and  1999,
respectively, to provide liquidity for deposits.

Note 3.  Investment Securities

The amortized cost and fair value of investment securities available for sale as
of June 30, 2000 and 1999 are as follows:
<TABLE>
                                                          Cost Or       Gross           Gross
                                                         Amortized    Unrealized      Unrealized      Fair
                                                            Cost         Gains         (Losses)       Value
                                                        ------------------------------------------------------
<S>                                                     <C>           <C>            <C>           <C>
2000:
   U. S. Treasury securities ........................   $   299,993   $         7    $       - -   $   300,000
   U. S. Government agencies ........................    16,517,807           - -       (462,027)   16,055,780
   Corporations and other ...........................     5,185,907           - -       (265,731)    4,920,176
   State and political subdivisions .................       332,905           - -         (6,510)      326,395
                                                        ------------------------------------------------------
                                                        $22,336,612   $         7    $  (734,268)  $21,602,351
                                                        ======================================================

1999:
   U. S. Treasury securities ........................   $ 1,704,558   $     3,192    $       - -   $ 1,707,750
   U. S. Government agencies ........................    13,871,569           - -       (248,191)   13,623,378
   Corporations and other ...........................     5,053,899           179       (128,573)    4,925,505
   State and political subdivisions .................       442,485           257         (4,009)      438,733
                                                        ------------------------------------------------------
                                                        $21,072,511   $     3,628    $  (380,773)  $20,695,366
                                                        ======================================================
</TABLE>

The amortized cost and fair value of investment  securities held to maturity are
as follows:

                                     Cost Or     Gross       Gross
                                    Amortized  Unrealized  Unrealized     Fair
                                       Cost      Gains      (Losses)      Value
                                    --------------------------------------------

State and political subdivisions:
2000 .............                  $774,629   $    - -    $     - -    $774,629
                                    ============================================

1999 .............                  $760,520   $    - -    $     - -    $760,520
                                    ============================================

The  amortized  cost and fair value of debt  securities  as of June 30,  2000 by
contractual maturity are shown below.
<TABLE>
                                                                                      Amortized      Fair
                                                                                         Cost        Value
                                                                                      ------------------------
<S>                                                                                   <C>          <C>
Available for sale:
   Due in one year or less .........................................................  $ 1,312,397  $ 1,301,375
   Due after one year through five years ...........................................   16,430,754   15,851,313
   Due after five years through ten years ..........................................    3,293,965    3,181,204
   Due after ten years .............................................................    1,299,496    1,268,459
                                                                                      ------------------------
                                                                                       22,336,612   21,602,351
                                                                                      ------------------------
Held to maturity:
   Due in one year or less .........................................................      262,129      262,129
   Due after one year through five years ...........................................      267,500      267,500
   Due after five years through ten years ..........................................      245,000      245,000
                                                                                      ------------------------
                                                                                          774,629      774,629
                                                                                      ------------------------
                                                                                      $23,111,241  $22,376,980
                                                                                      ========================
</TABLE>
<PAGE>


Investment  securities  with a carrying  amount of $1,260,631  and $3,741,599 at
June 30,  2000 and 1999,  respectively,  were  pledged as  collateral  on public
deposits.

For the years  ended  June 30,  2000,  1999 and  1998,  proceeds  from  sales of
securities available for sale amounted to $1,250,000, $1,800,000 and $1,416,719,
respectively.

Securities  gains (losses) for the years ended June 30, 2000,  1999 and 1998 are
as follows:

                                              2000         1999       1998
                                            -------------------------------

Realized gains .........................    $            $20,367    $ 5,383
Realized (losses) ......................     (9,456)      (5,162)       - -
                                            -------------------------------
                                            $(9,456)     $15,205    $ 5,383
                                            ===============================


Note 4.  Loans Receivable

Loans receivable are summarized as follows:
                                                           June 30,
                                                   ------------------------
                                                       2000         1999
                                                   ------------------------
Mortgage loans on real estate:
   Residential 1-4 family .......................  $50,766,522  $49,464,296
   Home equity and second mortgage ..............    2,430,726    1,257,725
   Multifamily and commercial real estate .......   13,726,769    8,611,583
   Construction loans ...........................    1,781,924      796,418
                                                   ------------------------
              Total mortgage loans ..............   68,705,941   60,130,022
Commercial loans ................................   10,963,334    8,714,483
Consumer and other loans:
   Automobile ...................................    4,141,674    3,161,472
   Other ........................................      825,129    1,245,387
                                                   ------------------------
              Total loans .......................   84,636,078   73,251,364
   Less allowance for loan losses ...............      647,605      472,187
                                                   ------------------------
                                                   $83,988,473  $72,779,177
                                                   ========================

Loans  receivable  are net of loans in process of $1,807,091  and $546,229 as of
June 30, 2000 and 1999, respectively.

Activity in the allowance for loan losses is summarized as follows for the years
ended June 30:

                                                 2000        1999        1998
                                               --------------------------------

Balance, beginning .........................   $472,187    $388,034    $225,650
   Provision charged to expense ............    186,500     112,500      89,000
   Charge-offs .............................    (44,033)    (47,208)    (46,428)
   Recoveries ..............................     32,951      18,861      14,638
   Allowance of Rubio at date of acquisition        - -         - -     105,174
                                               --------------------------------
Balance, ending ............................   $647,605    $472,187    $388,034
                                               ================================

Information regarding impaired loans is as follows:

   The Banks have no material  loans  receivable  at June 30, 2000 and 1999 that
   they  consider  to be  impaired  that are not part of a  homogenous  group of
   loans. Accordingly, no separate allowance has been provided for these loans.

Note 5.  Accrued Interest Receivable

Accrued interest receivable at June 30 is summarized as follows:

                                               2000          1999
                                            ------------------------

Investment securities ...................   $  388,206    $  324,475
Loans receivable ........................    1,075,632       866,125
                                            ------------------------
                                            $1,463,838    $1,190,600
                                            ========================
<PAGE>


Note 6.  Premises and Equipment

Premises and equipment consisted of the following at June 30:

                                                              2000       1999
                                                          ----------------------

Land ..........................................           $   83,080  $   83,080
Building ......................................              812,799     812,799
Furniture, fixtures and equipment .............              777,698     745,915
                                                          ----------------------
                                                           1,673,577   1,641,794
Less accumulated depreciation .................              855,349     767,243
                                                          ----------------------
                                                          $  818,228  $  874,551
                                                          ======================


Note 7.  Deposits

Deposits at June 30 are as follows:
<TABLE>
                                   Weighted
                                   Average
                                   Rate At           2000                 1999
                                   June 30, -------------------   -------------------
                                     2000      Amount   Percent      Amount   Percent
                                            -------------------   -------------------
<S>                                <C>      <C>         <C>       <C>         <C>
Demand and NOW accounts,
   including noninterest-bearing
   deposits 2000 $4,225,007;
   1999 $3,068,058 .............     0.98   $ 9,459,327   12.9%   $ 8,536,323   11.3%
Money market ...................     4.35    11,580,033   15.8     11,470,925   15.1
Passbook savings ...............     3.29     5,531,253    7.6      5,728,502    7.6
                                            -----------------------------------------
                                             26,570,613   36.3     25,735,750   34.0
                                            -----------------------------------------
Certificates of deposit:
   2.01% to 3% .................     2.61       260,335    0.4        360,797    0.5
   2.01% to 3% .................     3.12       185,203    0.2
   4.01% to 5% .................     4.59     9,843,292   13.4     11,423,071   15.1
   5.01% to 6% .................     5.43    21,965,258   30.0     31,958,585   42.2
   6.01% to 7% .................     5.67    14,472,396   19.7      6,211,263    8.2
                                            -----------------------------------------
                                             46,726,484   63.7     49,953,716   66.0
                                            -----------------------------------------
                                     4.44   $73,297,097  100.0%   $75,689,466  100.0%
                                            =========================================
</TABLE>

The aggregate amount of short-term jumbo  certificates of deposit with a minimum
denomination of $100,000 was approximately $3,282,000 and $3,233,000 at June 30,
2000 and 1999,  respectively.  Deposits in excess of $100,000 are not insured by
the FDIC.

At June 30,  2000,  scheduled  maturities  of  certificates  of  deposit  are as
follows:
<TABLE>
                                                  Year Ending June 30,
                   -----------------------------------------------------------------------------------
                       2001          2002          2003          2004           2005          Total
                   -----------------------------------------------------------------------------------
<S>                <C>           <C>           <C>           <C>            <C>            <C>
2% to 3%           $   260,335   $       - -   $       - -   $       - -    $       - -    $   260,335
3.01% to 4%            185,203           - -           - -           - -            - -        185,203
4.01% to 5%          8,440,318     1,133,472       269,502           - -            - -      9,843,292
5.01% to 6%          8,911,401     9,933,057     1,917,641       921,786        281,373     21,965,258
6.01% to 7%         12,744,960       573,981     1,062,703        90,752            - -     14,472,396
                   -----------------------------------------------------------------------------------
                   $30,542,217   $11,640,510   $ 3,249,846   $ 1,012,538    $   281,373    $46,726,484
                   ===================================================================================
</TABLE>
<PAGE>


Interest  expense  on  deposits  for the years  ended June 30 is  summarized  as
follows:

                                           2000       1999        1998
                                       ----------------------------------

Money market ........................  $  420,364  $  404,713  $  360,080
Passbook savings ....................     175,702     184,866     116,880
NOW .................................     100,135     111,094      82,454
Certificates of deposit .............   2,629,295   2,712,539   2,060,204
                                       ----------------------------------
                                       $3,325,496  $3,413,212  $2,619,618
                                       ==================================



Note 8.  Borrowed Funds

Borrowed funds at June 30 are as follows:

                                                           2000         1999
                                                       ------------------------

Short-term advances from the Federal Home Loan Bank .. $24,500,000  $ 8,750,000
Long-term advances from the Federal Home Loan Bank ...   5,693,250    6,956,290
                                                       ------------------------
                                                       $30,193,250  $15,706,290
                                                       ========================

Pursuant to collateral  agreements with the Federal Home Loan Bank (FHLB), these
advances  are  collateralized  by all the  Institution's  stock  in the FHLB and
qualifying  first  mortgage  loans with a face  amount of  $43,836,000.  Of this
total,  $7,500,000  of the advances are callable  every three months  thereafter
with a three calendar day notice.  Therefore,  these advances are categorized as
maturing within one year per the schedule below.

Advances at June 30, 2000 have maturity dates as follows:

  Year Ending                                                         June 30,
    June 30,                   Interest Rate                            2000
-------------------------------------------------------------------------------

   2001                        5.31% to 6.33%                       $24,779,115
   2002                        5.79% to 6.33%                           296,174
   2003                        5.41% to 6.33%                           814,275
   2004                        5.79% to 6.33%                           333,481
   2005                        5.79% to 6.33%                           353,868
   Thereafter                  5.79% to 6.33%                         3,616,337
                                                                    -----------
                                                                    $30,193,250
                                                                    ===========



Note 9.  Employee Benefit Plans

Employee Stock  Ownership  Plan:  The Company has  established an Employee Stock
Ownership  Plan  "(ESOP)" for eligible  employees.  The Company has financed the
ESOP's purchase of the Company's stock and, therefore, the ESOP is considered to
be internally leveraged. Employees 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.

The  Company  makes  annual  contributions  to the ESOP equal to the ESOP's debt
service less dividends  received by the ESOP. All dividends received by the ESOP
are used to pay debt service. Contributions to the ESOP and shares released from
the suspense account in an amount proportional to the repayment of the ESOP loan
are allocated  among ESOP  participants on the basis of compensation in the year
of  allocation.  Benefits  generally  become  100%  vested  after seven years of
credited service.  Forfeitures will be reallocated among remaining participating
employees,  in the same proportion as contributions.  Benefits may be payable in
the form of stock or cash upon termination of employment.

As shares are released,  the Company reports  compensation  expense equal to the
current  fair  value  of the  shares,  and the  shares  become  outstanding  for
earnings-per-share computations. Dividends on allocated ESOP shares are recorded
as a reduction of retained  earnings;  dividends on unallocated  ESOP shares are
recorded as a reduction of debt and accrued interest.  ESOP compensation expense
totaled $69,872, $74,924 and $68,865 for the years ended June 30, 2000, 1999 and
1998, respectively.
<PAGE>


Shares  of  common  stock  held by the  ESOP at June  30,  2000  and 1999 are as
follows:

                                                            2000      1999
                                                          -------------------

Allocated shares ..................................       $ 16,884   $ 12,376
Shares released for allocation ....................          2,435      2,254
Unreleased (unearned) shares ......................         33,283     37,972
                                                          -------------------
                                                          $ 52,602   $ 52,602
                                                          -------------------
Fair value of unreleased (unearned) shares ........       $713,283   $576,795
                                                          ===================

The ESOP plan may allow, at the discretion of the Advisory Committee,  employees
to elect to defer up to fifteen  percent of compensation  annually.  The Company
may, at the discretion of the Advisory Committee, make matching contributions on
an annual  basis.  For the years  ended June 30,  2000,  1999 and 1998,  $7,225,
$6,005 and $2,503, respectively, was charged to expense.

Defined contribution plan:
-------------------------

Rubio has a defined contribution  retirement plan covering  substantially all of
its  employees.   Contributions,  which  are  10%  of  each  covered  employee's
compensation,  totaled $18,640,  $18,920 and $5,961 for the years ended June 30,
2000, 1999 and 1998, respectively.

Stock-based  compensation  plans:  The Company has two stock-based  compensation
plans  which  are  described  below.  As  permitted  under  generally   accepted
accounting principles,  grants under those plans are accounted for following APB
Opinion No. 25 and related  interpretations.  Had compensation  cost for the two
stock-based  compensation  plans  been  determined  based on the grant date fair
values of the awards (the  method  prescribed  in SFAS No.  123),  reported  net
income and  earnings  per common  share would have been reduced to the pro forma
amounts shown below:

                                              2000      1999        1998
                                           -------------------------------

Pro forma net income ................      $989,015   $806,468    $781,465
Pro forma earnings per share:
   Basic ............................          1.81       1.43        1.29
   Diluted ..........................          1.78       1.39        1.26

The pro forma  effects of  applying  SFAS No. 123 are not  indicative  of future
amounts.

The fair value of each grant and award is  estimated at the grant date using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions for grants in 1999 and 1998:  dividend rates of 2.2% and 1.9%; price
volatility of 22.79% and 8.25%;  risk-free  interest rates of 6.0%; and expected
life of 5 years.

Stock options:  During the year ended June 30, 1997, the Company adopted a stock
option plan for certain officers and directors  whereby up to 65,751 shares were
reserved for grants.  The Board has granted  options at prices equal to the fair
value of the stock on the dates of the grants. All options are for a term of ten
years and 20% become exercisable each year for the next five years.

A summary of the status of the Company's stock option plan is as follows:

                                                                    Weighted-
                                                                     Average
                                                                    Exercise
                                                         Shares       Price
                                                         -------------------

Outstanding at June 30, 1998 ..................           47,121      $11.71
   Granted ....................................            5,479       16.63
   Exercised
   Forfeited
                                                         -------------------
Outstanding at June 30, 1999 ..................           52,600       12.22
   Granted
   Exercised
   Forfeited ..................................           (5,479)      16.63
                                                         -------------------
Outstanding at June 30, 2000 ..................           47,121       11.71
                                                         ===================
<PAGE>


                                                  2000        1999        1998
                                                --------------------------------
Weighted-average fair value per option of
     options granted during the year ......     $    - -     $  4.16    $   3.27
                                                ================================

Other pertinent  information related to the options outstanding at June 30, 2000
is as follows:

                            Remaining
     Number     Exercise   Contractual     Number
  Outstanding    Price        Life       Exercisable
----------------------------------------------------

    44,303      $ 11.25      6 Years       26,589
     2,818        18.94      7 Years        1,128
-----------------------                  -----------
    47,121      $ 11.71                    27,717
=======================                  ===========

Stock awards:  The Company  adopted a recognition  and retention plan in October
1996 whereby  26,300  shares of common stock have been  reserved for issuance to
certain executive officers and directors.  Shares awarded under the plan vest in
five equal  annual  installments,  beginning on the  anniversary  of the grants.
During the year ended June 30, 2000,  1999 and 1998,  awards were granted for no
shares, 2,192 shares and 2,127 shares, respectively,  with a fair value of none,
$16.63 and $18.94 per share at the date of the grant, respectively.

The  expense  under the plan is based  upon the fair  value of the shares on the
date of the grant, allocated over the five-year term of vesting. The expense for
the years  ended June 30,  2000,  1999 and 1998  totaled  $28,869,  $62,317  and
$67,329, respectively. Shares of common stock are issued upon vesting.

Note 10.  Income Taxes

Net deferred income tax assets (liabilities) consist of the following components
as of June 30, 2000 and 1999:

                                                      2000      1999
                                                    ------------------
Deferred tax assets:
   Unrealized loss on investment securities
      available for sale .........................  $286,363  $141,368
   Accrued compensation ..........................    26,272    29,387
   Allowance for loan losses .....................   168,845   147,888
   Other .........................................     7,640
                                                    ------------------
                                                     489,120   318,643
                                                    ------------------
Deferred tax liabilities:
   Recapture of allowance for loan losses ........   104,032   130,040
   FHLB stock dividends ..........................    44,067    44,067
   Premises and equipment ........................    91,735    87,556
   Accrued expenses ..............................    28,374    32,201
   Loan origination fees and costs ...............    68,170       - -
   Other .........................................     3,379     6,411
                                                    ------------------
                                                     339,757   300,275
                                                    ------------------
              Net deferred tax asset .............  $149,363  $ 18,368
                                                    ==================

The net  change in the  deferred  income  taxes is  reflected  in the  financial
statements for the years ended June 30, 2000, 1999 and 1998 as follows:
<TABLE>
                                                       2000       1999       1998
                                                    -------------------------------
<S>                                                 <C>         <C>        <C>
Statement of income .............................   $ (14,000)  $ 76,153   $ 31,383
Statement of stockholders' equity* ..............     144,995    141,064     (1,680)
Deferred taxes related to acquisition of Rubio ..         - -        - -   (122,753)
                                                    -------------------------------
                                                    $130,995    $217,217   $(93,050)
                                                    ===============================
</TABLE>
* Change in deferred taxes related to unrealized  loss on investment  securities
  available for sale.
<PAGE>


The provision  for income taxes  charged to operations  for the years ended June
30, 2000, 1999 and 1998 consisted of the following:

                                              2000       1999       1998
                                            ------------------------------

Current .................................   $699,437   $608,175   $471,063
Deferred ................................     14,000    (76,153)   (31,383)
                                            ------------------------------
                                            $713,437   $532,022   $439,680
                                            ==============================

The income tax  provision  differs from the amount of income tax  determined  by
applying the U. S. Federal  income tax rate to pretax income for the years ended
June 30, 2000, 1999 and 1998 due to the following:
<TABLE>
                                                Years Ended June 30,
                           -----------------------------------------------------------------
                                  2000                   1999                  1998
                           --------------------  -------------------  ----------------------
                                          % Of                 % Of                    % Of
                                         Pretax               Pretax                  Pretax
                            Amount       Income    Amount     Income   Amount         Income
                          ------------------------------------------------------------------
<S>                       <C>            <C>     <C>          <C>     <C>             <C>
Computed "expected"
   tax expense ........   $ 605,388       35.0%  $ 477,128     35.0%  $  441,881       35.0%
Tax-exempt interest ...     (23,754)      (1.4)    (34,454)    (2.5)     (26,760)      (2.1)
State income taxes, net
   of federal benefit .      62,376        3.6      50,009      3.7       37,811        3.0
Nondeductible goodwill
   amortization .......      33,097        1.9      33,097      2.4       15,169        1.2
Other, net ............      36,330        2.1       6,242      0.4      (28,421)      (2.3)
                          ------------------------------------------------------------------
                          $ 713,437       41.2%  $ 532,022     39.0%  $  439,680       34.8%
                          ==================================================================
</TABLE>

Note 11.  Earnings Per Share

Basic and diluted earnings per share are calculated as follows:
<TABLE>
                                                                 Year Ended June 30,
                                                         ------------------------------------
                                                            2000         1999         1998
                                                         ------------------------------------
<S>                                                      <C>          <C>          <C>
Basic earnings per share:
   Net income available to common stockholders, basic .  $1,016,242   $  831,200   $  822,836
                                                         ====================================

   Weighted average shares outstanding, basic .........     545,963      563,303      603,589
                                                         ====================================

   Basic earnings per share ...........................  $     1.86   $     1.48   $     1.36
                                                         ====================================

Diluted earnings per share:
   Net income available to common shareholders, diluted
      (Note 1) ........................................  $1,016,242   $  831,200   $  822,836
                                                         ====================================

   Weighted average shares outstanding, basic .........     545,963      563,303      603,589
      Effect of dilutive securities, stock options ....       9,643       14,812       16,677
                                                         ------------------------------------
   Weighted average shares outstanding, diluted .......     555,606      578,115      620,266
                                                         ====================================

   Diluted earnings per share .........................  $     1.83   $     1.44   $     1.33
                                                         ====================================
</TABLE>

Note 12.  Regulatory Capital Requirements

The ability of the Company to pay  dividends  to its  shareholders  is dependent
upon dividends paid by its subsidiary banks.
<PAGE>


Federal regulatory agencies have adopted various capital standards for financial
institutions,   including  risk-based  capital  standards.   Risk-based  capital
standards  have  requirements  for a  minimum  Tier 1 capital  to  assets  ratio
(leverage  ratio).  In addition,  regulatory  agencies  consider  the  published
capital  levels as minimum  levels and may  require a financial  institution  to
maintain capital at higher levels.

A comparison of the Banks' capital as of June 30, 2000 and 1999 with the minimum
requirements is presented below:

                                                    Actual
                                             ----------------------   Minimum
                                               2000          1999   Requirements
                                             -----------------------------------
Washington:
   Tangible capital .................          7.97%          8.53%        1.5%
   Risk-based capital ...............         12.32          12.92         8.0
   Core capital .....................          7.97           8.53         4.0

According to the Office of Thrift Supervision ("OTS"),  Washington is considered
to be "well capitalized."

                                                   Actual
                                              ------------------      Minimum
                                              2000        1999      Requirements
                                              ----------------------------------

Rubio:
   Tier 1 risk-based capital ........         15.4%        20.7%        4.0%
   Total risk-based capital .........         16.6         21.7         8.0
   Leverage ratio ...................         10.6         11.1         3.0

According  to  FDIC  capital  guidelines,   Rubio  is  considered  to  be  "well
capitalized."

Banking  laws and  regulations  limit the amount of  dividends  that may be paid
without  prior   approval  of  the  Bank's   regulatory   agency.   Under  these
restrictions,  the Company's  subsidiary  banks may not pay dividends that would
result in its capital levels being reduced below the minimum  requirements shown
above.

Note 13.  Commitments and Contingencies

Financial  instruments  with  off-balance  sheet risk:  The Banks are parties to
financial  instruments  with  off-balance-sheet  risk in the  normal  course  of
business  to  meet  the  financing  needs  of  its  customers.  These  financial
instruments include commitments to extend credit.  Those instruments involve, to
varying  degrees,  elements  of credit and  interest  rate risk in excess of the
amount recognized in the statement of financial position.

The Banks' exposure to credit loss in the event of  nonperformance  by the other
party  to  the  financial   instrument  for  commitments  to  extend  credit  is
represented by the contractual  notional amount of those instruments.  The Banks
use the same credit policies in making  commitments and conditional  obligations
as they do for on-statement of financial condition instruments.

Unless  noted  otherwise,  the Banks  require  collateral  or other  security to
support financial instruments with credit risk.

                                                     Contract Or
                                                   Notional Amount
                                               ------------------------
                                                June 30,       June 30,
                                                  2000          1999
                                               ------------------------
Financial instruments whose contract
  amounts represent credit risk,
  commitments to extend credit:

   First mortgage loans ................       $2,847,198    $1,910,601
   Consumer and other loans ............        2,890,459     1,412,509
                                               ------------------------
                                               $5,737,657     3,323,110
                                               ========================

The above commitments are to make fixed rate loans with a June 30, 2000 and 1999
weighted average interest rate of 8.97% and 8.52%, respectively.
<PAGE>


Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is not violation of any condition established in the contract. Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require payment of a fee. The Banks evaluate each customer's creditworthiness on
a case-by-case basis. The amount of collateral obtained,  if deemed necessary by
the Banks,  upon extension of credit is based on management's  credit evaluation
of the party.  Collateral  held  varies  but may  include  accounts  receivable,
inventory, property and equipment, and income-producing commercial properties.

Concentrations  of credit  risk:  Most of the Banks'  lending  activity  is with
customers located within the state. The Banks generally originate  single-family
residential  loans within its primary  lending area of  southeastern  Iowa.  The
Banks' underwriting policies require such loans to be an 85% loan to value based
upon appraised values. These loans are secured by the underlying properties. The
Banks are also active in  originating  secured  consumer loans to its customers,
primarily  automobile and home equity loans. As of June 30, 2000, the Banks have
approximately $14,760,000 of agriculturally dependent loans.

Note 14.  Fair Value of Financial Instruments

The carrying  value and estimated  fair values of financial  instruments at June
30, 2000 and 1999 are as follows:
<TABLE>
                                                             2000                       1999
                                                     ------------------------  ------------------------
                                                                   Estimated                 Estimated
                                                      Carrying       Fair       Carrying       Fair
                                                       Amount        Value       Amount        Value
                                                     ------------------------  ------------------------
<S>                                                  <C>          <C>          <C>          <C>
Financial assets:
   Cash and cash equivalents ......................  $ 2,849,385  $ 2,849,385  $ 2,557,430  $ 2,557,430
   Investment securities:
      Held to maturity ............................      774,629      774,629      760,520      760,520
      Available-for-sale ..........................   21,602,351   21,602,351   20,695,366   20,695,366
   Federal funds sold .............................      110,000      110,000    1,340,000    1,340,000
   Loans ..........................................   83,988,473   82,934,380   72,779,177   72,830,503
   Accrued interest receivable ....................    1,463,838    1,463,838    1,190,600    1,190,600
Financial liabilities:
   Deposits .......................................   73,297,097   73,622,836   75,689,466   76,479,543
   Borrowed funds .................................   30,193,250   29,559,753   15,706,290   15,225,298
   Accrued interest payable .......................      420,601      420,601      388,063      388,063

                                                      Face                       Face
                                                      Amount                     Amount
                                                     ----------                ----------
Off-balance sheet instruments,
   loan commitments ...............................  $ 5,737,657  $       - -  $ 3,323,110   $      - -
</TABLE>

Note 15.  Transactions with Related Parties

The  Banks  have  had,  and  may be  expected  to have  in the  future,  banking
transactions  in the  ordinary  course of  business  with  directors,  principal
officers,  their immediate  families and affiliated  companies in which they are
principal  stockholders  (commonly referred to as related parties), all of which
have, in the opinion of management,  on the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
others.

Aggregate loan transactions with related parties were as follows:

                                                 Year Ended June 30,
                                             --------------------------
                                                2000           1999
                                             --------------------------

Balance, beginning ....................      $  950,265     $   791,826
   New loans ..........................         689,250       1,174,375
   Repayments .........................        (295,960)     (1,015,936)
                                             --------------------------
Balance, ending .......................      $1,343,555     $   950,265
                                             ==========================

Maximum balance during the year .......      $1,411,639     $ 1,085,305
                                             ==========================

<PAGE>


Note 16.  Acquisition of a Business

Effective January 15, 1998, the Company acquired for cash all of the outstanding
shares of Rubio. The total  acquisition  cost was $4,797,689.  The excess of the
acquisition  cost over the fair value of the net assets  acquired was $1,418,428
and is being  amortized  over fifteen  years by the  straight-line  method.  The
acquisition was accounted for as a purchase and the results of operations  since
the date of the acquisition are included in the Company's statement of income.

Unaudited  proforma net income and earnings per share for 1998,  as though Rubio
had been acquired as of July 1, 1997 are not  significantly  different  than the
reported amounts of the Company.


Note 17.  Parent Company Only Financial Information

Following is condensed  financial  information  of the Company  (Parent  Company
only):

                                WASHINGTON BANCORP

                   CONDENSED STATEMENTS OF FINANCIAL CONDITION
                           As Of June 30, 2000 and 1999
<TABLE>

ASSETS                                                                                    2000           1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>            <C>

Cash ...............................................................................   $   432,621    $     4,632
Investment in subsidiary banks, at cost plus equity in
   undistributed earnings ..........................................................    10,516,430     10,526,726
Other assets .......................................................................       102,614        369,295
                                                                                       --------------------------
                                                                                       $11,051,665    $10,900,653
                                                                                       ==========================

LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------

Liabilities, accrued expenses and other liabilities ................................   $     1,260    $       - -
                                                                                       --------------------------
Redeemable common stock held by Employee Stock
   Ownership Plan (ESOP) ...........................................................       228,947        189,972
                                                                                       --------------------------
Stockholders' equity:
   Preferred stock

   Common stock ....................................................................         6,511          6,511
   Additional paid-in capital ......................................................     6,169,796      6,150,310
   Retained earnings ...............................................................     7,333,909      6,384,863
   Accumulated other comprehensive income, unrealized (losses)
      on debt securities, net ......................................................      (447,899)      (235,778)
                                                                                       --------------------------
                                                                                        13,062,317     12,305,906
   Less:
      Cost of common shares acquired for the treasury
        2000 103,399 shares; 1999 50,935 shares ....................................    (1,658,017)      (946,435)
      Deferred compensation ........................................................       (21,060)       (79,098)
      Maximum cash obligation related to ESOP shares ...............................      (228,947)      (189,972)
      Unearned shares, Employee Stock Ownership Plan ...............................      (332,835)      (379,720)
                                                                                       --------------------------
                                                                                        10,821,458     10,710,681
                                                                                       --------------------------
                                                                                       $11,051,665    $10,900,653
                                                                                       ==========================
</TABLE>
<PAGE>


                       WASHINGTON BANCORP

                      STATEMENTS OF INCOME
            Years Ended June 30, 2000, 1999 and 1998
<TABLE>

                                                               2000          1999          1998
--------------------------------------------------------------------------------------------------
<S>                                                         <C>           <C>           <C>
Dividends from subsidiaries .............................   $  914,560    $  782,292    $2,800,000
Interest income .........................................          - -         2,043         5,666
Miscellaneous income ....................................        7,762         8,359            25
Miscellaneous expense ...................................      (43,715)      (46,663)      (60,593)
                                                            --------------------------------------
              Income (loss) before equity in
                  subsidiaries' undistributed
                  income and taxes on income ............      878,607       746,031     2,745,098
Equity in undistributed net income (loss) of subsidiaries      137,635        71,919    (1,945,071)
                                                            --------------------------------------
              Income before taxes on income .............    1,016,242       817,950       800,027
Federal and state income taxes (credits) ................          - -       (13,250)      (22,809)
                                                            --------------------------------------
              Net income ................................   $1,016,242    $  831,200    $  822,836
                                                            ======================================
</TABLE>
<PAGE>



                         WASHINGTON BANCORP

                      STATEMENTS OF CASH FLOWS
              Years Ended June 30, 2000, 1999 and 1998
<TABLE>
                                                           2000           1999          1998
-----------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>           <C>
Cash Flows from Operating Activities
   Net income ........................................  $ 1,016,242   $   831,200   $   822,836
   Adjustments to reconcile net income to net cash
      provided by (used in) operations:
      Equity in net income of subsidiaries ...........   (1,052,195)     (854,211)     (854,929)
      (Increase) decrease in other assets ............      266,681      (302,007)      114,853
      Increase (decrease) in accrued expenses and
        other liabilities ............................        1,260       (17,943)        4,338
                                                        ---------------------------------------
              Net cash provided by (used in) operating
                  activities .........................      231,988      (342,961)       87,098
                                                        ---------------------------------------

Cash Flows from Investing Activities

   Dividends received from subsidiaries ..............      914,560       782,292     2,800,000
   Return of equity from subsidiaries ................          - -           - -     1,000,000
   Purchase of stock of Rubio ........................          - -           - -    (4,797,689)
                                                        ---------------------------------------
              Net cash provided by (used in) investing
                  activities .........................      914,560       782,292      (997,689)
                                                        ---------------------------------------

Cash Flows from Financing Activities
   Proceeds from issuance of shares of common stock ..          - -           - -        12,330
   Payments received from subsidiary for compensation
      under stock awards .............................       28,869        62,317        67,329
   Acquisition of common stock .......................     (680,232)     (684,125)     (328,899)
   Dividends paid ....................................      (67,196)     (271,700)     (267,925)
                                                        ---------------------------------------
              Net cash (used in) financing activities      (718,559)     (893,508)     (517,165)
                                                        ---------------------------------------

              Increase (decrease) in cash ............      427,989      (454,177)   (1,427,756)

Cash balance:
   Beginning .........................................        4,632       458,809     1,886,565
                                                        ---------------------------------------
   Ending ............................................  $   432,621   $     4,632   $   458,809
                                                        =======================================

Supplemental Disclosures
   Cash payments for income taxes, net of payments
      from subsidiary ................................  $   120,035   $   221,103   $   148,806

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