SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                   FORM 10-KSB

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

     For the Fiscal Year Ended June 30, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from ___________________ to _____________________

     Commission File Number 0-25076

                               WASHINGTON BANCORP
              ----------------------------------------------------
              (Exact Name of Small Business Issuer in its Charter)

            Iowa                                          42-1446740
-------------------------------                ---------------------------------
(State or Other Jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

           102 East Main Street
             Washington, Iowa                               52353
----------------------------------------                  ----------
(Address of Principal Executive Offices)                  (Zip Code)

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

         Securities Registered under Section 12(b) of the Exchange Act:

                                      None

         Securities Registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of Class)

         Check whether the Issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such requirements for the past 90 days. YES X . NO ___.

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the best of Registrant's  knowledge,  in the definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

         The Issuer had  $8,771,000  in revenues  for the fiscal year ended June
30, 2000.

         As of September  27, 2000,  there were issued and  outstanding  538,134
shares of the Issuer's  Common Stock.  The aggregate  market value of the voting
stock held by  non-affiliates  of the Issuer,  computed by reference to the last
known sale price of such stock as of September 18, 2000, was $7.2 million.  (The
exclusion from such amount of the market value of the shares owned by any person
shall not be deemed an  admission by the Issuer that such person is an affiliate
of the Issuer.)

                       DOCUMENTS INCORPORATED BY REFERENCE

  Part II of Form 10-KSB - Portions of the Annual Report to Stockholders for the
Fiscal Year Ended June 30, 2000.

      Part III of Form  10-KSB - Portions  of the Proxy  Statement  for the 2000
Annual Meeting of Shareholders.

         Transitional Small Business Disclosure Format    YES        NO  X
                                                              ---       ---
<PAGE>



                                     PART I

Item 1.   Description of Business

General

         Washington  Bancorp  ("Washington,"  and  with  its  subsidiaries,  the
"Company")  is an Iowa  corporation  which  was  organized  in  October  1995 by
Washington  Federal  Savings  Bank  ("Washington  Federal")  for the  purpose of
becoming a savings and loan holding company.  Washington  Federal is a federally
chartered savings bank headquartered in Washington,  Iowa.  Originally chartered
in 1934, Washington Federal converted to a federal savings bank in 1994.

         In March  1996,  Washington  Federal  converted  to the  stock  form of
organization  through the sale and  issuance of its common stock to the Company.
Washington,  on June 24, 1997,  entered into a merger agreement to acquire Rubio
Savings Bank of  Brighton,  Brighton,  Iowa  ("Rubio")  for an aggregate  merger
consideration  of  approximately  $4.6  million.  Rubio  is held  as a  separate
subsidiary of the Company.  In January 1998,  the Company  became a bank holding
company  upon its  acquisition  of Rubio.  In  December  1998,  Wellman  Federal
Savings,  a full-service  branch of Washington  Federal,  was opened in Wellman,
Iowa. In September 2000,  Richland  Federal  Savings,  a full-service  branch of
Washington  Federal,  was opened 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 of the
business of the Banks.  Deposits of both institutions are insured by the Federal
Deposit  Insurance  Corporation  (the "FDIC") to the fullest extent permitted by
law and regulation.

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

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

         At June 30,  2000,  the  Company  had  assets of  approximately  $115.4
million,  deposits of approximately  $73.3 million and  stockholders'  equity of
approximately $10.8 million.

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

Forward-Looking Statements

         When used in this Form 10-KSB or future filings by the Company with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases "will likely
result," "are  expected  to," "will  continue,"  "is  anticipated,"  "estimate,"
"project,"   "believe"   or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995.

         The Company  wishes to caution  readers not to place undue  reliance on
any such forward- looking statements,  which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions,  changes in levels of market interest rates, credit risks of lending
activities,  and competitive and regulatory factors,  could affect the Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ materially from those anticipated or projected.

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

Lending Activities

         General.  The  Company's  loan  portfolio   predominantly  consists  of
mortgage loans secured by one- to four-family residences. The Company also makes
home equity and second mortgage loans,  multi-family  and commercial real estate
loans, construction loans, commercial business loans and consumer loans.
<PAGE>


         At June 30,  2000,  the  Company's  net loan  portfolio  totaled  $84.0
million.  Loans  secured by first  mortgages on one- to  four-family  residences
totaled $50.8  million,  or 60.0% of the Company's  total loan portfolio at June
30, 2000. The Company  originates and retains  substantially all of its mortgage
loan portfolio, and currently originates only a limited number of mortgage loans
for sale to the secondary market.

         Loan  Approval  Authority.  Loans  for the  purchase  of  real  estate,
construction loans, first mortgage refinances,  second mortgages,  or commercial
loans to existing  customers for more than $125,000,  secured consumer loans for
more than $35,000, unsecured consumer loans for more than $20,000 and commercial
loans to new customers for more than $50,000  require loan  committee  approval.
All  other  loans  require  the  approval  of two loan  officers.  The  Board of
Directors  is  provided  a listing of all loans  granted on a monthly  basis for
ratification.

         Loans to One Borrower.  Washington  Federal, a savings bank, is subject
to the same limits as those  applicable to national  banks which,  under current
regulations,  limit  loans-to-one  borrower to an amount equal to the greater of
$500,000  or 15% of  unimpaired  capital  and  surplus  (except  for loans fully
secured by certain readily  marketable  collateral,  in which case this limit is
increased  to 25% of  unimpaired  capital  and  surplus).  Washington  Federal's
maximum loan-to-one borrower limit was approximately $1.0 million as of June 30,
2000.  Washington  Federal's largest amount outstanding to one borrower or group
of  related  borrowers,  as of  that  date,  was a group  of  loans  secured  by
agricultural  real  estate and  agricultural  operating  loans in the  aggregate
amount  of  $757,000.  All of the  loans  to this  borrower  have  performed  in
accordance with their terms since their origination.

         Rubio,  a state  bank,  is subject to current  regulations  which limit
loans-to-one borrower to an amount equal to 15% of the aggregate capital (except
for loans fully secured by certain readily marketable collateral,  in which case
this  limit  is  increased  to  25%  of  aggregate   capital.)  Rubio's  maximum
loan-to-one  borrower  limit was  approximately  $524,000  as of June 30,  2000.
Rubio's largest amount outstanding to one borrower or group of related borrowers
was a group of loans  secured  by  agricultural  real  estate  and  agricultural
operating  loans in the aggregate  amount of $470,000.  All of the loans to this
borrower have performed in accordance with their terms since their origination.

         Loan Portfolio  Composition.  The following  information sets forth the
composition of the Company's loan portfolio in dollar amounts and in percentages
at the dates indicated. All of the loans in the table have fixed interest rates,
except for the  commercial  business  loans  which have  adjustable  rates,  and
certain  adjustable rate one- to four-family real estate loans offered beginning
in March 1996. The amount of adjustable  rate one- to four-family  loans totaled
$12.3 million at June 30, 2000.
<TABLE>
                                                                                  At June 30,
                                            ----------------------------------------------------------------------------------------
                                                 2000             1999                1998              1997              1996
                                            ---------------  ----------------   ----------------   ---------------  ----------------
                                            Amount  Percent  Amount   Percent    Amount  Percent   Amount   Percent  Amount  Percent
                                            ---------------  ----------------   ----------------   ----------------  ---------------
                                                                             (Dollars in Thousands)
<S>                                         <C>     <C>      <C>      <C>       <C>      <C>       <C>      <C>      <C>     <C>
Real Estate Loans:
-----------------
  One- to four-family ...................   $50,766   60.0%  $49,464    67.5%   $45,303    68.4%   $40,696   77.1%   $33,914   78.7%
  Home equity and second mortgage .......     2,431    2.9     1,258     1.7      1,164     1.7      1,233    2.3      1,569    3.6
  Multi-family and commercial real estate    13,727   16.2     8,612    11.8      7,411    11.2      4,775    9.1      2,896    6.7
  Other .................................        --     --        --      --         --      --         99    0.2        115    0.3
                                            ----------------------------------------------------------------------------------------
     Total mortgages ....................    66,924   79.1    59,334    81.0     53,878    81.3     46,803   88.7     38,494   89.3
  Construction loans ....................     1,782    2.1       796     1.1        152     0.2        694    1.3      1,119    2.6
                                            ----------------------------------------------------------------------------------------
     Total real estate loans ............    68,706   81.2    60,130    82.1     54,030    81.5     47,497   90.0     39,613   91.9
                                            ----------------------------------------------------------------------------------------
Commercial business loans ...............    10,963   12.9     8,714    11.9      8,164    12.3      2,715    5.2      1,546    3.6
                                            ----------------------------------------------------------------------------------------
Consumer Loans:
  Automobile ............................     4,142    4.9     3,161     4.3      3,065     4.6     1,899     3.6      1,134    2.6
  Deposit account .......................       825    1.0     1,245     1.7      1,014     1.6       645     1.2        822    1.9
                                            ----------------------------------------------------------------------------------------
     Total consumer loans ...............     4,967    5.9     4,407     6.0      4,079     6.2     2,544     4.8      1,956    4.5
                                            ----------------------------------------------------------------------------------------
Total loans .............................    84,636  100.0%   73,251   100.0%    66,273   100.0%   52,756   100.0%    43,115  100.0%
                                                     ======            ======             ======            ======            ======
Less:
  Allowance for loan losses .............       648              472                388               226               209
                                            -------          -------            -------           -------           -------
     Total loans receivable, net ........   $83,988          $72,779            $65,885           $52,530           $42,906
                                            =======          =======            =======           =======           =======
</TABLE>
<PAGE>


There are no foreign loans outstanding for any of the years presented.

         Loan  Maturities.  The following  schedule  illustrates the contractual
maturity and weighted  average rates of the Company's loan portfolio at June 30,
2000.  Loans which have adjustable or  renegotiable  interest rates are shown as
maturing in the period  during which the contract is due. The schedule  does not
reflect  the effects of  possible  prepayments  or  enforcement  of  due-on-sale
clauses.
<TABLE>
                                    Real Estate
                       ------------------------------------
                                                                Commercial
                           Mortgage         Construction         Business            Consumer              Total
                       ------------------  ----------------  -----------------   -----------------  -------------------
                                 Weighted          Weighted           Weighted            Weighted             Weighted
                                 Average           Average            Average             Average              Average
                         Amount    Rate    Amount    Rate     Amount    Rate     Amount    Rate      Amount     Rate
                       ------------------------------------------------------------------------------------------------
                                                               (In Thousands)
<S>                    <C>       <C>       <C>     <C>        <C>    <C>         <C>      <C>       <C>        <C>
     Due During
    Period Ending
      June 30,
---------------------

2001.................  $10,913    8.64%    $1,782    7.90%    $ 7,055    9.28%   $1,196    10.52%   $20,946     8.90%
2002.................   12,650    8.39        ---     ---         826    8.37       868    10.61     14,344     8.58
2003.................   16,287    8.57        ---     ---       1,112    8.99     1,326    10.33     18,725     8.72
2004 and 2005........    5,147    8.46        ---     ---       1,060    8.93     1,542    10.10      7,749     8.85
2006 to 2010.........    4,035    8.04        ---     ---         624    9.37        29     7.45      4,688     8.21
2011 to 2015.........    7,080    8.05        ---     ---         286    9.10         6     9.24      7,372     8.09
2016 and thereafter..   10,812    8.21        ---     ---         ---     ---       ---      ---     10,812     8.21
                       -------             ------             -------            ------             -------
                       $66,924             $1,782             $10,963            $4,967             $84,636
                       =======             ======             =======            ======             =======
</TABLE>

         As of June 30, 2000,  the total amount of loans due after June 30, 2001
which  have  predetermined  interest  rates was $51.4  million,  while the total
amount of loans due after such date which have floating or  adjustable  interest
rates was $12.3 million.

         Loan   Originations,   Purchases  and  Sales.  Real  estate  loans  are
originated  by the  Company's  staff  of  salaried  loan  officers  who  receive
applications  from  existing   customers,   walk-in  customers  from  the  local
community, advertising, and referrals from realtors and contractors.

         While  the  Company  originates  predominately  fixed-rate  loans,  its
ability to originate  loans is dependent upon the relative  customer  demand for
loans in its market area. Demand is affected by the interest rate environment.

         The Company  originates  loans for its own portfolio  and  originates a
limited  number of loans for sale on the secondary  market.  Washington  Federal
originated  two one- to four-family  real estate loans for the secondary  market
during fiscal 2000.  Washington  Federal originated six 90% Farm Service Agency,
Guaranteed Farm Ownership,  and Guaranteed Operation Loans totaling $1.3 million
during  fiscal  year  2000.  Rubio  originated  two  90%  Farm  Service  Agency,
Guaranteed Farm  Ownership,  and Guaranteed  Operation  Loans totaling  $451,000
during  fiscal  year 2000.  The loans are backed by 90%  guarantees  of the U.S.
government.

         In periods of rising interest rates, the Company's ability to originate
large  dollar  volumes  of real  estate  loans may be  substantially  reduced or
restricted,  with a  resultant  decrease  in related  fee  income and  operating
earnings.
<PAGE>


         The  following  table shows the loan  origination,  purchase,  sale and
repayment activities of the Company for the periods indicated.
<TABLE>
                                                                     Year Ended June 30,
                                                              --------------------------------
                                                                2000        1999        1998
                                                              --------------------------------
                                                                   (Dollars in Thousands)
<S>                                                           <C>         <C>         <C>
Originations by type:
--------------------
Real estate
  One- to four-family .....................................   $ 12,869    $ 22,118    $ 15,744
   Home equity and second mortgage ........................      1,072         992       1,036
   Multi-family and commercial real estate ................      9,070       5,860       5,177
   Construction ...........................................      3,914       1,623         686
Non real estate
   Commercial business ....................................     10,906       6,827       6,348
   Consumer ...............................................      4,748       4,728       3,142
                                                              --------    --------    --------
      Total loans originated ..............................     42,579      42,148      32,133
Loans sold to secondary market ............................       (157)       (522)     (1,474)
Principal (repayments) ....................................    (31,037)    (34,648)    (25,096)
Balance of loans outstanding, net from acquisition of Rubio         --          --       7,849
Increase in allowance for loan losses .....................       (175)        (84)        (57)
                                                              --------    --------    --------
Net increase (decrease) ...................................   $ 11,210    $  6,894    $ 13,355
                                                              ========    ========    ========
</TABLE>

         One- to Four-Family Residential Mortgage Lending. The Company's primary
lending  activity  consists of the  origination  of  residential  mortgage loans
secured by property located in the Company's  market area of Washington  County,
Iowa and adjoining  counties.  The Company will not normally  originate any loan
which exceeds 85% of the lesser of the  appraised  value or selling price of the
mortgaged property.

         The Company primarily originates three year balloon mortgage loans with
an amortization of up to 25 years.  Interest rates charged on mortgage loans are
competitively priced based on market conditions and the Company's cost of funds.
The Company  generally does not charge  origination  fees for loans. The Company
originates  its loans for its own portfolio and  originates a limited  number of
loans for sale to the secondary  market.  Accordingly,  the Company's  portfolio
lending may not conform to secondary  market  guidelines,  such as Freddie Mac's
guidelines,  primarily  as they  relate  to  appraisal  requirements.  It is the
current policy of the Company to remain primarily a portfolio lender.

         Loan  originations  are generally  obtained  from  existing  customers,
members of the local  community,  advertising,  and referrals  from realtors and
contractors within the Company's market area. Mortgage loans originated and held
by the Company in its  portfolio  generally  include  due-on-sale  clauses which
provide the Company with the contractual  right to deem the loan immediately due
and payable in the event that the borrower  transfers  ownership of the property
without the Company's consent.

         The Company also has a limited amount of  non-owner-occupied  permanent
residential one- to four-family mortgage loans in its portfolio. These loans are
underwritten  using  generally  the same  criteria as  owner-occupied  permanent
residential one- to four-family mortgage loans.

         Home Equity and Second Mortgage  Lending.  The Company  originates home
equity and second mortgage  improvement  loans.  Home equity and second mortgage
loans,  together with loans secured by all prior liens, are generally limited to
90% or less of the appraised value. Generally, such loans have a maximum term of
up to three years with an  amortization  of up to 15 years. As of June 30, 2000,
home equity and second mortgage loans amounted to $2.4 million which represented
2.9% of the Company's total loan portfolio.

         Multi-Family   and  Commercial  Real  Estate  Loans.  The  Company  has
historically  engaged in a limited amount of  multi-family  and commercial  real
estate  lending.  Generally  such  loans  have  a term  of  three  years  and an
amortization of up to 25 years, and have  loan-to-value  ratios of up to 80%. At
June 30, 2000,  $13.7  million or 16.2% of the  Company's  total loan  portfolio
consisted of loans secured by existing multi-family  residential real estate and
commercial real estate,  including  primarily farm real estate and one- to four-
family housing  developments.  All of the Company's  multi-family and commercial
real estate  loans are secured by  properties  located in its market  area.  The
largest multi-family and commercial real estate loan as of June 30, 2000 totaled
$389,000, and was secured by farm land and buildings.  The loan has performed in
accordance with its terms since origination.
<PAGE>


         Multi-family   residential   and  commercial  real  estate  lending  is
generally  considered  to  involve  a  higher  degree  of  risk  than  permanent
residential one- to four-family  lending.  Such lending typically involves large
loan balances  concentrated in a single borrower or groups of related borrowers.
In  addition,  the  payment  experience  on loans  secured  by income  producing
properties  is typically  dependent on the  successful  operation of the related
real  estate  project  and thus may be  subject  to a greater  extent to adverse
conditions  in the real estate market or in the economy  generally.  The Company
generally   attempts  to  mitigate  the  risks   associated  with   multi-family
residential and commercial  real estate lending by, among other things,  lending
on collateral located in its market area and generally to individuals who reside
in its market.

         The   Company   requires   appraisals   on  all   properties   securing
non-residential and multi-family  residential real estate loans. Such appraisals
are completed by the Company's staff. If these loans exceed $250,000 a certified
appraisal  is  completed by a fee  appraiser  not  employed by the  Company.  In
originating  multi-family residential and non-residential real estate loans, the
Company considers the quality of the property, the credit of the borrower,  cash
flow projections, location of real estate and the quality of management involved
with the property.

         Construction  Loans. The Company makes  construction loans primarily to
individuals for the construction of single-family  residences. At June 30, 2000,
construction loans amounted to $1.8 million, or 2.1% of the Company's total loan
portfolio.  Construction  loan  rates  are  fixed at  prime-  based  during  the
construction  period.  The terms of these loans are generally six months with an
option to renew for an additional  six months,  at which time the loans are due.
During  the  construction  period,  only  interest  payments  are due,  and on a
case-by-case  basis,  the Company  may allow the  payment of interest  from loan
proceeds.  The Company  construction loan agreements generally provide that loan
proceeds are  disbursed in increments as  construction  progresses.  The Company
periodically  reviews  the  progress  of the  underlying  construction  project.
Construction loans are underwritten pursuant to the same general guidelines used
for originating  permanent one- to four-family  loans.  Construction  lending is
generally limited to the Company's market area.

         Construction lending is generally considered to involve a higher degree
of credit  risk  than  long-  term  financing  of  residential  properties.  The
Company's  risk of loss on a  construction  loan is  dependent  largely upon the
accuracy  of the initial  estimate  of the  property's  value at  completion  of
construction  and  the  estimated  cost  of  construction.  If the  estimate  of
construction  cost and the  marketability of the property upon completion of the
project  prove  to be  inaccurate,  the  Company  may be  compelled  to  advance
additional funds to complete the construction.  Furthermore,  if the estimate of
value proves to be inaccurate, the Company may be confronted, at or prior to the
maturity of the loan,  with a property  having a value that is  insufficient  to
assure full repayment.  For the small number of speculative  loans originated to
builders,  the  ability of the  builder to sell  completed  dwelling  units will
depend,  among other things,  on demand,  pricing and availability of comparable
properties,  and economic  conditions.  As of June 30, 2000, the Company had two
speculative loans to builders secured by the property being constructed totaling
$335,000.

         Commercial  Business Lending.  At June 30, 2000, $11.0 million or 13.0%
of the Company's total loans were comprised of commercial  business  loans.  The
Company's current commercial business lending portfolio is predominantly secured
by accounts receivable,  inventory,  and equipment.  The Company's  agricultural
loan portfolio,  totaling $6.2 million at June 30, 2000, is primarily secured by
livestock,  growing  crops,  machinery  and  equipment.  The largest  commercial
business loan totaled $296,000 at June 30, 2000.

         Unlike  residential  mortgage  loans,  which  generally are made on the
basis of the borrower's ability to make repayment from his or her employment and
other income and which are secured by real property, the value of which tends to
be more easily  ascertainable,  commercial  business loans typically are made on
the basis of the borrower's  ability to make repayment from the cash flow of the
borrower's business. As a result, the availability of funds for the repayment of
commercial  business loans may be substantially  dependent on the success of the
business  itself  (which,  in turn,  is likely to be dependent  upon the general
economic  environment).  The Company's  commercial business loans are sometimes,
but not always, secured by business assets. However, the collateral securing the
loans may  depreciate  over time, may be difficult to appraise and may fluctuate
in value based on the success of the business.

         Consumer  Lending.  The  Company  offers a variety of  consumer  loans,
including automobile loans and loans secured by deposits.  The Company currently
originates substantially all of its consumer loans in its market area, generally
to its  existing  customers.  At June 30,  2000,  the  Company's  consumer  loan
portfolio totaled $5.0 million or 5.9% of its total loan portfolio.
<PAGE>


         The largest component of the Company's consumer loan portfolio consists
of automobile  loans. The Company  originates new and used automobile loans on a
direct basis,  where the Company extends credit directly to the borrower.  These
loans  generally have terms that do not exceed five years and carry a fixed rate
of interest.  Generally,  loans on new vehicles are made in amounts up to 90% of
dealer  cost and loans on used  vehicles  are made in  amounts  up to 90% of the
purchase price or the vehicle's published value,  whichever is less. At June 30,
2000,  the  Company's  automobile  loans  totaled  $4.1  million  or 4.9% of the
Company's total loan portfolio.

         Consumer loan terms vary according to the type and value of collateral,
length of  contract  and  creditworthiness  of the  borrower.  The  underwriting
standards  employed by the Company for consumer loans include an application,  a
determination  of  the  applicant's  payment  history  on  other  debts  and  an
assessment of the applicant's ability to meet existing  obligations and payments
on the proposed loan.  Although  creditworthiness  of the applicant is a primary
consideration,  the underwriting process also includes a comparison of the value
of the security, if any, in relation to the proposed loan amount.

         Consumer  loans may  entail  greater  credit  risk than do  residential
mortgage  loans,  particularly in the case of consumer loans which are unsecured
or are secured by rapidly depreciable assets, such as automobiles.  Further, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the  outstanding  loan balance as a result of the greater
likelihood  of  damage,  loss  or  depreciation.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
bankruptcy and  insolvency  laws, may limit the amount which can be recovered on
such loans.  At June 30,  2000,  $29,000 of the  Company's  consumer  loans were
non-performing.  See "-- Non-Performing Assets and Classified Assets." There can
be no assurances, however, that delinquencies will not increase in the future.

Asset Quality

         Loan Delinquencies.  The Company's  collection  procedures provide that
when a mortgage  loan is 15 days past due, a notice of  nonpayment  is sent.  If
payment is still  delinquent  after 30 days,  the customer will receive  letters
and/or  telephone  calls  from a  representative  of the  Company.  If the  loan
continues in a delinquent status for 90 days and no repayment plan is in effect,
a notice of right to cure default is mailed to the customer giving 30 additional
days to bring the account  current  before  foreclosure  is commenced.  The loan
committee meets regularly to determine when  foreclosure  proceedings  should be
initiated and the customer is notified when foreclosure has been commenced.

         The following  table sets forth the  Company's  loan  delinquencies  by
type,  by amount and by  percentage  of category at June 30,  2000.  The amounts
presented represent the total remaining principal balances of the elapsed loans,
rather than the actual payment amounts which are overdue.
<TABLE>
                                               Loans Delinquent at June 30, 2000 for:
                       -------------------------------------------------------------------------------------
                            30-59 Days            60-89 Days        90 Days & Over             Total
                       ---------------------  -------------------  -------------------  ---------------------
                       No.    Amt.   Percent  No.   Amt.  Percent  No.   Amt.  Percent  No.   Amt.   Percent
                       ---------------------  -------------------  -------------------  ---------------------
                                                     (Dollars in Thousands)
<S>                    <C>    <C>    <C>      <C>   <C>  <C>       <C>   <C>   <C>      <C>  <C>     <C>
Real Estate:
  Mortgage Loans...     20    $751     77.9%  12    $479    84.6%   5    $164    43.6%  37   $1,394     73.1%
Consumer...........     26      88      9.1   13      58    10.3   19      29     7.7   58      175      9.2
Commercial Business     17     125     13.0   12      29     5.1    4     183    48.7   33      337     17.7
                        --------------------  -------------------  -------------------  ---------------------
Total..............     63    $964    100.0%  37    $566   100.0%  28    $376   100.0%  128  $1,906    100.0%
                        ====================  ===================  ===================  =====================
</TABLE>
<PAGE>


         Non-Performing  Assets.  The  following  table sets  forth  information
regarding  accruing loans  delinquent  more than 90 days and foreclosed  assets.
Loans are reviewed on a monthly basis and are generally  placed on a non-accrual
status when the loan becomes more than 90 days delinquent and, in the opinion of
management, the collection of additional interest is doubtful.  Interest accrued
and unpaid at the time a loan is placed on non-accrual status is charged against
interest  income.  Subsequent  payments,  if  any,  are  either  applied  to the
outstanding  principal balance or recorded as interest income,  depending on the
assessment of the ultimate  collectibility of the loan. For all years presented,
in the opinion of management, the collection of additional interest on all loans
delinquent  more  than  90  days  is  not  doubtful.  Therefore,  there  are  no
nonaccruing  loans.  For all years  presented,  the Company had no troubled debt
restructurings  (which involved  forgiving a portion of interest or principal on
any loans or making loans at a rate materially less than that of market rates).

                                                             At June 30,
                                                       -------------------------

                                                       2000      1999      1998
                                                       -------------------------
                                                         (Dollars in Thousands)

Accruing loans delinquent more than 90 days:
    Mortgage .....................................     $164      $144      $  6
    Consumer .....................................       29         7        39
    Commercial business ..........................      183         4        44
Foreclosed assets:
    One- to four-family ..........................       --        39        --
    Nonresidential real estate ...................      271       132        --
                                                       ----      ----      ----
Total non-performing assets ......................     $647      $326      $ 89
                                                       ----      ====      ====

Total as a percentage of total assets ............     0.56%     0.32%     0.09%
                                                       ====      ====      ====

         Other Loans of Concern.  In  addition to the  non-performing  loans set
forth in the table above,  as of June 30, 2000,  there was $1.5 million of loans
designated  as special  mention for which known  information  about the possible
credit  problems of the  borrowers or the cash flows of the security  properties
have caused management to have some doubts as to the ability of the borrowers to
comply  with  present  loan  repayment  terms and which may result in the future
inclusion of such items in the non-performing asset categories. The largest loan
classified as special mention had an outstanding balance of $154,000 on June 30,
2000, and was secured by land for development of one- to four-family residences.

         Foreclosed Real Estate. Real estate acquired by the Company as a result
of  foreclosure  or by deed in lieu of  foreclosure is classified as real estate
owned  until it is sold.  When  property  is acquired it is recorded at the fair
value at the date of foreclosure less estimated costs of disposition.

         The Company records loans as in-substance  foreclosures if the borrower
has little or no equity in the property based upon its  documented  current fair
value,  the Company can only expect  repayment of the loan to come from the sale
of the property and if the borrower  has  effectively  abandoned  control of the
collateral or has continued to retain  control of the  collateral but because of
the current  financial status of the borrower,  it is doubtful the borrower will
be able to repay the loan in the foreseeable future.  In-substance  foreclosures
are  accounted for as real estate  acquired  through  foreclosure.  There may be
significant  other  expenses  incurred such as attorney and other  extraordinary
servicing  costs  involved with in substance  foreclosures.  The Company had two
foreclosed  real estate  properties at June 30, 2000. One property has a pending
purchase  agreement  and the other is  currently  being rented and has a pending
purchase agreement.

         Classified Assets. OTS regulations provide for a classification  system
for problem  assets of insured  institutions  which  covers all problem  assets.
Under this  classification  system,  problem assets of insured  institutions are
classified  as  "substandard,"  "doubtful,"  or "loss."  An asset is  considered
substandard if it is inadequately  protected by the current net worth and paying
capacity of the obligor or of the collateral pledged, if any. Substandard assets
include  those  characterized  by the  "distinct  possibility"  that the insured
institution  will sustain  "some loss" if the  deficiencies  are not  corrected.
Assets  classified  as  doubtful  have all of the  weaknesses  inherent in those
classified  substandard,  with the  added  characteristic  that  the  weaknesses
presented  make  "collection  or liquidation in full," on the basis of currently
existing facts,  conditions and values,  "highly  questionable  and improbable."
Assets  classified as a loss are those  considered  "uncollectible"  and of such
little value that their  continuance  as assets without the  establishment  of a
specific loss reserve is  unwarranted.  Assets may also be  designated  "special
mention"   because  of  potential   weakness  that  do  not  currently   warrant
classification in one of the aforementioned categories.
<PAGE>


         When  an  insured  institution  classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but unlike specific allowances, have not been allocated
to particular  problem assets.  When an insured  institution  classifies problem
assets as a loss,  it is required  either to establish a specific  allowance for
losses equal to 100% of that portion of the asset so classified or to charge off
such amount.  An  institution's  determination as to the  classification  of its
assets and the amount of its  valuation  allowances  is subject to review by the
OTS, which may order the  establishment  of additional  general or specific loss
allowances.  A portion of general loss allowances  established to cover possible
losses  related to assets  classified as substandard or doubtful may be included
in determining an institution's  regulatory  capital,  while specific  valuation
allowances for loan losses  generally do not qualify as regulatory  capital.  At
June 30, 2000, the Company had classified $830,000 of its assets as substandard,
and  $10,000  as  doubtful  as  compared  to  $199,000  and $0 at June 30,  1999
classified as substandard and doubtful, respectively.

Allowances for Loan Losses

         It is management's  policy to provide for losses on unidentified  loans
in its loan  portfolio.  A provision  for loan  losses is charged to  operations
based on management's evaluation of the potential losses that may be incurred in
the Company's loan portfolio.  Such  evaluation,  which includes a review of all
loans  of  which  full  collectibility  of  interest  and  principal  may not be
reasonably assured, considers the Company's 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. The amount of provisions recorded in future periods
may be significantly  greater or less than the provisions taken in the past. The
allowance for loan losses was $648,000,  or as a ratio of total loans was 0.77%,
at June 30, 2000.

         The  Company's  reserve for loan loss  requirement  is  calculated as a
percentage of the total loans  outstanding  and total  delinquent  loans as of a
particular  quarter end. Over the past 12 months the Banks have seen an increase
in their loan portfolios. This has resulted in a greater than normal increase in
the reserve allowance  established by the Banks' respective Boards of Directors.
The Banks also anticipate  continuing with the current schedule of provisions to
keep up with  expected  increases  in loans  outstanding  during the next fiscal
year.

         Allocation of Allowance for Loan Losses. The following table sets forth
the  allocation of the Company's  allowance for loan losses by loan category and
the percent of loans in each  category to total  loans  receivable  at the dates
indicated.  The  portion  of the loan  loss  allowance  allocated  to each  loan
category does not represent the total available for future losses that may occur
within the loan  category  because the total loan loss  allowance is a valuation
reserve applicable to the entire loan portfolio.
<TABLE>
                                                           At June 30,
                               ---------------------------------------------------------------------
                                       2000                   1999                     1998
                               --------------------    --------------------     --------------------
                                         Percent of             Percent of               Percent of
                                          Loans in               Loans in                 Loans in
                                            Each                   Each                     Each
                                        Category to             Category to              Category to
                               Amount   Total Loans    Amount   Total Loans     Amount   Total Loans
                               ---------------------------------------------------------------------
                                                    (Dollars in Thousands)
<S>                            <C>      <C>            <C>      <C>             <C>      <C>
Mortgage Loans ..............   $403       81.2%        $205       82.1%        $168        81.5%
Commercial Business Loans ...    152       12.9          155       11.9          141        12.3
Consumer Loans ..............     86        5.9           74        6.0           61         6.2
Unallocated .................      7         --           38         --           18          --
                                --------------------------------------------------------------------
                                $648      100.0%        $472      100.0%        $388       100.0%
                                ====================================================================
</TABLE>
<PAGE>


         Analysis of the  Allowance for Loan Losses.  The  following  table sets
forth information with respect to the Company's allowance for loan losses at the
dates and for the periods indicated:
<TABLE>

                                                                               Year Ended June 30,
                                                                           -------------------------
                                                                            2000     1999      1998
                                                                           -------------------------
                                                                            (Dollars in Thousands)
<S>                                                                        <C>       <C>       <C>

Balance at beginning of period .........................................   $ 472     $ 388     $ 226
Balance of the allowance for loan losses of Rubio at date of acquisition      --        --       105
Charge offs:
    Mortgage ...........................................................      --        --        --
    Consumer ...........................................................     (44)      (47)      (46)
                                                                           -----     -----     -----
       Total charge offs ...............................................     (47)      (47)      (46)
Recoveries .............................................................      33        18        14
                                                                           -----     -----     -----
Net charge offs ........................................................     (11)      (29)      (32)
                                                                           -----     -----     -----
Provisions charged to operations .......................................     187       113        89
                                                                           -----     -----     -----
Balance at end of period ...............................................   $ 648     $ 472     $ 388
                                                                           =====     =====     =====

Ratio of net charge offs during the period to average loans outstanding
 during the period .....................................................     .01%      .04%      .05%
                                                                           =====     =====     =====

Ratio of net charge offs during the period to  average nonperforming
 assets ................................................................    2.16%     14.8%    35.30%
                                                                           =====     =====     =====
</TABLE>

Investment Activities

         The Company is required under federal regulations to maintain a minimum
amount of liquid assets which may be invested in specified short-term securities
and certain other investments.  See "Regulation -- Federal Regulation of Savings
Associations" and "Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  -- Liquidity  and Capital  Resources"  in the Annual
Report  to  Stockholders   attached  hereto  as  Exhibit  13.  The  Company  has
continuously   maintained  a  liquidity   portfolio  in  excess  of   regulatory
requirements.  Liquidity levels may be increased or decreased depending upon the
yields on  investment  alternatives  and upon  management's  judgment  as to the
attractiveness  of the yields then available in relation to other  opportunities
and its expectation of future yield levels, as well as management's  projections
as to  the  short-term  demand  for  funds  to be  used  in the  Company's  loan
origination  and  other  activities.  At  June  30,  2000,  the  Company  had an
investment  portfolio of approximately  $24.1 million,  consisting  primarily of
U.S. government agency obligations and corporate securities. To a lesser extent,
the portfolio also includes  mortgage-backed and related  securities,  municipal
bonds, and FHLB stock, as permitted by federal banking regulations.  The Company
classifies its investments as held to maturity or available for sale.

         Federally  chartered savings  institutions have the authority to invest
in  various  types  of  liquid  assets,  including  U.S.  treasury  obligations,
securities  of various  federal  agencies,  certain  certificates  of deposit of
insured banks and savings institutions, certain bankers' acceptances, repurchase
agreements  and  federal  funds.  Subject  to  various  restrictions,  federally
chartered savings institutions may also invest their assets in commercial paper,
investment grade corporate debt securities and mutual funds whose assets conform
to the investments that a federally  chartered savings  institution is otherwise
authorized to make directly.

         Generally,  the investment policy of the Company, as established by the
Board of Directors,  is to invest funds among various  categories of investments
and  maturities  based  upon  the  Company's  liquidity  needs,  asset/liability
management   policies,   investment   quality,   marketability  and  performance
objectives.
<PAGE>


         Investment Portfolio. The following table sets forth the carrying value
of the Company's investment securities portfolio,  short-term investments,  FHLB
stock, and  mortgage-backed  and related securities at the dates indicated.  For
additional information  concerning the Company's investments,  see Note 3 of the
Notes to Consolidated  Financial Statements in the Annual Report to Stockholders
attached hereto as Exhibit 13.
<TABLE>
                                                                      At June 30,
                                          --------------------------------------------------------------
                                                  2000                 1999                1998
                                          -------------------  -------------------- --------------------
                                           Book    Percent of    Book    Percent of   Book    Percent of
                                           Value      Total      Value      Total     Value      Total
                                          -------------------  -------------------- --------------------
                                                                 (Dollars in Thousands)
<S>                                       <C>      <C>         <C>       <C>        <C>       <C>
Investment Securities:
   Available for sale (1):
       U.S. treasury securities .......   $   300      1.24%   $ 1,708     7.65%    $ 6,337     30.08%
       U.S. government agencies .......    16,056     66.60     13,623    61.05       6,770     32.14
       State and political subdivisions       326      1.35        439     1.97         348      1.65
       Mortgage-backed securities .....      --          --         --       --          51      0.24
       Corporations ...................     4,920     20.41      4,925    22.07       5,616     26.66
                                          --------------------------------------------------------------------------
             Total Available for Sale .    21,602     89.61     20,695    92.74      19,122     90.78
                                          -----------------------------------------------------------

  Held to maturity(1):
       State and political subdivisions       775      3.21        761     3.41      1,131      5.37
       Mortgage-backed securities .....        --        --         --       --         --        --
                                          -----------------------------------------------------------
             Total held to maturity ...       775      3.21        761     3.41      1,131      5.37
                                          -----------------------------------------------------------
         Total Investment Securities ..    22,377     92.82     21,456    96.15     20,253     96.15
                                          -----------------------------------------------------------

FHLB Stock ............................     1,730      7.18        860     3.85        812      3.85
                                          -----------------------------------------------------------

        Total Investment Securities ...
          and FHLB Stock ..............   $24,107    100.00%   $22,316  100.00%     21,065    100.00%
                                          ===========================================================

Average remaining life of investment
  securities (excluding FHLB Stock) ...  4.3 years           3.9 Years            2.4 Years

Interest-Earning Assets:
   Interest-bearing deposits with
   banks ..............................   $ 1,859    100.00%   $  901   100.00%    $ 1,859    100.00%
                                          ===========================================================
 --------------------
<FN>
(1)  Securities  classified  as available for sale were carried at fair value at
     June 30, 2000,  1999 and 1998.  Securities  classified  as held to maturity
     were carried at historical cost at all respective dates.
</FN>
</TABLE>


         The fair value of the available for sale  investment  portfolio at June
30, 2000 was $21.6 million  resulting in an unrealized  loss, net of income tax,
at that date of approximately $448,000.

         The  category  of  investment  securities  entitled  "corporations"  is
comprised of investments in corporate  bonds. The corporate bonds are considered
investment  grade  bonds,  but carry  additional  credit risk  compared to bonds
guaranteed by the U.S. government or agencies thereof. The Company evaluates the
benefit of higher yields on these bonds versus increased credit risk as compared
to U.S. Treasury or agency  securities.  The quality of these bonds is monitored
primarily  by  reviewing  the  investment  ratings  assigned  to  the  bonds  by
independent  sources such as Standard & Poors, etc. Maturities and sales of U.S.
treasury securities have been reinvested  primarily in U.S. agency securities to
realize a higher interest yield.
<PAGE>


         Investment Portfolio Maturities. The following table sets forth certain
information   regarding  the  carrying  values,   weighted  average  yields  and
maturities of the Company's investment securities portfolio at June 30, 2000.
<TABLE>
                                                       At June 30, 2000
                                  ----------------------------------------------------------
                                        Book Value of Investment Securities Maturing In
                                  ----------------------------------------------------------
                                                                                    Total
                                  Less Than                              Over     Investment
                                    1 Year    1- 5 Years  5-10 Years   10 Years   Securities
                                  ----------------------------------------------------------
                                                    (Dollars in Thousands)
<S>                               <C>         <C>         <C>          <C>        <C>
U.S. treasury securities .......   $   300      $    --    $    --     $    --     $   300
U.S. government agencies .......       940       11,760      2,182       1,174      16,056
State and political subdivisions       324          389        294          94       1,101
Corporations ...................        --        3,970        950          --       4,920
                                   ----------------------------------------------------------
     Total .....................   $ 1,564      $16,119    $ 3,426     $ 1,268     $22,377
                                   ==========================================================

Weighted average yield .........      5.64%       6.07%      7.05%       7.78%       6.29%
                                   ==========================================================
</TABLE>

Sources of Funds

         General.  Deposits are the major external source of the Company's funds
for lending  and other  investment  purposes.  The  Company  derives  funds from
amortization and prepayment of loans and, to a much lesser extent, maturities of
investment securities,  borrowings,  mortgage-backed  securities and operations.
Scheduled  loan principal  repayments  are a relatively  stable source of funds,
while  deposit  inflows and  outflows  and loan  prepayments  are  significantly
influenced  by general  interest  rates and market  conditions.  The Company had
$30.2 million in FHLB advances outstanding at June 30, 2000.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from within the Banks' market area through the offering of a broad  selection of
deposit instruments  including regular savings accounts,  money market accounts,
and term  certificate  accounts.  The Banks  also  offer  individual  retirement
accounts  ("IRA"),  NOW  accounts,  checking  accounts and money market  deposit
accounts  ("MMDA").  Deposit account terms vary according to the minimum balance
required,  the time period the funds must remain on  deposit,  and the  interest
rate, among other factors.

         The interest  rates paid by the Banks on deposits are set  bi-weekly at
the direction of management and the Board of Directors.  The Banks determine the
interest rate to offer the public on new and maturing  accounts by reviewing the
current  Treasury  rate for the term and the market  interest  rates  offered by
competitors.  The Banks review,  weekly, the interest rates being offered by the
other principal financial institutions within its market area.

         Savings  accounts  constituted  $5.5 million,  or 7.3% of the Company's
deposit  portfolio at June 30, 2000.  Certificates of deposit  constituted $46.7
million or 61.7% of the deposit  portfolio  of which $3.6 million or 3.5% of the
deposit  portfolio  were  certificates  of deposit with  balances of $100,000 or
more. MMDA accounts  constituted $11.6 million or 15.3% of the Company's deposit
portfolio  at June 30,  2000.  As of June 30,  2000,  the Banks had no  brokered
deposits. At June 30, 2000,  transactions deposits were $9.5 million or 12.5% of
total deposits.

         Savings Deposit Activities.  The following table sets forth the savings
activity at the Banks during the period indicated.
<TABLE>
                                                           Year Ended June 30,
                                                   ---------------------------------
                                                     2000         1999       1998
                                                   ---------------------------------
                                                         (Dollars in Thousands)
<S>                                                <C>          <C>         <C>

Opening balance ................................   $ 75,689     $ 66,595    $ 44,754
Balance of deposits of Rubio at acquisition ....         --           --      19,959
Net increase (decrease) before interest credited     (4,576)       6,647         (33)
Interest credited ..............................      2,184        2,447       1,915
                                                   --------     --------    --------
Ending balance .................................   $ 73,297     $ 75,689    $ 66,595
                                                   ========     ========    ========

Net increase (decrease) ........................   $ (2,932)    $  9,094    $ 21,841
                                                   ========     ========    ========

Percent increase (decrease) ....................      (3.16)%      13.66%       48.8%
                                                   ========     ========    ========
</TABLE>
<PAGE>


         The following table sets forth the dollar amount of savings deposits in
the  various  types of deposit  programs  offered  by the Banks for the  periods
indicated.
<TABLE>
                                                                    June 30,
                                            --------------------------------------------------------
                                                   2000              1999                1998
                                            ------------------  -----------------  -----------------
                                                      Percent            Percent            Percent
                                             Amount   of Total  Amount   of Total  Amount   of Total
                                            ------------------  -----------------  -----------------
                                                              (Dollars in Thousands)
<S>                                         <C>       <C>       <C>      <C>       <C>      <C>
Transactions and Savings Deposits
-----------------------------------------
Demand and NOW Accounts (0.00%-3.35%) ...   $ 9,459    12.83%   $8,536   11.22%    $ 8,246    12.31%
Money Market Accounts (2.30% - 5.00%) ...    11,580    15.71    11,471   15.08      10,473    15.63
Passbook Savings Accounts (2.30% - 3.00%)     5,531     7.50     5,728    7.53       5,537     8.26
                                            ---------------------------------------------------------
Total Non-Certificates ..................    26,570    36.04    25,735   33.83      24,256    36.20
                                            ---------------------------------------------------------

Certificates

2.00% - 3.00% ...........................       260     0.35       361    0.47         155     0.23
3.01% - 4.00% ...........................       185     0.25        --      --          --       --
4.01% - 5.00% ...........................     9,843    13.35    11,423   15.01       2,550     3.81
5.01% - 6.00% ...........................    21,965    29.80    31,959   42.01      32,583    48.63
6.01% - 7.00% ...........................    14,473    19.63     6,211    8.17       7,050    10.52
                                            ---------------------------------------------------------
Total Certificates ......................    46,726    63.39    49,954   65.66      42,339    63.19
                                            ---------------------------------------------------------
Accrued Interest ........................       421     0.57       388    0.51         409     0.61
                                            ---------------------------------------------------------
Total Deposits and Accrued Interest .....   $73,717   100.00%  $76,077  100.00%    $67,004   100.00%
                                            =========================================================
</TABLE>

         The  following  table  shows  rate  and  maturity  information  for the
Company's certificates of deposit as of June 30, 2000.
<TABLE>

                        0.00-      4.01-      5.01-     6.01-              Percent of
                        4.00%      5.00%      6.00%     7.00%      Total     Total
                       --------------------------------------------------------------
                                          (Dollars in Thousands)
<S>                    <C>       <C>        <C>        <C>        <C>      <C>
Certificate accounts
  maturing in quarter
  ending:
---------------------
September 30, 2000    $    29    $ 2,525    $ 3,450    $ 3,121    $ 9,215     19.72%
December 31, 2000 .       130      2,621      2,096      1,750      6,597     14.12
March 31, 2001 ....       269      2,230        545      5,449      8,493     18.18
June 30, 2001 .....        18      1,064      2,730      2,426      6,238     13.35
September 30, 2001         --        384      5,611        300      6,296     13.47
December 31, 2001 .        --        463      2,962        231      3,656      7.82
March 31, 2002 ....        --         51        696         --        747      1.60
June 30, 2002 .....        --        208        664         43        915      1.96
September 30, 2002         --        122        675         --        797      1.71
December 31, 2002 .        --        121      1,006        514      1,641      3.51
March 31, 2003 ....        --         53        172        539        764      1.64
June 30, 2003 .....        --          1         64          0         74      0.16
Thereafter ........        --         --      1,203          1      1,294      2.77
                      ---------------------------------------------------------------
Total .............   $   446    $ 9,843    $21,964    $14,473    $46,726    100.00%
                      ================================================================

   Percent of Total     0.95%     21.07%     47.01%     30.97%   100.00%
                      ==================================================
</TABLE>
<PAGE>


         The following table indicates the amount of the Company's  certificates
of deposit by time remaining until maturity as of June 30, 2000.

                                                      MATURITY
                                 -----------------------------------------------
                                 3 Months  Over 3- 6  Over 6-12  Over 12
                                 or Less    Months      Months   Months    Total
                                 -----------------------------------------------
                                              (Dollars in Thousands)

Certificates of Deposit less
  than $100,000 ...............  $ 8,715   $ 6,025   $13,640   $15,745   $44,125
Certificates of Deposit of
  $100,000 or More ............      500       572     1,091       438     2,601
                                 -----------------------------------------------
Total Certificates of Deposit .  $ 9,215   $ 6,597   $14,731   $16,183   $46,726
                                 ===============================================

Borrowings

         Deposits are the primary  source of funds of the Company's  lending and
investment  activities  and for its  general  business  purposes.  In  addition,
Washington Federal may obtain advances from the FHLB of Des Moines to supplement
its supply of lendable funds. Advances from the FHLB of Des Moines are typically
secured by a pledge of Washington  Federal's stock in the FHLB of Des Moines and
a portion of the Company's  first mortgage  loans and certain other assets.  The
Company, if the need arises, may also access the Federal Reserve discount window
to  supplement  its  supply of  lendable  funds and to meet  deposit  withdrawal
requirements.  At  June  30,  2000  Washington  Federal  had  $30.2  million  of
borrowings.

         The  following  table  sets forth the  maximum  month-end  balance  and
average balance of FHLB advances at and for the dates indicated.

                                            At and For the Year Ended June 30,
                                         ---------------------------------------
                                           2000           1999            1998
                                         ---------------------------------------
                                                 (Dollars in Thousands)

Maximum Balance ................         $30,193         $16,628         $15,724

Average Balance ................         $23,441         $15,537         $11,519

         The  following  table sets forth certain  information  as to Washington
Federal's FHLB advances at the dates indicated.

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

                                                     (Dollars in Thousands)

FHLB Advances ...............................     $30,193    $15,706    $15,724
Weighted average interest rate during the
  period of FHLB advances ...................       5.89%      5.68%      5.55%
Weighted average interest rate at end of
  period of FHLB advances ...................       6.38%      5.66%      5.54%

Competition

         Washington  Federal is one of five financial  institutions  serving its
immediate market area of Washington,  Iowa. The competition for deposit products
comes from two banks owned by multi- bank holding companies, a local independent
community bank and a credit union. Deposit competition also includes a number of
insurance products sold by local agents, and investment  products such as mutual
funds and other securities sold by local and regional brokers.  Loan competition
varies depending upon market conditions.

         Rubio is located in  Brighton,  Iowa,  a small rural  community  of 800
people.  The  competition  for deposits  comes from  financial  institutions  in
outlying  communities.  The closest community with another financial institution
is approximately ten miles away. Deposit competition also includes insurance and
investment  products such as annuities,  mutual funds, and other securities sold
by local and  regional  brokers.  Loan  competition  varies  depending on market
conditions.
<PAGE>


         Wellman Federal Savings,  a division of Washington  Federal,  is one of
two financial  institutions serving its immediate market area of Wellman,  Iowa.
The competition  for deposits comes from a branch owned by a multi-bank  holding
company as well as financial  institutions in outlying communities.  The closest
community  is  approximately  seven  miles  away  and has  two  banks  owned  by
multi-bank  holding  companies.  Loan  competition  varies depending upon market
conditions.

         Richland Federal Savings, a division of Washington  Federal,  is one of
two financial institutions serving its immediate market area of Richland,  Iowa.
The  competition  for deposits  comes from a branch owned by a large  multi-bank
holding company as well as financial  institutions in outlying communities.  The
closest  community is approximately  ten miles away and has three banks owned by
multi-bank holding companies,  a local independent bank and three credit unions.
Loan competition varies depending upon market conditions.

         Washington Federal has traditionally  maintained a competitive position
in mortgage loan  originations  and market share  throughout its service area by
virtue of its local presence and its  involvement  in the  community.  Rubio has
traditionally  maintained a competitive  position in commercial and agricultural
loan originations and market share throughout its services area by virtue of its
local presence and its involvement in the community.  The Company  believes that
it has been able to effectively  market its loans and other  financial  products
and services when compared to other local-based institutions and it has superior
customer service when compared to other  institutions and mortgage bankers based
outside of the Company's market area.

         The Company  believes  that it is one of the few area  lenders that has
consistently  offered  a  variety  of loans  throughout  all  types of  economic
conditions. The Company believes that it has been able to effectively market its
loans  and  other  financial  products  and  services  when  compared  to  other
local-based institutions,  and it has superior customer service when compared to
the branch of a larger institution based outside of the Company's market area.

Subsidiary Activity

         Washington Federal is permitted to invest up to 2% of its assets in the
capital  stock of, or secured or unsecured  loans to,  subsidiary  corporations,
with an additional investment of 1% of assets when such additional investment is
utilized primarily for community development  purposes.  Under such limitations,
as of  June  30,  2000,  Washington  Federal  was  authorized  to  invest  up to
approximately  $1.6 million in the stock of, or loans to,  service  corporations
(based upon the 2% limitation).

         Washington  Federal has one wholly  owned  subsidiary.  The  subsidiary
conducts  business  under  the  name  of  Washington  Financial  Services,  Inc.
("Washington  Financial").  Washington  Federal's  investment in its  subsidiary
totaled  $138,000  at June 30,  2000.  The  subsidiary's  source  of  income  is
brokerage  fees,  and it had net income of $18,000,  $23,000 and $24,000 for the
years ended June 30, 2000, 1999 and 1998, respectively.  The primary activity of
the  subsidiary  is the  brokering  of  credit  life  and  disability  insurance
products.  In addition,  Washington  Federal has an  arrangement  with Eagle One
Investment  Group ("Eagle One") to provide  support for  Washington  Financial's
investment  services  office.  Washington  Financial began offering  non-insured
investment  products to meet the needs of current customers and the community on
July 1, 1999.  Eagle One is a locally-  owned  investment  firm with  offices in
banks  throughout the Midwest.  Eagle One offers  investment  options to include
stocks,   bonds,  mutual  funds,   tax-advantaged   investments  and  insurance.
Washington Financial is the only Eagle One retail office in Washington Federal's
market area.

Regulation

         General.  Washington Federal is a federally chartered savings bank, the
deposits of which are federally insured by the FDIC and backed by the full faith
and credit of the U.S. government. Accordingly, Washington Federal is subject to
broad federal  regulation  and oversight  extending to all its operations by the
Office of Thrift Supervision (the "OTS").  Washington Federal is a member of the
FHLB of Des Moines and is subject to certain  limited  regulation by the Federal
Reserve  Board  (the  "FRB").  Washington  Federal  is a member  of the  Savings
Association Insurance Fund ("SAIF"), which together with the Bank Insurance Fund
("BIF") are the two  deposit  insurance  funds  administered  by the FDIC.  As a
result,  the  FDIC  has  certain  regulatory  and  examination   authority  over
Washington Federal.

         Rubio is an Iowa  chartered  savings  bank and, as such,  is subject to
extensive regulation,  supervision and examination by the Iowa Superintendent of
Banking  (the  "ISB")  and the FDIC,  which are its  state and  primary  federal
regulators,  respectively.  As with  Washington  Federal,  such  regulation  and
supervision  governs the  activities in which Rubio can engage in and the manner
in which  such  activities  are  conducted  and is  intended  primarily  for the
protection of the insurance fund and depositors.
<PAGE>


         Washington  is  regulated as a bank  holding  company by the FRB.  Bank
holding companies are subject to comprehensive regulation and supervision by the
FRB under the Bank Holding  Company Act of 1956, as amended (the "BHCA") and the
regulations of the FRB. As a bank holding company,  Washington must file reports
with the FRB and such  additional  information  as the FRB may  require,  and is
subject to regular inspections by the FRB. Washington is subject to the activity
limitations  imposed  under the BHCA and in  general  may  engage in only  those
activities that the FRB has determined to be closely related to banking.

         Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document.

         Regulation  of Savings  Associations  and  Savings  Banks.  The OTS has
extensive authority over the operations of savings associations. As part of this
authority,  Washington Federal is required to file periodic reports with the OTS
and is subject to periodic  examinations  by the OTS and the FDIC.  Under agency
scheduling  guidelines,  it is likely that another examination will be initiated
within 18 months. When these examinations are conducted by the OTS and the FDIC,
the examiners may require  Washington  Federal to provide for higher  general or
specific  loan  loss  reserves.  All  savings  associations  are  subject  to  a
semi-annual  assessment,  based upon the savings  association's total assets, to
fund the  operations of the OTS. The Bank's OTS  assessment  for the fiscal year
ended June 30,  2000 was  $26,000.  Rubio is subject to similar  regulation  and
oversight by the ISB and the FRB.

         Each federal banking regulator has extensive enforcement authority over
its regulated  institutions.  This enforcement  authority includes,  among other
things, the ability to assess civil money penalties,  to issue  cease-and-desist
or  removal  orders  and to  initiate  injunctive  actions.  In  general,  these
enforcement  actions may be initiated for violations of laws and regulations and
unsafe or unsound  practices.  Other  actions or inactions may provide the basis
for enforcement action,  including misleading or untimely reports.  Except under
certain  circumstances,  public disclosure of final  enforcement  actions by the
regulator is required.

         In  addition,  the  investment,  lending  and  branching  authority  of
Washington  Federal is  prescribed  by federal  laws and it is  prohibited  from
engaging  in any  activities  not  permitted  by such laws.  Rubio is subject to
similar   restrictions   under  state  law  and  federal  law.  Federal  savings
associations are also generally  authorized to branch  nationwide  regardless of
state law whereas Iowa chartered  banks,  such as Rubio,  are subject to certain
state law  restrictions.  At June 30, 2000 Washington  Federal and Rubio were in
compliance with the noted restrictions.

         Washington    Federal's   general   permissible   lending   limit   for
loans-to-one-borrower  is equal to the greater of $500,000 or 15% of  unimpaired
capital  and  surplus  (except  for  loans  fully  secured  by  certain  readily
marketable  collateral,  in  which  case  this  limit  is  increased  to  25% of
unimpaired capital and surplus).  Rubio's general  permissible lending limit for
loans-to-one borrower is an amount equal to 15% of the aggregate capital (except
for loans fully secured by certain readily marketable collateral,  in which case
this  limit  is  increased  to 25% of  aggregate  capital).  At June  30,  2000,
Washington  Federal's and Rubio's  lending limit under these  restrictions  were
$1.0 million and  $524,000,  respectively.  Washington  Federal and Rubio are in
compliance with the loans-to-one- borrower limitation.

         The federal  banking  agencies  have  adopted  guidelines  establishing
safety  and  soundness  standards  on  such  matters  as loan  underwriting  and
documentation,  asset quality earnings  standards,  internal  controls and audit
systems,  interest  rate risk  exposure  and  compensation  and  other  employee
benefits. Any institution which fails to comply with these standards must submit
a compliance plan. A failure to submit a plan or to comply with an approved plan
will subject the institution to further enforcement action.

         Insurance of Accounts and Regulation by the FDIC. Washington Federal is
a member of the SAIF and Rubio is a member of BIF, each of which is administered
by the FDIC.  Deposits are insured up to applicable  limits by the FDIC and such
insurance  is backed by the full  faith and  credit of the U.S.  government.  As
insurer,  the FDIC  imposes  deposit  insurance  premiums and is  authorized  to
conduct  examinations of and to require reporting by FDIC-insured  institutions.
It also may prohibit any FDIC-insured  institution from engaging in any activity
the FDIC determines by regulation or order to pose a serious risk to the SAIF or
the BIF. The FDIC also has the authority to initiate enforcement actions against
savings  associations,  after giving the OTS an opportunity to take such action,
and may terminate the deposit insurance if it determines that an institution has
engaged in unsafe or unsound practices, or is in an unsafe or unsound condition.
<PAGE>


         The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums  based upon their  level of
capital and supervisory evaluation. Under the system, institutions classified as
"well-capitalized" (i.e., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium  while  institutions  that  are less  than  "adequately
capitalized"  (i.e., core or Tier 1 risk-based capital ratios of less than 4% or
a  risk-based  capital  ratio of less  than 8%) and  considered  of  substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions will be made by the FDIC for each semi-annual assessment period.

         The FDIC is authorized to increase  assessment  rates, on a semi-annual
basis,  if it  determines  that the reserve ratio of the SAIF or the BIF will be
less  than the  designated  reserve  ratio  of 1.25% of SAIF or the BIF  insured
deposits,  respectively.  In setting these increased assessments,  the FDIC must
seek to restore the reserve  ratio to that  designated  reserve  level,  or such
higher  reserve  ratio as  established  by the  FDIC.  The FDIC may also  impose
special  assessments  on SAIF members to repay  amounts  borrowed  from the U.S.
Treasury or for any other reason deemed necessary by the FDIC.

For fiscal 2000, the SAIF  insurance  premium range was 0 to 27 basis points per
$100 of domestic  deposits.  Washington  Federal  qualified for the minimum SAIF
assessment.

         In  addition,  insured  institutions  are  required  to pay a Financing
Corporation  (FICO)  assessment in order to fund the interest on bonds issued to
resolve thrift  failures in the 1980s,  equal to 2.08 basis points for each $100
in domestic deposits for both BIF and SAIF-insured deposits.  These assessments,
which may be revised based upon the level of BIF and SAIF deposits will continue
until the bonds mature in the years 2017 through 2019.

         Regulatory   Capital   Requirements.   Federally   insured   depository
institutions,  such as Washington  Federal and Rubio, are required to maintain a
minimum  level of  regulatory  capital.  For savings  associations,  the OTS has
established  capital  standards,  including a tangible  capital  requirement,  a
leverage  ratio  (or  core  capital)   requirement  and  a  risk-based   capital
requirement applicable to such savings associations.  The OTS is also authorized
to  impose  capital  requirements  in excess of these  standards  on  individual
associations on a case-by-case basis.

         The OTS capital  regulations  require tangible capital of at least 1.5%
of adjusted total assets (as defined by regulation).  Tangible capital generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible  capital.  At June 30, 2000,  Washington
Federal  did  not  have  any  intangible  assets  and  an  excludable  valuation
allowable, net of tax of $377,000.

         The OTS regulations establish special  capitalization  requirements for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements,  all subsidiaries engaged solely in activities permissible
for national  banks or engaged in certain other  activities  solely as agent for
its customers are  "includable"  subsidiaries  that are consolidated for capital
purposes in proportion to the association's  level of ownership.  For excludable
subsidiaries the debt and equity  investments in such  subsidiaries are deducted
from assets and capital. At June 30, 2000, Washington Federal had one excludable
subsidiary.

         At June 30,  2000,  Washington  Federal  had  tangible  capital of $7.4
million, or 7.97% of adjusted total assets,  which is approximately $5.9 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date.

         The OTS capital  standards  also require core capital equal to at least
4% of adjusted total assets. Core capital generally consists of tangible capital
plus certain intangible  assets,  including a limited amount of purchased credit
card  relationships.  As a result of the  prompt  corrective  action  provisions
discussed  below,  however,  a savings  association must maintain a core capital
ratio  of at least  4% to be  considered  "adequately  capitalized"  unless  its
supervisory  condition  allows  it to  maintain  a 3% ratio.  At June 30,  2000,
Washington Federal had no intangibles which were subject to these tests.

         At June 30, 2000,  Washington  Federal had core  capital  equal to $7.4
million,  or 7.97% of adjusted  total  assets,  which is $3.7 million  above the
minimum leverage ratio requirement of 4% as in effect on that date.
<PAGE>


          The OTS risk-based  requirement  requires savings associations to have
total capital of at least 8% of risk-weighted  assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the risk-based  requirement  only to the extent of core capital.  The
OTS is also authorized to require a saving association to maintain an additional
amount of total capital to account for concentration of credit risk and the risk
of  non-traditional  activities.  At June 30,  2000,  Washington  Federal had no
capital  instruments  that  qualify as  supplementary  capital  and  $461,000 of
general loss reserves, which was less than 1.25% of risk-weighted assets.

         Certain  exclusions from capital and assets are required to be made for
the purpose of calculating  total  capital.  Such  exclusions  consist of equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to- value ratio and
reciprocal  holdings of qualifying capital  instruments.  Washington Federal had
$21,000 of such exclusions from capital and assets at June 30, 2000.

         In  determining  the  amount  of  risk-weighted   assets,  all  assets,
including certain  off-balance sheet items, will be multiplied by a risk weight,
ranging from 0% to 100%,  based on the risk  inherent in the type of asset.  For
example,  the OTS has assigned a risk weight of 50% for  prudently  underwritten
permanent  one- to  four-family  first lien mortgage loans not more than 90 days
delinquent and having a loan-to-value  ratio of not more than 80% at origination
unless insured to such ratio by an insurer approved by the FNMA or FHLMC.

         The  OTS  has  adopted  a  final  rule  that  requires   every  savings
association with more than normal interest rate risk exposure to deduct from its
total capital, for purposes of determining compliance with such requirement,  an
amount equal to 50% of its interest-rate risk exposure multiplied by the present
value of its assets.  This exposure is a measure of the potential decline in the
net  portfolio  value of a savings  association,  greater than 2% of the present
value of its  assets,  based upon a  hypothetical  200 basis  point  increase or
decrease  in  interest  rates  (whichever  results  in a greater  decline).  Net
portfolio  value is the  present  value of  expected  cash  flows  from  assets,
liabilities and off-balance sheet contracts. The rule provides for a two-quarter
lag between  calculating  interest rate risk and  recognizing any deduction from
capital.  The rule will not become effective until the OTS evaluates the process
by which  savings  associations  may  appeal an  interest  rate  risk  deduction
determination. It is also uncertain as to when this evaluation may be completed.
Any  savings  association  with  less than $300  million  in assets  and a total
capital  ratio in excess of 12% is exempt from this  requirement  unless the OTS
determines otherwise.

         On June 30, 2000,  Washington Federal had total capital of $7.8 million
and  risk-weighted  assets  of $63.4  million  or total  capital  of  12.32%  of
risk-weighted  assets.  This amount was $2.7 million above the 8% requirement in
effect on that date.

         Rubio is subject to capital  requirements  similar to those required of
Washington  Federal.  At June 30, 2000,  Rubio had Tier 1 or leverage capital of
$2.4 million,  or 10.56% of average total assets,  which is  approximately  $1.7
million above the minimum requirement of 3% of average total assets in effect on
that date.

         At June 30, 2000, Rubio had Tier 1 risk-based  capital of $2.4 million,
or 15.44% of total risk- based assets, which is approximately $1.8 million above
the minimum requirement of 4% of total risk-based assets in effect on that date.

         At June 30, 2000,  Rubio had  risk-based  capital of $2.6  million,  or
16.63% of total risk-based assets, which is approximately $1.3 million above the
minimum requirement of 8% of total risk- based assets in effect on that date.

         The OTS and the FDIC are authorized  and,  under certain  circumstances
required,  to take certain actions against  institutions that fail to meet their
capital requirements. They are generally required to take action to restrict the
activities of an  "undercapitalized  association"  (generally  defined to be one
with less than either a 4% core capital ratio, a 4% Tier 1 risked-based  capital
ratio or an 8% risk-based  capital ratio).  Any such  institution  must submit a
capital  restoration plan and until such plan is approved by its primary federal
regulator may not increase its assets, acquire another institution,  establish a
branch or engage  in any new  activities,  and  generally  may not make  capital
distributions.  The OTS and the FDIC are  authorized  to impose  the  additional
restrictions that are applicable to significantly undercapitalized associations.

          As a condition to the approval of the capital  restoration  plan,  any
company  controlling  an  undercapitalized  association  must agree that it will
enter  into  a  limited  capital  maintenance  guarantee  with  respect  to  the
institution's achievement of its capital requirements.
<PAGE>


         Any  institution  that  fails to  comply  with its  capital  plan or is
"significantly undercapitalized" (i.e., Tier 1 risk-based or core capital ratios
of less  than 3% or a  risk-based  capital  ratio of less  than 6%) must be made
subject  to  one  or  more  of  additional   specified   actions  and  operating
restrictions  which may cover all aspects of its operations and include a forced
merger  or  acquisition  of  the   association.   An  institution  that  becomes
"critically  undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
subject to further mandatory restrictions on its activities in addition to those
applicable to  significantly  undercapitalized  institutions.  In addition,  the
institutions  must be placed in  receivership or  conservatorship,  with certain
limited exceptions, within 90 days after it becomes critically undercapitalized.

         Any  undercapitalized  institution  is  also  subject  to  the  general
enforcement  authority of the OTS and the FDIC,  including the  appointment of a
conservator or a receiver.

         The OTS and the FDIC are also  generally  authorized  to  reclassify an
association into a lower capital category and impose the restrictions applicable
to such category if the institution is engaged in unsafe or unsound practices or
is in an unsafe or unsound condition.

         The  imposition  by the OTS or the  FDIC of any of  these  measures  on
Washington  Federal  or Rubio  may have a  substantial  adverse  effect on their
operations  and  profitability.  Company  shareholders  do not  have  preemptive
rights,  and  therefore,  if the  Company is  directed by the OTS or the FDIC to
issue  additional  shares of  common  stock,  such  issuance  may  result in the
dilution in the percentage of ownership of the Company.

         Limitations   on  Dividends  and  Other  Capital   Distributions.   OTS
regulations impose various  restrictions on savings associations with respect to
their ability to make distributions of capital,  which include dividends,  stock
redemptions or repurchases,  cash-out mergers and other transactions  charged to
the capital account.  OTS regulations  also prohibit a savings  association from
declaring or paying any dividends or from repurchasing any of its stock if, as a
result,  the regulatory  capital of the  association  would be reduced below the
amount  required to be maintained  for the  liquidation  account  established in
connection with its mutual to stock conversion.

         Generally,  savings  associations,  such as  Washington  Federal,  that
before and after the proposed  distribution  remain  well-capitalized,  may make
capital  distributions  during any calendar year equal to the greater of 100% of
net income for the  year-to-date  plus retained net income for the two preceding
years.  However,  an  institution  deemed  to be in  need of  more  than  normal
supervision  by the OTS may have its dividend  authority  restricted by the OTS.
Washington Federal may pay dividends in accordance with this general authority.

         Savings  associations  proposing to make any capital  distribution need
only  submit  written  notice  to the OTS 30 days  prior  to such  distribution.
Savings  associations  that do not,  or would  not meet  their  current  minimum
capital requirements  following a proposed capital  distribution,  however, must
obtain OTS approval prior to making such distribution. The OTS may object to the
distribution  during that 30-day  notice  period  based on safety and  soundness
concerns. See "-- Regulatory Capital Requirements."

         Rubio may pay dividends, in cash or property, only out of its undivided
profits.  In addition,  FRB  regulations  prohibit the payment of dividends by a
state  member bank if losses have at any time been  sustained  by such bank that
equal or  exceed  its  undivided  profits  then on hand,  unless  (i) the  prior
approval of the FRB has been obtained and (ii) at least two-thirds of the shares
of each class of stock  outstanding  have  approved  the dividend  payment.  FRB
regulations  also  prohibit  the payment of any  dividend by a state member bank
without the prior approval of the FRB if the total of all dividends  declared by
the bank in any calendar year exceeds the total of its net profits for that year
combined with its retained net profits of the previous two calendar years (minus
any  required  transfers  to a surplus  or to a fund for the  retirement  of any
preferred stock).
<PAGE>


         Liquidity. All savings associations,  including Washington Federal, are
required  to  maintain  an average  daily  balance of liquid  assets  equal to a
certain  percentage of the sum of its average daily balance of net  withdrawable
deposit accounts and borrowings payable in one year or less. For a discussion of
what Washington Federal includes in liquid assets, see "Management's  Discussion
and Analysis of Financial  Condition  and Results of Operations -- Liquidity and
Capital  Resources"  in the Annual  Report to  Stockholders  filed as Exhibit 13
hereto. This liquid asset ratio requirement may vary from time to time depending
upon economic conditions and savings flows of all savings  associations.  At the
present  time,  the minimum  liquid  asset ratio is 4%.  Rubio has no  liquidity
requirement.  At June 30,  2000,  Washington  Federal had a  liquidity  ratio of
17.2%.

         Accounting.   An  OTS  policy  statement   applicable  to  all  savings
associations  clarifies and  re-emphasizes  that the investment  activities of a
savings   association  must  be  in  compliance  with  approved  and  documented
investment policies and strategies, and must be accounted for in accordance with
GAAP. Under the policy statement,  management must support its classification of
and accounting for loans and securities (i.e., whether held for investment, sale
or trading) with appropriate documentation.  Washington Federal is in compliance
with these amended rules.

         The OTS has adopted an amendment to its accounting  regulations,  which
the OTS may make more  stringent  than GAAP,  to require  that  transactions  be
reported in a manner that best reflects their underlying  economic substance and
inherent risk and that financial  reports must  incorporate any other accounting
regulations or orders prescribed by the OTS.

         Qualified  Thrift  Lender  Test.  All savings  associations,  including
Washington Federal,  are required to meet a qualified thrift lender ("QTL") test
to avoid certain restrictions on their operations.  This test requires a savings
association  to have  at  least  65% of its  portfolio  assets  (as  defined  by
regulation) in qualified thrift investments on a monthly average for nine out of
every 12 months on a rolling basis. As an alternative,  the savings  association
may maintain 60% of its assets in those assets specified in Section  7701(a)(19)
of the Code.  Under either test,  such assets  primarily  consist of residential
housing related loans and investments.  At June 30, 2000, Washington Federal met
the test and has always met the test since its effectiveness.

         Any savings association that fails to meet the QTL test must convert to
a national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association is immediately  ineligible to receive any new FHLB borrowings and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See "-- Holding Company Regulation."

         Community  Reinvestment  Act.  Under  the  Community  Reinvestment  Act
("CRA"),  every  FDIC  insured  institution  has a  continuing  and  affirmative
obligation  consistent  with safe and sound  banking  practices to help meet the
credit  needs  of its  entire  community,  including  low  and  moderate  income
neighborhoods.  The CRA does not  establish  specific  lending  requirements  or
programs  for  financial   institutions  nor  does  it  limit  an  institution's
discretion  to develop the types of products and  services  that it believes are
best  suited  to its  particular  community,  consistent  with the CRA.  The CRA
requires the OTS and the FDIC, in connection  with the examination of Washington
Federal and Rubio,  respectively,  to assess the institution's record of meeting
the credit  needs of its  community  and to take such record into account in its
evaluation of certain  applications,  such as a merger or the establishment of a
branch, by Washington Federal. An unsatisfactory rating may be used as the basis
for the denial of an application by the OTS and the FDIC.
<PAGE>


         The federal  banking  agencies,  including  the OTS and the FDIC,  have
recently  revised the CRA  regulations  and the  methodology  for determining an
institution's  compliance  with the CRA. Due to the heightened  attention  being
given to the CRA in the past few  years,  Washington  Federal  and  Rubio may be
required  to devote  additional  funds for  investment  and lending in its local
community.  Washington  Federal was examined for CRA compliance in July 1998 and
received a rating of  satisfactory.  Rubio was  examined for CRA  compliance  in
August 1999 and received a rating of satisfactory.

         Transactions  with  Affiliates.   Generally,  transactions  between  an
FDIC-insured  institution or its subsidiaries and its affiliates are required to
be on terms as favorable to the association as transactions with non-affiliates.
In addition,  certain of these transactions,  such as loans to an affiliate, are
restricted  to  a  percentage  of  the  institution's  capital.   Affiliates  of
Washington  Federal and Rubio include the Company and any company which is under
common  control  with  Washington  Federal  and Rubio.  Directors,  officers  or
controlling  persons are also subject to regulations that restrict loans to such
persons and their related interests. Among other things, such loans must be made
on terms substantially the same as for loans to unaffiliated individuals, except
if the loans are made  pursuant to an employee  benefit  plan. At June 30, 2000,
Washington Federal and Rubio were in compliance with the above restrictions.

         Certain  transactions with directors,  officers or controlling  persons
are also subject to conflict of interest regulations enforced by the OTS and the
FDIC.  These  conflict of interest  regulations  and other  statutes also impose
restrictions on loans to such persons and their related  interests.  Among other
things,  such loans must be made on terms substantially the same as for loans to
unaffiliated individuals.

         Holding Company  Regulation.  Bank holding companies such as Washington
are  subject  to  comprehensive  regulation  by the FRB  under  the BHCA and the
regulations  of the FRB. As a bank holding  company,  Washington  is required to
file  reports  with  the  FRB and  such  additional  information  as the FRB may
require,  and is  subject to regular  inspections  by the FRB.  The FRB also has
extensive  enforcement authority over bank holding companies,  including,  among
other things,  the ability to assess civil money  penalties,  to issue cease and
desist  or  removal  orders  and  to  require  that  a  holding  company  divest
subsidiaries (including its bank subsidiaries).  In general, enforcement actions
may be initiated  for  violations of law and  regulations  and unsafe or unsound
practices.

         Under FRB  policy,  a bank  holding  company  must serve as a source of
strength for its subsidiary  banks.  Under this policy the FRB may require,  and
has required in the past, a holding company to contribute  additional capital to
an undercapitalized subsidiary bank.

         Under the BHCA, a bank holding company must obtain FRB approval before:
(i) acquiring, directly or indirectly, ownership or control of any voting shares
of another bank or bank holding company if, after such acquisition, it would own
or control  more than 5% of such shares  (unless it already owns or controls the
majority of such shares);  (ii) acquiring all or substantially all of the assets
of another bank or bank holding company;  or (iii) merging or consolidating with
another bank holding company.
<PAGE>


         The BHCA  prohibits a bank holding  company,  with certain  exceptions,
from  acquiring  direct or indirect  ownership or control of more than 5% of the
voting  shares of any company  which is not a bank or bank holding  company,  or
from engaging  directly or indirectly in activities other than those of banking,
managing or controlling banks, or providing  services for its subsidiaries.  The
principal  exceptions to these prohibitions  involve certain non-bank activities
which,  by  statute  or by FRB  regulation  or order,  have been  identified  as
activities closely related to the business of banking or managing or controlling
banks. The list of activities permitted by the FRB includes, among other things,
operating a savings institution (such as Washington Federal),  mortgage company,
finance company,  credit card company or factoring  company;  performing certain
data processing  operations;  providing certain investment and financial advice;
underwriting   and  acting  as  an   insurance   agent  for  certain   types  of
credit-related  insurance;  leasing  property  on a  full-payout,  non-operating
basis;  real estate and personal  property  appraising;  and, subject to certain
limitations, providing securities brokerage services for customers. The scope of
permissible  activities  may be  expanded  from  time to time by the  FRB.  Such
activities may also be affected by federal legislation.

         In 1994, the Riegle-Neal  Interstate  Banking and Branching  Efficiency
Act of  1994  (the  "Riegle-Neal  Act")  was  enacted  to ease  restrictions  on
interstate banking. Effective September 29, 1995, the Riegle-Neal Act allows the
FRB to  approve an  application  of an  adequately  capitalized  and  adequately
managed  bank  holding  company  to  acquire  control  of,  or  acquire  all  or
substantially  all of the assets of, a bank  located in a state  other than such
holding  company's  home state,  without  regard to whether the  transaction  is
prohibited by the laws of any state.  The FRB may not approve the acquisition of
a bank that has not been in existence for the minimum time period (not exceeding
five years) specified by the statutory law of the host state or if the applicant
(and its depository institution  affiliates) controls or would control more than
10% of the insured  deposits in the United States or 30% or more of the deposits
in the  target  bank's  home  state or in any  state in which  the  target  bank
maintains a branch. Iowa has adopted a five year minimum existence  requirement.
The  Riegle-Neal  Act does not  affect  the  authority  of  states  to limit the
percentage  of  total  insured  deposits  in the  state  which  may be  held  or
controlled by a bank or bank holding  company to the extent such limitation does
not  discriminate   against   out-of-state  banks  or  bank  holding  companies.
Individual states may also waive the 30% state-wide concentration limit.

         Additionally,  since June 1, 1997,  the federal  banking  agencies have
been  authorized to approve  interstate  merger  transactions  without regard to
whether such transaction is prohibited by the law of any state,  unless the home
state of one of the banks  opts out of the  Riegle-Neal  Act by  adopting  a law
after the date of  enactment  of the  Riegle-Neal  Act and prior to June 1, 1997
which applies equally to all out-of-state  banks and expressly  prohibits merger
transactions  involving out-of- state banks. States were also permitted to allow
such  transactions  before  such  time  by  enacting  authorizing   legislation.
Interstate  acquisitions  of  branches or the  establishment  of a new branch is
permitted  only if the law of the state in which the branch is  located  permits
such acquisitions.  Interstate mergers and branch  acquisitions are also subject
to the nationwide and statewide insured deposit  concentration amounts described
above. Iowa permits interstate branching only by merger.

         The FRB has issued a policy  statement on the payment of cash dividends
by bank holding  companies,  which  expresses the FRB's view that a bank holding
company should pay cash dividends only to the extent that its net income for the
past year is sufficient  to cover both the cash  dividends and a rate of earning
retention that is consistent  with the holding  company's  capital needs,  asset
quality and overall financial condition. The FRB also indicated that it would be
inappropriate for a company  experiencing  serious financial  problems to borrow
funds  to  pay  dividends.  Furthermore,  under  the  prompt  corrective  action
regulations adopted by the FRB, the FRB may prohibit a bank holding company from
paying any dividends if the holding  company's bank  subsidiary is classified as
"undercapitalized."
<PAGE>


         Bank  holding  companies  are  required  to give the FRB prior  written
notice of any purchase or redemption of its outstanding equity securities if the
gross  consideration for the purchase or redemption,  when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months,  is equal to 10% or more of their  consolidated  net worth.  The FRB may
disapprove  such a purchase or  redemption  if it  determines  that the proposal
would  constitute  an unsafe  or  unsound  practice  or would  violate  any law,
regulation,  FRB order, or any condition  imposed by, or written agreement with,
the FRB. This notification  requirement does not apply to any company that meets
the "well-capitalized" standard for commercial banks, has a safety and soundness
examination  rating  of at  least a "2"  and is not  subject  to any  unresolved
supervisory issues.

         The FRB has established capital requirements for bank holding companies
that  generally  parallel  the capital  requirements  for  commercial  banks and
federal thrift institutions such as Washington Federal and Rubio.  Washington is
in compliance with these requirements.

         Federal Securities Law. The stock of the Company is registered with the
SEC under the Securities  Exchange Act of 1934, as amended (the "Exchange Act").
The Company is subject to the information,  proxy solicitation,  insider trading
restrictions and other requirements of the SEC under the Exchange Act.

         Company stock held by persons who are affiliates  (generally  officers,
directors and principal  stockholders)  of the Company may not be resold without
registration or unless sold in accordance with certain resale  restrictions.  If
the Company  meets  specified  current  public  information  requirements,  each
affiliate  of the  Company  is  able  to  sell  in the  public  market,  without
registration, a limited number of shares in any three-month period.

         Federal Reserve System. The FRB requires all depository institutions to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW and Super NOW checking accounts).
At June 30, 2000,  Washington was in compliance with these reserve requirements.
The balances maintained to meet the reserve  requirements imposed by the FRB may
be used to satisfy  liquidity  requirements  that may be imposed by the OTS. See
"-- Liquidity."

         Depository  institutions  are  authorized  to borrow  from the  Federal
Reserve Bank "discount window," but FRB regulations require such institutions to
exhaust  other  reasonable   alternative   sources  of  funds,   including  FHLB
borrowings, before borrowing from the Federal Reserve Bank.

         Federal Home Loan Bank System. Washington Federal and Rubio are members
of the FHLB of Des Moines,  which is one of 12 regional FHLBs,  that administers
the home financing credit function of savings associations.  Each FHLB serves as
a reserve or central  bank for its members  within its  assigned  region.  It is
funded primarily from proceeds derived from the sale of consolidated obligations
of the FHLB System.  It makes loans to members  (i.e.,  advances) in  accordance
with policies and procedures  established by the board of directors of the FHLB.
These policies and procedures are subject to the regulation and oversight of the
Federal  Housing  Finance  Board.  All advances from the FHLB are required to be
fully secured by  sufficient  collateral as determined by the FHLB. In addition,
all  long-term  advances  are  required to provide  funds for  residential  home
financing.

         As a member,  Washington Federal and Rubio are required to purchase and
maintain stock in the FHLB of Des Moines. At June 30, 2000,  Washington  Federal
had an  aggregate  of $1.7 million and Rubio had an aggregate of $74,000 in FHLB
stock, which was in compliance with this requirement.  In past years, Washington
Federal has received substantial dividends on its FHLB stock. Over the past five
fiscal years,  such dividends have averaged 6.87% and were 6.55% for fiscal year
2000.
<PAGE>


         Under  federal  law,  the FHLBs are  required to provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction  in  value  of  Washington  Federal's  FHLB  stock  may  result  in  a
corresponding reduction to its capital.

Federal and State Taxation

         Federal Taxation.  Prior to the enactment of legislation in August 1996
(discussed  below),  savings  associations  such as Washington  Federal that met
certain  definitional  tests  relating  to the  composition  of assets and other
conditions  prescribed  by the Internal  Revenue  Code of 1986,  as amended (the
"Code"),  had been  permitted  to  establish  reserves for bad debts and to make
annual additions thereto which could,  within specified formula limits, be taken
as a deduction in computing taxable income for federal income tax purposes.  The
amount of the bad debt reserve deduction for "non-qualifying loans" was computed
under the experience  method.  The amount of the bad debt reserve  deduction for
"qualifying  real  property  loans"  (generally  loans  secured by improved real
estate) is computed under the experience method.

         In August 1996, legislation was enacted that repealed the percentage of
taxable income method of accounting used by many thrifts,  including  Washington
Federal, to calculate their bad debt reserve for federal income tax purposes. As
a result,  large thrifts must recapture that portion of the reserve that exceeds
the amount that could have been taken under the experience method for post- 1987
tax years.  The legislation  also requires  thrifts to account for bad debts for
federal income tax purposes on the same basis as commercial  banks for tax years
beginning  after  December 31, 1995.  The  recapture  will occur over a six-year
period,  the  commencement  of which was delayed  until the first  taxable  year
beginning  after  December  31,  1997,  for   institutions   which  met  certain
residential lending  requirements.  The management of the Company and Washington
Federal do not believe that the  legislation  will have a material impact on the
Company or Washington Federal.

         In addition to the regular income tax, corporations,  including savings
associations such as Washington Federal, generally are subject to a minimum tax.
An  alternative  minimum  tax  is  imposed  at a  minimum  tax  rate  of  20% on
alternative minimum taxable income, which is the sum of a corporation's  regular
taxable income (with certain  adjustments)  and tax preference  items,  less any
available  exemption.  The  alternative  minimum tax is imposed to the extent it
exceeds the corporation's regular income tax and net operating losses can offset
no more than 90% of alternative minimum taxable income.

         To the extent earnings appropriated to a savings association's bad debt
reserves for  "qualifying  real property  loans" and deducted for federal income
tax purposes  exceed the allowable  amount of such reserves  computed  under the
experience method and to the extent of the association's  supplemental  reserves
for  losses on loans  ("Excess"),  such  Excess  may not,  without  adverse  tax
consequences,   be  utilized  for  the  payment  of  cash   dividends  or  other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses).  As of June 30,  2000  Washington  Federal's  Excess  for tax  purposes
totaled approximately $244,000.

         The Company  files  consolidated  federal  income tax returns  with the
Banks on a calendar year basis using the accrual method of  accounting.  Savings
associations,  such as Washington Federal,  that file federal income tax returns
as part of a consolidated group are required by applicable Treasury  regulations
to reduce their taxable income for purposes of computing the percentage bad debt
deduction for losses  attributable to activities of the non-savings  association
members  of  the  consolidated  group  that  are  functionally  related  to  the
activities of the savings association member.

         The  Company  has not been  audited by the IRS for the last five years.
With respect to years  examined by the IRS,  either all  deficiencies  have been
satisfied or  sufficient  reserves  have been  established  to satisfy  asserted
deficiencies.  In the  opinion  of  management,  any  examination  of still open
returns  would not result in a  deficiency  which could have a material  adverse
effect on the financial condition of the Company.

         Iowa Taxation.  Washington Federal and Rubio are subject to a franchise
tax by the state of Iowa.  The  franchise  tax is imposed  annually in an amount
equal to 5% of the Banks' adjusted  federal taxable income,  computed before any
net operating loss deduction. An alternative minimum tax is imposed on the Banks
to the extent such tax exceeds the Banks' regular tax  liability.  The franchise
tax is in lieu of Iowa income tax imposed on corporations  doing business within
the State.  The Company is not subject to the Iowa franchise tax, but is subject
to Iowa's regular corporate income tax.
<PAGE>


Executive Officers

         Set  forth  below  are the  names,  ages and  positions  of each of the
executive officers of the Company.  Except as otherwise  indicated,  the persons
named have served as officers of the Company since it became the holding company
of Washington  Federal,  and all offices and positions  described below are with
the Company and the Banks.  There are no arrangements or understandings  between
the persons  named and any other  person  pursuant to which such  officers  were
selected.

         Stan  Carlson,  age 43, was  appointed  President  and Chief  Executive
Officer of Washington  Federal in 1993 and President of Rubio in 2000.  Prior to
joining Washington  Federal, he was Executive Vice President of Northwoods State
Bank, Northwoods, Iowa.

         Chris Davies, age 45, became Vice President and Chief Executive Officer
of Rubio  Savings  Bank of  Brighton  in 2000.  From  1983 to 2000,  he was Vice
President and Cashier of Rubio. Prior to joining Rubio, he was Vice President of
Seymour State Bank, Seymour, Iowa.

         Dean Edwards, age 65, retired in 1999 and had been an employee of Rubio
since 1953. He was appointed  President and Chief Executive  Officer of Rubio in
1966. Mr. Edwards serves as a director of the Company.

         Jeff  Johnson,  age 41,  became Vice  President of  Washington  Federal
primarily  responsible for the Bank's lending  department in June 1995. Prior to
that time, he was branch manager with Midland Savings Bank, Des Moines, Iowa.

         Leisha A. Linge,  age 36, became Executive Vice President of Washington
Federal in 1999 and has acted as the  financial  and  accounting  officer  since
1995. From 1992 to 1995 she was a loan officer for Washington Federal.

Employees

         As of June 30, 2000,  the Company had 27 full time and 12 part-time and
seasonal  employees.  None  of the  Company's  employees  are  represented  by a
collective bargaining group. The Company believes that its relationship with its
employees is satisfactory.


Item 2.           Description of Property

         The Company  conducts its business at its main  offices.  The Company's
total investment in offices,  office property and equipment is $1.6 million with
a net book value of $818,000 at June 30, 2000.  The  following  table sets forth
information regarding the Company's properties:

                                                   Net Book Value
                                                  of Real Property
                                   Leased/   or Leasehold Improvements     Year
                                    Owned         at June 30, 2000        Opened
                                   ---------------------------------------------

Washington Federal Locations:
Main Office
102 East Main Street
Washington, Iowa                    Owned             $188,000             1976

Drive-thru
220 East Washington Street
Washington, Iowa                    Owned             $210,000             1994

Wellman Branch Office
801 6th Street
Wellman, Iowa                       Owned             $ 66,000             1999

Rubio Location:

Main Office
122 East Washington
Rubio, Iowa                         Owned             $203,000             1984

The branch location for the
new Richland office was acquired
subsequent to June 30, 2000
<PAGE>


Item 3.  Legal Proceedings

         The  Company,  from  time to  time,  is a  party  to  ordinary  routine
litigation,  which arises in the normal  course of  business,  such as claims to
enforce liens, condemnation proceedings on properties in which the Company holds
security  interests,  claims involving the making and servicing of real property
loans, and other issues incident to the business of the Banks. The resolution of
these proceedings should not have a material adverse effect on the Company.

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

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation of proxies or otherwise, during the quarter ended June 30, 2000.


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         Pages 53 and 54 of the attached  2000 Annual Report to  Stockholder  is
herein incorporated by reference.

Item 6.  Management's Discussion and Analysis or Plan of Operations

         Pages 6 to 18 of the attached  2000 Annual Report to  Stockholders  are
herein incorporated by reference.

Item 7.  Financial Statements

         Pages 19 to 51 of the Company's 2000 Annual Report to Stockholders  are
herein incorporated by reference.

Item 8.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure

         Not applicable.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act

Directors

         Information  concerning directors and executive officers of the Company
is  incorporated  herein  by  reference  from  the  Company's  definitive  Proxy
Statement for the Annual Meeting of Shareholders,  a copy of which will be filed
not later than 120 days after the close of the fiscal year.

Executive Officers

         Information regarding the business experience of the executive officers
of the Company and the Banks who are not also  directors  contained in Part I of
this Form 10-KSB is incorporated herein by reference.

Compliance With Section 16(a) of the Exchange Act

         Section 16(a) of the Exchange Act requires the Company's  directors and
executive  officers,  and persons who own more than 10% of a registered class of
the  Company's  equity  securities,  to file  with the SEC  initial  reports  of
ownership and reports of changes in ownership of Company  common stock and other
equity  securities of the Company by the tenth of the month  following a change.
Officers,  directors  and  greater  than 10%  stockholders  are  required by SEC
regulation  to furnish the Company  with copies of all Section  16(a) forms they
file.

         To the Company's  knowledge,  based solely on a review of the copies of
such reports furnished to the Company and written  representations that no other
reports were  required,  during the fiscal year ended June 30, 2000, all Section
16(a)  filing  requirements  applicable  to  its  officers,  directors  and  10%
beneficial owners were complied with by such persons.

Item 10. Executive Compensation

         Information concerning executive compensation is incorporated herein by
reference from the Company's  definitive  Proxy Statement for the Annual Meeting
of Shareholders, a copy of which will be filed not later than 120 days after the
close of the fiscal year.
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

         Information  concerning security ownership of certain beneficial owners
and management is incorporated herein by reference from the Company's definitive
Proxy Statement for the Annual Meeting of Shareholders,  a copy of which will be
filed not later than 120 days after the close of the fiscal year.

Item 12. Certain Relationships and Related Transactions

         Information   concerning  certain  relationships  and  transactions  is
incorporated  herein by reference from the Company's  definitive Proxy Statement
for the Annual Meeting of Shareholders,  a copy of which will be filed not later
than 120 days after the close of the fiscal year.

Item 13. Exhibits and Reports on Form 8-K

         (a)  Exhibits:
         -------------
<TABLE>
                                                                             Reference to
                                                                            Prior Filing or
    Regulation S-B                                                          Exhibit Number
    Exhibit Number                     Document                             Attached Hereto
-------------------------------------------------------------------------------------------
<S>                  <C>                                                    <C>
          2          Plan of Acquisition, Reorganization, Arrangement,          None
                     Liquidation or Succession

          3          (i)  Articles of Incorporation and                          *
                          amendments thereto
                     (ii) Bylaws                                                 *
          4          Instruments defining the rights of holders                 None
          9          Voting Trust Agreement                                     None
         10          Material Contracts
                       Employment Agreement with Stan Carlson                    *
                       Employee Stock Ownership Plan                             *
                       Stock Option Plan                                         *
                       Recognition and Retention Plan                            *
         11          Statement:  re computation of per share earnings            11
         13          Annual Report to Security Holders                           13
         16          Letter:  re change in certifying accountant                None
         18          Letter:  re change in accounting principles                None
         21          Subsidiaries of Registrant                                  21
         22          Published report regarding matter submitted                None
                       to vote
         23          Consent of  Accountants                                    None
         24          Power of Attorney                                      Not Required
         27          Financial Data Schedule                                     27
         99          Additional Exhibits                                        None
---------------------
<FN>
*    Filed  on  January  3,  1996,  as  exhibits  to  the  Company's   Form  S-1
     registration statement (File number 33-98778). All of such previously filed
     documents are hereby  incorporated  herein by reference in accordance  with
     Item 601 of Regulation S-B.
</FN>
</TABLE>

         (b)  Reports on Form 8-K:
         ------------------------

         No current  reports on Form 8-K were  filed by the  Company  during the
three months ended June 30, 2000.
<PAGE>



                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                        WASHINGTON BANCORP

Date:  September 28, 2000               By: /s/ Stan Carlson
       ------------------               ----------------------------------------
                                        Stan Carlson
                                        President, Chief Executive Officer and
                                           Director
                                        (Duly Authorized Representative)

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the dates indicated.

/s/ Stan Carlson                              /s/ Rick R. Hofer
----------------------------------------      ----------------------------------
Stan Carlson, President, Chief Executive      Rick R. Hofer, Director
 Officer and Director

Date: September 28, 2000                      Date: September 28, 2000
     -----------------------------------            ----------------------------


/s/ Myron L. Graber                           /s/ Richard L. Weeks
----------------------------------------      ----------------------------------
Myron L. Graber, Director                     Richard L. Weeks, Director

Date: September 28, 2000                     Date: September 28, 2000
     -----------------------------------           -----------------------------


/s/ Mary Levy                                 /s/ James D. Gorham
----------------------------------------      ----------------------------------
Mary Levy, Director                           James D. Gorham, Director

Date: September 28, 2000                      Date: September 28, 2000
     -----------------------------------           -----------------------------


/s/ J. Richard Wiley                          /s/ Leisha A. Linge
----------------------------------------      ----------------------------------
J. Richard Wiley, Chairman of the Board       Leisha A. Linge, Executive Vice
                                                President and Treasurer
                                              (Principal Financial and
                                                Accounting Officer)

Date: September 28, 2000                      Date: September 28, 2000
     -----------------------------------            ----------------------------


/s/ Dean Edwards
----------------------------------------
Dean Edwards, Director

Date: September 28, 2000
     -----------------------------------