<PAGE>
 
================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 1997

                         Commission File Number 0-19829


                               ARGO BANCORP, INC.
                               ------------------
        (Exact name of small business issuer as specified in its charter)



                   Delaware                            36-3620612     
         (State or other jurisdiction               (I.R.S. Employer  
       of incorporation or organization)           Identification No.)
                                                                            

                7600 W. 63rd Street, Summit, Illinois 60501-1830
                    (Address of principal executive offices)

                                 (708) 496-6010
                           (Issuer's telephone number)


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 report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes  X   No
                                                              ---     ---

The registrant had 488,250 shares outstanding as of April 30, 1997.

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

================================================================================
<PAGE>
 
                       ARGO BANCORP, INC. AND SUBSIDIARIES

                                   FORM 10-QSB
                                      INDEX
                                      -----
<TABLE> 
<CAPTION> 

PART I - FINANCIAL INFORMATION                                                                        PAGE NO.
------------------------------                                                                        --------
<S>                                                                                                   <C> 
Item 1               Financial Statements

                     Consolidated Statements of Financial Condition
                     as of March 31, 1997, (unaudited) and
                     December 31, 1996 ...............................................                   1

                     Consolidated Statements of Income for the Three
                     Months ended March 31, 1997, and 1996 (unaudited)................                   2

                     Consolidated Statements of Stockholders' Equity
                     for the Three Months Ended March 31, 1997,
                     and 1996 (unaudited) ............................................                   3

                     Consolidated Statements of Cash Flows for the
                     Three Months ended March 31, 1997
                     and 1996 (unaudited) ............................................                   4

                     Notes to Consolidated Financial Statements ......................                   5

Item 2               Management Discussion and Analysis of Financial
                     Condition and Results of Operations .............................                   9

PART II - OTHER INFORMATION
---------------------------

Item 1               Legal Proceedings ...............................................                   17

Item 2               Changes in Securities ...........................................                   17

Item 3               Default Upon Senior Securities ..................................                   17

Item 4               Submission of Matters to a Vote
                       of Security Holders ...........................................                   17

Item 5               Other Information ...............................................                   18

Item 6               Exhibits and Reports on Form 8-K ................................                   18

                     Signature Page ..................................................                   18

</TABLE> 
<PAGE>
 
                       ARGO BANCORP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE> 
<CAPTION> 

                                                                                            (Dollars in Thousands)
ASSETS:                                                                                 3/31/97            12/31/96
                                                                                        -------            --------
                                                                                     (Unaudited)
<S>                                                                                     <C>                <C> 
Cash......................................................................              $ 6,643              12,518
Interest-earning  deposits................................................                2,201                 758
FHLB of Chicago Stock.....................................................                3,428               3,428
Securities Available for Sale.............................................                6,557               5,788
Loans receivable, net.....................................................              144,855             125,704
Discounted loans receivable...............................................               54,970              47,725
Accrued interest receivable...............................................                2,196               2,089
Foreclosed real estate....................................................                4,469               3,913
Premises and equipment, net...............................................                9,861               9,856
Goodwill..................................................................                  306                 333
Purchased mortgage servicing rights.......................................                6,790               5,264
Prepaid expenses and other assets.........................................               11,542              11,908
                                                                                       --------            --------

                                                                                       $253,818             229,284
                                                                                       ========            ========
LIABILITIES AND STOCKHOLDERS' EQUITY:

Liabilities:
  Deposits................................................................            $ 162,743             150,627
  Borrowed money..........................................................               57,922              50,879
  Interest-bearing custodial escrow balances
    for loans serviced....................................................                   12                  76
  Custodial escrow balances for loans serviced............................                8,727               5,706
  Advance payments by borrowers for taxes and insurance...................                   13                  24
  Other liabilities.......................................................                6,570               5,412
                                                                                       --------           ---------
    Total liabilities.....................................................             $235,987             212,724
                                                                                       --------           ---------

Stockholders' Equity:
  Preferred stock, $0.01 par value;
    Authorized 500,000 shares; none issued or outstanding.................                  ---                 ---
  Common Stock:
    Class A, $0.01 par value;  Authorized
      3,020,000 shares; issued and outstanding
      308,519 shares......................................................                    5                   4
    Class B, $0.01 par value;  Authorized
      340,000 shares; none issued or outstanding..........................                  ---                 ---
    Class C, $0.01 par value;  Authorized
      340,000 shares; none issued or outstanding..........................                  ---                 ---
    Class D, $0.01 par value;  Authorized
      800,000 shares; none issued or outstanding..........................                  ---                 ---
  Additional paid-in capital..............................................                8,479               7,382
  Retained earnings - substantially restricted............................                9,615               9,444
  Net unrealized gain on securities available for sale,
    net of tax............................................................                  (28)                 12
  Common stock acquired by:
    Employee Stock Ownership Plan.........................................                 (102)               (117)
    Management Recognition Plan...........................................                 (138)               (165)
                                                                                     ----------           ---------
      Total stockholders' equity..........................................               17,831              16,560
                                                                                     ----------           ---------
</TABLE> 
Commitments and contingencies (Note E)

See Notes to accompanying unaudited consolidated financial statements

                                       1
<PAGE>
 
                       ARGO BANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE> 
<CAPTION> 
                                                                                       (Dollars in thousands, except per share data)


                                                                                         For the Three Months Ended March 31,
                                                                                             1997                      1996
                                                                                             ----                      ----
                                                                                                        (Unaudited)
<S>                                                                                      <C>                       <C> 
Interest income:
  Loans receivable.................................................................      $  2,974                     2,993
  Discounted loans receivable......................................................         1,456                       383
  Mortgage-backed securities.......................................................            80                        96
  Interest-earning deposits........................................................           146                       159
                                                                                         --------                  --------
    Total interest income..........................................................         4,656                     3,631
                                                                                         --------                  --------
Interest expense:
  Deposits.........................................................................         1,970                     1,517
  Custodial escrow balances for
    loans serviced.................................................................             3                        33
  Borrowed money...................................................................           772                       604
                                                                                         --------                  --------
    Total interest expense.........................................................         2,745                     2,154
                                                                                         --------                  --------
    Net interest income before provision
      for loan losses..............................................................         1,911                     1,477
Provision for loan losses..........................................................            60                        25
                                                                                         --------                  --------
Net interest income after provision
  for loan losses..................................................................         1,851                     1,452
                                                                                         --------                  --------

Non-interest income:
  Purchased mortgage servicing income, net.........................................           102                       112
Mortgage banking...................................................................           147                        13
  Gain on sale of mortgage servicing rights, loans receivable, discounted loans
    receivable, securities available for sale
      and mortgage-backed securities...............................................           381                       405
  Fees for other customer services.................................................            94                        85
  Data processing..................................................................         2,605                     2,729
  Other............................................................................            32                        80
                                                                                         --------                  --------
    Total non-interest income......................................................         3,361                     3,424
                                                                                         --------                  --------

Non-interest expense:
  Compensation and benefits........................................................         2,273                     2,116
  Occupancy and equipment..........................................................         1,090                     1,071
  Federal deposit insurance premiums...............................................            22                        73
  Data processing cost of services.................................................           439                       326
  Other general and administrative fees............................................         1,011                       573
  Amortization of goodwill.........................................................            27                        27
                                                                                         --------                  --------
    Total non-interest expense.....................................................         4,862                     4,186
                                                                                         --------                  --------
Earnings before provision for income tax
    expense and cumulative effect of accounting change.............................           350                       690
Income tax expense.................................................................            93                       225
                                                                                         --------                  --------

       Net earnings................................................................           257                       465
                                                                                         ========                  ========

Primary earnings per share.........................................................      $    .51                  $   1.30
                                                                                         ========                  ========

Fully diluted earnings per share...................................................      $    .51                  $   1.27
                                                                                         ========                  ========
</TABLE> 

See notes to accompanying unaudited consolidated financial statements

                                       2
<PAGE>
 
                      ARGO BANCORP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            (Dollars in thousands)
                                  (Unaudited)

<TABLE> 
<CAPTION> 

 
                                                                                                          Net
                                                                                                   Unrealized
                                                                                                  Gain (loss)    
                                                            Common   Additional                 on Securities    
                                                             Stock      paid-in     Retained        Available    
                                                           Class A      Capital     earnings         for Sale    
                                                           ----------------------------------------------------
<S>                                                         <C>           <C>          <C>              <C> 
Three months ended March 31, 1996
---------------------------------

Balance at December 31, 1995........................        $    3        2,739        8,323             42    

Net income .........................................           ---          ---          465            ---    

Change in unrealized loss on securities
  available for sale, net...........................           ---          ---          ---             12    

Principal payments on ESOP loan.....................           ---          ---          ---            ---    

Amortization of purchase price of  MRP stock........           ---          ---          ---            ---    

Proceeds from exercise of stock  options............           ---          ---          ---            ---    

Fair value adjustment for committed ESOP shares.....           ---            9          ---            ---    

Cash dividends......................................           ---          ---         (52)            ---    
                                                            ------       ------       ------          -----    

Balance at March 31, 1996...........................        $    3        2,748        8,736             54    
                                                            ======       ======       ======           ====    

Three months ended March 31, 1997
---------------------------------

Balance at December 31, 1996........................        $    4        7,382        9,444             12    

Net income..........................................           ---          ---          257            ---    

Proceeds from issuance of stock.....................             1          399          ---            ---    

Change in unrealized  gain  on securities
  available for sale, net...........................           ---          ---          ---           (40)    

Principal payments on ESOP loan.....................           ---          ---          ---            ---    

Purchase of MRP stock...............................           ---          ---          ---            ---    

Amortization of purchase price  of MRP stock........           ---          ---          ---            ---    

Proceeds from exercise  of stock options............           ---          494          ---            ---    

Tax benefits of stock options.......................           ---          193          ---            ---    

Fair value adjustment for committed ESOP shares.....           ---           11          ---            ---    

Cash dividends......................................           ---          ---         (86)            ---    
                                                             -----        -----       ------         ------    

Balance at March 31, 1997...........................        $    5        8,479        9,615           (28)    
                                                            ======       ======       ======         ======    

</TABLE> 

<TABLE> 
<CAPTION> 

                                                             Common                                
                                                              Stock         Stock          Total   
                                                           acquired      acquired  Stockholders'   
                                                            by ESOP        by MRP         Equity   
                                                          --------------------------------------  
<S>                                                           <C>          <C>            <C> 
Three months ended March 31, 1996
---------------------------------                                                                  

Balance at December 31, 1995........................          (177)          (50)         10,880   
                                                                                                   
Net income .........................................            ---           ---            465   
                                                                                                   
Change in unrealized loss on securities                                                            
  available for sale, net...........................            ---           ---             12   
                                                                                                   
Principal payments on ESOP loan.....................             15           ---             15   
                                                                                                   
Amortization of purchase price of  MRP stock........            ---          (85)           (85)   
                                                                                                   
Proceeds from exercise of stock  options............            ---           ---            ---   
                                                                                                   
Fair value adjustment for committed ESOP shares.....            ---           ---              9   
                                                                                                   
Cash dividends......................................            ---           ---           (52)   
                                                             ------        ------       --------    
                                                                                                   
Balance at March 31, 1996...........................          (162)         (135)         11,244   
                                                             ======       =======       ========   
                                                                                                   
Three months ended March 31, 1997                                                                  
---------------------------------
                                                                                                   
Balance at December 31, 1996........................          (117)         (165)         16,560   
                                                                                                   
Net income..........................................            ---           ---            257   
                                                                                                   
Proceeds from issuance of stock.....................            ---           ---            400   
                                                                                                   
Change in unrealized  gain  on securities                                                          
  available for sale, net...........................            ---           ---           (40)   
                                                                                                   
Principal payments on ESOP loan.....................             15           ---             15   
                                                                                                   
Purchase of MRP stock...............................            ---           ---            ---   
                                                                                                   
Amortization of purchase price  of MRP stock........            ---            27             27   
                                                                                                   
Proceeds from exercise  of stock options............            ---           ---            494   
                                                                                                   
Tax benefits of stock options.......................            ---           ---            193   
                                                                                                   
Fair value adjustment for committed ESOP shares.....            ---           ---             11   
                                                                                                   
Cash dividends......................................            ---           ---           (86)   
                                                             ------        ------        -------    
                                                                                                   
Balance at March 31, 1997...........................          (102)         (138)         17,831   
                                                            =======      ========        =======   
                                                          
</TABLE> 

--------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>
 
                       ARGO BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE> 
<CAPTION> 

                                                                                                  (Dollars in Thousands)
                                                                                            Three Months Ended March 31,
                                                                                                  1997                1996
                                                                                                  ----                ----
                                                                                                        (Unaudited)
<S>                                                                                          <C>                <C> 
Cash flows from operating activities:
  Net income.......................................................................            $   257           $     465
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
      Depreciation.................................................................                484                 411
      Accretion of discounts and deferred loan fees................................              (227)               (232)
      Provision for loan losses....................................................                 60                  25
      Provision for losses on foreclosed real estate...............................                 15                  25
 (Gain) loss on sale of:
        Securities available for sale..............................................               (83)                 ---
        Loans receivable...........................................................                (3)                 (5)
        Discounted loans receivable................................................              (250)               (400)
        Foreclosed real estate.....................................................               (46)                   7
      Loans originated and purchased for sale......................................            (7,419)            (18,598)
      Proceeds from sale of loans receivable.......................................              3,485              18,529
      Proceeds from sale of discounted loans receivable............................              1,741                 712
      Amortization of goodwill.....................................................                 27
      Amortization of purchased mortgage servicing rights..........................                 44                 ---
      Amortization of purchase price of MRP and ESOP stock.........................                 42                  15
     Recognition of fair value of ESOP shares scheduled to be released.............                 11                   9
      (Increase) decrease in accrued interest receivable, prepaid
        expenses, and other assets.................................................                478               1,418
      Increase (decrease) in accrued interest payable and other liabilities........              1,158               (756)
                                                                                             ---------             ------
 Net cash provided by (used in) operating activities...............................              (226)               1,652
                                                                                             --------              -------
 Cash flows from investing activities:
  Loans originated and purchased for portfolio.....................................           (27,940)            (12,906)
  Discounted loans receivable purchased............................................            (8,529)             (1,764)
  Principal repayments on:
    Loans receivable and discounted loans receivable...............................             11,625              11,940
    Mortgage-backed securities.....................................................                 93                 113
    Proceeds from maturities of securities available for sale......................                ---                 600
 Proceeds from sale of:
    Foreclosed real estate.........................................................                540                 121
    Securities held for sale.......................................................                722                 ---
   Purchase of:
    Stock in Federal Home loan Bank of Chicago.....................................                ---                (10)
    Loan servicing rights..........................................................                ---               (105)
    Securities available for sale..................................................            (1,570)                 ---
    Premises and equipment.........................................................              (489)               (551)
    Loan servicing rights..........................................................            (1,570)                 ---
    Contribution to MRP............................................................                ---                (85)
                                                                                              --------            -------
   Net cash provided by (used in) investing activities.............................           (27,118)             (2,647)
                                                                                              -------             -------
 Cash flows from financing activities:
  Net increase (decrease) in deposits..............................................             12,116                 537
  Proceeds from borrowed funds.....................................................             43,014              33,600
  Repayment of borrowed funds......................................................           (35,971)            (31,737)
  Proceeds from exercise of stock options..........................................                893                 ---
  Dividends paid...................................................................               (86)                (52)
  Net increase (decrease) in advance payments by borrowers for taxes and insurance.               (11)                 (3)
  Net increase (decrease) in custodial escrow balances for loans serviced..........              2,957               (962)
                                                                                              --------            -------
      Net cash provided by financing activities....................................             22,912               1,383
                                                                                              --------            --------
      Net increase (decrease) in cash and cash equivalents.........................            (4,432)                 388
  Cash and cash equivalents at beginning of year...................................             13,276              11,061
                                                                                              --------            --------
  Cash and cash equivalents at end of year.........................................           $  8,844            $ 11,499
                                                                                              ========            ========
 Supplemental disclosures of cash flow information: Cash paid during the period
  for:
    Interest expense...............................................................           $  2,716           $      21
  Non-cash investing activity - transfer of loans to foreclosed real estate........           $  1,035           $     216
                                                                                              ========           =========
</TABLE> 
See accompanying notes to unaudited financial statements.

                                       4
<PAGE>
 
                       ARGO BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments including normal
recurring accruals, considered necessary for fair presentation have been
included. The results of operations for the three months ended March 31, 1997,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997.

The unaudited consolidated financial statements include the accounts of Argo
Bancorp, Inc. ("Argo Bancorp," the "Corporation" or "Holding Company") and its
wholly owned subsidiaries, On-Line Financial Services, Inc. ("On-Line"), Argo
Federal Savings Bank, FSB ("Argo Savings" or "Savings Bank") and Argo Savings'
wholly owned subsidiaries, Argo Mortgage Corporation, Dolton-Riverdale Savings
Service Corporation, and Argo Savings' majority owned subsidiary Margo Financial
Services LLC ("Margo"). The statements also include Argo Bancorp's majority
owned limited liability corporation, Argo / Empire Mortgage LLC. Significant
intercompany accounts and transactions have been eliminated in consolidation.

NOTE B - STOCK BENEFIT PLANS

The Savings Bank adopted the Argo Federal Savings 401(k) Plan ("Plan") effective
October 1, 1988, for the exclusive benefit of eligible employees of the Savings
Bank. The Plan is a qualified plan covering all employees of the Savings Bank
who have completed at least 1,000 hours of service within a twelve (12)
consecutive month period and are age twenty-one (21) or older. Participants may
make contributions to the Plan from 1.0% to 12.0% of their earnings, subject to
Internal Revenue Service limitations. Matching contributions of 50.0% of each
participant's contribution up to 12.0% are made at the Savings Bank's discretion
each Plan year. The Savings Bank made contributions of $21,000 and $15,000, to
the Plan for the three months ended March 31, 1997, and 1996. The Plan also
provides benefits in the event of death, disability, or other termination of
employment.

On-Line has a 401(k) Plan covering all employees who have completed one or more
years of service. Participants may make contributions to the Plan from 1.0% to
12.0% of their earnings, subject to Internal Revenue Service limitations.
Matching contributions of 50.0% of each participant's contribution up to 6.0% of
participant contributions are made at On-Line's discretion each year. On-Line
made contributions of $13,000 and $18,400 to the Plan for the three months ended
March 31, 1997, and 1996, respectively.

                                       5
<PAGE>
 
In conformity with Internal Revenue Service (IRS) rules governing separate lines
of business, the 401(k) Plan for On-Line will continue to be operated separately
from the 401(k) Plan for the Savings Bank.

In connection with the Merger Conversion, Argo Savings formed an Employee Stock
Ownership Plan ("ESOP") for eligible employees. The ESOP borrowed funds from an
unrelated third party lender in the amount of $60,180 in order to purchase 7.0%
of the Common Stock to be issued in the Merger Conversion (5,233 shares at
$11.50 per share). The ESOP has subsequently borrowed additional funds from the
same third party lender in the amount of $245,000 in order to purchase
additional shares. The ESOP has purchased an additional 13,020 shares at an
average price of $18.79 per share. Argo Savings will make scheduled
discretionary cash contributions to the ESOP sufficient to service the amounts
borrowed. The unpaid balance of the ESOP has been included in borrowed funds on
the unaudited consolidated statement of condition and stockholders' equity has
been reduced by a similar amount. Contributions of $17,000 and $19,000 were made
to the ESOP to fund principal and interest for the three months ended March 31,
1997, and 1996, respectively.

On January 1, 1994, Argo Bancorp adopted the provisions of Statement of Position
93-6, ("SOP 93-6"). "Employer's Accounting for Employee Stock Ownership Plans,"
issued by the American Institute of Certified Public Accountants. SOP 93-6
requires Argo Bancorp to consider outstanding only those shares of the ESOP that
are committed to be released when calculating both primary and fully diluted
earnings per share. SOP 93-6 also requires the Savings Bank to record the
difference between the fair value of the shares committed to be released and the
cost of those shares to the ESOP as a charge to additional paid-in-capital with
the corresponding increase or decrease to compensation expense. The adoption of
SOP 93-6 had the effect of increasing additional paid in capital by $11,000 for
the three months ended March 31, 1997.

On-Line does not offer an ESOP for On-Line employees. On-Line employees are not
eligible for participation under the Savings Bank's ESOP.

The Board of Directors of Argo Bancorp formed a new MRP effective September 1,
1996, which purchased 12,500 shares of Argo Bancorp stock on September 24, 1996,
for $115,000. Under this plan, employees in key management positions with Argo
Bancorp and all its subsidiaries are eligible for participation. During the
three months ended March 31, 1997, 1,575 share were awarded to certain key
On-Line employees. Amortization expense amounted to $3,000 for the three months
ended March 31, 1997.

The Board of Directors of Argo Savings formed a Management Recognition Plan and
Trust ("MRP") effective October 31, 1991, which purchased 6.8% or 15,400 shares,
of the Corporation's authorized but unissued common stock in December 1991. In
addition, Argo Savings contributed $34,385 to allow the MRP to purchase 2,990
shares in the merger conversion or on the open market. All initial MRP shares
have been awarded to employees in key management positions with the Savings Bank
and are fully vested.

                                       6
<PAGE>
 
On April 26, 1995, an amendment to the MRP was approved, which increased the
amount of shares available to be awarded under the MRP to 24,498. As of March
31, 1997, an additional 5,704 shares have been purchased under the MRP and all
shares have been awarded. The awards are earned by employees over a three-year
period. Once awarded the aggregate purchase price of the shares will be
amortized to expense as a portion of annual compensation as the employees become
vested in their stock awards and the amortized cost is reflected as a reduction
of stockholders' equity. Amortization expense amounted to $27,000 and $15,000
for the three months ended March 31, 1997, and 1996, respectively.

Argo Bancorp's Board of Directors adopted the 1991 Stock Option and Incentive
Plan (the 1991 Stock Option Plan), which was approved by its shareholders
effective December 23, 1991, under which up to 107,450 shares of Argo Bancorp's
common stock were reserved for issuance by Argo Bancorp upon exercise of
incentive stock options to be granted to full-time employees of Argo Bancorp and
its subsidiaries from time to time. All 107,450 options were awarded by Argo
Bancorp under the 1991 Stock Option Plan. The exercise price for the options
awarded was equal to the fair market value of the common stock at the date of
grant. To date there have been 53,838 options exercised and 23,997 options were
exercised during the three months ended March 31, 1997. At March 31, 1997,
options to purchase 53,612 shares were outstanding.

Argo Bancorp's Board of Directors adopted the Non-Qualified Stock Option Plan
for Non-Employee Directors (Non-Qualified Stock Option Plan), which was approved
by its shareholders effective December 23, 1991, under which up to 107,450
shares of Argo Bancorp's common stock were reserved for issuance by Argo Bancorp
upon exercise of non-incentive stock options to be granted to non-employee
directors of the Corporation and its subsidiaries from time to time. At March
31, 1997, 55,100 options for shares have been awarded by Argo Bancorp under the
Non-Qualified Stock Option Plan. To date, options to acquire 12,200 shares have
been exercised of which 7,500 shares were exercised during the three months
ended March 31, 1997. The exercise price for the options awarded was equal to
the fair market value of the common stock at the date of grant. At March 31,
1997, options to purchase 42,900 shares were outstanding under the Non-Qualified
Stock Option Plan.

On-Line does not offer a stock option plan for On-Line employees. On-Line
employees are not eligible for participation under Argo Bancorp's Stock Option
Plan.

NOTE C - REGULATORY CAPITAL

Pursuant to the Office of Thrift Supervision ("OTS") regulations, savings
institutions must meet three separate minimum capital-to-assets requirements:
(1) a risk-based capital requirement of 8.0% of risk-weighted assets, (2) a
leverage ratio of 3.0% core capital to total adjusted assets, and (3) a tangible
capital requirement of 1.5% tangible core capital to total assets. Although the
minimum capital requirement is 3.0%, the OTS Regulations provide that an
institution with less than 4.0% core capital is deemed to be
"under-capitalized." The following table summarizes, as of March 31, 1997, Argo
Savings' capital requirements under OTS regulations and its actual capital
ratios at that date:

                                       7
<PAGE>
 
<TABLE> 
<CAPTION> 

                               Required               Actual               Required              Actual               Excess
                                Capital              Capital                Capital             Capital              Capital
                             Percentage           Percentage                Balance             Balance              Balance
                             ----------           ----------                -------             -------              -------
                                                                   (Dollars in Thousands)
<S>                          <C>                  <C>                       <C>                 <C>                  <C> 
Risk-based                          8.0%                9.93%               $11,029             $13,687              $ 2,658
Core                                3.0                 5.42                  7,176              12,962                5,786
Tangible                            1.5                 5.42                  3,588              12,962                9,374
</TABLE> 

NOTE D - EARNINGS PER SHARE

Primary earnings per share is based on a weighted average number of shares of
outstanding of 503,711 and 358,872 for the three months ended March 31, 1997,
and 1996, respectively. Fully diluted earnings per share for the three months
ended March 31, 1997, and 1996, is based upon 505,443 and 367,116, respectively.

NOTE E - COMMITMENTS AND CONTINGENCIES

At March 31, 1997, Argo Savings had loan commitments totaling $10.8 million and
$4.6 million in unused lines of credit. Commitments to fund loans have credit
risk essentially the same as that involved in extending loans to customers and
are subject to Argo Savings' normal credit policies. Argo Savings also had
community reinvestment act ("CRA") investment commitments outstanding of $1.9
million.

                                       8
<PAGE>
 
                              ARGO BANCORP, INC.

                     MANAGEMENT DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

In addition to historical information, this Annual Report may include certain
forward looking statements based on current management expectations. The
Company's actual results could differ materially from those management
expectations. Factors that could cause future results to vary from current
management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of
the federal government, changes in tax policies, rates and regulations of
federal, state and local tax authorities, changes in interest rates, deposit
flows, the cost o funds, demand for loan products, demand for financial
services, competition, changes in the quality or composition of the Bank's loan
and investment portfolios, changes in accounting principles, policies or
guidelines and other economic, competitive, governmental and technological
factors affecting the Company's operations, markets, products, services and
prices. Further description of the risks and uncertainties to the business are
included in detail in Item 1, "Business" of the Company's 1996 Form 10-KSB.

GENERAL

Argo Bancorp was incorporated in August 1987, for the sole purpose of acquiring
Argo Savings. Argo Bancorp was originally capitalized through the sale of 300
shares (which split in December of 1991 at 700/1) of common stock to three
investors for total proceeds of $60,000. Argo Bancorp acquired Argo Savings on
November 17, 1987 for a capital infusion of $1.1 million. On May 26, 1992, the
Corporation completed a merger conversion whereby Dolton-Riverdale Savings
converted from a state chartered mutual association to a federally chartered
stock association and simultaneously merged with and into Argo Savings with Argo
Savings as the surviving entity. The transaction was accounted for under the
pooling of interests method. There was no goodwill or other intangible assets
recorded as a result of the transaction. As part of the merger conversion with
Dolton-Riverdale Savings, the Corporation sold an additional 74,750 shares of
common stock at an issuance price of $11.50. Net proceeds from the merger
conversion were $326,000 after the deduction of the conversion expenses. The
Corporation retained 50.0% of the net proceeds from the merger conversion and
injected the remaining 50.0% into Argo Savings. All proceeds were used for
general business uses.

Argo Bancorp is a unitary savings and loan company and is registered as such
with the OTS. The Corporation is an active holding company with assets
consisting of Argo Savings stock, On-Line stock, marketable securities,
interest-earning deposits and a majority interest in Argo/Empire Mortgage LLC, a
limited liability corporation which engages in the purchase and disposition of
loans. Argo Bancorp is a Federal Housing Authority ("FHA") approved originator
and servicer, a licensed Illinois mortgage banker and an approved Federal
National Mortgage Association ("FNMA") servicer.

                                       9
<PAGE>
 
The principal business of Argo Savings consists of attracting deposits from the
general public and investing those deposits, together with custodial escrow
accounts associated with purchased mortgage servicing rights and funds generated
internally, primarily in one-to-four family mortgage loans. Argo Savings is a
member of the Federal Home Loan Bank ("FHLB") System, and its deposits are
insured to the maximum allowable amount by the Federal Deposit Insurance
Corporation ("FDIC").

Argo Savings operates one (1) wholly-owned service corporation subsidiary.
Dolton-Riverdale Savings Service Corporation is a wholly-owned subsidiary which
offers life insurance annuities to the customer base of Argo Savings. Argo
Savings also has two (2) operating subsidiaries, Argo Mortgage Corporation and
Margo Financial Services LLC. Argo Mortgage Corporation is a wholly-owned
operating subsidiary, which engages in mortgage brokerage activities that focus
on purchase and sale of mortgage loans into the secondary market. Margo
Financial Services LLC is a majority owned operating subsidiary, which was
incorporated and fully operational on August 20, 1996. The activities of Margo
relate to the origination, investment, sale and servicing of mortgage loans.

Argo Savings' results of operations are dependent primarily on net interest
income, representing the difference between the interest income earned on its
loans, mortgage-backed securities, investment securities and interest-earning
deposits and its cost of funds, consisting of the interest paid on its deposits,
escrows and borrowings. Argo Savings' operating results are also affected by the
fees generated by its investment in purchased mortgage servicing rights and, to
a lesser extent, the profit recognized on the sale of mortgage loans, customer
service charges and other income. Argo Savings' operating expenses consist of
employee compensation, occupancy expenses, federal insurance premiums,
amortization of goodwill, and other general and administrative expenses. Results
of operations are also significantly affected by general economic and
competitive conditions, particularly changes in market interest rates,
government policies and actions of regulatory authorities.

Through activities conducted by its Argo Mortgage Corporation subsidiary, in
recent years Argo Savings has acquired mortgage loans at a deep discount for
which the borrowers are either not current as to principal and interest payments
or there is doubt to the borrower's ability to pay in full the contractual
principal and interest outstanding. In determining the amount it will bid to
acquire such loans at private sales and auctions, the Company estimates the
amounts it will realize through foreclosure, collection efforts, or other
resolution of each loan and the length of time required to complete the
collection process. Investment in these assets has resulted in higher than
market interest yields and significant gains as a result of the ultimate sale of
properties acquired through these purchases. However, losses have also been
incurred from certain properties through other real estate owned activity.

On October 31, 1995, Argo Bancorp acquired On-Line, an Oak Brook, Illinois based
computer services bureau, serving bank and thrift clients throughout the
Midwest. The purchase transaction was consummated through the use of a wholly-
owned subsidiary, OLF Acquisition Corporation, which acquired shares of three
separate state chartered savings and loan services corporations which owned, in
the aggregate, 98.9% of the outstanding shares of On-Line.

                                       10
<PAGE>
 
Sale of the remaining 1.1% of On-Line shares was made by a single institutional
stockholder which held shares in On-Line directly. The intervening acquisition
subsidiary and state chartered savings and loan service corporation shells were
liquidated and merged by Argo Bancorp during 1996.

Financial terms of the transaction included a cash sweep to shareholders of On-
Line funds on hand on the closing date, less amounts necessary to establish
certain agreed-upon escrow balances, a two (2) year asset note of approximately
$1,026,000, representing the closing date net book value of On-Line; a twenty-
six (26) month escrow note in the amount of $460,000, representing funds held
for future performance under a third party computer lease; and a structured
schedule of contingent payments based on future revenues of On-Line over the
next seven (7) years. The total transaction value, including asset notes and
contingent payments, will not exceed $10.0 million.

On-Line is a third party provider of electronic data processing services to
financial institutions located throughout the Midwest. On-Line currently
provides data processing services to thrifts, community banks, savings banks,
and mortgage brokers representing over 1.5 million customer accounts in six
Midwestern states. On-Line has historically marketed its services to
institutions with assets of less than $1.0 billion, where On-Line's orientation
toward superior customer service and specialized products allows it to
effectively compete. On-Line's customer base include institutions with total
assets ranging from $13.0 million to $850.0 million, with an average of
approximately $95.0 million. The acquisition by Argo Bancorp has promoted the
development and sale of technological advances in the systems, programs, and
services offered by On-Line, which includes resale of software produced by
Information Technology Incorporated, integrated check and document imaging
systems, and computer output laser disc storage technology. These services are
in addition to new offerings by On-Line in the planning and deployment of wide
area and local area network systems, the sale of all related hardware and
services, expanded technical and communications support, consultation and
training, and the maintenance of in-house systems. On-Line's strategy to
implement and offer computer output laser disc storage technology and a full
line of document imaging services has been realized and is now being marketed to
a wide array of users of advanced technology. Together with aggressive marketing
to small and mid-size commercial and community banks, On-Line's business plan to
expand its traditional thrift institution client base is being implemented.

LIQUIDITY AND CAPITAL RESOURCES

Argo Savings' primary sources of funds are deposits, proceeds from principal and
interest payments on the loan and mortgage-backed securities portfolio,
custodial deposit accounts related to loans serviced for others, and the sale of
discounted loans receivable and newly originated fixed rate long-term mortgage
loans. The most liquid assets are cash and short-term investments. The levels of
these assets are dependent on the operating, financing and investing activities
during any given period. Cash and interest-earning deposits totaled $8.8 million
at March 31, 1997.

                                       11
<PAGE>
 
The primary investment activity of Argo Savings is the origination and purchase
of mortgage loans. During the three months ended March 31, 1997, and 1996, Argo
Savings originated and purchased loans receivable and discounted loans
receivable in the principal amounts of $43.9 million and $33.3 million,
respectively. During the three months ended March 31, 1997, and 1996, these
investing activities were primarily funded by principal repayments on loans
receivable and discounted loans receivable and mortgage-backed securities of
$11.7 million and $12.1 million, respectively, and the proceeds from the sale of
loans receivable and discounted loans receivable, and securities available for
sale of $5.9 million and $19.2 million, respectively. During the three months
ended March 31, 1997, additional funding was provided by the increase in
deposits of $12.1 million and the increase in borrowings of $7.0 million. During
the three months ended March 31, 1996, additional funding was provided by the
increase in deposits of $537,000 and the increase in borrowings of $1.9 million.

Argo Savings is required to maintain minimum levels of liquid assets as defined
by OTS regulation. At March 31, 1997, Argo Savings liquid assets represented
5.9% of its liquidity base as compared to the required level of 5.0%. The level
of liquidity maintained is believed by management to be adequate to meet the
requirements of normal operations, potential deposit outflows, and the current
loan demand.

Liquidity management for Argo Savings is both a daily and long-term function of
the Argo Savings' senior management. Argo Savings' management meets on a daily
basis and monitors interest rates, current and projected commitments to purchase
loans and the likelihood of funding such commitments, and projected cash flows.
Excess funds are generally invested in short-term investments such as federal
funds. Cash flow projections are updated regularly to assure necessary
liquidity.

At March 31, 1997, Argo Savings' capital exceeded all of the capital
requirements of the OTS on a current and fully phased-in basis. The Savings
Bank's tangible, core and risk-based capital ratios were 5.42%, 5.42%, and
9.93%, respectively.

The OTS regulatory capital requirements also incorporate an interest rate risk
component. Savings institutions with "above normal" interest rate risk exposure
are subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. A savings institution's interest rate risk is
measured by the decline in the net portfolio value of its assets (i.e., the
difference between incoming and outgoing discounted cash flows from assets,
liabilities, and off-balance sheet contracts) that would result from a
hypothetical 200 basis point increase or decrease in market interest rates
divided by the estimated economic value of the institution's assets. In
calculating its total capital under the risk-based capital rule, a savings
institution whose measured interest rate risk exposure exceeds 2.0% must deduct
an amount equal to one-half of the difference between the institution's measured
interest rate risk and 2.0% multiplied by the estimated economic value of the
institution's interest rate risk component on a case-by-case basis. A savings
institution with assets of less than $300 million and risk-based capital ratios
in excess of 12.0% is not subject to the interest rate risk component, unless
the OTS determines otherwise. For the present time, the OTS has deferred
implementation of the interest rate risk component. At March 31, 1997, the
Savings Bank met each of its capital requirements, and it is anticipated that
Argo Savings will not be subject to the interest rate risk component.

                                       12
<PAGE>
 
CHANGES IN FINANCIAL CONDITION

Total assets increased $24.5 million to $253.8 million at March 31, 1997, from
$229.3 million at December 31, 1996. The increase in total assets is due
primarily to the increase of $26.4 million in loans, and the $1.5 million
increase in purchased mortgage servicing rights, partially offset by the $4.4
million decrease in cash and interest earning deposits. This increase was funded
through an increase in deposits, short-term borrowings, and custodial escrows of
$12.1 million, $7.0 million, and $3.0 million, respectively.

Cash and interest-earning deposits decreased $4.4 million to $8.8 million at
March 31, 1997, primarily due to liquidity management.

Loans receivable and discounted loans receivable increased $26.4 million to
$199.8 million at March 31, 1997, primarily due to the origination of $35.4
million in loans receivable and the purchase of $8.5 million of discounted loans
receivable, partially offset by principal repayments of $11.6 million and the
sale of $5.2 million of loans receivable and discounted loans receivable.

Deposits increased $12.1 million to $162.7 million at March 31, 1997, from
$150.6 million at December 31, 1996. The increase can be attributed to a
certificate of deposit promotion that occurred during the three months ended
March 31, 1997.

Borrowings increased $7.0 million to $57.9 million at March 31, 1997, from $50.9
million at December 31, 1996. The increase is primarily due to proceeds from
short-term advances from the Federal Home Loan Bank. The increase in advances
were used to fund loan originations, loan purchases, and as an additional source
of liquidity.

Custodial escrow balances for loans serviced increased $3.0 million to $8.7
Million at March 31, 1997, from $5.8 million at December 31, 1996. This increase
reflects normal fluctuations within these accounts. The custodial accounts
pertain to escrowed payments of taxes and insurance and the float on principal
and interest payments on loans serviced either for Argo Savings or on behalf of
others by an independent mortgage servicing operation. The custodial accounts
related to loans serviced by others are maintained at Argo Savings in both
interest-bearing and non-interest bearing accounts. The custodial accounts
associated with loans or purchased mortgage servicing rights serviced for Argo
Savings are maintained in non-interest bearing accounts. At March 31, 1997, and
1996, $8.7 million of all custodial escrow balances pertain to loans subserviced
on behalf of Argo Savings for portfolio loans, servicing retained loans and
purchased mortgage servicing rights.

Stockholders' equity increased $1.3 million to $17.8 million at March 31, 1997,
from $16.6 million at December 31, 1996. The increase was caused by the issuance
of stock totaling $400,000, the exercise of stock options for $494,000, a
$193,000 tax benefit related to the exercise of non-qualified options and net
income of $257,000.

                                       13
<PAGE>
 
INTEREST RATE RISK

Argo Savings' financial objective is to reduce the sensitivity of its earnings
to interest rate fluctuations by attempting to achieve a match between the
interest rate sensitivity of its assets and liabilities. The major strategies
Argo Savings has implemented are (i) the origination and purchase of adjustable
rate loans and mortgage-backed securities; (ii) the origination of balloon
mortgages; (iii) the sale of newly originated long-term fixed rate mortgages;
(iv) the investment in purchased mortgage servicing rights which provide a
source of non-interest income and also act as a hedge against the decline in the
value of fixed rate mortgages in a rising interest rate environment; (v) the
increase of non-interest bearing custodial accounts related to the purchased
mortgage servicing rights; and (vi) the control of deposit growth and
maintenance of long-term deposits. The strategies listed have been implemented
by Argo Savings and are monitored on a monthly basis by management. Argo Savings
does not use any artificial hedge products to reduce its exposure to interest
rate risk.

As part of its asset/liability strategy, Argo Savings' objective is to maintain
the cumulative one-year hedged gap within a range of plus or minus 15.0% of
total assets, which helps maintain a more stable net interest spread in various
interest rate environments. The gap ratio fluctuates as a result of market
conditions and management's expectations of future interest rate trends.

Argo Savings had an excess of interest sensitive liabilities which mature or
reprice within one year over interest sensitive assets of $35.6 million or
14.86% of total assets at March 31, 1997. As a result of the excess of interest
sensitive liabilities over interest sensitive assets, Argo Savings is "Net
Liability Sensitive" which would indicate that its earnings would be negatively
affected by rising interest rates. In periods of falling interest rates,
however, the opposite effect on net interest income is expected.

In determining the gap position, Argo Savings has assumed that passbook
accounts, NOW accounts, money market accounts, and interest-bearing escrows are
withdrawn based on assumptions prepared by the OTS in its latest gap analysis
report. The assumptions used, although standardized, may not be indicative of
the actual withdrawals experienced by Argo Savings. Fixed maturity deposits
reprice at maturity. The combined effect of these assumptions on passbook, NOW,
money market accounts and interest-bearing escrows assumes 17.0% of these
accounts withdrawn within three years, and 15.0% per year, thereafter.
Management believes that these decay rate assumptions are reasonable.

THRIFT RECHARTERING LEGISLATION

The proposed legislation regarding elimination of the federal thrift charter and
related issues remains pending before Congress. The Bank is unable to predict
whether such legislation would be enacted, the extent to which the legislation
would restrict or disrupt its operations or whether the BIF and SAIF funds will
eventually merge. See Form 10-KSB for the fiscal year ended December 31, 1996,
for a discussion of the proposed legislation.

                                       14
<PAGE>
 
ACCOUNTING DEVELOPMENTS

In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" ("SFAS No. 128"). The Statement is effective for
periods ending after December 15, 1997, and will require restatement of all
prior-period earnings per share ("EPS") data presented. The Statement
establishes standards for computing and presenting EPS, and requires dual
presentation of basic and diluted EPS on the face of the income statement. Basic
EPS is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Based on its review of the Statement, management believes the adoption of SFAS
No. 128 will have no material effect on diluted earnings per share of the
Company.

ASSET QUALITY

Argo Bancorp and Argo Savings regularly review assets to determine proper
valuation. Loans are reviewed on a regular basis and an allowance for possible
loan losses is established when, in the opinion of management, the net
realizable value of the property collateralizing the loan is less than the
outstanding principal and interest and the collectibility of the loan's
principal and interest becomes doubtful.

At March 31, 1997, Argo Savings had one hundred forty-seven (147) properties,
for $4.5 million classified as foreclosed real estate, as compared to ninety-
five (95) properties for $3.9 million at December 31, 1996. The underlying
properties on March 31, 1997, consisted primarily of single family residences.
The foreclosed real estate has been written down to its estimated fair value at
March 31, 1997. The total amount of loans receivable ninety (90) days or more
past due at March 31, 1997, was $5.2 million or 3.58% of total loans receivable
compared to $3.9 million or 3.12% of total loans on December 31, 1996. At March
31, 1997, loans ninety (90) days or more past due totaling $5.2 million were
secured by one-to-four family residences. Total non-performing assets at March
31, 1997, totaled $9.7 million or 3.80% of total assets compared to $7.9 million
or 3.43% of total assets at December 31, 1996. Excluded from this total is the
$16.6 million of discounted loans ninety (90) days or more past due. Discounted
loans which are often purchased with the intent to foreclose and sell the
underlying property are excluded from non-performing loans.

There were no restructured loans within the meaning of Financial Accounting
Standards Board Statement 15 for any of the indicated periods.

                                       15
<PAGE>
 
RESULTS OF OPERATIONS - COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS
ENDED MARCH 31, 1997, AND 1996.

GENERAL

Net income for the three months ended March 31, 1997, was $257,000 or $.51 per
share compared to net income of $465,000 or $1.30 per share for the three months
ended March 31, 1996. The $208,000 decrease in comparable three month earnings
resulted primarily from a decrease in On-Line's data processing revenue and
increases in On-Line's cost of data processing services, and other general and
administrative expenses partially offset by an increase in net interest income.

INTEREST INCOME

Interest income for the three months ended March 31, 1997, totaled $4.7 million,
as compared to $3.6 million for the comparable 1996 period. The $1.0 million
increase was caused by the $39.1 million increase in average interest-earning
assets to $194.7 million for the quarter ended March 31, 1997, and the 23 basis
point increase in the weighted average yield on interest-earning assets to 9.56%
for the three months ended March 31, 1997. These increases are primarily
attributable to the purchase of discounted loans receivable, which typically
have higher than market yields.

INTEREST EXPENSES

Interest expense for the three months ended March 31, 1997, totaled $2.7 million
as compared to $2.2 million for the comparable 1996 period. The $591,000
increase was caused by the $46.5 million increase in average interest-bearing
liabilities to $208.8 million for the three months ended March 31, 1997,
partially offset by the 5 basis point decrease in the weighted average cost of
interest-bearing liabilities to 5.26% for the three months ended March 31, 1997.

NET INTEREST INCOME

Net interest income totaled $1.9 million for the three months ended March 31,
1997, reflecting an increase of $434,000 from the amount recorded in the
comparable 1996 period. The increase in net interest income for the three months
ended March 31, 1997, resulted from an increase of $39.1 million in the average
interest-earning assets and a 28 basis point increase in the effective net
spread to 4.31% from 4.03% for the comparable 1996 period offset by a $46.5
million increase in the average dollar amount of interest-bearing liabilities.

PROVISION FOR LOAN LOSSES

A general loan loss provision of $60,000 was recorded during the three months
ended March 31, 1997, as compared to $25,000 for the three months ended March
31, 1996. Management believes that loan loss provisions are adequate and will
continue to monitor the mortgage portfolio and substandard assets for loss
exposure.

                                       16
<PAGE>
 
NON-INTEREST INCOME

Non-interest income decreased $63,000 to $3.36 million for the three months
ended March 31, 1997, as compared to $3.4 million for the three months ended
March 31, 1996. The decrease was the result of a $124,000 decrease in data
processing revenue, which was caused by one-time revenue charges that occurred
during the three months ended March 31, 1996. Also contributing to the decrease
was a $24,000 decrease in gain on sale of loans receivable and a $48,000
decrease in other income partially offset by a $134,000 increase in mortgage
banking income.

NON-INTEREST EXPENSE

Non-interest expense increased $676,000 primarily due to a $157,000 increase in
compensation, a $113,000 increase in data processing cost of services, and a
$438,000 increase in other general and administrative expenses. The increase in
compensation was caused primarily by the addition of staff at the new operating
subsidiary, Margo Financial Services LLC. The $113,000 increase in data
processing cost of services is due to significant equipment and software
upgrades at On-Line. The increase in other general and administrative expenses
was caused by increases in accounting, legal, advertising, loan expense, and
other expense.

INCOME TAX EXPENSE

The provision for income tax expense decreased $132,000 to $93,000 or 26.5% of
pre-tax earnings for the three months ended March 31, 1997, as compared to
$225,000 or 32.6% of pre-tax earnings for the comparable period. The decrease is
due to the decrease in pre-tax earnings and the utilization of affordable
housing tax credits.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Argo Bancorp and Argo Savings are not engaged in any legal proceedings of a
material nature at the present time.

ITEM 2.  CHANGES IN SECURITIES

Not applicable.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

                                       17
<PAGE>
 
ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.     Exhibits

           The following exhibits are incorporated herein by reference:

           (3)       The Certificate of Incorporation and By-Laws.

                     3.1 Certificate of Incorporation of Argo Bancorp, Inc.*
                     3.2 By-Laws of Argo Bancorp, Inc.*
                     4.0 Stock Certificate of Argo Bancorp, Inc.*
                     27.0 Financial Data Schedule (filed herewith)

B.     Reports of Form 8-K

The Registrant filed a Report on Form 8-K on January 8, 1997, announcing the
sale of 111,563 shares of Argo Bancorp, stock to The Deltec Banking Corporation
Limited in a negotiated private offering.


-----------------
* Incorporated herein by reference into this document from Exhibits to Form S-1,
Registration Statement, and filed on January 28, 1992, any amendments thereeto, 
Registration No. 33-45222.

                                       18
<PAGE>
 
                                  SIGNATURES

Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                     ARGO BANCORP, INC.




Date:   May 9, 1996                  /S/ John G. Yedinak
     ----------------                -------------------------------------
                                     John G. Yedinak, Chairman of the Board,
                                     President, Chief Executive Officer, Interim
                                     Principal Accounting and Financial Officer,
                                     and Director

                                       19