UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION


                             WASHINGTON, D.C. 20549



                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                           COMMISSION FILE NO. 0-11786



                              VILLAGE BANCORP, INC.
             (Exact name of Registrant as specified in its charter)


         CONNECTICUT                                       06-1076844
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                        Identification Number)


                25 PROSPECT STREET RIDGEFIELD, CONNECTICUT 06877
             (Address of principal executive offices and Zip Code)


Registrant's telephone number, including area code (203) 438-9551


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                         YES _X_              NO___

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.



           CLASS                                  OUTSTANDING AT JULY 31, 1997
COMMON STOCK, $3.33 PAR VALUE                             952,317 SHARES



<PAGE>



                              VILLAGE BANCORP, INC.

                                TABLE OF CONTENTS

                                                                       PAGE NO.
                                                                       --------


PART I. FINANCIAL INFORMATION:


     ITEM 1. Financial Statements

       Condensed Consolidated Balance Sheets
          June 30, 1997 and December 31, 1996 (unaudited) ....................1

       Condensed Consolidated Statements of Income For The
          Three Months Ended June 30, 1997 and 1996 (unaudited)
          Six Months Ended June 30, 1997 and 1996 (unaudited) ................2

       Condensed Consolidated Statements of Cash Flows For The
          Six Months Ended June 30, 1997 and 1996 (unaudited) ................3

       Notes to Condensed Consolidated Financial Statements
          (unaudited) ........................................................4


     ITEM 2. Management's Discussion and Analysis of Financial
       Condition and Results of Operations ...................................9



PART II.  OTHER INFORMATION:


     ITEM 1. Legal Proceedings ..............................................14

     ITEM 2. Changes in Securities ..........................................14

     ITEM 3. Defaults Upon Senior Securities ................................14

     ITEM 4. Results of votes of Security Holders ...........................14

     ITEM 5. Other Information ..............................................14

     ITEM 6. (a). Exhibits ..................................................14

             (b). Reports on Form 8-K .......................................14


SIGNATURES ..................................................................15



<PAGE>




VILLAGE BANCORP, INC.

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

PART I. - FINANCIAL INFORMATION



<PAGE>




VILLAGE BANCORP, INC.

--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

ASSETS                                                  June 30,        Dec. 31,
                                                          1997           1996
                                                       ---------      ---------
                                                       (Unaudited)
                                                             (In thousands)

Cash and due from banks                                $  11,018      $   8,545
Federal funds sold                                         4,350          6,600
                                                       ---------      ---------
Total cash and cash equivalents                           15,368         15,145
                                                                      
Securities:                                                           
  Available-for-sale (at fair value)                      13,563         15,706
  Held-to-maturity (fair value of                                     
  $27,613 at June 30, 1997 and                                        
  $17,135 at December 31, 1996)                           27,707         17,198
                                                                      
Federal Home Loan Bank stock, at cost                        782            712
Loans, net of deferred loan fees - Note C                132,195        126,836
Allowance for loan losses                                 (1,344)        (1,356)
                                                       ---------      ---------
Loans - net                                              130,851        125,480
                                                                      
Loans held for sale                                         --               50
Bank premises and equipment - net                          1,466          1,509
Accrued interest and other assets                          6,044          3,750
                                                       ---------      ---------
TOTAL ASSETS                                            $195,781      $ 179,550
                                                        ========      =========
                                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                      
Deposits:                                                             
  Noninterest bearing                                  $  19,940      $  15,125
  Interest bearing                                       158,188        147,500
                                                       ---------      ---------
  Total deposits                                         178,128        162,625
                                                                  
Accrued interest payable                                   1,360            912
Other liabilities                                            617            716
                                                       ---------      ---------
                                                                      
  Total liabilities                                      180,105        164,253
                                                       ---------      ---------
                                                                      
Stockholders' Equity:                                                 
  Common stock, par value $3.33 per share;                        
      authorized - 10,000,000  shares,                            
      issued and outstanding, 952,317 at June 30,                 
      1997 and 952,117 at December 31, 1996                3,172          3,171
  Additional paid-in capital                               7,997          7,996
  Retained earnings                                        4,524          4,143
  Net unrealized losses on available-                             
     for-sale securities, net of tax                         (17)           (13)
                                                                  
                                                       ---------      ---------
  Total stockholders' equity                              15,676         15,297
                                                                      
                                                       ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 195,781      $ 179,550
                                                       =========      =========
                                                                      
                                                                      
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.             

                                                                    
                                      - 1 -


<PAGE>



VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                               (UNAUDITED)             (UNAUDITED)
                                           THREE MONTHS ENDED       SIX MONTHS ENDED
                                                  JUNE 30,              JUNE 30,
                                              1997       1996       1997       1996
                                           --------   --------   --------   --------
                                              (In thousands, except per share data)

<S>                                        <C>        <C>        <C>        <C>     
INTEREST INCOME:
      Loans, including fees                $  2,832   $  2,555   $  5,545   $  5,203
      Investment securities:
         Taxable                                490        526        947      1,009
         Tax-exempt                              73         30        108         59
      Federal funds sold                         98         51        205        184
                                           --------   --------   --------   --------

      Total interest income                   3,493      3,162      6,805      6,455

INTEREST EXPENSE ON DEPOSITS                  1,452      1,229      2,795      2,557
                                           --------   --------   --------   --------

NET INTEREST INCOME                           2,041      1,933      4,010      3,898

PROVISION FOR LOAN LOSSES                        15         30         30         60
                                           --------   --------   --------   --------

NET INTEREST INCOME AFTER PROVISION
      FOR LOAN LOSSES                         2,026      1,903      3,980      3,838
                                           --------   --------   --------   --------

OTHER INCOME:
      Security gains/(losses) - net              --          2         --          2
      Other operating income                    137        126        270        247
                                           --------   --------   --------   --------
      Total other income                        137        128        270        249
                                           --------   --------   --------   --------

OTHER EXPENSES:
      Salaries and employee benefits            862        725      1,675      1,506
      Net occupancy                             185        142        326        295
      Furniture and equipment                    62         65        120        135
      Data processing services                  139        132        279        261
      Regulatory assessments                      7          1         10          2
      Printing, stationery and supplies          59         37         99         80
      Other operating expenses                  340        296        658        565
                                           --------   --------   --------   --------
      Total other expenses                    1,654      1,398      3,167      2,844
                                           --------   --------   --------   --------

INCOME BEFORE PROVISION FOR INCOME TAXES        509        633      1,083      1,243
PROVISION FOR INCOME TAXES                      194        212        359        430
                                           --------   --------   --------   --------

NET INCOME                                 $    315   $    421   $    724   $    813
                                           ========   ========   ========   ========

PER SHARE DATA - Note E:
Cash dividends declared                    $    .18   $    .17   $    .36   $    .32
Net income                                 $    .33   $    .44   $    .75   $    .85
Weighted average number of common
  and common equivalent
  shares outstanding                        965,659    958,345    965,610    957,705
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                      - 2 -


<PAGE>



VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
--------------------------------------------------------------------------------


                                                              (Unaudited)
                                                       Six Months Ended June 30,
                                                             1997        1996
                                                           --------    --------
OPERATING ACTIVITIES:                                         (In thousands)
Net income                                                 $    724    $    813
Adjustments to reconcile net income to net cash
 (used in) provided by operating activities:
      Provision for loan losses                                  30          60
      Provision for depreciation and amortization               117         122
      (Accretion) amortization of investment security
      premiums discounts - net                                  (67)       (230)
      Net decrease in deferred loan fees                        (45)        (54)
      Increase (decrease) in interest payable                   448        (236)
      Increase in accrued interest and other assets          (2,290)       (369)
      (Decrease) increase in other liabilities                  (99)        189
      Origination of loans for sale                          (5,309)     (4,944)
      Proceeds from sales of loans                            5,359       5,266
                                                           --------    --------

Net cash (used in) provided by operating activities          (1,132)        617
                                                           --------    --------

INVESTING ACTIVITIES:
Proceeds from sales of available-for-sale securities           --         2,025
Proceeds from maturities of available-for-sale securities     5,043       9,151
Proceeds from maturities of held-to-maturity securities         332       5,524
Purchases of available-for-sale securities                   (2,852)     (5,178)
Purchases of held-to-maturity securities                    (10,830)     (9,433)
Purchase of Federal Home Loan Bank stock                        (70)       --
Net (increase) decrease in loans                             (5,356)      1,300
Purchases of premises and equipment                             (74)       (135)
                                                           --------    --------

Net cash (used in) provided by investing activities         (13,807)      3,254
                                                           --------    --------

FINANCING ACTIVITIES:
Net increase (decrease) in deposits                          15,503      (2,758)
Cash dividends                                                 (343)       (304)
Net proceeds from issuance of common stock                        2           6
                                                           --------    --------

Net cash provided by (used in) financing activities          15,162      (3,056)
                                                           --------    --------

INCREASE IN CASH AND CASH EQUIVALENTS                           223         815
                                                           --------    --------

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                 15,145      17,325
                                                           --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                   $ 15,368    $ 18,140
                                                           ========    ========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
      Interest paid on deposits                            $  2,347    $  2,793
      Tax payments                                              589         478
      Change in net unrealized losses on
      available-for-sale securities, net of tax                  (4)       (113)

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                      - 3 -


<PAGE>



VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
--------------------------------------------------------------------------------


NOTE A - BASIS OF PRESENTATION


In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  reflect all  adjustments  necessary,  consisting  only of
normal recurring accruals, to present fairly the financial position, the results
of  operations,  cash flows and the  changes in  financial  position  of Village
Bancorp,  Inc. (the  "Company")  for the periods  presented.  In preparing  such
financial  statements,  management is required to make estimates and assumptions
that effect the reported amounts. Actual results could differ significantly from
these estimates.

The Company's  consolidated financial statements include the accounts of Village
Bancorp,  Inc. and its wholly owned  subsidiary The Village Bank & Trust Company
("Village" or the "Bank") and have been prepared in  accordance  with  generally
accepted  accounting  principles  and conform with  predominant  practices  used
within the banking industry.

Village is engaged in the  business  of  commercial  banking and  operates  five
branch banking offices in Fairfield and Litchfield counties in Connecticut,  and
is principally engaged in lending and deposit gathering  activities within these
counties.

While management believes that the disclosures  presented are adequate so as not
to make  the  information  misleading,  it is  suggested  that  these  financial
statements be read in conjunction with the consolidated financial statements and
notes included in the Company's 1996 annual report.

In October 1995, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  SFAS No. 123 establishes a fair value based method of accounting
for  stock-based  compensation  plans  and  encourages,  but does  not  require,
entities  to  adopt  that  method  in  place  of the  provisions  of  Accounting
Principles  Board  Opinion  ("APB")  No.  25,  "Accounting  for Stock  Issued to
Employees," for all arrangements  under which employees  receive shares of stock
or other equity  instruments of the employer or the employer incurs  liabilities
to  employees  in  amounts  based on the price of the  stock.  SFAS No. 123 also
establishes  fair value as the  measurement  basis for  transactions in which an
entity  acquires  goods or services  from  non-employees  in exchange for equity
instruments.  The  accounting  provisions  of SFAS  No.  123 are  effective  for
transactions  entered into after December 15, 1995.  Effective  January 1, 1996,
the Company adopted SFAS No. 123 and has decided that it will continue measuring
compensation cost for employee stock  compensation  plans in accordance with the
provisions of APB No. 25.


                                      - 4 -


<PAGE>



VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
--------------------------------------------------------------------------------


     SFAS No. 125,  "Accounting for Transfers and Servicing of Financial  Assets
and  Extinguishments  of  Liabilities,"   specifies   accounting  and  reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities  and for  distinguishing  whether a transfer of financial  assets in
exchange for cash or other consideration should be accounted for as a sale or as
a pledge of  collateral  in a secured  borrowing.  SFAS No. 125 is effective for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after December 31, 1996,  except for certain  provisions  (relating to
the  accounting  for secured  borrowings  and  collateral and the accounting for
transfers  and  servicing of repurchase  agreements,  dollar  rolls,  securities
lending and similiar  transactions)  which have been  deferred  until January 1,
1998 in accordance with SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB  Statement No. 125." The adoption of these  standards has not
and is  not  expected  to  have  a  material  impact  on  the  Bank's  financial
statements.

     On March 3, 1997, the Financial  Accounting Standards Board issued SFAS No.
128,  "Earnings Per Share." SFAS No. 128 is effective  for financial  statements
issued for periods ending after December 31, 1997,  including  interim  periods.
Earlier application is not permitted.  Restatement of all prior-period  earnings
per share ("EPS") data  presented is required when SFAS No. 128 is  implemented.
SFAS No. 128  establishes  standards for computing  and  presenting  "Basic" and
"Diluted" EPS. SFAS No. 128 states that the "Basic EPS" excludes dilution and 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 or
resulted in the  issuance of common  stock that would then share in the earnings
of the entity.  "Diluted  EPS" is computed  similiarly  to "Fully  Diluted  EPS"
pursuant to APB Opinion No. 15.

     In June 1997,  the  Financial  Accounting  Standards  Board  issued two new
accounting  standards,  Statement  of  Financial  Standards  No. 130  "Reporting
Comprehensive Income" ("SFAS" No. 130") and Statement of Financial Standards No.
131 "Disclosures About Segments of an Enterprise and Related Information" ("SFAS
No. 131").

     SFAS  No.  130   establishes   standards   for  reporting  and  display  of
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial  statements.  This statement requires that all items that are required
to be recognized  under  accounting  standards as  components  of  comprehensive
income be reported  in a financial  statement  that is  displayed  with the same
prominence as are the financial  statments.  Comprehensive  income is defined as
"the change in equity (net assets) of a business enterprise during a period from
transactions  and other events and  circumstances  from  non-owner  sources.  It
includes all changes and equity  during a period,  except those  resulting  from
investments by owners and distributions to owners."


                                      - 5 -


<PAGE>


VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
--------------------------------------------------------------------------------


     SFAS No. 131 establishes  standards for the way public business enterprises
report information about operating segments and annual financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments  and  interim  financial  reports  issued  to  shareholders.   It  also
establishes  standards  for related  disclosure  about  products  and  services,
geographic  areas,  and major  customers.  The statement  requires that a public
business  enterprise  report  financial and  descriptive  information  about its
reportable   operating  segments.   Operating  segments  are  components  of  an
enterprise  about which  separate  financial  information  is available  that is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate  resources and assess  performance.  The statement requires that public
business  enterprises  report a  measure  of  segment  profit  or loss,  certain
specific  revenue  expense  items and  segment  assets.  It also  requires  that
information be reported about revenues derived from the enterprises' products or
services,  or about the  countries in which the  enterprises  earn  revenues and
holds assets, and about major customers,  regardless whether that information is
used in making  operating  decisions.  This statement is effective for financial
statements for periods beginning after December 31, 1997.

     Both of these statements require  disclosures that the Company must make in
its financial statements or notes thereto. Accordingly,  implementation of these
statements will not have any  significant  effect on the results of operation or
financial condition, as currently reported by the Company.


NOTE B - SECURITIES


The amortized cost and the approximate fair values of securities were as follows
(in thousands): 

                                                      (Unaudited)  
                                                     June 30, 1997 
                                      ------------------------------------------
                                      Amortized       Unrealized         Fair 
                                         Cost       Gain      (Loss)      Value
                                       -------    -------    -------     -------
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities               $16,259    $    26    $  (115)    $16,170
U.S. Government Agency                   4,626         10        (30)      4,606
Mortgage-backed securities of
  U.S. Government agencies                  57          1       --            58
Obligations of states and
  political subdivision                  6,765         44        (30)      6,779
                                       -------    -------    -------     -------
TOTAL                                  $27,707    $    81    $  (175)    $27,613
                                       =======    =======    =======     =======


                                      - 6 -


<PAGE>


VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
(Continued)
--------------------------------------------------------------------------------


SECURITIES AVAILABLE-FOR-SALE
-----------------------------
U.S. Treasury Securities                  $13,158   $     4   $   (35)   $13,127
Mortgage-backed Securities
  of U.S. Government agencies                 393         1      --          394
Other                                          42      --        --           42
                                          -------   -------   -------    -------
TOTAL                                     $13,593   $     5   $   (35)   $13,563
                                          =======   =======   =======    =======


                                                      December 31, 1996
                                         --------------------------------------
                                         Amortized       Unrealized       Fair
                                            Cost      Gain     (Loss)     Value
                                          -------   -------   -------    -------
SECURITIES HELD-TO-MATURITY
---------------------------
U.S. Treasury Securities                  $ 9,824   $    31   $   (96)   $ 9,759
Mortgage-backed securities of
  U.S. Government agencies                  4,735        15       (34)     4,716
Obligations of states and
  political subdivision                     2,639        37       (16)     2,660
                                          -------   -------   -------    -------
TOTAL                                     $17,198   $    83   $  (146)   $17,135
                                          =======   =======   =======    =======


SECURITIES AVAILABLE-FOR-SALE
-----------------------------
U.S. Treasury Securities                  $15,250   $     6   $   (27)   $15,229
Mortgage-backed securities of
  U.S. Government agencies                    430      --        --          430
Other                                          48      --          (1)        47
                                          -------   -------   -------    -------
TOTAL                                     $15,728   $     6   $   (28)   $15,706
                                          =======   =======   =======    =======


At June  30,  1997  and  December  31,  1996  securities  with a book  value  of
$1,137,000 and $1,140,000,  respectively, were pledged to secure public deposits
and for other purposes as required by law and banking regulation.


NOTE C - LOANS
                                                 June 30, 1997    Dec. 31, 1996
                                                 -------------    -------------
                                                            (In thousands)

Real estate                                          $ 108,785        $ 104,561
Commercial and financial                                15,146           12,621
Installment and consumer credit                          8,482            9,917
Deferred loan fees                                        (218)            (263)
                                                     ---------        ---------
TOTAL                                                $ 132,195        $ 126,836
                                                     =========        =========


                                      - 7 -


<PAGE>


VILLAGE BANCORP, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
(Continued)
--------------------------------------------------------------------------------


The recorded  investment in loans considered to be impaired at June 30, 1997 and
December  31,  1996  was  $1,516,000  and  $1,576,000,   respectively.  Specific
valuation  allowances for these loans was $207,000 and $215,000 at June 30, 1997
and December 31, 1996,  respectively.  Generally,  the fair value of impaired of
loans was determined using the fair value of the underlying collateral.


NOTE D - STANDBY LETTERS OF CREDIT


On June 30, 1997, standby letters of credit totaled $1,885,000.


NOTE E - STOCKHOLDERS' EQUITY


     A $.15  per  share  cash  dividend  was  distributed  February  2,  1996 to
stockholders  of record on January 19, 1996. A $.17 per share cash  dividend was
distributed May 3, 1996 to stockholders of record on April 25, 1996.
      
     An $.18 per  share  cash  dividend  was  distributed  February  7,  1997 to
stockholders  of record on January 30, 1997. An $.18 per share cash dividend was
distributed May 2, 1997 to stockholders of record on April 25, 1997.


NOTE F - PENDING ITEMS


     The Bank finished construction of a new building in Danbury, Connecticut. A
full-service  branch  office on the first floor  opened for business in this new
building on July 14, 1997.  Costs incurred  relating to the construction of this
building aggregated  $2,960,000 as of June 30, 1997, and such costs are included
in other assets.

The Bank  opened a new  full-service  branch  office on June 18,  1997 in leased
space in Westport, Connecticut.


                                      - 8 -


<PAGE>



VILLAGE BANCORP, INC.

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


GENERAL


     Village  Bancorp,  Inc. (the "Company")  through its only  subsidiary,  The
Village  Bank & Trust  Company  ("Village"  or the "Bank")  had total  assets of
$195,781,000  on June 30, 1997 in comparison to total assets of  $179,550,000 on
December 31, 1996. This is an increase of $16,231,000 or 9.0%.

     For the three month periods ended June 30, 1996 and 1997, the Company's net
income  decreased  from  $421,000  for the 1996 period to $315,000  for the 1997
period.  Net interest income  increased  $108,000 (5.6%) from $1,933,000 for the
1996 period to $2,041,000 for the 1997 period.

     For the six month periods  ended June 30, 1996 and 1997,  the Company's net
income  decreased  from  $813,000  for the 1996 period to $724,000  for the 1997
period.  Net interest income  increased  $112,000 (2.9%) from $3,898,000 for the
1996 period to $4,010,000 for the 1997 period.


ASSETS AND RELATED INCOME ANALYSIS (Six Month Comparison)


     Loans  outstanding  on June  30,  1997  totaled  $132,195,000  which  is an
increase of $5,359,000 (4.2%) from the $126,836,000  outstanding at December 31,
1996.  This  increase in loans is primarily  attributable  to a  combination  of
factors.  The Bank increased its marketing  effort in this area and expanded its
adjustable rate product line with a new selection of choices.  These new product
lines have been well received, and as the Bank generally retains adjustable rate
loans for its own  portfolio,  this  contributed to the increase in the mortgage
loan area.  Loan income  increased  $342,000 (6.6%) from $5,203,000 for the 1996
period to $5,545,000 for the 1997 period. This increase is due to an increase in
average  outstanding  loans from $119,336,000 in the 1996 period to $130,430,000
in the 1997 period offset by a decrease in the average rate earned from 8.72% in
the 1996 period to 8.50% in the 1997 period.

     Securities,  which consist of securities  held-to-maturity  and  securities
available-for-sale,  increased  $8,366,000  (25.4%) from $32,904,000 at December
31, 1996 to  $41,270,000 at June 30, 1997.  Security  income  decreased  $13,000
(.1%) from  $1,068,000  in the period  ending June 30, 1996 to $1,055,000 in the
1997 period.  This decrease was due to a slight  decrease in the average  dollar
amount of securities held, from $37,244,000 in the 1996 period to $36,625,000 in
the 1997 period,  offset by an increase in the average rate earned from 5.74% in
the 1996 period to 5.76% in the 1997 period. The Company


                                      - 9 -


<PAGE>


VILLAGE BANCORP, INC.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Continued)
--------------------------------------------------------------------------------


holds  securities  held-to-maturity  until  maturity  and does not  trade  them.
Securities classified as available-for-sale are used to compensate for liquidity
forecasting deviations.

     Federal funds sold decreased $2,250,000 (34.1%) from $6,600,000 at December
31, 1996 to  $4,350,000 at June 30, 1997.  Federal  funds sold income  increased
$21,000  (11.4%)  from  $184,000  for the 1996 period to  $205,000  for the 1997
period,  primarily due to an increase in the average  dollar amount  outstanding
from $6,968,000 in the 1996 period to $7,825,000 in the 1997 period, offset by a
decrease in the  average  rate earned from 5.28% in the 1996 period to 5.24% for
the 1997 period.


LIABILITIES AND RELATED EXPENSE ANALYSIS (Six Month Comparison)


     Deposits  increased  $15,503,000  (9.5%) from  $162,625,000 at December 31,
1996 to $178,128,000 at June 30, 1997.  Interest on deposits  increased $238,000
(9.3%) from  $2,557,000  for the 1996 period to $2,795,000  for the 1997 period.
This  increase  was  primarily  attributable  to  an  increase  in  the  average
outstandings  from $157,878,000 for the 1996 period to $171,005,000 for the 1997
period, coupled with an increase in the average rate paid from 3.24% in the 1996
period to 3.27% in the 1997 period.

     Salary  and  employee  benefit  expense  increased  $169,000  (11.2%)  from
$1,506,000 in the 1996 period to  $1,675,000  in the 1997 period  primarily as a
result of increased  staff levels as a result of growth of the Bank and staffing
for the two new branch offices.

     Printing,  stationery and supplies expense  increased  $19,000 (23.8%) from
$80,000 in the 1996 period to $99,000 in the 1997 period  primarily  as a result
of growth and purchasing for the new branch offices.

     Other  operating  expenses  increased  $93,000 (16.5%) from $565,000 in the
1996 period to $658,000 in the 1997 period  primarily as a result of an increase
in the Bank's marketing efforts,  whereby  advertising expense increased $37,000
and public relations expense increased $20,000.


ASSETS AND RELATED INCOME ANALYSIS (Three Month Comparison)


     Loans  outstanding  increased  $875,000 (.7%) during the three month period
ended June 30, 1997. This compares to the $45,000 increase in


                                     - 10 -


<PAGE>


VILLAGE BANCORP, INC.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Continued)
--------------------------------------------------------------------------------


the 1996 period.  Loan income increased $277,000 (10.8%) from $2,555,000 for the
1996  period to  $2,832,000  for the 1997  period.  This  increase  is due to an
increase in the average  outstanding loans from $118,791,000 for the 1996 period
to $131,633,000  for the 1997 period along with a slight increase in the average
rate earned from 8.60% for the 1996 period to 8.61% for the 1997 period.

     Securities,  which consist of securities  held-to-maturity  and  securities
available-for-sale,  increased  $1,011,000  (2.5%)  during  the 1997  period  as
compared  to a decrease of  $6,804,000  (17.3%)  for the 1996  period.  Security
income  increased  from  $556,000  for the 1996 period to $563,000  for the 1997
period,  primarily  as a result of an increase in the average  dollar  amount of
securities held from $38,894,000 for the 1996 period to $39,422,000 for the 1997
period,  offset by a decrease in the average rate earned from 5.72% for the 1996
period to 5.71% for the 1997 period.

     Federal  funds sold  decreased  $100,000  (2.2%)  during the 1997 period as
compared to a decrease of $1,150,000 (11.8%) for the 1996 period.  Federal funds
sold income increased $47,000 (92.2%) from $51,000 in the 1996 period to $98,000
in the 1997 period  primarily  as a result of an increase in the average  dollar
amount outstanding from $3,947,000 for the 1996 period as compared to $7,325,000
for the 1997 period coupled with an increase in the average rate earned of 5.17%
for the 1996 period as compared to 5.35% for the 1997 period.


LIABILITIES AND RELATED EXPENSE ANALYSIS (Three Month Comparison)


     Deposits increased  $4,470,000 (2.6%) during the 1997 period as compared to
a decrease  of  $6,559,000  (4.0%) for the 1996  period.  Interest  on  deposits
increased $223,000 (18.1%) from $1,229,000 for the 1996 period to $1,452,000 for
the 1997  period.  This  increase is mainly  attributable  to an increase in the
average  dollar  amount  outstanding  from  $156,085,000  for the 1996 period to
$174,940,000  for the 1997 period  coupled  with an increase in the average rate
paid from 3.15% in the 1996 period to 3.32% in the 1997 period.


LIQUIDITY


     Liquidity  is the ability to provide  funds for loan  requests,  unexpected
deposit  outflows and meeting other recurring  financial  obligations.  Cash and
cash  equivalents  at June 30, 1997 were  $15,368,000 or 7.8% of total assets as
compared to  $15,145,000  or 8.4% of total assets at December 31, 1996. The Bank
also maintains excess


                                     - 11 -


<PAGE>


VILLAGE BANCORP, INC.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Continued)
--------------------------------------------------------------------------------


stored liquidity  reserves to compensate for liquidity  forecasting  deviations.
These  reserves are comprised of  investment  grade  securities  that are highly
marketable and liquid. The primary source of liquidity,  cash and due from banks
and federal funds sold, have  historically  surpassed the liquidity needs of the
Company. Management closely monitors the Bank's liquidity/cash flow position and
does not anticipate any liquidity problems in the future.


CAPITAL RESOURCES


     The table  below  lists the  minimum  capital  requirements  along with the
Company's capital position at June 30, 1997:

 Capital                     Minimum  Capital        Company's Capital
 Standard                      Requirement               Position
----------                   ----------------        -----------------

Total capital to risk
 weighted assets                 8.00%                    14.19%

Stockholders' equity to
 risk weighted assets            4.00%                    13.07%

Leverage ratio                3.0 - 5.0%                   8.12%


FORWARD-LOOKING STATEMENTS

     The Company has made,  and may  continue to make,  various  forward-looking
statements  with respect to earnings,  credit  quality and other  financial  and
business  matters for periods  subsequent to June 30, 1997. The Company cautions
that these forward-looking statements are subject to numerous assumptions, risks
and   uncertainties,   and  that  statements   relating  to  subsequent  periods
increasingly  are  subject  to  greater  uncertainty  because  of the  increased
likelihood  of changes in underlying  factors and  assumptions.  Actual  results
could differ materially from forward-looking statements.

     In addition to those factors previously  disclosed by the Company and those
factors  identified  elsewhere herein,  the following factors could cause actual
results to differ materially from such forward-looking  statements;  competitive
pressures on loan and deposit  product  pricing;  other actions of  competitors;
changes in economic conditions;  the extent and timing of actions of the Federal
Reserve  Board;  customer  deposit  disintermediation;   changes  in  customers'
acceptance of the


                                     - 12 -


<PAGE>


VILLAGE BANCORP, INC.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Continued)
--------------------------------------------------------------------------------


Company's  products and services;  and the extent and timing of legislative  and
regulatory actions and reform.

     The Company's forward-looking statements speak only as of the date on which
such statements are made. By making any forward-looking  statements, the Company
assumes no duty to update them to reflect new, changing or unanticipated  events
or circumstances.



                                     - 13 -


<PAGE>


VILLAGE BANCORP, INC.

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

PART  II. - OTHER INFORMATION



<PAGE>


VILLAGE BANCORP, INC.

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

PART II. - OTHER INFORMATION



Item 1. Legal Proceedings                         Not Applicable


Item 2. Changes in Securities                     Not Applicable


Item 3. Defaults Upon Senior Securities           Not Applicable


Item 4. Results of Votes of Security Holders      Not Applicable


Item 5. Other Information                         Not Applicable


Item 6. Exhibits and Reports on Form 8-K


     (a)  Exhibits - None

     (b)  Reports  on Form 8-K - There were no reports on Form 8-K filed for the
          three months ended June 30, 1997.


                                     - 14 -


<PAGE>



                                   SIGNATURES



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



                                            Village Bancorp, Inc.
                                            ---------------------
                                                (Registrant)






Date:  August 12, 1997        /s/ Robert V. Macklin
       ---------------        ---------------------
                                 Robert V. Macklin - President
                                  and Chief Executive Officer





Date:  August 12, 1997        /s/ James R. Umbarger
       ---------------        ---------------------
                                James R. Umbarger - Executive Vice
                               President and Chief Financial Officer



                                     - 15 -