<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                     FORM  10-QSB

                                      (mark one)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
OF 1934

                  For the quarterly period ended SEPTEMBER 30, 1997

                                          OR

[  ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934

                       Commission File Number     0-24024
                                               -------------


                        FIRST COMMUNITY FINANCIAL GROUP, INC.
                ------------------------------------------------------
                (Exact name of registrant as specified in its charter)


        WASHINGTON                                       91 -1277503
      --------------                                   ---------------
(State or other jurisdiction              (IRS Employer Identification Number)
of incorporation or organization)


               721 COLLEGE STREET. SE, P.O. BOX 3800, LACEY, WA  98509
               -------------------------------------------------------
                       (Address of principal executive offices)


                     Issuer's telephone number:    (360) 459-1100


Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 
months (or for such shorter period that the registrant was required to file 
such reports), and (2) has been subject to such filing requirements for the 
past 90 days. Yes  X    No
                  ---      ---


         Number of shares of common stock outstanding as of
                    September 30, 1997:  1,985,549
                                         ---------

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

<PAGE>
                        FIRST COMMUNITY FINANCIAL GROUP, INC.


                                  TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION                                            Page

Item 1   Financial Statements
         Condensed Consolidated Balance Sheets............................  3
         Condensed Consolidated Statements of Income......................  4
         Condensed Consolidated Statements of Cash Flows..................  5
         Notes to Condensed Consolidated Financial Statements.............  6

Item 2   Management's Discussion of Financial Condition and
         Analysis or Plan of Operations...................................  7


PART II - OTHER INFORMATION

Item 6   Exhibits and Reports on Form 8-K................................. 11

SIGNATURES................................................................ 12

                                     2

<PAGE>

                FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                  Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
------------------------------------------------------------------------------
                                                September 30    December 31
                                                    1997            1996
------------------------------------------------------------------------------
<S>                                             <C>             <C>
Assets
Cash and due from banks.......................... $ 12,922        $ 8,467
Interest bearing deposits in banks...............    2,022         10,141
Federal funds sold...............................   17,000          4,000
Securities available for sale....................   37,875          7,513
Securities held to maturity......................    1,414          3,182
Loans held for sale..............................    2,986            726

Loans............................................  188,233        130,632
Less allowance for possible credit losses........    1,953          1,420
  Net Loans......................................  186,280        129,212

Premises and equipment...........................   11,405          7,593
Goodwill.........................................    5,058              0
Other assets.....................................    9,189          5,667

  Total assets................................... $286,151       $176,501


Liabilities
Deposits:
  Non-interest bearing........................... $ 42,423       $ 24,719
  Interest bearing...............................  211,454        128,715
Total deposits...................................  253,877        153,434


Long term debt...................................    4,075          1,294
Other liabilities................................    1,673            854
Total liabilities................................  259,625        155,582

Stockholders' Equity
  Common stock, par value $2.50 per share;
  10,000,000 shares authorized, 1,985,549 shares
  issued in 1997, and 1,698,505 shares issued
  in 1996........................................    4,964          4,246
Surplus..........................................   20,461         13,745
Retained earnings................................    2,267          3,186
Unrealized loss on securities available
  for sale.......................................       15            (13)
Guaranteed KSOP Obligation.......................   (1,181)          (245)
  Total Stockholders' Equity.....................   26,526         20,919

  Total liabilities and stockholders' equity..... $286,151       $176,501
</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                     3

<PAGE>

                FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
               Condensed Consolidated Statements of Income (Unaudited)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                  Three months ended          Nine months ended 
                                                                     September 30                September 30
                                                                  1997           1996           1997         1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>
Interest income
 Interest and fees on loans.................................     $4,993         $3,525         $13,845      $10,560
 Federal funds sold and deposits in banks...................        187            170             253          337
 Investments................................................        619            173           1,212          550
 Total interest income......................................      5,799          3,868          15,310       11,447

Interest Expense
 Deposits...................................................      2,126          1,418           5,534        4,124
 Other......................................................         37             25             98           85
 Total interest expense.....................................      2,163          1,443          5,632        4,209

 Net interest income........................................      3,636          2,425          9,678        7,238

Provision for possible credit losses........................        475             85            725          221

 Net interest income after provision
    for possible credit losses..............................      3,161          2,340          8,953        7,017

Non-Interest Income
 Service charges on deposit accounts........................        435            277          1,120          823
 Origination fees on mortgage loans sold....................        191             73            506          351
 Other income...............................................      1,288             47          1,576          296
 Total non-interest income..................................      1,914            397          3,202        1,470

Non-Interest Expense
 Salaries and employee benefits.............................      2,433          1,129          5,792        3,464
 Occupancy and equipment....................................        563            323          1,467        1,045
 Other expense..............................................      1,547            666          3,486        1,995
 Total non-interest expense.................................      4,543          2,118         10,745        6,504

Operating income before income taxes........................        532            619          1,410        1,983

Income Taxes................................................       (228)           169             21          535

 Net income.................................................       $ 760          $ 450        $ 1,389      $ 1,448

Earnings per common share and common
 Equivalent Share...........................................       $0.36          $0.25          $0.69        $0.80

Average number of common
 and equivalent shares outstanding..........................   2,089,471      1,838,217      2,026,832    1,818,552

Earnings per common share
 assuming full dilution.....................................       $0.36          $0.25          $0.68        $0.79

Average number of common and equivalent
 shares outstanding - assuming full dilution................   2,125,180      1,838,739      2,058,019    1,837,886
</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                     4

<PAGE>

                FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
             Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>

(DOLLARS IN THOUSANDS)
-----------------------------------------------------------------------------------------

                                                                   Nine months ended
                                                                      September 30
                                                                    1997        1996
-----------------------------------------------------------------------------------------
<S>                                                               <C>            <C>
Cash Flows from Operating Activities
 Net Income.................................................       $ 1,389      $ 1,448
 Adjustments to reconcile net income to net cash
 provided (used) by operating activities:
   Provision for possible credit losses.....................           725          221
   Depreciation and amortization............................           778          584
   Amortization of goodwill.................................           119            0
   Other - net..............................................        (2,611)      (1,524)
 Originations of loans held for sale........................       (16,774)     (16,478)
 Proceeds from sales of loans held for sale.................        14,514       17,104
 Net cash provided (used) by operating activities...........        (1,860)       1,355

Cash Flows from Investing Activities
 Net decrease in interest bearing deposits in banks.........         8,119        5,146
 Net (increase) in Federal funds sold.......................       (13,000)      (1,867)
 Proceeds from maturities of available-for-sale securities..         5,470        1,765
 Purchase of available-for-sale securities..................       (36,041)      (1,317)
 Proceeds from maturities of held-to-maturity securities....         2,265        2,670
 Purchases of held-to-maturity securities...................          (500)         (18)
 Net increase in loans......................................       (57,833)      (5,262)
 Additions to premises and equipment........................        (4,590)        (440)
 Increase in goodwill.......................................        (5,058)           0
 Net cash provided (used) by investing activities...........      (101,168)         677

Cash Flows from Financing Activities
 Net increase (decrease) in deposits........................       100,443       (7,129)
 Sale of common stock.......................................         7,651           24
 Repurchase of common stock.................................        (2,511)           0
 Long term borrowings.......................................         2,750            0
 Repayment of long-term borrowings..........................          (837)        (165)
 Payment for dividends......................................           (13)          (9)
 Net cash provided (used) by financing activities...........       107,483       (7,279)

 Net change in cash and due from banks......................         4,455       (5,247)

Cash and Due from Banks:
 Beginning of period........................................         8,467       15,024

 End of period..............................................       $12,922       $9,777

Supplemental Disclosures of Cash Flow Information:
 Cash payments for:
   Interest.................................................        $5,486       $4,328
   Taxes....................................................           430          665

Supplemental Disclosures of Non-Cash Investing Activities:
 Other real estate acquired in settlement of loans..........           303        1,625
 Increase (decrease) in depreciation of available for
   sale securities..........................................            27          (18)
 Increase (decrease) in guarantee of KSOP obligation........           936          265
</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                     5

<PAGE>

                FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      Notes to Consolidated Financial Statements
                                     (Unaudited)


1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been 
prepared in accordance with generally accepted accounting principals for 
interim financial information and with instructions to Form 10-KSB and Rule 
10-01 of 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, 
adjustments considered necessary for a fair presentation have been included.  
Operating results for the three months and nine months ended September 30, 
1997 are not necessarily indicative of the results anticipated for the year 
ended December 31, 1997.

2.  EARNINGS PER COMMON AND EQUIVALENT SHARE

Earnings per common and equivalent share is calculated by dividing net income 
by the weighted average number of common shares and common share equivalents 
outstanding during the periods presented.  Fully diluted earnings per share 
assumes that all dilutive stock options outstanding are issued such that 
their dilutive effect is maximized.

3.  ACQUISITIONS

PRAIRIE SECURITY BANK
---------------------
On February 7, 1997, the Company completed the acquisition of Prairie 
Security Bank (PSB) in a business combination accounted for as a purchase.  
PSB was a state chartered bank headquartered in Yelm, Washington with three 
branches and $47,334,000 in total assets.  The purchase price of $9,982,000 
in cash and company stock, exceeded value of net assets of PSB by $5,177,000, 
which will be amortized on the straight line basis over 25 years.

WELLS FARGO BRANCHES
--------------------
On March 3, 1997 the Bank was notified that it was the successful bidder in 
the sale of four Wells Fargo Bank branches.  This acquisition, which was 
completed on July 18, 1997, was for $43,200,000 in deposits and includes 
branch facilities in Hoquiam, Montesano, Toledo and Winlock, Washington.  The 
branches in Winlock, Toledo and Montesano represent further expansion of the 
Company's market area. The Hoquiam branch represents further penetration into 
an existing market.

                                     6

<PAGE>

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

FINANCIAL CONDITION

OVERVIEW
--------

The Company's consolidated total assets at September 30, 1997 of $286,151,000 
represent a 62.1% increase over December 31, 1996 assets of $176,501,000.  
This is primarily due to the Company's acquisition of Prairie Security Bank 
(PSB), effective February 7, 1997 and the deposits and fixed assets of four 
Wells Fargo branches.  The total assets acquired in these transactions were 
$88,188,000 ($47,334,000 and $40,854,000 respectively).  In addition to the 
acquired assets, a recognition of goodwill in the amount of $5,058,000 from 
the PSB acquisition and core deposit premium from the Wells Fargo branch 
acquisition in the amount of $2,361,000,  is included in the September 30, 
1997 total assets.  Total assets, excluding those added due to acquisition, 
still experienced a 8.0% growth over the level at December 31, 1996.

Total deposit growth in the first three quarters of 1997 amounted to 
$100,443,000, up 65.5% from $153,434,000 at December 31, 1996.  The 
acquisition of Prairie Security Bank accounted for $40,176,000 of the 
increase while the Wells Fargo branch acquisition provided $43,200,000.  The 
total deposit increase, net of those added by acquisition, represents a 11.1% 
increase for the first nine months.  The deposit growth is expected to 
continue due to the acquisition and its effects of solidifying the Company's 
position in certain markets while providing expansion into an additional 
market.

Loan balances in aggregate, net of loan loss reserve, increased by 
$59,328,000, or 45.7%, to $189,266,000.  The Prairie Security Bank 
transaction provided a net increase of $36,923,000.  Excluding this 
acquisition related increase, loan balances increased $22,405,000 or 17.2%.  
The loan to deposit ratio has decreased during the first nine months from 
84.7% to 74.6%.  This decrease is directly the result of the influx of 
deposits from the Wells Fargo branch acquisition.  This loan to deposit ratio 
is expected to rise over time to previously experienced levels as the 
opportunity to loan the acquired deposits persists.

The balances of cash and due from banks, interest bearing deposits in banks, 
Federal funds sold and investment securities have increased $37,930,000.  The 
increase experienced in these assets is primarily the result of the Wells 
Fargo branch acquisition.  The structure of the acquisition provided for the 
transfer of deposits in exchange for the cash to support these balances.  
This transfer has led to the significant growth in investment securities and 
Federal Funds sold as liquid investments in support of the loan portfolio.  
Premises and equipment growth as well as increases in other assets, result 
primarily from acquisitions.

The allowance for possible credit losses reflects management's current 
estimate of the amount required to absorb losses on existing loans and 
commitments to extend credit.  Determination of the appropriate level of the 
allowance is based on an analysis of various factors including historical 
loss experience based on volumes and types of loans; volumes and trends in 
delinquencies and non-accrual loans; trends in portfolio volume; results of 
internal and independent external credit reviews; and anticipated economic 
conditions.  An analysis of the adequacy of the allowance is subject to 
quarterly review by the Board of Directors.

                                     7

<PAGE>

The following table summarizes the allowance for loan losses and charge-off 
and recovery activity:

<TABLE>
<CAPTION>

                                                      Nine months ended        Year ended
Dollars In Thousands                                  September 30, 1997     December 31, 1996
--------------------                                  ------------------     -----------------
<S>                                                   <C>                    <C>
Loans outstanding at end of period....................    $ 191,219                $ 131,358
Average loans outstanding during the period...........      174,302                  131,187                          

Allowance for loan losses at beginning of period......    $   1,420                $   1,376
Allowance added due to acquisition....................          469                       --

Recoveries............................................           22                       10
Loans charged off.....................................         (683)                    (227)
Net loans charged off.................................          661                     (217)
Provision for loan losses.............................          725                      261
Allowance for loan losses, end of period..............    $   1,953                $   1,420
Ratio of net loans charged off
   to average loans outstanding (1)...................          .51%                     .17%
Ratio of allowance for loan losses
   to loans at end of period..........................         1.02%                    1.08%
</TABLE>

(1) The ratio for the nine months ended September 30, 1997 has been 
    annualized.

Non-accrual loans increased from $1,898,000 at December 31, 1996 to 
$3,355,000 at September 30,1997.  The majority of the Bank's non-performing 
loans result from loans acquired from Northwest Community Bank in the fourth 
quarter of 1995. Management continues to closely monitor the portfolio, and 
in addition to the Company's credit review procedures, an external loan 
review specialist has been retained to more quickly identify credit quality 
issues in acquired portfolios. Additional provisions to the allowance for 
possible credit losses may be made as collection efforts continue on these 
assets.

LIQUIDITY AND RATE SENSITIVITY
------------------------------

The Company's assets and liabilities are managed to maximize long-term 
shareholder returns by optimizing net interest income within the constraints 
of maintaining high credit quality, conservative interest rate risk 
disciplines and prudent levels of liquidity.  The Asset/Liability Committee 
meets regularly to monitor the composition of the balance sheet, to assess 
current and projected interest rate trends, and to formulate strategies 
consistent with established objectives for liquidity, interest rate risk and 
capital adequacy.

Liquidity management involves the ability to meet cash flow requirements of 
customers who may be either depositors wanting to withdraw funds or borrowers 
needing assurance that sufficient funds will be available to meet their 
credit needs.  Liquidity is generated from both internal and external 
sources. Internal sources are those assets that can be converted to cash with 
little or no risk of loss.  These include overnight investments in federal 
funds sold and investment securities, particularly those of shorter maturity, 
and are the principal source of asset liquidity.  At September 30, 1997, 
cash, deposits in banks, Federal funds sold and securities available for sale 
totaled $69,819,000. External sources refer to the ability to attract new 
liabilities and capital. They include increasing savings and demand deposits, 
federal funds purchased, and the issuance of capital and debt securities.  At 
September 30, 1997, federal funds borrowing lines of credit totaled 
$17,308,000 (5% of total assets plus $3,000,000) but was not used in the 
third quarter of 1997.  The Bank also has preestablished borrowing lines 
available with the Federal Home Loan Bank of approximately $14,308,000 (5% of 
total assets).  This credit facility has remained unused in 1997.

Management believes the Bank's liquidity position at September 30, 1997, was 
adequate to meet its short term funding requirements.

Interest rate sensitivity is closely related to liquidity, as each is 
directly affected by the maturity of assets and liabilities.  The Company's 
net interest margin is affected by changes in the level of market interest 
rates. Management's objectives are to monitor and control interest rate risk 
and ensure predictable and consistent growth in net interest income.

                                     8

<PAGE>

Management considers any asset or liability which matures, or is subject to 
repricing within one year to be interest sensitive, although continual 
monitoring is performed for other time intervals as well.  The difference 
between interest sensitive assets and liabilities for a defined period of 
time is known as the interest sensitivity "gap", and may be either positive 
or negative.  If positive, more assets reprice before liabilities.  If 
negative, the reverse is true.  Gap analysis provides a general measure of 
interest rate risk but does not address complexities such as prepayment risk, 
interest rate floors and ceilings imposed on financial instruments, interest 
rate dynamics and customers' response to interest rate changes.  Currently 
the Banks' interest sensitivity gap is negative within one year.  Assuming 
that general market interest rate changes affected the repricing of assets 
and liabilities in equal magnitudes, this indicates that the effects of 
rising interest rates on the Company would be a decrease in the net interest 
margin, whereas falling interest rates would cause a corresponding increase 
in the margin.

CAPITAL
-------

Consolidated capital of FCFG increased $5,607,000 during the first three 
quarters of 1997 as a result of the acquisition of Prairie Security Bank as 
well as increased retained earnings.  Reductions to capital included a 
targeted stock repurchase of 122,570 shares of common stock and an increase 
in the guarantee of a loan obligation on behalf of the Company's KSOP. 

There are regulatory constraints placed upon capital adequacy, and it is 
necessary to maintain an appropriate ratio between capital and assets. 
Regulations require banks and holding companies to maintain a minimum 
"leverage" ratio (primary capital ratio) of total assets.  For the most 
highly rated holding companies this ratio must be at least 3%, and for others 
it must be 4 to 5%.  At September 30, 1997, the Company's leverage ratio was 
7.88%, compared to 11.96% at year-end 1996.  This decrease is due to the 
effects of the use of purchase accounting in the acquisition of PSB and the 
Wells Fargo branches.  For regulatory purposes, the associated goodwill and 
core deposit premium is treated as a reduction of capital.  In addition, 
holding companies are required to meet minimum risk-based capital guidelines 
under which risk percentages are assigned to various categories of assets and 
off-balance-sheet items to calculate a risk-adjusted capital ratio.  Tier I 
capital generally consists of common stockholders' equity, less goodwill, 
while Tier II capital includes the allowance for possible loan losses, 
subject to 1.25% limitation of risk-adjusted assets.  The rules require Tier 
II capital of 4% of risk-adjusted assets and total capital (combined Tier I 
and Tier II) of 8%.  At September 30, 1997, the Tier I capital ratio was 
9.15%, and total capital was 10.03%.The similar ratios at December 31, 1996 
were a Tier I capital ratio of 14.78% and a total capital ratio of 15.77%.


RESULTS OF OPERATIONS
---------------------

GENERAL
-------

Net income is largely dependent upon the difference between the interest 
received on earning assets and the interest paid on interest bearing 
liabilities and is defined as net interest income.  Net income is also 
affected by the provision for loan losses, other non-interest income and 
other non-interest expense.

Net income for the three months ended September 30, 1997  was $760,000, 
compared to $450,000 for the three months ended September 30, 1996.   As 
detailed below, this 68.9% increase is due to a $1,931,000 increase in 
interest income, a $1,517,000 increase in non-interest income and a decrease 
of $397,000 in income tax.  The income tax reduction despite the net income 
increase is a factor of the tax-free benefit of the life insurance proceeds 
discussed below.  This was offset by a $720,000 increase in interest expense, 
a $2,425,000 increase in non-interest expense and an increase in the 
provision for loan losses of $390,000.

Net income for the nine months ended September 30, 1997  was $1,389,000, 
compared to $1,448,000 for the nine months ended September 30, 1996.   As 
detailed below, this 4.1% decrease is due to a $1,423,000 increase in 
interest expense, a $4,241,000 increase in non-interest expense and a 
$504,000 increase in the provision for loan losses.  This was offset to a 
lesser degree by a $3,863,000 increase in interest income, a $1,732,000 
increase in non-interest income, and a decrease of $514,000 in income taxes.  
The disproportionate reduction in income taxes is a factor of the tax-free 
benefit of the life insurance proceeds discussed below.

NET INTEREST INCOME
-------------------

Net interest income for the three months ended September 30, 1997 increased 
by $1,211,000 while the nine months ended September 30, 1997 increased 
$2,440,000 over the comparable period in 1996.  The net interest margin 
decreased, moving 5 basis points from 6.32% to 6.27%.

                                     9

<PAGE>

Interest income for the three months ended September 30, 1997 increased 
$1,931,000 over the same period for 1996 while the nine months ended 
September 30, 1997 increased $3,863,000 over the nine months ended September 
30, 1996.  Of  this increase, approximately $3,944,000 is attributed to an 
increase in the average volume of earning assets, offset by $81,000 as a 
result of an 8 basis point decrease in the aggregate yield on earning assets 
from 10.00% to 9.92%.  

Total interest expense for the three months ended September 30, 1997 
increased $720,000 as the deposit balances grew resulting from the Wells 
Fargo branches while the nine months ended September 30, 1997 increased over 
the comparable period of the prior year by $1,423,000.  Of  this increase, 
approximately $1,479,000 was due to an increase in the average volume of 
interest bearing liabilities, and offset by a $56,000 reduction due to a 6 
basis point decrease in the aggregate cost of funds.

NON-INTEREST INCOME
-------------------

Total non-interest income for the quarter ended September 30, 1997 increased 
by $1,517,000 from the comparable quarter of 1996.  Of this amount, 
$1,110,000 is due to the receipt of life insurance proceeds on the death of 
former Bank President John Johnson in July of 1997, of which the Bank was the 
beneficiary. Origination fees on mortgage loans sold experienced a growth of 
$118,000 over the prior year.  Service charges on deposit accounts also 
reflect the growth in deposit accounts and grew $158,000 as compared to the 
prior year.

Total non-interest income for the nine months ended September 30, 1997 
increased by $1,732,000 from the comparable quarter of 1996.  Of this amount, 
$1,280,000 is due to an increase in other income.  This increase is also 
reflective of the life insurance proceeds discussed above.  Services charges 
on deposit accounts have also grown by $297,000 over the prior period due to 
the increase in deposits.  Origination fees on mortgage loans sold increased 
by $155,000 over the comparable period in 1996.


NON-INTEREST EXPENSE
--------------------

Total non-interest expense for the quarter ended September 30, 1997 increased 
$2,425,000 over the third quarter of 1996.  Of this increase in non-interest 
expense, $1,304,000 reflects the increased salaries and employee benefits of 
the organization in its post-acquisitions structure.  Occupancy and equipment 
increased $240,000 as the result of the additional locations and resulting 
equipment needs.  Other expense increased $881,000 as the organization 
continues to incorporate the sizable growth that has taken place as well as 
the implementation of projects for the future benefit of the company.  
Included in other expense are $163,000 in Wells Fargo related expenses, 
including computer conversion and preparation, legal fees and marketing 
expenses, the recognition of $379,000 to reflect a survivor benefit due to 
the heirs of Mr. Johnson and $171,000 related to the settlement agreement 
with former President of Prairie Security Bank and First Community Bank, 
Michael D. Edwards.  These items are not expected to be recurring.

Total non-interest expense for the nine months ended September 30, 1997 
increased $4,241,000 over the first three quarters of 1996.  Of this increase 
in the level of non-interest expense, $2,328,000 reflects the increased 
salaries and employee benefits of the organization in its post-acquisition 
structure. Occupancy and equipment increased $422,000 as the result of the 
additional locations and resulting equipment needs.  Other expense increased 
$1,491,000 as the organization continues to incorporate the sizable growth 
that has taken place as well as the implementation of projects for the future 
benefit of the company.  Included in this area are $154,000 in PSB  
transitional costs, including computer conversion and preparation, legal fees 
and marketing expenses, $163,000 in Wells Fargo related expenses, including 
computer conversion and preparation, legal fees and marketing expenses, the 
recognition of $379,000 to reflect a survivor benefit due to the heirs of Mr. 
Johnson and $171,000 related to the settlement agreement with former 
President of Prairie Security Bank and First Community Bank, Michael D. 
Edwards.  These items are not expected to be recurring.

The Company has discovered two instances of embezzlement.  These events have 
been fully investigated and reported to the appropriate authorities.  The 
Company's bonding company has been notified and it is expected that full 
indemnification, net of deductible, will be forthcoming from the Company's 
bond.

The Company has accepted the resignation of Michael D. Edwards, President of 
First Community Bank.  Mr. Edwards was formerly the President of Prairie 
Security Bank, which was acquired by the Company on February 7, 1997.  The 
Company expects to recognize $195,000 in fiscal year 1997 for severance 
payments and other costs related to the separation.

                                    10

<PAGE>

                        FIRST COMMUNITY FINANCIAL GROUP, INC.

PART II - OTHER INFORMATION


ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits                                                    None


    (b) Reports on Form 8-K                                         None



                                    11

<PAGE>


FIRST COMMUNITY FINANCIAL GROUP, INC.


                              SIGNATURES

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

                              FIRST COMMUNITY FINANCIAL GROUP, INC.
         (Registrant)


Date: August 14, 1997         By: /s/ KEN F. PARSONS
                                  -----------------------------------------
                                      Ken F. Parsons
                                      President, Chief Executive Officer


                              By: /s/ JAMES F. ARNESON
                                  -----------------------------------------
                                      James F. Arneson
                                      Executive Vice President,
                                      Chief Financial Officer
                                      (Principal Accounting Officer)


                                    12