NORWICH FINANCIAL CORP. AND SUBSIDIARY

                                   
Contents
 1 Stockholder Information
 4 President's Letter to
   Stockholders
 6 Five Year Selected Consolidated
   Financial Data
 7 Management's Discussion and
   Analysis of Financial Condition
   and Results of Operations
19 Independent Auditors' Report
20 Consolidated Balance Sheets
21 Consolidated Statements of
   Income
51 Form 10-K
73 Directors and Officers of the 
   Company and Subsidiary
74 Office Locations

Cover Painting by:  Merrill Park Keeley


Stockholder Information                
                                     
Corporate Headquarters                 
Norwich Financial Corp.              
4 Broadway                             
P.O. Box 1048                          
Norwich, CT 06360                   
Telephone: (860) 889-2621           
                                    
Stock Listing                          
NASDAQ Symbol: NSSB                 
                                    
Transfer Agent/Registrar               
ChaseMellon Shareholder Services,   
L.L.C.                              
One Overpeck Centre                 
85 Challenger Road                  
Ridgefield Park, NJ 07660           
Telephone: (800) 298-6803           
                                    
Independent Public                  
Accountants                         
KPMG Peat Marwick LLP               
CityPlace II                        
Hartford, CT 06103                  
                                    
Annual Meeting                      
The Annual Meeting of Stockholders  
of Norwich Financial Corp. will be  
held on May 16, 1997 at 10:00 AM    
at the 
Ramada Hotel                                         
10 Laura Boulevard                  
Norwich, CT 06360                    

Stockholder Information              
If you have any questions or         
comments concerning Norwich         
Financial Corp., or if you would    
like copies of any financial        
reports, please contact:             
                                     
Investor Relations                   
Norwich Financial Corp.             
P.O. Box 1048                       
Norwich, CT  06360                  
Telephone: (860) 889-2621 Ext. 2246                                
                                    
Common Stock Information

Market Information
Norwich Financial Corp. (NFC or 
the Company) is listed as "NSSB" 
on the National Market System.
There were 2,105 stockholders of
record on January 31, 1997.  The
following information is pro-
vided by the National Associa-
tion of Securities Dealers, Inc.


                          Price Range
1996 Quarter Ended        High     Low
 March 31              $14 3/4   $12 9/16
 June 30                15 1/2    12 3/8
 September 30           18        14
 December 31            20 3/4    17 1/4
 
                          Price Range
1995 Quarter Ended        High     Low           
 March 31              $11 1/4   $ 9 1/2
 June 30                12        10 1/2
 September 30           15 1/2    11 1/4
 December 31            15        12 1/4

Dividends             
The NFC Board of Directors 
increased the regular quarterly 
dividend from $.10 to $.12 on
July 24, 1996.  The Board may
authorize the payment of special
dividends in the future if
warranted by NFC's earnings and
performance.  However, there can
be no assurances that NFC's
Board will authorize the payment
of special dividends in the 
future or that regular quarterly 
dividends will continue.


The following table illustrates dividends
that were declared:

Date Declared       Date Payable        Amount
September 21, 1994  October 18, 1994    $.05
October 24, 1994    November 23, 1994    .08
January 20, 1995    February 15, 1995    .08
January 20, 1995    February 15, 1995    .15*
April 19, 1995      May 17, 1995         .08
July 26, 1995       August 23, 1995      .10
October 20, 1995    November 17, 1995    .10
January 24, 1996    February 21, 1996    .10
January 24, 1996    February 21, 1996    .15*
April 24, 1996      May 22, 1996         .10
July 24, 1996       August 21, 1996      .12
October 23, 1996    November 20, 1996    .12
January 14, 1997    February 11, 1997    .12
January 14, 1997    February 11, 1997    .10*

* Denotes special dividends declared by the NFC Board of
Directors



Page 2 Graph - Primary Earnings Per Share
<TABLE>
                                   1996     1995     1994     1993    1992
<S>                               <C>      <C>      <C>      <C>     <C>
Primary earnings per share        $1.18    $1.00    $ .72    $ .37   $ .27     
</TABLE>

                                 
Page 2 Graph - Return on Average Assets                                 
<TABLE>
                                   1996    1995    1994    1993    1992
<S>                                <C>     <C>     <C>     <C>     <C>
Return on average assets           .95%    .87%    .65%    .35%    .24%                                 
</TABLE>
                                 

Page 2 Graph - Return on Average Equity
<TABLE>
                                    1996     1995     1994     1993     1992
<S>                                <C>      <C>      <C>      <C>      <C>
Return on average equity           8.91%    7.59%    5.62%    2.94%    2.20%                                 
</TABLE>
                                 
                                 
Page 3 Graph - Total Loans (in Millions) 
<TABLE>
                                 1996      1995      1994      1993      1992
<S>                            <C>       <C>       <C>       <C>       <C>
Total loans (in millions)      $477.1    $415.2    $347.2    $335.5    $338.8
</TABLE>
                                 
                                 
Page 3 Graph - Total Deposits (in Millions) 
<TABLE>
                                  1996      1995      1994      1993      1992
<S>                             <C>       <C>       <C>       <C>       <C>
Total deposits (in millions)    $585.1    $567.8    $485.4    $482.2    $484.3
</TABLE>

Page 3 Graph - Book Value Per Share
<TABLE>
                                   1996      1995      1994      1993      1992
<S>                              <C>       <C>       <C>       <C>       <C>
Book value per share             $14.17    $13.58    $12.71    $12.66    $12.62
</TABLE>


Page 3 Graph - Nonperforming Assets to Total Assets
<TABLE>
                                        1996    1995    1994    1993    1992
<S>                                    <C>     <C>     <C>     <C>     <C>
Nonperforming assets to total assets   1.02%   1.39%   1.67%   4.34%   7.37%
</TABLE>


Page 3 Graph - Total Allowance for Losses to Total Nonperforming Assets
<TABLE>
                                       1996      1995     1994     1992     1992
<S>                                 <C>       <C>       <C>      <C>      <C>
Total allowance for losses to     
total nonperforming assets           199.17%   140.43%   93.27%   42.37%   34.82%
</TABLE>




                               
                                 
                                 
                     Dear Fellow Stockholders:



  We  are  pleased to announce that 1996 was an excellent  year  for
Norwich Financial Corp. with record earnings and net income for  the
year of $6,651,000, or $1.17 per share.  When compared to net income
of  $5,473,000 or $0.97 for the year ended December 31, 1995,  these
improved  earnings represent an increase of over 21% from 1995.   In
recognition  of  these increased earnings, The  Board  of  Directors
declared  a  special cash dividend of $.10 per share to stockholders
of record as of January 28, 1997 as well as a regular quarterly cash
dividend of $.12 per share.  Among the factors contributing  to  our
robust results was an improving regional economic environment  which
resulted  in growth in the Company's loan portfolio and a year-over-
year  increase  in our earning assets related to our acquisition  of
The  Bank of Southeastern Connecticut.  Other factors impacting  our
results  included  management's commitment to  lower  funding  costs
while  maintaining a competitive deposit rate structure, to increase
fee  income as well as to significantly reduce nonperforming assets,
and to control operating expenses.
  We completed eighteen months of expansion which included enlarging
our  market  area in Mystic through the acquisition of The  Bank  of
Mystic,  Inc.  in 1995, extending our boundaries into Waterford  and
East  Lyme  through  the  acquisition of The  Bank  of  Southeastern
Connecticut  and  adding a de novo branch in New London.   We  spent
1996  building  our customer base and establishing our  presence  in
those  communities,  further enhancing  our  ability  to  serve  the
banking needs of area retail and business customers.  In an  era  of
ever expanding regional banking giants, we have worked diligently to
foster  a  friendly,  service oriented community  bank  environment,
reinforced   by  technological  advances  such  as  a   network   of
conveniently  located  and accessible ATMs.  The  Bank's  management
team has determined that the right balance of service and technology
is  what sets us apart from the competition and therefore strives to
develop  strategies for controlled growth while maintaining a  level
of  service second to none in the area.  We also recognize the  need
to   control   costs   and  improve  productivity   throughout   the
organization if we are to improve our profitability.  In conjunction
with  those  broad  goals, task forces comprised  of  seasoned  bank
employees  and  professional consultants have and are continuing  to
work  in  coalition with senior management to improve the efficiency
and cost effectiveness of our operation.
  Over  the  last  several years, in an effort to recover  from  the
industry  wide loan losses incurred in the late eighties  and  early
nineties,  a major thrust has been to accelerate the disposition  of
selected  nonperforming loans.  I am pleased to  report  that  great
strides have been made in this area including the sale of $2 million
of  nonperforming  loans in the fourth quarter,  which  reduced  the
level of total nonperforming assets to approximately $7.0 million at
December 31, 1996.
  Noninterest income, primarily derived from securities  gains  as
well  as retail and commercial deposit service fees, increased  by
more  than 32% from $2.9 million in 1995 to $3.9 million  at  year
end  1996.   The improvement in fee income is in part attributable
to  the  Bank's  cross  selling efforts at  the  branch  level  in
addition to diligence exercised in  monitoring and collecting fees
for  commercial and retail services rendered throughout the organ-
ization.
  Located in a region undergoing a renewal in economic growth, the
Bank is strategically positioned between two thriving casinos, the
Mashantucket  Pequot Foxwoods Resort Casino  in  Ledyard  and  the
recently opened Mohegan Sun Resort in Uncasville.  Dependent  upon
an  economy  that for decades was anchored almost  exclusively  by
defense  oriented  industries  with  Electric  Boat  as  the  most
significant  player, but which is now retooling  as  a  result  of
defense downsizing, the recent emphasis on gaming and tourism  has
provided  the stimulus needed to transition our economy.   Tourism
will continue to expand with new ventures such as a Six Flags Park
proposed location in North Stonington, in addition to the draw  of
such  proven attractions as Mystic Marinelife Aquarium and  Mystic
Seaport.  That segment of the economy attributable to the  defense
industry  still  remains highly viable although  it  continues  to
downsize to a lower level than a decade ago.  With a concentration
of  highly educated and skilled workers, unemployment levels  have
remained consistently in the 5% or lower range even as the  region
has responded to the shift in direction.
  Our  management team is encouraged by the expanding economy  and
feels that the ensuing opportunities for measured growth mesh well
with our strategic plan which includes increasing our market share
through  acquisitions  of existing retail  banking  outlets  which
complement our profile.  In keeping with that goal, the Bank  will
complete  its  acquisition of two First Union  branches  in  early
March  whose  customer base and deposits will be merged  with  and
into  our  Groton and New London branch offices, thereby expanding
our  market  share  in  those two communities.   Also  a  critical
component  to both our short term and long range planning  is  our
commitment  to  improving efficiency in addition to ensuring  that
serving  our customers is always the major focus of our  business,
and  that  we serve them with competitive pricing of both  deposit
and  loan products and superior service through our branch and ATM
outlets.   Early  in 1997 we launched our Customer Service  Center
which  provides customers with direct access to a team  of  highly
trained   customer  service  representatives.   In   addition   to
responding  to customer questions and issues expeditiously,  these
representatives   also   focus   on   expanding   those   customer
relationships.
 We look forward to 1997 with optimism for the eastern Connecticut
region  and with confidence that The Norwich Savings Society  will
be  a  major  player  as  we fulfill our corporate  commitment  to
operate   in   a  financially  sound  and  prudent  manner   while
maintaining a strong capital position and striving to  maintain  a
high  level of profitability in addition to a favorable return  to
you, our stockholders.  We will continue to work diligently to not
only  meet  but  surpass your expectations  as  stockholders  both
responsibly and profitably.  We appreciate your ongoing confidence
and support.


/s/ Danield R. Dennis, Jr.

Daniel R. Dennis, Jr.
Chairman, President and Chief Executive Officer


<TABLE>
                                    
                  Selected Consolidated Financial Data
(Dollars in thousands,
except share data)              1996(a)   1995(b)    1994     1993     1992
<CAPTION>
<S>                            <C>      <C>      <C>      <C>      <C>
OPERATING HIGHLIGHTS FOR
 THE YEAR
  Interest and dividend
   income                       $52,289  $47,139  $37,784  $36,828  $43,187
  Interest expense               25,342   22,797   17,477   19,045   25,731
   Net interest income           26,947   24,342   20,307   17,783   17,456
  Loan loss provision
   (recovery)                     1,400    5,500    3,370        -    (426)
  Net securities gains              366       86      290    1,140    1,138
  Service fee and other non-
   interest income                3,501    2,824    2,225    2,209    1,914
  Noninterest expenses           18,136   16,379   18,631   18,159   19,299
  Income before income taxes,
   extraordinary item and
   cumulative effect of
   changes in accounting
   principles                    11,278    5,373      821    2,973    1,635
  Income tax provision
   (benefit)                      4,627     (100)  (2,926)   1,040      818
  Income before extraordinary
   item and cumulative effect
   of changes in accounting
   principles                     6,651    5,473    3,747    1,933      817
  Extraordinary item -
   tax loss carryforward              -        -        -        -      614
  Income before cumulative
   effect of changes in
   accounting principles          6,651    5,473    3,747    1,933    1,431
  Cumulative effect of
   changes in accounting
   principles                         -        -        -       22        -
    Net income                  $ 6,651   $5,473  $ 3,747  $ 1,955   $1,431

PER SHARE DATA
 Income before extraordinary
  item and cumulative effect
  of accounting changes         $  1.18   $ 1.00   $  .72   $  .37    $ .15
 Primary earnings                  1.18     1.00      .72      .37      .27
 Fully diluted earnings            1.17      .97      .71      .37      .27
 Cash dividends declared            .59      .51      .13      .35        -
 Book value                     $ 14.17  $ 13.58  $ 12.71  $ 12.66  $ 12.62

BALANCE SHEET HIGHLIGHTS
 AT YEAR END
 Total assets                  $683,299 $675,322 $593,665 $580,230 $570,569
 Total loans                    477,111  415,241  347,241  335,509  338,803
  Allowance for loan
   losses                       (13,928) (13,168)  (8,654)  (9,689) (12,343)
    Net loans                   463,183  402,073  338,587  325,820  326,460
 Total investment securities    171,710  228,040  217,978  203,762  188,488
 Deposits, excluding escrow     585,080  567,783  485,372  482,209  484,344
 Borrowed funds                  11,928   22,400   36,400   24,400   15,365
 Stockholders' equity          $ 76,498 $ 76,020 $ 65,534 $ 65,578 $ 65,773

NONPERFORMING ASSETS AT
 YEAR END
  Nonperforming assets,
   exclusive of nonperforming
   assets held for sale        $  6,993 $  9,377  $ 9,901 $ 25,158 $ 42,079
  Nonperforming assets to
   total assets                    1.02%    1.39%    1.67%    4.34%    7.37%

SELECTED RATIOS
  Return on average assets         0.95%    0.87%    0.65%    0.35%    0.24%
  Return on average equity         8.91     7.59     5.62     2.94     2.20
  Average equity to average 
   assets                         10.64    11.46    11.56    11.82    11.04
  Net interest rate 
   spread (c)                      3.25     3.29     3.11     2.77     2.47
  Net interest margin (c)          4.04     4.04     3.68     3.33     3.11
  Dividend payout ratio           50.00    51.00    18.06    94.59        -
</TABLE>

(a) The financial information reflects the acquisition of Seconn Holding
    Company on January 2, 1996.
(b) The financial information reflects the acquisition of The Bank of
    Mystic, Inc. on April 1, 1995.
(c) Fully taxable equivalent basis.

                                
  Management's Discussion and Analysis of Financial Condition and
                      Results of Operations
 
 The  following  discussion and analysis presents  a  review  of
Norwich  Financial Corp.'s consolidated financial  condition  and
results of operations.  This review should be read in conjunction
with  the  selected consolidated financial statements  and  other
financial data presented elsewhere herein.

General

  Norwich  Financial  Corp. (NFC or the  Company)  is  a  holding
company  and  parent to The Norwich Savings Society  (the  Bank).
The Bank is a state chartered stock savings bank headquartered in
Norwich, Connecticut which originates real estate, commercial and
consumer  loans in southeastern Connecticut.  The Bank funds  its
operations  through  the taking of deposits in  the  same  market
area.

Summary

  The  Company  reported  net income for  1996  of  $6.7  million
compared to net income of $5.5 million for 1995 and $3.7  million
for  1994.  Fully diluted earnings per share were $1.17 for 1996,
$.97 for 1995 and $.71 for 1994.
  Return  on average assets and return on average equity improved
to  .95% and 8.91%, respectively, in 1996 from .87% and 7.59%  in
1995.  Return on average assets and return on average equity were
 .65% and 5.62% in 1994.
                                
Page 7 Graph - Net Income (in Millions)
<TABLE>
                              1996    1995    1994
<S>                           <C>     <C>     <C>
Net income (in millions)      $6.7    $5.5    $3.7
</TABLE>

Page 7 Graph - Return on Average Assets
<TABLE>
                             1996    1995    1994
<S>                          <C>     <C>     <C>
Return on average assets     .95%    .87%    .65%
</TABLE>

Page 7 Graph - Return on Average Equity
<TABLE>
                              1996     1995     1994
<S>                          <C>      <C>      <C>
Return on average equity     8.91%    7.59%    5.62%
</TABLE>

  Core  earnings  for 1996 were $12.0 million compared  to  $10.7
million  for  1995  and $7.2 million for  1994.   The  1996  core
earnings represent an 11.9% increase over the 1995 results.   The
$1.3  million increase in core earnings in 1996 was due primarily
to a $2.6 million increase in net interest income attributable to
an  11.0% increase in average earning assets.  The year-over-year
increase  in  earning assets was due primarily to  the  Company's
acquisition of The Bank of Southeastern Connecticut on January 2,
1996,  which added approximately $44.0 million in earning  assets
as  of the acquisition date. The Company defines core earnings as
net  interest  income plus service fee income,  less  noninterest
expenses   other   than  provision  for  losses   on   foreclosed
properties.
  Net interest income totaled $26.9 million for 1996 compared  to
$24.3  million  for  1995 and $20.3 million for  1994.   The  net
interest margin on a fully taxable equivalent basis was 4.04% for
1996 and 1995 and 3.68% for 1994.
  NFC recorded combined provisions for loan losses and losses  on
foreclosed  properties of $1.4 million in 1996 compared  to  $5.6
million  in  1995 and $6.5 million in 1994.  A portion  of  these
provisions was necessary to facilitate the Company's strategy  to
accelerate  the disposition of selected nonperforming  loans  and
foreclosed   properties.   See  discussion  under  "Nonperforming
Assets and Allowances for Losses."
  Noninterest  income totaled $3.9 million for 1996  compared  to
$2.9  million  for  1995 and $2.5 million for 1994.   Net  pretax
securities gains included in noninterest income totaled  $366,000
in  1996, $86,000 in 1995 and $290,000 in 1994.  Service fees and
other  noninterest income amounted to $3.5 million, $2.8  million
and $2.2 million, respectively for 1996, 1995 and 1994.
  Noninterest expenses totaled $18.1 million for 1996 compared to
$16.4  million for 1995 and $18.6 million for 1994.   Noninterest
expenses,  excluding  the  provision  for  losses  on  foreclosed
properties,  totaled  $18.1 million for 1996  compared  to  $16.3
million  for  1995 and $15.5 million for 1994.  The  increase  in
total  noninterest expense is primarily due to the  expansion  of
the   Company's  eastern  Connecticut  banking  franchise   which
included  the acquisition of The Bank of Southeastern Connecticut
in 1996, the acquisition of The Bank of Mystic, Inc. in 1995, and
the  addition of de novo branches in Waterford and New London  in
1995  and  1996,  respectively.  These increases were  offset  by
reduced  spending on advertising and promotions, a  reduction  in
the   federal  deposit  insurance  (FDIC)  assessment  and  gains
recognized on nonperforming loans and foreclosed properties  held
for sale.
  NFC  recorded an income tax provision of $4.6 million for  1996
reflecting  federal and state income tax expense at an  effective
rate of approximately 41.0%.  During 1995, the Company recorded a
tax  benefit  of  $100,000  resulting from  a  reduction  in  the
valuation  allowance associated with the Company's  deferred  tax
asset.   NFC recorded a similar tax benefit in 1994 amounting  to
$3.0 million, which also represented a reduction in the valuation
allowance  associated  with  the Company's  deferred  tax  asset.
Future  earnings  are anticipated to reflect  federal  and  state
income  tax expense at an effective rate of approximately  41.0%.
See discussion under "Income Taxes."
  Norwich  Financial Corp. maintained its strong capital position
during  1996.  NFC's equity-to-asset ratio was 11.20% at December
31,  1996  compared to 11.26% at December 31, 1995 and 11.04%  at
December  31,  1994.  The Company's leverage  capital  ratio  was
10.32%  and  its  total risk-based capital ratio  was  15.12%  at
December 31, 1996.  At December 31, 1995 these ratios were 10.78%
and  18.07%,  respectively, and at December 31,  1994  they  were
11.03%  and  20.07%,  respectively.   Both  measures  of  capital
continue  to be well above regulatory requirements.   Book  value
per  share was $14.17 at December 31, 1996 compared to $13.58  at
December 31, 1995 and $12.71 at December 31, 1994.
  Total assets at the end of 1996 were $683.3 million compared to
$675.3 million and $593.7 million at December 31, 1995 and  1994,
respectively.
  On  January  2, 1996, NFC completed its acquisition  of  Seconn
Holding  Company (Seconn), the holding company for  The  Bank  of
Southeastern  Connecticut.  Under the terms of  the  acquisition,
The Bank of Southeastern Connecticut was merged with and into the
Bank.   Consideration was in the form of $6.00 in cash  for  each
share  of  stock  of Seconn.  The total purchase  price  paid  to
selling shareholders was approximately $4.7 million.  As  of  the
acquisition date, The Bank of Southeastern Connecticut had  total
loans  (net of allowance for loan losses) of approximately  $28.9
million,  total  assets of $47.0 million and  total  deposits  of
$44.4 million.
  Effective September 20, 1996, the Bank completed the sale of  a
branch.   Deposits  totaling  $10.0  million  were  sold  in  the
transaction.   Loans  were excluded from the  transaction.   This
transaction  resulted  in a gain of $201,000  being  recorded  as
other noninterest income in 1996.
  During 1996, the Bank entered into an agreement to acquire  two
branch  offices of First Union Bank of Connecticut (First Union).
The transaction is expected to close in the first quarter of 1997
and  will  include the merger of those First Union branches  with
the  Bank's  existing offices in New London and  Groton  and  the
transfer  of  approximately $25.0 million in  deposits  and  $1.0
million in loans.

Net Interest Income

  The Company's asset yields remained constant while the cost  of
funds  increased  slightly during 1996 from year-earlier  levels.
Asset  yields  and  cost  of funds increased  during  1995  after
declining during 1994.  Average interest-earning assets increased
more than average interest-bearing liabilities resulting in a net
interest margin of 4.04% for 1996, which is consistent with  1995
and  higher  than the 1994 net interest margin of  3.68%.   Asset
yields  increased  more than deposit interest costs  during  1995
resulting  in  an  improvement in NFC's net  yield  on  interest-
earning  assets  (net interest margin).  The rate  of  return  on
earning  assets on a fully taxable equivalent basis was 7.82%  in
1996  and  in  1995  compared to 6.84% in  1994.   The  Company's
overall  cost of interest-bearing liabilities increased to  4.57%
in 1996 from 4.53% in 1995 and 3.73% in 1994.
  NFC's  net  interest spread decreased to 3.25%  in  1996  after
increasing  to  3.29% in 1995 from 3.11% in 1994.   Net  interest
income  increased to $26.9 million in 1996 from $24.3 million  in
1995  and  $20.3  million in 1994.  As previously mentioned,  the
increase in 1996 net interest income was due to an 11.0% increase
in   average  earning  assets  primarily  as  a  result  of   the
acquisition of The Bank of Southeastern Connecticut on January 2,
1996.   The  1996  increase  in  net  interest  income  is   also
attributable  to  a  shift  in  the Bank's  earning  assets  from
investment securities to higher yielding loans.  The increase  in
1995  net  interest income was due to NFC's higher  net  interest
margin and a 9.0% increase in average earning assets as The  Bank
of  Mystic,  Inc.  was  acquired  on  April  1,  1995.   Overall,
nonperforming  asset volumes had little effect on the  year-over-
year  change  in net interest income during 1996 and  1995  while
lower  nonperforming asset volumes had a favorable effect on  the
year-over-year  change in net interest income  and  net  interest
rate  spread  during 1994.  Average interest-earning assets  were
$669.0  million in 1996 compared with $602.9 million in 1995  and
$553.1 million in 1994.
  The composition of NFC's interest-earning assets changed during
1996  as  loan portfolio growth was funded with the  proceeds  of
maturing investment securities.  At December 31, 1996, investment
securities  comprised 26.5% of total earning assets  compared  to
35.3% at December 31, 1995 and 38.4% at December 31, 1994.  Loans
represented  73.5% of total earning assets at December  31,  1996
versus 64.7% at December 31, 1995 and 61.6% at December 31,  1994
(before allowance for loan losses).
  In  order to remain competitive in the Bank's market area, both
fixed  and  variable rate residential mortgages  are  originated.
The  majority  of the fixed rate residential mortgages  that  the
Bank  originates  conform to secondary market specifications  and
are  originated with the intent of selling them in the  secondary
market.   Non-conforming fixed rate mortgages and  most  variable
rate  mortgages  remain in the Bank's portfolio.   In  1996,  the
Company sold $25.6 million of residential mortgage loans for cash
compared  with $12.7 million in 1995 and $21.0 million  in  1994.
Management  expects to continue to originate mortgage  loans  for
sale  during  1997.   The  Company  has  retained  servicing   on
substantially all residential mortgage loans securitized or  sold
for cash.  At December 31, 1996, the current principal balance of
the Company's serviced loan portfolio was $157.3 million compared
to  $147.9  million  at December 31, 1995 and $143.4  million  at
December  31, 1994.  The Company adopted the provisions  of  SFAS
No.  122 "Accounting for Mortgage Servicing Rights" prospectively
on January 1, 1996.  The adoption of SFAS No. 122 did not have  a
material  impact  on the Company's financial statements.   During
1996,  mortgage servicing rights of $243,000 were recorded.   See
Note  2  of  "Notes  to  Consolidated Financial  Statements"  for
further information on SFAS No. 122.
  The  composition of NFC's deposit liabilities has also changed.
At  the  end  of  1996, time deposits comprised  54.0%  of  total
deposits,  compared to 57.1% at December 31, 1995  and  53.0%  at
December  31, 1994.  Demand deposits were 11.8% of total deposits
at  December  31, 1996 compared to 9.9% and 9.1% at December  31,
1995  and  1994, respectively.  Savings, escrow and money  market
deposits were 34.2% at December 31, 1996 versus 33.0% at December
31,  1995  and 37.9% at December 31, 1994.  The shift in deposits
is  a  result  of  the Bank adopting a more conservative  pricing
policy  for  time deposits in the second half of  1996  with  the
objective of lowering the Bank's cost of funds and increasing the
Bank's net interest margin.  See discussion under "Liquidity."
  Borrowed funds at December 31, 1996 were $11.9 million compared
to $22.4 million and $36.4 million at December 31, 1995 and 1994,
respectively.   Borrowings are used to supplement deposit  growth
in funding earning assets.


<TABLE>
            Average Balances and Interest Rates (Fully Taxable Equivalent 
                                 Basis)(a)(b)
<CAPTION>
                                                           Years Ended December 31,
                                       1996                        1995                       1994
<S>                       <C>       <C>       <C>    <C>        <C>       <C>   <C>         <C>       <C>
                            Average  Interest Average  Average   Interest Average  Average   Interest Average
(Dollars in thousands)     Balance(c)   (d)    Rate   Balance(c)   (d)     Rate   Balance(c)   (d)     Rate
Interest-earning assets
 Federal funds sold       $  5,029    $ 268   5.33%   $ 8,329     $ 484   5.81%  $11,855    $  463    3.91%
 Money market instruments   24,861    1,379   5.55      7,747       456   5.89         -         -       -
  Investment securities
   Taxable                  76,869    4,276   5.56    105,028     6,279   5.98    98,793      4,265   4.32
   Tax advantaged(e)         3,009      121   4.02        208        12   5.77     2,600         85   3.27
 Federal Home Loan
   Bank stock                3,715      238   6.41      3,535       245   6.93     2,959        230   7.77
 Mortgage-backed securities 94,825    5,966   6.29     84,356     5,154   6.11    86,558      4,945   5.71
 Mortgage loans(e)         338,106   29,119   8.61    290,242    24,830   8.55   258,890     20,142   7.78
 Other loans               122,536   10,969   8.95    103,463     9,694   9.37    91,416      7,693   8.42
                           668,950   52,336   7.82    602,908    47,154   7.82   553,071     37,823   6.84
Noninterest-earning assets
 Cash and due from banks    14,760                     11,527                      9,584
 Premises and equipment     10,658                      9,735                      9,857
 Other assets, net of
  allowance for loan losses  7,266                      5,037                      4,163
                            32,684                     26,299                     23,604
                          $701,634                   $629,207                   $576,675
Interest-bearing liabilities
 Savings and mortgagors
   escrow                 $103,804   $2,445   2.36%  $101,853    $2,379   2.34% $100,634      $2,283  2.27%
 Money market accounts      97,127    2,746   2.83     83,800     2,341   2.79    89,293       2,001  2.24
 Time deposits             337,600   19,119   5.66    303,917    17,319   5.70   255,630      12,021  4.70
                           538,531   24,310   4.51    489,570    22,039   4.50   445,557      16,305  3.66
 Borrowed funds             16,062    1,032   6.43     13,601       758   5.57    22,975       1,172  5.10
                           554,593   25,342   4.57    503,171    22,797   4.53   468,532      17,477  3.73
Noninterest-bearing 
 liabilities
  Demand deposits           66,603                     48,202                     37,410
  Other                      5,818                      5,711                      4,093
  Stockholders' equity      74,620                     72,123                     66,640
                           147,041                    126,036                    108,143
                          $701,634                   $629,207                   $576,675
Net interest income before
 federal tax equivalent
 adjustment                          26,994                      24,357                       20,346
Federal tax equivalent
 adjustment                             (47)                        (15)                         (39)
Net interest income                 $26,947                     $24,342                      $20,307
Net interest rate spread                      3.25%                       3.29%                       3.11%
Net interest margin                           4.04                        4.04                        3.68
</TABLE>

(a)  Fully taxable equivalent income was calculated based on statutory
     federal and state tax rates.
(b)  Inclusive of loans and foreclosed properties held for sale.
(c)  Nonaccrual loans are included in the appropriate category by type
     of loan.
(d)  Loan fees included in interest income were approximately $398,000,
     $417,000 and $430,000 for the years ended December 31, 1996, 1995 and
     1994, respectively.
(e)  Included in interest income are the following amounts for tax
     advantaged investments by asset type:

<TABLE>
     
                                  1996              1995             1994
  <S>                           <C>               <C>              <C>
  Investment securities         $85,000           $ 9,000          $49,000
  Mortgage loans                 25,000            34,000           32,000
</TABLE>
                                   


  The following table sets forth changes in the Company's interest
earned  and  interest paid resulting from changes  in  volume  and
changes in rates.  The changes in interest due to both volume  and
rate  have been allocated to volume and rate changes in proportion
to  the  relationship to the absolute dollar amounts of the change
in each:
        
<TABLE>
                         
     Rate/Volume Analysis (Fully Taxable Equivalent Basis)(a)
                                                Years Ended December 31,            
                                         1996 vs. 1995           1995 vs. 1994
                                       Increase (Decrease)     Increase (Decrease)
                                       Due to a Change in      Due to a Change in
(Dollars in thousands)              Volume    Rate    Net   Volume   Rate     Net
<CAPTION>
<S>                                 <C>     <C>    <C>     <C>     <C>     <C>
Interest income
  Federal funds sold                 $(178)  $(38)  $(216)  $(163)   $184    $21
  Money market instruments             949    (26)    923     456       -     456
  Investment securities
   Taxable                          (1,587)  (416) (2,003)    284   1,730   2,014
   Tax advantaged                      114     (5)    109    (112)     39     (73)
  Federal Home Loan Bank stock          12    (19)     (7)     42     (27)     15
  Mortgage-backed securities           656    156     812    (128)    337     209
  Mortgage loans                     4,114    175   4,289   2,580   2,108   4,688
  Other loans                        1,725   (450)  1,275   1,078     923   2,001
                                     5,805   (623)  5,182   4,037   5,294   9,331
Interest expense
  Savings and mortgagors' escrow        46     20      66      27      69      96
  Money market accounts                371     34     405    (129)    469     340
  Time deposits                      1,922   (122)  1,800   2,492   2,806   5,298
  Borrowed funds                       148    126     274    (514)    100    (414)
                                     2,487     58   2,545   1,876   3,444   5,320
Net interest income before federal
   tax equivalent adjustment         3,318   (681)  2,637   2,161   1,850   4,011
Federal tax equivalent adjustment      (32)     -     (32)     24       -      24
Net interest income                 $3,286  $(681) $2,605  $2,185  $1,850  $4,035
</TABLE>

(a) Inclusive of loans held for sale.




Rate Sensitivity

 The Company's goal is to manage asset and liability positions so
as  to  moderate the effect of interest rate fluctuations on  net
interest income.  An interest rate sensitivity (GAP) analysis  is
completed  quarterly  which provides a  static  analysis  of  the
repricing  characteristics of the entire balance  sheet.  Because
GAP  analysis is only an estimate of NFC's interest rate exposure
at  a  particular point in time, the Company supplements its  GAP
analysis  with  other  measurements of interest  rate  risk.   In
addition,  management  continually reviews the  potential  effect
that  changes  in interest rates could have on the  repayment  of
rate  sensitive assets and funding requirements of rate sensitive
liabilities.
  One  of  NFC's objectives is to maintain the ratio of  interest
rate  sensitive  assets  to interest rate  sensitive  liabilities
within a one-year time frame within a range of 90% to 110%.   The
Investment Committee of the Company's Board of Directors  (Board)
reviews  asset/liability guidelines from time-to-time,  including
the  target  range for the rate sensitivity ratio  at  one  year.
Ratios  outside the prescribed range of 90% to 110% are presented
to  the Board for approval.  As of December 31, 1996, NFC's  one-
year  ratio  of  rate sensitive assets to liabilities  was  88.7%
compared to 91.5% at December 31, 1995 and 88.2% at December  31,
1994.  A ratio below 100% suggests that net interest income would
tend  to  decrease as interest rates increase,  and  increase  as
rates fall.
   In   computing  interest  rate  sensitivity,  investments  are
determined to reprice at the earlier of maturity, the first  date
on  which  a  security may be put at par or  the  next  following
contractual  repricing date.  Adjustable rate loans are  included
in  the  period in which they next reprice.  Monthly amortization
and   prepayments  of  mortgage-backed  securities,  fixed   rate
mortgage   loans  and  other  consumer  installment   loans   are
determined on the basis of experience and estimates.  At December
31,   1996  noncontractual  deposits  such  as  demand  deposits,
interest-bearing checking, and savings and money market  deposits
are scheduled into discrete time frames based on (1) management's
current estimate of the sensitivity of the rates and balances  of
these   accounts  to  changes  in  market  interest  rates,   (2)
management's  current deposit pricing philosophy in  response  to
changes  in  the interest rate environment, and (3)  management's
assumptions  regarding seasonal patterns, cyclical  factors,  and
industry trends or innovations that may influence the pricing  or
stability  of  these accounts.  Previously, all  interest-bearing
checking,  savings and money market deposits were  classified  as
rate  sensitive  within  one year while all  noninterest  bearing
demand  deposits were classified as long term, non-rate sensitive
liabilities.   This  change  in methodology  resulted  in  a  net
reduction  in  rate sensitive liabilities within a one-year  time
frame of approximately $48.3 million at December 31, 1996.  It is
believed  that  the  new methodology appropriately  reflects  the
Company's  rate sensitive position.  Had the previous methodology
been  applied  at December 31, 1996, the one year ratio  of  rate
sensitive  assets  to liabilities would have been  78.1%.   Other
deposit accounts and borrowed funds are determined to reprice  at
the  earlier  of  contractual maturity or  contractual  repricing
date.
  NFC's  rate sensitivity position as measured by the ratio of  
interest rate  sensitive assets to interest rate sensitive lia-
bilities within  a given time frame reveals only the anticipated
difference in timing, not magnitude, of the repricing of assets 
and liabilities.  The GAP analysis does  not  evaluate potential 
delays in the repricing of certain  assets and liabilities when 
market rates change, or changes in spreads between different market 
rates. Additionally, the GAP analysis does not  measure or evaluate
"pricing margin risk," or the risk that pricing margins will change
adversely  over time due to competition or other  factors.   An ex-
ample of pricing margin risk is the potential for the spread  be-
tween deposit  rates  and investment yields or mortgage rates to 
narrow over time due to competitive factors.


<TABLE>
                                     Pricing Maturity or Rate Change by Period
                                                  December 31, 1996
                                                                      Over 1    Over 2
                                         Days                 Total   year to  years to   Over
(Dollars in thousands)        1 to 30  31 to 180 181 to 365   1 year  2 years  3 years   3 years   Total
<S>                          <C>        <C>        <C>      <C>       <C>      <C>     <C>      <C>
Earning Assets
 Investments
  Federal funds                $3,700        $-         $-    $3,700       $-       $-       $-   $3,700
    Money market instruments   13,961    17,808          -    31,769        -        -        -   31,769
    Bonds                      11,995     9,800          -    21,795    1,490        -    2,013   25,298
    Stocks                          -         -          -         -        -        -    6,203    6,203
    Mortgage-backed securities  2,991    11,284     21,372    35,647   12,783   12,783   39,812  101,025
    Federal Home Loan Bank
     stock                          -     3,715          -     3,715        -        -        -    3,715
    Total investments          32,647    42,607     21,372    96,626   14,273   12,783   48,028  171,710
 Loans
   Fixed rate
    Mortgage
     Residential                1,092     5,460      6,553    13,105   13,105   13,105   69,086  108,401
     Commercial                   903       722        734     2,359    3,280    2,037   10,120   17,796
    Commercial                    394       417        409     1,220    1,358    1,181    4,345    8,104
    Consumer                      823     2,076      2,487     5,386    4,985    4,948   26,568   41,887
   Total fixed rate             3,212     8,675     10,183    22,070   22,728   21,271  110,119  176,188
   Adjustable rate
    Mortgage
     Residential                8,197    31,610     42,651    82,458    1,553    1,743    5,761   91,515
     Commercial                29,553     7,605      8,530    45,688   15,691   34,945   32,934  129,258
    Commercial                 38,144         -          -    38,144        -        -        -   38,144
    Consumer                   26,545     3,565      2,638    32,748    1,037        -    3,104   36,889
    Total adjustable rate     102,439    42,780     53,819   199,038   18,281   36,688   41,799  295,806
      Total loans(a)          105,651    51,455     64,002   221,108   41,009   57,959  151,918  471,994
     Total earning assets    $138,298   $94,062    $85,374  $317,734  $55,282  $70,742 $199,946 $643,704
Interest-Bearing Liabilities
  Demand  Deposits           $      -   $     -    $14,182   $14,182    $   -   $    -  $55,337  $69,519
  Savings and money market     73,588    39,959     21,760   135,307   40,553   10,880   11,078  197,818
  Time deposits                41,310   102,161     61,735   205,206   41,615   30,043   40,879  317,743
  Mortgagors' escrow            3,654         -          -     3,654        -        -        -    3,654
  FHLB advances                     -         -          -         -        -        -   11,928   11,928
   Total  interest-bearing 
    liabilities               118,552   142,120     97,677   358,349   82,168   40,923  119,222  600,662
   Noninterest-bearing
    liabilities, net                -         -          -         -        -        -   43,042   43,042
                             $118,552  $142,120    $97,677  $358,349  $82,168  $40,923 $162,264 $643,704
Maturity/rate sensitivity gap  19,746   (48,058)   (12,303)  (40,615) (26,886)  29,819   37,682
Cumulative gap                 19,746   (28,312)   (40,615)           (67,501) (37,682)
Rate sensitive assets as a % of
 rate sensitive liabilities-
   cumulative                   116.7%     89.1%      88.7%     88.7%    84.7%    92.2%
Cumulative gap as a % of total 
   assets                         2.9      (4.1)      (5.9)     (5.9)    (9.9)    (5.5)
</TABLE>
(a)  Inclusive of performing loans held for sale in the secondary market
     of $172,000 and exclusive of nonaccrual loans of $5.3 million.
                                  


Nonperforming Assets and Allowances For Losses
 
 For  the  year ended December 31, 1996, the Company  recorded  a
loan  loss provision of $1.4 million compared to $5.5 million  in
1995  and  $3.4  million in 1994.  The provision  for  losses  on
foreclosed properties was $18,000 in 1996 compared to $98,000  in
1995  and  $3.1 million in 1994.  Also, for the 12  months  ended
December  31, 1996, NFC charged off $3.1 million of nonperforming
assets (net of recoveries) compared with $3.5 million in 1995 and
$7.9  million in 1994.  Net loan charge-offs for the years  ended
December 31, 1996, 1995 and 1994 were $3.1 million, $2.8  million
and  $4.4  million, respectively.  Net charge-offs of  foreclosed
properties  for  the same years were $18,000, $714,000  and  $3.5
million, respectively.
 Management  continues to focus on the reduction of nonperforming
assets  in  order to reduce noninterest expenses associated  with
holding nonperforming loans and foreclosed properties.  As  such,
during the fourth quarter of 1996 management sold $2.5 million of
loans of which $2.0 million were nonperforming. Proceeds of  $1.5
million  were  received,  transaction expenses  of  $36,000  were
charged  to  earnings and a loss on the sale of $1.0 million  was
charged  against  the  allowance for loan losses  to  reduce  the
carrying value to the sales price.
 During 1995, nonperforming loans and foreclosed properties  with
a   carrying  value  of  $4.5  million  were  charged   down   by
approximately $1.7 million.  After the write-downs, the remaining
balance  of $2.8 million was transferred to "loans and foreclosed
properties held for sale" at December 31, 1995.  The majority  of
the  loans  identified for sale were commercial real  estate  and
residential real estate loans.
 During  1994,  nonperforming loans and foreclosed properties  of
$7.8  million  and performing loans of $1.0 million were  charged
down  by $3.3 million to facilitate their disposition.  A portion
of  these  assets were sold in December 1994 and $1.5 million  of
loans and $1.8 million of foreclosed properties were reclassified
as  loans  and foreclosed properties held for sale.  The majority
of   the  loans  identified  were  commercial  real  estate   and
residential real estate loans.  In connection with charging  down
the  loans and foreclosed properties for losses estimated  to  be
incurred as a result of the accelerated disposition strategy,  an
additional  provision of $2.2 million was made to  the  allowance
for  loan losses and an additional provision of $1.1 million  was
made to the allowance for losses on foreclosed properties.
  During  1996,  proceeds from sales of nonperforming  loans  and
foreclosed properties held for sale of $3.7 million were received
and  gains  of  $615,000 were recognized as an offset  to  "other
nonperforming  asset  expenses"  in  the  Company's  Consolidated
Statements  of  Income.  During  1995,  proceeds  from  sales  of
nonperforming loans and foreclosed properties held  for  sale  of
$1.9  million  approximated the carrying value of the  respective
assets.    At  December  31,  1996,  the  remaining  balance   of
nonperfoming  loans  held  for sale of  $292,000  and  foreclosed
properties  held for sale of $423,000 were transferred  to  loans
and foreclosed properties, respectively, at the lower of cost  or
fair  value.  The balance of loans and foreclosed properties held
for  sale  at December 31, 1996 of $172,000 represents performing
loans held for sale in the secondary market.

Page 14 graph - Nonperforming Assets to Total Assets
<TABLE>
                           1996   1995   1994
<S>                       <C>    <C>    <C>
Nonperforming assets to       
  total assets             1.0%   1.4%   1.7%
</TABLE>


   At December 31, 1996, nonperforming assets, exclusive of loans
and foreclosed properties held for sale, amounted to $7.0 million
or 1.0% of total assets compared to $9.4 million or 1.4% of total
assets  at  December 31, 1995 and $9.9 million or 1.7%  of  total
assets  at  December 31, 1994.  Nonperforming loans  included  in
these  amounts were $5.8 million, $9.1 million and $8.3  million,
respectively, at December 31, 1996, 1995 and 1994.  Nonperforming
loans  comprised 83.3% of total nonperforming assets at  December
31,  1996  compared to 97.2% at December 31, 1995  and  83.9%  at
December 31, 1994.
  Foreclosed  properties, before the allowance for  losses,  were
$1.2  million at December 31, 1996, $264,000 at December 31, 1995
and  $1.6  million  at December 31, 1994.  Foreclosed  properties
comprised  16.7%  of total nonperforming assets at  December  31,
1996, 2.8% at December 31, 1995 and 16.1% at December 31, 1994.
  Total  nonperforming assets, exclusive of "loans and  foreclosed
properties held for sale," were reduced by $2.4 million  or  25.4%
during  1996 and by $524,000 or 5.3% during 1995.  The decline  in
nonperforming assets during 1996 resulted primarily  from  charge-
offs (net of recoveries) of $3.1 million.
  The  decline  in nonperforming assets during 1995 resulted  from
charge-offs  (net of recoveries) of $3.5 million and transfers  to
loans and foreclosed properties held for sale of $2.8 million. The
dollar  amount  of new credits designated as nonperforming  assets
during  the year exceeded resolutions of nonperforming  assets  by
$5.8 million, partially offsetting the above-mentioned charge-offs
and  transfers.   The $5.8 million net addition  to  nonperforming
assets  before charge-offs and transfers to "loans and  foreclosed
properties  held  for  sale"  includes  $1.4  million   in   loans
originated by The Bank of Mystic, Inc. prior to the acquisition of
that institution in April, 1995.
  The  decline  in nonperforming assets during 1994 resulted  from
charge-offs  (net  of  recoveries) of $7.9 million,  transfers  to
"loans  and  foreclosed properties held for sale" of $3.3  million
and the net resolution of $4.1 million in problem assets.
  Certain of the Company's existing nonperforming assets have been
partially  charged  off.  The current total  of  $7.0  million  in
nonperforming   assets,   exclusive  of  "loans   and   foreclosed
properties held for sale," is net of approximately $3.4 million in
charge-offs.
  Nonperforming  asset ratios by portfolio  (the  ratio  of  total
nonperforming  assets by portfolio to total loans  and  foreclosed
properties  by portfolio, exclusive of nonperforming  assets  held
for sale) are summarized as follows:
<TABLE>
                                    December 31,
                          1996      1995      1994      1993
<S>                      <C>       <C>       <C>      <C>
Residential mortgages     0.88%     0.90%     0.99%     3.29%
Real estate - commercial  2.49      4.14      6.26     13.72
Commercial business       2.80      5.01      4.88     16.14
Consumer                  0.18      0.93      0.99      1.65
Total - all portfolios    1.46%     2.25%     2.83%     7.02%
</TABLE>

 Combined allowances for losses were $13.9 million at December 31,
1996  compared  to  $13.2 million at December 31,  1995  and  $9.2
million  at  December 31, 1994. The Company's combined  allowances
for losses as a percentage of nonperforming assets excluding those
held for sale were 199.2% at December 31, 1996, 140.4% at December
31, 1995 and 93.3% at December 31, 1994.
  The  allowance for loan losses was $13.9 million at the  end  of
1996, $13.2 million at the end of 1995 and $8.7 million at the end
of  1994.  The allowance for loan losses was impacted during  1995
by  the  addition of The Bank of Mystic, Inc. allowance  for  loan
losses of $1.8 million and again in 1996 with the addition of  The
Bank of Southeastern Connecticut allowance for loan losses of $2.5
million.   The  allowance for loan losses amounted  to  239.1%  of
nonperforming loans at the end of 1996 as compared to  144.5%  and
104.2%  at the end of 1995 and 1994, respectively.  There  was  no
allowance for losses on foreclosed properties at December 31, 1996
or 1995 compared to $581,000 at December 31, 1994.
  NFC  attempts to control asset quality through review  processes
that  include  careful analysis of credit applications,  portfolio
diversification, and ongoing internal examination  of  outstanding
and delinquent loans using both internal personnel and independent
review services.
  Management monitors the adequacy of the allowance for losses  on
loans  and foreclosed properties on a continual basis.   Based  on
the  overall  improvement in asset quality and  the  reduction  in
nonperforming assets, management believes the allowance for losses
on  loans and foreclosed properties is adequate.  While management
uses  available  information  to recognize  losses  on  loans  and
foreclosed  properties,  future additions  to  the  allowance  and
additional  write-downs  may  be necessary  based  on  changes  in
economic conditions.  In addition, various regulatory agencies, as
an integral part of their examination process, periodically review
the  Bank's  allowance  for  losses  on  loans  and  valuation  of
foreclosed  properties.  Such agencies may  require  the  Bank  to
recognize  additions  to  the allowance or additional  write-downs
based  on their judgment of information available to them  at  the
time of their examination.

Noninterest Income

   Mortgage  servicing  fees  were  $639,000  in  1996,   net   of
amortization  of  $42,000 relating to mortgage  servicing  rights,
compared  to  $667,000 in 1995 and $691,000 in 1994.  The  average
servicing  spread,  or servicing fee income  as  a  percentage  of
serviced  portfolio balance, declined from approximately 0.47%  in
1995  to  0.42% in 1996.  Servicing spreads on new loans added  to
the serviced portfolio in 1996 were lower than spreads on serviced
loans paid off.  See discussion under "Net Interest Income."
 Other service fee income totaled $2.5 million in 1996 compared to
$2.0  million  in 1995 and $1.7 million in 1994.  Deposit  account
service  charges,  automated teller machine  fees  and  commercial
servicing  charges  contributed to  the  1996  increase  in  other
service  fee  income.  These increases resulted both  from  higher
account activity as the Company's banking franchise expanded and a
change  in the Company's deposit fee structure in the second  half
of 1996.
  Securities gains included in noninterest income totaled $366,000
in  1996,  $86,000  in  1995  and  $290,000  in  1994.   Sales  of
securities in 1996 resulted in proceeds of $23.4 million  compared
to $20.2 million and $19.5 million in 1995 and 1994, respectively.
Sales   were  largely  the  result  of  the  previously  mentioned
asset/liability strategies employed by management.
  The Company recorded net gains on loans sold or held for sale of
$18,000 in 1996, compared to net losses of $65,000 in 1995 and net
losses of $317,000 in 1994.  Other noninterest income amounted  to
$362,000  in  1996 compared to $268,000 and $158,000 in  1995  and
1994, respectively.  Other noninterest income consists principally
of other nonrecurring income.

Noninterest Expenses

  Total  noninterest expenses were $18.1 million for 1996 compared
to $16.4 million for 1995 and $18.6 million for 1994.  Noninterest
expenses, excluding the previously discussed provision for  losses
on  foreclosed properties, totaled $18.1 million for 1996 compared
to   $16.3   million  and  $15.5  million  for  1995   and   1994,
respectively.   The 11.3% increase in noninterest expenses,  other
than  the  provision  for  losses on  foreclosed  properties,  was
principally  the  result  of  higher  general  operating  expenses
partially  offset by significant reductions in other nonperforming
asset  expenses and the Company's federal deposit insurance (FDIC)
assessment.
   Salaries   and  employee  benefits,  furniture  and  equipment,
occupancy  expenses, and other operating expenses were  higher  in
1996  than  in  1995  due  to NFC's acquisition  of  The  Bank  of
Southeastern Connecticut on January 2, the opening of a new branch
in  New  London, Connecticut in January and the Company's expanded
lending  activities.  Salaries and employee benefits increased  by
$2.0  million or 27.0% in 1996 compared to an increase of $846,000
or  12.8%  in  1995 and an increase of $197,000 or 3.1%  in  1994.
Furniture and equipment expense increased by $159,000 or 15.0%  in
1996  compared  to an increase of $31,000 or 3.0% in  1995  and  a
decrease  of  $54,000  or  5.0% in 1994.   Net  occupancy  expense
increased by $589,000 or 32.6% in 1996 compared to an increase  of
$378,000  or 26.5% in 1995 and an increase of $41,000 or  3.0%  in
1994.
  Other  nonperforming assets had net income of  $90,000  in  1996
compared  to net expenses of $474,000 in 1995 and $1.3 million  in
1994.  The decline in nonperforming asset expenses in 1996 is  due
to  the recognition of additional gains on sales of assets in 1996
versus  1995.   During 1996, gains of $738,000 were recognized  on
nonperforming  loans  and  foreclosed  properties,  which   offset
incurred  expenses of $648,000.  During 1995, the Bank  recognized
gains of $134,000 on nonperforming loans and foreclosed properties
which partially offset incurred expenses of $608,000.  The decline
in nonperforming asset expenses during 1995 was due primarily to a
reduction in foreclosed properties and other nonperforming  assets
held  by the Company.  Nonperforming asset expenses are a function
of the level and composition of nonperforming assets in each year,
and  are  comprised of property taxes, legal expenses,  insurance,
repair   and   maintenance,   appraisal   and   consulting   fees,
administrative  and  other costs required  to  obtain  and  market
properties  acquired,  as  well as  expenses  required  to  pursue
borrowers and guarantors where no specific collateral exists.
  The  Company's  federal deposit insurance (FDIC) assessment  was
significantly  reduced during the year, resulting in substantially
lower   deposit  insurance  expenses  in  1996.   FDIC  and  state
assessments  totaled  $12,000 in 1996  versus  $625,000  and  $1.1
million in 1995 and 1994, respectively.
  Other  operating expenses were $3.3 million in 1996 compared  to
$3.0  million  and  $2.9 million in 1995 and  1994,  respectively.
Included  in  other operating expenses are costs such as  supplies
and printing, postage and express mail as well as consulting fees.
The  increase during 1995 and 1996 is due to the expansion of  the
Company's banking franchise.
 Total noninterest expenses, excluding the Company's provision for
losses  on  foreclosed properties, amounted to  2.58%  of  average
assets  in  1996 compared to 2.59% and 2.69% of average assets  in
1995 and 1994, respectively.

Income Taxes

  The Company recorded an income tax provision of $4.6 million for
1996  reflecting  federal  and state  income  tax  expense  at  an
effective  rate  of approximately 41%.  During 1995,  the  Company
recorded a tax benefit of $100,000 resulting from the reduction in
the valuation allowance associated with the Company's deferred tax
asset.   This reduction in the valuation allowance was the  result
of  the  Company's  trend of positive core earnings  which  caused
management to determine that the future benefit from a significant
amount of the Company's remaining unrecognized deferred tax  asset
would  more likely than not be realized.  Accordingly, NFC reduced
the valuation allowance associated with the deferred tax asset  by
$3.1 million in 1995, which offset income tax expense recorded  at
statutory rates to produce a net tax benefit of $100,000 for 1995.
NFC  recorded  a  similar tax benefit in 1994  amounting  to  $3.0
million,  which  also  represented a reduction  in  the  valuation
allowance associated with the Company's deferred tax asset.
  At  December 31, 1996, the Company's net deferred tax asset  was
$5.4  million,  which  is net of a $175,000  valuation  allowance.
Future  earnings  are  anticipated to reflect  federal  and  state
income tax expense at an effective rate of approximately 41%.

Liquidity

  Liquidity  is  the ability of the Company to meet each  maturing
obligation  or  customer demand for funds.  NFC's main  source  of
liquidity  is dividends from the Bank.  As a result, the liquidity
of  the  Company  is  largely dependent  upon  the  liquidity  and
profitability  of  the Bank and the ability of  the  Bank  to  pay
dividends under applicable laws and regulations.
  The  Bank considers liquid assets to be cash and due from banks,
Federal  funds sold, time deposits with other banks, money  market
instruments  and  U.S. government and agency obligations  maturing
within  one year.  At December 31, 1996, liquid assets were  $75.8
million  or  11.1% of total assets compared to $143.0  million  or
21.2%  of  total assets at the end of 1995 and $132.4  million  or
22.3% of total assets at the end of 1994.
  Liquidity  is  generated by deposit inflows, loan principal  and
interest payments, maturing investments and Federal Home Loan Bank
advances.   Principal  uses  of funds include  loan  originations,
investment  purchases,  payments  of  interest  on  deposits   and
payments  to  meet operating expenses.  During 1996, total  loans,
excluding those held for sale, increased $61.9 million,  of  which
approximately  $31.4 million were a result of the  acquisition  of
The  Bank  of  Southeastern Connecticut on January  2,  1996.   As
previously  mentioned, the remaining growth in the loan  portfolio
during  1996  was funded with the proceeds of maturing  investment
securities causing a reduction in liquid assets.
  Total  deposits,  excluding escrow, increased by  $17.3  million
during  1996.   The  increase  is  due  primarily  to  the  Seconn
transaction  which added approximately $44.4 million  in  deposits
offset  by  the sale of a branch with $10.0 million  in  deposits.
Deposits also decreased slightly in the second half of 1996 as the
Bank adopted a more conservative pricing policy for time deposits.
This  pricing  policy contributed to lower funding  costs  in  the
second  half  of  1996  which led to the  1996  quarter-to-quarter
improvement in net interest margin.
  The  Bank has classified individual securities into one  of  two
categories:  held  to maturity or available for sale.   Securities
held  to  maturity  will  consist of U.S.  Government  and  agency
obligations as well as money market instruments which the Bank has
the  positive  intent and ability to hold to maturity.  All  other
securities held by the Bank are classified as available for sale.
  Management  classifies securities into each category considering
current  and  projected liquidity requirements.  At  December  31,
1996,  the  Bank classified mortgage-backed securities  and  other
debt  and equity securities with a market value of $111.6  million
(amortized cost of $110.8 million) as available for sale, with the
unrealized  gain of $801,000 shown as a component of stockholders'
equity, net of related taxes of $329,000.

Capital Resources

  Capital ratios for NFC and the Bank were well in excess of  all
applicable  regulatory  requirements for all  periods  presented.
Capital requirements and ratios are discussed in the "Summary" to
this discussion and in Note 9 of "Notes to Consolidated Financial
Statements."
     
Inflation

  The  effect  of  inflation is reflected in the  cost  of  NFC's
operations.   Since  the  assets  and  liabilities  of  NFC   are
primarily  monetary  in  nature, the extent  to  which  inflation
affects interest rates will, in turn, affect NFC's operations.



KPMG Peat Marwick LLP Logo 


Independent Auditors' Report



The Board of Directors and Stockholders
Norwich Financial Corp.:

We  have audited the accompanying consolidated balance sheets  of
Norwich  Financial  Corp.  and subsidiary  (the  Company)  as  of
December   31,  1996  and  1995,  and  the  related  consolidated
statements  of income, changes in stockholders' equity  and  cash
flows  for  each  of  the  years in the three-year  period  ended
December  31, 1996.  These consolidated financial statements  are
the    responsibility   of   the   Company's   management.    Our
responsibility  is  to express an opinion on  these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position of Norwich Financial Corp. and subsidiary as of December
31,  1996 and 1995, and the results of their operations and their
cash  flows for each of the years in the three-year period  ended
December   31,   1996  in  conformity  with  generally   accepted
accounting principles.

As  discussed in Notes 2 and 3 of Notes to Consolidated Financial
Statements,  the  Company changed its method  of  accounting  for
investments in 1994.


/s/ KPMG PEAT MARWICK LLP

Hartford, Connecticut
January 17, 1997






             
<TABLE>
                                
                     Consolidated Balance Sheets

                                                             December 31,
(Dollars in thousands, except share data)                 1996           1995
<CAPTION>
<S>                                                   <C>           <C>
Assets
Cash and due from banks                               $ 19,419      $  14,600
Federal funds sold                                       3,700          4,150
Money market instruments, held to maturity
  (market value of $31,765 and $15,701 in 1996
  and 1995, respectively)                               31,769         15,691
Mortgage-backed securities, available for sale
  (amortized cost of $100,844 and $93,456
  in 1996 and 1995, respectively)                      101,025         93,921
Federal Home Loan Bank stock, at cost                    3,715          3,715
Other investment securities
  Held to maturity (market value of $20,941
    and $95,287in 1996 and 1995, respectively)          20,945         95,281
  Available for sale (amortized cost of $9,936
    and $14,934 in 1996 and 1995, respectively)         10,556         15,282
Loans, net of allowance for loan losses of $13,928
  and $13,168 in 1996 and 1995, respectively           463,183        402,073
Loans and foreclosed properties held for sale              172          5,192
Premises and equipment, at cost, less accumulated
 depreciation of $8,500 and $8,394 in 1996 and
 1995, respectively                                      6,216          5,910
Accrued income receivable                                3,474          3,512
Foreclosed properties                                    1,167            264
Deferred tax asset, net                                  5,356          4,718
Other assets                                            12,602         11,023
     Total assets                                     $683,299       $675,332

Liabilities and Stockholders' Equity
Deposits
  Demand                                              $ 69,519       $ 56,707
  Savings and mortgagors' escrow                       101,508        100,736
  Money market accounts                                 99,964         87,785
  Time                                                 317,743        325,776
     Total deposits                                    588,734        571,004
FHLB advances                                           11,928         22,400
Other liabilities                                        6,139          5,908
     Total liabilities                                $606,801       $599,312
Common stock, $.01 par value; authorized
 25,000,000 shares;issued 5,953,881 and
 5,886,278 shares in 1996 and 1995, respectively      $     60       $     59
Additional paid-in capital                              58,708         58,030
Retained income                                         23,869         20,468
Less: Treasury stock, at cost, 554,240 and
 288,729 shares in 1996 and 1995, respectively          (6,611)        (3,074)
Net unrealized gain on securities available for
 sale, net of tax benefit                                  472            537
     Total stockholders' equity                       $ 76,498       $ 76,020
Commitments and contingencies (Note 15)
     Total liabilities and stockholders' equity       $683,299       $675,332
</TABLE>
                                
The accompanying notes are an integral part of these financial statements.
                                
                                
                               
                                                  
             
<TABLE>
                   Consolidated Statements of Income       
                                              Years Ended December 31,
(Dollars in thousands, except share data)            1996      1995      1994
<CAPTION>
<S>                                             <C>       <C>       <C>
Interest and dividend income
 Federal funds sold                             $     268 $     484 $     463
 Money market instruments                           1,379       456         -
 Mortgage-backed securities                         5,966     5,154     4,945
 Other investment securities, including
   dividends                                        4,599     6,533     4,551
 Loans, including fees                             40,077    34,512    27,825
  Total interest and dividend income               52,289    47,139    37,784
Interest expense
 Deposits                                          24,310    22,039    16,305
 FHLB advances                                      1,032       758     1,172
  Total interest expense                           25,342    22,797    17,477
Net interest income                                26,947    24,342    20,307
Loan loss provision                                 1,400     5,500     3,370
  Net interest income after loan loss
    provision                                      25,547    18,842    16,937
Noninterest income
 Mortgage servicing fees                              639       667       691
 Other service fee income                           2,482     1,954     1,693
 Net securities gains                                 366        86       290
 Gain (loss) on loans sold or held for sale            18       (65)     (317)
 Other                                                362       268       158
  Total noninterest income                          3,867     2,910     2,515
Noninterest expenses
 Salaries and employee benefits                     9,495     7,477     6,631
 Net occupancy                                      2,394     1,805     1,427
 Furniture and equipment                            1,219     1,060     1,029
 Data processing                                      682       727       650
 Advertising and promotion                            469       780       385
 Amortization of intangibles                          649       291         -
 FDIC and state assessments                            12       625     1,122
 Provision for losses on foreclosed properties         18        98     3,130
 Other nonperforming asset (income) expense           (90)      474     1,332
 Other operating expenses                           3,288     3,042     2,925
  Total noninterest expenses                       18,136    16,379    18,631
Income before income taxes                         11,278     5,373       821
Income tax provision (benefit)                      4,627      (100)   (2,926)
  Net income                                     $  6,651  $  5,473  $  3,747
  Net income per share
   Primary                                       $   1.18  $   1.00  $    .72
   Fully diluted                                 $   1.17  $    .97  $    .71
</TABLE>
                                
The accompanying notes are an integral part of these financial statements.
                                

                                
                                
<TABLE>
                               
                 Consolidated Statements of Changes in Stockholders' Equity
                                                                          Net
                                   Additional                          Unrealized
(Dollars in thousands,     Common   Paid-in    Retained   Treasury    (Loss) Gain On
except share data)          Stock   Capital     Income      Stock      Securities     Total
<CAPTION>
<S>                        <C>     <C>         <C>        <C>          <C>         <C>
Balance, December 31, 1993  $  58   $56,800     $14,678    $(5,958)     $      -    $65,578
 Net unrealized gain on
  securities available for
  sale upon implementation
  of change in accounting
  for debt and equity
  securities                    -         -           -          -         1,304      1,304
 Net income                     -         -       3,747          -             -      3,747
 Dividends on common stock
  ($.13 per share declared)     -         -        (678)         -             -       (678)
 Exercise of stock options      -       273           -          -             -        273
 Purchase of treasury stock     -         -           -       (668)            -       (668)
 Change in net unrealized
  gain/loss on securities
  available for sale            -         -           -          -        (4,022)    (4,022)
Balance, December 31, 1994     58    57,073      17,747     (6,626)       (2,718)    65,534
 Net income                     -         -       5,473          -             -      5,473
 Dividends on common stock
  ($.51 per share declared)     -         -      (2,752)         -             -     (2,752)
 Exercise of stock options      1       586           -          -             -        587  
 Purchase of treasury stock     -         -           -     (1,821)            -     (1,821)
 Issuance of treasury stock
  for the purchase of The
  Bank of Mystic, Inc.          -       371           -      5,373             -      5,744
 Change in net unrealized
  gain/loss on securities
  available for sale            -         -           -          -         3,255      3,255
Balance, December 31, 1995     59    58,030      20,468     (3,074)          537     76,020
 Net Income                     -         -       6,651          -             -      6,651
 Dividends on common stock
  ($.59 per share declared)     -         -      (3,250)         -             -     (3,250)
 Exercise of stock options      1       678           -        572             -      1,251
 Purchase of treasury stock     -         -           -     (4,109)            -     (4,109)
 Change in net unrealized
  gain/loss on securities
  available for sale            -         -           -          -           (65)       (65)
Balance, December 31, 1996  $  60   $58,708     $23,869    $(6,611)      $   472    $76,498
</TABLE>
                                
The accompanying notes are an integral part of these financial statements.





<TABLE>
                                
                    Consolidated Statements of Cash Flows
                                                      Years Ended December 31,
(Dollars in thousands)                                1996      1995      1994
<CAPTION>
OPERATING ACTIVITIES                                   
<S>                                              <C>       <C>       <C> 
Net income                                       $   6,651 $   5,473 $   3,747
   Adjustments to reconcile net income to
     net cash provided by operating activities
    Loan loss provision                              1,400     5,500     3,370
    Provision for losses on foreclosed 
     properties                                         18        98     3,130
    Depreciation, amortization and accretion        (2,956)   (3,926)   (1,330)
    Amortization of intangible                         649       291         -
    Deferred income tax benefit                      1,458      (530)   (4,883)
    Net gain on sales of securities                   (366)      (86)     (290)
    (Gain) loss on loans sold or held for sale         (18)       65       317
    Loans originated for sale                      (24,736)  (12,641)  (12,894)
    Proceeds from loans sold                        25,647    12,689    20,951
    Gain on nonperforming loans and foreclosed
     properties held for sale                         (615)        -         -
    Gain on foreclosed properties                      (65)      (26)        -
    Gain on sale of branch                            (201)        -         -
    Change in assets and liabilities net of
     effect from the purchase of Seconn Holding
     Company and The Bank of Mystic, Inc.
      Change in accrued income receivable              285      (345)      133
      Change in other liabilities                     (741)    1,848       (15)
      Change in other assets                          (794)    1,459       531
    Net cash provided by operating activities        5,616     9,869    12,767

INVESTING ACTIVITIES
Cash acquired net of cash paid for purchase of
   Seconn Holding Company                           10,387         -         -
Cash acquired net of cash paid for purchase of
   The Bank of Mystic, Inc.                              -     8,951         -
Mortgage-backed securities
   Available or held for sale
    Proceeds
     Sales                                               -    10,245    11,037
     Maturities and repayments                      17,483    11,851    31,955
    Purchases                                      (24,979)  (34,305)  (30,212)
Other investment securities
   Available or held for sale
    Proceeds
     Sales                                          23,369     9,927     8,420
     Maturities and repayments                       8,500       500         -
    Purchases                                      (25,481)   (4,992)  (15,779)
   Held to maturity
    Proceeds
     Sales                                               -         -         -
     Maturities and repayments                     228,120   210,000   180,155
    Purchases                                     (165,845) (201,581) (187,841)
Net increase in loans                              (33,882)  (24,271)  (22,280)
Proceeds from sales of foreclosed properties         1,062       532     6,297
Proceeds from sales of loans and
   foreclosed properties held for sale               3,728     1,937         -
Premises and equipment, net                           (776)   (1,353)     (486)
    Net cash provided (used) by investing
     activities                                     41,686   (12,559)  (18,734)                       

FINANCING ACTIVITIES
 Net increase (decrease) in savings,
  demand and other deposit accounts                  4,526    (8,916)    4,068
 Net (decrease) increase in
  certificates of deposit                          (21,477)   31,267      (905)
 Sale of deposits                                   (9,820)        -         -
 Net increase in mortgagors' escrow accounts           418       343       144
 Proceeds from FHLB advances                        23,120    30,649    47,161
 Repayments of FHLB advances                       (33,592)  (45,649)  (35,161)
 Proceeds from exercise of stock options             1,251       587       273
 Purchase of treasury stock                         (4,109)   (1,821)     (668)
 Cash dividends paid                                (3,250)   (2,752)   (2,492)
   Net cash (used) provided by financing
    activities                                     (42,933)    3,708    12,420
 Net increase in cash and cash equivalents           4,369     1,018     6,453
 Cash and cash equivalents at beginning of year     18,750    17,732    11,279
 Cash and cash equivalents at end of year         $ 23,119 $  18,750  $ 17,732

Supplemental Information on Cash Payments
  (Receipts)
 Interest                                         $ 25,391 $  22,745  $ 17,597
 Income taxes                                        3,433        35       (27)

Supplemental Information on Noncash Transactions
 Securitization of loans into mortgage-backed
  securities                                             -         -     4,988
 Transfer to foreclosed properties from loans          782     1,198     5,315
 Loans to facilitate the sale of foreclosed
  properties                                         1,927       509     4,248
 Transfer from loans and foreclosed properties
  to held for sale                                       -     2,803     3,261
 Treasury stock issued for the purchase of
  The Bank of Mystic, Inc.                        $      -  $  5,744   $     -
</TABLE>

  As of April 1, 1995, the Company purchased all of the stock  of
The  Bank  of  Mystic, Inc. for approximately $8.2  million.   In
conjunction  with the acquisition, liabilities  were  assumed  as
follows:
<TABLE>
      <S>                              <C>
      Fair value of assets acquired    $69,850
      Cash and stock paid               (8,200)
        Liabilities assumed            $61,650
</TABLE>

  As  of January 2, 1996, the Company purchased all the stock  of
Seconn  Holding  Company  for  approximately  $4.7  million.   In
conjunction  with the acquisition, liabilities  were  assumed  as
follows:
<TABLE>
      <S>                              <C>
      Fair value of assets acquired    $49,910
      Cash paid                         (4,654)
        Liabilities assumed            $45,256
                                
The accompanying notes are an integral part of these financial statements.
                                




           Notes to Consolidated Financial Statements

1.  Conversion to Stock Ownership and Formation of Bank Holding Company

  On  November  14, 1986, The Norwich Savings Society  (the  Bank)
completed  its  conversion from a state chartered  mutual  savings
bank  to a state chartered stock savings bank through the issuance
of  5,741,151  shares of $1 par value common stock at  $10.50  per
share, before conversion related expenses of $3,763,465.
  On August 10, 1988, Norwich Financial Corp. (NFC or the Company)
acquired  all  of  the outstanding common stock  of  the  Bank  in
exchange  for  its  common  stock  on  a  one-for-one  basis,   in
accordance  with  an  Agreement and Plan of  Reorganization.   The
accompanying consolidated financial statements give effect to  the
Company's  reorganization and the exchange of  stock,  which  have
been accounted for as a pooling-of-interests transaction.

2. Summary of Significant Accounting Policies

Principles of Business and Consolidation
  The  Norwich Financial Corp. is a one bank holding company which
through  its wholly-owned subsidiary, The Norwich Savings Society,
originates   real  estate,  commercial  and  consumer   loans   in
southeastern  Connecticut.  NFC funds its operations  through  the
taking  of  deposits in the same market area.  As of December  31,
1996,  approximately  96% of the loans in the  portfolio  were  to
borrowers  concentrated in the Company's market area,  defined  as
southeastern Connecticut.
  The consolidated financial statements include the Company and the
Bank.  All significant intercompany accounts and transactions have
been eliminated in consolidation.

Acquisitions
  On  April 1, 1995, The Bank of Mystic, Inc. (TBM), a Connecticut
chartered  state  bank  and trust company  with  assets  of  $66.0
million, was merged with and into the Bank.  As of April 1,  1995,
TBM  had net loans of $49.0 million and deposits of $60.2 million.
The acquisition was accounted for as a purchase.
  Each share of TBM common stock issued and outstanding (except for
(1)  shares owned by TBM as treasury shares, (2) shares  owned  by
any  direct or indirect subsidiary of TBM, (3) shares held by  the
Company  or  the Bank other than in a fiduciary or trust  capacity
for  the  benefit  of third parties, and (4) shares  as  to  which
appraisal rights have been perfected) was converted into $2.40  in
cash  and  $5.60 payable in shares of the Company's common  stock.
The total cash consideration paid by the Company was approximately
$2.5  million  which was available from the Company's  operations.
In  addition,  shareholders of TBM received approximately  554,000
shares  of the Company's common stock in the merger, which  shares
were  paid  by  the Company from treasury stock and had  a  market
value of $5.7 million.
  As part of the acquisition, goodwill of $4.6 million was recorded
as  of  April 1, 1995.  Goodwill was later reduced during 1996  by
$500,000  and  during  1995 by $375,000  in  connection  with  the
reduction  of  the  valuation allowance  on  deferred  tax  assets
attributable to The Bank of Mystic, Inc.
  On  January  2,  1996, the Company completed the acquisition  of
Seconn Holding Company (Seconn), the holding company for The  Bank
of  Southeastern Connecticut.  As of January 2, 1996,  Seconn  had
total  assets of $47.0 million, including $28.9 million in  loans.
Deposits  as  of  January  2,  1996,  were  $44.4  million.    The
acquisition was accounted for as a purchase.
  In  accordance  with  the  definitive  acquisition  agreement,
shareholders  of  Seconn received $6 in cash  for  each  share  of
outstanding  stock  of Seconn.  The total price  paid  to  selling
shareholders  was  approximately $4.7 million.  Goodwill  of  $1.8
million was recorded for this acquisition.


 Presented below is certain pro forma information as if The Bank of
Mystic,  Inc. had been acquired on January 1, 1994 and Seconn  had
been  acquired  on  January 1, 1995.  These  results  combine  the
historical results of The Bank of Mystic, Inc. and Seconn into the
Company's  Consolidated Statements of Income  and,  while  certain
adjustments  were  made  for  the  estimated  impact  of  purchase
accounting  adjustments  and  other acquisition-related  activity,
they  are  not necessarily indicative of what would have  occurred
had the acquisition taken place at that time.


</TABLE>
<TABLE>
                                         Pro forma
                                  Years ended December 31,
                                        (Unaudited)
(Dollars in thousands)                1995        1994
<CAPTION>
<S>                                <C>         <C>
Interest income                    $52,032     $42,870
Net interest income                 27,224      23,085
Net income                           3,469       4,148
Net income per share               $  0.63     $  0.72
</TABLE>

  During  1996, the Bank entered into an agreement to acquire  two
branch offices of First Union Bank of Connecticut.  In addition to
the  two  branches, the transaction will include the  transfer  of
approximately  $25  million in deposits and  certain  loans.   The
transaction is expected to close in the first quarter of 1997.

Other Events
  Effective September 20, 1996, the Bank completed the sale  of  a
branch.   Deposits  totaling  $10.0  million  were  sold  in   the
transaction.   Loans  were excluded from  the  transaction.   This
transaction resulted in a gain of $201,000 being recorded in 1996.

Securities
  The  Company's  securities portfolio consists of mortgage-backed
securities  and  other  debt and equity securities.   The  Company
adopted Statement of Financial Accounting Standards SFAS No.  115,
"Accounting   for   Certain  Investments  in   Debt   and   Equity
Securities," on a prospective basis in the first quarter of  1994.
In accordance with SFAS No. 115, the Company classifies individual
securities  into  one  of  three  categories;  held  to  maturity,
available  for sale or trading.  Securities held to maturity  will
be limited to mortgage-backed securities and other debt securities
which  the Company has the positive intent and ability to hold  to
maturity.   Trading securities, if any, will consist of securities
bought  principally for the purpose of selling them  in  the  near
term.  All other securities held by the Company will be classified
as  available  for  sale.  Under SFAS No. 115,  held  to  maturity
securities  are carried at amortized cost; trading securities  are
carried at market value, with unrealized gains and losses reported
in  earnings;  and available for sale securities  are  carried  at
market  value,  with  unrealized gains and  losses  excluded  from
earnings  and  reported as a separate component  of  stockholders'
equity  (net  of taxes).  Stockholders' equity will  fluctuate  in
future  periods  reflecting changes in the  unrealized  gains  and
losses on securities classified as available for sale.
  Premiums  and  discounts on debt securities are  amortized  into
interest income over the terms of the securities in a manner  that
approximates  the interest method.  Realized gains and  losses  on
sales of securities are computed using the specific identification
method.  Any security which management believes has experienced  a
decline in value which is other than temporary is written down  to
its market value through a charge to earnings.

Loans and Allowance for Losses
  Interest  on  loans is included in income as  earned,  based  on
contractual   rates  applied  to  principal  amounts  outstanding.
Unearned  interest  on  loans  made  on  a  discounted  basis   is
recognized  by  use  of  a method that approximates  the  interest
method.   Generally,  loans are placed on  nonaccrual  status  and
previously accrued interest thereon is charged against income when
principal  or  interest is delinquent 90 days,  unless  management
determines  that the loan status clearly warrants other treatment.
When a loan is in nonaccrual status, interest income is recognized
only to the extent of cash received.
  Loan  origination  and commitment fees, net  of  certain  direct
costs,  are  amortized over the estimated life of the  loan  on  a
basis   which  approximates  the  interest  method,   except   for
origination  and  commitment  fees  on  demand  loans  which   are
amortized on a straight-line basis over the expected life  of  the
loan.   When  loans are prepaid or sold in whole or in  part,  the
unamortized  portion of net fees is recognized in income  at  that
time.
  Mortgage  loans  originated and held for sale in  the  secondary
market  are  carried at the lower of aggregate cost  or  estimated
market value.  Net unrealized losses are recognized in a valuation
allowance through a charge to income.
   The Company adopted SFAS No. 114, "Accounting by Creditors  for
Impairment of a Loan," and SFAS No. 118, "Accounting by  Creditors
for Impairment of a Loan - Income Recognition and Disclosure,"  on
January  1, 1995, with no impact on its results of operations.  As
required  by  SFAS No. 114, loans that are impaired  (due  to  the
inability to collect all amounts due under the contractual  terms)
are measured and valued based on (1) the present value of expected
future  cash  flows  discounted at the loan's  effective  rate  of
interest, (2) the loan's observable market price, or (3) the  fair
value   of   supporting  collateral  if  the  loan  is  collateral
dependent.   To the extent the recorded investment of an  impaired
loan  exceeds the present value of the loan's expected future cash
flows  or  other  measures  of value,  a  valuation  allowance  is
established  for the difference.  The corresponding allocation  or
charge  is  to  either the allowance for loan  losses  or  to  the
provision  for  loan  losses, depending on  the  adequacy  of  the
overall  allowance  for  loan losses.  SFAS  No.  118  allows  for
existing  income recognition practices to continue.  The Company's
method  for  recognition of interest income on impaired  loans  is
consistent with the method for recognition of interest  income  on
all loans.
  The  allowance for loan losses is maintained at a level believed
by  management  to be adequate to absorb losses in the  portfolio.
Management's  determination of the adequacy of  the  allowance  is
based upon an evaluation of the portfolio, the financial condition
of  borrowers  and guarantors, past loss experience, current  real
estate  and economic conditions, the composition and size  of  the
portfolio,  credit risks, the values of underlying collateral  and
other  factors.   The  allowance is increased by  charges  against
income and recoveries on loans previously charged off.

Loans and Foreclosed Properties Held for Sale
  Loans and foreclosed properties held for sale are valued at  the
lower of cost or market.  In developing estimates of market value,
the Company considers information derived from appraisals, selling
prices  of  similar assets and discounted cash flows  using  rates
commensurate with the risk involved.  Loans held for  sale,  other
than  those  originated for sale in the secondary market,  are  on
nonaccrual status.  Payments received for loans on nonaccrual  are
applied  against  the  carrying value.  Changes  in  the  carrying
value, as well as gains or losses realized upon disposition of the
properties,  are reflected in "other nonperforming asset  expense"
in  the  Company's Consolidated Statements of Income in the period
incurred.

Mortgage Servicing Rights
  The  Company  adopted  SFAS No. 122,  "Accounting  for  Mortgage
Servicing  Rights," on January 1, 1996. SFAS No. 122  requires  an
enterprise which acquires mortgage servicing rights through either
the  purchase  or  origination  of mortgage  loans  and  sells  or
securitizes  those loans with servicing retained, to allocate  the
total  cost of the mortgage loans to the mortgage servicing rights
and  the  loans  based  on their relative fair  values  if  it  is
practical to estimate those fair values.  These mortgage servicing
rights  are  amortized over the period of estimated net  servicing
income  and  are  evaluated for impairment  based  on  their  fair
values. Mortgage servicing rights of $243,000 were recorded during
1996.  Amortization of $42,000 was recorded during 1996 and offset
against mortgage servicing fees in the Company's 1996 Consolidated
Statements  of Income.  The carrying value of the Bank's  mortgage
servicing rights is $201,000 at December 31, 1996. The fair  value
of these rights at December 31, 1996 is $386,000.

Transfer of Financial Assets
 The Financial Accounting Standards Board has issued SFAS No. 125,
"Accounting  for Transfers and Servicing of Financial  Assets  and
Extinguishments  of  Liabilities,"  effective  for  transfers   of
financial  assets  made after December 31, 1996 except  for  those
transfers  relating  to secured borrowings, repurchase  agreements
and  similar  transactions which are effective after December  31,
1997.   This Statement provides financial reporting standards  for
the  derecognition and recognition of financial assets,  including
the distinction between transfers of financial assets which should
be recorded as sales and those which should be recorded as secured
borrowings.  The Company believes that the effect of the  adoption
of  SFAS No. 125 will not be material to its financial position or
results of operations.

Premises and Equipment
  Premises  and  equipment are stated at  cost,  less  accumulated
depreciation and amortization.  Depreciation and amortization  are
computed using the straight-line method over the estimated  useful
lives of the assets (3 to 40 years).

Foreclosed Properties
  Foreclosed  properties  consist of properties  acquired  through
foreclosure  or  accepting a deed in lieu of foreclosure  and  are
stated  at  the  lower of fair value less selling costs  or  cost.
Thereafter,  an allowance for losses on foreclosed  properties  is
established  if  the cost of a property exceeds its  current  fair
value  less  estimated costs to sell.  In developing estimates  of
fair   value,  the  Company  considers  information  derived  from
appraisals, selling prices for similar assets and discounted  cash
flows  using rates commensurate with the risk involved.  Costs  of
holding  foreclosed  properties, as well as  gains  or  losses  in
excess   of  the  related  allowance  for  losses  realized   upon
disposition of the properties, are reflected in operations in  the
period incurred.

Material Estimates
  The  consolidated  financial statements have  been  prepared  in
accordance  with  generally  accepted accounting  principles.   In
preparing  the  consolidated financial statements,  management  is
required  to  make  estimates  and  assumptions  that  affect  the
reported amounts of assets and liabilities as of the date  of  the
balance  sheet  and revenues and expenses for the period.   Actual
results could differ from those estimates.
  Material  estimates that are particularly susceptible to  change
relate to the determination of the allowance for loan losses,  the
valuation  of  foreclosed properties acquired in  connection  with
foreclosures  or  in satisfaction of loans and  the  valuation  of
assets held for sale.  In connection with the determination of the
allowance   for  loan  losses  and  the  valuation  of  foreclosed
properties   and   assets  held  for  sale,   management   obtains
independent  appraisals  for  significant  properties   and   uses
independent market information.
  Management believes that the allowance for losses on  loans  and
valuation  of foreclosed properties and assets held for  sale  are
adequate.    While  management  uses  available   information   to
recognize  losses  on  loans  and  foreclosed  properties,  future
additions  to  the  allowance and additional  write-downs  may  be
necessary  based on changes in economic conditions.  In  addition,
various  regulatory  agencies,  as  an  integral  part  of   their
examination process, periodically review the Bank's allowance  for
losses  on loans and valuation of foreclosed properties and assets
held  for  sale.  Such agencies may require the Bank to  recognize
additions  to  the  allowance or additional write-downs  based  on
their  judgment of information available to them at  the  time  of
their examination.

Long-Lived Assets
  The Company adopted SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
on  January 1, 1996.  SFAS No. 121 requires that long-lived assets
and  certain identifiable intangibles to be held and used  by  the
Company  be reviewed for impairment whenever events or changes  in
circumstances indicate that the carrying amount of  an  asset  may
not   be  recoverable.   If  an  asset  is  deemed  impaired,  the
impairment  loss is charged against operations.  The  adoption  of
this accounting standard did not impact the Company's operations.

Other Assets
  Other assets consist principally of prepaid expenses, investment
in  a  joint  venture, investment in real estate, the excess  cost
over net assets acquired (goodwill) from the acquisition of Seconn
Holding   Company  and  The  Bank  of  Mystic,  Inc.,  and   other
miscellaneous  receivables.  Goodwill  is  being  amortized  on  a
straight-line  basis  over 12 years.  On  a  periodic  basis,  the
Company  reviews  goodwill for events or changes in  circumstances
that may indicate that the carrying amount of goodwill may not  be
recoverable.
 Through its wholly-owned subsidiaries, the Bank has an investment
in a real estate property acquired for future bank expansion.  The
property, which includes land, building and building improvements,
is being carried at cost less accumulated depreciation.
  The  Company  participates in a joint  venture  engaged  in  the
acquisition,  development  and sale of  real  estate.   The  joint
venture,  which is 50% or less owned, is accounted for  using  the
equity method of accounting.

Stock Option Plans
  In  October  1995,  SFAS  No. 123, "Accounting  for  Stock-Based
Compensation,"  was  issued. This Statement establishes  financial
accounting  and  reporting  standards  for  stock-based   employee
compensation  plans.   This  includes all  arrangements  by  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  employer's  stock.   This
Statement defines a fair value based method of accounting  for  an
employee  stock option or similar equity instrument and encourages
all  entities to adopt that method of accounting for all of  their
employee  stock  compensation plans.  However, it also  allows  an
entity  to  continue to measure compensation cost for those  plans
using the intrinsic value based method of accounting prescribed by
Accounting  Principles  Board Opinion 25,  "Accounting  for  Stock
Issued  to  Employees."  The Company elected to  remain  with  the
accounting  in  Opinion 25 and make pro forma disclosures  of  net
income  and  earnings  per share as if the fair  value  method  of
accounting defined in this Statement had been applied.   See  Note
10 for the required disclosures.

Income Taxes
 Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial  statement  carrying  amounts  of  existing  assets  and
liabilities  and  their respective tax bases  and  operating  loss
carryforwards.   Deferred tax assets are reduced  by  a  valuation
allowance  which  takes  into account the  uncertainty  of  future
income  and  tax events.  Deferred tax assets and liabilities  are
measured  using  enacted tax rates expected to  apply  to  taxable
income  in  the  years  in which those temporary  differences  are
expected to be recovered or settled.

Disclosures of Fair Value of Financial Instruments
  Fair value estimates are made at a specific point in time, based
on relevant market information and information about the financial
instrument.   These  estimates  do  not  reflect  any  premium  or
discount  that could result from offering for sale, at  one  time,
the   Company's   entire   holdings  of  a  particular   financial
instrument.   In addition, the tax ramifications relating  to  the
realization  of  the  unrealized  gains  and  losses  may  have  a
significant  effect  on fair value estimates  and  have  not  been
considered  in the estimates.  Fair value methods and  assumptions
are set forth below for the Company's financial instruments:

 Cash and Federal Funds Sold
   For these short-term instruments, the carrying amount is a rea-
 sonable estimate of fair value.

 Investment Securities and Mortgage-backed Securities
   Fair  value  equals  quoted market price or  dealer  quote,  if
 available.   If  a  quoted market price is  not  available,  fair
 value  is  estimated  using  quoted  market  prices  for  similar
 securities.
 
 Loans
   For  certain  homogeneous categories of  loans,  such  as  some
 residential  mortgages,  fair value is estimated  by  discounting
 the  future  cash flows using the current rates at which  similar
 loans would be made to borrowers with similar credit ratings  and
 for similar remaining maturities or estimated average lives.
   The  fair  value  of residential mortgages  held  for  sale  is
 estimated  using  quoted  market prices  provided  by  government
 agencies.   The  fair  value of commercial mortgages,  commercial
 business  loans, nonperforming loans and loans held for  sale  is
 derived  by  using management estimates of losses  and  expenses,
 and  by  discounting  the future cash flows  over  the  estimated
 remaining maturities or estimated average lives.

 Deposits
   The  fair  value of demand, savings, and certain  money  market
 deposits  is the amount payable on demand at the reporting  date.
 The  fair  value  of fixed-maturity certificates  of  deposit  is
 estimated  by discounting the future cash flows using  the  rates
 offered  for deposits of similar remaining maturities as of  year
 end.

 FHLB Advances
   The  fair value of existing debt is based on the estimated cost
 to  prepay  the  debt  prior to maturity, or by  discounting  the
 future  cash  flows using the rates prevailing at  year  end  for
 debt of similar remaining maturities.

Net Income Per Share
  Net  income per share is computed by dividing net income by  the
weighted  average common shares and common stock  equivalents,  if
dilutive,  outstanding during the year.  Weighted  average  common
shares  outstanding used to calculate primary earnings  per  share
were  5,616,650,  5,485,553  and 5,209,017  for  the  years  ended
December 31, 1996, 1995 and 1994, respectively.  Weighted  average
common shares outstanding used to calculate fully diluted earnings
per  share  were 5,668,893, 5,615,779 and 5,285,744 for the  years
ended December 31, 1996, 1995 and 1994, respectively.

Cash Flows
  For  purposes of reporting cash flows, cash and cash equivalents
include cash and due from banks and Federal funds sold.

Reclassification
   Certain  reclassifications have been made to the  prior  years'
amounts to conform with the 1996 presentation.

                                

3. Investment Securities and Mortgage-Backed Securities

  On  January 1, 1994, the Company adopted the provisions of  SFAS
No.  115,  "Accounting for Certain Investments in Debt and  Equity
Securities," and reclassified the securities labeled as  held  for
sale  to  available  for  sale.  The net unrealized  gain  on  the
securities  available for sale on January 1, 1994  of  $1,977,000,
less income taxes of $673,000, increased stockholders' equity.  At
December  31,  1995,  the  net  unrealized  gain  of  $813,000  on
securities  available for sale has been shown as  an  increase  of
stockholders' equity, net of related income taxes of $276,000.  At
December  31,  1996,  the  net  unrealized  gain  of  $801,000  on
securities  available for sale has been shown as  an  increase  of
stockholders' equity, net of related income taxes of $329,000.
 A summary of investment and mortgage-backed securities classified
as  available for sale and held to maturity at December  31,  1996
and 1995 follows:

<TABLE>
Available for sale
                                                 December 31, 1996
                               Amortized     Unrealized    Unrealized     Market
(Dollars in thousands)           Cost           Gains         Losses       Value
<CAPTION>
<S>                             <C>            <C>            <C>        <C>
Investment securities
 U.S. Government and agency
  obligations                     $1,494           $-           $(4)       $1,490
 Corporate securities              2,018            -            (5)        2,013
 Foreign governments                 850            -             -           850
 Marketable equity securities      5,574          629             -         6,203
   Total investment securities     9,936          629            (9)       10,556
Mortgage-backed securities
 by issuer
  Fixed rate
   FHLMC                          69,698          232          (545)       69,385
   FNMA                            8,832            -           (52)        8,780
  Adjustable rate
   FHLMC                          17,431          468             -        17,899
   GNMA                            4,883           78             -         4,961
    Total mortgage-backed
     securities                  100,844          778          (597)      101,025
      Total available for sale  $110,780       $1,407         $(606)     $111,581
</TABLE>


<TABLE>
Held to maturity
                                                December 31, 1996
                               Amortized    Unrealized     Unrealized     Market
(Dollars in thousands)           Cost          Gains          Losses       Value
<CAPTION>
<S>                              <C>             <C>            <C>       <C>
Investment securities
 U.S. Government and agency
  obligations                    $20,945         $-             $(4)      $20,941
 Money market instruments         31,769          1              (5)       31,765
      Total held to maturity     $52,714         $1             $(9)      $52,706
</TABLE>

                                                                 
<TABLE>                                                          
Available for sale
                                                 December 31, 1995
                               Amortized     Unrealized     Unrealized    Market
(Dollars in thousands)           Cost           Gains          Losses      Value
<CAPTION>
<S>                             <C>             <C>           <C>        <C>
Investment securities
 U.S. Government and agency
  obligations                    $13,976           $79           $-       $14,055
 Foreign governments                 750             -            -           750
 Marketable equity securities        208           269            -           477
   Total investment securities    14,934           348            -        15,282
Mortgage-backed securities
 by issuer
  Fixed rate
   FHLMC                          61,808           207         (374)       61,641
   FNMA                           10,889            80          (24)       10,945
  Adjustable rate
   FHLMC                          20,759           576            -        21,335
    Total mortgage-backed
     securities                   93,456           863         (398)       93,921
      Total available for sale  $108,390        $1,211        $(398)     $109,203
</TABLE>


<TABLE>
Held to maturity
                                                 December 31, 1995
                               Amortized     Unrealized    Unrealized     Market
(Dollars in thousands)           Cost           Gains         Losses       Value
<CAPTION>
<S>                             <C>               <C>           <C>      <C>
Investment securities
 U.S. Government and agency
     obligations                 $95,281          $40           $(34)     $95,287
 Money market instruments         15,691           10              -       15,701
      Total held to maturity    $110,972          $50           $(34)    $110,988
</TABLE>

 Proceeds from sales and realized gains and losses on investment
and mortgage-backed securities available for sale were as follows:
<TABLE>
                                              Years Ended December 31,
(Dollars in thousands)                  1996            1995          1994
<CAPTION>
<S>                                  <C>            <C>            <C>
Investment securities
 U.S. Government and
  agency obligations
   Proceeds                          $20,968         $9,927         $5,248
   Realized gains                         79             37             34
   Realized losses                       (23)             -              -
 Marketable equity securities
   Proceeds                            2,401              -          3,172
   Realized gains                        310              -            558
   Realized losses                         -              -           (222)
Mortgage-backed securities
 Proceeds                                 $-        $10,245        $11,037
 Realized gains                            -             49            149
 Realized losses                           -              -           (229)
</TABLE>

There were no held to maturity investment securities sold during
 1996, 1995 or 1994.


 The following table sets forth the maturities of the available
for  sale portfolio at December 31, 1996.  U.S. Government  and
agency    obligations,   corporate   securities   and   foreign
governments reflect contractual maturities.

<TABLE>
Amortized Cost
                                       After One   After Five
                             Within     Through      Through       After
(Dollars in thousands)      One Year   Five Years   Ten Years    Ten Years   Total
<CAPTION>
<S>                             <C>       <C>            <C>       <C>     <C>
U.S. Government and agency
 obligations                    $-        $1,494         $-          $-      $1,494
Corporate securities             -         2,018          -           -       2,018
Foreign governments              -           750          -         100         850
                                 -         4,262          -         100       4,362
Mortgage-backed securities                                                  100,844
Marketable equity securities                                                  5,574
  Total amortized cost                                                     $110,780
Weighted average interest
 rate/dividend yield             -%         6.32%         -%       6.63%       6.24%
</TABLE>


<TABLE>
Market Value
                                       After One    After Five
                             Within     Through      Through      After
(Dollars in thousands)      One Year   Five Years   Ten Years   Ten Years    Total
<CAPTION>
<S>                             <C>       <C>            <C>        <C>    <C>
U.S. Government and agency
 obligations                    $-        $1,490         $-         $-       $1,490
Corporate securities             -         2,013          -          -        2,013
Foreign governments              -           750          -        100          850
                                 -         4,253          -        100        4,353
Mortgage-backed securities                                                  101,025
Marketable equity securities                                                  6,203
  Total market value                                                       $111,581
</TABLE>

  The  estimated  average remaining life of  the  mortgage-backed
securities held at December 31, 1996 is approximately 3 years and
the estimated average lives for each security range from 4 months
to  11  years. The actual average will differ from the  estimates
with changes in interest rates and other market conditions.
  At  December  31, 1996, the Company had held to  maturity  U.S.
Government  and  agency obligations and money market  instruments
maturing within one year with an amortized cost and market  value
of $52.7 million and a weighted average interest rate of 5.53%.
  At  December  31, 1996, the Company had securities  pledged  as
collateral  for  various financial purposes which  had  a  market
value and amortized cost of approximately $1.7 million.



4.  Loans and Allowances for Losses

 The following table sets forth loans, by type of collateral, and
the industry classification for commercial loans:

<TABLE>
                                                 December 31,
                                        1996                      1995
                                           Percent of                Percent of
(Dollars in thousands)           Amount    Total Loans     Amount    Total Loans
<CAPTION>
<S>                             <C>           <C>          <C>           <C>
Real estate secured
 1-4 family owner occupied      $159,593       33.5%       $145,173       34.9%
 1-4 family construction           8,290        1.7           6,558        1.6
 Condominiums                      4,995        1.1           4,435        1.1
 1-4 family non-owner occupied    30,170        6.3          25,085        6.0
 5 or more family                  9,653        2.0           6,777        1.6
 Offices                          34,967        7.3          22,559        5.4
 Shopping centers/retail          59,069       12.4          48,979       11.8
 Motels                            8,414        1.8          14,468        3.5
 Construction, land and land
  development                      6,823        1.4           4,808        1.2
 Industrial                        6,532        1.4           4,591        1.1
 Recreational/school               5,498        1.2           5,690        1.4
 All other                        16,777        3.5          15,103        3.6
                                 350,781       73.6         304,226       73.2
Commercial
 Builder/developer                 8,772        1.8           9,007        2.2
 Retail                           10,315        2.2           8,404        2.0
 Services                         15,970        3.3          10,401        2.5
 Personal                          4,032        0.8           3,101        0.8
 Transportation and public
   utilities                       3,296        0.7           2,086        0.5
 All other                         5,037        1.1           6,301        1.5
                                  47,422        9.9          39,300        9.5
Consumer loans
 Second mortgages and home
  equity mortgages                59,674       12.5          55,933       13.5
 Education                         3,209        0.7           2,705        0.7
 Automobile                        6,429        1.3           3,764        0.9
 Recreational vehicle              1,459        0.3           2,113        0.5
 Collateral                        2,990        0.6           3,030        0.7
 Marine                            1,475        0.3           1,463        0.4
 All other                         3,672        0.8           2,707        0.6
                                  78,908       16.5          71,715       17.3

Total loans                     $477,111      100.0%       $415,241      100.0%
Less allowance for loan losses   (13,928)                   (13,168)
Net loans                       $463,183                   $402,073
</TABLE>

 Included in net loans were $180,000 and $423,000 of net deferred
loan  origination fees, net of costs, at December  31,  1996  and
1995, respectively.
                                
  Nonperforming  assets,  exclusive of  nonperforming  loans  and
foreclosed properties held for sale, are as follows:

<TABLE>
                                                                 December 31,
(Dollars in thousands)                                         1996       1995
<CAPTION>
<S>                                                         <C>        <C>
Nonperforming assets
 Nonaccrual loans                                           $ 5,289    $ 8,017
 Nonperforming restructured loans                               537      1,096
 Foreclosed properties                                        1,167        264
Nonperforming assets, exclusive of nonperforming loans
 and foreclosed properties held for sale                    $ 6,993    $ 9,377
Nonperforming  assets as a percent of total loans and
 foreclosed properties, exclusive of nonperforming loans
 and foreclosed properties held for sale                       1.46%      2.25%
</TABLE>

  In  order  to reduce nonperforming loans, management sold  $2.5
million of loans at December 31, 1996 of which $2.0 million  were
nonperforming.    Proceeds  of  $1.5   million   were   received,
transaction  expenses of $36,000 were charged to earnings  and  a
loss  on  the  sale  of  $1.0 million  was  charged  against  the
allowance  for loan losses.  During the fourth quarter  of  1995,
nonperforming  loans and foreclosed properties  with  a  carrying
value  of  $4.5  million were charged down by approximately  $1.7
million.   After the write-downs, the remaining balance  of  $2.8
million  was transferred to loans and foreclosed properties  held
for  sale  at  December  31, 1995.  The  majority  of  the  loans
identified  for sale were commercial real estate and  residential
real estate loans.
  During  1994, nonperforming loans and foreclosed properties  of
$7.8  million  and performing loans of $1.0 million were  charged
down  by $3.3 million to facilitate their disposition.  A portion
of  these  assets were sold in December 1994 and $1.5 million  of
loans and $1.8 million of foreclosed properties were reclassified
as  loans  and foreclosed properties held for sale.  The majority
of  the loans identified for sale were commercial real estate and
residential real estate loans.  In connection with charging  down
the  loans and foreclosed properties for losses estimated  to  be
incurred as a result of the accelerated disposition strategy,  an
additional  provision of $2.2 million was made to  the  allowance
for  loan losses and an additional provision of $1.1 million  was
made to the allowance for losses on foreclosed properties.
  At  December  31, 1996, the remaining balance of  nonperforming
assets  held  for  sale was transferred to loans  and  foreclosed
properties at the lower of cost or fair value as set forth below.

  Activity in loans and foreclosed properties held for sale is as
follows:

<TABLE>
                                                                 December 31,
(Dollars in thousands)                                         1996       1995
<CAPTION>
<S>                <C>                                        <C>        <C>
Nonperforming assets held for sale at January 1               $4,127     $3,261
Transfer from loans                                                -      1,768
Transfer from foreclosed properties                                -      1,035
Proceeds from sales/collections                               (3,728)    (1,937)
Gain on sales                                                    615          -
Transfer to loans                                               (591)         -
Transfer to foreclosed properties                               (423)         -
Nonperforming assets held for sale at December 31                  -      4,127
Performing loans held for sale in the
 secondary market                                                172      1,065
Loans and foreclosed properties held for sale                   $172     $5,192
</TABLE>

  During  1995,  proceeds  from  sales  of  nonperforming  assets
approximated the carrying value of the respective assets.


 Impairment of loans having recorded investments of $6.4 million
at  December 31, 1996 and $10.8 million at December 31, 1995 has
been  recognized in conformity with FASB Statement No.  114,  as
amended  by  FASB  Statement  No.  118.   The  average  recorded
investment in impaired loans was $10.2 and $10.1 million in 1996
and  1995,  respectively.  The total allowance for  loan  losses
related to these loans was $1.8 million on December 31, 1996 and
$1.5  million on December 31, 1995.  Interest income  recognized
on  impaired  loans  during  1996  and  1995  was  $257,000  and
$193,000, respectively.
  If  nonaccrual loans at December 31, 1996, 1995 and  1994  had
remained  current in accordance with contractual payment  terms,
interest   income  of  $689,000,  $1.1  million  and   $716,000,
respectively,  would have been recognized compared  to  interest
income   of   $180,000,  $594,000  and  $402,000,  respectively,
actually recognized.
  Interest income of $22,000, $66,000 and $67,000 was recognized
in  1996,  1995  and  1994, respectively, on restructured  loans
which  were  performing  in accordance with  their  restructured
terms.
  The  Bank  has  one  loan totaling $537,000  classified  as  a
troubled  debt  restructuring at December  31,  1996  which  was
restructured  at  a  rate  lower than  market  at  the  time  of
restructuring.
  As  of December 31, 1996 and 1995, the Company serviced  loans
for  others of approximately $157.3 million and $147.9  million,
respectively.
  Executive  officers of the Company are prohibited  by  Company
policy  from  borrowing  from the Bank  with  the  exception  of
residential  mortgage  loans  and  other  collateralized  loans.
Directors and their associates conducted transactions  with  the
Company  or  Bank  in  the ordinary course of  business.   These
transactions  were  made  on substantially  the  same  terms  as
comparable  transactions with others.  As of December  31,  1996
and  1995, loans to related parties were approximately  $346,000
and $360,000, respectively.

  Changes  in  the allowance for loan losses and  allowance  for
losses on foreclosed properties were as follows:

<TABLE>
                                                         Allowance for
                                                                   Losses on 
                                                                   Foreclosed
(Dollars in thousands)                            Loan Losses      Properties
<CAPTION>
<S>                                                <C>               <C>
Balance at December 31, 1993                        $9,689             $971
Provision                                            3,370            3,130
Charge-offs                                         (5,163)          (4,140)
Recoveries                                             758              620
Balance at December 31, 1994                         8,654              581
Provision                                            5,500               98
Allowance of The Bank of Mystic, Inc.                1,839               35
Charge-offs                                         (3,179)            (714)
Recoveries                                             354                -
Balance at December 31, 1995                        13,168                -
Provision                                            1,400               18
Allowance of The Bank of Southeastern Connecticut    2,506                -
Charge-offs                                         (4,134)             (18)
Recoveries                                             988                -
Balance at December 31, 1996                       $13,928               $-
</TABLE>



5.  Premises and Equipment
<TABLE>
                                                           December 31,
(Dollars in thousands)                               1996                1995
<CAPTION>
<S>                                                <C>                 <C>
Land                                                 $313                $260
Office buildings and improvements                   4,297               3,728
Furniture, fixtures and equipment                   8,264               8,578
Leasehold improvements                              1,842               1,738
 Total                                             14,716              14,304
Less accumulated depreciation and amortization      8,500               8,394
 Total premises and equipment, net                 $6,216              $5,910
</TABLE>

   For  the  years  ended  December  31,  1996,  1995  and  1994,
depreciation   and  amortization  were  approximately   $980,000,
$803,000 and $870,000, respectively.
  The  Company  leases most of its branch office  premises  under
lease agreements which expire at various dates through 2005.  The
Company  has  the option to renew certain leases at  fair  rental
values.   Rental  expense  was approximately  $903,000  in  1996,
$656,000  in 1995 and $396,000 in 1994, after reduction by  rents
received  from  subleases of approximately $59,000,  $40,000  and
$47,000,  respectively.  As of December 31, 1996, minimum  rental
commitments  under  noncancelable operating  leases,  reduced  by
rents to be received from existing noncancelable subleases, were:

<TABLE>
(Dollars in thousands)       Gross Rent   Sublease Rent   Net Rent
<CAPTION>
<S>                           <C>              <C>         <C>
Year
 1997                           $870           $44           $826
 1998                            598             4            594
 1999                            530             -            530
 2000                            461             -            461
 2001                            294             -            294
 2002 and thereafter             608             -            608
 Total leases                 $3,361           $48         $3,313
</TABLE>



6.  Other Assets

 Included in other assets at December 31, are as follows:

<TABLE>
(Dollars in thousands)                                     1996        1995
<CAPTION>
<S>                                                     <C>         <C>
Goodwill (net of accumulated amortization
 of $940 in 1996 and $291 in 1995)                       $4,924      $3,961
Real estate property acquired for future
 bank expansion (net of accumulated
 depreciation of $1.7 million in 1996 and
 $1.5 million in 1995)                                    4,170       4,354
Investment in a joint venture                               504         533
Cash surrender value of life insurance                      760         617
Other                                                     2,244       1,558
 Total other assets                                     $12,602     $11,023
</TABLE>

   Through  its  wholly-owned  subsidiaries,  the  Bank  has   an
investment  in  a real estate property acquired for  future  bank
expansion.   The  property is currently leased to third  parties.
The  operating results of the investment property include  rental
income  of  $569,000 in 1996, $555,000 in 1995  and  $634,000  in
1994. The operating expenses, including depreciation of $194,000,
were  approximately $484,000 during 1996. During  1995  and  1994
operating  expenses,  including  depreciation  of  $280,000   and
$356,000, respectively, approximated rental income.



7.  Deposits

 Deposit balances are as follows:

<TABLE>
                                                December 31,
(Dollars in thousands)                 1996                       1995
                             Average            % of  Average             % of
                              Rate    Amount   Total    Rate     Amount  Total
<CAPTION>
<S>                           <C>    <C>        <C>     <C>     <C>       <C>
Demand deposits                  -%   $69,519    12%       -%    $56,707   10%
Savings                       2.30     97,854    17     2.30      97,515   17
Money market accounts         3.02     99,964    17     3.09      87,785   16
                                     $267,337    46%            $242,007   43%
Time deposits with remaining
 maturities of:
  Up to one year                      205,206    35%            $201,580   35%
  Over one to two years                41,615     7               45,329    8
  Over two to three years              30,043     5               22,597    4
  Over three to four years             28,283     5               24,384    4
  Over four to five years               8,530     1               26,674    5
  Over five years                       4,066     1                5,212    1
    Total time deposits       5.54    317,743    54     5.83     325,776   57
Mortgagors' escrow            3.10      3,654           2.80       3,221
    Total deposits            3.87%  $588,734   100%    4.21%   $571,004  100%
</TABLE>

 Maturities of time deposit accounts with a balance of $100,000 or
more at December 31, 1996, are summarized as follows:

<TABLE>
(Dollars in thousands)
<CAPTION>
<S>                                       <C>
Three months or less                        $7,613
Over 3 through 6 months                      5,583
Over 6 through 12 months                     6,998
Over 12 months                              16,968
 Total                                     $37,162
</TABLE>

  Interest on the time deposits with balances of $100,000 or  more
was $2.3 million in 1996, $1.8 million in 1995 and $1.3 million in
1994.

 Interest on deposits is summarized as follows:

<TABLE>
                                          December 31,
(Dollars in thousands)           1996         1995         1994
<CAPTION>
<S>                           <C>          <C>          <C>
Savings                       $ 2,350      $ 2,300      $ 2,216
Money market accounts           2,746        2,341        2,001
Time deposits                  19,119       17,319       12,021
Mortgagors' escrow                 95           79           67
 Total interest on deposits   $24,310      $22,039      $16,305
</TABLE>



8. FHLB Advances

<TABLE>
                                                        December 31,
(Dollars in thousands)                              1996           1995
<CAPTION>
<S>                                              <C>            <C>
Advances from Federal Home Loan Bank (FHLB)
  4.59% due January 2, 1996                           $-         $2,000
  5.92% due January 4, 1996                            -          4,000
  9.39% due October 26, 1996                           -          1,400
  4.88% due December 10, 1996                          -          3,000
  6.34% due September 28, 2000                     3,000          3,000
  6.41% due September 28, 2001                     3,000          3,000
  6.48% due September 30, 2002                     3,000          3,000
  6.07% due December 21, 2005                      2,928          3,000
 Total FHLB advances                             $11,928        $22,400
</TABLE>

<TABLE>
                                                    Years Ended December 31,
(Dollars in thousands)                                 1995           1994
<CAPTION>
<S>                                                  <C>           <C>
Information on FHLB advances with an original
 maturity under one year:
  Amount outstanding                                 $4,000        $20,000
  Average amount outstanding during year              2,615          7,615
  Maximum outstanding at any month end               10,000         20,000
  Weighted average interest rate at year end           5.92%          6.23%
  Weighted average interest rate during the year       6.26%          4.59%
</TABLE>

As of December 31, 1995 the Bank had one outstanding FHLB advance
with  an  original  maturity under one  year  in  the  amount  of
$4,000,000.  This advance was issued on December 28,  1995  at  a
rate  of  5.92%  and matured on January 4, 1996.  There  were  no
other short term FHLB advances during 1996.

  The  Bank  has a maximum line of credit of $12,046,000  million
under  the Federal Home Loan Bank of Boston's Ideal Way  Line  of
Credit  Program.   Interest is payable at a rate  determined  and
reset  by the Federal Home Loan Bank of Boston on a daily  basis.
As  of December 31, 1996, the rate of interest was 7.32%.  As  of
December  31,  1996, there were no outstanding  borrowings  under
this  program.  During 1996, the maximum amount outstanding under
the  Ideal  Way Line of Credit Program was $2.0 million  and  the
average  amount  outstanding during the year was  $122,000.   The
weighted  average interest rate for borrowings outstanding  under
this program during 1996 was 5.81%.
  First  mortgage loans on residential property, U.S.  Government
and agency obligations, funds deposited at the FHLB of Boston and
all  FHLB  stock  were pledged as collateral to secure  the  FHLB
advances as of December 31, 1996.



9.  Capital

  The  Company  and  the Bank are subject to  various  regulatory
capital   requirements  administered  by  the   federal   banking
agencies.   Failure  to  meet minimum  capital  requirements  can
initiate    certain    mandatory,   and    possibly    additional
discretionary,  actions by regulators that, if undertaken,  could
have  a  direct  material  effect on the  consolidated  financial
statements.  Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the  Bank
must  meet  specific capital guidelines that involve quantitative
measures  of  the  assets, liabilities, and certain  off-balance-
sheet  items as calculated under regulatory accounting practices.
The  capital  amounts  and classification  are  also  subject  to
qualitative  judgments by the regulators about  components,  risk
weightings, and other factors.
  Quantitative  measures  established  by  regulation  to  ensure
capital  adequacy  require the Company and the Bank  to  maintain
minimum  amounts  and  ratios of total and  Tier  I  capital  (as
defined  in the regulations) to risk-weighted assets (as defined)
and  of  Tier  I  capital  (as defined)  to  average  assets  (as
defined).  Management believes, as of December 31, 1996, that the
Company  and  the Bank meet all capital adequacy requirements  to
which they are subject.
  As  of December 31, 1996, the most recent notification from  the
Federal Deposit Insurance Corporation (FDIC) categorized the  Bank
as  well  capitalized  under the regulatory framework  for  prompt
corrective action. To be categorized as well capitalized the  Bank
must maintain minimum total risk-based, Tier I risk-based and Tier
I  leverage  ratios  as  set forth in the  table.   There  are  no
conditions  or  events  since  that notification  that  management
believes have changed the institution's category.
  The  Company's and the Bank's actual capital amounts and  ratios
are also presented in the table.

<TABLE>
                                                                      To Be Well
                                                                   Capitalized Under
                                                   For Capital     Prompt Corrective
                                   Actual       Adequacy Purposes   Action Provisions
(Dollars in thousands)         Amount  Ratio      Amount  Ratio     Amount   Ratio
<CAPTION>
<S>                           <C>      <C>       <C>      <C>      <C>       <C>
As of December 31, 1996
 Total Capital
   (to Risk Weighted Assets)
    Consolidated              $77,017  15.12%    $40,746  8.00%    $50,933   10.00%
    The Bank                   75,288  14.78      40,746  8.00      50,933   10.00
 Tier I Capital
   (to Risk Weighted Assets)
    Consolidated               70,557  13.85      20,373  4.00      30,560    6.00
    The Bank                   68,828  13.51      20,373  4.00      30,560    6.00
 Tier I Capital
   (to Average Assets)
    Consolidated               70,557  10.32      27,355  4.00      34,194    5.00
    The Bank                   68,828  10.06      27,355  4.00      34,194    5.00
As of December 31, 1995
 Total Capital
   (to Risk Weighted Assets)
    Consolidated               76,942  18.07      34,068  8.00      42,585   10.00
    The Bank                   74,272  17.45      34,055  8.00      42,569   10.00
 Tier 1 Capital
   (to Risk Weighted Assets)
    Consolidated               71,522  16.80      17,034  4.00      25,551    6.00
    The Bank                   68,854  16.17      17,027  4.00      25,541    6.00
 Tier I Capital
   (to Average Assets)
    Consolidated               71,522  10.78      26,529  4.00      33,161    5.00
    The Bank                  $68,854  10.38%    $26,521  4.00%    $33,152    5.00%
</TABLE>

  The principal source of revenue for the Company is dividends
received  from the Bank.  The total of all dividends  declared  by
the  Bank in a given calendar year cannot exceed the total of  the
Bank's net profits for that year, plus the Bank's retained profits
from  the  preceding  two years.  Also, the Bank  cannot  pay  any
dividends  that would cause it to have insufficient capital  under
regulatory  guidelines.   These limitations  did  not  affect  the
dividends paid by the Bank to the Company or the dividends paid by
the Company to the shareholders during 1996, 1995 or 1994.

                                

10. Stock Option Plans

  In connection with the conversion to a publicly owned company in
1986,  the  Bank adopted separate stock option plans for employees
and outside directors.  These plans were assumed by the Company as
part  of  the Bank's holding company reorganization.  A  total  of
600,000  shares of stock has been reserved for issuance under  the
employee  and  director stock option plans.   Under  the  employee
stock  option plan, the exercise price of each option  equals  the
market price of the Company's stock on the date preceding the date
of  grant.    Under  the  directors plan,  each  outside  director
receives  options  to purchase common stock at  the  market  value
prevailing  on the date preceding the date he becomes a  director.
All  options  granted under the employee stock option plan  expire
ten  years from the date of grant and fifteen years from the  date
of grant for directors.  Shares are not available for future grant
under either the employee or director plan at December 31, 1996.
  In  1994,  the  Board of Directors adopted an  additional  stock
option plan and incentive plan for employees and directors of  the
Company's  subsidiaries and an additional stock  option  plan  for
outside  directors  of  the  Company.   In  conjunction  with  the
adoption  of  the  1994 outside directors plan, the  1986  outside
directors  plan  was terminated although previous  shares  granted
under this plan remain outstanding.  All shares granted under  the
1994  plans  expire in ten years from date of grant for  employees
and directors of the Company's subsidiaries and fifteen years from
date  of  grant for outside directors of the Company.  A total  of
600,000 shares has been reserved for issuance under the 1994 stock
option  plans.  Shares available for future grant totaled  393,450
at December 31, 1996.
   The   Company   applies  APB  Opinion  No.   25   and   related
Interpretations  in  accounting for  its  plans.  Accordingly,  no
compensation cost has been recognized.  Had compensation cost  for
the  Company's  stock-based  compensation  plans  been  determined
consistent  with  SFAS  No.  123, the  Company's  net  income  and
earnings  per  share  would have been reduced  to  the  pro  forma
amounts indicated below:

<TABLE>

Dollars in thousands,                      1996                       1995
 except share data)               As Reported   Pro forma     As Reported  Pro forma
<CAPTION>
<S>                                  <C>         <C>             <C>        <C>
Net income                           $6,651      $6,450          $5,473     $5,207
Primary earnings per share             1.18        1.15            1.00        .95
Fully diluted earnings per share     $ 1.17      $ 1.14          $  .97     $  .93
</TABLE>

  The effects of applying SFAS No. 123 to the above disclosure may
not be representative of net income in future years.
  The fair value of each option grant is estimated on the date  of
grant  using  the  Black-Scholes  option-pricing  model  with  the
following weighted average assumptions used for grants in 1996 and
1995, respectively:

<TABLE>
                          Dividend    Expected     Risk-Free       Expected
                            Yield    Volatility  Interest Rate   Life in Years
<CAPTION>
<S>                          <C>        <C>            <C>             <C>
1996
 Employee                    3.5%       36.0%          6.4%            5
 Directors of the Bank       3.8        45.3           6.5             6
 Directors of the Company    3.7        43.8           6.7             8
1995
 Employee                    4.7        48.1           6.3             5
 Directors of the Bank       4.2        48.2           6.4             6
 Directors of the Company    4.2%       44.2%          6.7%            8
</TABLE>


   A  summary of the status of the Company's stock option plans
as  of December 31, 1996, 1995 and 1994 and changes during  the
years ended on those dates is presented below:

<TABLE>
                               1996              1995               1994
                                   Weighted          Weighted           Weighted
                                   Average           Average            Average
                                   Exercise          Exercise           Exercise
(In thousands)           Shares     Price   Shares    Price    Shares    Price
<CAPTION>
<S>                     <C>         <C>     <C>       <C>      <C>       <C>
Outstanding at
 beginning of year       429,803    $8.98   376,730   $8.69    368,080   $7.89
 Granted                  75,800    13.62   103,250   10.39     76,250   10.62
 Exercised              (106,903)    9.49   (47,177)   9.72    (41,600)   4.21
 Canceled or expired      (1,750)   10.50    (3,000)  10.19    (26,000)  10.16
Outstanding at end of
 year                    396,950    $9.72   429,803   $8.98    376,730   $8.69
Options exercisable at
 year-end                389,950            424,803            376,730
Weighted average fair
 value of options granted
 during the year           $4.49              $3.97
</TABLE>

   The following table summarizes information about stock options
outstanding at December 31, 1996:

<TABLE>
                              Options Outstanding                Options Exercisable
                                   Weighted                  
                                    Average      Weighted                     Weighted
                        Number     Remaining      Average          Number      Average
Range of             Outstanding  Contractual    Exercise       Exercisable   Exercise 
Exercise Prices      at 12/31/96     Life         Price         at 12/31/96     Price
<CAPTION>
<S>                    <C>           <C>           <C>            <C>           <C>
$2.37 to 3.50           39,000        4.52         $2.53           39,000       $2.53
$3.51 to 7.00           26,500        3.14          6.12           26,500        6.12
$7.01 to 10.50         196,650        6.84          9.69          196,650        9.69
$10.51 to 14.00        134,800       10.55         12.54          127,800       12.58
$2.37 to 14.00         396,950        7.63         $9.72          389,950       $9.68
</TABLE>



11. Preferred Stock Purchase Rights

 On November 21, 1989, the Company's Board of Directors declared a
dividend of one preferred stock purchase right (a Right) for  each
outstanding  share  of  the Company's common  stock.   Each  Right
entitles  a  stockholder to buy 1/100 of a share of the  Company's
Series A Preferred Stock at an exercise price of $45.00 per share,
subject to adjustment.  The Rights are exercisable, and separately
tradeable  apart from the common stock, 10 days after a person  or
group  has (a) become the beneficial owner of 20% or more  of  the
Company's common stock, or (b) become the beneficial owner of  10%
or more of the Company's common stock and is declared by the Board
of  Directors  to  be  an  adverse person,  or  (c)  commenced  or
announced an intention to commence a tender or exchange offer that
would  result  in  the ownership of 20% or more of  the  Company's
common stock.
  Once  the  Rights become exercisable as a result of any  of  the
above  events, other than the commencement of a tender or exchange
offer,  each  Right would entitle the holder to purchase,  at  the
then  prevailing exercise price, shares of Company preferred stock
or  common stock having a value equal to twice the exercise  price
of  the  Right.  Rights held by the acquiring person would  become
void  and  could not be exercised.  If the Company  is  unable  to
authorize  or issue the amount of preferred stock or common  stock
otherwise  called  for  upon exercise of a Right,  the  Board  may
authorize the issuance of other securities, or cash, to holders of
Rights.   Additionally, once the Rights become  exercisable  as  a
result of any of the above events, including the commencement of a
tender  or  exchange offer, and the Company should consolidate  or
merge  with another company and the Company was not the  surviving
company, or if 50% or more of the Company's consolidated assets or
earning power were sold, each Right would entitle a stockholder to
purchase,  at  the then current exercise price, shares  of  common
stock  of the acquiring company having a value equal to twice  the
exercise price of the Right.
  The distribution of the Rights was made on December 4, 1989  to
stockholders of record on that date.  The Rights will  expire  on
December  4, 1999, unless redeemed at the option of the Board  of
Directors  for  one cent per Right.  Redemption  may  occur  only
until 14 days after a person or group acquires 10% or more of the
Company's common stock and is declared to be an adverse person or
14  days  after  a person or group acquires 20% or  more  of  the
Company's  common stock.  Redemption of the Rights,  and  certain
other  actions,  require  authorization  by  a  majority  of  the
continuing  Directors  of  the Company  (defined  essentially  as
directors not nominated or elected by a potential acquirer).



12. Employee Benefits

  The  Company has a noncontributory defined benefit pension plan
covering substantially all employees.  The benefits are based  on
years of service and the employee's compensation during the  last
five  years  of employment.  The Company's funding policy  is  to
contribute annually an amount between the minimum amount required
by  ERISA and the maximum amount that can be deducted for federal
income  tax purposes.  Contributions are intended to provide  not
only  for  benefits attributed to service to date  but  also  for
those expected to be earned in the future.
  The  unrecognized  net  gain shown in  the  table  arises  from
differences  between actual experience and projected  results  as
well  as  from  the effects of changes in actuarial  assumptions.
Actuarial  calculations are based on the  projected  unit  credit
method.

<TABLE>
                                                             December 31,
(Dollars in thousands)                                1996      1995      1994
<CAPTION>
<S>                                                 <C>       <C>       <C>
Actuarial present value of benefit
 obligation, substantially all vested               $3,042    $2,858    $2,004
Plan assets at fair value                            4,151     3,442     2,845
Projected benefit obligation                         4,260     4,002     2,401

Plan assets in excess of (less than)
 projected benefit obligation                         (109)     (560)      444
Unrecognized net gain                                1,081     1,535       290
Unrecognized prior service cost                        (17)      (18)       36
Unrecognized net asset at January 1, 1987
 being amortized over 15 years                        (222)     (267)     (311)
Prepaid pension cost                                  $733      $690      $459

Net pension cost
 Service cost                                         $282      $180      $223
 Interest cost                                         303       192       189
 Return on plan assets                                (195)     (254)     (213)
 Amortization of accumulated loss                        -         -        47
 Amortization of prior service cost                     (2)       (2)        3
 Amortization of transition asset                      (44)      (44)      (44)
Net pension expense                                   $344       $72      $205

Significant actuarial assumptions
 Weighted average discount rate                       7.75%     7.25%     8.25%
 Increase in future compensation                      4.75      4.25      4.25
 Rate of return on assets                             8.50      8.50      8.50
</TABLE>

  As  of  December 31, 1996, pension plan investments  were  $2.5
million  in  the  Bank's  certificates of  deposit,  $207,000  in
various money market accounts, $549,000 in real estate equity and
$868,000 in equity mutual funds independent of the Company.
  In addition to providing pension benefits, the Company provides
certain  health  care  and  life insurance  benefits  to  retired
employees.  Participants become eligible for the benefits if they
retire  after reaching age 55, with 10 or more years of  service.
Benefits are paid for medical coverage, once deductibles and  co-
insurance  requirements  have been met, and  for  life  insurance
coverage based upon provisions of the plan. The Company does  not
fund this plan actuarially.
  The  Company accrues the cost of non-pension-related retirement
benefits  such as health care and life insurance in  the  periods
that employees perform services to earn the benefits.
  The  postretirement  benefit expense for 1996,  1995  and  1994
included the following components:

<TABLE>
                                              December 31,
(Dollars in thousands)                  1996      1995      1994
<CAPTION>
<S>                                      <C>       <C>       <C>
Service cost                             $23       $19       $37
Interest cost on accumulated
 postretirement benefit obligation        51        54        55
Net gain                                  (5)       (8)        -
Postretirement benefit expense           $69       $65       $92
</TABLE>

  The following table reconciles the Plan's funded status to  the
accrued  postretirement  cost  liability  as  reflected  on   the
consolidated balance sheet:

<TABLE>
                                                       December 31,
(Dollars in thousands)                               1996        1995
<CAPTION>
<S>                                                  <C>         <C>
Actuarial present value of accumulated
 postretirement benefit obligation:
  Retirees                                           $388        $451
  Fully eligible active employees                      51          31
  Active employees not eligible to retire             161         289
Total                                                $600        $771

Plan assets at fair value                               -           -
Accumulated postretirement benefit
  obligation in excess of plan asset                 $600        $771
Unrecognized net gain                                 233          31
Accrued postretirement benefit cost liability        $833        $802
</TABLE>

 The weighted average discount rate was 7.75%, 7.25% and 8.50% as
of  December 31, 1996, 1995 and 1994, respectively.  The rate  of
compensation increase, for purposes of calculating life insurance
amounts,  is  4.75%  as  of December 31, 1996,  and  4.0%  as  of
December 31, 1995 and 1994.  The health care cost trend rate used
to  measure the accumulated postretirement benefit obligation  is
8.5%  initially,  at December 31, 1996, decreasing  gradually  to
4.5% by the year 2005; and it was 9.5% initially, at December 31,
1995,  decreasing gradually to 4.5% by the year 2005.  Increasing
the  health  care  cost  trend rate by one  percentage  point  at
December  31,  1996 would increase the accumulated postretirement
benefit  obligation by approximately $129,000  and  net  periodic
postretirement benefit cost by approximately $26,000 (pretax).
  The  Company has a deferred compensation plan for its directors
which  provides  the  participants or  their  beneficiaries  with
annual  payments each year for ten years after the retirement  or
death  of  the  participant.  The liability  arising  from  these
agreements  is  being  accrued over the  participants'  remaining
period  of service so that, at the expected retirement date,  the
then  present  value  of  the  annual  payments  will  have  been
expensed.   The  cost  of the plan to the Company  was  $122,000,
$120,000 and $147,000 in 1996, 1995 and 1994, respectively.
  In  1995,  the  Company established a new Deferred  Compensation
Plan.   The Plan is established and maintained for the purpose  of
providing   unfunded,  non-qualified  deferred  compensation   for
members of the Company's and Bank's Board of Directors, as well as
a select group of officers and highly compensated employees of the
Bank.   A  total  of  $85,400 and $44,200  in  director  fees  was
deferred  under  the Plan in 1996 and 1995, respectively.   During
1996  and  1995,  only outside members of the Board  of  Directors
participated in this plan.
  In  1995,  the  Company established The Norwich Savings  Society
Pension  Restoration Plan.  The Plan is established and maintained
for the purpose of providing unfunded, non-qualified benefits, for
a select group of officers and highly compensated employees of the
Bank,  equal  to  that portion of any pension or  pension  related
benefit which cannot be provided under the terms of the Retirement
Program  by  virtue of the limitations of ERISA and  the  Internal
Revenue  Code of 1986.  In 1996 and 1995, a total of  $48,444  and
$28,902, respectively, was accrued under this plan and placed in a
trust.
  The  Norwich Savings Society maintains a savings and  investment
plan for employees who have completed at least one year of service
and   have   worked  1,000  hours.   Participation  is  voluntary.
Participants  may  contribute  from  2%  to  6%  of  their  annual
compensation  on a pre-tax basis or from 2% to 6% of their  annual
compensation  on  an  after tax basis.  As  of  January  1,  1997,
participants  may  contribute from  2%  to  10%  of  their  annual
compensation  on a pre-tax basis and/or from 2%  to  6%  of  their
annual compensation on an after tax basis not to exceed a total of
10%  of annual compensation.  If the participant contributes on  a
pre-tax basis, the Bank makes a matching contribution to the  plan
equal  to  100% on the employee's contribution up  to  2%  of  the
employee's  pre-tax  earnings.  Participants vest  immediately  in
their  own  contributions and are subject to a seven year  vesting
schedule   on  the  Bank's  contributions.   The  Bank's  matching
contribution was suspended in 1991 and reinstated in January 1995.
In  1996  and 1995, the Bank's matching contribution was  $112,360
and $104,000 respectively.



13. Income Taxes

  For  the  years  ended December 31, 1996,  1995  and  1994,  the
provision (benefit) for income taxes consisted of:

<TABLE>
(Dollars in thousands)                       1996        1995        1994
<CAPTION>
<S>                                        <C>         <C>        <C>
Current
 Federal                                   $3,160        $370          $-
 State                                          9          60          26
                                            3,169         430          26
Deferred
 Federal                                      648       1,343         231
 State                                        905         990         109
 Effect of change in state tax rates            -         275           -
                                            1,553       2,608         340
Change in valuation allowance
  for deferred tax asset                      (95)     (3,138)     (3,292)
Income tax provision (benefit)             $4,627       $(100)    $(2,926)
</TABLE>

 As of December 31, 1996 and 1995, the components of the deferred
income tax asset were:

<TABLE>

(Dollars in thousands)                                 1996           1995
<CAPTION>
<S>                                                  <C>            <C>
Deferred tax asset
 Allowance for loan losses                           $4,989         $4,337
 Allowance for losses on foreclosed properties          113             30
 Net operating loss carryforwards                     1,555          1,917
 Capital loss carryforward                                -             57
 Deferred compensation                                  271            340
 Retiree health benefits                                350            374
 Deferred loan origination fees                           -            172
  Alternative  minimum  tax credit  carryforward          -            174
Total gross deferred tax asset                        7,278          7,401
Less valuation allowance                               (175)          (770)
                                                      7,103          6,631
Deferred tax liabilities
 Unrealized gains on securities                         329            276
 Bond discount accretion                              1,118            642
 Premises and equipment                                 263            406
 Deferred loan origination fees                          26              -
 Other                                                   11            589
Total gross deferred tax liabilities                  1,747          1,913
Net deferred tax asset                               $5,356         $4,718
</TABLE>

  In  order to realize the net deferred tax asset of $5.4 million
at  December  31, 1996, the Company must generate future  taxable
income  (in  addition  to  income from the  reversal  of  taxable
temporary differences) of approximately $13.2 million.  Based  on
the  Company's  recent historical and anticipated future  pre-tax
earnings,  management believes that it is more  likely  than  not
that  the Company's net deferred tax asset will be realized.   At
December 31, 1996, the remaining valuation allowance for The Bank
of Mystic, Inc. deferred tax asset of $500,000 was eliminated and
recorded as a reduction of goodwill.
  The  provision  or benefit for income taxes  differs  from  the
amount computed by applying the statutory federal income tax rate
of  34%  to  income before income taxes and cumulative effect  of
changes in accounting principles for the following reasons:

<TABLE>
                                                         December 31,
(Dollars in thousands)                             1996      1995      1994
<CAPTION>
<S>                                             <C>       <C>       <C>
Tax provision at statutory rate                 $3,835    $1,827      $279
 Increase (decrease) in
  tax resulting from:
   State income taxes, net of federal
     tax benefit                                    603       693        89
   Effect of change in state tax rates                -       275         -
   Change in valuation allowance for
     deferred tax asset                             (95)   (3,138)   (3,292)
   Tax exempt income                                 (8)      (10)      (10)
   Exclusion of dividend income                      (2)       (2)      (19)
   Amortization of goodwill                         211        97         -
   Other, net                                        83       158        27
 Income tax provision (benefit)                  $4,627     $(100)  $(2,926)
</TABLE>

  As  of  December 31, 1996, the Company had federal net operating
loss  carryforwards for tax return purposes of approximately  $2.6
million  attributable to The Bank of Mystic, Inc.  Utilization  of
the  net  operating  loss  carryforwards is  limited  to  $568,000
annually  and  expire beginning in 2005 through 2008.   State  net
operating  loss carryforwards as of December 31, 1996  were  $10.2
million and expire beginning in 1997 through 2000.
  Separate  legislation  was enacted in 1996  to  repeal  most  of
Section  593  of  the  Internal Revenue  Code  pertaining  to  how
qualified  savings institutions calculate their bad debt deduction
for  federal income tax purposes.  This legislation eliminated the
Bank's  ability  to compute its bad debt deduction  utilizing  the
percentage-of-taxable-income method or the  reserve  method  based
upon  experience.  It also suspended the recapture of the pre-1988
tax  bad  debt  reserves and will require the recapture  of  these
amounts  only  under very limited circumstances.  It does  require
the  recapture of the post-1987 tax bad debt reserves over  a  six
year period.  The Bank's pre-1988 tax bad debt reserves which have
been  suspended are $7.8 million and the amount of  the  post-1987
reserves  which will be recaptured into income beginning  in  1996
are  $2.2  million.   Deferred taxes have been  provided  for  the
remainder of the amount to be recaptured.



14. Disclosures About Fair Value of Financial Instruments

 The estimated fair values of the Company's financial instruments
were as follows:

<TABLE>
                                    December 31, 1996           December 31, 1995
                                                 Fair Value                   Fair Value
                                  Book    Fair    versus       Book    Fair    versus
(Dollars in thousands)           Value    Value  Book Value   Value    Value  Book Value
<CAPTION>
<S>                           <C>       <C>       <C>       <C>      <C>       <C>
Financial assets
 Cash and due from banks       $19,419   $19,419      $-     $14,600  $14,600      $-
 Federal funds sold              3,700     3,700       -       4,150    4,150       -
 Mortgage-backed securities
  available for sale           101,025   101,025       -      93,921   93,921       -
 Federal Home Loan Bank stock    3,715     3,715       -       3,715    3,715       -
 Other investment securities
  Held to maturity              52,714    52,706      (8)    110,972  110,988      16
  Available for sale            10,556    10,556       -      15,282   15,282       -
 Loans                         477,111   474,338  (2,773)    415,241  416,990   1,749
 Less: allowance for loan
  losses                       (13,928)        -  13,928     (13,168)       -  13,168
 Net loans, excluding those
  held for sale                463,183   474,338  11,155     402,073  416,990  14,917
 Loans held for sale              $172      $172      $-      $3,273   $3,273      $-
Financial liabilities
 Deposits, including
  mortgagors' escrow          $588,734  $591,707  $2,973    $571,004 $575,152  $4,148
 FHLB advances                  11,928    11,936       8      22,400   22,788     388
</TABLE>

 In addition to the above, there are certain off-balance sheet
financial instruments, as described in Note 15, the fair value of
which is insignificant.



15. Commitments and Contingencies

  Cash  and  due from banks withdrawal and usage restrictions  of
$4.6  million  existed as of December 31, 1996,  primarily  as  a
result  of  Federal  Reserve  requirements  to  maintain  certain
average balances.
  There are various legal proceedings against the Company arising
out  of  its  normal course of business.  It is  the  opinion  of
management,  after  consultation with  legal  counsel,  that  the
outcome  of  existing  litigation will have no  material  adverse
effect  on the financial position or future operating results  of
the Company.
 The Company is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs  of  its  customers.   Commitments  to  extend  credit  are
agreements to lend to a customer as long as there is no violation
of  any  condition  established  in  the  contract.   Commitments
generally  have  fixed  expiration  dates  or  other  termination
clauses  and  may  require payment of  a  fee.   These  financial
instruments involve, to varying degrees, elements of  credit  and
interest rate risk.  The Company's exposure to credit loss in the
event  of  nonperformance by the other  party  to  the  financial
instrument  is  represented by the contractual  amount  of  those
instruments.   Since  the  making of a  commitment  precedes  the
funding  of a loan, the Company's normal underwriting and  credit
policies  are  applied before a commitment is  made.   Management
believes that the Company controls the credit risk through credit
approvals  and  limits, portfolio monitoring procedures  and  the
receipt of collateral when deemed necessary.

<TABLE>
                                                            December 31,
(Dollars in thousands)                                     1996       1995
<CAPTION>
<S>                                                     <C>        <C>
Financial instruments with off-balance sheet risk
   Commitments to extend credit
    Mortgage
     Residential
       Fixed                                             $3,432       $542
       Variable                                             739      5,955
     Commercial
       Fixed                                              1,188          -
       Variable                                             500      1,886
     Residential and commercial construction
       Fixed                                             12,552      7,370
       Variable                                           1,665      2,477
    Commercial
       Fixed                                              1,011        710
       Variable                                          19,578     10,534
    Consumer
     Home equity line of credit
       Fixed                                                  -        909
       Variable                                          18,259     19,201
     Other
       Fixed                                              1,201      1,046
       Variable                                           1,252        729
    Letters of credit                                     3,220      1,054
                                                        $64,597    $52,413
</TABLE>

  At  December 31, 1995, the Company had a commitment to sell $25
million  of  1-4 family residential loans to FHLMC.  Of  the  $25
million commitment, $16 million was at the option of the Company.
The  Bank  filled $14.8 million of the commitment.  The remaining
commitment  of $10.2 million was forgiven by FHLMC.  In  December
1996,  the  Company entered into a new commitment with  FHLMC  to
sell  $25  million of 1-4 family residential loans  to  FHLMC  by
December 31, 1997.  Of the $25 million commitment, $20.5  million
is at the option of the Company.



16. Condensed Financial Information of Norwich Financial Corp.
(Parent Company only)

<TABLE>
Condensed Balance Sheets                                       December 31,
(Dollars in thousands)                                    1996            1995
<CAPTION>
<S>                                                    <C>             <C>
Assets
  Cash                                                  $1,742              $-
  Dividend and other assets                                306           6,877
  Investment in Bank subsidiary                         74,463          73,287
   Total assets                                        $76,511         $80,164
Liabilities and Stockholders' Equity
  Payable to Bank subsidiary and other payables            $13          $4,144
  Stockholders' equity                                  76,498          76,020
   Total liabilities and stockholders' equity          $76,511         $80,164
</TABLE>

<TABLE>
Condensed Statements of Income                 Years Ended December 31,
(Dollars in thousands)                        1996      1995      1994
<CAPTION>
<S>                                         <C>       <C>       <C>
Income
  Equity in undistributed income of
   Bank subsidiary                          $1,241    $1,200    $1,351
  Dividend from Bank subsidiary              5,600     4,500     3,000
   Total income                              6,841     5,700     4,351
  Noninterest expense                          190       227       604
   Net income                               $6,651    $5,473    $3,747
</TABLE>

<TABLE>
Condensed Statements of Cash Flows                    Years Ended December 31,
(Dollars in thousands)                                1996      1995      1994
<CAPTION>
<S>                                                 <C>       <C>       <C>
Operating Activities
  Net income                                        $6,651    $5,473    $3,747
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Equity in undistributed income of
     Bank subsidiary                                (1,241)   (1,200)   (1,351)
    Decrease (increase) in dividend
     and other assets                                6,571    (2,566)   (1,374)
    Increase (decrease) in payable to
     Bank subsidiary and other payables             (4,131)    2,279     1,865
    Net cash provided by operating activities        7,850     3,986     2,887
Financing Activities
  Proceeds from exercise of stock options            1,251       587       273
  Purchase of treasury stock                        (4,109)   (1,821)     (668)
  Cash dividends paid                               (3,250)   (2,752)   (2,492)
        Net cash used by financing activities       (6,108)   (3,986)   (2,887)
  Net increase in cash and cash equivalents          1,742         -         -
  Cash and cash equivalents at beginning of year         -         -         -
  Cash and cash equivalents at end of year          $1,742        $-        $-
</TABLE>


<TABLE>
           Selected Quarterly Consolidated Financial Data (unaudited)
  
                                               1996 Quarterly Results(a)
(Dollars in thousands,
 except share data)                    Fourth      Third      Second     First
<CAPTION>
<S>                                   <C>         <C>        <C>       <C>
Interest income                       $13,148     $13,083    $13,090   $12,968
Interest expense                        6,031       6,296      6,456     6,559
Net interest income                     7,117       6,787      6,634     6,409
Loan loss provision                       600         400        200       200
Mortgage service fees                     157         154        160       168
Gain (loss) on loans sold or
 held for sale                             30          35        (45)       (2)
All other noninterest income              812         868        832       698
Noninterest expenses                    4,539       4,321      4,702     4,574
Income tax provision                    1,036       1,335      1,165     1,091
Net income                              1,941       1,788      1,514     1,408
Primary earnings per share               0.35        0.32       0.27      0.25
Fully diluted earnings per share         0.35        0.32       0.27      0.24
</TABLE>


<TABLE>
                                                1995 Quarterly Results
(Dollars in thousands,
 except share data)                    Fourth      Third      Second(d)  First
<CAPTION>
<S>                                   <C>         <C>        <C>       <C>
Interest income                       $12,535     $12,192    $11,978   $10,434
Interest expense                        6,328       6,052      5,723     4,694
Net interest income                     6,207       6,140      6,255     5,740
Loan loss provision                     3,600(b)      600        600       700
Mortgage service fees                     168         167        170       162
Gain (loss) on loans sold or
 held for sale                            (39)        (35)        12        (3)
All other noninterest income              627         591        516       574
Noninterest expenses                    4,487       4,003      4,274     3,615
Income tax provision (benefit)         (2,438)(c)     827        747       764
Net income                              1,314       1,433      1,332     1,394
Primary earnings per share               0.24        0.26       0.23      0.27
Fully diluted earnings per share         0.23        0.25       0.23      0.27
</TABLE>


(a)The  financial data reflects the acquisition of Seconn Holding
   Company on January 2, 1996.
(b)The  increase in the fourth quarter was to facilitate the 1995
   strategy   to   accelerate   the   disposition   of   selected
   nonperforming loans and foreclosed properties and provide  for
   the  continued  impact of the weak local economy  on the  loan
   portfolio.   See  Note  4  on Notes to  Consolidated Financial
   Statements.
(c)Benefit  in  the  fourth  quarter  was  attributable  to  a
   reduction  of the valuation allowance against the deferred  tax
   asset.
(d)The  financial data reflects the acquisition of  The  Bank  of
   Mystic, Inc. on April 1, 1995.




                                
                            Form 10-K
Securities and Exchange Commission
Washington, D.C. 20540
_____________________________________________________________________________
Mark One

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

    For the fiscal year ended                       December 31,1996
 
    OR

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

_____________________________________________________________________________
    For the transition period from                   to

    Commission file number                           34-0-17138

    Exact name of registrant as specified
    in its charter                                   Norwich Financial Corp.

    State  or  other jurisdiction of
     incorporation or organization                   Delaware

    IRS Employer Identification No.                  06-1226755

    Address of principal executive offices           4 Broadway, Norwich, CT

    Zip Code                                         06360
  
    Registrant's telephone number,
     including area code                             860/889-2621
  
    Securities registered pursuant to
     Section 12(b) of the Act:
      Title of each class                            None
      Name of each exchange on which registered

    Securities registered pursuant to
     section 12(g) of the Act:
      Title of class                                 Common Stock, $.01 
                                                       Par Value
_____________________________________________________________________________  
    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 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  by  check mark if disclosure of  delinquent  filers
  pursuant  to  Item  405  of Regulation  S-K  is  not  contained
  herein,  and will not be contained, to the best of registrant's
  knowledge,   in  definitive  proxy  or  information  statements
  incorporated by reference in Part III of this Form 10-K or  any
  amendment to this Form 10-K.   Yes [X]    No [ ]

    5,399,641 shares of Common Stock were outstanding at  January
  31,  1997.  The aggregate market value of the voting stock held
  by   non-affiliates  of  Norwich  Financial  Corp.   (5,236,092
  shares)  totaled $99,486,000 based upon the closing  price  (of
  $19.00  per  share)  as  quoted on the NASDAQ  National  Market
  System, as of January 31, 1997.

    This  Annual Report and Form 10-K incorporate into  a  single
 document the requirements of the accounting profession  and  the
 Securities  and  Exchange Commission. Portions  of  the  Norwich
 Financial  Corp. Proxy Statement for the 1997 Annual Meeting  of
 Stockholders  are  incorporated by reference into  Part  III  of
 this report.





                      Cross Reference Index
                                
                                                                       Page
                                                               
PART 1   Item  1 - Business------------------------------------------    53
         Item  2 - Properties----------------------------------------    67
         Item  3 - Legal Proceedings---------------------------------    68
         Item  4 - Submission of Matters to a Vote of
                   Security Holders----------------------------------    68
         Executive Officers of the Registrant------------------------    68


PART II  Item  5 - Market for Registrant's
                   Common Equity and Related Shareholder
                   Matters-------------------------------------------    68
         Item  6 - Selected Consolidated Financial Data--------------     6
         Item  7 - Management's Discussion and Analysis of
                   Financial Condition and Results of Operations-----     7
         Item  8 - Financial Statements and Supplementary Data-------    20
         Item  9 - Changes in and Disagreements with Accountants
                   on Accounting and Financial Disclosure------------    69


PART III Item 10 - Directors and Executive Officers of the
                   Registrant----------------------------------------    69
         Item 11 - Executive Compensation----------------------------    69
         Item 12 - Security Ownership of Certain Beneficial Owners
                   and Management------------------------------------    69
         Item 13 - Certain Relationships and Related Transactions----    69

PART IV  Item 14 - Exhibits, Financial Statement Schedules,
                   and Reports on Form 8-K---------------------------    69






PART 1
Item 1 - Business

  The main offices of Norwich Financial Corp. (NFC or the Company)
and  The  Norwich  Savings Society (the Bank)  are  located  at  4
Broadway,  Norwich,  Connecticut 06360.  The telephone  number  is
(860)889-2621.   The Company was organized under the laws  of  the
State of Delaware on December 10, 1987, to operate principally  as
a  bank  holding  company for the Bank.   The  Bank  is  the  sole
subsidiary of the Company and its principal asset.
 The Bank originates real estate, commercial and consumer loans in
southeastern  Connecticut,  funding  its  operations  through  the
taking  of deposits in the same market area.  In addition  to  the
traditional banking services, the Bank also offers a full range of
investment  products including brokerage services through  Liberty
Securities  and insurance products through the Savings  Bank  Life
Insurance Company.

Principal Market Area

  Headquartered in Norwich, which is located in New London County,
and  about  midway  along  the New York to  Boston  corridor  with
convenient access via interstate highways and Amtrak service,  the
Bank  serves  communities throughout eastern Connecticut  with  16
full  service branch offices in addition to the main office and  a
complementary network of 21 ATM machines.  The acquisition of  The
Bank  of  Southeastern Connecticut and a de  novo  branch  in  New
London  early  in  1996  netted three new  branches.   The  Bank's
customer  base  is essentially comprised of depositors  from  area
communities.   The composition of these area communities  includes
residential,  shoreline and industrial in addition  to  the  urban
areas of Norwich, New London, Groton and Willimantic.
  Traditionally a defense oriented economy, dominated  by  General
Dynamic's Electric Boat Division, the Bank's market area has  been
diversifying to accommodate defense downsizing which continues  to
impact  the  area's  economy.  The gaming  industry  is  currently
anchored by the Mashantucket Pequot's Foxwoods Casino which is one
of the region's largest employers and is continuing to expand.   A
second  casino,  Mohegan  Sun Resort, just  south  of  Norwich  in
Uncasville  opened  in  October of 1996 and  is  operated  by  the
Mohegan  Tribe.  Tourism continues to grow throughout  the  region
with   the  expansion,  for  example,  of  the  Mystic  Marinelife
Aquarium.   The  Nautilus  Submarine and  Museum  and  The  Mystic
Seaport  both represent existing major attractions of  the  region
while  North Stonington is the planned home for a Six Flags  Theme
Park,  a  family oriented endeavor which will enhance the  tourist
draw  to the area.  In addition to the regional tourism and gaming
concentration, eastern Connecticut's economy also benefits by  the
presence   of  employers  such  as  Pfizer,  Inc.  expanding   its
pharmaceutical research facility in Groton and the  University  of
Connecticut locating its Marine Science and Technology  Center  in
Groton.

Lending and Investment Activities

  The Bank is permitted by statute to invest its funds in a variety of
assets,   of   which  the  primary  forms  are  loans  and  investment
securities.    The  Bank's  loan  portfolio  includes   variable   and
fixed-rate  real  estate  loans, consumer  loans  and  commercial  and
industrial  loans.   The Bank may also invest in  a  wide  variety  of
investment  securities  including  mortgage-backed  securities,   U.S.
Government   and  agency  obligations,  corporate  debt   obligations,
municipal obligations and marketable common or preferred stocks listed
on  a  national securities exchange or shares of registered investment
companies.   See  "Management's Discussion and Analysis  of  Financial
Condition  and Results of Operations," which includes a table  setting
forth  the  average dollar amounts and types of loans  and  investment
securities held.
  Management  believes  the  Bank continues  to  conduct  its  lending
activities  in  accordance  with  appropriate  underwriting  criteria.
While  the criteria may not allow the Bank to take advantage of  every
opportunity,  they  are  designed  to  ensure  that  the   Bank   will
accommodate   credit-worthy  borrowers.  Underwriting  standards   are
reviewed on an on-going basis.
  In  originating loans, the Bank competes with other  area  financial
institutions which offer homogeneous products.

 The composition of the Bank's loan portfolio is as follows:

<TABLE>
                                                     December 31,
                     1996              1995              1994              1993             1992
(Dollars in
 thousands)     Amount     %      Amount    %       Amount     %      Amount    %      Amount    %
<CAPTION>
<S>            <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>     <C>      <C>
Loans
Real estate -
  mortgage     $335,668  70.4%   $292,860  70.5%   $250,809  72.3%   $237,131  70.7%  $230,306  68.0%
Real estate -
 construction    15,113   3.2      11,366   2.7       5,304   1.5       6,619   2.0      6,287   1.9
Commercial and
 financial       47,422   9.9      39,300   9.5      32,387   9.3      31,398   9.3     34,320  10.1
Consumer         78,908  16.5      71,715  17.3      58,741  16.9      60,361  18.0     67,890  20.0
               $477,111 100.0%   $415,241 100.0%   $347,241 100.0%   $335,509 100.0%  $338,803 100.0%
</TABLE>


Residential Mortgage Loans

 The Bank is authorized, under its charter, to engage in residential
and  commercial  mortgage activity within or outside  the  State  of
Connecticut.  As a matter of current policy, the Bank restricts  its
mortgage  activities  to  properties located  within  the  State  of
Connecticut.    The  Bank  has  placed  its  primary   emphasis   on
residential  mortgage  lending directly  to  individual  applicants,
utilizing  its branch office network and mortgage originators.   The
Bank  also  solicits applications from builders and developers,  but
these loans are generally limited to nonspeculative projects.
 During 1996, the Bank originated 574 residential mortgage loans for
$63.0  million  as  compared to 1995 when it  originated  447  loans
totaling  $49.1 million.  The mortgage loans originated during  1996
consisted of 155 refinances, 78 of which were previously with  other
institutions  and  419  purchases/new  construction.    The   latter
amounted to 73% of the Bank's overall residential mortgage volume.
  The Bank currently originates adjustable rate first mortgage loans
(ARMs)  secured by residential properties which it retains  for  its
own  portfolio  as  whole  loans or as  mortgage-backed  securities.
These loans adjust annually (1-year ARM).  Adjustable rate mortgages
carry  a  lifetime cap on aggregate adjustments of 6% and an  annual
cap of 2%.
  In  addition to the adjustable rate mortgage product, the  Bank
offers  a  variety  of fixed-rate residential mortgage  products.
The  majority  of  these  loans are  underwritten  for,  and  are
available to be sold in, the secondary market, to either  Federal
National  Mortgage  Association (FNMA) or the Federal  Home  Loan
Mortgage Corporation (FHLMC).  These loans have a maximum  dollar
amount of  $214,600.
  The Bank also offers "Jumbo" mortgages, which individually  are
in  excess of $214,600.  These mortgages are currently capped  at
$350,000 if originated for retention in the Bank's own portfolio.
These   mortgages  are  underwritten  in  conformity   with   the
requirements of a "private investor" secondary market.  The  Bank
is  able  to  sell its jumbo mortgages in the "private  investor"
market  and may originate 15 and 30-year fixed rate mortgages  up
to $650,000, if it chooses, for sale.
  The  Bank generally lends up to 80% of the appraised  value  of
owner  occupied residential property, and up to 70% of  non-owner
occupied   residential  property.   Residential   borrowers   are
required  to obtain private mortgage insurance covering the  loan
balance  in  excess of 80% of appraised value.  All  conventional
first   mortgages  include  "due-on-sale"  clauses,   which   are
provisions  giving  the  lender  the  right  to  declare  a  loan
immediately due and payable in the event that the borrower  sells
or  otherwise  disposes of the real property  which  secures  the
loan.  "Due-on-sale" clauses contained in residential real estate
mortgages have been ruled enforceable in the State of Connecticut
by the Connecticut Supreme Court, the state's highest court.  The
United  States  Congress, in the Garn Act, also  has  upheld  the
enforceability of such clauses.
  The  Bank  both  purchases  and sells  mortgage  loans  without
recourse.   As  of December 31, 1996, the Bank's  loan  portfolio
included  approximately $2.8 million of mortgage loans  purchased
from other lenders, the majority of which are secured by property
located  within the State of Connecticut.  At December 31,  1995,
the  Company had a commitment to sell $25 million of  1-4  family
residential loans to FHLMC.  Of the $25 million commitment, $16.0
million was at the option of the Company.  The Bank filled  $14.8
million  of  the commitment.  The remaining commitment  of  $10.2
million  was  forgiven by FHLMC.  In December 1996,  the  Company
entered into a new commitment with FHLMC to sell $25 million of 1-
4 family residential loans to FHLMC by December 31, 1997.  Of the
$25  million  commitment, $20.5 million is at the option  of  the
Company.  The Bank intends to fill this commitment from new fixed
rate loan originations in 1997.
  The  Bank  offers  a  full  range of  other  mortgage  products
including financing for vacation and multi-family homes.  Most of
the  Bank's  mortgage programs require that the Bank  collect  an
origination fee.  This fee is generally calculated at 2%  of  the
mortgage amount.
 For the foreseeable future, the Bank expects to continue to be a
major  provider  of residential mortgages in its primary  lending
area.


Commercial Loans

 The Bank also engages in commercial lending activities.

<TABLE>
                                              December 31, 1996
(Dollars  in  thousands)            Amount          % of             % of
                                              Commercial Loans    Total Loans
<CAPTION>
<S>                                 <C>              <C>             <C>
Permanent commercial mortgages      $142,738          72.5%          29.9%
Commercial business loans             47,422          24.0            9.9
Construction mortgages                 6,823           3.5            1.4
                                    $196,983         100.0%          41.2%
</TABLE>

  As  of  December  31, 1996 and 1995, the total commercial  loan
portfolio represented $197.0 million or 28.8% and $162.2  million
or  24.0%,  of total assets, respectively.  The majority  of  the
Bank's commercial business loan portfolio consists of loans which
adjust  periodically  to a margin over a  contractual  index  and
therefore are rate sensitive.
  For  selected  categories of loans outstanding,  the  following
table  shows the maturities and sensitivities of loans to changes
in interest rates.

<TABLE>
                                               December 31, 1996
                                                    Maturing
                                  -------------------------------------------       
                                            After One
                                   Within   But Within  After Five
(Dollars in thousands)            One Year  Five Years     Years        Total
<CAPTION>
<S>                               <C>         <C>         <C>        <C>
Permanent commercial mortgages     $7,771     $40,578     $94,389    $142,738
Commercial business loans          22,622      20,030       4,770      47,422
Construction mortgages              5,698       1,111          14       6,823
                                  $36,091     $61,719     $99,173    $196,983
</TABLE>


<TABLE>
                                           December 31, 1996
(Dollars in thousands)                   Maturing After One Year
<CAPTION>
<S>                                             <C>
Predetermined interest rate
 Permanent commercial mortgages                  $16,338
 Commercial business loans                         5,709
 Construction mortgages                              110
Adjustable interest rate
 Permanent commercial mortgages                  118,629
 Commercial business loans                        19,091
 Construction mortgages                            1,015
                                                $160,892
</TABLE>

  The  Bank currently has full commercial lending powers, subject
only  to  applicable restrictions of Connecticut law on loans  to
any  one borrower.  In addition, as a matter of policy, the  Bank
generally limits its total extension of debt to one borrower to a
maximum  of  $3.5  million.   In determining  a  borrower's  debt
limitation,  the  Bank  includes  all  direct  debt,   contingent
liabilities  (guarantees and endorsements) and  debt  to  related
entities.   The  Bank continually reviews its loan  policies  and
procedures  in  order to minimize its exposure  to  one  obligor.
These  reviews are based on a number of factors and from time-to-
time  the internal limit to any one obligor may change.  In March
1993, federal regulations restricting the loan-to-value ratios at
which  banks  may lend became effective.  These regulations  were
developed  pursuant to the Federal Deposit Insurance  Corporation
Improvement Act of 1991 (FDICIA) and set the following limits  on
loan-to-value ratios for various commercial properties:  Raw Land
-   65%;  Real  Estate  Development  -  75%  and  Non-residential
Construction  -  80%.   Commercial loans collateralized  by  real
estate  are presently underwritten with a loan-to-value ratio  of
no  greater than 75%; however, under certain conditions the loan-
to-value  ratio  may  equal 80% which is within  the  supervisory
limits  established in FDICIA.  In the case of undeveloped  land,
the loan-to-value ratio is 60%.
  Beginning  in  1989, the commercial loan portfolio  experienced
significant  loan  quality  problems,  resulting  in  write-offs,
transfers to nonperforming asset categories and restructured  and
renegotiated  loans,  which have had a  negative  impact  on  the
Bank's   profitability.    Management  constantly   reviews   its
underwriting  procedures and philosophy with regard to  desirable
business, with the focus on loan quality and broadening  interest
rate spreads to enhance profitability.
  Concentration  of  risk continues to  be  a  major  concern  of
management.  The Bank is located in eastern Connecticut  and  the
largest  portion of the Bank's portfolio continues to be  derived
from  this  market.   There  are both real  and  perceived  risks
associated   with  the  region's  job  market.   The   State   of
Connecticut   continues  to  be  dependent   on   defense-related
businesses;  principally, Pratt & Whitney, Sikorsky and,  in  the
Bank's   principal  market  area,  Electric  Boat,  where   total
employment is forecasted to dip to 7,000 by 1997.
  However,  the economy of southeastern Connecticut continues  to
focus on tourism and other leisure-time activities, including the
Mashantucket  Pequot's Tribal Nation which owns  Foxwoods  Resort
Casino  and  the  Mohegan Tribe of Indians of  Connecticut  which
operates the Mohegan Sun Resort Casino.  Total employment at both
casinos is projected to exceed 14,000 in 1997.
   Construction  loans  involve  uncertainties  inherent  to  the
estimation  of  construction costs,  delays  arising  from  labor
problems,  material shortages and other contingencies which  make
it  difficult to evaluate accurately the total funds required  to
complete a project and, consequently, the requisite loan-to-value
ratios.   These  risks  are in addition to  normal  credit  risks
related to other real estate loans.

Consumer Loans

  The Bank's consumer loans include second mortgages, home equity
lines  of credit, home improvement loans, automobile loans,  boat
loans, recreational vehicle (RV) loans, education loans, personal
loans,  cash  reserve loans and land loans.  The Bank  originates
for  its own portfolio both fixed rate second mortgage loans  and
lines  of credit secured by the equity in the borrower's  primary
residence.    Due   to  a  decline  in  value  of   single-family
residences,   the  Bank  periodically  reinspects   property   to
determine current valuation.  The Bank presently underwrites  its
home  equity credit lines at a loan-to-value no greater than 80%,
including any existing first mortgage.  Additionally, the Bank is
offering a line of credit to customers who are currently  closing
residential  first mortgages with the Bank.  Under this  program,
the combined first and second mortgages may reach a loan-to-value
ratio of 80% maximum.
  The Bank also is authorized to make educational loans under the
Connecticut  Guaranteed Student Loan Program.   The  interest  on
loans   in  this  program  is  partially  subsidized  and   fully
guaranteed by the federal government.
  Connecticut savings banks may invest, without restriction as to
a  percentage of assets, in lines of credit, overdraft loans  and
credit  card  loans.   With  the  acquisition  of  The  Bank   of
Southeastern  Connecticut on January 2, 1996, the  Bank  acquired
outstanding credit card loans.  The balance of credit card  loans
at December 31, 1996 is $120,000.
  Total  consumer loans increased $7.2 million or 10.0% from  the
end  of  1995 to the end of 1996.  The increase was primarily  in
the  second mortgages and home equity lines of credit, which were
$3.7 million (6.7%) higher at the end of 1996 than at the end  of
1995.   Automobile  loans increased $2.7 million  (70.8%)  during
1996.   Other  categories of consumer loans reflected  minor  and
offsetting increases and decreases.

Nonperforming Assets

 The Bank's policy is to cease accrual of interest on loans which
are  90  days or more past due and to reverse any interest earned
but   not   paid.   Additionally  management  may  designate   as
nonaccrual,  loans  which  are  currently  performing  based   on
knowledge it has obtained relative to specific circumstances that
may  result  in  the  borrower being unable to  pay  interest  or
otherwise perform in accordance with contractual obligations.  At
December 31, 1996, there were no management designated nonaccrual
loans.
  The Bank has made certain concessions on restructured loans  in
an  attempt  to  maximize  the ultimate collectability  of  these
loans.   These  concessions  may include  deferring  or  lowering
principal payments, reducing interest rates to below market rates
charged  for loans having similar risks, adding interest  due  to
the  principal balance and collecting interest at a reduced rate.
While  all of these loans are performing in accordance  with  the
restructured  terms,  management  has  designated   $537,000   as
nonaccrual, as of December 31, 1996.
  In addition to the nonaccrual loans of $5.3 million, management
has  identified  $3.7 million of potential problem  loans  as  of
December  31,  1996.   These loans are  currently  performing  in
accordance  with  the  loan terms and,  therefore,  are  accruing
interest.
  The  Company's policy is to carry foreclosed properties at  the
lower of fair value minus estimated costs to sell or cost, net of
the  allowance for losses.  Review and evaluation of the carrying
values  of  foreclosed  properties are performed  on  an  ongoing
basis.
   Nonperforming  assets,  exclusive  of  "loans  and  foreclosed
properties  held for sale," showed improvement year-over-year  of
$2.4 million.  This positive trend occurred primarily as a result
of charge-offs taken during 1996.

<TABLE>
                                                          December 31,
(Dollars in thousands)                     1996    1995      1994      1993      1992
<CAPTION>
<S>                                     <C>      <C>       <C>      <C>       <C>
Nonperforming assets, exclusive of
 loans and foreclosed properties
 held for sale
   Nonaccrual loans                      $5,289   $8,017   $7,702   $16,021   $24,658
   Nonperforming restructured loans         537    1,096      602       769     3,470
   Foreclosed properties, before
    allowance for losses                  1,167      264    1,597     8,368    13,951
Total nonperforming assets, exclusive
 of nonperforming loans and
 foreclosed properties held for sale     $6,993   $9,377   $9,901   $25,158   $42,079
Total allowance for losses              $13,928  $13,168   $9,235   $10,660   $14,651
Nonperforming assets as a percent
 of total loans and foreclosed
 properties, exclusive of nonperforming
 loans and foreclosed properties held
 for sale                                  1.46%    2.25%    2.83%     7.02%    11.65%
Total allowance for losses to total
 nonperforming assets, exclusive of
 nonperforming loans and foreclosed
 properties held for sale                199.17%  140.43%   93.27%    42.37%    34.82%
</TABLE>


<TABLE>
                                                      December 31,
(Dollars in thousands)                 1996     1995     1994     1993     1992
<CAPTION>
 <S>                                 <C>      <C>      <C>     <C>      <C>
Nonperforming assets, exclusive
 of loans and foreclosed
 properties held for sale
  Real estate
   Residential                       $1,775   $1,636   $1,587   $5,524   $7,738
   Commercial                         3,747    5,098    6,150   13,506   24,245
                                      5,522    6,734    7,737   19,030   31,983
  Commercial                          1,331    1,978    1,583    5,131    8,895
  Consumer                              140      665      581      997    1,201
                                     $6,993   $9,377   $9,901  $25,158  $42,079
Nonperforming loans and foreclosed
 properties held for sale
 Nonperforming loans                     $-   $2,208   $1,450       $-       $-
 Foreclosed properties                    -    1,919    1,811        -        -
Total nonperforming loans and
 foreclosed properties held for sale     $-   $4,127   $3,261       $-       $-
</TABLE>


<TABLE>
                                                          December 31,
                                                   1996                  1995
(Dollars in thousands)                               Percent of            Percent of
                                            Amount      Total      Amount     Total
<CAPTION>
<S>                                         <C>         <C>         <C>      <C>
Foreclosed property by type, exclusive of
 foreclosed properties held for sale
  Residential mortgage                        $299       25.6%        $-         -%
  Commercial mortgage                          701       60.1         95      36.0
  Commercial                                   155       13.3        169      64.0
  Consumer                                      12        1.0          -         -
                                            $1,167      100.0%      $264     100.0%
</TABLE>



<TABLE>

Asset Quality                                      Years Ended December 31,
(Dollars in thousands)                   1996      1995      1994      1993      1992
<CAPTION>
<S>                                  <C>       <C>       <C>       <C>       <C>
Loans outstanding at year end        $477,111  $415,241  $347,241  $335,509  $338,803
Average loans outstanding            $460,642  $393,705  $350,306  $346,448  $374,813
Allowance for loan losses, beginning
 of the year                          $13,168    $8,654    $9,689   $12,343   $19,241
Provision (recovery)                    1,400     5,500     3,370         -      (426)
Allowance - The Bank of Mystic, Inc.        -     1,839         -         -         -
Allowance - The Bank of Southeastern
 Connecticut                            2,506         -         -         -         -
Loans charged off
 Real estate - mortgage                 2,646     1,540     3,718     1,585     1,761
 Real estate - construction               134       465       282         3       719
 Commercial business                      997       838       975     1,450     4,086
 Consumer                                 357       336       188       397       692
  Total loans charged off               4,134     3,179     5,163     3,435     7,258
Recoveries on loans previously
 charged off
 Real estate - mortgage                   522       158       171       396       315
 Commercial business                      333       145       533       234        62
 Consumer                                 133        51        54       151       409
  Total recoveries                        988       354       758       781       786
  Net loans charged off                 3,146     2,825     4,405     2,654     6,472
Allowance for loan losses, end
 of year                              $13,928   $13,168    $8,654    $9,689   $12,343
Net loans charged off as a
 percentage of average loans
 outstanding                             0.68%     0.72%     1.26%     0.77%     1.73%
Allowance as a percentage of
 loans outstanding at year end           2.92%     3.17%     2.49%     2.89%     3.64%
</TABLE>

 Management's judgment as to the amount of the provisions for losses on
loans  and  foreclosed  properties takes  into  account  a  variety  of
factors,  including (a) the experience of management and the Bank,  (b)
management's  analysis  of  individual  loans  and  the  overall   risk
characteristics  of  the  loan  portfolio,  (c)  the  results  of   the
statutorily  mandated examination of the loan portfolio  by  regulatory
agencies,  independent reviews and evaluations of  loans  by  the  Loan
Committee  of  the  Bank's  Board  of  Directors  and  the  independent
auditors' annual audit and (d) current economic conditions.
  In  allocating the allowance for loan losses, amounts allocated to the
individual  categories  of  loans include (1)  allowances  for  specific
impaired  loans, (2) an allocation of remaining allowance amounts  based
on  the  experience  of management and the Bank, (3)  the  overall  risk
characteristics  of  the individual loan category and  (4)  the  current
economic conditions that could affect the individual loan categories.

<TABLE>
                                                        December 31,
                             1996            1995           1994            1993             1992
                     Allowance        Allowance       Allowance       Allowance        Allowance
                      for Loan   % of  for Loan  % of  for Loan  % of  for Loan   % of  for Loan  % of
(Dollars in thousands) Losses   Total   Losses  Total   Losses  Total   Losses   Total   Losses  Total
<CAPTION>
<S>                   <C>      <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>      <C>
Real estate -
  mortgage             $9,314   66.9%   $8,854   67.2%  $5,389   62.3%  $6,037   62.3%   $5,474   44.3%
Real estate -
  construction            747    5.4       657    5.0      575    6.6      700    7.2     1,055    8.6
Commercial business     2,207   15.8     2,089   15.9    1,625   18.8    1,868   19.3     5,294   42.9
Consumer                1,660   11.9     1,568   11.9    1,065   12.3    1,084   11.2       520    4.2
                      $13,928  100.0%  $13,168  100.0%  $8,654  100.0%  $9,689  100.0%  $12,343  100.0%
</TABLE>


Investment Activities

 Connecticut law has provided savings banks chartered in the State
of  Connecticut  authority  to make a wide  range  of  investments
deemed  to  be prudent by their boards of directors.   Subject  to
various  restrictions, they traditionally have been  able  to  own
commercial  paper, bonds of government agencies, including  states
and  municipalities, corporate bonds, mutual fund shares, debt and
equity obligations issued by creditworthy entities, whether traded
on  public securities exchanges or placed privately for investment
purposes  and  interests in real estate located in or  outside  of
Connecticut without limitations as to use.
  However, beginning on December 31, 1991, FDICIA has limited  the
ability of state-chartered banks to invest in "equity securities."
"Equity  securities"  for  this purpose  include  standard  equity
interests  and  also  most  interests  in  real  estate.    FDICIA
generally  permits  state-chartered  banks  to  invest  in  equity
securities  only to the same extent as national banks.   With  the
limited  exception  of  certain convertible  securities,  national
banks  may  not invest in equity securities.  Nonetheless,  FDICIA
permits certain insured state banks to obtain an exception to  the
equity investment rules that permits banks to invest in marketable
common  or  preferred  stocks  listed  on  a  national  securities
exchange or share of registered investment companies in an  amount
equal  to  up to 100% of the Bank's Tier 1 capital.  The Bank  has
been  granted  this  exception.  As  of  December  31,  1996,  the
marketable equity securities portfolio was $6,203,000.
  Because of FDICIA's equity investment restrictions, one  of  the
Company's subsidiaries must divest a real estate property interest
of  $504,000 by December of 1998.  In accordance with FDICIA,  the
Bank  has filed a Divestiture Plan with the FDIC stating that  its
subsidiary  will  sell  this  remaining  interest  as  quickly  as
prudently possible, and in any event before December 19, 1998.
 Due to a continuing shift in the Bank's mix of liabilities toward
rate  sensitive  deposit  instruments,  it  has  been  the  Bank's
practice to utilize a variety of investment vehicles to achieve  a
better  match  with deposit maturities.  In addition to  providing
for   liquidity   requirements,  the  Bank  maintains   investment
portfolios to employ funds not currently required for its  various
lending  activities.   Having a portion of  assets  in  short-term
securities  has  proved beneficial to the Bank during  periods  of
rapidly rising interest rates.  During such periods, as short-term
securities mature, the proceeds can be reinvested in securities at
market  rates.  In a declining rate environment, loans are  likely
to   have   higher  yields  than  debt  securities.   Nonetheless,
management  considers  it appropriate to  utilize  its  investment
portfolio  to  ameliorate the effects on the Bank of  future  rate
volatility in the financial markets.

 A summary of investment and mortgage-backed securities classified
as  available for sale and held to maturity at December 31,  1996,
1995 and 1994, are as follows:

<TABLE>
                                         1996                1995               1994
                                 Amortized   Market  Amortized  Market  Amortized   Market
(Dollars in thousands)              Cost      Value     Cost     Value     Cost      Value
<CAPTION>
Available for sale
<S>                              <C>       <C>       <C>       <C>       <C>       <C>
U.S. Government and agency
  obligations                      $1,494    $1,490   $13,976   $14,055   $14,809   $14,311
 Corporate securities               2,018     2,013         -         -         -         -
 Foreign governments                  850       850       750       750       750       750
 Marketable equity securities       5,574     6,203       208       477       208       284
 Mortgage-backed securities       100,844   101,025    93,456    93,921    81,283    77,587
    Total available for sale     $110,780  $111,581  $108,390  $109,203   $97,050   $92,932

Held to maturity
 U.S. Government and agency
  obligations                     $20,945   $20,941   $95,281   $95,287  $114,694  $114,480
 Money market instruments          31,769    31,765    15,691    15,701         -         -
    Total held to maturity        $52,714   $52,706  $110,972  $110,988  $114,694  $114,480

      Total investments          $163,494  $164,287  $219,362  $220,191  $211,744  $207,412
</TABLE>




Deposits and Other Sources of Funds

  The  Bank  seeks  to  attract money market  and  demand  deposit
accounts as well as certificates of deposit from both personal and
business  sources.   Individual Retirement Accounts  and  passbook
savings  are  also  primary sources of funds.  The  shortest  term
certificate  of deposit now offered is 91 days while  the  longest
maturity is 8 years.
   In  June  1993,  FDICIA's  Truth-in-Savings  provisions  became
effective.  These provisions significantly increased the federally
mandated  disclosures that all banks must provide with respect  to
deposit  accounts and also restricted banks' flexibility regarding
how   interest  may  be  calculated.   The  additional  costs   of
compliance  with  the  Truth-in-Savings  requirements   were   not
material.

Competition
 
 The Company's market area is highly competitive with a wide range
of  financial institutions including commercial banks, both mutual
and  stock owned savings banks, savings and loan associations  and
credit  unions.  In addition to traditional banking  institutions,
the  Bank  also  competes  with insurance and  finance  companies,
investment  companies and brokers for the same funds.  The  Bank's
market  area  has  become  more competitive  in  recent  years  as
multibranch  regional  institutions  have  resulted  from   recent
mergers  and  acquisitions, new products and rate structures  have
been  introduced  and  customers of  financial  institutions  have
become more sophisticated.
  Under  Connecticut  banking  laws, mergers  or  acquisitions  of
Connecticut  banks  and  bank holding  companies  with  banks  and
holding  companies of another state are permissible provided  that
the  other  state's interstate banking law is no more  restrictive
than  Connecticut's.  Connecticut banking laws also allow  out-of-
state  bank holding companies to establish a financial institution
in  Connecticut subject to the same conditions.  As  of  September
1995,   federal  interstate  banking  legislation  extended   this
interstate bank holding company acquisition authority nationwide.
  From  time-to-time, competing financial institutions  set  rates
higher  than  market rates to attract or retain deposits,  a  fact
which may cause upward pressure on the Bank's rate structure or  a
loss of deposits.

Employees

  As  of December 31, 1996, the Company and the Bank had 234 full-
time  equivalent  employees, including  49  officers.   Management
considers the Bank's relations with its employees to be good.  The
Bank's  employees are not represented by any collective bargaining
group.

Regulation and Supervision

  As  a  Connecticut-chartered capital  stock  savings  bank,  the
deposits  of  which  are insured by the Federal Deposit  Insurance
Corporation   (the  FDIC),  the  Bank  is  subject  to   extensive
regulation  and  supervision  by  both  the  Connecticut   Banking
Commissioner and the FDIC.  The Company also is subject to certain
regulations  of  the  Board of Governors of  the  Federal  Reserve
System  (the  Federal  Reserve Board) and the Connecticut  Banking
Commissioner.  This governmental regulation is intended  primarily
to  protect  depositors and the FDIC's Bank  Insurance  Fund,  not
stockholders.

Connecticut Regulation

   The  Connecticut  Banking  Commissioner  regulates  the  Bank's
internal  organization  as  well  as  its  deposit,  lending   and
investment  activities.  The approval of the  Connecticut  Banking
Commissioner   is   required,  among   other   things,   for   the
establishment   of   branch  offices  and   business   combination
transactions.   The  Connecticut  Banking  Commissioner   conducts
periodic examinations of the Bank.  Many of the areas regulated by
the  Connecticut  Banking  Commissioner  are  subject  to  similar
regulation by the FDIC.
  Connecticut  banking laws grant banks broad  lending  authority.
Subject to certain limited exceptions, however, total secured  and
unsecured loans made to any one obligor pursuant to this statutory
authority  may  not  exceed  25% of the Bank's  capital,  surplus,
undivided profits and loss reserves.
  The  Bank  is prohibited by Connecticut banking law from  paying
dividends  except from its net profits, which are defined  as  the
remainder of all earnings from current operations.  The  total  of
all  dividends declared by the Bank in any calendar year may  not,
unless   specifically   approved  by   the   Connecticut   Banking
Commissioner,  exceed the total of its net profits  of  that  year
combined with its retained net profits of the preceding two years.
These  dividend  limitations can affect the  amount  of  dividends
payable  to stockholders of the Company because dividends received
by  the Company from the Bank are the primary source of funds  for
the  Company.  Under resolutions adopted by the Board of Directors
of  the Bank on October 23, 1991, no dividend will be declared  or
paid by the Bank which, in the judgment of the Board, would reduce
the  Bank's  leverage capital ratio below 8%, or any higher  level
which  the  Board considers appropriate in light of the prevailing
economic  circumstances.  These resolutions will remain in  effect
until amended or revoked by subsequent action of the Board.
  Under  Connecticut  banking  law,  no  person  may  acquire  the
beneficial  ownership  of more than 10% of  any  class  of  voting
securities  of  a  bank chartered by the State of  Connecticut  or
having  its  principal office in Connecticut  or  a  bank  holding
company thereof, or after obtaining 10%, increase said holdings to
25%  or  more,  without  the prior notification  of  and  lack  of
disapproval by the Connecticut Banking Commissioner.
 Any state-chartered bank meeting statutory requirements may, with
the  approval  of the Connecticut Banking Commissioner,  establish
and operate branches in any town or towns within the state.
  The Connecticut Interstate Banking Act permits Connecticut banks
to  engage  in stock acquisitions of, and mergers with, depository
institutions in other states with reciprocal legislation.  All  of
the  other New England states, and a majority of the other states,
have  enacted reciprocal legislation.  Federal interstate  banking
legislation   extended  this  interstate  bank   holding   company
acquisition  authority nationwide as of September  1995.   Several
interstate  mergers  and acquisitions involving  Connecticut  bank
holding companies or banks with offices in the Bank's service area
and  bank holding companies or banks headquartered in other states
have  been completed.  Under recent federal and state legislation,
interstate  banking and branching authority will be  expanded  and
facilitated.   Such  legislation may lead to increased  interstate
banking activity in Connecticut and elsewhere.

FDIC Regulation

  The  Bank's  deposit accounts are insured by the Bank  Insurance
Fund  of  the FDIC, generally, to a maximum of $100,000  for  each
insured  depositor.   As  with  all  state-chartered  FDIC-insured
banks,   the   Bank  is  subject  to  extensive  supervision   and
examination  by  the FDIC and also is subject to FDIC  regulations
regarding many aspects of its business, including types of deposit
instruments  offered and permissible methods  for  acquisition  of
funds.
  Pursuant  to  FDICIA, in September 1992, the FDIC implemented  a
system  of  risk-related deposit insurance assessments.  Initially
under  the  new  system,  beginning  January  1,  1993,  insurance
premiums  for  all  banks varied between .23% and  .31%  of  total
deposits, depending upon the capital level and supervisory  rating
of  the  institution.   On May 31, 1995,  when  the  desired  Bank
Insurance  Fund (BIF) reserve ratio of 1.25% was achieved  by  the
FDIC, a new risk-based assessment rate schedule of .04% to .31% of
total deposits was established commencing on June 1, 1995.   As  a
result of this new schedule, during the third quarter of 1995, the
Company benefited from a reduction in the Bank's deposit insurance
premium  as  well as from a refund for deposit insurance  premiums
paid in previous quarters.  The FDIC evaluates the adequacy of its
assessment  schedule and may adjust the schedule every six  months
as  the FDIC deems necessary to maintain the BIF reserve ratio  at
the designated level.  Effective January 1, 1996, the schedule was
further  revised resulting in assessment rates ranging from  .000%
to  .270%  of total deposits, subject to the statutory requirement
that  all  institutions  pay at least  $2,000  annually  for  FDIC
insurance.   The lower FDIC assessment rates continued  throughout
1996.
 As a result of the Deposit Insurance Act of 1996, a new Financing
Corporation (FICO) Payment Computation was established.  Beginning
January 1, 1997, and for the three following years, BIF-assessable
deposits  will  be  charged  20% of  the  rate  imposed  on  SAIF-
assessable deposits.  The FICO BIF annual rate for 1997 is .013%.
  FDIC  risk-based capital requirements became fully effective  at
the end of 1992.  Under these requirements, all FDIC-insured banks
are required to maintain minimum levels of "capital" based upon an
institution's total "risk-weighted assets."  For purposes of these
requirements,  "capital" is comprised of both Tier 1  capital  and
Tier 2 capital.  Tier 1 capital consists primarily of common stock
and  limited amounts of perpetual preferred stock.  Tier 2 capital
consists  of  the  allowance for loan losses (subject  to  certain
limitations),  certain  preferred  stock,  subordinated  debt  and
convertible securities.  In determining total capital, the  amount
of Tier 2 capital may not exceed the amount of Tier 1 capital.   A
bank's  total  "risk-weighted assets" are determined by  assigning
the  bank's  assets and off-balance sheet items (e.g., letters  of
credit)  to one of four risk categories based upon their  relative
credit  risk.   Under  the  regulations,  the  greater  the   risk
associated  with an asset, the greater the amount of  such  assets
that   will   be   subject  to  the  capital  requirements.    All
FDIC-insured banks are required to maintain minimum ratios of Tier
1  and  total  capital  to risk-weighted assets  of  4%  and   8%,
respectively.  At December 31, 1996, the Bank's Tier 1  and  total
risk-based  capital  ratios were 13.51% and 14.78%,  respectively,
compared  to 16.17% and 17.45% in 1995.  Management believes  that
the  Bank  will remain in full compliance with applicable  capital
requirements.
 A leverage ratio requirement adopted by the FDIC became effective
in  1991.   Under this requirement, all FDIC-insured  institutions
are  required  to  maintain  a ratio of common  equity,  excluding
intangible  assets, to total assets of at least 3%  for  the  most
highly rated institutions and 4% to 5% for most institutions.   By
resolution adopted on October 23, 1991, the Board of Directors  of
the  Bank adopted a policy that the Bank will endeavor to maintain
leverage  capital  at or in excess of 8% of  total  assets.   This
policy  will  remain  in  effect  until  amended  or  revoked   by
subsequent  action  of the Board.  As of December  31,  1996,  the
Bank's leverage capital ratio was 10.06%, compared to 10.38% as of
December 31, 1995.
  In  addition,  FDICIA categorizes banks based on  five  separate
capital  levels  and triggers certain mandatory and  discretionary
federal banking agency responses for institutions that fall  below
certain  capital  levels.   These  categories  range  from   "well
capitalized"  for  the  most  highly capitalized  institutions  to
"critically    undercapitalized"   for   the   least   capitalized
institutions.  A bank is categorized as "well capitalized"  if  it
maintains  a leverage ratio of at least 5%, a total capital  ratio
of at least 10%, a Tier 1 risk-based capital ratio of at least 6%,
and  is not subject to a capital order or directive.  Based on its
regulatory  capital ratios at December 31, 1996, the  Company  and
the Bank are well capitalized as defined in federal banking agency
regulations.
  FDICIA  also restricts the ability of FDIC-insured state  banks,
such  as  the  Bank,  to  acquire and retain  equity  investments.
Generally,  state  banks may hold equity securities  only  to  the
extent permitted for national banks.  However, FDICIA also permits
certain state banks to acquire or retain equity investments in  an
amount  up  to  100%  of Tier 1 capital in either  (1)  common  or
preferred stock listed on a national securities exchange,  or  (2)
shares  of  a  registered investment company.  The Bank  has  been
granted this exception.
  Pursuant  to FDICIA, in December 1993, the FDIC issued  a  final
rule concerning activities of FDIC-insured state banks.  Under the
final  rule,  an insured state bank must obtain the  FDIC's  prior
consent  before  directly, or indirectly through a  majority-owned
subsidiary,  engaging "as principal" in any activity that  is  not
permissible  for  a  national bank unless one  of  the  exceptions
contained  in  the regulation applies.  The final  rule  sets  out
application procedures for requesting FDIC's consent;  provides  a
phase-out  period  for activities which are not  approved  by  the
FDIC;  and  sets out conditions that may be imposed at the  FDIC's
discretion  when approving applications.  The final rule  has  not
had a material impact on the business of the Bank.
  Pursuant  to  FDICIA, in June 1995, the federal bank  regulatory
agencies issued final rules establishing standards for safety  and
soundness   at   FDIC-insured  institutions  and   their   holding
companies.   These rules became effective in August  1995.   These
standards  formalize in regulation the fundamental standards  used
by  the federal bank regulatory agencies to assess the operational
and  managerial qualities of an institution.  The rules  establish
operational, managerial, asset quality and earnings standards  for
FDIC-insured banks and their holding companies and standards  that
prohibit  as  an  unsafe  and  unsound  practice  the  payment  of
compensation that is excessive or could lead to material financial
loss  to  such  institutions.  These  standards  are  designed  to
identify  potential safety and soundness concerns and ensure  that
action is taken to address those concerns before they pose a  risk
to  the  deposit insurance funds.  The Bank is in compliance  with
these standards.
  FDIC  insurance of deposits may be terminated by the FDIC, after
notice  and  hearing, upon a finding by the FDIC that the  insured
institution has engaged in unsafe or unsound practices, or  is  in
an  unsafe  or  unsound condition to continue operations,  or  has
violated  any  applicable law, regulation, rule or  order  of,  or
conditions  imposed by, the FDIC.  The Bank is not  aware  of  any
practice, condition or violation that might lead to termination of
its deposit insurance.

Federal Reserve System  Regulation

  Under  the regulations of the Federal Reserve System, depository
institutions  such  as the Bank are required to maintain  reserves
against  their transaction accounts.  These regulations  generally
require  the  maintenance of reserves of 3.0% against  transaction
accounts of $52.0 million or less and 10.0% of the amount of  such
accounts  in excess of such amount.  These amounts and percentages
are subject to adjustment by the Federal Reserve Board.
 The Company is subject to regulation by the Federal Reserve Board
as  a  registered bank holding company.  The Federal Bank  Holding
Company  Act  of  1956,  as amended (the BHCA),  under  which  the
Company  registered,  limits  the types  of  companies  which  the
Company  may acquire or organize and the activities in which  they
may   engage.   In  general,  a  bank  holding  company  and   its
subsidiaries are prohibited from engaging in or acquiring  control
of  any  company  engaged  in nonbanking  activities  unless  such
activities  are  so  closely related to  banking  or  managing  or
controlling banks as to be a proper incident thereto.  The Company
has  not  determined which, if any, of these or other  permissible
nonbanking activities it might seek to engage in.
  The  Federal  Reserve  Board  has established  capital  adequacy
guidelines for bank holding companies that are similar to the FDIC
capital  requirements described above.  As of December  31,  1996,
the  Company's  Tier  1 and total risk-based capital  ratios  were
13.85%  and  15.12%,  respectively,  and  the  Company's  leverage
capital  ratio was 10.32%, compared to 16.80%, 18.07% and  10.78%,
respectively,  as of December 31, 1995.  Management believes  that
the Company will remain in full compliance with applicable capital
requirements.
  Under the BHCA, a bank holding company is required to obtain the
prior  approval  of  the Federal Reserve Board  to  acquire,  with
certain  exceptions, more than 5% of the outstanding voting  stock
of   any  bank  or  bank  holding  company,  to  acquire  all   or
substantially  all  of  the  assets of  a  bank  or  to  merge  or
consolidate with another bank holding company.
  As  described previously, the Connecticut Interstate Banking Act
and  recent  federal legislation specifically permits  Connecticut
bank  holding  companies and banks to acquire or  be  acquired  by
banks  or  bank holding companies in other states with  reciprocal
merger  and  acquisition  laws.  As  of  September  1995,  federal
interstate  banking  legislation  extended  this  interstate  bank
holding   company   acquisition  authority  nationwide.    Federal
antitrust  laws place limitations on the acquisition of banks  and
other businesses.
 Under the BHCA, the Company, the Bank, and any other subsidiaries
are prohibited from engaging in certain reciprocal arrangements in
connection  with  any  extension of credit  or  provision  of  any
property or services.  The Bank is subject to certain restrictions
imposed  by  the Federal Reserve Act on making any investments  in
the  stock  or  other  securities of the Company  or  any  of  its
subsidiaries,  and  the  taking of such  stock  or  securities  as
collateral for loans to any borrower.
  The Bank also is subject to certain restrictions imposed by  the
Federal  Reserve  Act on the amount of loans it can  make  to  the
Company   or   its   other  affiliates.   Such   loans   must   be
collateralized as provided by the Federal Reserve Act.  The amount
of  such loans may not exceed (when aggregated with certain  other
transactions between the Bank and the Company) 10% of the  capital
stock  and  surplus  of  the Bank.  Since  the  formation  of  the
Company, there have been no loans made by the Bank to the Company.
  The Company is required under the BHCA to file annually with the
Federal Reserve Board reports of operations, and it, the Bank, and
any  other subsidiaries are subject to examination by the  Federal
Reserve  Board.   In  addition, the Company,  as  a  bank  holding
company,  is  registered with the Connecticut Banking Commissioner
under  the  Connecticut Bank Holding Company and Bank  Acquisition
Act.

Effect of Governmental Policy

   Banking   is   a   business  that  depends  on  interest   rate
differentials.  One of the most significant factors affecting  the
Company's  and the Bank's earnings is the difference  between  (1)
the  interest rates paid by the Bank on its deposits and its other
borrowings  and  (2) the interest rates received by  the  Bank  on
loans  extended to its customers and securities held in the Bank's
investment portfolio.  The value and yields of its assets and  the
rates  paid  on  its  liabilities  are  sensitive  to  changes  in
prevailing  market  rates of interest.   Thus,  the  earnings  and
growth  of  the  Bank  will  be  influenced  by  general  economic
conditions,  the  monetary  and fiscal  policies  of  the  federal
government  and policies of regulatory agencies, particularly  the
Federal  Reserve  Board, that implement national monetary  policy.
The  nature and impact of any future changes in monetary  policies
cannot be predicted.
  The  present  bank regulatory climate is undergoing  significant
change, both as it affects the banking industry itself and  as  it
affects   competition  between  banks  and  nonbanking   financial
institutions.  There has been significant regulatory change in the
regulation  and operations of savings associations,  in  the  bank
merger  and  acquisition area, in the products and services  banks
can  offer, and in the nonbanking activities in which bank holding
companies can engage.  In part as a result of these changes, banks
are competing actively with other types of depository institutions
and  with  nonbank financial institutions, such  as  money  market
funds,  brokerage firms, insurance companies and  other  financial
services  enterprises.  It is not possible at this time to  assess
what  impact  these  changes in the regulatory climate  ultimately
will have on the Bank.
 Moreover, certain legislative and regulatory proposals that could
affect  the Bank and the banking business in general are  pending,
or  may  be  introduced, before the United  States  Congress,  the
Connecticut  General  Assembly and various governmental  agencies.
These  proposals  include  measures that  may  alter  further  the
structure,  regulation and competitive relationship  of  financial
institutions,  and  that  may  subject  the  Bank   to   increased
regulation,  disclosure and reporting requirements.  In  addition,
the  various banking regulatory agencies frequently propose  rules
and regulations to implement and enforce existing legislation.  It
cannot  be  predicted whether or in what form any  legislation  or
regulations will be enacted or the extent to which the business of
the Company and/or the Bank will be affected thereby.
  Separate  legislation  was enacted in 1996  to  repeal  most  of
Section  593  of  the  Internal Revenue  Code  pertaining  to  how
qualified  savings institutions calculate their bad debt deduction
for  federal  income tax purposes.  The impact of this legislation
is immaterial to the financial position of the Bank.


Item 2 - Properties

  In  addition  to the main office of the Company and  the  Bank,
located at 4 Broadway, Norwich, Connecticut, the Bank operated 16
banking  branches  located throughout  New  London,  Tolland  and
Windham counties in 1996.  The following table sets forth certain
information regarding the banking offices of the Bank.
                                                                    Lease
                                           Date     Owned or      Expiration
 Office         Location                 Opened      Leased          Date

 Main Office     4 Broadway                1824      Owned      Not Applicable
                 Norwich, CT

 Norwichtown     45 Town Street            1956      Leased       9/30/2001
                 Norwich, CT

 Ledyard         Rt. 12 & King's Highway   1964      Leased       10/1/2004
                 Gales Ferry, CT

 West Main       624 W. Main St.           1972      Leased       1/31/2002
                 Norwich, CT

 Taftville       30 Norwich Avenue         1975      Leased       7/31/2000
                 Norwich, CT

 Montville       Route 32                  1976      Leased       7/31/2001
                 Uncasville, CT

 Mansfield       Route 195                 1979      Leased       6/30/1999
                 Mansfield Center, CT

 Plainfield      67 Lathrop Road           1980      Leased       5/10/2001
                 Plainfield, CT

 Mystic          Rt. 27 & Whitehall Ave.   1980      Leased       9/30/2005
                 Mystic, CT

 Mystic          12 Roosevelt Avenue       1995      Leased       2/14/1998
                 Mystic, CT

 Colchester      139 South Main St.        1981      Leased       4/30/1998
                 Colchester, CT

 Griswold        Route 138                 1989      Leased      10/31/2004
                 Griswold, CT

 Groton          218 Route 12              1989      Leased       9/30/2002
                 Groton, CT                          (land)

 Waterford       119 Boston Post Rd.       1995      Leased       3/31/2005
                 Waterford, CT

 New London      15 Masonic St.            1996      Leased      11/01/2000
                 New London, CT

 Waterford       716 Broad St. Ext.        1996       Owned     Not Applicable
                 Waterford, CT

 Flanders        125 Boston Post Rd.       1996      Leased      11/30/2003
                 East Lyme, CT



Item 3 - Legal Proceedings

  There  are no pending legal proceedings to which the Company  or
the Bank is a party, other than ordinary routine litigation in the
normal course of business.  After consultation with legal counsel,
it  is  the  opinion  of management that the outcome  of  existing
litigation  will have no material adverse effect on the  financial
position or future operating results of the Company or the Bank.

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

  During the fourth quarter of 1996, no matter was submitted to  a
vote of stockholders of the Company.

Executive Officers of the Registrant

 The following persons are the executive officers of the Company:

    Daniel  R. Dennis, Jr., age 52, has been the Chairman  of  the
    Board  of Directors, President and Chief Executive Officer  of
    the  Company  since  its incorporation in  August  1988.   Mr.
    Dennis  was  elected President and Chief Executive Officer  of
    the Bank in 1985.

    Michael  J.  Hartl,  age  55,  has  been  the  Executive  Vice
    President,  Treasurer  and  Chief  Financial  Officer  and   a
    director  of  the  Company since its incorporation  in  August
    1988.  Mr.  Hartl has been Executive Vice President, Treasurer
    and  Chief  Financial Officer of the Bank  since  1985  and  a
    director since 1986.

    Daphne  P.  Cannata, age 42, has served as Vice President  and
    Corporate Secretary of the Company since its incorporation  in
    August  1988.   Ms. Cannata has been Senior Vice  President  -
    General  Administration and Corporate Secretary  of  the  Bank
    since March 1989, and has held various positions with the Bank
    since 1978.

    James  R.  Brown,  age 61, has been Senior  Vice  President  -
    Lending of the Bank since 1985.
    
    Richard W. Dennison, age 51, has been Senior Vice President  -
    Systems and Operations of the Bank since 1989.

    James  F.  Dewey,  age 55, has been Senior  Vice  President  -
    Marketing and Branch Administration of the Bank since 1985.

    Lori  J.  Ferro,  CPA,  age 32, has been  Vice  President  and
    Controller of the Company and the Bank since 1995.   Prior  to
    joining  the Company,  Ms. Ferro was a Senior Manager  in  the
    Hartford office of KPMG Peat Marwick LLP.

  Each  of the above officers is elected by the Board of Directors
of  the  Company  and/or the Bank to hold office  until  the  next
annual  election  of officers or until his or her successor  shall
have been elected.  There is no relationship by blood, marriage or
adoption between any executive officer or director of the  Company
and any other executive officer or director of the Company.

PART II
Item  5  -  Market  for  Registrant's Common  Equity  and  Related
            Shareholder Matters

  Reference  is  made  to  "Common  Stock  Information"  contained
elsewhere in this report.

  Dividends  are  paid by the Company from its  assets  which  are
provided  mainly  by  dividends from the Bank.   However,  certain
restrictions exist regarding the ability of the Bank  to  transfer
funds  to  the  Company in the form of cash  dividends,  loans  or
advances.
  Connecticut capital stock savings banks, such as the  Bank,  may
not  declare  cash  dividends in excess of  "net  profits."   "Net
profits" are defined statutorily as "the remainder of all earnings
from  current  operations."  In addition, the total  of  all  cash
dividends  declared  in any calendar year  may  not,  without  the
specific approval of the Connecticut Banking Commissioner,  exceed
the  total  of  its  net profits of that year  combined  with  its
retained  net  profits of the preceding two years. For  additional
information  on  dividend restrictions, see Item 1 under  headings
"Connecticut Regulation" and "FDIC Regulation."

Item  9  -  Changes  in  and  Disagreements  with  Accountants  on
            Accounting and Financial Disclosure

 Not Applicable

PART III
Item 10 - Directors and Executive Officers of the Registrant

  Information concerning the directors and executive  officers  of
the  Company and Section 16 reporting persons is included  in  the
Proxy Statement under the caption "Election of Directors (Proposal
1),"  and  in  Part I of this Report under the caption  "Executive
Officers  of  the  Registrant," and is incorporated  by  reference
herein.

Item 11 - Executive Compensation

   Information  concerning  the  compensation  paid  and  benefits
provided  to  directors and executive officers of the  Company  is
included  in  the Proxy Statement under the caption  "Election  of
Directors  (Proposal 1) - Compensation and Related  Matters,"  and
"Election of Directors (Proposal 1) - Employee Benefit Plan,"  and
is incorporated by reference herein.

Item  12  -  Security Ownership of Certain Beneficial  Owners  and
             Management

  Information concerning the ownership of the Company's securities
by  certain  beneficial owners and management is included  in  the
Proxy Statement under the caption "Voting Securities and Principal
Holders Thereof" and "Election of Directors (Proposal 1)"  and  is
incorporated by reference herein.

Item 13 - Certain Relationships and Related Transactions

  Information  concerning  transactions between  the  Company  and
management,  directors  and  certain  beneficial  owners  of   the
Company's securities is contained in the Proxy Statement under the
caption  "Election  of Directors (Proposal 1) - Transactions  with
Management and Others" and is incorporated by reference herein.

PART IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports  on
          Form 8-K

 (a)  The  following documents are filed as part of this report.

    (1)  Financial Statements:
         Norwich Financial Corp. and Subsidiary
         Independent Auditors' Report
         Consolidated Balance Sheets
         Consolidated Statements of Income
         Consolidated Statements of Changes in Stockholders'Equity
         Consolidated Statements of Cash Flows
         Notes to Consolidated Financial Statements
         Selected Quarterly Consolidated Financial Data

    (2)  Financial Statement Schedules:
         All  Schedules to the Consolidated Financial Statements
         required  by  Article  9  of  Regulation  S-X  are  not
         required   under  the  related  instructions   or   are
         disclosed in the financial statements and related notes
         or are inapplicable and therefore have been omitted.

    (3)  Exhibits:
         Exhibit No.   Description

         3.1           Certificate of Incorporation of the Company,
                       as amended (Incorporated by reference to
                       Exhibit 3.1 to the Company's Annual Report
                       on Form 10-K for the year ended December 31,
                       1989)

         3.2           Bylaws of the Company, as amended (Incorporated
                       by reference to Exhibit 3.2 to the Company's
                       Annual Report on Form 10-K for the year ended
                       December 31, 1989)

         4             Instruments Defining Rights of Security Holders
                       (Included in Exhibits 3.1 and 3.2)

        10.1*          Amended and Restated The Norwich Savings Society  
                       1986 Stock Option and Incentive Plan, as restated
                       September 11, 1996

        10.2*          Amended and Restated Norwich Financial  Corp.
                       1986 Stock Option Plan for Outside Directors, as
                       restated September 11, 1996

        10.3*          Form of The Norwich Savings Society 1986 Stock
                       Option and Incentive Plan Incentive Stock Option
                       Agreement (Incorporated by reference to Exhibit
                       4.5 of the Company's Registration Statement on
                       Form S-8 (No. 33-24866) filed on October 7, 1988)

        10.4*          Form of The Norwich Savings Society 1986 Stock
                       Option and Incentive Plan Non-Qualified Stock
                       Option Agreement (Incorporated by reference to
                       Exhibit 4.6 of the Company's Registration 
                       Statement on Form S-8 (No. 33-24866) filed on
                       October 7, 1988)

        10.5a*         Employment Agreement between the Company, the
                       Bank and the President and Chief Executive
                       Officer of the Bank and the Company, (Incorporated
                       by reference to Exhibit 10.4 to the Company's
                       quarterly report on Form 10-Q for the quarter
                       ended September 30, 1995 filed on November 2, 1995)

        10.5b*         Employment Agreement between the Company, the Bank
                       and the Executive Vice President, Treasurer and
                       Chief Financial Officer of the Bank and the Company,
                       (Incorporated by reference to Exhibit 10.4 to the
                       Company's quarterly report on Form 10-Q for the
                       quarter ended September 30, 1995 filed on November 2,
                       1995)

        10.5c*         Employment Agreement between the Company, the Bank
                       and the Vice President and Secretary of the Company
                       and Senior Vice President of the Bank (Incorporated
                       by reference  to  Exhibit 10.5c to the Company's
                       Annual Report on Form 10-K for the year ended
                       December 31, 1995)

        10.5d*         Employment Agreement between the Bank and a Senior 
                       Vice President of the Bank (Incorporated by reference
                       to Exhibit 10.5d to the Company's Annual Report on
                       Form 10-K for the year ended December 31, 1995)

        10.5e*         Employment Agreement between the Bank and a Senior
                       Vice President of the Bank (Incorporated by reference
                       to Exhibit 10.5e to the Company's Annual Report on 
                       Form 10-K for the year ended December 31, 1995)

        10.6           The Norwich Savings Society Thrift Plan (Incorporated
                       by reference to Exhibit 10.6 to the Company's Annual
                       Report on Form 10-K for the year ended December 31,
                       1995)  

        10.6a          First Amendment to The Norwich Savings Society Thrift
                       Plan

        10.7*          Amended and Restated Norwich Financial Corp. 1994
                       Stock Option and Incentive Plan, as restated September
                       11, 1996

        10.8*          Amended and Restated Norwich Financial Corp. 1994 
                       Stock Option Plan for Outside Directors, as restated
                       September 11, 1996

        13             Annual Report to Security Holders

        21             Subsidiaries of the Registrant (Incorporated by 
                       reference to Exhibit 2 to the Company's registration
                       Statement on Form S-4 (No. 33-19887) filed on January
                       29, 1988)

        23.1           Consent of KPMG Peat Marwick LLP

        24             Powers of Attorney

        27             Financial Data Schedule

                       *Management contract or compensatory plan or 
                        arrangement required to be filed as an exhibit to this
                        report.

A copy of any exhibit listed above will be provided by the Company to any
stockholder upon the written request of such stockholder and upon the payment
of a reasonable fee limited to the Company's expenses in furnishing such 
exhibit.  Requests should be addressed to:  Daphne P. Cannata, Corporate
Secretary, Norwich Financial Corp., 4 Broadway, Norwich, Connecticut 06360.

 (b) No reports on Form 8-K have been filed during the fourth quarter of 
     1996.

 (c) The exhibits required by Item 601 of Regulation S-K are filed as a
     separate part of this report. 


                              Signatures

  Pursuant to the requirements of Section 13 and 15(d) 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.

                                            Norwich Financial Corp.

Date: March 18, 1997                        By /s/ Daniel R. Dennis, Jr.
                                            Daniel R. Dennis, Jr.
                                            Chairman, President and Chief
                                            Executive Officer

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

      Signatures                        Title                       Date

/s/ Daniel R. Dennis, Jr.
Daniel R. Dennis, Jr.         Chairman, President and Chief    March 18, 1997  
                              Executive Officer, and Director
                              (Principal Executive Officer)

/s/ Michael J. Hartl
Michael J. Hartl              Executive Vice President,        March 18, 1997
                              Treasurer and Chief Financial
                              Officer, and Director 
                              (Principal Financial Officer
                              and Principal Accounting
                              Officer)

Paul R. Duevel*
Paul R. Duevel                Director                         March 18, 1997

Anthony P. Halsey*
Anthony P. Halsey             Director                         March 18, 1997

Jeremiah J. Lowney, Jr.*                 
Jeremiah J. Lowney, Jr        Director                         March 18, 1997

Robert T. Ramsdell*
Robert T. Ramsdell            Director                         March 18, 1997

Richard P. Reed*
Richard P. Reed               Director                         March 18, 1997

Martin C. Shapiro*
Martin C. Shapiro             Director                         March 18, 1997



*By /s/ Daniel R. Dennis, Jr.
Daniel R. Dennis, Jr.
Attorney-in-fact

Directors                                Officers of Subsidiary
*Norwich Financial Corp.                 The Norwich Savings Society

Daniel R. Dennis, Jr.                    Daniel R. Dennis, Jr.  
Chairman, President and                  Chairman, President and         
Chief Executive Officer,                 Chief Executive Officer         
The Norwich Savings Society
                                         Michael J. Hartl                 
Paul R. Duevel                           Executive Vice President,
Retired Senior Vice President            Treasurer and             
for Corporate Affairs                    Chief Financial Officer    
Backus Corporation                                               
                                         James R. Brown          
Anthony P. Halsey                        Senior Vice President,  
Past Chairman                            Lending 
The Bank of Mystic, Inc.                       
                                         Daphne P. Cannata          
Michael J. Hartl                         Senior Vice President,     
Executive Vice President,                General Administration
Treasurer and Chief Financial            and Corporate Secretary   
Officer, The Norwich Savings                                     
Society                                  Richard W. Dennison              
                                         Senior Vice President,
Jeremiah J. Lowney, Jr.                  Systems and Operations    
Orthodontist                                                    
                                         James F. Dewey             
Robert T. Ramsdell                       Senior Vice President, 
Chairman, President and                  Marketing and Branch    
Chief Executive Officer,                 Administration          
New London County Mutual                                      
Insurance Company                        Richard R. Cascio                
                                         Vice President,                  
Richard P. Reed                          Credit Administration         
President, Radio Station                        
WICH, Inc. and Executive                 Lori J. Ferro, CPA      
Vice President, Hall                     Vice President and      
Communications, Inc.                     Controller

Martin C. Shapiro                        Carolyn L. Fisher
Retired President, M.S. Chambers         Vice President,
& Son, Inc.                              Commercial Loan Officer

                                         Anthony A. Joyce, III
                                         Vice President,
                                         Commercial Loan Officer

                                         Catherine L. Sarni
                                         Vice President
                                         Human Resources

                                         William J. Terwilliger
                                         Vice President
                                         Commercial Lending

                                         Mark A. Turner
                                         Vice President,
                                         Commercial Loan Officer

                                         Janet M. West, CPA
                                         Vice President
                                         Auditor

                                         Mary Jo Wlodecki
                                         Vice President,
                                         Mortgage and Consumer
                                         Lending and Loan
                                         Operations

                                         Richard A. Woerle
                                         Vice President,
                                         Investments


* In addition to the above, the following individuals served as directors of 
The Norwich Savings Society until their retirement on December 31, 1996:

Joseph H. Brustolon
President, Brustolon
Buick-Pontiac, Inc.

Walter L. McGill
Retired President and
Treasurer,
Anderson Supply Company, Inc.



                               Office Locations
                         The Norwich Savings Society 

Main Office                                     Plainfield Office       
4 Broadway                                      67 Lathrop Road
Norwich, CT 06360                               Plainfield, CT 06374
(860) 889-2621                                  (860) 564-2753

Norwichtown Office                              Mystic Office
45 Town Street                                  Route 27 & Whitehall Avenue
Norwich, CT 06360                               Mystic, CT 06355
(860) 886-2888                                  (860) 572-0547

Ledyard Office                                  Colchester Office
Rt. 12 & Kings Highway                          139 South Main Street
Gales Ferry, CT 06335                           Colchester, CT 06415
(860) 464-2247                                  (860) 537-3476            

West Main Street                                Griswold Office
624 W. Main Street                              Route 138
Norwich, CT 06360                               Griswold, CT 06351
(860) 889-4711                                  (860) 376-2541

Taftville Office                                Groton Office
30 Norwich Avenue                               218 Route 12
Norwich, CT 06360                               Groton, CT 06340
(860) 889-1788                                  (860) 445-4353

Montville Office                                New London Office
Route 32                                        15 Masonic Street
Uncasville, CT 06382                            New London, CT 06320
(860) 848-1132                                  (860) 447-7944

Mansfield Office                                Mystic Packer Office
Route 195                                       12 Roosevelt Avenue
Mansfield Center, CT 06250                      Mystic, CT 06355
(860) 456-2207                                  (860) 572-8981

Waterford Office                                Waterford Broad Street Office
119 Boston Post Road                            716 Broad Street Ext.
Waterford, CT 06385                             Waterford, CT 06385
(860) 444-2011                                  (860) 447-1401

                           Flanders Office
                           125 Boston Post Road
                           East Lyme, CT 06333
                           (860) 739-3035