U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-KSB

[X]    Annual Report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934.

       For the Fiscal Year ended March 31, 1998.

                        Commission File number: 811-0969

                    The First Connecticut Capital Corporation
--------------------------------------------------------------------------------
             (Exact name of Registrant as Specified in its Charter)

         Connecticut                                        06-0759497
--------------------------------------------------------------------------------
  (State of Incorporation)                                (IRS Employer
                                                       Identification No.)

1000 Bridgeport Avenue, Shelton, Connecticut                           06484
--------------------------------------------------------------------------------
  (Address of principal executive offices)                           Zip Code

                  Registrant's telephone number (203) 944-5400

Securities registered under Section 12(b) of the Exchange Act:  NONE

                            Name of each exchange on
                                which registered:
                                      NONE

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                                 Title of Class
                                     COMMON

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

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-B 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-KSB or any  amendment to
this Form 10-KSB. [ ]

Registrant's revenues for its most recent fiscal year:  $660,000

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as of June 3, 1998 based on the closing sales price of such stock on
such date was approximately $804,000
<PAGE>
Check whether the registrant has filed all documents and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [ ] No [ ]

The number of shares outstanding of the registrant's  common stock as of June 3,
1998 was 1,173,382.

                      DOCUMENTS INCORPORATED BY REFERENCE:

The following  documents are hereby incorporated by reference into the following
Parts of this Form 10-KSB:  (1) financial  statements and Independent  Auditors'
Report for the fiscal  years ended March 31,  1998 and 1997 is  incorporated  by
reference into Part II Item 7.
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

         The  First  Connecticut  Capital  Corporation  (the  "Corporation")  is
engaged in the  mortgage  banking  business,  which  involves  the  origination,
purchase,  sale and  servicing  of  mortgage  loans  secured by  residential  or
commercial real estate.  The  Corporation's  revenues  consist of loan servicing
fees, loan origination  fees,  interest on mortgage loans held prior to sale and
gains from the sale of loans and mortgage servicing rights. Mortgage loans which
are originated or purchased by the Corporation may be resold.

         The  Corporation  also  engages  in  mortgage  servicing,  of  its  own
Portfolio Loan Program,  which includes the  processing  and  administration  of
mortgage loan payments and remitting  principal and interest to purchasers.  The
Corporation   also  monitors   delinquencies,   collects   late  fees,   manages
foreclosures,   processes   prepayments  and  loan  assumption  fees,   provides
purchasers with required reports, and answers borrowers' inquiries. Although the
Corporation  plans,  from  time to  time,  to  sell a  portion  of its  mortgage
servicing  rights,  it  intends  to  build  the size of its  mortgage  servicing
portfolio by retaining the  servicing  rights from a large share of its mortgage
loan  originations.  As of  June  1,  1998,  the  Corporation  services  a total
portfolio of approximately  $12,302,000,  consisting, in part, of mortgage loans
which were sold by the Corporation to GF Mortgage  Corporation,  a subsidiary of
Gruntal Financial  Corporation,  a subsidiary of The Home Insurance Corporation,
on  December  15,  1993 as  described  below.  On April 19,  1996,  GF  Mortgage
Corporation  was  sold  to  Walsh  Acquisition  Company,  also  known  as  Walsh
Securities.  In  October  27,  1997 the  balance of that  portfolio  was sold to
Greenwich Capital Financial Corporation.  First Connecticut continues to service
the  remaining  balance  which is  $4,955,000  as of June 1,  1998,  under a new
service agreement.  At June 1, 1998 the Company also services its Portfolio Loan
Program,  which  has an  outstanding  balance  of  $5,444,000,  representing  an
increase of 37% from the prior period.  In addition the  Corporation  as General
partner also  services  loans for First  Connecticut  Capital  Mortgage  Fund A,
Limited Partnership,  which has a mortgage loan balance of $1,903,000 at June 1,
1998.

History

         The  Corporation   (formerly  The  First   Connecticut  Small  Business
Investment  Company)  was  incorporated  on May 6, 1960 as a federally  licensed
small business  investment  company under the Small  Business  Investment Act of
1958 and was registered as an investment  company under the  Investment  Company
Act of 1940. The Corporation's  business consisted of providing  long-term loans
to finance the growth, expansion and development of small business concerns.

         On August 15, 1990, the  Corporation  filed a petition for relief under
Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court.
On October 18, 1991, the Corporation filed a plan of reorganization (the "Plan")
with the United States Bankruptcy Court. The Plan was confirmed as of January 9,
1992.  Under the Plan, the  Corporation was required to surrender its license to
operate as a small business investment company.
 
         On June 29, 1993,  the  Corporation's  application  for  deregistration
under the  Investment  Company Act of 1940 was  approved by the  Securities  and
Exchange Commission.
<PAGE>
         On December 15, 1993, the  Corporation  sold  substantially  all of its
outstanding  investment  portfolio  to GF  Mortgage  Corporation  for an  amount
sufficient to settle  substantially  all of the Company's  liabilities under the
Plan. As part of this  transaction,  restrictions  under the Plan  regarding the
Corporation's lending activities were waived.

         The  Corporation  was  granted  a license  by the State of  Connecticut
Department   of   Banking   to  engage   in   business   as  a  First   Mortgage
Loan-Lender-Broker  on April 8, 1994.  The  Corporation  is also licensed by the
State of Connecticut as a Second Mortgage Lender/Broker.

         On December 28, 1994 the United States  Bankruptcy Court issued a final
decree closing the Chapter 11 case of the Company.

         On August 3, 1995 the Corporation was granted a license by the State of
Massachusetts,  Department  of  Banking,  to engage in  business  as a  Mortgage
Lender.

Seasonality

         The Corporation's business and the mortgage banking industry as a whole
is generally  subject to seasonal  trends which  reflect a pattern of home sales
and  resales.  Loan  originations  typically  peak  during the spring and summer
seasons and decline from mid-November through January. Prior to January 1996 the
Corporation  focused its  efforts on  refinances  of  mortgages  on  residential
properties  which was generally the case throughout the industry.  Since January
1996,  the  Corporation  has  expanded  its  Portfolio  Loan  Program to include
short-term mortgages for construction, remodeling and additions. These loans are
predominately secured by first mortgage liens on residential  properties and are
sold to qualified investors with fees retained for servicing.

Competition

         The Corporation competes with other mortgage bankers, mortgage brokers,
state and national banks,  thrift  institutions and insurance companies for loan
originations and purchases.  Many of its competitors have substantially  greater
financial  resources than the  Corporation.  The  Corporation  competes for loan
originations,  in part,  based on  price,  through  print and  electronic  media
advertising  campaigns,   by  telemarketing  to  potential  borrowers,   and  by
maintaining close  relationships with mortgage brokers,  real estate brokers and
builder-developers.

Regulation

         The  Corporation is not presently an approved  seller/servicer  for the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"),  or the Federal Home Loan Mortgage Corporation  ("FHLMC"),
nor is the Corporation an approved issuer and servicer under GNMA, FNMA or FHLMC
mortgage-backed  securities  programs.  The  Corporation  is  not  qualified  to
originate  mortgage  loans insured by the Federal  Housing  Administration  (the
"FHA") or partially  guaranteed by the Veterans  Administration  (the "VA"). The
Corporation   does  not  presently   intend  to  apply  for  such  approvals  or
qualifications.  Accordingly,  the  Corporation is not currently  subject to the
rules and regulations of these agencies with respect to originating, processing,
<PAGE>
selling and servicing  mortgage loans,  but may become subject to such rules and
regulations should the Corporation become an approved issuer, seller or servicer
for any of these agencies. Such rules and regulations would, among other things,
prohibit  discrimination  and establish  underwriting  guidelines  which include
provisions  for  inspections  and  appraisals  and  require  credit  reports  on
prospective borrowers, and with respect to VA loans, fix maximum interest rates.

         The Corporation's  mortgage loan origination  activities are subject to
the Equal Credit  Opportunity  Act, the Federal  Truth-In-Lending  Act, the Real
Estate  Settlement  Procedures Act and the  regulations  promulgated  thereunder
which prohibit  discrimination and require the disclosure of certain information
to borrowers concerning credit and settlement costs.  Additionally,  the sale of
mortgage  loans by the  Corporation  to purchasers  may be subject to applicable
federal and state securities laws.

         There are  various  state laws  affecting  the  Corporation's  mortgage
banking operations, including licensing requirements and substantive limitations
on the interest and fees that may be charged.  The  Corporation is in possession
of all required  licenses in those states in which it does business that require
such licenses, except where the absence of such licenses are not material to the
business and operations as a whole.  States have the right to conduct  financial
and regulatory audits of the loans under their jurisdiction.

Personnel

         As of June 1, 1998, the Corporation  had 5 employees,  all of whom were
employed  at  the  Corporation's  headquarters  in  Shelton,   Connecticut.  The
Corporation believes that its relations with its employees are good.


Investment Policies

         (i)      Investments in real estate - The  Corporation  does not invest
                  in real  estate or  interests  in real  estate but may acquire
                  real  estate by  foreclosure  of  mortgage  loans owned by the
                  Corporation or by deed in lieu of foreclosure.  Primarily such
                  properties   would   consist  of  1-4  family   dwellings   or
                  undeveloped acreage. The Corporation does not intend to own or
                  operate  properties for an extended  period of time but rather
                  its policy is to sell such  properties at fair market value as
                  soon as possible.

         (ii)     Investments in real estate mortgages - The Corporation intends
                  to originate  first or second real estate  mortgages  and sell
                  certain  of  these   mortgages   immediately   to   interested
                  purchasers,  retaining  the  application  fees  and  servicing
                  rights.  Maturities  of mortgages not sold will range from one
                  to five years.

         (iii)    The  Corporation  currently  does not  intend to invest in the
                  securities  of, or interests in, persons or entities which are
                  primarily engaged in real estate activities.
<PAGE>
ITEM 2.  DESCRIPTION OF PROPERTY

         During  the prior year the  Corporation  relocated  to 1000  Bridgeport
Avenue,  Shelton,  Connecticut.  The office  contains 1,772 square feet of space
which the Corporation  currently leases from an unaffiliated party pursuant to a
5 year lease expiring December 31, 2002.

ITEM 3.  LEGAL PROCEEDINGS

         None.

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

         None.

                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

         The Corporation's common stock is traded over the counter, and the high
(bid) and low (asked) prices of the Corporation's  stock are quoted in the "pink
sheets" published by the National Quotation Bureau, Inc.

         Following are the high and low bid prices for the Corporation's  common
stock  during the fiscal  years ended March 31, 1998 and 1997  according  to the
"pink sheets" published by the National Quotation Bureau, Inc.

                                               High            Low
                                               ----            ---
                 1997
                 ----
                 First Quarter                $.5625          $.5000
                 Second Quarter                .5625           .4375
                 Third Quarter                 .4375           .3125
                 Fourth Quarter                .3125           .2500

                 1998
                 ----
                 First Quarter                $.2500          $.20000
                 Second Quarter                .4375           .15000
                 Third Quarter                 .3200           .21875
                 Fourth Quarter                .2600           .22000

         The  approximate  number of  stockholders of record on June 3, 1998 was
1,244  and  the   Corporation   estimates  that  it  has   approximately   1,650
shareholders.  The closing bid  quotation of the  Corporation's  Common Stock on
that date was approximately 78 cents. The Corporation has not paid any dividends
on its Common Stock since April 27, 1990. The Corporation  currently  intends to
retain  earnings,  for use in its business and does not  anticipate  paying cash
dividends in the foreseeable future.
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

Results of Operations

         The Corporation had net income of $288,000 for the year ended March 31,
1998  compared to a net loss of $230,000 for the year ended March 31, 1997.  The
increase of  $518,000 is due  primarily  to a  non-recurring  recovery of a note
payable of $268,000.  Included in net income is a loss of $52,000 resulting from
the assignment of the loan  portfolio  serviced by First  Connecticut  under the
Asset  Management  Loan  Servicing   Agreement  Dated  December  15,  1993  (the
"Agreement") from Walsh Securities to Greenwich Capital Financial Products, Inc.
The Corporation  exchanged the unamortized  balance of mortgage servicing rights
for the Walsh Portfolio and related  receivable for certain collection costs for
a $560,000  non  interest  bearing note (the  "Note").  The Note was  discounted
approximately $78,000 to reflect a market rate of interest.

         Total  interest  income  for 1998 was  $107,000  as  compared  to total
interest  income for 1997 of $103,000 an increase of $4,000 or 4%. This increase
was a result of unaccrued interest collected on non performing loans.

         Other operating  expenses for 1998 was $468,000 as compared to $814,000
in 1997, a decrease of 346,000 or 43%.  This  decrease was  primarily due to the
decrease in officer and other  salaries and employee and general  insurance.  In
addition,  in 1997 there was a  non-recurring  collection  expense  of  $150,000
representing taxes on sold loans.  During 1998, the Corporation has continued to
reduce overall operating expenses.

         The  amortization  of  servicing  rights has stopped in 1998 due to the
aforementioned  assignment  of the Walsh loan  portfolio  to  Greenwich  Capital
Financial  Products.  The  Corporation  continues to service the  portfolio  for
Greenwich Capital under a new agreement. Professional services increased $16,000
or 50% from  $16,000  in 1997 to  $32,000  in 1998  primarily  as a result of an
increase in accounting and legal costs.

         Total loan  origination  fees for 1998 were  $163,000  as  compared  to
$198,000 in 1997, a decrease of $35,000 or 18%. Loan  origination  fees for 1998
reflect a decrease of $120,000 for  origination  fees on loans funded by outside
parties and are partially  offset by an increase of $85,000 in origination  fees
on loans funded by the Corporation.

Recorded  in other fees for the year ended 1997 was a  non-recurring  management
fee of $150,000. After considering this one time fee, other fee income increased
by $14,000 due to interest earned on idle funds and loan inspection fees.

During the year ended 1997 the  Corporation  recorded a provision for investment
losses of $215,000 to adjust the allowance for  investment  losses to adequately
absorb decreases in investment values based on re-appraisals and evaluations. No
such  valuation  adjustment  were  required in 1998.  In 1998,  the  Corporation
recorded a recovery of $49,000  attributable  to the  liquidation of an impaired
loan which was over-reserved.

Plan of Operation

         The  Corporation  is engaged in the mortgage  banking  business,  which
involves the origination, purchase, sale and servicing of mortgage loans secured
by residential or commercial real estate.
<PAGE>
Liquidity and Capital Resources

         At  March  31,  1998  and  1997,  the  Corporation  had  cash  and cash
equivalents of $214,000 and $211,000, respectively.

         The Corporation currently anticipates that during the year ending March
31, 1999,  its  principal  financing  needs will consist of funding its mortgage
loans held for sale (see Note 10 of  Financial  Statements)  and the ongoing net
cost of mortgage loan  originations.  Future cash flow  requirements will depend
primarily  on the  level of the  Corporation's  activities  in  originating  and
selling  mortgage  loans,  as well  as cash  flow  required  by its  operations.
Although  the  Corporation   anticipates  increased  activities  in  originating
mortgage  loans,  the  difficulties  experienced  within the  relevant  economic
markets still exist and there are no  assurances  that  increased  activity will
occur.  Consequently,  as a means to provide  further cash flow, the Corporation
has expressed a willingness to liquidate certain current assets in its portfolio
and believes that a market exists for those assets.

         The  Corporation  continues to investigate  and pursue  alternative and
supplementary  methods to financing its  operations and to support the growth of
the Corporation.

         The  Corporation  believes that cash on hand and  internally  generated
funds will be  sufficient  to meet its  corporate,  general  and  administrative
working  capital and other cash  requirements  during the year ending  March 31,
1999. The Corporation took certain steps during the year ended March 31, 1997 to
decrease its cash flow requirements for the years ended March 31, 1998 and 1997.
Those  steps  included a  management  salary  reduction  and a  restatement  and
termination of the pension plan. The Corporation  also continues to decrease its
cash flow requirements, by monitoring all expenses. As a result of the Note with
Walsh Securities the  Corporation's  cash flow will increase by $120,000 a year.
Management also believes additional steps can be taken if necessary.

         The Corporation did not have any material capital  commitments at March
31, 1998.

Inflation

         Inflation will affect the Corporation most significantly in the area of
loan  originations.  Interest  rates  normally  increase  during periods of high
inflation and decrease during periods of low inflation.

Accounting Pronouncements

         New  Accounting  Pronouncements  - In 1997,  the  Financial  Accounting
Standards Board issued  Statement of Financial  Accounting  Standards (SFAS) No.
130, Reporting  Comprehensive  Income, which establishes standards for reporting
and  displaying  comprehensive  income  and its  components  and SFAS  No.  131,
Disclosures  about  Segments of an  Enterprise  and Related  Information,  which
establishes  standards for the way public  companies  report  information  about
operating  segments in both interim and annual financial  statements and related
disclosures.  The adoption of these standards is not expected to have a material
impact  on  the  Corporation's  financial  statements.  The  standards  will  be
effective for the Corporation's financial statements in fiscal year 1999.
<PAGE>
Partnership - The  Corporation has formed a Limited  Partnership  known as First
Connecticut  Capital  Mortgage  Fund A,  Limited  Partnership  as to  which  the
Corporation  is the  General  Partner.  The intent of this new entity is to sell
units in the Limited  Partnership to investors in a private  placement,  up to a
maximum of $5 million in $50,000 units,  for the purpose of funding a short-term
Portfolio Loan Program for the Limited Partnership. The limited partners will be
limited  to  investors  who  qualify  as  "Accredited  Investors"  as defined in
Regulation D,  promulgated  under the Securities Act of 1933. This program would
generate  income to the  Corporation  in the form of loan  origination  fees and
servicing fees in excess of a guaranteed  income return to the limited  partners
in  connection  with  mortgage  loans that  would be  purchased  by the  Limited
Partnership from the funds invested by the limited  partner.  As of June 1, 1998
the Corporation has sold 33 units. A copy of the offering memo is available upon
request.

ITEM 7.  FINANCIAL STATEMENTS

         The following  report and financial  statements of the  Corporation are
contained on the pages indicated.

         Independent  Auditors'  Report - Page 1 

         Balance Sheets as of March 31, 1998 and 1997 - Page 2

         Statements of Operations  for the years ended March 31, 1998 and 1997 -
         Page 3

         Statements of Changes in Stockholders' Equity for the years ended March
         31, 1998 and 1997 - Page 4

         Statements  of Cash Flows for the years ended March 31, 1998 and 1997 -
         Page 5

         Notes to Financial Statements - Page 6

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

         The  Corporation has not changed  accountants in the twenty-four  month
period prior to March 31, 1998.  No  disagreements  on  accounting  or financial
disclosure practices occurred during the fiscal year ended March 31, 1998.
<PAGE>
                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors and Executive Officers of the Registrant

         The directors and executive  officers of the  Corporation  as of May 1,
1998 are as follows:

   Names                   Age               Present Position
   -----                   ---               ----------------

James M. Breiner           79                Chairman of the Board of Directors
                                             and Treasurer

David Engelson             77                President and Director

Louis I. Cohen             77                Director

Edward Ardolino            77                Director

Mario D'Addario            78                Director

Edward M. Freda            74                Director

Allan J. Rosen             62                Director

Lawrence R. Yurdin         58                Vice President and Director

Priscilla E. Ottowell      51                Secretary and Controller


         James M. Breiner,  Director of the Corporation since 1960.  Chairman of
the Board and Treasurer of the  Corporation;  Director of State Street  Mortgage
Company.

         David Engelson,  Director of the Corporation  since 1960.  President of
the Corporation; Director of State Street Mortgage Company.

         Louis I. Cohen,  Director of the  Corporation  since 1968.  Director of
State Street Mortgage Company.

         Edward Ardolino,  Director of the Corporation since 1960. President and
CEO of Aerospace Coating Systems, Inc.

         Mario D'Addario,  Director of the Corporation since 1976.  President of
Mario D'Addario Buick, Inc.

         Edward M.  Freda,  Director  of the  Corporation  since  1979.  Retired
Executive Vice President of People's Bank, Bridgeport, Connecticut.

         Allan J. Rosen,  elected to the Board of  Directors  on  September  16,
1997.  Shareholder,   Kleban  &  Samor,  P.C.,  act  as  legal  counsel  to  the
Corporation.
<PAGE>
         Lawrence  R.   Yurdin,   Director  of  the   Corporation   since  1986.
Vice-President  of the  Corporation;  employed  by the  Corporation  in  various
capacities since 1970; Director of State Street Mortgage Company.

         Priscilla E. Ottowell,  elected  Secretary of the  Corporation on April
12, 1995. Employed by the Corporation as Controller since 1985.

         Each of the directors  holds office for a term of one year, and until a
successor has been chosen and qualified.  Directors,  except Messrs. J. Breiner,
D. Engelson and L. Yurdin, receive a fee of $300 per Board meeting.

         Mr.  Lawrence  R.  Yurdin  is the  son-in-law  of Mr.  David  Engelson,
President and a Director of the Corporation.

ITEM 10. EXECUTIVE COMPENSATION

         The following summary compensation table sets forth certain information
regarding  the annual and long-term  compensation  of James M. Breiner and David
Engelson, who together perform the function of Chief Executive Officer, for each
of the last three fiscal years. No officers of the  Corporation  received salary
and bonus in excess of $100,000.
<TABLE>
<CAPTION>

                                                 SUMMARY COMPENSATION TABLE

                                                Annual Compensation             Long Term Compensation
                                           -------------------------------  --------------------------------
                                                                   Other              Awards        Payouts
                                                                   Annual   Restricted                           All Other
       Name and                                                    Compen-     Stock     Options       LTIP      Compen-
      Principal            Year             Salary       Bonus     sation     Awards       SARs      Payouts      sation
      Position            Ended              ($)          ($)        ($)        ($)        (#)          ($)         ($)
      --------           --------          -------       -----     -------    ------     -------     -------      ------
<S>                      <C>   <C>         <C>             <C>        <C>                    <C>                     <C> 
James M. Breiner         03/31/98          $12,000         0          0         None         0          None         0   
 Chairman of the         03/31/97          $38,493         0          0         None         0          None         0 
 Board & Treasurer       03/31/96          $39,233         0          0         None         0          None         0 
                                                                                                                       
David Engelson           03/31/98          $12,000         0          0         None         0          None         0 
 President               03/31/97          $38,493         0          0         None         0          None         0 
                         03/31/96          $39,233         0          0         None         0          None         0 
</TABLE>
                           
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

Security Ownership of Certain Beneficial Owners

         The  following  tables  list the  beneficial  owners  of more than five
percent of the Corporation's  Common Stock and the shares  beneficially owned by
all directors and executive officers of the Corporation as of March 31, 1998.

Name and Address of                  Amount and Nature of
Beneficial Owner                        Beneficial Owner               Percent
----------------                        ----------------               -------

Robert E. Humphreys                         114,900                     9.792
64 Alcott Street
Acton, MA  01720
<PAGE>
Security Ownership of Management

Name and Address of                  Amount and Nature of
Beneficial Owner                        Beneficial Owner               Percent
----------------                        ----------------               -------

James M. Breiner                             53,172(i)                  4.530
David Engelson                               43,605                     3.716
Louis I. Cohen                                8,351                      .712
Edward Ardolino                               3,741                      .319
Mario D'Addario                               3,860                      .329
Edward M. Freda                                 131                         -
Alan J. Rosen                                 4,000                      .341
Lawrence R. Yurdin                           21,707                     1.850
Priscilla E. Ottowell                         4,389                      .374

All directors and executive officers
 as a group (nine persons)                  142,956                    12.183

(i)  Includes 2,272 shares owned by the Estate of William Breiner,  of which Mr.
     Breiner is the  administrator.  Mr.  Breiner has sole voting and investment
     power with respect to these shares.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                          TRANSACTIONS WITH MANAGEMENT

         Five (5) directors and officers of the  Corporation  are also directors
and  officers of State  Street  Mortgage  Company,  which makes first and second
mortgage loans to commercial and  residential  borrowers.  State Street Mortgage
Company  is in the  process  of  liquidation  and  does  not  compete  with  the
Corporation.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  (10.2)   Asset Management and Loan Servicing Agreement with GF
                           Mortgage   Corp.   now  known  as  Walsh   Securities
                           (incorporated  by reference to Exhibit 7(c)(l) to the
                           Current  Report on Form 8-K filed by the  Corporation
                           with  the  Securities  and  Exchange   Commission  on
                           December 29, 1993).

                  (99)     Independent Auditors' Report and Financial Statements

         (b)      Reports on Form 8-K.

                  No  reports on Form 8-K were filed  during the  quarter  ended
March 31, 1998.
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 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.

                                                  THE FIRST CONNECTICUT CAPITAL
                                                  CORPORATION

Date:  June 29, 1998                              By:  /s/ David Engelson
                                                       ------------------
                                                       David Engelson
                                                       President

Date:  June 29, 1998                              By:  /s/ Priscilla E. Ottowell
                                                       -------------------------
                                                       Priscilla E. Ottowell
                                                       Secretary and Controller

         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.

Date:  June 29, 1998                                 /s/  James M. Breiner
                                                     ---------------------
                                                     James M. Breiner
                                                     Chairman and Treasurer

Date:  June 29, 1998                                 /s/  David Engelson
                                                     -------------------
                                                     David Engelson
                                                     President and Director

Date:  June 29, 1998                                 /s/  Louis I. Cohen
                                                     -------------------
                                                     Louis I. Cohen
                                                     Director

Date:  June 29, 1998                                 /s/  Edward Ardolino
                                                     --------------------
                                                     Edward Ardolino
                                                     Director

Date:  June 29, 1998                                 /s/ Mario D'Addario
                                                     -------------------
                                                     Mario D'Addario
                                                     Director

Date:  June 29, 1998                                 /s/ Edward M. Freda
                                                     -------------------
                                                     Edward M. Freda
                                                     Director
<PAGE>

Date:  June 29, 1998                                 /s/ Allan J. Rosen
                                                     ------------------
                                                     Allan J. Rosen
                                                     Director
 
Date:  June 29, 1998                                 /s/ Lawrence R. Yurdin
                                                     ----------------------
                                                     Lawrence R. Yurdin
                                                     Vice-President and Director

Date:  June 29, 1998                                 /s/ Priscilla E. Ottowell
                                                     -------------------------
                                                     Priscilla E. Ottowell
                                                     Secretary and Controller
<PAGE>













         THE FIRST CONNECTICUT CAPITAL CORPORATION

         Financial Statements for the Years Ended March 31, 1998 and 1997 and  
         Independent Auditors' Report



<PAGE>
INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors
         of The First Connecticut Capital Corporation:

We have audited the accompanying balance sheets of The First Connecticut Capital
Corporation  (the  "Corporation")  as of March 31, 1998 and 1997 and the related
statements of operations, changes in stockholders' equity and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Corporation's  management.  Our responsibility is to express an opinion on these
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,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of the Corporation at March 31, 1998 and 1997
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.








June 12, 1998

                                      -1-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
BALANCE SHEETS, MARCH 31, 1998 AND 1997 
(Dollars in thousands,  except share and
per share data)

                                                                 NOTES        1998           1997
                                                                 -----        ----           ----
<S>                                                                <C>      <C>            <C>   
ASSETS
Investments:
Loans - net of allowance for investment losses                     6        $  466         $  481
             of $300 in 1998 and $695 in 1997

Cash and cash equivalents                                                      214            211
Restricted cash                                                    3            49             45
Loans held for sale                                                             94            380
Partnership loans                                                               91              0
Accrued interest                                                                21             41
Note receivable                                                                450              0
Servicing rights                                                   3            14            347
Fixed assets                                                       7            37             47
Other assets                                                                    35            245
                                                                            ------         ------ 

TOTAL ASSETS                                                                $1,471         $1,797
                                                                            ======         ====== 

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Warehouse line of credit                                           10       $    -         $  317
Accounts payable and other accrued expenses                                    142            439
                                                                            ------         ------ 

TOTAL LIABILITIES                                                              142            756
                                                                            ------         ------ 

Commitments and contingencies                                      12

STOCKHOLDERS' EQUITY:
Common stock, no par value, stated value $.50
   per share, authorized 3,000,000 shares,
   issued and outstanding 1,173,382 shares                                     587            587
Paid-in surplus                                                              9,253          9,253
Accumulated deficit                                                         (8,511)        (8,799)
                                                                            ------         ------ 

TOTAL STOCKHOLDERS' EQUITY                                                   1,329          1,041
                                                                            ------         ------ 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $1,471         $1,797
                                                                            ======         ====== 
</TABLE>

See notes to financial statements.

                                      -2-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1998 AND 1997 
(Dollars in thousands, except share and per share data)

                                                                           Year Ended       Year Ended
                                                                 NOTES         1998             1997
                                                                 -----         ----             ----
<S>                                                                <C>      <C>            <C>   
INTEREST INCOME:
Interest and fees on loans                                                  $     107            $103

INTEREST EXPENSE:
Interest expense                                                                    4               9          
                                                                            ----------     -----------

NET INTEREST INCOME                                                               103              94
                                                                            ----------     -----------

RECOVERY OF (PROVISION FOR) INVESTMENT LOSSES                                      49            (215)
                                                                            ----------     -----------
NET INTEREST  INCOME (EXPENSE) AFTER RECOVERY OF
   (PROVISION FOR) INVESTMENT LOSSES                                              152            (121)
                                                                            ----------     -----------
OTHER OPERATING INCOME:
Servicing fees                                                      4             132             166
Loan Origination fees                                                             163             198
Other fees                                                                         32             164
Recovery on note payable                                           12             268               -
Recovery on legal settlement                                                        -              24
Gain on sale of loans                                               3              14              22
Other income                                                                        -             136
                                                                            ----------     -----------

    Total Other Operating Income                                                  609             710
                                                                            ----------     -----------

TOTAL INCOME                                                                      761             589
                                                                            ----------     -----------
OTHER OPERATING EXPENSES:
Amortization of servicing rights                                    3              27              17
Collection expenses                                                                 -             151
Officers' salaries                                                                138             224
Other salaries                                                                     37              81
Directors' fees                                                                     9              18
Professional services                                                              32              16
Miscellaneous taxes                                                                21              36
Employee and general insurance                                                     38              88
Loss on note receivable                                             5              52               -
Rent                                                                               31              33
Communications                                                                     11              19
Advertising and promotions                                                          5               4
Stock record and other financial expenses                                           5               5
Depreciation expense                                                               10              15
Other                                                                              52             107
                                                                            ----------     -----------

    Total Other Operating Expenses                                                468             814
                                                                            ----------     -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1998 AND 1997 
(Dollars in thousands, except share and per share data) (continued)

                                                                           Year Ended     Year Ended
                                                                 NOTES        1998           1997
                                                                 -----        ----           ----
<S>                                                                <C>      <C>            <C>   
INCOME (LOSS) BEFORE INCOME TAXES                                                 293            (225)
INCOME TAX EXPENSE                                                                  5               5
                                                                            ----------     -----------

NET INCOME (LOSS)                                                           $     288           ($230)
                                                                            ==========     ===========

INCOME (LOSS) PER COMMON SHARE (BASIC AND DILUTED)                  3       $    0.25          ($0.20)
                                                                            ==========     ===========

Weighted average number of
  common shares outstanding (Basic and Diluted)                             1,173,382       1,173,382
                                                                            ==========     ===========
</TABLE>

See notes to financial statements.

                                      -3-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997 
(Dollars in thousands, except share and per share data)

                                         Common Stock                                           
                                   ---------------------                                        Total
                                   Number Of                   Paid-In       Accumulated    Stockholders'
                                     Shares       Amount       Surplus        Deficit           Equity
                                     ------       ------       -------        -------           ------
<S>            <C>                 <C>             <C>         <C>           <C>               <C>   
BALANCE, MARCH 31,1996             1,173,382       $587        $9,253        ($8,569)          $1,271


Net Loss                                                                        (230)            (230)
                                   ---------       ----        ------        -------           ------  

BALANCE, MARCH 31,1997             1,173,382       $587        $9,253        ($8,799)          $1,041



Net Income                                                                       288              288
                                   ---------       ----        ------        -------           ------
                                  
BALANCE, MARCH 31,1998             1,173,382       $587        $9,253        ($8,511)          $1,329
                                   =========       ====        ======        =======           ======
                                   
</TABLE>
See notes to financial statements.

                                      -4-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands)

                                                                      1998         1997
                                                                    -------      -------
<S>                                                                 <C>          <C>     
OPERATING ACTIVITIES
   Net income (loss) ..........................................     $   288      ($  230)
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
       Loss on disposal of furniture and equipment ............        --             15
       Net Gain on sale of loans held for sale ................         (14)         (22)
       (Recovery of) provision for investment losses ..........         (49)         215
       Loss on note receivable ................................          52         --
       Principal collected on note receivable .................          40         --
       Recovery on note payable ...............................        (268)        --
       Depreciation ...........................................          10           15
       Amortization of servicing rights .......................          27           17
       Origination of loans held for sale .....................      (7,033)      (3,256)
       Proceeds from sales of loans held for sale .............       7,333        2,876
       Increase in Partnership loans ..........................         (91)        --
       Decrease (Increase) in accrued interest receivable .....          20           (6)
       Decrease in other assets ...............................          (4)          20
       Decrease in accounts payable and other accrued expenses          (29)        (130)
       Decrease in deferred income taxes ......................        --            (76)
       Increase in restricted cash ............................          (4)        --
                                                                    -------      -------

            Net cash provided by (used in) operating activities         278         (562)
                                                                    -------      -------

INVESTING ACTIVITIES
      Proceeds from sales of investments ......................        --            250
      Principal collected on investments ......................          42            2
                                                                    -------      -------

            Net cash provided by investing activities .........          42          252
                                                                    -------      -------

FINANCING ACTIVITIES
     (Decrease) increase in warehouse line of credit ..........        (317)          91
                                                                    -------      -------

            Net cash (used in) provided by financing activities        (317)          91
                                                                    -------      -------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..............           3         (219)

CASH AND CASH EQUIVALENTS, BEGINNING ..........................         211          430
                                                                    -------      -------

CASH AND CASH EQUIVALENTS, ENDING .............................     $   214      $   211
                                                                    =======      =======
</TABLE>
See notes to financial statements.

                                      -5-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

1.       MANAGEMENT'S PLAN

         On August 15, 1990,  the  Corporation,  formerly The First  Connecticut
Small Business Investment Company,  filed a petition for relief under Chapter 11
of the federal bankruptcy laws in the United States Bankruptcy Court.

         On October 18, 1991,  the  Corporation  filed a plan of  reorganization
(the "Plan") with the United States  Bankruptcy Court. The Plan was confirmed as
of January 9, 1992, and generally  provided for payment in full of all creditors
except the U.S. Small Business Administration (the "SBA").

         The Corporation filed an application to close the Chapter 11 bankruptcy
proceedings.  That  application  was approved and the  Corporation  emerged from
bankruptcy on December 24, 1994.

         During  1998,  the  Corporation  generated  net  income  of  $288.  The
Corporation  currently  anticipates  that during the year ending March 31, 1999,
its principal  financing  needs will consist of funding its mortgage  loans held
for sale (see Note 10 -  Warehouse  Line of Credit)  and the ongoing net cost of
mortgage loan originations.  Future cash flow requirements will depend primarily
on the level of the Corporation's activities in originating and selling mortgage
loans, as well as cash flow required by its operations. Although the Corporation
anticipates increased activities in originating mortgage loans, the difficulties
experienced  within the relevant  economic  markets still exist and there are no
assurances  that  increased  activity  will occur.  Consequently,  as a means to
provide  further cash flow,  the  Corporation  has  expressed a  willingness  to
liquidate  certain  current assets in its portfolio and that a market exists for
those assets.

         The  Corporation  continues to investigate  and pursue  alternative and
supplementary  methods of financing its  operations and to support the growth of
the Corporation.

         The  Corporation  believes that cash on hand and  internally  generated
funds will be  sufficient  to meet its  corporate,  general  and  administrative
working  capital and other cash  requirements  during the year ending  March 31,
1999. The Corporation  took certain action steps during the year ended March 31,
1997 to decrease its cash flow  requirements  for the years ended March 31, 1998
and 1997. Those steps included an overall salary reduction and a restatement and
termination of the pension plan. As a result of the note  receivable  from Walsh
Securities  (see Note 4 ) the  Corporation's  cash flow will  increase by $120 a
year. Management also believes additional steps can be taken if necessary.

                                      -6-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

2.       PARTNERSHIP

         The Corporation has formed a Limited  Partnership  (the  "Partnership")
known as First  Connecticut  Capital Mortgage Fund A, Limited  Partnership as to
which the Corporation is the General  Partner.  The intent of this new entity is
to sell units in the Limited Partnership to investors in a private placement, up
to a maximum of $5 million in $50 units, for the purpose of funding a short-term
Portfolio Loan Program for the Limited Partnership. The limited partners will be
limited  to  investors  who  qualify  as  "Accredited  Investors"  as defined in
regulation D,  promulgated  under the Securities act of 1933. This program would
generate  income to the  Corporation  in the form of loan  origination  fees and
service fees in excess of a guaranteed  income return to the limited partners in
connection  with,  mortgage  loans  that  would  be  purchased  by  the  Limited
Partnership from the funds invested by the limited  partner.  As of June 1, 1998
the Corporation has sold 33 units.

         As of March 31, 1998, the Corporation had a one percent interest in the
Partnership  with a recorded balance of $13 which is accounted for on the equity
method of accounting.  The following presents summarized  financial  information
for  the  Partnership  as of and for the  year  ended  December  31,  1997,  the
Partnership's fiscal year end:

         Total Assets (principally consisting of mortgages receivable)    $1,279
         Total Liabilities                                                    11
         Total Partnership Capital                                         1,269
         Total Revenues                                                       40
         Net loss                                                         $    1

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Loans  -  Loans  are  generally   recorded  at  the  principal   amount
outstanding.  Interest  rates on loans are fixed at the time of issuance and are
based upon current  market rates at the time. As of March 31, 1998,  outstanding
loans are  payable in a variety of methods  over a term of less than five years,
all are collateralized by liens on real properties; a few of such properties are
subject to prior liens.  Interest  income on loans is recognized  based on rates
applied to principal  amounts  outstanding.  In connection with most loans,  the
borrower also pays a nonrefundable  fee to the Corporation.  Loans are generally
placed on  nonaccrual  status when they become 180 days past due or earlier,  if
the loan is considered impaired.  Any unpaid amounts previously accrued on these
loans are reversed  from  income.  Subsequent  cash  receipts are applied to the
outstanding  principal  balance or to  interest  income if, in the  judgment  of
management,  collection of the outstanding  principal is not in question.  Loans
are  removed  from  non-accrual  status  when  they  become  current  as to both
principal and interest and when subsequent performance reduces the concern as to
the collectibility of principal and interest.

         Loans held for sale - Mortgage  loans  originated and intended for sale
in the  secondary  market are  carried at the lower of cost or fair value in the
aggregate.  Net unrealized losses are recognized  through a valuation  allowance
charged to income.

                                      -7-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and  per share amounts)

         Allowance for Investment  Losses - The allowance for investment  losses
is determined by management on an investment by investment  basis. The allowance
is an amount that  management  believes  will be  adequate  to absorb  losses on
existing investments that may become uncollectible,  based on evaluations of the
collectibility of the investments.  The evaluations take into consideration such
factors as geographic location,  assessment of collateral quality, appraisals of
significant  collateral  and other  conditions  that may affect  the  borrower's
ability to repay.

         Certain  impaired  loans are  measured  based on the  present  value of
expected future cash flows discounted at the loan's effective  interest rate or,
as a practical  expedient,  at the loan's  observable  market  price or the fair
value of the collateral if the loan is collateral dependent.

         Concentration  of  Credit  Risks  - The  nature  of  the  Corporation's
business is to fund and service  mortgages  to  qualified  borrowers  within the
northeastern  United  States , and more  localized  in the state of  Connecticut
where management has the most experience.  The mortgage loans are  predominately
collateralized  with residential  properties,  however,  there are a few smaller
commercial  properties as well as some vacant land. The Corporation  maintains a
strict real estate appraisal policy as well as underwriting guidelines.

         Pension Plan - The Corporation had a  non-contributory  defined benefit
pension plan covering all employees  meeting certain  eligibility  requirements.
The Corporation's policy was to fund accrued pension cost.
This plan was terminated on March 31, 1997 (See Note 14).

         Cash and Cash  Equivalents - For the purpose of the  statements of cash
flows,  the  Corporation  has defined cash as including cash on hand and cash in
interest bearing and noninterest bearing operating bank accounts.  Highly liquid
investments  such as time deposits with an original  maturity of three months or
less are considered to be cash equivalents.

         Restricted  Cash -  Restricted  cash is  composed of a  certificate  of
deposit which is being  maintained as collateral for the  Corporation's  standby
letter of credit.

         Income Taxes - The Corporation  follows the asset and liability method,
whereby  deferred tax assets and  liabilities  are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis.  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.

         Servicing Rights - In connection with the sale of substantially  all of
the  Corporation's  investments as discussed in Note 4, the Corporation  stopped
the  amortization of certain  servicing rights due to the assignment of the loan
portfolio  serviced by the Corporation under the Asset Management Loan Servicing
agreement  dated  December  15,1993  (the   "Agreement")  to  Greenwich  Capital
Financial Products,  Inc.(Note 5). Servicing rights amortized using the interest
method  were $27 and $17  during  the  years  ended  March  31,  1998 and  1997,
respectively.

                                      -8-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         Fixed Assets - Fixed assets are carried at original cost.  Depreciation
is provided for  primarily by using  accelerated  depreciation  methods over the
estimated service lives as follows:

                  Improvements                       31  years
                  Furniture and fixtures             3-5 years
                  Equipment                          3-5 years
                  Automobiles                        3   years


         Loan Servicing - As of April 1, 1996, the Corporation adopted Statement
of  Financial  Accounting  Standard  (SFAS) No. 122,  "Accounting  for  Mortgage
Servicing  Rights."  This  Statement  required  allocation  of the total cost of
mortgage  loans to the  mortgage  servicing  rights and the loans  (without  the
mortgage  servicing  rights)  based on their  relative  fair  values.  Effective
January 1, 1997,  SFAS No. 122 was superseded by SFAS No. 125,  "Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
the  effective  provisions  of which were adopted by the  Corporation  as of the
above  mentioned  effective  date.  This  statement  specifies   accounting  and
reporting  standards  for  transfers  and  servicing  of  financial  assets  and
extinguishments  of liabilities and for  distinguishing  whether a transfer of a
financial asset in exchange for cash or other consideration  should be accounted
for  as a  sale  or as a  pledge  of  collateral  in a  secured  borrowing.  The
Corporation  recorded an asset of $14 and $27,  related to servicing of loans as
of March  31,  1998 and  1997,  respectively.  This  asset  is  affected  by the
predominant  risk  characteristics  of  the  underlying  financial  assets  and,
accordingly,  the  Corporation  periodically  assesses the asset for impairment.
Since the underlying  financial assets primarily represent loans  collateralized
by first  mortgages,  the  servicing  rights asset  encompasses  risks  commonly
associated  with mortgage loans.  Estimation of a valuation  allowance to reduce
the servicing rights asset to fair value involves evaluating the characteristics
of the underling assets  including  interest rates,  estimated  remaining lives,
dates of origination, terms, and geographic location. No valuation allowance was
recorded  at March  31,  1998 and  1997,  based  on the  characteristics  of the
underlying financial assets.

         Income (Loss) Per Common Share - As of March 31, 1998, the  Corporation
adopted  Statement of Financial  Accounting  Standards No. 128 ("SFAS No. 128"),
"Earnings per Share," which  establishes  new standards for the  computation and
disclosure  of  earning  per share  ("EPS").  The new  statement  requires  dual
presentation  of  "basic"  EPS and  "diluted"  EPS.  Basic  EPS is  based on the
weighted average number of common shares  outstanding for the period,  excluding
the effects of any  potentially  dilutive  securities.  Diluted EPS reflects the
potential  dilution that could occur if  securities or other  contracts to issue
common  stock  were  exercised  or  converted.  Net  income  (loss) per share is
calculated  by dividing  net income  (loss) by the  weighted  average  number of
common  shares  outstanding  during the period.  The  Corporation's  outstanding
options are excluded from the computation due to their antidilutive effect.

                                      -9-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         Stock  Options - During  1997,  the  Corporation  adopted SFAS No. 123,
"Accounting for Stock-Based  Compensation." This statement encourages,  but does
not require,  employers to adopt a fair value method of accounting  for employee
stock-based  compensation.  The Corporation continues to account for stock-based
compensation using the intrinsic value under Accounting Principles Board Opinion
No. 25,  "Accounting  for Stock Issued to  Employees."  Regardless of the method
used for employee  stock-based  arrangements,  SFAS No. 123  requires  increased
disclosures  of  stock-based  compensation   arrangements  with  employees.  The
Corporation  has  adopted  SFAS No.  123  through a separate  disclosure  to the
financial statements.

         Use  of  Estimates  -  The  preparation  of  financial   statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.

         New Accounting  Standards - In 1997, the Financial Accounting Standards
Board  issued  Statement  of  Financial  Accounting  Standards  (SFAS) No.  130,
Reporting  Comprehensive  Income, which establishes  standards for reporting and
displaying comprehensive income and its components and SFAS No. 131, Disclosures
about  Segments of an  Enterprise  and Related  Information,  which  establishes
standards  for the way  public  companies  report  information  about  operating
segments  in  both  interim  and  annual   financial   statements   and  related
disclosures.  The adoption of these standards is not expected to have a material
impact  on  the  Corporation's  financial  statements.  The  standards  will  be
effective for the Corporation's financial statements in fiscal year 1999.

4.       SALE OF INVESTMENTS

         On December 15, 1993,  the  Corporation  sold  outstanding  investments
including  accrued  interest with a net book value of $30,025 pursuant to a Loan
and Real Property Purchase Agreement (the "Purchase Agreement") dated as of June
29,  1993 (and as amended on October 29,  1993).  The  portfolio  was sold to GF
Mortgage  Corporation,  an unrelated  purchaser which is a subsidiary of Gruntal
Financial  Corporation,  a subsidiary of The Home Insurance Company, in exchange
for satisfaction of outstanding  liabilities to the Participants'  Trust and the
SBA  with  carrying   values  at  December  15,  1993  of  $17,359  and  $5,275,
respectively,  and options to purchase 60,000 shares of the Corporation's common
stock (see Note 15). The  Corporation  recognized a loss of $6,412 in connection
with the sale.  The  Corporation  also  received a  participation  under certain
conditions in the recovery of non-accrued interest or principal in excess of the
book value of the loans and entered into an Asset Management and Loan Servicing

                                      -10-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

Agreement (the "Agreement") dated December 15, 1993 with GF Mortgage Corporation
whereby the  Corporation  continued to service the portfolio for an amount equal
to 1/12th of one percent of the  principal  balance  outstanding  each month and
received 2.5% of the principal  outstanding or the sales price as defined in the
Agreement upon subsequent sale of these investments to an outside party.  During
the years ended March 31, 1998 and 1997, the Corporation  realized $41 and $126,
respectively,  in accordance with this Agreement. See Note 5 for a discussion of
the termination of the Agreement.

5.       TERMINATION OF SERVICING RIGHTS

         On October 27, 1997, Walsh Securities  assigned the balance of the loan
portfolio  serviced by the Corporation  under the Agreement to Greenwich Capital
Financial Products,  Inc. ("Greenwich Capital") As a result of this transaction,
the Agreement was  terminated.  Walsh  Securities  issued a promissory note (the
"Note")  dated  November  12,  1997  in the  amount  of $560  to  fulfill  their
obligation  to the  Corporation  under  the  Agreement.  Since  the  Note is not
interest  bearing,  interest has been  imputed at 8.5%  resulting in an original
issue  discount  ("OID") of $78.  This OID will be amortized to interest  income
over the life of the Note.

         The  discounted  value  of the  Note  of  $482  was  exchanged  for the
unamortized balance of the servicing rights of $320 and a receivable of $214 for
certain  reimbursable  fees  and  expenses  resulting  in  a  $52  loss  on  the
transaction.

         The Note requires  monthly  payments of $10 beginning  December 1, 1997
through December 1, 2000 with a lump sum payment of $200 on December 31, 2000.

         The  Corporation  will continue to service the remaining loan portfolio
for Greenwich Capital under a new servicing agreement.

6.       INVESTMENTS AND ALLOWANCE FOR INVESTMENT LOSSES

         Investments by type at March 31, are as follows:

                                                  1998      1997
                                                 -----     ------

             Loans .........................     $ 766     $1,176
             Allowance for investment losses      (300)      (695)
                                                 -----      -----

             Total .........................     $ 466      $ 481
                                                 =====      =====

                                      -11-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         Changes  in the  allowance  for  investment  losses are  summarized  as
follows for the years ended March 31:

                                                        1998        1997
                                                     --------    --------

         Beginning balance                           $    695    $    636
         (Recovery of) Provision for losses               (49)        215
         Investment write-offs                           (346)       (156)
                                                     --------    --------

         Ending balance                              $    300    $    695
                                                     ========    ========


         At March  31,  1998,  the  Corporation  has a  recorded  investment  in
impaired loans of $735 and a related allowance for investment losses of $300, as
compared  to $1,176 of impaired  loans and a related  allowance  for  investment
losses of $695 at March 31, 1997.  The average  recorded  investment in impaired
loans  for the year  ended  March  31,  1998 and 1997  was  $1,042  and  $1,120,
respectively,  and the income  recorded  on these loans  identified  as impaired
totaled $107 and $103, respectively.

         Loans on which the accrual of interest has been  discontinued  amounted
to approximately $94 and $491 at March 31, 1998 and 1997, respectively. If those
loans had been  current  throughout  their  terms,  interest  income  would have
increased $12 and $95 for the years ended March 31, 1998 and 1997, respectively.

7.       FIXED ASSETS

         At  March  31,  1998  and  1997,  the  costs  and  related  accumulated
depreciation of the Corporation's fixed assets were as follows:

                                                        1998       1997
                                                       -----      ------

         Improvements ............................     $   7      $   7
         Equipment ...............................       234        237
                                                       -----      -----
         Fixed assets at cost ....................       241        244
         Less accumulated depreciation............      (204)      (197)
                                                       -----      -----
         Fixed assets-net ........................     $  37      $  47
                                                       =====      =====

8.       PARI PASU LOAN PARTICIPATIONS

         Certain  participation  agreements  provide for the participant and the
Corporation  to share,  pari pasu in the  rights and risks of payment in certain
loan accounts.  Investments are shown net of the pari pasu participation amount.
The outstanding participant balance under these agreements is $44 and $253 as of
March 31, 1998 and 1997, respectively.

                                      -12-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

9.       INCOME TAXES

         The income tax provision consisted solely of current state income taxes
for the years ended March 31, 1998 and 1997.

         A  reconciliation  of the income tax  provision  (benefit)  computed by
applying the Federal  statutory rate to income before income taxes to the actual
provisions  for income  taxes for the years  ended March 31, 1998 and 1997 is as
follows:

                                                        1998       1997
                                                       -----      -----
        Income tax provision (benefit)
          at statutory rate ......................     $ 103      $ (79)
        Primarily loss for which no benefit
          can be realized ........................         0         84
        Benefit of net operating loss carryforward
          for which no asset was previously
          recognized .............................       (98)         0
                                                       -----      -----
        Total ....................................     $   5      $   5
                                                       =====      =====

The components of the net deferred tax asset are as follows:

                                               1998                1997
                                             -------             -------
       Deferred tax asset:
         Net operating loss carryforward     $ 3,295             $ 3,746
         Valuation allowance ...........      (3,295)             (3,746)
                                             -------             -------
       Net deferred tax asset ..........     $     0             $     0
                                             =======             =======

         The Corporation has elected, for income tax purposes, to report certain
capital gains on an installment basis, whereas the total amount of such gains is
reported for financial  statement purposes as of the transaction date.  Deferred
income taxes are provided for the difference between the gains reported for book
and tax purposes,  and becomes  currently  payable as the gains are realized for
tax purposes. There was no deferred tax liability at March 31, 1998 or 1997.

         In  addition,  deferred  tax  assets  result  from net  operating  loss
carryforwards  (NOLS). Due to the uncertainty of realizing the benefits of these
NOLS a valuation  allowance has been  established.  The valuation  allowance was
reduced by $451 and  increased  by $22 for the years  ending  March 31, 1998 and
1997, respectively.

                                      -13-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         At March 31, 1998, the Corporation had available  federal and state net
operating loss carryforwards of $9,293 and $5,344, respectively,  for income tax
purposes which expire as follows:

                                            Federal                    State
                                            -------                    -----

                  1999                           -                     $4,087
                  2000                           -                        678
                  2001                           -                        483
                  2002                           -                         69
                  2003                           -                         27
                  2008                       $3,914                        -
                  2009                        4,087                        -
                  2010                          679                        -
                  2011                          497                        -
                  2012                           81                        -
                  2013                           35                        -
                                             ------                     ------

                                             $9,293                     $5,344
                                             ======                     ======

10.      WAREHOUSE LINE OF CREDIT

         The  Corporation  had a $1 million  warehouse line of credit with Walsh
Securities  to fund  mortgages  before  they were sold.  This line of credit was
collateralized  by mortgage  loans  originated  with the proceeds.  This line of
credit expired on December 31, 1997 and, accordingly,  there were no outstanding
advances  at March 31,  1998.  At March 31,  1997 there was $317 of  outstanding
advances under the line of credit.

11.      TRANSACTIONS WITH AFFILIATES

         Affiliates  include  directors  and  officers  of the  Corporation  and
members  of their  immediate  families  and  companies  which  have a 5% or more
ownership in the Corporation.

Legal services,  including  representation  of the Corporation on the closing of
all new loans, foreclosure proceedings on delinquent loans and general corporate
and security matters, are provided by a firm in which a director is a principal.
Fees for these  services were $17 and $31 for the years ended March 31, 1998 and
1997, respectively, of which $15 of legal expenses accrued at March 31, 1996 had
been negotiated and forgiven by the law firm in the year ended March 31, 1997.

                                      -14-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         Certain  officers and directors of the  Corporation are principals of a
mortgage company. The Corporation extended second mortgages to borrowers secured
by  collateral  which had also been  pledged  to the  mortgage  company on first
mortgages.  The mortgage  company is in the process of liquidation  and does not
compete with the Corporation.

12.      COMMITMENTS AND CONTINGENCIES

         The Corporation had made certain guarantees with a contractual  balance
of $368 at March 31, 1997. The guarantees were for small business  concerns from
whom  collateralized  loans were  outstanding and were previously sold (see Note
4).  During the year ended March 31,  1995,  $368 of these  guarantees  had been
called by the bank. The Corporation had fully accrued for the guaranteed amounts
called at March 31, 1997. On March 31, 1998 this guarantee had been  negotiated,
forgiven and  released  for a cash payment of $100,  resulting in income of $268
included in the recovery of notes  payable in the  statement of  operations  for
1998.

         Additionally,  the  Corporation has made no payments on prior mortgages
to other financial  institutions in order to secure the  Corporation's  position
during the years ended March 31, 1998 or 1997.

         As of March 31, 1998 and 1997, the  Corporation  had  outstanding  loan
commitments of $2,447 and $1,132, respectively.

13.      LETTER OF CREDIT

         The Corporation has a $40 letter of credit  outstanding as of March 31,
1998 at a stated  interest  rate of 2.00% per annum  related  to  obtaining  its
license as a First  Mortgage  Loan-Lender  Broker.  The letter of credit expires
February 9, 2000. At March 31, 1998,  restricted cash includes a $49 certificate
of deposit which is being maintained as collateral for the letter of credit.

14.      EMPLOYEE BENEFITS

         The  Corporation  had a  non-contributory  defined benefit pension plan
covering substantially all of its employees. The benefits were based on years of
service and the average of the highest consecutive five years compensation. Plan
assets consisted primarily of cash equivalents and debt securities.

         The Plan, as restated on March 31, 1995, froze benefits for the "Highly
Compensated  Employees" at the March 31, 1989 level and provided the "Non-Highly
Compensated  Employees"  with  pre-1986  level  of  benefits.   Furthermore,  an
amendment  adopted March 31, 1995 ceased benefits  accruals for all participants
effective  April 14, 1995.  Finally on March 31, 1997, the Plan was  terminated.
Accordingly,  the  projected  benefit  obligation  became  fully vested and Plan
assets of $293 were distributed to participants on November 24, 1997.

                                      -15-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         Net periodic  pension  cost for the year ended March 31, 1997  included
the following components:


         Service cost-benefits earned
          during the year                                     $  11
         Interest cost on projected
          benefit obligation                                     20
         Actual return on assets                                  0
         Net amortization of transition obligation              (21)
                                                              -----

         Net periodic pension cost                            $  10
                                                              =====

         The following  table sets forth the benefit  obligations and net assets
of the plan at March 31, 1997:

Vested benefit obligation                                      $293

Accumulated benefit obligation                                  293

Projected benefit obligation                                    293
Plan assets at fair value                                       293
                                                               ----

Excess of plan asset
 over projected benefit obligation                                0
Unrecognized net gain                                             0
                                                              -----
Accrued pension costs included in
 accrued expenses                                             $   0
                                                              =====

The  following  are rates and  assumptions  used in  determining  the  actuarial
present value of the projected benefit obligations for fiscal 1997:



         Weighted average discount rate                       7.25%

         Expected long-term rate of
          return on assets                                    7.50%

                                      -16-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

15.      STOCK OPTIONS

         The Corporation has a compensatory  stock option plan which enables the
granting of options to officers to purchase shares of the  Corporation's  common
stock at prices  equal to fair market  value at the date of grant.  As the grant
date coincides with the  measurement  date, and the option price is equal to the
quoted market price at the measurement  date,  there is no related  compensation
expense.  At March 31,  1998,  no options were  outstanding  under this plan and
options for 40,000 shares were  available for future grants.  Options  generally
become exerciseable two years after grant and expire within five years of grant.

         In connection with the Purchase  Agreement (see Note 4) and pursuant to
a stock option  agreement  dated December 15, 1993, the  Corporation  granted GF
Mortgage  Corporation  the right and  option to  purchase  60,000  shares of the
Corporation's common stock expiring on December 15, 1998 at an exercise price of
$1.50 per  share  which was less  than  market  value at the date of grant.  The
difference  between the quoted  market  value of the shares at the date of grant
and  the  option  price  for  the  grant  was  charged  to the  loss  on sale of
investments  at the date of grant.  As of March 31,  1998,  60,000  options  are
excercisable and no such options have been exercised.

16.      DIVIDEND REINVESTMENT PLAN

         Previously,  the Corporation  had  established a Dividend  Reinvestment
Plan whereby holders of the Corporation's  common stock may automatically invest
cash dividend  payments in additional shares of common stock at a price equal to
90% of the then market  value,  as  defined,  without  payment of any  brokerage
commissions or service charge.  No shares of common stock were issued under this
plan during 1998 or 1997.

17.      LEASES

         The   Corporation   leases  office  space  and  equipment  for  use  in
operations.  The  leases  generally  provide  that the  Corporation  pay  taxes,
insurance and maintenance  expenses.  Some leases contain renewal  options,  and
rent  payments  change in accordance  with changes in the Consumer  Price Index.
Rental  expense  relating  to  cancelable  and  noncancelable  operating  leases
amounted  to $31  and  $33  for  the  years  ended  March  31,  1998  and  1997,
respectively.

                                      -17-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         As of March 31, 1998,  future  minimum rental  payments  required under
noncancelable operating leases were as follows:

                    Year Ending                   Minimum
                     March 31,               Rental Payments
                     ---------               ---------------

                       1999                       $  36
                       2000                          35
                       2001                          32
                       2002                          23

                           TOTAL                  $ 126
                                                  -----

18.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         Methods and  assumptions for estimating the fair value of the Company's
financial  instruments are set forth below.  Fair values are calculated based on
the value  without  regard to any  premium  or  discount  that may  result  from
concentrations   of   ownership   of  a  financial   instrument,   possible  tax
ramifications or estimated transaction costs.

         Loans - As substantially all of the Corporation's loans fall within the
scope of SFAS No. 114, the  estimated  fair value for such loans is based on the
present value of expected future cash flows  discounted at the loan's  effective
interest  rate or on  recent  external  appraisals  or  other  available  market
information if the loan is collateral  dependent.  Assumptions  regarding credit
risk, cash flow, and discount rates are judgmentally  determined using available
market information and specific borrower information.

         Servicing  Rights  - The  Corporation  estimates  fair  value  for  its
servicing  rights by discounting  expected net cash flows through  maturity from
servicing  activities  at market  discount  rates  that  reflect  the credit and
interest rate risk inherent in the servicing rights.

         Note Receivable - The fair value of the note receivable is estimated by
discounting future cash flows at a current market rate of interest.

         Other On-Balance  Sheet Financial  Instruments - Other on-balance sheet
financial  instruments  include  cash and  cash  equivalents,  restricted  cash,
accrued  interest and a warehouse line of credit.  The carrying value of each of
these financial instruments is a reasonable estimation of fair value.

         Loans held for sale - For loans  held for sale fair value is  estimated
by discounting  contractual  cash flows adjusted for prepayment  estimates using
discount rates based on secondary market sources adjusted to reflect differences
in servicing and credit costs.

                                      -18-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION


NOTES TO FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)

         The carrying values were equal to the estimated fair values of cash and
cash equivalents,  restricted cash, net investments, loans held for resale, note
receivable,  accrued interest, warehouse line of credit and net servicing rights
as of March 31, 1998 and 1997.

         Limitations  - 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.  Because no market  exists for a  significant
portion of the Company's financial  instruments,  fair value estimates are based
on  judgments  regarding  future  expected  loss  experience,  current  economic
conditions,  risk  characteristics  of various  financial  instruments and other
factors.  These estimates are subjective in nature and involve uncertainties and
matters of  significant  judgment  and,  therefore,  cannot be  determined  with
precision. Changes in assumptions could significantly affect the estimates.

                                    * * * * *

                                      -19-