<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-K

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

For the fiscal year ended                              Commission File Number
    December 31, 1995                                        34-0-18162

                        People's Savings Financial Corp.
             (Exact name of registrant as specified in its charter)


               Connecticut                                   06-1259026
     (State or other jurisdiction of                      (I.R.S. employer
      incorporation or organization)                     identification no.)


123 Broad Street, New Britain, Connecticut                      06053
 (Address of principal executive offices)                     (Zip code)

Registrant's telephone number, including area code:   (203)224-7771

Securities registered pursuant to Section 12(b) of the Act:  None

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


                     Common Stock, par value $1.00 per share
                                (Title of class)



     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve  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 ninety days.

                             X    Yes            No
                           -----          -----

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

                               Page 1 of 30 pages.

                     The Exhibit Index is found at page 25.
<PAGE>
 
     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant  based on the closing  sale price of such stock on February  29,
1996 was $35,339,335.


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

                                                             Outstanding at
                  Class                                    February 29, 1996
                  -----                                    -----------------
Common Stock, par value $1.00 per share                        1,924,363
                                                               =========


                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the following  documents are  incorporated by reference in this
Annual Report on Form 10-K as indicated herein.


                                                          Part of Form 10-K
               Document                                into which incorporated
               --------                                -----------------------

  1995 Annual Report to Shareholders                          I and II

  Proxy Statement for the 1996 Annual                            III 
  Meeting of  Stockholders  (to be filed
  within 120 days of December 31, 1995)
  (the "Proxy Statement")

                                       2
<PAGE>
 
                                TABLE OF CONTENTS


                                                                      Page
                                                                      ----
                                     PART I

Item 1  -  Business..............................................       1
Item 2  -  Properties............................................      20
Item 3  -  Legal Proceedings.....................................      20
Item 4  -  Submission of Matters to a Vote of Security
             Holders.............................................      21
        -  Executive Officers of the Registrant..................      21

                                     PART II

Item 5  -  Market for Registrant's Common Equity and
             Related Stockholder Matters.........................      21
Item 6  -  Selected Financial Data...............................      22
Item 7  -  Management's Discussion and Analysis of
             Financial Condition and Results of Operations.......      22
Item 8  -  Financial Statements and Supplementary Data...........      22
Item 9  -  Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure..............      23

                                    PART III

Item 10 -  Directors and Executive Officers of the
             Registrant..........................................      23
Item 11 -  Executive Compensation................................      23
Item 12 -  Security Ownership of Certain Beneficial Owner
             and Management......................................      23
Item 13 -  Certain Relationships and Related Transactions........      23


                                            PART IV

Item 14 -  Exhibits, Financial Statement Schedules and
             Reports on Form 8-K.................................      24
<PAGE>
 
                                     PART I

Item 1  -  Business

     The principal  executive  offices of People's Savings  Financial Corp. (the
"Company")  and of The  People's  Savings  Bank of New Britain  (the "Bank") are
located at 123 Broad  Street,  New Britain,  Connecticut  06053.  The  telephone
number of the Company and the Bank is (203)224-7771.

     The Company was organized as a  corporation  under the laws of the State of
Connecticut  on February  22,  1989,  to operate  principally  as a bank holding
company for the Bank. The Bank's  shareholders  approved the  acquisition by the
Company of all of the  outstanding  common  stock of the Bank (the "Bank  Common
Stock") in  exchange  for shares of common  stock of the Company  (the  "Company
Common Stock"). The Bank is the sole subsidiary of the Company and its principal
asset.  As of December 31, 1995,  the Company had total  consolidated  assets of
$410.2 million, total consolidated deposits of $339.4 million,  consolidated net
loans of $236.8 million and consolidated  shareholders' equity of $44.7 million.
As of December 31,  1994,  the Bank had total  assets of $402.1  million,  total
deposits of $321.7 million, net loans of $226.3 million and shareholders' equity
of $41.2 million.

     The Bank was originally organized in 1907 as a Connecticut-chartered mutual
savings  bank,  and converted to a  Connecticut-chartered  capital stock savings
bank on August 27, 1986. The Bank currently  offers  general  banking  services,
including  accepting  deposits from the general  public and lending or investing
those funds and also offers trust services.  In addition to its main office, the
Bank  operates  seven  banking  branches  located in New  Britain,  Southington,
Newington, Rocky Hill, and Plainville, Connecticut. The Bank will open its eight
branch in Meriden, CT in early spring 1996.

Principal Market Area

     The Bank's  principal  market  encompasses  the City of New Britain and the
Towns of Berlin,  Newington,  Southington,  Rocky Hill,  Plainville and Meriden.
Although  traditionally  servicing  the banking  needs of New  Britain's  Polish
community,  the Bank has expanded its customer base over the past several years.
The Bank intends to continue to focus its marketing  efforts in the next several
years on other segments of the New Britain community and upon residents of other
towns in its market area.

     The City of New Britain is evolving from a primarily  industrial economy to
an  industrial-commercial-service   economy.  The  surrounding  communities  are
largely  residential  but  also  have  significant   industrial  and  commercial
activities.  The transfer of several  major  manufacturing  facilities  to other
areas of the country  continues to affect  adversely  the New Britain area labor
market.
<PAGE>
 
Lending and Investment Activities

     The Bank provides personalized financial services to its existing customers
and intends to achieve growth by increasing its customer base in New Britain and
by  increasing  its  services  to,  and  expanding  its  customer  base in,  the
communities  surrounding New Britain.  The Bank's principal business consists of
attracting  deposits from the public and using such deposits,  with other funds,
to make various types of loans and  investments.  A  substantial  portion of the
loans  and  investments  originated  over  the  last  five  years  has been on a
short-term or  variable-rate  basis,  although  origination of more  traditional
fixed-rate  mortgage loans increased during the low interest rate environment in
1993.  The Bank has  originated  more  adjustable  rate  loans  with the rise in
interest  rates during 1994 and 1995.  During 1991 through  1995,  maturities on
both mortgages and investments  were extended to take advantage of higher yields
on longer maturities. Fixed rate mortgages and loans are originated with 8 to 30
year  maturities,  while  maturities on some investments were extended to 5 to 7
years.  The Bank sold the majority of the 30-year fixed rate mortgages  which it
originated during 1994 and 1995 in order to reduce the Bank's interest rate risk
exposure.  The Bank's activities in this regard will vary in degree from time to
time  depending upon  investment  opportunities,  economic and rate  conditions,
liability  strategy and the Bank's  efforts to maintain an adequate net interest
spread.

     Since  the  conversion  to a  capital  stock  savings  bank,  the  Bank has
regulated its efforts to increase  future deposit growth based on its assessment
of the profitability of the investment options then available for such funds.

     The Bank also seeks to expand  existing  and develop  additional  fee-based
services. Current fee-based product lines include mortgage originations, selling
and servicing  mortgages  (the income from which is not considered a significant
part of the  Bank's  operations),  checking  accounts,  and  Savings  Bank  Life
Insurance.

     During  1993,  the Bank also  added a Trust  Department  and an  Investment
Services Department to increase fee income. In November 1994, the Bank purchased
the New Meriden  Trust Co., a trust  company with  $179,000,000  in trust assets
from the FDIC.  In May, 1995 the Bank opened a trust office in  Middletown,  CT.
Trust assets grew to $310 million at December 31, 1995.

Average Balance Sheets; Analysis of Net Interest Income; and Analysis of Changes
in Interest Income and Interest Expense

     The supplementary  information  required by Item I of "Guide 3. Statistical
Disclosure by Bank Holding  Companies"  relating to average balance  sheets;  an
analysis of net interest  income;  and an analysis of increases and decreases in
interest  income and  expense in terms of changes in volume and  interest  rates
appears on pages 19 and 20 of the Company's  1995 Annual Report to  Shareholders
under the caption  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations",  and is  incorporated  by  reference  herein.  Such
information should be read in conjunction with the related financial  statements
and notes thereto incorporated by reference herein under Item 8.

                                       2
<PAGE>
 
Lending Activities

     The  supplementary  information  required  by  Item  III.A.  of  "Guide  3.
Statistical Disclosure by Bank Holding Companies" relating to the composition of
the loan  portfolio  appears on page 13 of the  Company's  1995 Annual Report to
Shareholders  under  the  caption  "Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations", and is incorporated by reference
herein.  Such  information  should  be  read in  conjunction  with  the  related
financial  statements and notes thereto  incorporated by reference  herein under
Item 8.

     The Bank's net loan portfolio totaled $236.8 million,  excluding loans held
for sale,  as of December  31, 1995,  representing  57.7% of total  assets.  The
Bank's principal  lending activity consists of the origination of mortgage loans
on residential property.

     The Bank's consumer loans continue to be an important aspect of its lending
activities, representing 13.6% of the Bank's total loan portfolio.

     In order to diversify its loan  products the Bank  established a commercial
loan  department  to provide  traditional  commercial  loans and Small  Business
Administration  loans.  The  void  resulting  from  industry  consolidation  and
downsizing  has  created  an  opportunity  for the Bank to respond to the credit
needs of small and medium size  business in a timely  manner with  practical and
effective  solutions.  The Bank hired a team of experienced  commercial  lending
officers to build a conservative,  high-quality commercial loan portfolio. As of
December 31, 1995, the commercial mortgage portfolio totaled  approximately $5.9
million, representing 2.5% of the Bank's total loan portfolio.

     The  lending  activities  of the Bank are  heavily  influenced  by economic
trends  affecting the availability of funds and by general interest rate levels.
In originating  loans,  the Bank must compete with other savings banks,  savings
and loan associations, commercial banks, mortgage companies, insurance companies
and other financial intermediaries.

     Residential Mortgage Loans. The Bank actively solicits residential mortgage
loan applications from existing customers,  builders and Realtors. Almost all of
the  Bank's  residential  mortgage  loans are made to  borrowers  who occupy the
properties  securing  their loans.  While the Bank is  authorized  to make loans
secured  by  real  estate   located  either  within  or  outside  the  State  of
Connecticut, its policy is to concentrate on loans secured by properties located
within Connecticut, particularly in its primary market area. The Bank originates
residential  real  estate  loans  through all eight of its  offices.  The Bank's
mortgage  originations  decreased by 25% from 1994 to 1995,  primarily  due to a
sluggish real estate market and increased  competition.  As of December 31, 1995
residential mortgage loans were 80.6% of the Bank's total loans.

     For its own portfolio,  the Bank  originates  adjustable-rate  and selected
fixed-rate first mortgage loans secured by residential  properties.  In 1993 and
1992 the Bank sold a  significant  number of its  30-year,  20-year  and 15-year
fixed-rate  mortgage  loans and in 1994 and 1995 sold  some of its  30-year  and
20-year  fixed rate loans  generated in those  years.  Points are charged on all
residential  mortgage loans unless the borrower  elects to pay a higher interest
rate to offset points.

                                       3
<PAGE>
 
During 1994 the Bank started offering  adjustable-rate  loans that are fixed for
the first three,  five or seven years and then adjust every year after the fixed
period. In 1995 the Bank started offering  adjustable-rate  loans that are fixed
for the first  ten years and then  adjust  every  year  after the fixed  period.
Adjustable-rate  mortgages  carry an interest  rate cap which  limits the Bank's
ability  to vary  the rate at the  time of  adjustment  and over the life of the
loan.  The annual  interest rate cap is 2% and the lifetime cap is 6%,  although
the Bank in the past had an  adjustable  rate  mortgage  loan program with an 8%
lifetime cap. Interest rate caps limit both increases and decreases in rate. The
Bank bases its adjustable-rate mortgages on indices that are best matched to the
repricing of its liabilities.

     Fixed-rate  first mortgage  loans  constituted  approximately  37.3% of net
loans as of December 31, 1995, down from 40.8% as of December 31, 1994.

     The volume of first mortgage loan  originations  since 1990 is shown in the
following table:

          Year Ended                Number of               Total Loans
          December 31,                Loans                 Originated
          ------------                -----                 ----------

             1991                      397                  44,344,000
             1992                      795                  81,485,000
             1993                      721                  73,072,000
             1994                      432                  47,237,000
             1995                      305                  35,338,000

     Despite  the   benefits  of   adjustable-rate   mortgages   to  the  Bank's
asset/liability  management  program,  they do pose potential  additional risks,
primarily  because as  interest  rates  rise,  the  underlying  payments  by the
borrower rise, thereby  increasing the potential for default.  At the same time,
the marketability of the underlying property may be adversely affected by higher
interest  rates.  It is difficult to quantify the risks resulting from increased
costs to the  borrower  as a result of  periodic  repricing  of  adjustable-rate
mortgages.  The risk  associated with holding fixed rate mortgages in the Bank's
loan  portfolio is that during  periods of rising  interest  rates,  their value
decreases  and the  initial  positive  spread  over the Bank's cost of funds may
become negative.  The benefits of holding fixed rate mortgages  include a larger
initial positive spread,  increased cash flows and the average life of the loans
are usually shorter than the stated maturity.

     In its residential  real estate lending,  the Bank follows the underwriting
requirements  of Federal  National  Mortgage  Association  and Federal Home Loan
Mortgage  Corporation.  The  Bank  lends  up to 95% of the  appraised  value  of
owner-occupied  property  and  up to  70% of  the  value  of  non-owner-occupied
property.  Under a special  program for first time home buyers the Bank has lent
up to 97% of the appraised  value of the  owner-occupied  property.  Residential
borrowers are required to obtain private mortgage  insurance covering any excess
on loans with over 80% loan-to-value  ratios.  All conventional  first mortgages
include "due-on-sale" clauses, which give the lender the right to declare a loan
immediately  due and  payable  in the  event  the  borrower  sells or  otherwise
disposes of the real property that secures the loan.

     Loans Held for Sale.  At December  31,  1995,  loans held for sale  totaled
$927,000, with a market value of $927,000.

                                       4
<PAGE>
 
     Commercial  Loans. As of December 31, 1995,  commercial and commercial real
estate  loans  totaled  $519,000,  compared to $329,000  at December  31,  1994.
Commercial  loans  constituted 0.2% of the Bank's total loans as of December 31,
1995.

     The Bank's commercial mortgage loans are directly originated and consist of
loans made on multifamily homes (more than four units) and loans  collateralized
by  non-residential  properties.  Commercial  mortgage loans  collateralized  by
non-residential  properties  as of  December  31,  1995  totaled  $5.9  million,
compared to $4.2  million as of December  31, 1994.  Commercial  mortgage  loans
collateralized by non-residential  properties constituted 2.5% of total loans as
of December 31, 1995. Loans made on multifamily  homes constituted 1.6% of total
loans,  or $3.9  million,  as of December 31, 1995,  compared to $3.9 million at
December 31, 1994. The Bank lends up to 80% of the appraised value of commercial
property.  Generally,  the  size of  commercial  mortgage  loans  is  less  than
$300,000, with the largest loan totaling $737,000.

     Construction Loans. As of December 31, 1995, residential construction loans
totaled  approximately $3.9 million, or 1.6% of the Bank's total loans, compared
to $3.1  million,  or 1.4% of total loans as of December  31,  1994.  The Bank's
limited  construction loan investments are generally  short-term (1-2 years) and
are presently  limited to residential  properties in  Connecticut.  Construction
loan  applications are  underwritten as if they were  applications for permanent
financing,  obviating the need for a commitment  for permanent  financing at the
close of the construction period.

     Consumer  Loans.  Connecticut  savings  banks are  authorized by statute to
invest their assets in secured and unsecured consumer loans without  limitation.
Connecticut  savings banks may also invest their assets,  without restriction as
to a percentage of assets, in lines of credit,  overdraft loans, and credit card
outstandings.   The  Bank's  consumer  loans  include  home  improvement  loans,
automobile and boat loans and loans to pay for medical or vacation expenses.  In
October of 1994 the Bank  started  offering its own  MasterCard  and Visa credit
cards.  The Bank originates both fixed and adjustable rate second mortgage loans
for its own portfolio and offers a variable rate  pre-approved  consumer line of
credit product secured by the equity in the consumer's home.

     The Bank also is authorized to make educational loans under the Connecticut
Guaranteed  Student  Loan  Program.  The  interest  on loans in this  program is
partially  subsidized  and is fully  guaranteed  by the federal  government.  At
December 31, 1995, the Bank had sold substantially all of its education loans to
the Student Loan Marketing  Association (Sallie Mae) prior to conversion of such
loans to amortizing loans.

     Total consumer  loans  (excluding  credit card loans)  increased from $29.0
million at December 31, 1994 to $30.8 million at December 31, 1995. Although not
classified  as collateral  loans,  approximately  99% of the Bank's  installment
loans are  secured by  mortgages  on real  property  or  security  interests  in
personal property. Collateral loans, secured by either regular savings accounts,
marketable  securities,  or certificates of deposit,  amounted to  approximately
$1.9  million at December  31, 1995 and  December  31,  1994.  Credit card loans
totaled $1.3 million at December 31, 1995 as compared to $.5 million at December
31, 1994.

     Interest  Rates.  Interest  rates  charged  by the  Bank on its  loans  are
primarily  determined by the cost of funds to the Bank,  competitors'  rates and

                                       5
<PAGE>
 
comparable investment  alternatives  available to the Bank. Federal law preempts
state usury limits on  interest,  origination  fees and all related  charges for
federally  related  mortgage  loans secured by first liens on  residential  real
property,  and no  action  has been  taken by the  Connecticut  legislature  (as
permitted by Federal law) to reimpose such state limits.

     The  supplementary  information  required  by  Item  III.B.  of  "Guide  3.
Statistical  Disclosure by Bank Holding  Companies"  relating to maturities  and
sensitivities  of loans to changes in interest  rates  appears on page 16 of the
Company's  1995 Annual Report to  Shareholders  under the caption  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations",  and
is  incorporated  by  reference  herein.  Such  information  should  be  read in
conjunction with the related financial statements and notes thereto incorporated
by reference herein under Item 8.

     Loan Commitments. The Bank's commitments to make mortgage loans on existing
residential  and commercial real property are made for periods of up to 120 days
from the date of commitment.  Such  commitments are generally made at the market
rate of  interest  prevailing  at the time  that the  commitment  is made to the
customer. The rate on the commitment is guaranteed for a period of 60 days.

     Loan  Origination  Fees and Other Fees.  In addition to interest  earned on
loans, the Bank receives loan  origination fees for originating  residential and
commercial  mortgage loans.  These fees,  commonly called "points",  are paid by
borrowers  from  their own funds and are not  netted  from the face  amount of a
mortgage loan. Loan origination  fees and certain direct loan origination  costs
are deferred and the net amount  amortized as an  adjustment of the loan's yield
over the life of the loan.  Origination fees on loans sold by the Bank are taken
into income currently.

     The Bank also receives other fees and charges  relating to existing  loans,
which  include  primarily  late charges.  In  connection  with its mortgage loan
origination  activities,  the Bank also receives application fees. These fees do
not constitute a material source of income to the Bank.

     Risk  Elements  in the Loan  Portfolio.  The  Bank's  loans  are  regularly
reviewed by management.  If contractually due principal and interest payments on
any loan are not received 15 days after the due date of the overdue payment, the
Bank institutes  monitored efforts to restore such loan to current status. Loans
are classified as non-accrual  and placed on a cash basis for purposes of income
recognition when the collectibility of interest and principal becomes uncertain.
All loans past due 90 days are treated as non-accrual loans. Generally, payments
received are recorded as principal  only after the interest is brought  current.
Continued  unsuccessful  collection efforts lead to initiation of foreclosure or
other legal proceedings.

     Properties  carried as  foreclosed  real estate  have either been  acquired
through  foreclosure  or by deed in lieu of  foreclosure,  and is carried at the
lower of (1) carrying  value of loan,  including  costs of  foreclosure,  or (2)
estimated fair value of the real estate acquired less estimated cost to sell. At
the  time of  foreclosure,  the  excess,  if any,  of the  loan  value  over the
estimated  fair value of the property  acquired is charged to the  allowance for
loan losses.  Subsequent to the time of foreclosure,  reductions in the carrying
value of foreclosed  properties due to further  declines in fair value or losses
on their sale are recognized  through charges to foreclosed real estate expense.
Costs relating to the subsequent  development or improvement 

                                       6
<PAGE>
 
of the property are capitalized; and holding costs are charged to foreclosed
real estate expense in the period in which they are incurred.

     In May 1993,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 114,  "Accounting by Creditors
for  Impairment  of a Loan" ("SFAS  114") which was later  amended in October of
1994 by SFAS 118,  "Accounting  by Creditors  for  Impairment  of a  Loan-Income
Recognition and  Disclosures."  SFAS 114 and SFAS 118, which the Bank adopted in
1995,  requires  creditors to evaluate the  collectibility  of both  contractual
interest and  contractual  principal of all loans when  assessing the need for a
loss accrual. When a loan is impaired, a creditor shall measure impairment based
on the present value of the expected future cash flows  discounted at the loan's
effective  interest  rate, or the fair value of the  collateral,  less estimated
selling costs, if the loan is collateral-dependent  and foreclosure is probable.
The creditor  shall  recognize an impairment by creating a valuation  allowance.
The  adoption  of these  pronouncements  did not have a  material  impact on the
Bank's financial condition or results of operations.

     The  supplementary  information  required  by  Item  III.C.  of  "Guide  3.
Statistical Disclosure by Bank Holding Companies" relating to the discussion and
statistical  disclosure of non-accrual,  past due and restructured loans appears
on pages 14 and 15 of the Company's 1995 Annual Report to Shareholders under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations", and is incorporated by reference herein. Such information should
be read in conjunction with the related  financial  statements and notes thereto
incorporated by reference herein under Item 8.

     The Company has not made loans to borrowers  outside the United States.  At
December 31, 1995, there were no  concentrations of loans exceeding 10% of total
loans.  A  concentration  of loans is  defined as an amount  loaned to  multiple
borrowers  engaged in similar  activities which would cause them to be similarly
affected by economic or other conditions.

     Potential problem loans are not disclosed as non-accrual, 90 days past due,
or restructured,  but are loans which are monitored because of known information
about  possible  credit  problems of  borrowers or because they are more than 30
days but less than 90 days past due.  Management assesses the potential for loss
on these loans when  evaluating the adequacy of the allowance for loan losses on
a regular  basis.  As of December 31,  1995,  monitored  loans not  disclosed as
non-accrual,  90 days past  due,  or  restructured  that  were  current  totaled
$168,000  ($57,000  residential real estate loans, and $110,000  commercial real
estate loans); monitored loans 30 days delinquent totaled $3,117,000 ($2,673,000
residential  real  estate  loans,   $224,000  second  mortgage  loans,  $171,000
commercial  real estate loans,  and $49,000  installment  loans);  and monitored
loans 60 day's  delinquent  totaled $791,000  ($404,000  residential real estate
loans, $369,000 second mortgage loans, and $18,000 installment loans).

                                       7
<PAGE>
 
Summary of Loan Loss Experience

     Management's  determination  as to the adequacy of the  allowance  for loan
losses  takes into  account a variety of  factors,  including  (a)  management's
analysis of individual  loans and the overall risk  characteristics  of the loan
portfolio,  (b) past loan loss  experience,  (c) the results of the  statutorily
mandated   examination  of  the  loan  portfolio  by  regulatory   agencies  and
independent reviews and evaluations of loans by the Loan Committee of the Bank's
Board of Directors, (d) current and expected economic conditions,  and (e) other
relevant factors.

     The supplementary  information  required by Items IV.A. and IV.B. of "Guide
3. Statistical  Disclosure by Bank Holding Companies" relating to an analysis of
the allowance for loan losses and an allocation for loan losses by loan category
appears on pages 14 and 15 of the Company's  1995 Annual Report to  Shareholders
under the caption  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations",  and is  incorporated  by  reference  herein.  Such
information should be read in conjunction with the related financial  statements
and notes thereto incorporated by reference herein under Item 8.

Investment Activities

     Savings banks chartered in the State of Connecticut  have authority to make
a wide range of  investments  deemed to be prudent by their boards of directors.
Subject  to  various  restrictions,  they  may own  commercial  paper,  bonds of
government  agencies  (including  states and  municipalities),  corporate bonds,
mutual fund shares, debt and equity obligations issued by creditworthy  entities
(whether  traded  on  public  securities   exchanges  or  placed  privately  for
investment  purposes)  and  interests in real estate  located  within or outside
Connecticut without limitations as to use.

     It has been the Bank's practice to utilize a variety of investment vehicles
to better  match  deposit  maturities.  In addition to providing  for  liquidity
requirements,  the Bank  maintains  investment  portfolios  to employ  funds not
currently  required  for its  various  lending  activities.  Having a portion of
assets in short-term securities has proved beneficial to the Bank during periods
of rapidly rising interest rates. During such periods, as short-term  securities
mature,  the proceeds can be reinvested  in  securities  at market  rates.  In a
declining  rate  environment,  loans are likely to have higher  yields than debt
securities.  Management  considers  the overall  rate-sensitivity  of the Bank's
earning assets when investing in securities.

     Because  of the  shortened  maturity  of its  deposit  base and  increasing
sensitivity  to the interest  rate cycle,  the Bank has  invested a  substantial
amount of its cash flow in short-term or interest-sensitive money market assets,
including the use of federal funds,  debt  obligations with maturities no longer
than 5 years of  companies  rated "A" or better,  US Treasury  obligations,  and
similar  instruments.  In addition to providing a match of rates on the interest
rate cycle,  such a shift of funds into money  market  instruments  provides the
Bank with the liquidity it deems necessary for normal operations.

     A majority of the Bank's  investments  in 1995,  excluding  mortgage-backed
securities, were purchased with three to five year maturities,  although some of
the Bank's investments  purchased in 1995 were purchased with maturities 

                                       8
<PAGE>
 
greater than five years in order to obtain higher yields. Mortgage-based
securities were purchased with fifteen and thirty year maturities. Mortgage-
backed securities pay monthly principal and interest payments providing for a
return of principal earlier than that of a regular bond with the same maturity.

     The  supplementary   information  required  by  Item  II.A.  of  "Guide  3.
Statistical  Disclosure by Bank Holding Companies"  relating to the maturity and
composition of the Bank's investment portfolio appears on pages 10 through 12 of
the Company's 1995 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial  Condition and Results of Operations",  and
is  incorporated  by  reference  herein.  Such  information  should  be  read in
conjunction with the related financial statements and notes thereto incorporated
by reference herein under Item 8.

     At December 31, 1995, the Bank had invested approximately $15.6 million, or
3.8% of its assets, in marketable  preferred and common stocks and mutual funds.
This  portion of the Bank's  portfolio  generates  dividend  income and also may
produce capital gains and losses. Dividends received by the Bank are entitled to
the 70% dividends-received deduction on federal income taxes.

     The Bank sold no equity securities during 1995. The Bank had net gains from
the sale of equity  securities of $779,000 in 1994. In the event of a decline in
the market for equity securities,  the value of the Bank's equity portfolio, and
hence its  capital,  may be  reduced.  During the past five  years,  the largest
amount that the Bank had invested at any one time in the equity  securities of a
single  company was $730,000.  The  investment in this company was sold in 1994.
See "Federal Reserve System Regulation" below for further discussion relating to
this investment.

     In 1991,  the Bank  revised  its  investment  strategy,  hired new  outside
investment  advisors  and  transferred  $4.2  million in equity  securities  and
$835,000 in cash to the trading account in order to create a balanced investment
portfolio managed by professional investment advisors with investment objectives
to match or outperform several investment  indices. In February of 1995 the Bank
liquidated it's trading account because of volatility in the investment  markets
and the uncertainty of earnings  generated from this account.  Net gains in this
account in 1995 amounted to $49,000.

     The Federal Deposit Insurance Corporation Improvement Act of 1991, which is
discussed  in detail  below  under the  caption  "Regulation  and  Supervision",
generally limits the equity investments of state non-member banks to investments
which are  permissible  for a  national  bank.  An  insured  state  bank is also
prohibited  from  engaging  as  principal  in any type of  activity  that is not
permissible  for  a  national  bank,   unless  the  Federal  Deposit   Insurance
Corporation  (the  "FDIC")  determines  that  the  activity  would  not  pose  a
significant  risk to the  insurance  fund  and the  bank is in  compliance  with
applicable capital  standards.  As of December 19, 1992, a subsidiary of a state
bank may not engage as principal in an activity which is not  permissible  for a
subsidiary of a national  bank,  unless the same  conditions  are met. See "FDIC
Regulation"  below for  further  discussion  relating  to these  investment  and
activities limitations.

                                       9
<PAGE>
 
Deposits and Other Sources of Funds

     Deposits.  Deposits  have  traditionally  been the Bank's  major  source of
funds,  and will  continue  to be a major  source  of  funds in the  foreseeable
future. However, the Bank may rely on borrowings from the Federal Home Loan Bank
in the  future (if  available)  as long as  interest  rates are  favorable.  See
"Borrowing"  below.  The Bank also derives funds from loan  amortizations,  loan
prepayments, interest and dividend income and sales of assets deemed appropriate
by Bank management.

     The Bank  offers a wide  variety of retail  deposit  accounts  designed  to
attract both short- and long-term  funds.  Time deposits were the primary source
of new funds for the Bank during 1995 due to customer preference,  and represent
the largest  component  of  deposits  (representing  61.6% of total  deposits at
December 31, 1995).  Certificates of deposit  currently offered by the Bank have
maturities  that  range  from 91  days  to five  years.  The  Bank  also  offers
tax-deferred  retirement savings programs (IRA accounts and Simplified  Employee
Pension  Plans) and other types of plans for its customers.  In determining  the
rate  of  interest  to pay  on  deposits,  the  Bank  considers  its  cash  flow
requirements,  rates  paid by  competitors  and the  Bank's  income  and  growth
objectives.

     Management  expects  competition  for deposits in the Bank's market area to
continue for the  foreseeable  future.  As of December 31, 1995,  the  aggregate
amount of savings  accounts at the Bank was $109.2 million and the interest rate
paid on such accounts was 2.0%.

     The Bank's deposit marketing strategy includes continually monitoring rates
to insure  competitiveness while providing a high level of service at all of the
branch offices.  Branch employees  participate in sales training  programs.  The
Bank has been able to attract  reasonable deposit growth without having to match
the most competitive rates being offered in its market area.

     Substantially all of the Bank's depositors are residents of New Britain and
the contiguous communities. The Bank plans to continue its marketing and service
efforts in the other  communities  within its market area. Until recently,  such
efforts had been hampered by the lack of any Bank branches  outside New Britain.
The Bank does not  solicit  deposits  outside  Connecticut,  nor does it solicit
deposits through deposit brokers.

     The  supplementary   information   required  by  Item  V.A.  of  "Guide  3.
Statistical  Disclosure by Bank Holding  Companies"  relating to average amounts
of, and average rates paid on, deposits appears on page 15 of the Company's 1995
Annual Report to  Shareholders  under the caption  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations",  and is incorporated
by reference  herein.  Such  information  should be read in conjunction with the
related financial  statements and notes thereto incorporated by reference herein
under Item 8.

     The  decrease  in  average  savings  deposits  from 1994 to 1995 was due to
customer  preference  and the  rate  structure  of  deposit  products.  The Bank
believes that its high capital ratios and financial  strength have attracted new
deposit  customers.  The increase in average time deposits from 1994 to 1995 was
the result of customer  preference and the rate  structure of deposit  products.
The  overall  increase in average  rates paid on  deposits  from 1994 to 1995 is
consistent  with rising  interest  rates through 1994 and the beginning of 1995,
even though rates  decreased  in the second half of 1995,  because of 

                                       10
<PAGE>
 
the normal time lag for the Bank's balance sheet to react to market interest 
rates.

     The  supplementary   information   required  by  Item  V.D.  of  "Guide  3.
Statistical  Disclosure  by Bank  Holding  Companies"  relating to the  maturity
distributions  of time  certificates of deposit issued in amounts of $100,000 or
more  appears on page 16 of the  Company's  1995 Annual  Report to  Shareholders
under the caption  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations",  and is  incorporated  by  reference  herein.  Such
information should be read in conjunction with the related financial  statements
and notes thereto incorporated by reference herein under Item 8.

     Borrowing.  The Bank  has  been a member  of the  Federal  Home  Loan  Bank
("FHLB")  of Boston  since  1980,  and as a member may  borrow  from the FHLB to
secure  additional  funds. At December 31, 1995, the Bank had outstanding  $19.0
million in loans from the FHLB of Boston, a decrease of $14.5 million from $33.5
million  outstanding  at December 31, 1994.  The primary reason for the decrease
was  maturities  of  borrowings.  Borrowing  from the FHLB of  Boston  may be at
interest rates and under terms and conditions which vary from time to time.

     The Bank also has access to a pre-approved  line of credit with the FHLB of
Boston of $8,042,000, and has sufficient qualified collateral to borrow up to an
additional  $222 million.  This  arrangement  allows the Bank to obtain advances
from the FHLB of Boston rather than relying on commercial  bank lines of credit.
The  Bank's  interest  expense  on  advances  was  $1,253,000,  $1,455,176,  and
$471,767, for the years ended December 31, 1995, 1994 and 1993, respectively.

Competition

     The Bank's most direct  competition for deposits has historically come from
other thrift  institutions  and commercial banks located in its principal market
area,  many of which have greater  resources  than the Bank.  There are numerous
other banks, credit unions and financial institutions located in the City of New
Britain and  surrounding  areas that also compete with the Bank.  The Bank faces
significant  additional  competition for investors'  funds from short-term money
market funds of securities firms and other financial institutions and from other
corporate and government  securities  yielding  higher interest rates than those
paid by the Bank.

     This  increased  competition  has, and is expected to continue to have,  an
effect on the Bank's cost of funds.  However,  the Bank has not  experienced and
does not expect to experience any substantial adverse effect on the stability of
its deposit base as a result of  increased  competition.  The Bank  competes for
deposits by offering  depositors a high degree of personal  service,  convenient
locations  and  hours,  and  other  services.  The Bank  does not rely  upon any
individual or entity for a material portion of its deposits,  nor does it obtain
any  deposits  through  deposit  brokers.  A  substantial  portion of the Bank's
customer and deposit base  traditionally  has been and continues to be the large
Polish community in New Britain.

     The  Bank's  competition  for real  estate  loans  comes  principally  from
mortgage  banking  companies,  other  thrift  institutions,   commercial  banks,
insurance companies and other institutional  lenders. The Bank competes for loan
originations  primarily  through the interest rates and loan fees it charges and
the  efficiency  and  quality of services  it  provides  borrowers,  real 

                                       11
<PAGE>
 
estate brokers and builders. Factors that affect competition include, among
other things, the general availability of lendable funds and credit, general and
local economic conditions, current interest rate levels, and volatility in the
mortgage markets.

     Competition is expected to increase as a result of  legislation  adopted in
recent years at the Federal and State of  Connecticut  levels which  effectively
provide,  subject to  minimal  limitations,  for full  interestate  banking  and
branching.  As a result of this legislation and increasingly  aggressive  merger
activity in the Company's market area, competition from larger institutions with
resources  much greater  than the  Company's,  is expected to continue  into the
future.

     Certain legislative and regulatory  proposals that could affect the Company
and the  Bank  and the  banking  business  in  general  are  pending,  or may be
introduced, before the United States Congress, the Connecticut General Assembly,
and various  governmental  agencies.  These proposals  include measures that may
further alter the structure, regulation, powers, and competitive relationship of
financial  institutions  and  that  may  subject  the  Company  and the  Bank to
increased regulation,  disclosure, and reporting requirements.  In addition, the
various banking regulatory  agencies frequently propose rules and regulations to
implement and enforce existing legislation. It cannot be predicted whether or in
what form any legislation or regulations  will be enacted or the extent to which
the business of the Company and the Bank will be affected thereby.

Employees

     As of December 31, 1995,  the Company and the Bank employed 132  employees,
113 of whom are  full-time,  including 31  officers.  Management  considers  the
Bank's  relations  with its employees to be good.  The Bank's  employees are not
represented by any collective bargaining group.


                           REGULATION AND SUPERVISION

Connecticut Regulation

     As a  state-chartered  capital stock  savings bank,  the Bank is subject to
applicable  provisions of Connecticut law and the regulations adopted thereunder
by the Connecticut Banking Commissioner (the  "Commissioner").  The Commissioner
administers Connecticut banking laws, which contain comprehensive provisions for
the  regulation of savings  banks.  The Bank derives its lending and  investment
powers from these laws, and is subject to periodic  examination by and reporting
to the Commissioner.

     Savings banks in Connecticut  are empowered by statute to conduct a general
banking  business  and to exercise  all  incidental  powers  necessary  thereto.
Subject to limitations expressed in the statutes, permissible activities include
taking  savings and time  deposits,  including  NOW  checking  accounts,  paying
interest on such deposits and accounts,  accepting demand deposits, making loans
on residential  and other real estate,  making  consumer 

                                       12
<PAGE>
 
and commercial loans, exercising trust powers, investing, with certain
limitations, in equity securities and debt obligations of banks and
corporations, and issuing credit cards. In addition, savings banks may engage in
certain other enumerated activities, including the establishment of an insurance
department to sell life insurance and annuities. Connecticut savings banks, in
general, have powers identical to those enjoyed by Connecticut commercial banks.

     The Bank is prohibited by  Connecticut  banking law from paying  dividends,
except from its net  profits.  Net profits are defined as the  remainder  of all
earnings from current  operations.  The total of all  dividends  declared by the
Bank  in  any  calendar  year  may  not,  unless  specifically  approved  by the
Commissioner, exceed the total of its net profits of that year combined with its
retained net profits of the  preceding  two years.  These  provisions  limit the
amount of dividends  payable to  stockholders  of the Company,  since  dividends
received  from the Bank are the  primary  source of funds for the Company to pay
dividends.  As of December 31, 1995,  approximately  $666,000 was  available for
payment of dividends by the Bank to the Company.

     Under  Connecticut  banking  law,  no person  may  acquire  the  beneficial
ownership of more than 10% or 25% or more of any class of voting securities of a
bank  chartered by the State of  Connecticut  or having its principal  office in
Connecticut or a bank holding company thereof unless the  Commissioner  approves
such acquisition.

     Full  statewide  branching  is  available  to  all  Connecticut  depository
institutions.  This legislation expands the branching  opportunities of the Bank
to other towns while  allowing  virtually  unrestricted  branching  expansion by
other  institutions  into New Britain.  Legislation  passed in 1990 requires the
Commissioner to consider  significant  additional criteria when reviewing branch
applications.  While this  legislation  may result in  increased  administrative
review of bank branching  applications,  the Company does not anticipate at this
time that the  criteria to be  considered  by the  Commissioner  will  adversely
impact the Company's  future  branching  activities or that any such review will
materially  deter  financial  institutions  which desire to open branches in New
Britain from doing so.

     See "Competition" above for a discussion of Connecticut  interstate banking
statutes.

                                       13
<PAGE>
 
FDIC Regulation

     The Bank's  deposit  accounts  are insured by the FDIC,  up to a maximum of
$100,000 per insured depositor.  The FDIC issues regulations,  conducts periodic
examinations,  requires  the  filing of reports  and  generally  supervises  the
operations of its insured  banks.  The approval of the FDIC is required prior to
any merger or  consolidation  or the  establishment  or  relocation of an office
facility.  This  supervision  and  regulation  is  intended  primarily  for  the
protection of depositors.  Any insured bank which does not operate in accordance
with or conform to FDIC  regulations,  policies and directives may be sanctioned
for  noncompliance.  Under  FDIC  regulations,  the Bank is a member of the Bank
Insurance  Fund  ("BIF")  and is  required  to pay  annual  insurance  premiums,
currently 0.00% of its deposits. Under the Federal Deposit Insurance Corporation
Improvement  Act  of  1991  (the  "Improvement   Act"),  the  FDIC  has  adopted
regulations  establishing a risk-based assessment system for insurance premiums.
Under this system, a depository  institution's  semi-annual assessment will fall
within a range of 0.00%  to  0.27% of  domestic  deposits,  based in part on the
probability  that the deposit  insurance  fund will incur a loss with respect to
that  institution.  In setting  assessments  for a bank, the FDIC is required to
take  into  account  the  revenue  needs  of the  insurance  fund and to set the
assessments in a manner that will be sufficient to maintain the insurance fund's
required  reserve ratio.  Insured  depository  institutions are required to file
with the FDIC certified  statements  containing all information  required by the
FDIC for the determination of the semi-annual  assessment.  Each institution has
been or will be notified of its risk classification based on its capital ratios.
The FDIC has the authority to assess penalties against an institution that fails
to make an accurate certified statement. These provisions of the Improvement Act
have not affected the Bank's assessment.  Under this system, the Bank, as a well
capitalized institution,  is required currently to pay annual insurance premiums
of 0.00% of its deposits.

     The FDIC also  requires  FDIC-insured,  state-chartered  banks that are not
members  of  the  Federal   Reserve  System  to  meet  certain  minimum  capital
requirements.  The FDIC  amended  its  minimum  requirements  for  capital  as a
percentage  of total assets to define  capital in a manner  consistent  with the
risk-based capital categories  described below and to require a minimum leverage
standard of 3 percent  Tier 1 (or core)  capital to total  assets (as defined in
FDIC  regulations)  for the most highly rated banks that are not anticipating or
experiencing any significant  growth. All other state banks that are not members
of the Federal Reserve System would be required to meet a minimum leverage ratio
that is at least 100 to 200  basis  points  above  this  minimum  -- that is, an
absolute  minimum leverage ratio of not less than 4 percent for those banks that
are not  highly  rated  or that are  anticipating  or  experiencing  significant
growth.  "Tier 1 capital" is generally defined as common  stockholders'  equity,
minority  interests in consolidated  subsidiaries and  non-cumulative  perpetual
preferred  stock.  Tier  1  capital   generally   excludes  goodwill  and  other
intangibles and investments in subsidiaries  that the FDIC determines  should be
deducted from capital.  As of December 31, 1994,  the Bank's  leverage ratio was
approximately 9.35%, exceeding the FDIC requirements.

     The  FDIC has  also  adopted  supplementary  capital  regulations  based on
international  risk-based  capital  standards.  The  other  United  States  bank
regulatory  agencies  have  also  adopted  similar  guidelines  based  on  these
international  standards.  The  guidelines,  as adopted,  supplement the minimum
leverage ratios described in the immediately preceding paragraph. The guidelines
set forth (i) a definition of "capital" for risk-based capital 

                                       14
<PAGE>
 
purposes; (ii) a system for calculating risk-weighted assets by assigning assets
and certain off-balance sheet items to broad risk categories; and (iii) a
schedule, including transitional arrangements during a phase-in period, for
achieving a minimum supervisory ratio of capital to risk-weighted assets. In
general, the risk-weighting imposes "zero percent" risk-weighting for cash;
balances due from Federal Reserve banks; direct claims on (including
securities), and the portions of claims unconditionally guaranteed by, the
United States treasury and United States government agencies; and gold bullion;
"twenty percent" for cash items in the process of collection; all claims on, and
portions of claims guaranteed by, United States depository institutions, United
States government agencies and United States government-sponsored agencies;
general obligation claims on, and the portions of claims that are guaranteed by,
the full faith and credit of states or other political subdivisions of the
United States; and the portions of claims that are collateralized by securities
issued or guaranteed by the United States treasury, governmental agencies or
government-sponsored agencies; "fifty percent" for loans fully secured by first
liens on one to four family residential properties written in accordance with
prudent underwriting standards and certain privately issued mortgage-backed
securities; and "one hundred percent" risk-weighting for assets not included in
one of the other categories, including fixed assets, premises, other real estate
owned and equity investments. Basically, the higher percentage of riskier assets
an institution has, the more capital it must have to satisfy the risk-based
guidelines; the lower the risk, the lower the required capital. The guidelines
do not address other bank "risk" areas, such as interest rate, liquidity,
funding and market risks, the quality and level of earnings, investment or loan
portfolio concentrations, the quality of loans and investments, the
effectiveness of loan and investment policies and management's ability to
monitor and control financial and operating risks. The current minimum risk-
based ratio is 8%. The Bank's total risk-based ratio as of December 31, 1995 was
18.38%. The Bank does not believe that the implementation of the risk-based
guidelines has had or will have a material adverse effect on its prospective
business or require capital-raising efforts in the foreseeable future. In
January 1995, the risk-based capital standards were amended to require analysis
of the Bank's and Company's concentration of credit risks and certain risks from
non-traditional activities in assessing the institution's overall capital
adequacy. The Company and Bank believe that these amended regulations will not
materially affect the Company's and Bank's capital ratios or adequacy.

     The Improvement  Act increases the  supervisory  powers of the FDIC and the
other federal  regulatory  agencies with regard to  undercapitalized  depository
institutions,  and changes the capital  rules  applicable to the Company and the
Bank. As of December 19, 1992,  banking  regulators  adopted  regulations  which
define five  capital  categories  of  institutions:  institutions  that are well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized   and  critically   undercapitalized.   The  purpose  of  these
categories is to allow federal regulatory  agencies to monitor  undercapitalized
institutions  more closely in order to take  appropriate  and prompt  regulatory
action to minimize the potential for significant  loss to the deposit  insurance
fund.   Institutions   in  the  first  two  categories  will  operate  with  few
restrictions.  Institutions  in the other  three  categories  may be required to
raise  additional  capital,  curtail growth,  limit interest rates paid,  divest
subsidiaries and limit executive compensation.  Regulators are also be empowered
to  remove  top  management  and  call  for  new  elections  of  directors.  The
Improvement  Act also allows for the appointment of a conservator or receiver of
an insured  depository  institution if the institution is

                                       15
<PAGE>
 
undercapitalized and either has no reasonable prospect of becoming adequately
capitalized, fails to become adequately capitalized as required, or fails to
submit or materially implement a capital plan. In addition, the Improvement Act
requires a holding company of a failing institution to guarantee that the
institution will comply with a capital restoration plan to the extent of 5% of
the institution's total assets or the amount needed to achieve the required
minimum capital levels. See pages 17 and 18 of the Company's 1995 Annual Report
to Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Capital". The Bank is currently
categorized as a "well capitalized" institution under the Improvement Act.

     After notice and hearing,  FDIC  insurance of deposits may be terminated by
the FDIC upon a finding by the FDIC that the insured  institution has engaged in
unsafe or unsound  practices or is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule or order of, or
conditions  imposed  by, the FDIC.  Neither the Company nor the Bank is aware of
any  practice,  condition or  violation  that might lead to  termination  of its
deposit insurance.

     The  Improvement  Act also  generally  limits  the  activities  and  equity
investments of FDIC-insured, state-chartered banks to those that are permissible
for national banks.  These  restrictions  became effective on December 19, 1992,
although the restrictions  dealing with equity investments became effective upon
enactment of the Improvement Act on December 19, 1991. In October 1992, the FDIC
issued final regulations to implement the restrictions on equity investments and
indicated  its  intention  to  propose  regulations  addressing  the  activities
limitations  at  a  later  date.  Under  the  regulations  dealing  with  equity
investments,  an insured  state  bank  generally  may not  acquire or retain any
equity  investment of a type,  or in an amount,  that is not  permissible  for a
national bank. In addition, an insured state bank (i) that is located in a state
which  authorized  as of September  30, 1991  investment  in common or preferred
stock listed on a national  securities  exchange ("listed stock") or shares of a
registered investment company ("registered  shares"),  and (ii) which during the
period  beginning  September  30, 1990 through  November 26, 1991  ("measurement
period") made or maintained  investments in listed stocks and registered shares,
may retain whatever shares that were lawfully acquired or held prior to December
19, 1991 and continue to acquire  listed stock and registered  shares,  provided
that the bank does not  convert  its  charter to another  form or undergo one of
four  types of  specified  transactions  which  generally  deal with  changes in
control.  In order to acquire or retain any listed stock or  registered  shares,
however,  the bank  must  file a  one-time  notice  with the  FDIC  which  meets
specified  requirements and which sets forth the bank's intention to acquire and
retain stocks or shares, and the FDIC must determine that acquiring or retaining
the listed stocks or registered  shares will not pose a significant  risk to the
deposit insurance fund of which the bank is a member. The Bank filed a notice of
intention  to invest in listed  stocks and  registered  shares  with the FDIC on
December 11, 1992. On March 15, 1993,  the FDIC granted its approval to the Bank
to continue to hold or acquire listed stocks and registered  shares,  subject to
the  following  conditions:  (a) the  maximum  investment  in listed  stocks and
registered shares may not exceed 100% of the Bank's Tier 1 capital; (b) the Bank
must follow reasonable  procedures limiting  concentrations in listed stocks and
registered shares so as to provide for diversification of risk; and (c) the FDIC
may alter,  suspend or withdraw its approval should any development warrant such
action.  At December  31, 1995,  the Bank held $.2 million of listed  stocks and
registered shares.

                                       16
<PAGE>
 
     The  Community  Reinvestment  Act of 1977  ("CRA") was enacted to encourage
every  financial  institution  to help  meet  the  credit  needs  of its  entire
community, including low and moderate-income neighborhoods,  consistent with the
institution's safe and sound operation.  Under CRA, state and federal regulators
are  required,  when  examining  financial  institutions  and  when  considering
applications for approval of certain merger,  acquisition or other transactions,
to take into  account  the  institution's  record in  helping to meet the credit
needs of its entire community,  including low and moderate-income neighborhoods.
In reviewing an  institution's  CRA record for this  purpose,  state and federal
regulators will consider reports of regulatory  examination,  comments  received
from interested  members of the public or community groups,  and the description
of the  institution's  CRA  activities in its publicly  available CRA statement,
supplemented,  as necessary,  by the institution.  The Federal Reserve Board has
the power to disapprove  proposed merger or acquisition  transactions  involving
banking  organizations  that are  deemed by the  Federal  Reserve  Board to have
unsatisfactory examination records of CRA compliance.  Following its most recent
CRA examination as of August 24, 1995, the Bank received a "Satisfactory" rating
regarding its compliance with CRA.

Federal Reserve System Regulation

     Federal  Reserve Board  regulations  require the Bank to maintain  reserves
against  its  transaction   accounts  and  non-personal  time  deposits.   These
regulations  generally  require  that  reserves  of  3%  be  maintained  against
transaction  accounts (other than  non-personal  time deposits and  Eurocurrency
liabilities)  totaling  $54.0  million or less  (except that $4.2 million in the
transaction  accounts is exempt from the reserve  requirement)  and a reserve of
10% be maintained  against that portion of total transaction  accounts in excess
of $54.0  million.  Effective  December  19,  1995,  the Federal  Reserve  Board
adjusted  these  amounts so that  reserves of 3% are  required to be  maintained
against  transaction  accounts  totaling $52.0 million or less (except that $4.3
million is exempt)  and a reserve of 10% is required  to be  maintained  against
that portion of total  transaction  accounts in excess of $52.0  million.  These
amounts and percentages are subject to further adjustment by the Federal Reserve
Board.  The Bank also has  authority to borrow from the Federal  Reserve Bank of
Boston "discount window."

     The Federal Reserve Board's  capital  adequacy  guidelines for bank holding
companies are similar to the FDIC leverage ratio  requirements  described above.
This  standard  establishes a minimum level of Tier 1 capital to total assets of
3% for all bank holding  companies with  consolidated  assets of $150 million or
more. Except with respect to the most highly-rated  institutions,  this standard
requires bank holding companies to maintain an additional  cushion of 100 to 200
basis points  depending  upon the  institution's  financial  condition  and risk
profile.  Additionally, the Federal Reserve Board has adopted risk-based capital
guidelines,  similar to those adopted by the FDIC as described  above,  that are
applicable to all bank holding companies.  Management  believes that the Company
currently is, and expects to continue to be, in full  compliance with applicable
capital requirements.

     The  Company is subject to  regulation  by the Federal  Reserve  Board as a
registered  bank  holding  company.  The Bank  Holding  Company Act of 1956,  as
amended (the "BHCA"), under which the Company is registered, limits the types of
companies  that the Company may acquire or organize and the  activities in which
it or they  may  engage.  In  general,  the  Company  and its  subsidiaries  are
prohibited  from engaging in or acquiring  direct control of any company engaged

                                       17
<PAGE>
 
in  non-banking  activities  unless such  activities  are so closely  related to
banking or  managing or  controlling  banks or savings  associations  as to be a
proper incident  thereto.  Subject to various  limitations,  the Federal Reserve
Board has determined by regulation a number of activities  that qualify  without
the need for specific FRB approval. The Company believes that neither it nor the
Bank is engaged in any activities which would be prohibited under the BHCA.

     Under the BHCA, the Company is required to obtain the prior approval of the
Board of  Governors  of the  Federal  Reserve  System to acquire,  with  certain
exceptions, more than 5% of the outstanding voting stock of any bank, to acquire
all or substantially all of the assets of a bank or to merge or consolidate with
another bank holding company.

     Under the  BHCA,  the  Company,  the Bank and any  other  subsidiaries  are
prohibited  from engaging in certain tying  arrangements  in connection with any
extension of credit or  provision of any property or services.  The Bank is also
subject to certain  restrictions  imposed by the Federal  Reserve Act on issuing
any extension of credit to the Company or any of its subsidiaries, or making any
investments in the stock or other securities thereof,  and on the taking of such
stock or securities as collateral for loans to any borrower.

     The  Company  is  required  under the BHCA to file an annual  report of its
operations  with the Federal  Reserve  Board,  and it and the Bank and any other
subsidiaries  are  subject to  examination  by the  Federal  Reserve  Board.  In
addition,  the Company, as a bank holding company, is required to register with,
submit reports to and be examined by the Commissioner under the Connecticut Bank
Holding Company and Bank Acquisition Act.

Effect of Government Policy

     Banking is a business that has historically  depended primarily on interest
rate  differentials.  In general,  the  difference  between the  interest  rates
received by the Bank on loans to its customers and securities held in the Bank's
portfolio  and the interest  rate paid by the Bank on its deposits and its other
borrowings will comprise the major portion of the Bank's earnings. The value and
yields of its assets  and the rates paid on its  liabilities  are  sensitive  to
changes in prevailing market rates of interest. Thus, the earnings and growth of
the Bank will be influenced  by general  economic  conditions,  the monetary and
fiscal policies of the federal government,  and policies of regulatory agencies,
particularly  the Federal  Reserve  Board,  which  implement  national  monetary
policy.  The nature and impact of any future  changes in  monetary  policies  is
beyond the control of the Bank and cannot be predicted.

     The FDIC is required to conduct  annual  FDIC  examinations  of all insured
depository institutions unless they are well or adequately capitalized, not less
than $250 million in assets, and have an "outstanding"  composite  condition (or
"good" if a bank has less than $100 million in assets); such institutions may be
examined every eighteen  months.  The Improvement Act also requires each insured
depository institution to submit a publicly available annual audit report to its
federal  regulators.  The report is required to be prepared in  accordance  with
generally  accepted  accounting  principles and to contain any information  that
federal regulators may require. The report must contain  management's  statement
of its  responsibilities  for preparing financial  statements,  establishing and
maintaining  internal controls,  complying with banking laws and regulations and
assessing  the  institution's  results in these 

                                       18
<PAGE>
 
areas during the past year. The institution's independent public accountants
must also attest to, and report separately on, management's statement. The
federal regulatory agencies are also required to adopt regulations requiring
each insured depository institution to have an independent audit made of its
financial statements. These audited financial statements will be included in the
institution's annual reports. The Company and the Bank have always had an annual
independent audit.

     As discussed above,  the Improvement Act allows the regulatory  agencies to
take prompt  regulatory  action for  institutions  falling into one of the lower
three of five  capital  categories  (see "FDIC  Regulation")  and  restricts  an
institution's ability to accept brokered deposits unless the institution is well
capitalized.  Restrictions on loans to insiders are also strengthened  under the
Improvement Act. Total aggregate loans to all insiders (including  directors and
executive officers) and their related interests are generally  restricted to the
amount of a bank's  unimpaired  capital  and  surplus.  Unimpaired  capital  and
surplus is defined by  regulation to mean the sum of (1) the bank's total equity
capital as reported on the bank's most recent  consolidated report of condition,
(2) any subordinated notes and debentures  approved as an addition to the bank's
capital  structure  by the  appropriate  federal  banking  agency,  and  (3) any
valuation  reserves  created by charges to the bank's  income as reported on its
most recent consolidated report of condition.  The Federal Reserve Board may, by
regulation, make the restrictions on aggregate loans to insiders more stringent.
In addition, certain restrictions on types and amounts of loans that can be made
to  executive  officers  of  financial  institutions  have been added to federal
regulations  in addition to the existing  restrictions  in state law on loans to
executive officers. Loans to individual directors, executive officers, principal
shareholders  and  their  related   interests  also  may  not  exceed  specified
percentages of the Bank's  unimpaired  capital and surplus  (generally,  15% for
loans  not  "fully  secured",  and 10%  additional  for  loans  that are  "fully
secured",  with  certain  limited  exceptions).  Because the level of the Bank's
loans to  insiders  is  significantly  below  the  amount  permitted  under  the
Improvement  Act,  the Company does not expect  these  regulations  to adversely
impact the Company or the Bank.

     The  Improvement  Act has also resulted in federal  regulatory  agencies to
adopt  regulations  setting  forth safety and  soundness  standards  relating to
internal  controls,   information  systems  and  internal  audit  systems;  loan
documentation;  credit underwriting;  interest rate exposure;  asset growth; and
officers and employees compensation, fees and benefits. The Bank and the Company
do not expect these regulations will materially adversely affect them.

     The regulations  establish a standard for the ratio of classified assets to
total  capital  and  loan  loss  allowances  at no  greater  than  100%;  and an
earnings/capital   standard  which  provides  that  a  bank's  capital  will  be
sufficient if the bank's last four quarters of earnings history,  projected over
the next four quarters, would leave the bank with capital meeting the applicable
minimum  capital  requirements.  If the FDIC were to find that the Bank violated
either of the standards, the Bank would be required to submit a compliance plan,
which must be approved by the FDIC,  describing  the steps it would take to cure
the  deficiency.  However,  the Company and the Bank  currently  comply with and
expect to continue to comply with these standards.

     The present bank  regulatory  scheme has undergone and continues to undergo
significant  change,  both as it affects the banking  industry  itself and as it
affects competition between banks and non-banking financial 

                                       19
<PAGE>
 
institutions.  There have been significant regulatory changes in the bank merger
and acquisition area, in the products and services banks can offer, and in the
non-banking activities in which bank holding companies can engage. Banks are now
actively competing with other types of depository institutions and with non-bank
financial institutions, such as money market funds, brokerage firms, insurance
companies, and other financial services enterprises. It is not possible at this
time to assess what impact these changes in the regulatory scheme will
ultimately have on the Bank.

Item 2  -  Properties

     In addition to the main office of the Company and the Bank,  located at 123
Broad Street,  New Britain,  Connecticut,  the Bank has seven  banking  branches
located in New Britain,  Southington,  Newington,  Rocky Hill,  and  Plainville,
Connecticut.  The following table sets forth certain  information  regarding the
Bank's banking offices.

                                                     Owned           Lease
                                                       or          Expiration
Office                 Location                      Leased           Date
------                 --------                      ------           ----
Main Office            123 Broad Street               Owned       Not applicable
                       New Britain, CT  06050

Farmington Avenue      553 Farmington Avenue          Owned       Not applicable
                       New Britain, CT  06050

Columbus Plaza         150 Columbus Boulevard         Leased      October 1999
                       New Britain, CT  06050

Lafayette Square       450 Main Street                Leased      July 2001
                       New Britain, CT 06050

Southington Office     405 Queen Street               Leased      August 2002
                       Southington, CT  06489

Newington Office       36 Fenn Road                   Leased      January 2003
                       Newington, CT  06111

Rocky Hill Office      2270 Silas Deane Highway       Owned       Not applicable
                       Rocky Hill, CT  06067

Plainville Offic       275C New Britain Avenue        Leased      June 2004
                       Plainville, CT  06062


Total lease  payments for all of the Bank's leased  offices for 1995 amounted to
$442,892.

Item 3  -  Legal Proceedings

     There are no pending legal  proceedings to which the Company or the Bank is
a party,  other  than  ordinary  routine  litigation  in the  normal  course  of
business. No such proceeding is material to the Company or the Bank.

                                       20
<PAGE>
 
Item 4  -  Submission of Matters to a Vote of Security Holders

     During the fourth  quarter of 1995,  no matter was  submitted  to a vote of
shareholders of the Company.

Executive Officers of the Registrant

     The following persons are the executive officers of the Company:

     Richard S.  Mansfield,  age 55, has been the President and Chief  Executive
Officer and a director of the Company since its  incorporation in February 1989.
Mr.  Mansfield has been President and Chief Executive  Officer and a director of
the Bank since 1986 and was  Executive  Vice  President  and Vice  President  in
charge  of  mortgage  lending  at the Bank  since  1980.  Mr.  Mansfield's  1986
employment  agreement  with the Bank  provides  for a term of three  years  with
automatic one year renewals each January 1st,  unless either party gives written
notice of his or its intention not to extend the agreement.

     John G. Medvec, age 49, has been the Executive Vice President and Treasurer
of the Company since its  incorporation  in February  1989.  Mr. Medvec has been
Executive  Vice President and Treasurer of the Bank since 1986 and has served in
various  executive  positions  with the  Bank  since  1971.  Mr.  Medvec's  1986
employment  agreement  with the Bank  provides  for a term of three  years  with
automatic one year renewals each January 1st,  unless either party gives written
notice of his or its intention not to extend the agreement.

     There is no  relationship  by  blood,  marriage  or  adoption  between  any
executive  officer or director of the Company and any other executive officer or
director of the Company.


                                     PART II

Item 5  -  Market for Registrant's Common Equity and Related Stockholder Matters

     As of February 29, 1996,  the Company had 1,924,363  shares of Common Stock
issued and  outstanding and  approximately  1,404  shareholders  of record.  The
Company's stock is traded  over-the-counter and is quoted on The NASDAQ National
Market under the symbol "PBNB".

     The market price  information  regarding  the Company  Common Stock and the
information  relating to the payment of dividends  required by Item 5 appears on
page 46 of the Company's 1995 Annual Report to  Shareholders  under the captions
"Common Stock Information" and "Dividend Policy",  and is incorporated herein by
reference.  Dividends are paid by the Company from its assets,  which are mainly
provided  by  dividends  from the  Bank.  However,  certain  restrictions  exist
regarding  the ability of the Bank to transfer  funds to the Company in the form
of cash dividends,  loans or advances and such restrictions may materially limit
the Company's ability to pay dividends to its shareholders.

     In connection  with the Bank's  conversion  from a mutual savings bank to a
capital  stock  savings bank,  2,444,324  shares of Common Stock were  initially
offered to depositors of the Bank in a subscription offering, with the remaining
shares sold in a public offering. As part of the subscription 

                                       21
<PAGE>
 
offering, the Bank established a liquidation account for a ten-year period for
the benefit of eligible depositors who maintain their accounts with the Bank
after the conversion. In the event of a complete liquidation (and only in such
an event), each eligible account holder will be entitled to receive a
liquidation distribution from the liquidation account before any liquidation
distribution may be made with respect to Bank Common Stock. The Bank may not
declare or pay a cash dividend on or repurchase any of its Common Stock if the
effect thereof would cause the capital accounts to be reduced below the amount
required for the liquidation account, which was approximately $913,000 as of
December 31, 1995.

     Connecticut  capital stock savings banks, such as the Bank, may not declare
cash dividends in excess of "net profits". "Net profits" are statutorily defined
as "the  remainder of all earnings from current  operations."  In addition,  the
total of all cash dividends  declared in any calendar year may not,  without the
specific  approval of the  Commissioner,  exceed the total of its net profits of
that year combined with its retained net profits of the preceding two years.

     The  present  intention  of the Board of  Directors  of the  Company  is to
continue  the  practice of  declaring  and paying cash  dividends on a quarterly
basis.  However, the payment and size of any future Company dividend will depend
on the future earnings of the Company and the Bank.

Item 6  -  Selected Financial Data

     The information  required by Item 6 appears on page 1 of the Company's 1995
Annual Report to Shareholders under the caption "Selected Financial Highlights",
and is incorporated by reference herein.

Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations

     The  information  required  by Item 7 appears  on pages 9 through 24 of the
Company's  1995 Annual Report to  Shareholders  under the caption  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations",  and
is  incorporated   by  reference   herein.   See  Note  18  "Recent   Accounting
Pronouncements"  on page 42 of the Company's 1995 Annual Report to  Shareholders
and  the  caption  notes  to the  Consolidated  Financial  Statements  contained
therein.

Item 8  -  Financial Statements and Supplementary Data

     The  information  required  by Item 8 is indexed in Item 14 of this  Annual
Report on Form 10-K,  and portions  thereof  appearing on pages 23 through 45 of
the Company's 1995 Annual Report to Shareholders  are  incorporated by reference
herein.

                                       22
<PAGE>
 
Item 9  -  Changes  in and  Disagreements  with  Accountants  on  Accounting and
Financial Disclosure

     Not applicable.


                                    PART III

Item 10  -  Directors and Executive Officers of the Registrant

     The  information  required  by Item 10 relating  to the  identification  of
directors and executive  officers of the Company and their  business  experience
appears on pages 3 through 14 of the Company's  definitive Proxy Statement dated
March 22, 1996 under the caption "Election of a Class of Directors  (Proposal 1)
- Information on Nominees and Directors", and in Part I of this Annual Report on
Form 10-K under the  caption  "Executive  Officers  of the  Registrant",  and is
incorporated by reference herein.

Item 11  -  Executive Compensation

     The information  required by Item 11 relating to the compensation  paid and
benefits provided to directors and executive  officers of the Company appears on
pages 8  through  14 of the  Company's  definitive  Proxy  Statement  under  the
captions  "Election  of a Class of  Directors  (Proposal  1) -  Compensation  of
Directors" and "Election of a Class of Directors  (Proposal 1) - Compensation of
Executive Officers", and is incorporated by reference herein.

Item 12  -  Security Ownership of Certain Beneficial Owners and Management

     The  information  required  by Item 12  relating  to the  ownership  of the
Company's  securities by certain  beneficial  owners and  management  appears on
pages 2 through 7 of the Company's definitive Proxy Statement under the captions
"Principal  Stockholders",  "Election  of a Class of  Directors  (Proposal  1) -
Information  on Nominees and  Directors"  and  "Election of a Class of Directors
(Proposal  1)  -  Ownership  of  Shares  by  Directors  and  Officers",  and  is
incorporated by reference herein.

Item 13  -  Certain Relationships and Related Transactions

     The information  required by Item 13 relating to  transactions  between the
Company and management, directors and certain beneficial owners of the Company's
securities  appears  on pages 13 through 15 of the  Company's  definitive  Proxy
Statement under the caption  "Transactions  with Management and Others",  and is
incorporated by reference herein.

                                       23
<PAGE>
 
                                     PART IV

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

(a)  The following documents,  filed as part of this report, are included herein
     or are  incorporated by reference from the indicated pages of the Company's
     1995 Annual Report to Shareholders:

     1.   Financial Statements:

                                                               Page(s) in
                                                              Annual Report
                                                              -------------
          Report of Independent Auditors                            23
          Consolidated Balance Sheets                               24
          Consolidated Statements of Income                         25
          Consolidated Statements of Stockholders' Equity           26
          Consolidated Statements of Cash Flows                     27
          Notes to Consolidated Financial Statements                28-45


     2.   Financial Statement Schedules:

          All Schedules to the  Consolidated  Financial  Statements  required by
          Article  9 of  Regulation  S-X  are not  required  under  the  related
          instructions or are inapplicable and therefore have been omitted.

                                       24
<PAGE>
 
     3.   Exhibits:

          Exhibit No.                        Description
          -----------                        -----------
              3.1        Certificate   of    Incorporation    of   the   Company
                         (incorporated  by  reference  to  Exhibit  3.1  to  the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

              3.2        Bylaws of the Company  (incorporated  by  reference  to
                         Exhibit 3.2 to the Company's  Registration Statement on
                         Form S-4 (No. 33-27219) filed on February 23, 1989).   

              4          Instruments Defining the Rights of Security Holders are
                         filed as Exhibits 3.1 and 3.2.                         

            *10.1        Employment  Agreement  dated August 1, 1986 between the
                         Bank  and  Richard  S.   Mansfield   (incorporated   by
                         reference to Exhibit 10.1 of the Company's Registration
                         Statement on Form S-4 (No.  33-27219) filed on February
                         23, 1989).                                             

            *10.2        Employment  Agreement  dated August 1, 1986 between the
                         Bank and John G. Medvec  (incorporated  by reference to
                         Exhibit 10.2 of the Company's Registration Statement on
                         Form S-4 (No. 33-27219) filed on February 23, 1989).   

            *10.3        Employment  Agreement  dated August 1, 1986 between the
                         Bank and Florence Zaniewski  (incorporated by reference
                         to Exhibit 10.3 of the Company's Registration Statement
                         on Form S-4 (No. 33-27219) filed on February 23, 1989).

            *10.4        1986 Stock Option and Incentive Plan  (incorporated  by
                         reference to Exhibit 10.4 to the Company's Registration
                         Statement on Form S-4 (No.  33-27219) filed on February
                         23, 1989).                                             

            *10.5        1986   Stock   Option   Plan  for   Outside   Directors
                         (incorporated  by  reference  to  Exhibit  10.5  to the
                         Company's  Registration  Statement  on  Form  S-4  (No.
                         33-27219) filed on February 23, 1989).                 

            *10.6        Pension  Plan  of  The  People's  Savings  Bank  of New
                         Britain,  as  amended  (incorporated  by  reference  to
                         Exhibit 10.6 to the Company's Registration Statement on
                         Form S-4 (No. 33-27219) filed on February 23, 1989).   

            *10.7        Change of Control Agreement,  dated as of September 17,
                         1991,   between   the  Bank  and   Florence  K.  Gagnon
                         (incorporated  by  reference  to  Exhibit  10.7  to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.8        Change of Control Agreement,  dated as of September 18,
                         1991,    between   the   Bank   and   Teresa   Sasinski
                         (incorporated  by  reference  to  Exhibit  10.8  to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.9        Change of Control Agreement,  dated as of September 23,
                         1991,  between the Bank and Edward E.  Bohnwagner,  III
                         (incorporated  by  reference  to  Exhibit  10.9  to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.10       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between the Bank and Walter D.  Blogoslawski,
                         as amended January 1, 1987  (incorporated  by reference
                         to 

                                       25
<PAGE>
 
                         Exhibit 10.10 to the Company's Annual Report on Form
                         10-K for the fiscal year ended December 31, 1991).     

            *10.11       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between  the Bank and  Matthew P.  Duksa,  as
                         amended   January  1,  1987  and   January   20,   1987
                         (incorporated  by  reference  to  Exhibit  10.11 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.12       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between the Bank and Stanley P. Filewicz,  as
                         amended   January  20,  1987  and   February  10,  1989
                         (incorporated  by  reference  to  Exhibit  10.12 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.13       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985, between the Bank and Robert A. Gryboski, M.D.,
                         as  amended  January  1,  1987,  January  20,  1987 and
                         February 10, 1989 (incorporated by reference to Exhibit
                         10.13 to the  Company's  Annual Report on Form 10-K for
                         the fiscal year ended December 31, 1991).              

            *10.14       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between the Bank and Edward  Januszewski,  as
                         amended   January  1,  1987  and   January   20,   1987
                         (incorporated  by  reference  to  Exhibit  10.14 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.15       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between  the Bank and Roland L.  LeClerc,  as
                         amended January 1, 1987,  January 20, 1987 and February
                         10, 1989 (incorporated by reference to Exhibit 10.15 to
                         the Company's Annual Report on Form 10-K for the fiscal
                         year ended December 31, 1991).                         

            *10.16       Directors' Voluntary Deferral Agreement,  dated January
                         1,  1985,  between  the Bank and  Walter  J.  Liss,  as
                         amended   January  1,  1987  and   February   10,  1989
                         (incorporated  by  reference  to  Exhibit  10.16 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.17       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between  the Bank and Henry R.  Poplaski,  as
                         amended January 1, 1987,  January 20, 1987 and February
                         10, 1989 (incorporated by reference to Exhibit 10.17 to
                         the Company's Annual Report on Form 10-K for the fiscal
                         year ended December 31, 1991).                         

            *10.18       Directors' Voluntary Deferral Agreement,  dated January
                         20, 1987, between the Bank and Anthony R. Puskarz,  Jr.
                         (incorporated  by  reference  to  Exhibit  10.18 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991)                          

            *10.19       Directors' Voluntary Deferral Agreement,  dated January
                         1,  1985,  between  the Bank and  Eugene M.  Rosol,  as
                         amended   January  1,  1987  and   January   20,   1987
                         (incorporated  by  reference  to  Exhibit  10.19 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1991).                         

            *10.20       Directors' Voluntary Deferral Agreement,  dated January
                         1, 1985,  between the Bank and Chester S.  Sledzik,  as
                         amended January 1, 1987,  January 20, 1987 and February
                         10, 1989 (incorporated by reference to Exhibit 10.20 to
                         the 

                                       26
<PAGE>
 
                         Company's Annual Report on Form 10-K for the fiscal
                         year ended December 31, 1991).

            *10.21       Directors' Voluntary Deferral Agreement,  dated January
                         1,  1985,  between  the Bank and  Robert A.  Story,  as
                         amended January 1, 1987,  January 20, 1987 and February
                         10, 1989 (incorporated by reference to Exhibit 10.21 to
                         the Company's Annual Report on Form 10-K for the fiscal
                         year ended December 31, 1991).                         

            *10.22       Directors' Voluntary Deferral Agreement,  dated January
                         1,  1985,  between  the Bank and  Joseph A.  Welna,  as
                         amended January 1, 1987,  January 20, 1987 and February
                         10, 1989 (incorporated by reference to Exhibit 10.22 to
                         the Company's Annual Report on Form 10-K for the fiscal
                         year ended December 31, 1991).                         

            *10.23       People's Savings Financial Corp. Dividend  Reinvestment
                         Plan and Stock Purchase Plan (incorporated by reference
                         to Exhibit 10.23 to the Company's Annual Report on Form
                         10-K for this fiscal year ended December 31, 1992).    

            *10.24       People's Savings Financial Corp. Savings and Investment
                         Plan (incorporated by reference to Exhibit 10.24 to the
                         Company's  Annual  Report on Form  10-K for the  fiscal
                         year ended December 31, 1993).                         

            *10.25       Change of Control  Agreement,  dated as of January  17,
                         1995, between the Bank and Daniel Hurley  (incorporated
                         by reference to Exhibit 10.25 to the  Company's  Annual
                         Report on Form 10-K for the fiscal year ended  December
                         31, 1994).                                             

            *10.26       Change of Control  Agreement,  dated as of January  17,
                         1995, between the Bank and Earl Young  (incorporated by
                         reference  to  Exhibit  10.26 to the  Company's  Annual
                         Report on Form 10-K for the fiscal year ended  December
                         31, 1994).                                             

            *10.27       The People's Savings  Financial Corp. 1995 Stock Option
                         and Incentive Plan for Outside Directors  (incorporated
                         by  reference  to  Exhibit  A to  the  Company's  Proxy
                         Statement for the 1995 Annual meeting of Stockholders).

            *10.28       The People's Savings  Financial Corp. 1995 Stock Option
                         and Incentive  Plan (for  Employees)  (incorporated  by
                         reference to Exhibit B to the Company's Proxy Statement
                         for the 1995 Annual meeting of Stockholders).          

             11          Statement Concerning Computation of Per Share Earnings

             13          1995 Annual Report to Shareholders

             21          Subsidiaries of the Registrant   

             24          Consent of Independent Accountants

             25          Power of Attorney
------
*   Management contracts or compensatory plans, contracts or arrangements.

                                       27
<PAGE>
 
(b)  Reports  on Form 8-K.  No report on Form 8-K was filed  during  the  fourth
     quarter of 1995.

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

                                       28
<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.

                                       PEOPLE'S SAVINGS FINANCIAL CORP.


                                       By  /s/ RICHARD S. MANSFIELD
                                           -------------------------------------
                                           Richard S. Mansfield
                                           President and Chief Executive Officer


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

             Signature                     Title                      Date
             ---------                     -----                      ----

/s/ RICHARD S. MANSFIELD            President and Chief          March 19, 1996
--------------------------          Executive Officer
    Richard S. Mansfield            (Principal Executive
                                    Officer)

/s/ JOHN G. MEDVEC                  Executive Vice               March 19, 1996
--------------------------          President and
    John G. Medvec                  Treasurer (Principal
                                    Financial Officer
                                    and Principal
                                    Accounting Officer)

            *                       Director                     March 19, 1996
--------------------------
Joseph A. Welna

            *                       Director                     March 19, 1996
--------------------------
Robert A. Gryboski

            *                       Director                     March 19, 1996
--------------------------
Walter J. Liss

            *                       Director                     March 19, 1996
--------------------------
Robert A. Story

            *                       Director                     March 19, 1996
--------------------------
Walter D. Blogoslawski

            *                       Director                     March 19, 1996
--------------------------
Stanley P. Filewicz

                                       29
<PAGE>
 
            *                       Director                     March 19, 1996
--------------------------
Roland L. LeClerc

            *                       Director                     March 19, 1996
--------------------------
Chester S. Sledzik

            *                       Director                     March 19, 1996
--------------------------
Henry Poplaski

            *                       Director                     March 19, 1996
--------------------------
A. Richard Puskarz, Jr.


By /c/ JOHN G. MEDVEC
--------------------------
  John G. Medvec
  Attorney-in-Fact

                                       30
<PAGE>
 
                                  EXHIBIT INDEX



 Exhibit                                                                Page
 Number                    Description                                 Number
 ------                    -----------                                 ------
   3.1        Certificate  of   Incorporation   of  the  Company
              (incorporated  by  reference to Exhibit 3.1 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1991).             

   3.2        Bylaws of the Company  (incorporated  by reference
              to  Exhibit  3.2  to  the  Company's  Registration
              Statement  on Form  S-4  (No.  33-27219)  filed on
              February 23, 1989).                               

   4          Instruments   Defining   the  Rights  of  Security
              Holders are filed as Exhibits 3.1 and 3.2.        

 *10.1        Employment  Agreement dated August 1, 1986 between
              the Bank and Richard S. Mansfield (incorporated by
              reference  to  Exhibit   10.1  of  the   Company's
              Registration  Statement on Form S-4 (No. 33-27219)
              filed on February 23, 1989).                      

 *10.2        Employment  Agreement dated August 1, 1986 between
              the  Bank  and  John G.  Medvec  (incorporated  by
              reference  to  Exhibit   10.2  of  the   Company's
              Registration  Statement on Form S-4 (No. 33-27219)
              filed on February 23, 1989).                      

 *10.3        Employment  Agreement dated August 1, 1986 between
              the Bank and Florence  Zaniewski  (incorporated by
              reference  to  Exhibit   10.3  of  the   Company's
              Registration  Statement on Form S-4 (No. 33-27219)
              filed on February 23, 1989).                      

 *10.4        1986 Stock Option and Incentive Plan (incorporated
              by  reference  to  Exhibit  10.4 to the  Company's
              Registration  Statement on Form S-4 (No. 33-27219)
              filed on February 23, 1989).                      

 *10.5        1986  Stock  Option  Plan  for  Outside  Directors
              (incorporated  by reference to Exhibit 10.5 to the
              Company's  Registration Statement on Form S-4 (No.
              33-27219) filed on February 23, 1989).            

 *10.6        Pension Plan of The  People's  Savings Bank of New
              Britain, as amended  (incorporated by reference to
              Exhibit   10.6  to  the   Company's   Registration
              Statement  on Form  S-4  (No.  33-27219)  filed on
              February 23, 1989).                               

 *10.7        Change of Control Agreement, dated as of September
              17, 1991,  between the Bank and Florence K. Gagnon
              (incorporated  by reference to Exhibit 10.7 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1991).             

 *10.8        Change of Control Agreement, dated as of September
              18,  1991,  between  the Bank and Teresa  Sasinski
              (incorporated  by reference to Exhibit 10.8 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1991).             

 *10.9        Change of Control Agreement, dated as of September
              23,   1991,   between   the  Bank  and  Edward  E.
              Bohnwagner,  III  (incorporated  by  reference  to
              Exhibit  10.9 to the  Company's  Annual  Report on
              Form 10-K for the fiscal year ended  December  31,
              1991).                                            
<PAGE>
 
 *10.10       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Walter D.
              Blogoslawski,   as   amended   January   1,   1987
              (incorporated by reference to Exhibit 10.10 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1991).             

 *10.11       Directors'  Voluntary  Deferral  Agreement,  dated
              January 1, 1985,  between  the Bank and Matthew P.
              Duksa,  as amended January 1, 1987 and January 20,
              1987  (incorporated  by reference to Exhibit 10.11
              to the  Company's  Annual  Report on Form 10-K for
              the fiscal year ended December 31, 1991).         

 *10.12       Directors'  Voluntary  Deferral  Agreement,  dated
              January 1, 1985,  between  the Bank and Stanley P.
              Filewicz, as amended January 20, 1987 and February
              10, 1989  (incorporated  by  reference  to Exhibit
              10.12 to the Company's  Annual Report on Form 10-K
              for the fiscal year ended December 31, 1991).     

 *10.13       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Robert A.
              Gryboski,   M.D.,  as  amended  January  1,  1987,
              January   20,   1987   and   February   10,   1989
              (incorporated by reference to Exhibit 10.13 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1991).             

 *10.14       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1,  1985,  between  the Bank  and  Edward
              Januszewski,   as  amended  January  1,  1987  and
              January 20, 1987  (incorporated  by  reference  to
              Exhibit  10.14 to the  Company's  Annual Report on
              Form 10-K for the fiscal year ended  December  31,
              1991).                                            

 *10.15       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Roland L.
              LeClerc,  as amended January 1, 1987,  January 20,
              1987  and  February  10,  1989   (incorporated  by
              reference to Exhibit 10.15 to the Company's Annual
              Report  on Form  10-K for the  fiscal  year  ended
              December 31, 1991).                               

 *10.16       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Walter J.
              Liss, as amended  January 1, 1987 and February 10,
              1989  (incorporated  by reference to Exhibit 10.16
              to the  Company's  Annual  Report on Form 10-K for
              the fiscal year ended December 31, 1991).         

 *10.17       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1,  1985,  between  the Bank and Henry R.
              Poplaski,  as amended January 1, 1987, January 20,
              1987  and  February  10,  1989   (incorporated  by
              reference to Exhibit 10.17 to the Company's Annual
              Report  on Form  10-K for the  fiscal  year  ended
              December 31, 1991).                               

 *10.18       Directors'  Voluntary  Deferral  Agreement,  dated
              January 20, 1987,  between the Bank and Anthony R.
              Puskarz, Jr. (incorporated by reference to Exhibit
              10.18 to the Company's  Annual Report on Form 10-K
              for the fiscal year ended December 31, 1991).     

 *10.19       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Eugene M.
              Rosol,  as amended January 1, 1987 and January 20,
              1987  (incorporated  by reference to Exhibit 10.19
              to the  Company's  Annual  Report on Form 10-K for
              the fiscal year ended December 31, 1991).         

                                       2
<PAGE>
 
 *10.20       Directors'  Voluntary  Deferral  Agreement,  dated
              January 1, 1985,  between  the Bank and Chester S.
              Sledzik,  as amended January 1, 1987,  January 20,
              1987  and  February  10,  1989   (incorporated  by
              reference to Exhibit 10.20 to the Company's Annual
              Report  on Form  10-K for the  fiscal  year  ended
              December 31, 1991).                               

 *10.21       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Robert A.
              Story,  as amended  January 1, 1987,  January  20,
              1987  and  February  10,  1989   (incorporated  by
              reference to Exhibit 10.21 to the Company's Annual
              Report  on Form  10-K for the  fiscal  year  ended
              December 31, 1991).                               

 *10.22       Directors'  Voluntary  Deferral  Agreement,  dated
              January  1, 1985,  between  the Bank and Joseph A.
              Welna,  as amended  January 1, 1987,  January  20,
              1987  and  February  10,  1989   (incorporated  by
              reference to Exhibit 10.22 to the Company's Annual
              Report  on Form  10-K for the  fiscal  year  ended
              December 31, 1991).                               

 *10.23       People's   Savings   Financial   Corp.    Dividend
              Reinvestment   Plan  and   Stock   Purchase   Plan
              (incorporated by reference to Exhibit 10.23 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1992).             

 *10.24       People's  Savings  Financial  Corp.   Savings  and
              Investment  Plan  (incorporated  by  reference  to
              Exhibit  10.24 to the  Company's  Annual Report on
              Form 10-K for the fiscal year ended  December  31,
              1993).                                            

 *10.25       Change of Control  Agreement,  dated as of January
              17,  1995,  between  the  Bank and  Daniel  Hurley
              (incorporated by reference to Exhibit 10.25 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1994).             

 *10.26       Change of Control  Agreement,  dated as of January
              17,   1995,   between  the  Bank  and  Earl  Young
              (incorporated by reference to Exhibit 10.26 to the
              Company's  Annual  Report  on  Form  10-K  for the
              fiscal year ended December 31, 1994).             

 *10.27       The People's  Savings  Financial  Corp. 1995 Stock
              Option and Incentive  Plan for Outside  Directors.
              Incentive Plan for Outside Directors (incorporated
              by reference to Exhibit A to the  Company's  Proxy
              Statement   for  the  1995   Annual   meeting   of
              Stockholders).                                    

 *10.28       The People's  Savings  Financial  Corp. 1995 Stock
              Option and Incentive  Plan for Outside  Directors.
              Incentive Plan (for  Employees),  (incorporated by
              reference  to  Exhibit  B to the  Company's  Proxy
              Statement   for  the  1995   Annual   meeting   of
              Stockholders).                                    

  11          Statement  Concerning  Computation  of  Per  Share
              Earnings                                          

  13          1995 Annual Report to Shareholders

  21          Subsidiaries of the Registrant  

  24          Consent of Independent Auditors

  25          Power of Attorney

------
*  Management contracts or compensatory plans, contracts or arrangements.

                                       3