U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-KSB

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

For the fiscal year ended September 30, 1999

Commission File No.: 01-13465

FALMOUTH BANCORP, INC.(Name of small business issuer in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 04-3337685(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

20 Davis Straits, Falmouth, Massachusetts 02540(Address of principal executive offices)(508) 548-3500(Issuer's Telephone Number)

Securities registered pursuant to section 12(b) of the Exchange Act:



|Title of each classCommon Stock, par value $0.01 per share | Name of Exchange on which registered:American Stock Exchange
|---------------------------------------------------------- | ------------------------------------------------------------

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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  [ X ]

The revenues for the issuer's fiscal year ended September 30, 1999 were $8,137,606.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, as of a specified date within the last 60
days. On November 30, 1999: $19,696,217.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. The Company had 1,071,838 shares outstanding as of December 7, 1999.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement pursuant to Regulation 14A, which was delivered to the Commission for filing on December 17, 1999, and the 1999 Annual Report to Stockholders for the fiscal year ended
September 30, 1999, which has not previously been mailed to the Commission, are incorporated by reference into Part II and III of this report.

Transitional Small Business Disclosure Format (check one):
Yes   No  X

TABLE OF CONTENTS

|PART I   |                                             |                                                                                                                                                                                                                                                                       | Page          
|-------- | ------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------
|         | ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.             | BUSINESS
DESCRIPTION OF PROPERTY
LEGAL PROCEEDINGS
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                | 1
26
27
27    
|PART II  |                                             |                                                                                                                                                                                                                                                                       |               
|         | ITEM 5.
ITEM 6.
ITEM 7.
ITEM 8.             | MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
 STOCKHOLDER MATTERS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
FINANCIAL STATEMENTS
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
 ACCOUNTING AND FINANCIAL DISCLOSURE | 27
27
27
27   
|PART III |                                             |                                                                                                                                                                                                                                                                       |               
|         | ITEM 9.
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13. | DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EXHIBITS AND REPORTS ON FORM 8-K                                                 | 27
27
27
28
28

PART I

ITEM 1.  BUSINESS

General

Falmouth Bancorp, Inc. (the "Company" or "Bancorp"), a Delaware corporation, is the holding company for Falmouth Co-operative Bank (the "Bank"), a Massachusetts-chartered stock
co-operative bank. The Bank converted to stock form on March 28, 1996, and issued 1,454,750 shares of common stock at $10.00 per share (the "Conversion"). On October 14, 1997, the Company acquired all of the capital stock of the Bank and
stockholders of the Bank became stockholders of the Company in a share for share exchange pursuant to a plan of reorganization approved by the Bank's stockholders on January 21, 1997 (the "Reorganization") whereby the Bank became the
wholly-owned subsidiary of the Company. At September 30, 1999, there were 1,175,744 shares outstanding. The Company's sole business activity is ownership of the Bank. The Company also makes investments in long and short-term marketable securities and
other liquid investments. The Company's Common Stock trades on the American Stock Exchange under the symbol "FCB." Unless otherwise disclosed, the information presented in this Report on Form 10-KSB represents the activity of the Bank for fiscal
1997 and the period prior to the Reorganization, and the consolidated activity of Falmouth Bancorp, Inc. and subsidiaries thereafter. The Company had total assets of $118.7 million as of September 30, 1999.

The Bank conducts its business through an office located in Falmouth, Massachusetts, where it was originally founded in 1925 as a Massachusetts chartered mutual co-operative Bank, and two branches located in East
Falmouth and North Falmouth, Massachusetts. The Bank's deposits are currently insured up to applicable limits by the Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC") and the Share Insurance Fund of the Co-operative
Central Bank of Massachusetts.

The Bank's principal business consists of attracting deposits from the general public and using these funds to originate mortgage loans secured by one- to four-family residences located primarily in Falmouth,
Massachusetts and surrounding areas and to invest in United States Government and Agency securities.

Business Strategy

The Bank's business strategy is to operate as a well-capitalized, profitable and independent community bank dedicated to financing home ownership and consumer needs in its market area and to provide quality
service to its customers. The Bank has implemented this strategy by: (i) closely monitoring the needs of customers and providing quality service; (ii) emphasizing consumer-oriented banking by originating residential mortgage loans and consumer loans, and
by offering checking accounts and other financial services and products; (iii) focusing on expanding lending activities to produce moderate increases in loan originations; (iv) maintaining asset quality; (v) maintaining capital in excess of regulatory
requirements; and (vi) producing stable earnings.

The Bank serves its primary market area, the Massachusetts communities of Falmouth and Mashpee located in the Cape Cod region of Massachusetts, through its three offices in Falmouth, Massachusetts. In October 1998,
the Bank activated its toll free Voice Response System "ON CALL", which enabled its customers to obtain current balance information and transfer funds between accounts by telephone. In May 1999, the Bank installed its first off-site ATM in a
local market. By August 1999, the Bank introduced its enhanced website at falmouthbank.com, which allows access to interactive calculators, as well as to the Company's current stock price and other relative information regarding the Bank's products and
services.  The Bank competes with fifteen branches of financial institutions (including national banks, savings banks, savings and loans and credit unions) which are headquartered outside its market area. The Bank is the only independent financial
institution headquartered in Falmouth.

To a lesser extent, the Bank also makes commercial real estate loans and consumer loans, including passbook loans, automobile, home equity and other consumer loans. The Bank originates both fixed-rate and
adjustable-rate loans and emphasizes the origination of residential real estate mortgage loans with adjustable interest rates, and makes other investments which allow the Bank to more closely match the interest rate and maturities of its assets and
liabilities.

Market Area

The Bank considers its primary market area to be the communities of Falmouth and Mashpee in Barnstable County, which is located in the Cape Cod region of Massachusetts, approximately 72 miles south of Boston. The
year-round population of Barnstable County is over 200,000. The majority of the Bank's lending has been in Falmouth and Mashpee. The Cape Cod region is a major recreational resort/retirement community, with seasonal tourism being the most significant
economic activity. Falmouth's year-round population of 29,585 (1996 census) increases to a summer population of approximately 70,000. Visitors find accommodations in the many motels, hotels and inns in the area. Falmouth has approximately 44 miles of
ocean and lake shoreline. There are nine harbors and inlets, some with docking and most with mooring facilities. Two major harbors offer access, via ferry, to the island of Martha's Vineyard with service to the island of Nantucket during the summer months
from Woods Hole. In addition to swimming, boating, fishing and other forms of water recreation, Falmouth also has four public and two private golf courses.

The major employers in the Falmouth area are the Woods Hole Oceanographic Institute, with approximately 800 employees, Falmouth Hospital, with 750 employees and Woods Hole, Martha's Vineyard and Nantucket Steamship
Authority, with 500 employees. Other major employers include Marine Biological Laboratories.

Employees

At September 30, 1999, the Bank employed 28 full-time and 5 part-time employees.

Lending Activities

General. The principal lending activity of the Bank is the origination of conventional mortgage loans for the purpose of purchasing or refinancing owner-occupied, one- to four-family residential properties
in its designated community reinvestment area of the Massachusetts towns of Falmouth and Mashpee. To a lesser extent, the Bank also originates consumer loans including home equity and passbook loans and commercial loans. The Bank also originates and
retains in its loan portfolio adjustable-rate loans and fixed-rate loans with maturities of up to 30 years. Traditionally, fixed-rate loans with terms in excess of 30 years are originated and sold in the secondary market. Loan originations for the year
ended September 30, 1999, achieved the level of $34.9 million and were primarily single family residential loans. During this period, the Bank was ranked as one of the largest producers of residential mortgage loans. The mortgage market in the Falmouth
area was vigorous in both the purchase money and refinance categories during fiscal 1999. The Bank is a qualified seller/servicer for Federal National Mortgage Corporation ("FNMA") and was servicing $3.6 million in loans for FNMA and $3.1
million for other investors at September 30, 1999.

Loan Portfolio. The following table presents selected data relating to the composition of the Bank's loan portfolio by type of loan on the dates indicated.



|                                  | At September 30,
|--------------------------------- | ----------------
|                                  | 1999            
|                                  | Amount          
|                                  |                 
|Residential mortgage loans        | $ 67,712        
|Commercial real estate loans      | 8,488           
|Consumer loans                    | 577             
|Home equity loans                 | 4,621           
|Commercial loans                  | 2,175           
|Total loans                       | 83,570          
|                                  |                 
|                                  |                 
|Less:
Unearned income (cost), net | 19              
|Unadvanced principal              | 2,533           
|Allowance for loan losses         | 569             
|Loans, net                        | $ 80,487        

One- to Four-Family Residential Real Estate Lending. The primary emphasis of the Bank's lending activity is the origination of conventional mortgage loans secured by one- to four-family residential dwellings
located in the Bank's primary market area. As of September 30, 1999, loans on one- to four-family residential properties accounted for 81.0% of the Bank's loan portfolio.

The Bank's mortgage loan originations are for terms of up to 30 years, amortized on a monthly basis with interest and principal due each month. Residential real estate loans often remain outstanding for significantly
shorter periods than their contractual terms as borrowers may refinance or prepay loans at their option, without penalty. Conventional residential mortgage loans granted by the Bank customarily contain "due-on-sale" clauses which permits the
Bank to accelerate the indebtedness of the loan upon transfer of ownership of the mortgaged property.

The Bank makes conventional mortgage loans and it uses standard FNMA documents to allow for the sale of loans in the secondary mortgage market. The Bank's lending policies generally limit the maximum loan-to-value
ratio on mortgage loans secured by owner-occupied properties to 95% of the lesser of the appraised value or purchase price of the property, with the condition that private mortgage insurance is required on loans with a loan-to-value ratio in excess of 80%.

The Bank, since the early 1980s, has offered adjustable-rate mortgage loans with terms of up to 30 years. Adjustable-rate loans offered by the Bank include loans which reprice every one, three and five years and
provide for an interest rate which is based on the interest rate paid on United States Treasury securities of a corresponding term, plus a margin of 2.75%. The Bank currently offers adjustable-rate loans with initial rates below those which would prevail
under the foregoing computations, based upon the Bank's determination of market factors and competitive rates for adjustable-rate loans in its market area. For adjustable-rate loans, borrowers are qualified at the initial rate plus an anticipated upward
adjustment of 200 basis points.

The Bank retains all adjustable-rate mortgages it originates. The Bank's adjustable-rate mortgages include caps on increases or decreases of 2% per year, and 6% over the life of the loan (2% per adjustment, and 5%
over the life of the loan for five-year adjustable-rate loans). The retention of adjustable-rate mortgage loans in the Bank's loan portfolio helps reduce the Bank's exposure to increases in interest rates. However, there are unquantifiable credit risks
resulting from potential increased costs to the borrower as a result of repricing of adjustable-rate mortgage loans. It is possible that during periods of rising interest rates, the risk of default on adjustable-rate mortgage loans may increase due to the
upward adjustment of interest cost to the borrower.

During the year ended September 30, 1999, the Bank originated $4.9 million in adjustable-rate mortgage loans and $9.7 million in fixed-rate mortgage loans for portfolio. Approximately 5.2% of all loan originations
during fiscal 1999 were refinancings of loans already in the Bank's loan portfolio. At September 30, 1999, the Bank's loan portfolio included $19.1 million in adjustable-rate one- to four-family residential mortgage loans or 24.4% of the Bank's total loan
portfolio, and $50.2 million in fixed-rate one- to four-family residential mortgage loans, or 60.0% of the Bank's total loan portfolio.

The Bank engages in a limited amount of construction lending usually for the construction of single family residences. Most are construction/permanent loans structured to become permanent loans upon the completion of
construction. All construction loans are secured by first liens on the property. Loan proceeds are disbursed as construction progresses and inspections warrant. Loans involving construction financing present a greater risk than loans for the purchase of
existing homes, since collateral values and construction costs can only be estimated at the time the loan is approved. Due to the small amount of construction loans in the Bank's portfolio, the risk in this area is limited.

Commercial Real Estate Loans. At September 30, 1999, the Bank's commercial real estate loan portfolio totaled $8.5 million, or 10.2% of total loans. The Bank's largest loan is a commercial loan with an
outstanding balance of $685,000 at September 30, 1999 secured by an office complex located in Falmouth, Massachusetts.

Commercial real estate lending entails additional risks compared with one- to four-family residential lending. For example, commercial real estate loans typically involve large loan balances to single borrowers or
groups of related borrowers and the payment experience on such loans is typically dependent on the successful operation of a real estate project and/or the collateral value of the commercial real estate securing the loan. At September 30, 1999, all of the
Bank's commercial real estate loans were performing.

Home Equity Loans. The Bank also originates home equity loans which are loans secured by available equity based on the appraised value of one- to four-family residential property. Home equity loans will be
made for up to 80% of the tax assessed or appraised value of the property (less the amount of the first mortgage). Home equity loans have an adjustable interest rate which ranges from 0% to 1% above the prime rate as reported in The Wall Street Journaland have terms of twenty years or less. At September 30, 1999, the Bank had $10.9 million in home equity loans with unused credit available to existing borrowers of $6.3 million.

Consumer Loans. The Bank's consumer loans consist of passbook loans, and other consumer loans, including automobile loans. At September 30, 1999, the consumer loan portfolio totaled $577,000 or .69% of total
loans. Consumer loans generally are offered for terms of up to five years at fixed interest rates. Consumer loans do not exceed $15,000 individually. Management expects to continue to promote consumer loans as part of its strategy to provide a wide range
of personal financial services to its customers and as a means to increase the yield on the Bank's diversified loan portfolio.

The Bank makes loans up to 90% of the amount of the depositor's savings account balance. The interest rate on the loan is 4.0% higher than the rate being paid on regular savings accounts and 3% higher than the
rate being paid on certificates of deposit. The Bank also makes other consumer loans, which may or may not be secured. The terms of such loans usually depend on the collateral. At September 30, 1999, the total amount of passbook and other consumer loans
was $500,000.

The Bank makes loans for automobiles, both new and used, directly to the borrowers. The loans are generally limited to 80% of the purchase price or the retail value listed by the National Automobile Dealers
Book. The terms of the loans are determined by the age and condition of the collateral. Collision insurance policies are required on all these loans. At September 30, 1999, the total amount of automobile loans was $121,000.

Consumer loans generally are originated at higher interest rates than residential mortgage loans but also tend to have a higher credit risk than residential loans due to the loan being unsecured or secured by
rapidly depreciable assets. Despite these risks, the Bank's level of consumer loan delinquencies generally has been low. No assurance can be given, however, that the Bank's delinquency rate on consumer loans will continue to remain low in the future, or
that the Bank will not incur future losses on these activities.

Commercial Loans. The Bank employs a commercial loan officer with over 19 years of experience in commercial lending in the Falmouth market. The Bank is pursuing on a selective basis the origination of
commercial loans to meet the working capital and short-term financing needs of established local businesses. Unless otherwise structured as a mortgage on commercial real estate, such loans are generally be limited to terms of five years or less.
Substantially all such commercial loans have variable interest rates tied to the prime rate as reported in The Wall Street Journal.Whenever possible, the Bank collateralizes these loans with a lien on commercial real estate, or alternatively, with a lien on business assets and equipment and the personal guarantees from principals of the borrower.
Commercial loans do not presently comprise a significant portion of the Bank's loan portfolio. At September 30, 1999 the Bank's non-real estate commercial loan portfolio totaled $2.2 million.

Commercial business loans generally are considered to involve a higher degree of risk than residential mortgage loans because the collateral may be in the form of intangible assets and/or inventory subject to
market obsolescence. Commercial loans also may involve relatively large loan balances to single borrowers or groups of related borrowers, with the repayment of such loans typically dependent on the successful operation and income stream of the borrower.
Such risks can be affected significantly by economic conditions. In addition, commercial business lending generally requires substantially greater oversight efforts compared to residential real estate lending.

Loan Commitments. The Bank makes a 60-day loan commitment to borrowers. At September 30,1999, the Bank had $1.7 million in loan commitments outstanding, for the origination of one- to four-family residential
real estate loans.

Loan Solicitation Origination and Loan Fees. The Bank originates loans through its main office located in Falmouth, Massachusetts and two branch offices located in East and North Falmouth. Loan originations
are derived from a number of sources, including the Bank's existing customers, referrals, realtors, advertising and "walk-in" customers at the Bank's offices.

The Bank has one full-time residential loan originator who is compensated by salary and commission. The originator meets with applicants at their convenience and location and is in regular contact with real
estate brokers, attorneys, accountants, building contractors, developers and others in the Bank's local market area. The Bank increased its advertising in locally distributed newspapers and has utilized local radio advertising to increase market share of
residential loan originations.

Upon receipt of a loan application from a prospective borrower, a credit report and verifications are ordered to verify specific information relating to the loan applicant's employment, income and credit
standing. For all mortgage loans, an appraisal of real estate intended to secure the proposed loan is obtained from an independent fee appraiser who has been approved by the Bank's Board of Directors. Fire, casualty and sometimes flood insurance are
required on all loans secured by improved real estate.

Insurance on other collateral is required unless waived by the loan committee. The Board of Directors of the Bank has the responsibility and authority for the general supervision over the loan policies of the
Bank. The Board has established written lending policies for the Bank. All applications for residential and commercial real estate mortgages and commercial business loans must be ratified by the Bank's Board of Directors. In addition, certain designated
officers of the Bank have limited authority to approve consumer loans.

Interest rates charged by the Bank on all loans are primarily determined by competitive loan rates offered in its market area and the Bank generally charges an origination fee on new mortgage loans. The
origination fees, net of direct origination costs, are deferred and amortized into income over the life of the loan.

Loan Maturities. The following table sets forth certain information at September 30, 1999 regarding the dollar amount of loans maturing in the Bank's portfolio based on their contractual terms to maturity,
including scheduled repayments of principal. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less.



|                                                          | At September 30, 1999(1)
|--------------------------------------------------------- | ------------------------
|                                                          | RealEstate              
|                                                          | (In thousands)          
|                                                          |                         
|Total loans scheduled to mature:                          |                         
|In one year or less                                       | $  5,604                
|After one year through five years                         | 2,912                   
|Beyond five years                                         | 69,755                  
|Total                                                     | $73,291                 
|Loan balance by type scheduled to
 mature after one year: |                         
|Fixed                                                     | 46,233                  
|Adjustable                                                | 26,458                  

__________________

(1)   Net of unearned income and unadvanced principal.

Originations and Sales of Loans. The following table sets forth information with respect to originations and sales of loans during the periods indicated. In recent years, the Bank has been retaining more of
its fixed-rate residential loans in excess of 15-year term with the intent of selling such loans service retained.



|                                    | Years Ended September 30,
|----------------------------------- | -------------------------
|                                    | 1999                     
|                                    | (In thousands)           
|                                    |                          
|Beginning balance(1)                | $78,182                  
|Mortgage loan originations(2)       | 28,279                   
|Consumer loan originations          | 4,323                    
|Commercial loan originations        | 2,249                    
|Less:
  Amortization and payoffs(3) | (24,193)                 
|Transfers to OREO                   | -                        
|Net loans originated                | 10,658                   
|Total loans sold                    | (7,784)                  
|Ending balance(1)                   | $81,056                  

_________________

(1)   Net of unearned income and unadvanced principal.
(2)   Includes residential and commercial real estate loans.
(3)   Includes unadvanced principal.

Non-Performing Assets, Asset Classification and Allowances for Losses. Loans are reviewed on a regular basis and are placed on a non-accrual status when, in the opinion of management, the collection of
principal and interest are doubtful.

Real estate acquired by the Bank as a result of foreclosure is classified as real estate owned until such time as it is sold. When such property is acquired, it is recorded at the lower of the unpaid principal
balance or its fair value. Any required write-down of the loan to its fair value is charged to the allowance for loan losses.



|                                                                | At September 30,      
|--------------------------------------------------------------- | ----------------------
|                                                                | 1999                  
|                                                                | (Dollars in thousands)
|                                                                |                       
|Loans 30-89 days past due(not included in non-performing loans) | $57                   
|Loans 30-89 days past due as a percent of total loans           | .07%                  
|Non-performing loans: (90 days past due)                        | $  -                  
|OREO                                                            | $  -                  
|Total non-performing assets                                     | $  -                  
|Non-performing loans as a percent oftotal loans                 | -%                    
|Non-performing assets as apercent of total assets               | -%                    

During the year ended September 30, 1999, no gross interest income would have been recorded on loans accounted for on a non-accrual basis if the loans had been current throughout the period. No interest on such loans
was included in income during the respective periods. At September 30, 1999, management was not aware of any loans not currently classified as non-accrual, 90 days past due or restructured but which may be so classified in the near future because of
concerns over the borrower's ability to comply with repayment terms.

Federal and state regulations require each banking institution to classify its asset quality on a regular basis. In addition, in connection with examinations of such banking institutions, federal and state examiners
have authority to identify problem assets and, if appropriate, classify them. An asset is classified substandard if it is determined to be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if
any. As a general rule, the Bank will classify a loan as substandard if the Bank can no longer rely on the borrower's income as the primary source for repayment of the indebtedness and must look to secondary sources such as guarantors or collateral. An
asset is classified as doubtful if full collection is highly questionable or improbable. An asset is classified as loss if it is considered uncollectible, even if a partial recovery could be expected in the future. The regulations also provide for a
special mention designation, described as assets which do not currently expose a banking institution to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving management's close
attention. Assets classified as substandard or doubtful require a banking institution to establish general allowances for loan losses. If an asset or portion thereof is classified loss, a banking institution must either establish specific allowances for
loan losses in the amount of the portion of the asset classified loss, or charge off such amount. Examiners may disagree with a banking institution's classifications and amounts reserved. If a banking institution does not agree with an examiner's
classification of an asset, it may appeal this determination to the FDIC Regional Director. At September 30, 1999, the Bank had no assets classified as special mention or doubtful, $87,757 in assets designated as substandard, and $3,458 classified as loss.

In originating loans, the Bank recognizes that credit losses will occur and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of
the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan. It is management's policy to maintain an adequate general allowance for loan losses based on, among other things, the Bank's and the
industry's historical loan loss experience, evaluation of economic conditions and regular reviews of delinquencies and loan portfolio quality. Further, after properties are acquired following loan defaults, additional losses may occur with respect to such
properties while the Bank is holding them for sale. The Bank increases its allowances for loan losses and losses on real estate owned by charging provisions for possible losses against the Bank's income. Specific reserves also are recognized against
specific assets when warranted.

Results of recent examinations by bank regulators indicate that these regulators may be applying more conservative criteria in evaluating real estate market values, requiring significantly increased provisions for
potential loan losses. While Falmouth believes it has established its existing allowances for loan losses in accordance with generally accepted accounting principles, there can be no assurance that regulators, in reviewing the Bank's loan portfolio, will
not request the Bank to increase its allowance for loan losses, thereby negatively affecting the Bank's financial condition and earnings.

The banking regulatory agencies, including the FDIC, have a policy statement regarding maintenance of an adequate allowance for loan and lease losses and an effective loan review system. This policy includes an
arithmetic formula for checking the reasonableness of an institution's allowance for loan loss estimate compared to the average loss experience of the industry as a whole. Examiners will review an institution's allowance for loan losses and compare it
against the sum of (i) 50% of the portfolio that is classified doubtful; (ii) 15% of the portfolio that is classified as substandard; and (iii) for the portions of the portfolio that have not been classified (including those loans designated as special
mention), estimated credit losses over the upcoming twelve months given the facts and circumstances as of the evaluation date. This amount is considered neither a "floor" nor a "safe harbor" of the level of allowance for loan losses an
institution should maintain, but examiners will view a shortfall relative to the amount as an indication that they should review management's policy on allocating these allowances to determine whether it is reasonable based on all relevant factors.

The following table analyzes activity the Bank's allowance for loan losses for the periods indicated.

|                                                                              | Year Ended September 30,
|----------------------------------------------------------------------------- | ------------------------
|                                                                              | 1999                    
|                                                                              | (Dollars in thousands)  
|                                                                              |                         
|Average loans, net                                                            | $77,657                 
|Period-end total loans(1)                                                     | 81,056                  
|Allowance for loan losses at beginning of period                              | 527                     
|Loans charged-off                                                             | -                       
|Recoveries                                                                    | -                       
|Provision charged to operations                                               | 42                      
|Allowance for loan losses at end of period                                    | $     569               
|Ratios: 
Allowance for loan losses as a percentage of
 Period end total loans | .70%                    
|Allowance for loan losses as a percentage of
 non-performing loans            | -%                      
|Net charge-offs to average loans, net                                         | -                       
|Net charge-offs to allowance for loan losses                                  | -                       

_________________________

(1)   Net of unearned income and unadvanced principle.

The following table sets forth a breakdown of the allowance for loan losses by loan category at the dates indicated. Management believes that the allowance can be allocated by category only on an approximate basis.
These allocations are not necessarily indicative of future losses and do not restrict the use of the allowance to absorb losses in any loan category.

|                                       | At September 30,      
|-------------------------------------- | ----------------------
|                                       | 1999                  
|                                       | Amount                
|                                       | (Dollars in thousands)
|                                       |                       
|Real estate  mortgage:                 |                       
|Residential                            | $282                  
|Commercial                             | 171                   
|Commercial loans, other                | 62                    
|Consumer, including
 home equity loans | 54                    
|Total allowance for loan
 losses       | $569                  

Investment Activities

General. The Bank is required to maintain an amount of liquid assets appropriate for its level of net withdrawals from savings accounts and current borrowings. It has been generally the Bank's policy to
maintain a liquidity portfolio in excess of regulatory requirements. At September 30, 1999, the Bank's liquidity ratio was 31.50%. Liquidity levels may be increased or decreased depending upon the yields on investment alternatives, management's judgment
as to the attractiveness of the yields then available in relation to other opportunities, management's expectations of the level of yield that will be available in the future and management's projections as to the short-term demand for funds to be used in
Falmouth's loan origination and other activities.

Interest income from investments in various types of liquid assets provides a significant source of revenue for the Bank. In the late 1980s, the Bank maintained its conservative underwriting standards in an effort to
avoid asset quality problems and chose instead to invest excess liquidity in its investment portfolio. The Bank's short-term investments include United States Treasury securities and United States Agency securities, commercial paper, equity securities,
short-term corporate debt securities and overnight federal funds. The balance of the securities investments maintained by the Bank in excess of regulatory requirements reflects management's historical objective of maintaining liquidity at a level that
assures the availability of adequate funds, taking into account anticipated cash flows and available sources of credit, for meeting withdrawal requests and loan commitments and making other investments.

The Bank purchases securities through a primary dealer of United States Government obligations or such other securities dealers authorized by the Board of Directors and requires that the securities be delivered to
the safekeeping agent (Investors Bank & Trust Company) before the funds are transferred to the broker or dealer. The Bank purchases investment securities pursuant to an investment policy established by the Board of Directors.

All securities and investments are recorded on the books of the Bank in accordance with generally accepted accounting principles. The Bank does not purchase securities and investments for trading. Effective October
1, 1994, the Bank implemented SFAS 115. Available-for-sale securities are reported at fair value with unrealized gains or losses reported as a separate component of net worth. All purchases of securities and investments conform to the Bank's interest rate
risk policy.

The following table sets forth the scheduled maturities, average yields, amortized cost and market value for the Bank's investment securities at September 30, 1999.

|                               | September 30, 1999                                     
                                           
;
|------------------------------ | ---------------------------------------------------------------------------------------------------------
|                               | One Year or Less                                                                                         
|                               | Amortized
Cost                                                                                           
|                               | (Dollars in thousands)                                                                                   
|                               |                                                                                                          
|U.S. Government 
 Obligations  | $  8,985                                                                                                 
|Mortgage-backed 
 Securities   | -                                                                                                        
|Corporate Notes and 
 Bonds    | 6,448                                                                                                    
|Total                          | $15,433                                                                                                  
|Marketable Equity 
 Securities |                                                                                                          
|FHLB Stock                     |                                                                                                          
|Total Investment 
 Portfolio   |                                                                                                          

The following tables set forth information regarding the investment portfolio at the dates indicated.

|                              | September 30, 1999    
|----------------------------- | ----------------------
|                              | Available-for-Sale    
|                              | Amortized
Cost        
|                              | (Dollars in thousands)
|                              |                       
|Investment securities(3):     |                       
|U.S. government obligations   | $6,259                
|Other bonds and obligations   | 5,160                 
|Marketable equity securities  | 3,862                 
|Mortgage-backed securities(4) | 1,638                 
|Total Investment Portfolio    | $16,919               

|                              | September 30,         
|----------------------------- | ----------------------
|                              | 1999                  
|                              | Amount                
|                              | (Dollars in thousands)
|                              |                       
|Investment securities(3):     |                       
|U.S. government obligations   | $10,254               
|Other bonds and obligations   | 10,478                
|Marketable equity securities  | 4,070                 
|Mortgage-backed securities(4) | 1,984                 
|Total Investment Portfolio    | $26,786               

___________________________

(1)   As a percentage of market value.
(2)   As a percentage of amortized cost.
(3)   Includes $1.1 million invested in Bank Investment Fund One, a mutual bond fund offered by the Co-operative Central Bank, a 
        quasi-governmental agency, and does not include interest-earning overnight deposits of $4,805,000 or Federal Home Loan Bank 
        Stock of $720,700.
(4)   Consists of collateralized mortgage obligations, GNMA, FHLMC and FNMA certificates.

Deposit Activity and Other Sources of Funds

General. Deposits are the primary source of the Bank's funds for lending and other investment purposes. In addition to deposits, the Bank derives funds from principal repayments and interest payments on
loans and investments as well as other sources arising from operations in the production of net earnings. Loan repayments and interest payments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by
general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources, or on a longer term basis for general business purposes.

Deposits. Deposits are attracted principally from within the Bank's primary market area through the offering of a broad selection of deposit instruments, including passbook savings, NOW accounts, demand
deposits, money market accounts and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit and the interest rate.

The Bank's policies are designed primarily to attract deposits from local residents and businesses rather than to solicit deposits from areas outside its primary market. The Bank does not accept deposits from brokers
due to the volatility and rate sensitivity of such deposits. Interest rates paid, maturity terms, service fees and withdrawal penalties are established by the Bank on a periodic basis. Determination of rates and terms are predicated upon funds acquisition
and liquidity requirements, rates paid by competitors, growth goals and federal regulations.

The following table sets forth the various types of deposit accounts at the Bank and the balances in these accounts at the dates indicated.

|                        | At September 30,      
|----------------------- | ----------------------
|                        | 1999                  
|                        | Amount                
|                        | (Dollars in thousands)
|                        |                       
|Savings deposits        | $17,782               
|NOW accounts            | 9,389                 
|Money market deposits   | 14,188                
|Total                   | 41,359                
|Demand deposits         | 8,091                 
|Certificates of deposit | 43,436                
|Total deposits          | $92,886               

For more information on the Bank's deposit accounts, see Note 6 of Notes to Financial Statements.

The following table indicates the amount of the Bank's certificates of deposit of $100,000 or more by time remaining until maturity at September 30, 1999.



|Maturity Period                   | Certificates ofDeposit
|--------------------------------- | ----------------------
|                                  | (In thousands)        
|Within three months               | $2,270                
|After three but within six months | 2,606                 
|After six but within 12 months    | 1,638                 
|After 12 months                   | 1,532                 
|Total                             | $8,046                

The following table sets forth the deposit activity of the Bank for the periods indicated.



|                                                      | Years Ended September 30,
|----------------------------------------------------- | -------------------------
|                                                      | 1999                     
|                                                      | (In thousands)           
|Deposits                                              | $344,310                 
|Withdrawals                                           | 335,933                  
|Net increase (decrease)
     before interest credited | 8,377                    
|Interest credited                                     | 2,990                    
|Net increase (decrease) in deposits                   | $  11,367                

Borrowings. Savings deposits historically have been the primary source of funds for the Bank's lending and investment activities and for its general business activities. The Bank is authorized, however, to use
advances from the FHLB of Boston to supplement its supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are secured by the Bank's stock in the FHLB and a portion of the Bank's mortgage loans. The Bank had $5.4
million of FHLB advances outstanding at September 30, 1999.

The FHLB of Boston functions as a central reserve bank providing credit for savings institutions and certain other financial institutions. As a member, the bank is required to own capital stock in the FHLB and
is authorized to apply for advances on the security of such stock and certain of its home mortgages and other assets (principally, securities which are obligations of, or guaranteed by the United States) provided certain standards related to
creditworthiness have been met.

Competition

The Bank experiences substantial competition both in attracting and retaining savings deposits and in the making of mortgage and other loans. Direct competition for savings deposits primarily comes from
larger commercial banks and other savings institutions located in or near the Bank's primary market area which generally have significantly greater financial and technological resources than the Bank. Additional significant competition for savings
deposits comes from credit unions, money market funds and brokerage firms. The primary factors in competing for loans are interest rates and loan origination fees and the range of services offered by the various financial institutions. Competition for
origination of real estate loans normally comes from commercial banks, other thrift institutions, mortgage bankers, mortgage brokers and insurance companies. Management considers the Bank's competitors in its market area to consist of 15 branches of
financial institutions headquartered outside of its market area. The Bank is the only independent financial institution headquartered in Falmouth.

Employees

At September 30, 1999, the Bank had 28 full-time and 5 part-time employees. The Bank's employees are not represented by a collective bargaining agreement, and the Bank considers its relationship with its
employees to be good.

FEDERAL AND STATE TAXATION

Federal Taxation

General. The following is intended only as a discussion of material federal income tax matters and does not purport to be a comprehensive description of the federal income tax rules applicable to the Bank
or the Company. The Bank's federal income tax return was last audited for the tax year ended September 30, 1975. For federal income tax purposes, the Company and the Bank, as members of the same affiliated group, file consolidated income tax returns on a
September 30 fiscal year basis using the accrual method of accounting and are subject to federal income taxation in the same manner as other corporations with some exceptions, including particularly the Bank's tax reserve for bad debts, discussed below.

Bad Debt Reserves. The Bank, as a "small bank" (one with assets having an adjusted tax basis of $500 million or less) is permitted to maintain a reserve for bad debts with respect to "qualifying
loans," which, in general, are loans secured by certain interests in real property, and to make, within specified formula limits, annual additions to the reserve which are deductible for purposes of computing the Bank's taxable income. Pursuant to
the Small Business Job Protection Act of 1996, the Bank is now recapturing (taking into income) over a multi-year period a portion of the balance of its bad debt reserve as of September 30, 1996. See Note 9 to the consolidated financial statements.

Distributions. To that the extent that the Bank makes "non-dividend distributions" to the Company, such distributions will be considered to have been made from the Bank's "base year reserve,"
 i.e., its reserve as of September 30, 1988, and then from the Bank's supplemental reserve for losses on loans, to the extent thereof, and an amount based on the amount distributed (but not in excess of the amount of such reserves) will be included
in the Bank's income. Non-dividend distributions include distributions in excess of the Bank's current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial
or complete liquidation. Dividends paid out of the Bank's current or accumulated earnings and profits will not be so included in the Bank's income.

The amount of additional taxable income created from a non-dividend distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if the
Bank makes a non-dividend distribution to the Company, approximately one and one-half times the amount of such distribution (but not in excess of the amount of such reserves) would be includible in income, assuming a 34% federal corporate income tax rate.
The Bank does not intend to pay dividends that would result in a recapture of any portion of its bad debt reserves.

Corporate Alternative Minimum Tax. The Code imposes a tax ("AMT") on alternative minimum taxable income ("AMTI") at a rate of 20%. Only 90% of AMTI can be offset by net operating loss
carryovers of which the Bank currently has none. AMTI is also adjusted by determining the tax treatment of certain items in a manner that negates the deferral of income resulting from the regular tax treatment of those items. Thus, the Bank's AMTI is
increased by an amount equal to 75% of the amount by which the Bank's adjusted current earnings exceeds its AMTI (determined without regard to this adjustment and prior to reduction for net operating losses). The Bank does not expect to be subject to the
AMT.

Elimination of Dividends; Dividends Received Deduction. The Company may exclude from its income 100% of dividends received from the Bank as a member of the same affiliated group of corporations. The corporate
dividends-received deduction is generally 70% in the case of dividends received from unaffiliated corporations with which the Company and the Bank will not file a consolidated tax return, except that if the Company or the Bank owns more than 20% of the
stock of a corporation distributing a dividend, then 80% of any dividends received may be deducted.

State Taxation

Massachusetts Taxation. The Bank currently files a separate Massachusetts excise tax return, based on net income. Under state laws, Massachusetts-based financial institutions may apportion income earned in
other states. However, the Massachusetts bank excise (income) tax applies to non-bank entities and out-of-state financial institutions as well as Massachusetts-based financial institutions. The Massachusetts excise tax rate for co-operative banks is
currently 10.50% of federal taxable income, adjusted for certain items. Taxable income includes gross income as defined under the Code, plus interest from bonds, notes and evidences of indebtedness of any state, including Massachusetts, less deductions,
but not the credits, allowable under the provisions of the Code. Carryforwards and carrybacks of net operating losses are not allowed.

The Bank's active subsidiary, Falmouth Securities Corporation, was established solely for the purpose of acquiring and holding investments which are permissible for banks to hold under Massachusetts law.
Falmouth Securities Corporation has qualified as a "security corporation" under Massachusetts law, qualifying it to take advantage of the 1.32% income tax rate on gross income applicable to companies that are so classified.

The Bank and the Company are not permitted to file a combined Massachusetts excise tax return. The Company will be subject to Massachusetts corporate excise tax, which is determined by two measures: (1) the
income measure, a tax of 9.5% on net income attributable to Massachusetts; and (2) the non-income measure, a tax of $2.60 per $1,000 imposed on either (a) tangible property, if the corporation is a tangible property corporation, or (b) net worth, if the
corporation is an intangible property corporation. Unlike the definition of net income for purposes of the Bank's taxation, net operating loss carryovers and a 95% dividends received deduction for intercompany dividends is permissible for corporations.

For additional information regarding taxation, see Note 9 of the Notes to Financial Statements.

Delaware Taxation. As a Delaware holding company not earning income in Delaware, the Company is exempt from Delaware corporate income tax but is required to file an annual report with and pay an annual
franchise tax to the State of Delaware.

REGULATION AND SUPERVISION

General

As a co-operative bank, chartered by the Commonwealth of Massachusetts, whose deposits are insured by the BIF of the FDIC, the Bank is subject to extensive regulation under state law with respect to many
aspects of its banking activities; this state regulation is administered by the Division of Banks. In addition, the FDIC levies assessments or deposit insurance premiums on the bank and is vested with authority to supervise the Bank and to exercise a
broad range of enforcement powers. Finally, the Bank is required to maintain reserves against deposits according to a schedule established by the Federal Reserve System. These laws and regulations have been established primarily for the protection of
depositors and the deposit insurance fund, not the Company's stockholders.

The following references to the laws and regulations under which the Bank is regulated are brief summaries thereof, do not purport to be complete and are qualified in their entirety by reference to such laws
and regulations.

Financial Services Modernization Legislation

On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, federal legislation intended to modernize the financial services industry by
establishing a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms and other financial service providers. Generally, the Act:

*

*

*

*

*

*

*

Bank holding companies will be permitted to engage in a wider variety of financial activities than permitted under prior law, particularly with respect to insurance and securities activities. In addition, in a
change from prior law, bank holding companies will be in a position to be owned, controlled or acquired by any company engaged in financially-related activities.

The Company believes that the Act will not have a material adverse effect on our operations in the near-term. However, to the extent that it permits banks, securities firms and insurance companies to
affiliate, the financial services industry may experience further consolidation. This could result in a growing number of larger financial institutions that offer a wider variety of financial services than we currently offer and that can aggressively
compete in the markets the Bank currently serves.

Federal Banking Regulations

Capital Requirements. FDIC regulations require BIF-insured banks, such as the Bank, to maintain minimum levels of capital. The FDIC regulations define two tiers, or classes, of capital.

Tier 1 capital is comprised of the sum of common stockholders' equity (excluding the unrealized appreciation or depreciation, net of tax, from available-for-sale securities), non-cumulative perpetual preferred
stock (including any related surplus) and minority interests in consolidated subsidiaries, minus all intangible assets (other than qualifying servicing rights), and any net unrealized loss on marketable equity securities.

The components of Tier 2 capital currently include cumulative perpetual preferred stock, certain perpetual preferred stock for which the dividend rate may be reset periodically, mandatory convertible
securities, subordinated debt, intermediate preferred stock and allowance for possible loan losses. Allowance for possible loan losses includible in Tier 2 capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of Tier 2
capital that may be included in total capital can not exceed 100% of Tier 1 capital.

The FDIC regulations establish a minimum leverage capital requirement for banks in the strongest financial and managerial condition, with a rating of 1 (the highest examination rating of the FDIC for banks)
under the Uniform Financial Institutions Rating System, of not less than a ratio of 3.0% of Tier 1 capital to total assets. For all other banks, the minimum leverage capital requirement is 4.0%, unless a higher leverage capital ratio is warranted by the
particular circumstances or risk profile of the depository institution.

The FDIC regulations also require that savings banks meet a risk-based capital standard. The risk-based capital standard requires the maintenance of a ratio of total capital (which is defined as the sum of
Tier 1 capital and Tier 2 capital) to risk-weighted assets of at least 8% and a ratio of Tier 1 capital to risk-weighted assets of at least 4%. In determining the amount of risk-weighted assets, all assets, plus certain off balance sheet items, are
multiplied by a risk-weight of 0% to 100%, based on the risks the FDIC believes are inherent in the type of asset or item.

The federal banking agencies, including the FDIC, have also adopted regulations to require an assessment of an institution's exposure to declines in the economic value of a bank's capital due to changes in
interest rates when assessing the bank's capital adequacy. Under such a risk assessment, examiners will evaluate a bank's capital for interest rate risk on a case-by-case basis, with consideration of both quantitative and qualitative factors. According to
the agencies, applicable considerations include the quality of the bank's interest rate risk management process, the overall financial condition of the bank and the level of other risks at the bank for which capital is needed. Institutions with
significant interest rate risk may be required to hold additional capital. The agencies also issued a joint policy statement providing guidance on interest rate risk management, including a discussion of the critical factors affecting the agencies'
evaluation of interest rate risk in connection with capital adequacy.

The following table shows the Bank's leverage capital ratio, its Tier 1 risk-based capital ratio, and its total risk-based capital ratio, at September 30, 1999. The Bank exceeded the minimum capital adequacy
requirements at September 30, 1999.



|                          | At September 30, 1999 
|------------------------- | ----------------------
|                          | CapitalAmount         
|                          | (Dollars in thousands)
|Tier 1 leverage capital   | $15,311               
|Tier 1 risk-based capital | $15,311               
|Total risk-based capital  | $15,880               

___________________

(1)   For purposes of calculating the Tier 1 leverage capital ratio, assets include adjusted total average assets. In calculating Tier 1 
        risk-based capital and total risk-based capital ratio, assets include total risk-weighted assets.

Enforcement

The FDIC has extensive enforcement authority over insured co-operative banks, including the Bank. This enforcement authority includes, among other things, the ability to assess civil money penalties, to
issue cease and desist orders and to remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations and to unsafe or unsound practices.

The FDIC has authority under federal law to appoint a conservator or receiver for an insured bank under certain circumstances. The FDIC is required, with certain exceptions, to appoint a receiver or
conservator for an insured state bank if that bank was "critically undercapitalized" on average during the calendar quarter beginning 270 days after the date on which the bank became "critically undercapitalized." For this purpose,
"critically undercapitalized" means having a ratio of tangible capital to total assets of less than 2%. The FDIC may also appoint a conservator or receiver for a state bank on the basis of the institution's financial condition or upon the
occurrence of certain events, including: (i) insolvency (whereby the assets of the bank are less than its liabilities to depositors and others); (ii) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices;
(iii) existence of an unsafe or unsound condition to transact business; (iv) likelihood that the bank will be unable to meet the demands of its depositors or to pay its obligations in the normal course of business; and (v) insufficient capital, or the
incurring or likely incurring of losses that will deplete substantially all of the institution's capital with no reasonable prospect of replenishment of capital without federal assistance.

Deposit Insurance

The FDIC has adopted a risk-based deposit insurance assessment system. The FDIC assigns an institution to one of three capital categories based on the institution's financial information, as of the
reporting period ending seven months before the assessment period, consisting of (1) well capitalized, (2) adequately capitalized or (3) undercapitalized, and one of three supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided to the FDIC by the institution's primary federal regulator and information that the FDIC determines to be relevant to the institution's financial condition and the risk posed
to the deposit insurance funds. An institution's assessment rate depends on the capital category and supervisory category to which it is assigned. Assessment rates for BIF deposits currently range from 0 basis points to 27 basis points. The Bank's
assessment rate is currently 0 basis points. The FDIC is authorized to raise the assessment rates in certain circumstances, including to maintain or achieve the designated reserve ratio of 1.25%, which requirement the BIF currently meets. The FDIC has
exercised its authority to raise rates in the past and may raise insurance premiums in the future. If such action is taken by the FDIC, it could have an adverse effect on the earnings of the Bank. In addition, recent legislation requires BIF-insured
institutions like the Bank to assist in the payment of FICO bonds.

Under the Deposit Insurance Funds Act of 1996 (the "Funds Act"), the assessment base for the payments on the FICO bonds was expanded to add, beginning January 1, 1997, the deposits of BIF-insured
institutions, such as the Bank. Until December 31, 1999, or such earlier date on which the last savings association ceases to exist, the rate of assessment for BIF-assessable deposits shall be one-fifth of the rate imposed on SAIF-assessable deposits. The
annual rate of assessments for the payments on the FICO bonds for the semi-annual period beginning on July 1, 1998 was 0.0122% for BIF-assessable deposits and 0.0610% for SAIF-assessable deposits. For the semi-annual period beginning July 1, 1999, the
rates of assessment for the FICO bonds is 0.01184% for BIF-assessable deposits and 0.0592% for SAIF-assessable deposits.

Under the Federal Deposit Insurance Act (the "FDI Act"), insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the Division. The management of the Bank does not know of any practice, condition or violation that might
lead to termination of deposit insurance.

Transactions with Affiliates and Insiders

Transactions between state non-member banks and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a bank is any company or entity which controls, is controlled
by or is under common control with the bank. Currently, a subsidiary of a bank that is not also a depository institution is not treated as an affiliate of the bank for purposes of Sections 23A and 23B, but the FRB has proposed treating any subsidiary of a
bank that is engaged in activities not permissible for bank holding companies under the BHCA as an affiliate for purposes of Sections 23A and 23B. Generally, Section 23A (i) limits the extent to which the bank or its subsidiaries may engage in "
covered transactions" with any one affiliate to an amount equal to 10% of such bank's capital and surplus, and contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital and surplus and (ii)
requires that all such transactions be on terms that are consistent with safe and sound banking practices. The term "covered transaction" includes the making of loans, purchase of assets, issuance of guarantees and similar other types of
transactions. In addition, most extensions of credit by a bank to any of its affiliates must be secured by collateral in amounts ranging from 100% to 130% of the loan amounts, depending on the type of collateral. Section 23B requires that any covered
transaction, and certain other transactions, including the bank's sale of assets and purchase of services from an affiliate must be on terms that are substantially the same, or at least as favorable, to the institution as those that would prevail in a
comparable transaction with a non-affiliate.

Banks are also subject to the restrictions contained in Section 22(h) of the Federal Reserve Act and the FRB's Regulation O thereunder on loans to executive officers, directors and principal stockholders.
Under Section 22(h), loans to a director, an executive officer or a holder of more than 10% of the shares of a bank, as well as certain affiliated interests of such persons, may not exceed, together with all other outstanding loans to such person and
affiliated interests, the loans-to-one-borrower limit applicable to national banks (generally 15% of an institution's unimpaired capital and surplus) and all loans to all such persons in the aggregate may not exceed an institution's unimpaired capital and
unimpaired surplus. Regulation O also prohibits the making of loans in an amount greater than the lesser of $25,000 or 5% of capital and surplus but in any event over $500,000, to a director, executive officer and greater than 10% stockholder of a bank,
and the respective affiliates of such a person, unless such loans are approved in advance by a majority of the board of directors of the bank, with any "interested" director not participating in the voting. Further, the FRB pursuant to
Regulation O requires that loans to directors, executive officers and principal stockholders (a) be made on terms substantially the same as those that are offered in comparable transactions to persons not affiliated with the bank and (b) follow credit
underwriting procedures not less stringent than those prevailing for comparable transactions with persons not affiliated with the bank. Regulation O also prohibits a depository institution from paying, with certain exceptions, an overdraft of any of the
executive officers or directors of the institution or any of its affiliates unless the overdraft is paid pursuant to written pre-authorized extension of interest-bearing extension of credit or transfer of funds from another account at the bank.

State chartered non-member banks are further subject to the requirements and restrictions against certain tying arrangements and on extensions of credit involving correspondent banks. Specifically, a
depository institution is prohibited from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the
institution or certain of its affiliates or not obtain services of a competitor of the institution, subject to certain exceptions. In addition, a depository institution with a correspondent banking relationship with another depository institution is
prohibited from extending credit to the executive officers, directors, and holders of more than 10% of the stock of the other depository institution, unless such extension of credit is on substantially the same terms as those prevailing at the time for
comparable transactions with other persons and does not involve more than the normal risk of repayment or present other unfavorable features.

Real Estate Lending Policies

Under FDIC regulations, state-chartered nonmember banks must adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens or
interest in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards, including loan-to-value limits, that are clear
and measurable, loan administration procedures and documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies (the "Interagency
Guidelines") that have been adopted by the federal bank regulators.

The Interagency Guidelines, among other things, call upon a depository institution to establish internal loan-to-value limits for real estate loans that are not in excess of the following supervisory limits:
(i) for loans secured by raw land, the supervisory loan-to-value limit is 65% of the value of the collateral; (ii) for land development loans (i.e., loans for the purpose of improving unimproved property prior to the erection of structures), the supervisory limit is 75%; (iii) for loans for the construction of commercial, multi-family or other nonresidential property, the supervisory
limit is 80%; (iv) for loans for the construction of one- to four-family properties, the supervisory limit is 85%; and (v) for loans secured by other improved property (e.g., farmland, completed commercial property and other income-producing property including non-owner-occupied, one- to four-family property), the limit is 85%. Although no supervisory loan-to-value limit has been established for owner-occupied,
one- to four-family and home equity loans, the Interagency Guidelines state that for any such loan with a loan-to-value ratio that equals or exceeds 90% at origination, an institution should require appropriate credit enhancement in the form of either
mortgage insurance or readily marketable collateral.

Standards for Safety and Soundness

Under FDICIA, each federal banking agency is required to prescribe, by regulation, safety and soundness standards for institutions under its authority. The federal banking agencies, including the FDIC,
have adopted standards covering internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, employee compensation, employee benefits, fees, asset quality and earnings
sufficiency. These standards are in the form of broad guidelines for performance that generally leave to each institution the methods for achieving the objectives. The Bank believes it meets the FDIC's safety and soundness standards.

Federal Home Loan Bank System

The Bank is a member of the FHLB System, which consists of 12 regional Federal Home Loan Banks subject to supervision and regulation by the Federal Housing Finance Board ("FHFB"). The Federal
Home Loan Banks provide a central credit facility primarily for member institution. As a member of the FHLB, the Bank is required to acquire and hold shares of capital stock in the FHLB in an amount at least equal to 1% of the aggregate unpaid principal
of its home mortgage loans, home purchase contracts, and similar obligations at the beginning of each year, or 1/20 of its advances (borrowings) from the FHLB, whichever is greater. Falmouth was in compliance with this requirement with an investment in
FHLB of Boston stock at September 30, 1999, of $720,700.

The FHLB of Boston serves as a reserve or central bank for its member institutions within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB
System. It offers policies and procedures established by the FHFB and the Board of Directors of the FHLB of Boston. Long-term advances may only be made for the purpose of providing funds for residential housing finance.

Federal Reserve System

Under FRB regulations, the Bank is required to maintain noninterest-earning reserves against its transaction accounts (primarily NOW and regular checking accounts). The FRB regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts of $46.5 million or less (subject to adjustment by the FRB) and an initial reserve of $1.4 million plus 10% (subject to adjustment by the FRB between 8% and 14%) against that
portion of total transaction accounts in excess of $46.5 million. The first $4.9 million of otherwise reservable balances (subject to adjustments by the FRB) are exempted from the reserve requirements. As of September 30, 1999, the Bank met its reserve
requirements.

Massachusetts Banking Laws and Supervision

Massachusetts co-operative banks such as the Bank are also regulated and supervised by the Division of Banks. The Division of Banks is required to regularly examine each state-chartered bank. The approval
of the Division of Banks is required to establish or close branches, to merge with another bank, to form a bank holding company, to issue stock or to undertake many other activities. Any Massachusetts bank that does not operate in accordance with the
regulations, policies and directives of the Division of Banks is subject to sanctions. The Division of Banks may under certain circumstances suspend or remove directors or officers of a bank who have violated the law, conducted a bank's business in a
manner which is unsafe, unsound or contrary to the depositors' interests, or been negligent in the performance of their duties.

All Massachusetts-chartered co-operative banks are required to be members of the Co-operative Central Bank and are subject to its assessments. The Co-operative Central Bank maintains the Share Insurance Fund,
a private deposit insurer, which insures all deposits in member banks in excess of FDIC deposit insurance limits. In addition, the Co-operative Central Bank acts as a source of liquidity to its members in supplying them with low-cost funds, and purchasing
certain qualifying obligations from them.

Major changes in Massachusetts law in 1982 and 1983 substantially expanded the powers of co-operative banks. Their powers were made virtually identical to those of state-chartered commercial banks. The powers
which Massachusetts-chartered co-operative banks can exercise under these laws are summarized below.

Lending Activities. A wide variety of mortgage loans may be made. Fixed-rate loans, adjustable-rate loans, variable-rate loans, participation loans, graduated payment loans, construction loans, condominium and
co-operative loans, second mortgage loans and other types of loans may be made in accordance with applicable regulations. Mortgage loans may be made on real estate in Massachusetts or in another New England state if the bank making the loan has an office
there or under certain other circumstances. In addition, certain mortgage loans may be made on improved real estate located anywhere in the United States. Commercial loans may be made to corporations and other commercial enterprises with or without
security. With certain exceptions, such loans may be made without geographic limitations. Consumer and personal loans may be made with or without security and without geographic limitations. Loans to individual borrowers generally will be limited to 20%
of the total of the Bank's capital accounts and stockholders' equity.

Investments Authorized. Massachusetts-chartered co-operative banks have broad investment powers under Massachusetts law, including so-called "leeway" authority for investments that are not otherwise
specifically authorized. The investment powers authorized under Massachusetts law are restricted by federal law to permit only investments of the kinds that would be permitted for national banks. The Bank has authority to invest in all of the classes of
loans and investments that are permitted by its existing loan and investment policies.

Payment of Dividends. A co-operative bank only may pay dividends on its capital stock if such payment would not impair the bank's capital stock and surplus account. No dividends may be paid to stockholders of
a bank if such dividends would reduce stockholders' equity of the bank below the amount of the liquidation account required by Massachusetts conversion regulations.

Branches. With the approval of the Division of Banks, bank branches may be established in any city or town in Massachusetts. In addition, co-operative banks may operate automated teller machines at any of
their offices or, with the approval of the Division of Banks, anywhere in Massachusetts. Sharing of ATMs or "networking" is also permitted with the approval of the Division of Banks. Massachusetts chartered co-operative banks may also operate
ATMs outside of Massachusetts if permitted to do so by the law of the jurisdiction in which the ATM is located.

Interstate Acquisitions. In 1996, the Massachusetts legislature passed a new interstate banking statute in anticipation of the June 1, 1997 effective date of the federal interstate banking law. Pursuant to
this statute, an out-of-state bank may (subject to various regulatory approvals and to reciprocity in its home state) establish and maintain bank branches in Massachusetts by (i) merging with a Massachusetts bank that has been in existence for at least
three years, (ii) acquiring a branch or branches of a Massachusetts bank without acquiring the entire bank, or (iii) opening such branches de novo. Massachusetts banks' ability to exercise similar interstate banking powers in other states depends upon the laws of the other states. For example, according to the law of the bordering state of New Hampshire, out-of-state banks may acquire
New Hampshire banks by merger, but may not establish de novo branches in New Hampshire.

Other Powers. Massachusetts-chartered co-operative banks may also lease machinery and equipment, act as trustee or custodian for tax qualified retirement plans, establish trust departments and act as
professional trustee or fiduciary, provide payroll services for their customers, issue or participate with others in the issuance of mortgage-backed securities and establish mortgage banking companies and discount securities brokerage operations. Some of
these activities require the prior approval of the Division of Banks.

Regulation of Holding Company

Federal Regulation. The Company is subject to examination, regulation and periodic reporting under the BHCA, as administered by the FRB. The FRB has adopted capital adequacy guidelines for bank holding
companies on a consolidated basis substantially similar to those of the FDIC for the Bank.

The Company is required to obtain the prior approval of the FRB and the Massachusetts Board of Bank Incorporation ("BBI") to acquire all, or substantially all, of the assets or any bank of bank
holding company. Prior FRB and BBI approval would be required for the Company to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if, after giving effect to such acquisition, it would, directly
or indirectly, own or control more than 5% of any class of voting shares of such bank or bank holding company.

Bancorp will be required to give the FRB prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with
the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of Bancorp's consolidated net worth. The FRB may disapprove such a purchase or redemption if it determines that the proposal would
constitute an unsafe and unsound practice, or would violate any law, regulation, FRB order or directive, or any condition imposed by, or written agreement with, the FRB. Such notice and approval is not required for a bank holding company that would be
treated as "well capitalized" under applicable regulations of the FRB, that has received a composite "1" or "2" rating at its most recent bank holding company inspection by the FRB, and that is not the subject of any unresolved
supervisory issues.

The status of Bancorp as a registered bank holding company under the BHCA will not exempt it from certain federal and state laws and regulations applicable to corporations generally, including, without
limitation, certain provisions of the federal securities laws.

In addition, a bank holding company is prohibited generally from engaging in, or acquiring 5% or more of any class of voting securities of any company engaged in, non-banking activities. One of the principal
exceptions to this prohibition is for activities found by the FRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the FRB has determined by regulation to be so
closely related to banking as to be a proper incident thereto are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v)
leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association.

Under FIRREA, depository institutions are liable to the FDIC for losses suffered or anticipated by the FDIC in connection with the default of a commonly controlled depository institution or any assistance
provided by the FDIC to such an institution in danger of default. This law would have potential applicability if Bancorp ever acquired as a separate subsidiary a depository institution in addition to the Bank. There are no current plans for such an
acquisition.

Subsidiary banks of a bank holding company are subject to certain quantitative and qualitative restrictions imposed by the Federal Reserve Act on any extension of credit to, or purchase of assets from, or
letter of credit on behalf of, the bank holding company or its subsidiaries, and on the investment in or acceptance of stocks or securities of such holding company or its subsidiaries as collateral for loans. In addition, provisions of the Federal Reserve
Act and FRB regulations limit the amounts of, and establish required procedures and credit standards with respect to, loans and other extensions of credit to officers, directors and principal stockholders of the Bank, Bancorp, any subsidiary of Bancorp
and related interests of such persons. Moreover, subsidiaries of bank holding companies are prohibited from engaging in certain tie-in arrangements (with the holding company or any of its subsidiaries) in connection with any extension of credit, lease or
sale of property or furnishing of services. See "Regulation and Supervision -- Transactions with Affiliates and Insiders."

Federal Securities Laws

The Company's Common Stock is registered with the SEC under Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Company is subject to the information, proxy
solicitation, insider trading restrictions and other requirements under the Exchange Act.

ITEM 2. DESCRIPTION OF PROPERTY

The following table sets forth certain information at September 30, 1999 regarding Falmouth's office facilities, and certain other information relating to the properties at that date.

|                                                                      | Year Completedor Acquired | SquareFootage | Net Book Valueat September 30, 1999
|--------------------------------------------------------------------- | ------------------------- | ------------- | -----------------------------------
|Main Office:20 Davis Straits
Falmouth, MA 02540                       | 1978                      | 10,696        | $265,795                           
|                                                                      |                           |               |                                    
|Branch Offices:North Falmouth, MA
78 County Rd.
N. Falmouth, MA 02556 | 1998                      | 1,706         | $587,684                           
|East Falmouth, MA
397 E. Falmouth Hwy
E. Falmouth, MA 02536           | 1998                      | 2,380         | $823,683                           

At September 30, 1999, the net book value of Falmouth's computer equipment and other furniture, fixtures and equipment at its offices totaled $321,886. For more information, see Note 5 of Notes to Financial
Statements.

ITEM 3.  LEGAL PROCEEDINGS

Although the Bank and the Company, from time to time, are involved in various legal proceedings in the normal course of business, there are no material legal proceedings to which the Bank or the Company,
its directors or its officers is a party or to which any of its property is subject as of the date of this Form 10-KSB.

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

None.

PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The following information included in the Falmouth Bancorp, Inc. 1999 Annual Report to Stockholders (the "Annual Report") is incorporated herein by reference: "Market for the Company's
Common Stock."

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

The following information included in the Falmouth Bancorp, Inc. 1999 Annual Report to Stockholders (the "Annual Report") is incorporated herein by reference: "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Financial Highlights" on pages 3 through 18 of the Annual Report.

ITEM 7.  FINANCIAL STATEMENTS

The following information included in the Annual Report is incorporated herein by reference: "Financial Statements and Notes to Financial Statements."

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

None.

PART III

ITEM 9.  DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

The following information included in the Company's 1999 Proxy Statement for the 2000 Annual Meeting of Stockholders ("Proxy Statement") is incorporated herein by reference: "Election of
Directors," "Nominees and Continuing Directors," "Executive Officers," and "Section 16(a) Beneficial Ownership Reporting Compliance."

ITEM 10.  EXECUTIVE COMPENSATION

The following information included in the Proxy Statement is incorporated herein by reference: "Proposal 1 --Election of Directors -- Directors' Compensation," "-- Compensation Table," "
-- Certain Employee Benefit Plans and Employment Agreements" and "-- Transactions with Certain Related Persons."

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following information included in the Proxy Statement is incorporated herein by reference: "Stock Ownership of Management" and "Security Ownership of Certain Beneficial Owners."

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following information included in the Proxy Statement is incorporated herein by reference: "Transactions with Certain Related Persons."

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K



|(a) | The following financial statements included in the 1999 Annual Report are incorporated herein by reference:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Balance Sheets -- At September 30, 1999 and 1998;
Statements of Income -- Years Ended September 30, 1999, 1998 and 1997;
Statements of Changes in Stockholders' Equity -- Years Ended September 30, 1999, 1998 and 1997;
Statements of Cash Flows -- Years Ended September 30, 1999, 1998 and 1997; and
Notes to Financial Statements -- Years Ended September 30, 1999, 1998 and 1997                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(b) | Exhibits. The following exhibits are either filed as part of this report or are incorporated herein by reference:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | 3.1    Certificate of Incorporation of Falmouth Bancorp, Inc.(1)
3.2    By-laws of Falmouth Bancorp, Inc.(1)
4.3    Specimen Stock Certificate of Falmouth Bancorp, Inc.(1).
10.1  1997 Stock Option Plan for Outside Directors, Officers and Employees of Falmouth Bancorp, Inc.(1)
10.2  1997 Recognition and Retention Plan for Outside Directors, Officers and Employees of Falmouth Bancorp, Inc.(1)
10.3  Agreement and Plan of Reorganization by and among Falmouth Co-operative Bank and Falmouth Bancorp, Inc., 
         dated November 25, 1997 (1)
10.4  Employment Agreement by and between Falmouth Co-operative Bank and Santo Pasqualucci.(1)
10.5  Employment Agreement by and between Falmouth Co-operative Bank and George Young.(1)
10.6  Falmouth Co-operative Bank Employee Stock Ownership Plan.(1)
10.7  Falmouth Bancorp, Inc. Employee Stock Ownership Trust.(1)
13   Annual Report to Stockholders for the Year Ended September 30, 1999.
21   Subsidiaries of the Registrant. (2)
27   Financial Data Schedule.*

______________________

(1)   Incorporated herein by reference Registration Statement on Form S-4 (Registration No. 333-16931), as filed with the Securities 
        and Exchange Commission on November 27, 1996.
(2)   Incorporated herein by reference Registration Statement on Form 10-KSB for the year ended September 30, 1997, as filed with 
        the Securities and Exchange Commission on December 29, 1997.

* Filed in electronic format only.



|(c) | Reports on Form 8-K.
None.
|--- | --------------------------

This Form 10-KSB contains certain forward looking statements consisting of estimates with respect to the financial condition, results of operations and business of the Bank and the Company that are subject to various
factors which could cause actual results to differ materially from these estimates. These factors include: changes in general, economic and market conditions, or the development of an adverse interest rate environment that adversely affects the interest
rate spread or other income anticipated from the Bank's or the Company's operations and investments.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Falmouth Bancorp, Inc.

By: /s/ Santo P. Pasqualucci        President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|Name                                         |  | Title                                                                         | Date             
|-------------------------------------------- |  | ----------------------------------------------------------------------------- | -----------------
|/s/ Santo P. PasqualucciSanto P. Pasqualucci |  | Director, President and Chief Executive Officer (Principal executive officer) | December 21, 1999
|/s/ George E. Young, IIIGeorge E. Young, III |  | Vice President and Chief Financial Officer (Principal financial officer)      | December 21, 1999
|/s/ John W. Holland, Jr.John W. Holland, Jr. |  | Director                                                                      | December 21, 1999
|/s/ James A. KeefeJames A. Keefe             |  | Director                                                                      | December 21, 1999
|/s/ Wayne C. LamsonWayne C. Lamson           |  | Director                                                                      | December 21, 1999
|/s/ Gardner L. LewisGardner L. Lewis         |  | Director                                                                      | December 21, 1999
|/s/ John J. Lynch, Jr.John J. Lynch, Jr.     |  | Director                                                                      | December 21, 1999
|/s/ Ronald L. McLaneRonald L. McLane         |  | Director                                                                      | December 21, 1999
|/s/ Eileen C. MiskellEileen C. Miskell       |  | Director                                                                      | December 21, 1999
|/s/ Robert H. MooreRobert H. Moore           |  | Director                                                                      | December 21, 1999
|/s/ Walter A. MurphyWalter A. Murphy         |  | Director                                                                      | December 21, 1999
|/s/ William E. NewtonWilliam E. Newton       |  | Director                                                                      | December 21, 1999