EXHIBIT 13


                             2000 ANNUAL REPORT

                          FALMOUTH
                          BANCORP, Inc.      [LOGO]

                         http://www.falmouthbank.com


                             2000 ANNUAL REPORT
===========================================================================

                              TABLE OF CONTENTS
                              -----------------

Company Profile                                                           1

President's Message                                                       2

Financial Highlights                                                      3

Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                                5

Market for the Company's Common Stock                                    16

Consolidated Financial Statements                                        17


===========================================================================
FORWARD LOOKING STATEMENTS

      This Annual Report to Stockholders contains certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company and the Bank that are
subject to various factors which could cause actual results to differ
materially from these estimates.  These factors include, but are not
limited to: general and local economic conditions; changes in interest
rates, deposit flows, demand for mortgages and other loans, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting
our operations, pricing, products and services.

      Any or all of our forward-looking statements in this Annual Report
and in any other public statements we make may turn out to be wrong.  They
can be affected by inaccurate assumptions we might make or by known or
unknown risks and uncertainties. Consequently, no forward-looking statement
can be guaranteed.

      We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or
otherwise.
===========================================================================


                             2000 ANNUAL REPORT
===========================================================================

                               COMPANY PROFILE
                               ---------------

      Falmouth Bancorp, Inc. (the "Company") is the holding company for
Falmouth Co-operative Bank (the "Bank"), a Massachusetts-chartered stock
co-operative bank.

      The Company had total assets of $135.5 million as of September 30,
2000. 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 and the Share Insurance Fund of the
Co-operative Central Bank of Massachusetts.

      The Bank considers its primary market area to be the communities of
Falmouth and Mashpee in Barnstable County, Massachusetts.

      The Bank's business strategy is to operate as a well-capitalized,
profitable and independent community bank dedicated to financing home
ownership and consumer and small business needs in its market area and to
providing 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 the volume of the Bank's existing lending activities to produce
moderate increases in loan originations; (iv) maintaining asset quality
through conservative underwriting standards; (v) maintaining capital in
excess of regulatory requirements; and (vi) producing stable earnings.

      Falmouth Bancorp, Inc. is headquartered in Falmouth, Massachusetts.
The Company's stock trades on the American Stock Exchange under the symbol
"FCB."


                             2000 ANNUAL REPORT
===========================================================================

                             PRESIDENT'S MESSAGE
                             -------------------

To Our Shareholders and Customers:

      On the cover of this Annual Report we included the signatures of the
directors and employees who govern and power the success of Falmouth
Bancorp, Inc.  The foundation of this Company's success lies within our
collective wisdom and commitment to the excellence in quality retail and
commercial products and to personal attentive service of the highest level
for each customer, one at a time.  Our collective signatures on this cover
is an affirmation of this commitment.

      The fiscal year ended September 30, 2000 was a very successful year
for the Company and was influenced by several important events.  One of the
more significant impacts to many community banks, such as ours, in
Massachusetts was the consumer response to the mega-merger of Fleet and
BankBoston.  Many local dissatisfied "big-bank" customers transferred their
accounts to our more personable and consumer friendly Bank which further
bolstered annual deposit growth to an impressive 21.0%.  This unusually
favorable deposit growth fueled our ability to more fully participate in an
active local residential mortgage market.  During fiscal 2000, our loan
portfolio increased primarily in secured 1-4 family real estate loans by
$25.2 million or 31.4%.  Total loan originations during fiscal 2000 were
$46.8 million as compared to $34.7 million during fiscal 1999, for an
increase in loan production of 34.9%.  Our emphasis on quality personal
service and competitive pricing, coupled with more aggressive marketing
initiatives in an active Upper-Cape Cod real estate market, contributed to
our performance on loan originations during fiscal 2000.  At September 30,
2000 there were no non-performing loans and no overdue loans in the entire
portfolio.

      Stockholders' equity to total assets was 13.3% at September 30, 2000,
as compared to 16.2% at September 30, 1999.  During fiscal 2000 the Company
purchased 139,906 shares of its common stock in the open market at a cost
of $2.3 million.  The book value of the Company's common stock was $17.37
at September 30, 2000, as compared to $16.37 at the prior year.

      Net income for the year ended September 30, 2000 was $1,177,000, or
 .93% return on average assets, as compared to $969,000, or .85% return on
average assets, for the prior year.  Earnings per common share, assuming
dilution for the year ended September 30, 2000, was $1.16 as compared to
$.77 for the prior year.  This represents a marked increase of 51% in
earnings per common share, assuming dilution.  The combination of a
stronger "bottom line" and the decrease in shares outstanding, resulting
from our stock repurchase programs, powered the outstanding 51% increase in
earnings per share.

      Our Board of Directors continues to be mindful of the capital
management strategy options available to it and continues to exercise those
options on a pro-active basis.

      In order to effect a state tax planning opportunity, the Bank formed
a captive real estate investment trust subsidiary during fiscal 2000 which
is designed to enhance after-tax earnings by reducing state income tax
liabilities going forward.  Earnings during fiscal 2000 were enhanced by
this tax planning opportunity.

      Personalized service within a traditional branch bank setting
continues to be the cornerstone of our delivery system.  Accordingly, we
continue to explore opportunities to expand our branch network and ATM
locations.

      This year Ronald L. McLane, Director and member of the Loan
Committee, concluded thirty years of unwavering dedication and service to
the Bank and the Community.  We thank him for his valued friendship, wisdom
and guidance.

      In conclusion, it is noteworthy to recognize the focus and dedication
of our employees and Board of Directors and for all of us to express our
sincere appreciation for the continued confidence and support that is
evidenced by both our customers and shareholders alike.

                                       /s/ Santo P. Pasqualucci
                                       Santo P. Pasqualucci
                                       President & Chief Executive Officer


                             2000 ANNUAL REPORT
===========================================================================

                             FINANCIAL HIGHLIGHTS
                             --------------------

      The selected consolidated financial and other data of the Company and
the Bank set forth below is derived in part from and should be read in
conjunction with the Consolidated Financial Statements of the Company and
Notes thereto.

<TABLE>
<CAPTION>
                                                                      At September 30,
                                         --------------------------------------------------------------------------
                                            2000            1999            1998            1997            1996
                                            ----            ----            ----            ----            ----
                                                                   (Dollars in thousands)

<S>                                      <C>             <C>             <C>             <C>             <C>
Selected Financial Condition Data:
  Assets                                 $  135,464      $  118,652      $  112,793      $   96,391      $   90,516
  Loans, net                                105,732          80,487          77,655          53,881          40,237
  Investment securities                      19,304          27,507          24,524          36,402          45,553
  Deposits                                  112,374          92,886          81,519          72,191          66,439
  Stockholders' equity/net worth(1)          17,992          19,259          22,241          22,806          21,914

<CAPTION>
                                                                  Year Ended September 30,
                                         --------------------------------------------------------------------------
                                            2000            1999            1998            1997            1996
                                            ----            ----            ----            ----            ----
                                                      (Dollars in thousands, except per share data)

Selected Operating Data:
  Interest and dividend income           $    8,306      $    7,488      $    7,206      $    6,259      $    5,576
  Interest expense on deposits and
   borrowings                                 3,742           3,358           3,140           2,794           2,833
                                         --------------------------------------------------------------------------
  Net interest income                         4,564           4,130           4,066           3,465           2,743
  Provision for loan losses                     189              42              26               -              51
                                         --------------------------------------------------------------------------
  Net interest income after provision
   for loan losses                            4,375           4,088           4,040           3,465           2,692
                                         --------------------------------------------------------------------------
  Other income:
    Gain on sales of investment
     securities, net                            398             263             840             112               2
    Other                                       359             386             211             133             123
                                         --------------------------------------------------------------------------
      Total other income                        757             649           1,051             245             125
                                         --------------------------------------------------------------------------
  Operating expenses                          3,296           2,924           3,177           2,527           1,888
                                         --------------------------------------------------------------------------
  Income before income taxes                  1,836           1,813           1,914           1,183             929
  Income taxes                                  659             844             729             431             359
                                         --------------------------------------------------------------------------
  Net income                             $    1,177      $      969      $    1,185      $      752      $      570
                                         ==========================================================================

Per Share Data:
  Earnings per common share              $     1.17      $      .78      $      .86      $      .55             -(2)
  Earnings per common share,
   assuming dilution                     $     1.16      $      .77      $      .84      $      .55             -(2)
  Cash dividends per share               $      .31      $      .28      $      .23      $      .20               -
  Dividend payout ratio                       26.50%          35.90%          26.74%          36.36%              -
  Weighted average number of common
   shares outstanding                     1,009,475       1,243,925       1,375,057       1,376,193               -

-------------------
<FN>
<F1>  Includes unrealized gain on available-for-sale securities of $26,000,
      $128,000, $324,000, $416,000 and $144,000 net of tax, at September
      30, 2000, 1999, 1998, 1997 and 1996, respectively.
<F2>  Because of the Bank's conversion in mid-1996 from mutual to stock
      ownership, a presentation of earnings per share for fiscal 1996 is
      not meaningful.
<FN>

<CAPTION>
                                                           At or for the Year Ended September 30,
                                         --------------------------------------------------------------------------
                                            2000            1999            1998            1997            1996
                                            ----            ----            ----            ----            ----

Interest rate spread information:(1)
  Average during period                        3.07%           2.98%           3.13%           2.85%           2.59%
  End of period                                2.81            2.93            2.85            2.81            2.73
  Net interest margin(2)                       3.81            3.80            4.10            3.90            3.40
  Return on average assets                     0.93            0.85            1.14             .83             .69
  Return on average equity                     6.63            4.61            5.11            3.37            3.51

Asset Quality Ratios:
  Non-performing loans as a percent
   of total loans                                 -               -               -             .06             .03
  Non-performing assets as a percent
   of total assets                                -               -               -             .03             .02
  Allowance for loan losses as a
   percent of non-performing loans                -               -               -           1,670           3,557

Capital Ratios:(3)
  Average equity to average assets            14.05           18.35           22.19           24.35           19.56
  Regulatory Tier 1 leverage capital
   ratio                                      12.82           13.46           13.62           23.64           24.27

-------------------
<FN>
<F1>  Interest rate spread represents the difference between weighted
      average yield on interest-earning assets and the weighted average
      cost of interest-bearing liabilities.
<F2>  Net interest margin represents net interest income divided by average
      interest-earning assets.
<F3>  Represents capital ratios of the Bank.
</FN>
</TABLE>


                             2000 ANNUAL REPORT
===========================================================================

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

General

      Falmouth Bancorp, Inc. (the "Company"), a Delaware corporation, is
the holding company for Falmouth Co-operative Bank (the "Bank"), a
Massachusetts-chartered stock co-operative bank.  At September 30, 2000
there were 1,035,838 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 business of the Bank 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 investment securities. To a lesser
extent, the Bank engages in various forms of consumer and home equity
lending. The Bank's profitability depends primarily on its net interest
income, which is the difference between the interest income it earns on its
loans and investment portfolio and its cost of funds, which consists mainly
of interest paid on deposits. Net interest income is affected by the
relative amounts of interest-earning assets and interest-bearing
liabilities and the interest rates earned or paid on these balances.  When
interest-earning assets approximate or exceed interest-bearing liabilities,
any positive interest rate spread will generate net interest income.

      The Bank's profitability is also affected by the level of non-
interest income and expense.  Non-interest income, or other income,
consists primarily of service fees and gains on sales of investment
securities. Non-interest expense, or operating expenses, consists of
salaries and benefits, deposit insurance premiums paid to the Federal
Deposit Insurance Corporation ("FDIC"), occupancy related expenses and
other operating expenses.

      The operations of the Bank, and banking institutions in general, are
influenced significantly by general economic conditions and related
monetary and fiscal policies of financial institutions' regulatory
agencies. Deposit flows and the cost of funds are influenced by interest
rates on competing investments and general market rates of interest.
Lending activities are affected by the demand for financing real estate and
other types of loans, which in turn are affected by the interest rates at
which such financing may be offered and other factors affecting loan demand
and the availability of funds.

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 providing 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.

Comparison of Financial Condition at September 30, 2000 and 1999

      The Company's total assets were $135.5 million at September 30, 2000,
as compared to $118.7 million at September 30, 1999, an increase of $16.8
million or 14.2%. Total deposits were $112.4 million at September 30, 2000,
as compared to $92.9 million at September 30, 1999, an increase of $19.5
million, or 21.0%.  The growth in deposits was due, in part, to our ability
to attract retail checking accounts, commercial checking accounts and
certificates of deposit in a very competitive environment created by
regional bank mergers.  Total net loans were $105.7 million, or 94.1% of
total deposits at September 30, 2000, as compared to $80.5 million, or
86.7% of total deposits at September 30, 1999.  Loan portfolio growth,
primarily in secured 1-4 family real estate, was 31.3%, or $25.2 million
for the year ended September 30, 2000.  A continued strong real estate
market drove increased single-family loan originations. Investment
securities were $19.3 million, or 14.3% of total assets at September 30,
2000, as compared to $27.5 million, or 23.2% of total assets at September
30, 1999.  Stockholders' equity was $18.0 million at September 30, 2000 as
compared to $19.3 million at September 30, 1999, a decrease of $1.3
million.  The net decrease in stockholders' equity was the result of the
repurchase of 139,906 shares of the Company's common stock at a cost of
$2.3 million, combined with increased retained earnings of $852,000 after
dividend payments. Stockholders' equity reported at September 30, 2000
included an unrealized gain, net of tax effects, in available-for-sale
securities of $26,000 and retained earnings of $11.7 million.  The ratio of
stockholders' equity to total assets was 13.3% at September 30, 2000, as
compared to 16.2% at September 30, 1999.  The book value of common stock
was $17.37 at September 30, 2000, as compared to $16.37 at September 30,
1999.

Comparison of Financial Condition at September 30, 1999 and 1998

      The Company's total assets increased by $5.9 million or 5.2% for the
year ended September 30, 1999 from $112.8 million at September 30, 1998 to
$118.7 million at September 30, 1999. Total net loans were $80.5 million or
86.7% of total deposits at September 30, 1999 as compared to $77.7 million
or 95.3% of total deposits at September 30, 1998, representing an increase
of $2.8 million.  Investment securities were $27.5 million or 23.2% of
total assets at September 30, 1999 as compared to $24.5 million or 21.7% of
total assets at September 30, 1998. The proceeds from maturing securities
were in part allocated to fund the volume of loan production, with the
balance redeployed into short-term securities investments.  Total deposits
were $92.9 million at September 30, 1999 as compared to $81.5 million at
September 30, 1998, a 14.0% increase.  Total deposits increased by $11.4
million for the year ended September 30, 1999. Stockholders' equity was
$19.3 million at September 30, 1999 as compared to $22.2 million at
September 30, 1998, a decrease of $2.9 million. Stockholders' equity
reported at September 30, 1999 included an unrealized gain in available-
for-sale securities of $128,000 and retained earnings of $10.8 million.
The ratio of stockholders' equity to total assets was 16.2% at September
30, 1999 and the book value per share of common stock was $16.37.  Net
income per share of common stock for the fiscal year ended September 30,
1999 was $0.78, as compared to $0.86 for the prior year.  The decrease in
net income per share was due primarily to the $577,000 decrease in net
gains from sales of investment securities in fiscal 1999, as compared to
the prior year.

Comparison of Operating Results at September 30, 2000 and 1999

      Net Income.  The Company's net income for the twelve months ended
September 30, 2000 was $1.2 million, as compared to $969,000 for the twelve
months ended September 30, 1999.  The $208,000 increase in net income was
primarily the result of an $818,000 increase in interest and dividend
income, an increase in other income of $108,000, and a $185,000 decrease in
income taxes.  This was offset, in part, by a $372,000 increase in other
expenses, a $147,000 increase in the provision for loan losses, and a
$384,000 increase in interest expense on deposits and borrowed funds.

      Net Interest and Dividend Income.  Net interest and dividend income
for the twelve months ended September 30, 2000 was $4.6 million, as
compared to $4.1 million for the twelve months ended September 30, 1999.
The $433,000 increase in net interest and dividend income was primarily the
result of the increase in 1-4 family residential loan interest income.  The
net interest margin for the twelve months ended September 30, 2000 was
3.81%, an increase of 1 basis point, as compared to 3.80% for the twelve
months ended September 30, 1999.  The return on average assets for the
twelve months ended September 30, 2000 was 0.93%, an increase of 8 basis
points, as compared to 0.85% for the prior year.  The primary reason for
the increase in the return on average assets was the increased revenue
generated by the growth in 1-4 family residential loan holdings powered by
the substantial growth in low cost core deposits.

      Interest and Dividend Income.  Total interest and dividend income for
the twelve months ended September 30, 2000 was $8.3 million, an increase of
$818,000, as compared to $7.5 million for the twelve months ended September
30, 1999.  The increase in interest and dividend income was due primarily
to a $1.1 million increase in interest income on loans off-set by a
$267,000 decrease in interest and dividends on securities and short-term
investments.  The increase in interest income on loans was primarily the
result of an increase in the volume of loans held in portfolio, while the
decrease in interest and dividends on securities was the result of
utilizing maturing securities to fund the purchase of treasury shares.

      Interest Expense.  Interest expense for the twelve months ended
September 30, 2000 was $3.7 million, an increase of $384,000 as compared to
$3.4 million for the twelve months ended September 30, 1999.  The increase
in interest expense was due primarily to the increase in deposit accounts
of $19.5 million during the period, off-set in part by a decrease in
interest on borrowings of $54,000 over the previous year.

      Provision for Loan Losses.  The provision for loan loss expense for
the twelve months ended September 30, 2000 was $189,000 compared to $42,000
for the twelve months ended September 30, 1999.  The level established for
the provision for losses is determined by management in its effort to maintain
an allowance for loan losses that is adequate for the size and composition of
its loan portfolio, that is in line with its peers, and reflects the Bank's
history of loan losses. Loans with deviations in their quality are monitored
on the Bank's "watch list" and may be assigned specific reserve allocations.
Loan volume and fluctuations in loan type concentrations, such as commercial
loans and construction loans, which are weighted heavier than owner occupied
1-4 family residential loans, warrant increased provisions on an on-going
basis. The Bank's commercial loan portfolio totaled $3.3 million at September
30, 2000 as compared to $2.2 million at September 30, 1999.

      Management routinely reviews the risk weighting applied to each loan
type. These are estimates that can increase or decrease the provision. The
risk weightings have not changed during the twelve month period ended
September 30, 2000.

      Reallocation of the allowance among different parts of the portfolio has
occurred only as a result of the increased size of the loan portfolio, which
grew in all areas except consumer loans. This was due to increased loan
activity in the Bank's market area during the period. Residential loans
increased $20.9 million during the period ended September 30, 2000, but dropped
from 81.02% to 79.50% of total loans. The decrease as a percentage of total
loans resulted in a percentage decrease in the allowance allocated to
residential loans.

      There have been no changes, nor does the Bank expect changes in its
non-performing loans that will materially affect the allowance.

      On September 30, 2000 the Bank had no delinquent loans, no non-performing
loans, and no loans with specific reserve allocation requirements. The
allowance for loan losses at September 30, 2000 was $755,000, as compared to
$569,000 at September 30, 1999, an increase of 32.7%. The growth in the
allowance for loan losses is proportionate to the growth in loans, net, which
increased 31.4% to $105.7 million at September 30, 2000, compared to $80.5
million at September 30, 1999. The allowance for loan losses as a percentage
of total loans was 0.71% at September 30, 2000, as compared to 0.70% at
September 30, 1999.

      Non-interest Income.  Non-interest income, or other income, for the
twelve months ended September 30, 2000 was $757,000, as compared to
$649,000 for the twelve months ended September 30, 1999.  The $108,000
increase was due to an increase in net securities gains of $135,000,
coupled with an increase of $23,000 in service charge income, a $39,000
increase in other income, off-set in part by a $89,000 reduction in gains
on mortgages sold.

      Non-Interest Expense.  Non-interest expense, or other expense, for
the twelve months ended September 30, 2000 was $3.3 million as compared to
$2.9 million for the twelve months ended September 30, 1999.  The $372,000
increase was primarily due to the combination of an increase in salaries
and employee benefits of $52,000, an increase in occupancy expense of
$27,000, an increase in legal and professional fees of $126,000, an
increase in data processing fees of $1,000, an increase in equipment
expense of $12,000, and an increase in other operating expenses of
$154,000. The increases in the legal and professional fees and other
operating expenses were due to the formation, by the Bank, of a Real Estate
Investment Trust and resulted in one-time fees to date of $68,000 in legal
and professional fees and $59,000 in other operating expenses.

Comparison of Operating Results at September 30, 1999 and 1998

      Net Income.  The Company's net income for the twelve months ended
September 30, 1999 was $969,000, as compared to $1.2 million for the twelve
months ended September 30, 1998.  The $216,000 decrease in net income was
due primarily to the $577,000 decrease in net gain from sales of investment
securities as compared to the prior year.  Additionally, total other
expense for the twelve months ended September 30, 1999 was $2,924,000 as
compared to $3,177,000 for the prior year.  The $252,000 decrease in total
other expenses was due primarily to the $327,000 decrease in write-down of
long lived assets associated with the relocation of the East Falmouth
branch office.

      Net Interest and Dividend Income.  Net interest and dividend income
for the twelve months ended September 30, 1999 was $4.1 million,
representing no change from the $4.1 million for the twelve months ended
September 30, 1998.  The zero net change in net interest and dividend
income was the result of the increase in interest income offset by an
increase in total interest expense.  The net interest margin for the twelve
months ended September 30, 1999 was 3.80%, a decrease of 30 basis points,
as compared to 4.10% for the twelve months ended September 30, 1998.  The
return on average assets for the twelve months ended September 30, 1998 was
0.85%, a decrease of 29 basis points, as compared to 1.14% for the prior
year.  The primary reason for the decrease in the return on average assets
was the decrease in net securities gains from $840,000 for the year ended
September 30, 1998 to $263,000 for the year ended September 30, 1999, a
difference of $578,000.

      Interest and Dividend Income.  Total interest and dividend income for
the twelve months ended September 30, 1999 was $7.5 million, an increase of
$282,000, as compared to $7.2 million for the twelve months ended September
30, 1998.  The increase in interest and dividend income was due primarily
to a $513,000 increase in interest income on loans off-set, in part, by a
$231,000 decrease in interest and dividends on securities and short-term
investments.  The increase in interest income on loans was primarily the
result of an increase in the volume of loans held in portfolio, while the
decrease in interest and dividends on securities was the result of
utilizing maturing securities to fund the purchase of treasury shares.

      Interest Expense.  Interest expense for the twelve months ended
September 30, 1999 was $3.4 million, an increase of $218,000 as compared to
$3.1 million for the twelve months ended September 30, 1998.  The increase
in interest expense was due primarily to an increase in deposit accounts of
$11.4 million during the period, coupled with an increase of interest on
borrowings of $173,000 over the previous year.

      Provision for Loan Losses.  The provision for loan losses for the
twelve months ended September 30, 1999 was $42,000 compared to $26,000 for
the twelve months ended September 30, 1998.  The increase in the amount of
the provision for loan losses was the result of the Bank's efforts to
maintain adequate reserves for the increased net loans. The allowance for
loan losses at September 30, 1999 was $569,000, as compared to $527,000 at
September 30, 1998.

      Non-interest Income.  Non-interest income, or other income, for the
twelve months ended September 30, 1999 was $649,000, as compared to $1.1
million for the twelve months ended September 30, 1998.  The $401,000
decrease was due to reduced net securities gains of $578,000, coupled with
increases of $35,000 in service charge income, $71,000 in gains on
mortgages sold, and a $50,000 increase in other income.

      Non-interest Expense.  Non-interest expense or other expense for the
twelve months ended September 30, 1999 was $2.9 million as compared to $3.2
million for the twelve months ended September 30, 1998.  The $252,000
decrease was primarily due to the combination of an increase in salaries
and employee benefits of $52,000, a decrease in occupancy expense of
$10,000, a decrease in legal and professional fees of $81,000, an increase
in data processing fees of $38,000, a decrease in directors' fees of
$6,000, an increase in equipment expense of $17,000, an increase in other
operating expenses of $65,000 and a one time write-down of $327,000 that
was made to leasehold improvements during the fourth quarter of 1998  due
to the relocation of the East Falmouth branch office. There were no write-
downs during the year ended September 30, 1999.

Liquidity and Capital Resources

      The Bank's primary sources of funds consist of deposits, repayment
and prepayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, other borrowed funds and funds
provided from operations. While scheduled repayments of loans and mortgage-
backed securities and maturities of investment securities are predictable
sources of funds, deposit flows and loan prepayments are greatly influenced
by the general level of interest rates, economic conditions and
competition.  The Bank uses its liquidity resources principally to fund
existing and future loan commitments, to fund net deposit outflows, to
invest in other interest-earning assets, to maintain liquidity and to meet
operating expenses.  Management believes that loan repayments and other
sources of funds will be adequate to meet the Bank's liquidity needs for
fiscal year 2001.

      The Bank is required to maintain adequate levels of liquid assets.
This guideline, which may be varied depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and short-term
borrowings.  The Bank has historically maintained a level of liquid assets
in excess of regulatory requirements. The Bank's liquidity ratio at
September 30, 2000 was 21.29%.

      A major portion of the Bank's liquidity consists of short-term U.S.
Government and high grade corporate obligations.  The level of these assets
is dependent on the Bank's operating, investing, lending and financing
activities during any given period.  At September 30, 2000, net cash and
short-term assets totaled $24.6 million.

      The primary investing activities of the Bank include the origination
of loans and the purchase of investment securities.  During the year ended
September 30, 2000, purchases of investment securities and mortgage-backed
securities totaled  $9.6 million, while loan originations totaled $46.8
million.  These investments were funded primarily from loan repayments of
$21.3 million, investment security maturities of $16.4 million, loans sold
of $60,000 and borrowed funds from the Federal Home Loan Bank of Boston
(FHLB).

      Liquidity management is both a daily and long-term function of
management.  If the Bank requires more funds than it can generate
internally, the Bank will borrow additional funds from the FHLB of Boston.
At September 30, 2000, the Bank had $3.9 million in outstanding advances
from the FHLB of Boston.

      At September 30, 2000, the Bank had $7.0 million in outstanding
commitments to originate loans.  The Bank anticipates that it will have
sufficient funds available to meet its current loan origination
commitments.  Certificates of deposit which are scheduled to mature in one
year or less totaled $44.7 million at September 30, 2000.  Based on
historical experience, management believes that a significant portion of
such deposits will remain with the Bank.

      At September 30, 2000, the Company and the Bank exceeded all of their
respective regulatory capital requirements.

Impact of Inflation and Changing Prices

      The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and results of operations in
terms of historical dollars without considering changes in the relative
purchasing power of money over time because of inflation.  Unlike for
instance industrial companies, virtually all of the assets and liabilities
of the Bank are monetary in nature.  As a result, interest rates have a
more significant impact on the Bank's performance than the effects of
general levels of inflation.  Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and
services.

Asset/Liability Management

      A principal operating objective of the Bank is to produce stable
earnings by achieving a favorable interest rate spread that can be
sustained during fluctuations in prevailing interest rates.  Since the
Bank's principal interest-earning assets have longer terms to maturity than
its primary source of funds  (deposit liabilities), increases in general
interest rates will generally result in an increase in the Bank's cost of
funds before the yield on its asset portfolio adjusts upwards.  Banking
institutions generally have sought to reduce their exposure to adverse
changes in interest rates by attempting to achieve a closer match between
the periods in which their interest-bearing liabilities and interest-
earning assets can be expected to reprice through the origination of
adjustable-rate mortgages and loans with shorter terms and the purchase of
other shorter term interest-earning assets.

      The term "interest rate sensitivity" refers to those assets and
liabilities which mature and reprice periodically in response to
fluctuations in market rates and yields.  Thrift institutions historically
have operated in a mismatched position with interest-sensitive liabilities
exceeding interest-sensitive assets over short-term time periods. As noted
above, one of the principal goals of the Bank's asset/liability program is
to more closely match the interest rate sensitivity characteristics of the
asset and liability portfolios.

      In order to properly manage interest rate risk, the Bank's Board of
Directors has an Executive Committee to monitor the difference between the
Bank's maturing and repricing assets and liabilities and to develop and
implement strategies to decrease the "negative gap" between the two.  The
primary responsibilities of the committee are to assess the Bank's
asset/liability mix, recommend strategies to the Board of Directors that
will enhance income while managing the Bank's sensitivity to changes in
interest rates and report to the Board of Directors the results of the
strategies used.

      Since the mid-1980s, the Bank has stressed the origination of
adjustable-rate residential mortgage loans and adjustable-rate home equity
loans. Historically, the Bank did not retain fixed-rate loans with terms in
excess of 15 years in its portfolio. Beginning in March 1995, however, the
Bank retained a portion of its fixed-rate loans with terms in excess of 15
years in the portfolio. At September 30, 2000, the Bank's loan portfolio
included $27.9 million of adjustable-rate mortgages and $6.7 million of
adjustable-rate home equity loans that together represent 32.5% of the
Bank's total loans.

      In order to increase the interest rate sensitivity of its assets, the
Bank has also maintained a consistent level of investment securities and
other assets of maturities of three years or less.  At September 30, 2000,
the Bank had $14.3 million of investment securities maturing within one
year or less and $2.5 million of investment securities maturing over one
through five years.

      In the future, in managing its interest rate sensitivity, the Bank
intends to continue to stress the origination of adjustable-rate mortgages
and loans with shorter maturities and the maintenance of a consistent level
of short-term securities.

Interest Rate Sensitivity Analysis

      The matching of assets and liabilities may be analyzed by examining
the extent to which such assets and liabilities are "interest rate
sensitive" and by monitoring an institution's amount of interest rate
sensitive assets.  Generally, during a period of rising interest rates, a
negative gap would adversely affect net interest income while a positive
gap would result in an increase in net interest income.  Conversely, during
a period of falling interest rates, a negative gap would result in an
increase in net interest income, and a positive gap would adversely affect
net interest income.  An asset or liability is said to be interest rate
sensitive within a specific period if it will mature or reprice within that
period.  The interest rate sensitivity gap is defined as the difference
between the amount of interest-earning assets maturing or repricing within
a specific time period and the amount of interest-bearing liabilities
maturing or repricing within that time period.  A gap is considered
positive when the amount of interest rate sensitive assets exceeds the
amount of interest rate sensitive liabilities, and is considered negative
when the amount of interest rate sensitive liabilities exceeds the amount
of interest-rate-sensitive assets.

Impact of New Accounting Standards

      In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities".  Statement No. 133, as amended by SFAS
No. 138, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities.  The Statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000.  In
management's opinion, SFAS No. 133, when adopted, will not have a material
effect on the Company's consolidated financial statements.

      The following table sets forth the amounts of interest-earning assets
and interest-bearing liabilities outstanding at September 30, 2000 which
are expected to mature or reprice in each of the time periods shown. The
investment securities and mortgage-backed securities in the following table
are presented at amortized cost.

<TABLE>
<CAPTION>
                                                              At September 30, 2000
                                         ---------------------------------------------------------------
                                                       Over One      Over Five
                                         One Year      Through        Through      Over Ten
                                         or Less      Five Years     Ten Years       Years        Total
                                         --------     ----------     ---------     --------       -----
                                                              (Dollars in thousands)

<S>                                      <C>           <C>           <C>           <C>           <C>
Interest-earning assets:
  Investment securities                  $ 14,338      $  2,526      $      -      $      -      $ 16,864
  Mortgage-backed securities                    -             4            95         1,578         1,677
  Other interest-earning assets             4,496             -             -             -         4,496
  Adjustable rate 1-4 family loans         13,715        20,098           820             -        34,633
  Fixed rate 1-4 family loans               3,941         1,469         4,344        47,063        56,817
  Commercial real estate loans              3,104         6,196           871         1,001        11,172
  Consumer and commercial loans             1,249         1,452         1,164             -         3,865
                                         ----------------------------------------------------------------
      Total(1)                           $ 40,843      $ 31,745      $  7,294      $ 49,642      $129,524
                                         ================================================================

Interest-bearing liabilities:
  Certificates of deposit                $ 44,728      $  7,466      $      -      $      -      $ 52,194
  Money market accounts                    16,462             -             -             -        16,462
  NOW accounts                             10,095             -             -             -        10,095
  Passbook accounts                        19,380             -             -             -        19,380
  Repurchase agreements                       864             -             -             -           864
  FHLB advances                             2,584           893           375             -         3,852
                                         ----------------------------------------------------------------
      Total                              $ 94,113      $  8,359      $    375      $      -      $102,847
                                         ================================================================
  Interest sensitivity gap                (53,270)       23,386         6,919        49,642        26,677
  Cumulative interest sensitivity gap     (53,270)      (29,884)      (22,965)       26,677
  Ratio of cumulative gap to total
   assets                                  (39.32)%      (22.06)%      (16.95)%       19.69%

-------------------
<FN>
<F1>  Loans are presented net of unearned income and unadvanced principal.
</FN>
</TABLE>

      Management believes the current one-year gap of negative 39.32%
presents a risk to net interest income should a sustained increase occur in
the current level of interest rates. If interest rates increase, the Bank's
negative one-year gap should cause the net interest margin to decrease.  A
conservative rate-gap policy provides a stable net interest income margin.
Accordingly, management emphasizes a structured schedule of investments
spread by term to maturity with greater emphasis on maturities of one year
or less.  The preceding table utilized no assumptions or adjustments
regarding prepayment of loans and decay rates based upon Falmouth's actual
experience. Accordingly, it is possible that the actual interest rate
sensitivity of the Bank's assets and liabilities could vary significantly
from the information set forth in the table due to market and other
factors.

      Certain shortcomings are inherent in the method of analysis presented
in the preceding table.  Although certain assets and liabilities may have
similar maturity or periods of repricing, they may react in different
degrees to changes in market interest rates. The interest rates on certain
types of assets and liabilities may fluctuate in advance of changes in
market interest rates, while rates on other types of assets and liabilities
may lag behind changes in market interest rates. Certain assets, such as
adjustable-rate mortgages, generally have features  which restrict changes
in interest rates on a short-term basis and over the life of the asset. In
the event of a change in interest rates, prepayments and early withdrawal
levels would likely deviate significantly from those assumed in calculating
the table. Additionally, an increased credit risk may result as the ability
of many borrowers to service their debt may decrease in the event of an
interest rate increase. Virtually all of the adjustable-rate loans in the
Bank's portfolio contain conditions which restrict the periodic change in
interest rates.

Average Balances, Interest and Average Yields

      The following table sets forth certain information relating to the
Bank's average balance sheet and reflects the average yield on assets,
average cost of liabilities, interest earned and interest paid for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average monthly balance of assets or liabilities,
respectively, for the periods presented. Average balances are derived from
monthly balances. Management does not believe that the use of monthly
balances instead of daily balances has caused any material difference in
the information presented. Interest earned on loan portfolios is net of
reserves for uncollected interest.

<TABLE>
<CAPTION>
                                                                        Year Ended September 30,
                                      ---------------------------------------------------------------------------------------------
                                                   2000                            1999                           1998
                                      -----------------------------   -----------------------------   -----------------------------
                                                            Average                         Average                        Average
                                      Average               Yield/    Average               Yield/    Average               Yield/
                                      Balance    Interest    Cost     Balance    Interest    Cost     Balance    Interest    Cost
                                      -------    --------   -------   -------    --------   -------   -------    --------   -------
                                                                          (Dollars in thousands)

<S>                                   <C>         <C>        <C>      <C>         <C>        <C>      <C>         <C>        <C>
Assets:
Interest-earning assets:
Loans, net:
  Mortgages                           $ 84,443    $6,140     7.27%    $ 70,742    $5,271     7.45%    $ 64,202    $4,861     7.57%
  Consumer and other                     9,872       774     7.84        6,915       558     8.07        5,056       455     9.00
                                      --------    ------              --------    ------              --------    ------
      Total loans, net                  94,315     6,914     7.33       77,657     5,829     7.51       69,258     5,316     7.68
  Investments                           19,849     1,162     5.85       22,946     1,219     5.31       21,812     1,438     6.59
  Other earning assets                   5,766       230     3.99        8,314       440     5.29        8,107       452     5.58
                                      --------    ------              --------    ------              --------    ------
      Total interest-earning assets    119,930     8,306     6.93      108,917     7,488     6.88       99,177     7,206     7.26
                                                  ------                          ------                          ------
  Cash and due from banks                3,339                           2,720                           2,256
  Other assets                           3,118                           2,879                           2,969
                                      --------                        --------                        --------
      Total assets                    $126,387                        $114,516                        $104,402
                                      ========                        ========                        ========

Liabilities:
Interest-bearing liabilities:
Deposits:
  Savings deposits                    $ 18,910    $  368     1.95%    $ 17,471    $  357     2.05%    $ 15,571    $  385     2.47%
  NOW                                    9,560        78     0.82        7,533        73     0.97        7,013        66     0.94
  Money market deposits                 14,946       475     3.18       11,884       372     3.13        9,746       299     3.07
  Certificates of deposit               48,325     2,507     5.19       42,245     2,187     5.18       39,794     2,195     5.52
  Borrowed money                         5,146       314     6.10        6,936       368     5.30        3,881       195     5.02
                                      --------    ------              --------    ------              --------    ------
      Total interest-bearing
       liabilities                      96,887     3,742     3.86       86,069     3,357     3.90       76,005     3,140     4.13
                                                  ------                          ------                          ------
  Non-interest bearing liabilities      11,741                           7,431                           5,225
                                      --------                        --------                        --------
      Total liabilities                108,628                          93,500                          81,230
  Stockholders' equity                  17,759                          21,016                          23,172
                                      --------                        --------                        --------
      Total liabilities and
       stockholders' equity           $126,387                        $114,516                        $104,402
                                      ========                        ========                        ========

Net interest and dividend income                  $4,564                          $4,131                          $4,066
                                                  ======                          ======                          ======

Interest rate spread                                         3.07%                           2.98%                           3.13%
Net interest margin                                          3.81%                           3.80%                           4.10%
Ratio of average interest-earning
 assets to average interest-bearing
 liabilities                            123.78%                         126.55%                         130.49%
</TABLE>

Rate/Volume Analysis

      The following table sets forth certain information regarding changes
in interest income and interest expense of the Bank for the periods
indicated.  For each category of interest-earning assets and interest-
bearing liabilities, information is provided on changes attributable to:
(i) changes in volume (change in volume multiplied by old rate); and (ii)
changes in rates (change in rate multiplied by old volume).  Changes in
rate-volume (change in rate multiplied by change in volume) are allocated
between changes in rates and changes in volume.

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                                            ---------------------------------------------------------------
                                                    2000 vs. 1999                     1999 vs. 1998
                                                 Increase (Decrease)               Increase (Decrease)
                                                        Due To                            Due To
                                            -----------------------------      ----------------------------
                                            Volume       Rate       Total      Volume      Rate       Total
                                            ------       ----       -----      ------      ----       -----
                                                                  (Dollars in thousands)

<S>                                         <C>         <C>         <C>         <C>       <C>         <C>
Interest-earning assets:
  Loans                                     $1,218      $(133)      $1,085      $630      $(117)      $ 513
  Investments                                 (349)        82         (267)       72       (302)       (230)
                                            ---------------------------------------------------------------
      Total interest-earning assets            869        (51)         818       702       (419)        283
                                            ---------------------------------------------------------------

Interest-bearing liabilities:
  Savings deposits                              26        (15)          11        38        (66)        (28)
  NOW                                           12         (7)           5         5          2           7
  Money market deposits                         97          6          103        66          6          72
  Certificates of deposit                      315          5          320       130       (135)         (5)
  Borrowed money                              (129)        75          (54)      159         13         172
                                            ---------------------------------------------------------------
      Total interest-bearing liabilities       321         64          385       398       (180)        218
                                            ---------------------------------------------------------------
Net change in net interest income           $  548      $(115)      $  433     $ 304      $(239)      $  65
                                            ===============================================================
</TABLE>


                             2000 ANNUAL REPORT
===========================================================================

                   MARKET FOR THE COMPANY'S COMMON STOCK
                   -------------------------------------

      Falmouth Bancorp, Inc.'s common stock is traded on the American Stock
Exchange and quoted under the symbol "FCB."  The table below shows the high
and low sales price during the periods indicated.

      At September 30, 2000, the last trading date in the Bank's fiscal
year, the Bank's common stock closed at $13.625.  At September 30, 2000,
there were 1,035,838 shares of the Company's common stock outstanding,
which were held of record by approximately 575 stockholders, not including
persons or entities that hold the stock in nominee or "street" name through
various brokerage firms.

      On November 21, 2000, the Board of Directors of the Company declared
a quarterly cash dividend of $0.09 per share of common stock, which will be
paid on December 21, 2000 to stockholders of record on December 7, 2000.

      The Board of Directors considers paying dividends, dependent on the
results of operations and financial condition of the Company, tax
considerations, industry standards, economic conditions, regulatory
restrictions and other factors.  There are significant regulatory
limitations on the Company's ability to pay dividends depending on the
dividends it receives from the Bank, which are subject to regulations and
the Bank's continued compliance with all regulatory capital requirements
and the overall health of the institution.

<TABLE>
<CAPTION>
                                                        Price Range
                                                   --------------------
Quarter Ended                                        High         Low      Dividends
-------------                                        ----         ---      ---------

<S>                                                <C>          <C>          <C>
Fiscal year ended September 30, 1999:
  First Quarter ended December 31, 1998            $17-1/4      $12          $.07
  Second Quarter ended March 31, 1999               16-3/4       13-3/4       .07
  Third Quarter ended June 30, 1999                 17-7/8       13-1/8       .07
  Fourth Quarter ended September 30, 1999           17-1/4       15           .07

Fiscal year ended September 30, 2000:
  First Quarter ended December 31, 1999            $17-1/4      $14          $.07
  Second Quarter ended March 31, 2000               14-5/8       13           .08
  Third Quarter ended June 30, 2000                 14           11-3/4       .08
  Fourth Quarter ended September 30, 2000           13-7/8       12-5/8       .08
</TABLE>


                  [SHATSWELL, MACLEOD & COMPANY, P.C. LOGO]


The Board of Directors
Falmouth Bancorp, Inc.
Falmouth, Massachusetts

                        INDEPENDENT AUDITORS' REPORT
                        ----------------------------


We have audited the accompanying consolidated balance sheets of Falmouth
Bancorp, Inc. and Subsidiaries as of September 30, 2000 and 1999 and the
related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended
September 30, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Falmouth Bancorp, Inc. and Subsidiaries as of September 30, 2000
and 1999, and the consolidated results of their operations and their cash
flows for each of the years in the three-year period ended September 30,
2000, in conformity with generally accepted accounting principles.


                                       /s/ Shatswell, MacLeod & Company, P.C.
                                       SHATSWELL, MacLEOD & COMPANY, P.C.

West Peabody, Massachusetts
October 23, 2000


                   FALMOUTH BANCORP, INC. AND SUBSIDIARIES
                   ---------------------------------------

                         CONSOLIDATED BALANCE SHEETS
                         ---------------------------

                         September 30, 2000 and 1999
                         ---------------------------

<TABLE>
<CAPTION>

ASSETS                                                              2000            1999
------                                                          ------------    ------------

<S>                                                             <C>             <C>
Cash, due from banks and interest bearing deposits              $  3,450,297    $  2,472,360
Federal funds sold                                                 3,380,176       4,805,000
                                                                ----------------------------
      Total cash and cash equivalents                              6,830,473       7,277,360
Investments in available-for-sale securities (at fair value)       7,807,742      17,144,442
Investments in held-to-maturity securities
 (fair values of $10,781,002 as of September 30, 2000
 and $9,631,547 as of September 30, 1999)                         10,776,000       9,641,817
Federal Home Loan Bank stock, at cost                                720,700         720,700
Loans, net                                                       105,731,509      80,487,395
Premises and equipment                                             1,991,077       2,023,577
Accrued interest receivable                                          750,690         729,668
Cooperative Central Bank Reserve Fund Deposit                        395,395         395,395
Other assets                                                         460,301         231,928
                                                                ----------------------------
      Total assets                                              $135,463,887    $118,652,282
                                                                ============================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
  Noninterest-bearing                                           $ 14,243,255    $  8,091,418
  Interest-bearing                                                98,130,985      84,794,290
                                                                ----------------------------
      Total deposits                                             112,374,240      92,885,708
Securities sold under agreements to repurchase                       863,943         857,727
Federal Home Loan Bank advances                                    3,851,961       5,431,290
Other liabilities                                                    327,680         218,104
                                                                ----------------------------
      Total liabilities                                          117,417,824      99,392,829
                                                                ----------------------------
Minority preferred stockholders' equity in a
 subsidiary company of Falmouth Cooperative Bank                      54,000
                                                                ----------------------------
Stockholders' equity:
  Preferred stock, par value $.01 per share,
   authorized 500,000 shares; none issued
  Common stock, par value $.01 per share,
   authorized 2,500,000 shares; issued 1,454,750 shares               14,547          14,547
  Paid -in capital                                                13,901,452      13,907,812
  Retained earnings                                               11,669,877      10,818,456
  Unallocated Employee Stock Ownership Plan shares                  (477,668)       (565,853)
  Treasury stock (418,912 shares as of September 30, 2000
   and 279,006 shares as of September 30, 1999)                   (6,850,722)     (4,600,671)
  Unearned compensation                                             (291,097)       (443,284)
  Accumulated other comprehensive income                              25,674         128,446
                                                                ----------------------------
      Total stockholders' equity                                  17,992,063      19,259,453
                                                                ----------------------------
      Total liabilities and stockholders' equity                $135,463,887    $118,652,282
                                                                ============================
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                   FALMOUTH BANCORP, INC. AND SUBSIDIARIES
                   ---------------------------------------

                      CONSOLIDATED STATEMENTS OF INCOME
                      ---------------------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

<TABLE>
<CAPTION>

                                                                     2000          1999          1998
                                                                  ----------    ----------    ----------

<S>                                                               <C>           <C>           <C>
Interest and dividend income:
  Interest and fees on loans                                      $6,913,845    $5,829,184    $5,316,011
  Interest and dividends on securities:
    Taxable                                                        1,021,594     1,112,344     1,316,020
    Dividends on marketable equity securities                        104,530       107,164       152,341
  Dividends on Cooperative Bank Investment and Liquidity Funds        35,644       158,851       198,015
  Other interest                                                     230,460       280,827       223,391
                                                                  --------------------------------------
      Total interest and dividend income                           8,306,073     7,488,370     7,205,778
                                                                  --------------------------------------
Interest expense:
  Interest on deposits                                             3,428,521     2,990,151     2,944,707
  Interest on securities sold under agreements to repurchase          54,240        48,173        24,100
  Interest on Federal Home Loan Bank advances                        259,531       319,464       148,138
  Interest on other borrowings                                                                    22,556
                                                                  --------------------------------------
      Total interest expense                                       3,742,292     3,357,788     3,139,501
                                                                  --------------------------------------
      Net interest and dividend income                             4,563,781     4,130,582     4,066,277
Provision for loan losses                                            189,000        42,000        26,000
                                                                  --------------------------------------
      Net interest and dividend income after provision
       for loan losses                                             4,374,781     4,088,582     4,040,277
                                                                  --------------------------------------
Other income:
  Service charges on deposit accounts                                130,706       108,416        73,667
  Gains on sales of available-for-sale securities, net               397,732       262,511       840,208
  Net gains on sales of loans                                          1,711        91,317        19,607
  Other income                                                       226,444       186,992       117,177
                                                                  --------------------------------------
      Total other income                                             756,593       649,236     1,050,659
                                                                  --------------------------------------
Other expense:
  Salaries and employee benefits                                   1,640,003     1,587,684     1,535,625
  Occupancy expense                                                  216,938       189,519       199,759
  Equipment expense                                                  171,620       159,508       142,429
  Writedown on impairment of long lived assets                                                   327,307
  Data processing expense                                            245,512       245,310       207,061
  Director's fees                                                     52,000        52,200        57,950
  Legal and professional fees                                        297,120       170,772       251,734
  Other expense                                                      672,714       519,472       454,695
                                                                  --------------------------------------
      Total other expense                                          3,295,907     2,924,465     3,176,560
                                                                  --------------------------------------
      Income before income taxes                                   1,835,467     1,813,353     1,914,376
Income taxes                                                         658,725       844,440       729,300
                                                                  --------------------------------------
      Net income                                                  $1,176,742    $  968,913    $1,185,076
                                                                  ======================================

Earnings per common share                                         $     1.17    $      .78    $      .86
                                                                  ======================================
Earnings per common share, assuming dilution                      $     1.16    $      .77    $      .84
                                                                  ======================================
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                   FALMOUTH BANCORP, INC. AND SUBSIDIARIES
                   ---------------------------------------

         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         ----------------------------------------------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

<TABLE>
<CAPTION>

                                                             Unallocated
                                                              Employee
                                                                Stock                                   Accumulated
                                                              Ownership                                    Other
                       Common      Paid-in      Retained         Plan       Treasury      Unearned     Comprehensive
                        Stock      Capital      Earnings        Shares        Stock     Compensation       Income        Total
                      --------   -----------   -----------   -----------  -----------   ------------   -------------  -----------

<S>                   <C>        <C>           <C>           <C>          <C>            <C>              <C>         <C>
Balance, September
 30, 1997             $145,475   $13,651,570   $ 9,334,011   $(741,923)   $              $                $416,383    $22,805,516
Employee Stock
 Ownership Plan                       94,566                                                                               94,566
ESOP shares released                                            87,885                                                     87,885
Purchase of shares
 for recognition and
 retention plan (RRP)                                                                     (751,433)                      (751,433)
Recognition and
 retention plan                      158,760                                                                              158,760
Distribution of
 RRP shares                         (157,016)                                              157,016
Tax benefit from RRP                  20,206                                                                               20,206
Formation of the
 Holding Company,
 change in par value  (130,928)      130,928
Purchases of
 treasury stock                                                             (952,668)                                    (952,668)
Dividends declared
 ($.23 per share)                                 (314,350)                                                              (314,350)
Comprehensive income:
  Net income                                     1,185,076
  Change in net
   unrealized holding
   gain on available-
   for-sale securities,
   net of tax effect
   of $54,071                                                                                              (92,068)
      Comprehensive
       income                                                                                                           1,093,008
                     -----------------------------------------------------------------------------------------------------------
Balance, September
 30, 1998               14,547    13,899,014    10,204,737    (654,038)     (952,668)     (594,417)        324,315     22,241,490
Employee Stock
 Ownership Plan                       49,149                                                                               49,149
ESOP shares released                                            88,185                                                     88,185
Purchases of shares
 for recognition and
 retention plan (RRP)                                                                       (9,558)                        (9,558)
Recognition and
 retention plan                      114,417                                                                              114,417
Distribution of
 RRP shares                         (160,691)                                              160,691
Tax benefit from RRP                   9,388                                                                                9,388
Purchases of
treasury stock                                                            (3,665,778)                                  (3,665,778)
Exercise of stock
 options and related
 tax benefit                          (3,465)                                 17,775                                       14,310
Dividends declared
 ($.28 per share)                                 (355,194)                                                              (355,194)
Comprehensive income:
  Net income                                       968,913
  Change in net
   unrealized holding
   gain on available-
   for-sale securities,
   net of tax effect                                                                                      (195,869)
      Comprehensive
       income                                                                                                             773,044
                     -----------------------------------------------------------------------------------------------------------
Balance, September
 30, 1999               14,547    13,907,812    10,818,456    (565,853)   (4,600,671)     (443,284)        128,446     19,259,453
Employee Stock
 Ownership Plan                       34,333                                                                               34,333
ESOP shares released                                            88,185                                                     88,185
Recognition and
 retention plan                      112,197                                                                              112,197
Distribution of
 RRP shares                         (152,187)                                              152,187
Tax benefit from RRP                     822                                                                                  822
Purchases of
 treasury stock                                                           (2,263,130)                                  (2,263,130)
Exercise of stock
 options and related
 tax benefit                          (1,525)                                 13,079                                       11,554
Dividends declared
 ($.31 per share)                                 (325,321)                                                              (325,321)
Comprehensive income:
  Net income                                     1,176,742
  Change in net
   unrealized holding
   gain on available-
   for-sale securities,
   net of tax effect                                                                                      (102,772)
      Comprehensive
       income                                                                                                           1,073,970
                     -----------------------------------------------------------------------------------------------------------
Balance, September
 30, 2000             $ 14,547   $13,901,452   $11,669,877   $(477,668)  $(6,850,722)    $(291,097)       $ 25,674    $17,992,063
                      ===========================================================================================================

<CAPTION>
                                                                     2000         1999
                                                                  ---------     ---------

<S>                                                               <C>           <C>
Reclassification disclosure for the years ended September 30:


Net unrealized gains (losses) on available-for-sale securities    $ 215,678     $ (72,067)
Reclassification adjustment for realized gains in net income       (397,732)     (262,511)
                                                                  -----------------------
  Other comprehensive loss before income tax effect                (182,054)     (334,578)
Income tax benefit                                                   79,282       138,709
                                                                  -----------------------
      Other comprehensive loss, net of tax                        $(102,772)    $(195,869)
                                                                  =======================
</TABLE>

Accumulated other comprehensive income as of September 30, 2000, 1999 and
1998 consists of net unrealized holding gains on available-for-sale
securities, net of taxes.


The accompanying notes are an integral part of these consolidated financial
statements.


                   FALMOUTH BANCORP, INC. AND SUBSIDIARIES
                   ---------------------------------------

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                    -------------------------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

<TABLE>
<CAPTION>

                                                                         2000             1999             1998
                                                                     ------------     ------------     ------------

<S>                                                                  <C>              <C>              <C>
Cash flows from operating activities:
  Net income                                                         $  1,176,742     $    968,913     $  1,185,076
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Gains on sales of available-for-sale securities, net               (397,732)        (262,511)        (840,208)
      (Accretion) amortization of investment securities, net              (32,780)         105,788           24,417
      Provision for loan losses                                           189,000           42,000           26,000
      Change in unearned income                                          (170,822)         (64,575)         (51,047)
      Net gains on sales of loans                                          (1,711)         (91,317)         (19,607)
      Loss on sale of equipment                                                                               5,245
      Loss on trade-in of equipment                                                                           8,869
      Depreciation and amortization                                       194,297          167,096          170,714
      Writedown on impairment of long lived assets                                                          327,307
      Increase in accrued interest receivable                             (21,022)         (98,078)         (17,301)
      (Increase) decrease in prepaid expenses                              (4,891)          86,716           25,646
      (Increase) decrease in other assets                                  (6,605)                           74,662
      Recognition and retention plan (RRP)                                112,197          114,417          158,760
      Deferred tax (benefit) expense                                     (137,594)           1,903         (118,872)
      Minority interest in subsidiary                                      54,000
      Increase (decrease) in accrued expenses                             100,772          (53,674)        (143,478)
      Increase (decrease) in taxes payable                                 (9,841)         (65,034)          29,615
      Increase (decrease) in other liabilities                             19,466            3,717            7,172
                                                                     ----------------------------------------------
  Net cash provided by operating activities                             1,063,476          855,361          852,970
                                                                     ----------------------------------------------

Cash flows from investing activities:
  Purchases of available-for-sale securities                           (2,645,873)     (12,976,478)      (7,426,624)
  Proceeds from sales of available-for-sale securities                  1,709,769        4,807,124        9,886,752
  Proceeds from maturities of available-for-sale securities            10,503,872        7,801,411        6,827,890
  Purchases of held-to-maturity securities                             (6,973,992)      (8,989,501)      (2,000,000)
  Proceeds from maturities of held-to-maturity securities               5,857,199        6,354,140        5,417,562
  Purchases of Federal Home Loan Bank stock                                               (157,900)        (157,600)
  Net increase in loans                                               (25,323,244)     (10,397,781)     (27,088,014)
  Proceeds from sales of loans                                             61,711        7,679,217        3,358,900
  Recoveries of loans previously charged off                                  952
  Capital expenditures                                                   (161,797)         (82,329)      (1,626,772)
  Proceeds from sale of equipment                                                                             6,000
  Increase in deposit with Cooperative Central Bank Reserve Fund                                           (109,715)
                                                                     ----------------------------------------------
  Net cash used in investing activities                               (16,971,403)      (5,962,097)     (12,911,621)
                                                                     ----------------------------------------------

Cash flows from financing activities:
  Net increase in demand deposits, NOW and savings accounts            10,731,200        9,874,877        4,516,180
  Net increase in time deposits                                         8,757,332        1,492,064        4,811,498
  Net increase (decrease) in securities sold
   under agreements to repurchase                                           6,216         (222,827)       1,080,554
  Proceeds from Federal Home Loan Bank long-term advances               7,000,000
  Repayment of Federal Home Loan Bank long-term advances               (8,579,329)
  Net change in Federal Home Loan Bank short-term advances                      0
  Proceeds from Federal Home Loan Bank advances                                          4,772,000        8,148,000
  Repayments of Federal Home Loan Bank advances                                         (6,939,710)        (549,000)
  Proceeds from exercise of stock options                                  11,554           14,310
  Dividends paid                                                         (325,321)        (355,194)        (314,350)
  Payment of Employee Stock Ownership Plan loan                                                            (741,923)
  Employee Stock Ownership Plan                                            34,333           49,149           94,566
  Unallocated ESOP shares released                                         88,185           88,185           87,885
  Purchase of company shares for RRP Trust                                                  (9,558)        (751,433)
  Purchases of treasury stock                                          (2,263,130)      (3,665,778)        (952,668)
                                                                     ----------------------------------------------
  Net cash provided by financing activities                            15,461,040        5,097,518       15,429,309
                                                                     ----------------------------------------------

Increase (decrease) in cash and cash equivalents                         (446,887)          (9,218)       3,370,658
Cash and cash equivalents at beginning of period                        7,277,360        7,286,578        3,915,920
                                                                     ----------------------------------------------
Cash and cash equivalents at end of period                           $  6,830,473     $  7,277,360     $  7,286,578
                                                                     ==============================================

Supplemental disclosures:
  Interest paid                                                      $  3,742,292     $  3,357,788     $  3,139,501
  Income taxes paid                                                       806,160          907,571          859,664
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                   FALMOUTH BANCORP, INC. AND SUBSIDIARIES
                   ---------------------------------------

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 ------------------------------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

NOTE 1 - NATURE OF OPERATIONS
-----------------------------

Falmouth Bancorp, Inc. (the "Company"), a Delaware corporation was organized
by the Falmouth Co-Operative Bank (the "Bank") on November 25, 1996 to be a
bank holding company with the Bank as its wholly-owned subsidiary.

The Bank was organized in 1925 and is headquartered in Falmouth,
Massachusetts. The Bank is engaged principally in the business of attracting
deposits from the general public and investing those deposits in
residential, real estate, consumer and small business loans.

NOTE 2 - ACCOUNTING POLICIES
----------------------------

The accounting and reporting policies of the Company and its subsidiaries
conform to generally accepted accounting principles and predominant
practices within the savings institution industry. The consolidated
financial statements were prepared using the accrual method of accounting.
The significant accounting policies are summarized below to assist the
reader in better understanding the consolidated financial statements and
other data contained herein.

      PERVASIVENESS OF ESTIMATES:

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

      BASIS OF PRESENTATION:

      The consolidated financial statements include the accounts of the
      Company, the RRP Trust, the Company's wholly-owned subsidiary, the
      Bank and the Bank's wholly-owned subsidiaries, Falmouth Securities
      Corporation and Falmouth Capital Corporation. All significant
      intercompany accounts and transactions have been eliminated in the
      consolidation.

      The RRP Trust was formed on October 21, 1997 in connection with the
      Bank's 1997 Recognition and Retention Plan for Outside Directors,
      officers and employees of Falmouth Bancorp, Inc. (the "RRP"). The
      Company contributes to the RRP Trust from time to time. The RRP Trust
      invests the assets of the Trust in shares of the Company.

      The Trustees of the RRP Trust are also directors of the Company. The
      RRP is administered by the compensation committee of the Board of
      Directors of the Company which consists of certain non-employee
      members of the Board of Directors of the Company.

      Falmouth Securities Corporation, an active security corporation, was
      established solely for the purpose of acquiring and holding
      investments which are permissible for banks to hold under
      Massachusetts law.

      Falmouth Capital Corporation, a real estate investment trust, was
      established as part of the Company's tax management planning.

      CASH AND CASH EQUIVALENTS:

      For purposes of reporting cash flows, cash and cash equivalents
      include cash on hand, cash items, due from banks, interest bearing
      deposits and federal funds sold.

      SECURITIES:

      Investments in debt securities are adjusted for amortization of
      premiums and accretion of discounts computed on the straight-line
      method which has substantially the same effect as using the interest
      method. Gains or losses on sales of investment securities are computed
      on a specific identification basis.

      The Company classifies debt and equity securities into one of three
      categories:  held-to-maturity, available-for-sale, or trading. This
      security classification may be modified after acquisition only under
      certain specified conditions. In general, securities may be classified
      as held-to-maturity only if the Company has the positive intent and
      ability to hold them to maturity. Trading securities are defined as
      those bought and held principally for the purpose of selling them in
      the near term. All other securities must be classified as available-
      for-sale.

      --    Held-to-maturity securities are measured at amortized cost on
            the balance sheet. Unrealized holding gains and losses are not
            included in earnings or in a separate component of capital. They
            are merely disclosed in the notes to the consolidated financial
            statements.

      --    Available-for-sale securities are carried at fair value on the
            balance sheet. Unrealized holding gains and losses are not
            included in earnings, but are reported as a net amount (less
            expected tax) in a separate component of capital until realized.

      --    Trading securities are carried at fair value on the balance
            sheet. Unrealized holding gains and losses for trading
            securities are included in earnings.

      LOANS:

      Loans receivable that management has the intent and ability to hold
      until maturity or payoff, are reported at their outstanding principal
      balances reduced by amounts due to borrowers on unadvanced loans, any
      charge-offs, the allowance for loan losses and any deferred fees,
      costs on originated loans or unamortized premiums or discounts on
      purchased loans.

      Interest on loans is recognized on a simple interest basis.

      Loan origination, commitment fees and certain direct origination costs
      are deferred and the net amount amortized as an adjustment of the
      related loan's yield. The Company is amortizing these amounts over the
      contractual life of the related loans.

      Cash receipts of interest income on impaired loans is credited to
      principal to the extent necessary to eliminate doubt as to the
      collectibility of the net carrying amount of the loan. Some or all of
      the cash receipts of interest income on impaired loans is recognized
      as interest income if the remaining net carrying amount of the loan is
      deemed to be fully collectible. When recognition of interest income on
      an impaired loan on a cash basis is appropriate, the amount of income
      that is recognized is limited to that which would have been accrued on
      the net carrying amount of the loan at the contractual interest rate.
      Any cash interest payments received in excess of the limit and not
      applied to reduce the net carrying amount of the loan are recorded as
      recoveries of charge-offs until the charge-offs are fully recovered.

      ALLOWANCE FOR LOAN LOSSES:

      The allowance for loan losses is established as losses are estimated to
      have occurred through a provision for loan losses charged to earnings.
      Loan losses are charged against the allowance when management believes
      the uncollectibility of a loan balance is confirmed. Subsequent
      recoveries, if any, are credited to the allowance.

      The general allowance for loan losses is evaluated on a regular basis by
      management and is based upon management's periodic review of the
      collectibility of the loans in light of historical experience, the nature
      and volume of the loan portfolio, adverse situations that may affect the
      borrower's ability to repay, estimated value of any underlying collateral
      and prevailing economic conditions. This evaluation is inherently
      subjective as it requires estimates that are susceptible to significant
      revision as more information becomes available. The general allowance for
      loan losses is management's best estimate of probable loan losses
      incurred as of the balance sheet date.

      Losses on specific impaired loans are based on SFAS No. 114. A loan is
      considered impaired when, based on current information and events, it is
      probable that the Company will be unable to collect the scheduled
      payments of principal or interest when due according to the contractual
      terms of the loan agreement. Factors considered by management in
      determining impairment include payment status, collateral value, and the
      probability of collecting scheduled principal and interest payments when
      due. Loans that experience insignificant payment delays and payment
      shortfalls generally are not classified as impaired. Management
      determines the significance of payment delays and payment shortfalls on
      a case-by-case basis, taking into consideration all of the circumstances
      surrounding the loan and the borrower, including the length of the delay,
      the reasons for the delay, the borrower's prior payment record, and the
      amount of the shortfall in relation to the principal and interest owed.
      Impairment is measured as of the balance sheet date on a loan by loan
      basis for commercial loans by either the present value of expected future
      cash flows discounted at the loan's effective interest rate, the loan's
      obtainable market price, or the fair value of the collateral if the loan
      is collateral dependent.

      Large groups of smaller balance homogeneous loans are collectively
      evaluated for impairment. Accordingly, the Company does not separately
      identify individual consumer and residential loans for impairment
      disclosures.

      PREMISES AND EQUIPMENT:

      Premises and equipment are stated at cost, less accumulated
      depreciation and amortization. Cost and related allowances for
      depreciation and amortization of premises and equipment retired or
      otherwise disposed of are removed from the respective accounts with
      any gain or loss included in income or expense. Depreciation and
      amortization are calculated principally on the straight-line method
      over the estimated useful lives of the assets.

      OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:

      Other real estate owned includes properties acquired through
      foreclosure and properties classified as in-substance foreclosures in
      accordance with Financial Accounting Standards Board Statement No. 15,
      "Accounting by Debtors and Creditors for Troubled Debt Restructuring."
      These properties are carried at the lower of cost or estimated fair
      value less estimated costs to sell. Any write-down from cost to
      estimated fair value, required at the time of foreclosure or
      classification as in-substance foreclosure, is charged to the
      allowance for loan losses. Expenses incurred in connection with
      maintaining these assets, subsequent write-downs and gains or losses
      recognized upon sale are included in other expense.

      In accordance with Statement of Financial Accounting Standards No.
      114, "Accounting by Creditors for Impairment of a Loan," the Company
      classifies loans as in-substance repossessed or foreclosed if the
      Company receives physical possession of the debtor's assets regardless
      of whether formal foreclosure proceedings take place.

      COOPERATIVE CENTRAL BANK RESERVE FUND DEPOSIT:

      The Reserve Fund was established for liquidity purposes and consists
      of deposits required of all insured cooperative banks in
      Massachusetts. The Fund is used by the Central Bank to advance funds
      to member banks, but such advances generally are not made until
      Federal Home Loan Bank and commercial bank sources of borrowings have
      been exhausted. The Company has not borrowed funds from the Central
      Bank since rejoining the Federal Home Loan Bank on January 2, 1975.

      INCOME TAXES:

      The Company recognizes income taxes under the asset and liability
      method. Under this method, deferred tax assets and liabilities are
      established for the temporary differences between the accounting basis
      and the tax basis of the Company's assets and liabilities at enacted
      tax rates expected to be in effect when the amounts related to such
      temporary differences are realized or settled.

      RETIREMENT PLAN:

      The compensation cost of an employee's pension benefit is recognized
      on the net periodic pension cost method over the employee's
      approximate service period. The aggregate cost method is used for
      funding purposes.

      FAIR VALUES OF FINANCIAL INSTRUMENTS:

      Statement of Financial Accounting Standards No. 107, "Disclosures
      About Fair Value of Financial Instruments," requires that the Company
      disclose estimated fair value for its financial instruments. Fair
      value methods and assumptions used by the Company in estimating its
      fair value disclosures are as follows:

      Cash and cash equivalents:  The carrying amounts reported in the
      balance sheet for cash and cash equivalents approximate those assets'
      fair values.

      Securities (including mortgage-backed securities):  Fair values for
      securities are based on quoted market prices, where available. If
      quoted market prices are not available, fair values are based on
      quoted market prices of comparable instruments.

      Loans receivable:  For variable-rate loans that reprice frequently and
      with no significant change in credit risk, fair values are based on
      carrying values. The fair values for other loans are estimated using
      discounted cash flow analyses, using interest rates currently being
      offered for loans with similar terms to borrowers of similar credit
      quality.

      Accrued interest receivable and Cooperative Central Bank Reserve Fund
      Deposit:  The carrying amounts of accrued interest receivable and
      Cooperative Central Bank Reserve Fund Deposit approximate their fair
      values.

      Deposit liabilities:  The fair values disclosed for demand deposits
      (e.g., interest and non-interest checking, passbook savings and money
      market accounts) are, by definition, equal to the amount payable on
      demand at the reporting date (i.e., their carrying amounts). Fair
      values for fixed-rate certificates of deposit are estimated using a
      discounted cash flow calculation that applies interest rates currently
      being offered on certificates to a schedule of aggregated expected
      monthly maturities on time deposits.

      Securities sold under agreements to repurchase:  The carrying amount
      reported on the balance sheet for securities sold under agreement to
      repurchase approximates those liabilities' fair values.

      Federal Home Loan Bank Advances:  Fair values for Federal Home Loan
      Bank advances are estimated using a discounted cash flow technique
      that applies interest rates currently being offered on advances to a
      schedule of aggregated expected monthly maturities on Federal Home
      Loan Bank advances.

      Off-balance sheet instruments:  The fair value of commitments to
      originate loans is estimated using the fees currently charged to enter
      similar agreements, taking into account the remaining terms of the
      agreements and the present creditworthiness of the counterparties. For
      fixed-rate loan commitments and the unadvanced portion of loans, fair
      value also considers the difference between current levels of interest
      rates and the committed rates. The fair value of letters of credit is
      based on fees currently charged for similar agreements or on the
      estimated cost to terminate them or otherwise settle the obligation
      with the counterparties at the reporting date.

      STOCK BASED COMPENSATION:

      In accordance with SFAS No. 123, entities can recognize stock-based
      compensation expense in the basic financial statements using either
      (i) the intrinsic value approach set forth in APB Opinion No. 25 or
      (ii) the fair value method in SFAS No. 123. Entities electing to
      follow the provisions of APB Opinion No. 25 must make pro forma
      disclosure of net income and earnings per share, as if the fair value
      method of accounting defined in SFAS No. 123 had been applied.
      Management measures stock-based compensation costs in accordance with
      APB Opinion No. 25 and has made the pro forma disclosure requirements
      of SFAS No. 123 for the years ended September 30, 2000, 1999 and 1998.

      EARNINGS PER SHARE:

      In the year ended September 30, 1998, the Company adopted Statement of
      Financial Accounting Standards No. 128 (SFAS No. 128) "Earnings per
      Share" (EPS) issued by the Financial Accounting Standards Board. SFAS
      No. 128 required restatement of all prior-period EPS presented that
      was not in accordance with SFAS No. 128. This statement simplifies the
      standards for computing earnings per share. It replaces the
      presentation of primary EPS with a presentation of Basic EPS which
      excludes dilution and is computed by dividing income available to
      common stockholders by the weighted-average number of common shares
      outstanding for the period. Diluted EPS, if applicable, reflects the
      potential dilution that could occur if securities or other contracts
      to issue common stock were exercised or converted into common stock or
      resulted in the issuance of common stock that then shared in the
      earnings of the entity. The adoption of SFAS No. 128 had no material
      effect on the Company's 1998 financial statements.

NOTE 3 - INVESTMENTS IN SECURITIES
----------------------------------

Debt and equity securities have been classified in the consolidated balance
sheets according to management's intent. The carrying amount of securities
and their approximate fair values are as follows as of September 30:

<TABLE>
<CAPTION>

                                                                      Gross            Gross
                                                    Amortized       Unrealized       Unrealized
                                                   Cost Basis     Holding Gains    Holding Losses    Fair Value
                                                   ----------     -------------    --------------    ----------

<S>                                                <C>               <C>              <C>            <C>
Available-for-sale:
  September 30, 2000:
    Debt securities issued by the U.S. Treasury
     and other U.S. government corporations
     and agencies                                  $   498,876       $                $    431       $   498,445
    Other debt securities                            2,047,476            865            2,911         2,045,430
    Mortgage-backed securities                       1,381,682         11,790                          1,393,472
    Marketable equity securities                     3,836,917        537,499          504,021         3,870,395
                                                   -------------------------------------------------------------
                                                   $ 7,764,951       $550,154         $507,363       $ 7,807,742
                                                   =============================================================

  September 30, 1999:
    Debt securities issued by the U.S. Treasury
     and other U.S. government corporations
     and agencies                                  $ 6,258,966       $     64         $  4,465       $ 6,254,565
    Other debt securities                            5,160,463          1,184            4,679         5,156,968
    Mortgage-backed securities                       1,637,687         24,770                          1,662,457
    Marketable equity securities                     3,862,481        524,379           316,408        4,070,452
                                                   -------------------------------------------------------------
                                                   $16,919,597       $550,397          $325,552      $17,144,442
                                                   =============================================================

<CAPTION>

                                                                      Gross            Gross
                                                    Amortized       Unrealized       Unrealized
                                                   Cost Basis     Holding Gains    Holding Losses    Fair Value
                                                   ----------     -------------    --------------    ----------

<S>                                                <C>               <C>              <C>            <C>
Held-to-maturity:
  September 30, 2000:
    Debt securities issued by the U.S. Treasury
     and other U.S. government corporations
     and agencies                                  $ 2,500,160       $    625          $  4,690      $ 2,496,095
    Other debt securities                            7,981,020          7,938             4,749        7,984,209
    Mortgage-backed securities                         294,820          5,878                            300,698
                                                   -------------------------------------------------------------
                                                   $10,776,000       $ 14,441          $  9,439      $10,781,002
                                                   =============================================================

  September 30, 1999:
    Debt securities issued by the U.S. Treasury
     and other U.S. government corporations
     and agencies                                  $ 3,999,291       $    146          $ 11,136      $ 3,988,301
    Other debt securities                            5,320,989          1,106             9,235        5,312,860
    Mortgage-backed securities                         321,537          8,849                            330,386
                                                   -------------------------------------------------------------
                                                   $ 9,641,817       $ 10,101          $ 20,371      $ 9,631,547
                                                   =============================================================
</TABLE>

The scheduled maturities of held-to-maturity securities and available-for-
sale securities (other than equity securities) were as follows as of
September 30, 2000:

<TABLE>
<CAPTION>

                                                             Available-for-sale            Held-to-maturity
                                                                 securities:                 securities:
                                                          ------------------------    --------------------------
                                                          Amortized                    Amortized
                                                            Cost           Fair          Cost           Fair
                                                            Basis          Value         Basis          Value
                                                          ----------    ----------    -----------    -----------

<S>                                                       <C>           <C>           <C>            <C>
Debt securities other than mortgage-backed securities:
  Due within one year                                     $1,515,711    $1,516,145    $ 8,985,686    $ 8,980,783
  Due after one year through five years                    1,030,641     1,027,730      1,495,494      1,499,521
Mortgage-backed securities                                 1,381,682     1,393,472        294,820        300,698
                                                          ------------------------------------------------------
                                                          $3,928,034    $3,937,347    $10,776,000    $10,781,002
                                                          ======================================================
</TABLE>

For the year ended September 30, 2000, proceeds from sales of securities
available-for-sale amounted to $1,709,769. Gross realized gains and gross
realized losses on those sales amounted to $438,346 and $40,614,
respectively. For the year ended September 30, 1999, proceeds from sales of
securities available-for-sale amounted to $4,807,124. Gross realized gains
and gross realized losses on those sales amounted to $498,147 and $235,636,
respectively. For the year ended September 30, 1998, proceeds from sales of
securities available-for-sale amounted to $9,886,752. Gross realized gains
and gross realized losses on those sales amounted to $898,379 and $58,171,
respectively.

Total carrying amounts of $3,396,617 and $500,625 of debt securities were
pledged to secure repurchase agreements and borrowings from the Federal
Reserve Bank discount window as of September 30, 2000 and 1999,
respectively.

The aggregate amortized cost basis and fair value of securities of issuers
which exceeded 10% of stockholders' equity were as follows as of September
30, 2000:

<TABLE>
<CAPTION>

                       Amortized
                          Cost          Fair
           Issuer        Basis          Value
           ------      ----------    ----------

           <S>         <C>           <C>
           GMAC        $1,999,945    $1,998,990
                       ========================
</TABLE>

NOTE 4 - LOANS
--------------

Loans consisted of the following as of September 30:

<TABLE>
<CAPTION>

                                                       2000            1999
                                                   ------------    -----------

<S>                                                <C>             <C>
Commercial, financial and agricultural             $  3,331,032    $ 2,175,375
Real estate - construction and land development       5,170,400      4,322,578
Real estate - residential                            86,671,574     67,279,811
Real estate - commercial                             10,596,540      6,682,463
Consumer                                                527,265        577,482
                                                   ---------------------------
                                                    106,296,811     81,037,709
Deferred costs, net of unearned income                  189,945         19,123
Allowance for loan losses                              (755,247)      (569,437)
                                                   ---------------------------
      Loans, net                                   $105,731,509    $80,487,395
                                                   ===========================
</TABLE>

Certain directors and executive officers of the Company were customers of
the Bank during the year ended September 30, 2000. Total loans to such
persons and their companies amounted to $491,948 as of September 30, 2000.
During the year ended September 30, 2000, total payments amounted to
$246,549 and principal advances were $399,670.

Changes in the allowance for loan losses were as follows for the years ended
September 30:

<TABLE>
<CAPTION>

                                                2000        1999        1998
                                              --------    --------    --------

<S>                                           <C>         <C>         <C>
Balance at beginning of period                $569,437    $527,437    $501,437
Loans charged off                               (4,142)
Provision for loan losses                      189,000      42,000      26,000
Recoveries of loans previously charged off         952
                                              --------------------------------
Balance at end of period                      $755,247    $569,437    $527,437
                                              ================================
</TABLE>

As of September 30, 2000 and 1999 there were no loans that met the
definition of an impaired loan in Statement of Financial Accounting
Standards No. 114. There was no investment in impaired loans or related
interest-income recognized on impaired loans during the years ended
September 30, 2000 and 1999.

Loans serviced for others are not included in the accompanying consolidated
balance sheets. The unpaid principal balances of mortgage loans serviced for
others were $6,307,783 and $6,735,826 as of September 30, 2000 and 1999,
respectively. The fair value of mortgage servicing rights under SFAS No. 125
is not material and has not been recognized in the consolidated financial
statements for the years ended September 30, 2000 and 1999

NOTE 5 - PREMISES AND EQUIPMENT
-------------------------------

The following is a summary of premises and equipment as of September 30:

<TABLE>
<CAPTION>

                                                2000          1999
                                             ----------    ----------

<S>                                          <C>           <C>
Bank building                                $2,218,290    $2,152,148
Furniture and equipment                         876,924       781,269
Vehicle                                          21,000        21,000
                                             ------------------------
                                              3,116,214     2,954,417
Accumulated depreciation and amortization    (1,125,137)     (930,840)
                                             ------------------------
                                             $1,991,077    $2,023,577
                                             ========================
</TABLE>

During the fiscal year 1998 the Company determined that the carrying amounts
of the leasehold improvements and equipment at a former branch office are
probably not recoverable and that the assets are impaired as defined by SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed of."  The impairment loss was $327,307 and is
reflected in the 1998 consolidated statement of income. The Company closed
this branch office in 1998.

NOTE 6 - DEPOSITS
-----------------

The aggregate amount of time deposit accounts in denominations of $100,000
or more as of September 30, 2000 and 1999 was $11,025,216 and $8,046,253,
respectively.

For time deposits as of September 30, 2000, the scheduled maturities for
each of the following four years ended September 30 and thereafter are as
follows:

<TABLE>
<CAPTION>

                     (in thousands)

           <S>           <C>
           2001          $44,728
           2002            5,911
           2003            1,150
           2004              405
                         -------
                         $52,194
                         =======
</TABLE>

NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
-------------------------------------------------------

The securities sold under agreements to repurchase are securities sold on a
short term basis by the Company that have been accounted not as sales but as
borrowings. The securities were held in the Company's safekeeping account at
Investors Bank & Trust Company under the control of the Company and pledged
to the purchasers of the securities. The purchasers have agreed to sell to
the Company substantially identical securities at the maturity of the
agreements.

NOTE 8 - FEDERAL HOME LOAN BANK ADVANCES
----------------------------------------

Advances consist of funds borrowed from the Federal Home Loan Bank (FHLB).

Maturities of advances from the FHLB for the five fiscal years ending after
September 30, 2000 and thereafter are summarized as follows:

<TABLE>
<CAPTION>

                    INTEREST RATE RANGE      AMOUNT
                    -------------------      ------

      <S>              <C>                 <C>
      2001             5.79% - 6.62%       $2,584,014
      2002             5.94%                   89,772
      2003             5.86% - 5.94%          595,290
      2004             5.94%                  101,061
      2005             5.94%                  107,316
      Thereafter       5.94%                  374,508
                                           ----------
                                           $3,851,961
                                           ==========
</TABLE>

Advances are secured by the Company's stock in that institution, its
residential real estate mortgage portfolio and the remaining U.S. government
and agencies obligation not otherwise pledged.

NOTE 9 - INCOME TAXES
---------------------

The components of income tax expense are as follows for the years ended
September 30:

<TABLE>
<CAPTION>

                                    2000         1999        1998
                                  --------     --------    --------

<S>                               <C>          <C>         <C>
Current:
  Federal                         $734,897     $634,485    $599,930
  State                             61,422      208,052     248,242
                                  ---------------------------------
                                   796,319      842,537     848,172
                                  ---------------------------------

Deferred:
  Federal                         (102,297)       1,413     (88,378)
  State                            (35,297)         490     (30,494)
                                  ---------------------------------
                                  (137,594)       1,903    (118,872)
                                  ---------------------------------
      Total income tax expense    $658,725     $844,440    $729,300
                                  =================================
</TABLE>

The tax effects of each type of item that gives rise to deferred taxes are
as follows as of September 30:

<TABLE>
<CAPTION>

                                                                     2000          1999
                                                                  ---------     ---------

<S>                                                               <C>           <C>
Deferred tax assets:
  Allowance for loan losses                                       $ 265,377     $ 173,041
  Deferred income                                                   130,561       107,384
  Reserve for contingencies                                           5,589         7,944
  Employee benefit plan                                              40,022        23,443
  Impairment loss on leasehold improvements and equipment           133,967       133,967
                                                                  -----------------------
      Gross deferred tax assets                                     575,516       445,779
                                                                  -----------------------
Deferred tax liabilities:
  Net unrealized holding gain on available-for-sale securities      (17,117)      (96,399)
  Excess depreciation                                               (99,840)     (109,119)
  Deferred loan costs                                              (115,209)     (113,787)
                                                                  -----------------------
  Gross deferred tax liabilities                                   (232,166)     (319,305)
                                                                  -----------------------
Net deferred tax assets                                           $ 343,350     $ 126,474
                                                                  =======================
</TABLE>

Deferred tax assets as of September 30, 2000 and 1999 have not been reduced
by a valuation allowance because management believes that it is more likely
than not that the full amount of deferred tax assets will be realized.

The reasons for the differences between the tax at the statutory federal
income rate and the effective tax rate are summarized as follows for the
years ended September 30:

<TABLE>
<CAPTION>

                                             2000     1999     1998
                                             ----     ----     ----

<S>                                          <C>      <C>      <C>
Tax at statutory rate of 34%                 34.0%    34.0%    34.0%
Increase (decrease) resulting from:
  State taxes, net of federal tax benefit     1.6      7.6      7.5
  Dividend received deduction                (0.8)    (0.9)    (1.5)
  Other, net                                  1.1      5.9     (1.9)
                                             ----------------------
Effective tax rates                          35.9%    46.6%    38.1%
                                             ======================
</TABLE>

As part of the Adoption Tax Credit within the Minimum Wage Bill that was
enacted into law on August 20, 1996 the Section 593 tax additions to the
reserve for bad debts was repealed, effective for taxable years beginning
after December 31, 1995. Thus, the Company was allowed a tax deduction for
bad debts under the experience method only starting with the year beginning
October 1, 1996.

As part of this legislation the Company will have to recapture in taxable
income the excess of the tax reserve for bad debts at September 30, 1996
over the tax reserve at April 30, 1988. The recapture amount is $238,709
resulting in Federal and Massachusetts income taxes of approximately $98,000
which is being paid over a six year period starting with the tax year
beginning October 1, 1998. This tax has been provided for in past years and
will not result in any charge to earnings.

In prior years, the Company was allowed a special tax-basis bad debt
deduction under certain provisions of the Internal Revenue Code. As a
result, retained earnings of the Company as of September 30, 2000 includes
$1,639,418 for which federal and state income taxes have not been provided.
Under the provisions of recent federal income tax legislation, if the
Company no longer qualifies as a bank as defined in certain provisions of
the Internal Revenue Code, this amount will be subject to recapture in
taxable income ratably over six (6) years, subject to a combined federal and
state tax rate of approximately 41% based on the effective tax rates of the
Company in prior years.

NOTE 10 - EMPLOYEE RETIREMENT, PENSION PLANS AND BENEFITS
---------------------------------------------------------

Retirement Plan
---------------

The Company is a participant in the Cooperative Banks Employee Retirement
Association Defined Contribution and Defined Benefit Plans (a multi-employer
plan). The plans provide benefits to substantially all of the Company's
employees. Benefits under the defined contribution plan are based on a
percentage of employee contributions while benefits under the defined
benefit plan are based primarily on years of service and employees'
compensation. The Company's funding policy for the defined benefit plan is
to fund amounts required by applicable regulations and which are tax
deductible. Amounts charged to retirement fund expense for the years ending
September 30, 2000, 1999 and 1998 totaled $127,444, $110,374 and $102,799,
respectively.

Employee Stock Ownership Plan
-----------------------------

Effective March 1996 the Bank adopted the Falmouth Co-Operative Bank
Employee Stock Ownership Plan (ESOP).

On March 26, 1996 the ESOP borrowed $872,850 from Bridgewater Savings Bank
("the old debt") to purchase 87,285 shares of the stock of Falmouth Co-
Operative Bank. In the year ended September 30, 1998 the old debt was paid
off and replaced by an inter-company loan by the Company to the ESOP. The
loan is secured by a pledge of the stock purchased. The Company makes annual
contributions to the ESOP in amounts determined by the Board of Directors.
Dividends received by the ESOP may be credited to participants' accounts or
may be used to repay the ESOP's debt.

Any shares of the Company purchased by the ESOP are subject to the
accounting specified by the American Institute of CPA's Statement of
Position 93-6. Under the statement, as any shares are released from
collateral, the Company will report compensation expense equal to the
current market price of the shares and the shares will be outstanding for
earnings-per-share computations. Also, as the shares are released, the
related dividends will be recorded as a reduction of retained earnings and
dividends on the allocated shares will be recorded as a reduction of debt
and accrued interest.

The shares purchased by the ESOP are pledged as collateral for its debt. As
the debt is repaid, shares are released from collateral and allocated to
active employees, based on the proportion of debt service paid in the year.
The old debt of the ESOP was recorded as debt of the Company. The inter-
company loan is eliminated in consolidation. The shares pledged as
collateral are reported as unearned ESOP shares in the balance sheet. The
ESOP shares were as follows as of September 30:

<TABLE>
<CAPTION>

                                     2000        1999
                                   --------    --------

<S>                                <C>         <C>
Allocated shares                     27,846      19,537
Committed to be released shares       8,728       8,728
Unreleased shares                    48,008      56,737
                                   --------------------
                                     84,582      85,002
                                   ====================

Fair value of unreleased shares    $654,109    $851,055
</TABLE>

For the old ESOP debt, the interest rate per annum was 8.15%. Interest
expense on the old debt was $0, $0 and $22,556 for the years ended September
30, 2000, 1999 and 1998, respectively.

Annual contributions to the plan are discretionary. Contributions to the
ESOP by the Bank or Company were $88,185, $88,185 and $87,885 for the years
ended September 30, 2000, 1999 and 1998, respectively and ESOP compensation
expense was $122,518, $128,137 and $182,511, respectively.

Stock Option Plan
-----------------

On November 19, 1996, the Bank adopted the 1997 Stock Option Plan for
Outside Directors, Officers, and Employees of the Bank. The plan was
approved by shareholders effective as of January 21, 1997. The Board of
Directors formed an Option Committee to administer the plan. A total of
145,475 shares were made available for issuance under the plan.

Stock Options Granted to Eligible Directors
-------------------------------------------

The price, at which an option granted to an eligible director may be
exercised, is the fair market value of a share on the date on which the
option is granted. Such options expire ten years after the grant date. The
options are not exercisable in the first year after grant. In the second
through fifth year after the grant, the options are exercisable on a pro
rata basis up to 80% of the grant by the fifth year. After the fifth year,
100% of the grant not previously exercised may be exercised.

Stock Options Granted to Eligible Employees
-------------------------------------------

An option granted to an eligible employee must be designated as either an
Incentive Stock Option or a Non-Qualifying Stock Option. The price at which
an option may be exercised is determined by the Committee, it its
discretion; provided, however, that the exercise price shall not be less
than the fair market value of a share on the grant date. These options may
be exercised in periods specified by the Committee in the option agreement.

The Company applies APB Opinion 25 and related Interpretations in accounting
for its plan. Accordingly, no compensation cost has been recognized for its
stock option plan. Had compensation cost for the Company's stock-based
compensation plan been determined based on the fair value at the grant dates
for awards under those plans consistent with the method of FASB Statement
123, the Company's net income and earnings per share for the years ended
September 30 would have been reduced to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>

                                                  2000         1999         1998
                                               ----------    --------    ----------

<S>                             <C>            <C>           <C>         <C>
Net income                      As reported    $1,176,742    $968,913    $1,185,076
                                Pro forma      $  989,879    $880,025    $1,113,695

Earnings per share - Basic      As reported    $     1.17    $    .78    $      .86
                                Pro forma      $      .98    $    .71    $      .81

Earnings per share - Diluted    As reported    $     1.16    $    .77    $      .84
                                Pro forma      $      .98    $    .70    $      .79
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in the years ended September 30, 2000, 1999 and
1998:  dividend yield of 2 percent for all years; expected volatility of 25
percent for 2000 and 1999 and 19 percent for 1998; risk-free interest rate
of 5.2, 5.8 and 6.5 percent, respectively; and expected lives of 8 years for
all years.

A summary of the status of the Company's stock option plan as of September
30, 2000, 1999 and 1998 and changes during the years ending on those dates
is presented below:

<TABLE>
<CAPTION>

                                               2000                         1999                         1998
                                    -------------------------    -------------------------    -------------------------
                                                  Weighted-                    Weighted-                    Weighted-
                                                   Average                      Average                      Average
               Options              Shares     Exercise Price    Shares     Exercise Price    Shares     Exercise Price
--------------------------------    -------    --------------    -------    --------------    -------    --------------

<S>                                 <C>            <C>           <C>            <C>           <C>            <C>
Outstanding at beginning of year    112,062        $13.524       107,625        $13.414       109,125        $13.375
Granted                              21,000         14.869         6,331         15.390           666         19.625
Correction of prior grant                                                                        (666)        13.375
Exercised                              (794)        13.375          (994)        13.601             0
Forfeited                              (800)        14.78           (900)        13.375        (1,500)        13.375
                                    -------                      -------                      -------
Outstanding at end of year          131,468        $13.732       112,062        $13.524       107,625        $13.414
                                    =======                      =======                      =======

Options exercisable at year-end      86,447                       45,127                       21,525
Weighted-average fair value of
 options granted during the year    $  5.19                      $  4.86                      $  5.69
</TABLE>

The following table summarizes information about stock options outstanding
as of September 30, 2000:

<TABLE>
<CAPTION>

                      Options Outstanding                                Options Exercisable
---------------------------------------------------------------    -------------------------------
Range of                   Weighted-Average
Exercise       Number          Remaining       Weighted-Average       Number      Weighted-Average
 Prices     Outstanding    Contractual Life     Exercise Price     Exercisable     Exercise Price
--------    -----------    ----------------    ----------------    -----------    ----------------

<S>           <C>              <C>                  <C>               <C>              <C>
$12.25            800          9.5 years            $12.25                             $12.25
 13.375       104,371          6.5                   13.375           63,578            13.375
 15.00         22,381          8.6                   15.00            20,794            15.00
 15.625         3,250          8.1                   15.625            1,676            15.625
 19.625           666          6.5                   19.625              399            19.625
              -------                                                 ------
              131,468          6.9 years            $13.732           86,447           $13.838
              =======                                                 ======
</TABLE>

Recognition and Retention Plan
------------------------------

On November 19, 1996, the Bank adopted the 1997 Recognition and Retention
Plan for Outside Directors, Officers and Employees of Falmouth Co-operative
Bank (the RRP). The Company subsequently adopted and assumed sponsorship of
the RRP and appointed a compensation committee to administer it. The Company
established the RRP Trust and contributes, or causes to be contributed, to
the RRP Trust, from time to time, such amounts of money or property as
determined by the Compensation Committee. In no event shall the assets of
the RRP Trust be used to purchase more than 58,190 shares of Company common
stock. In its discretion, the Compensation Committee may grant awards of
restricted stock to officers and employees. Each award will become vested
and distributable at a rate of 20% on each anniversary date of the grant and
fully vested on the date of the award holder's death or disability. Stock
subject to awards is held in the RRP Trust until the award is vested. An
individual to whom an award is granted is entitled to exercise voting rights
and receive cash dividends with respect to stock subject to awards granted
to him/her whether or not vested. The Compensation Committee exercises
voting rights with respect to the shares in the RRP Trust that have not been
allocated as directed by the individuals eligible to participate. On
April 15, 1997, 39,000 shares were awarded, with vesting beginning as of
February 1, 1998. Compensation expense amounted to $112,197, $114,417 and
$67,816 for the years ending September 30, 2000, 1999 and 1998,
respectively. Compensation expense is based on the fair value of the common
stock on the grant date. As of September 30, 2000, the RRP Trust had
purchased a total of 39,638 shares, and 24,269 vested shares had been
distributed to eligible participants.

NOTE 11 - REGULATORY MATTERS
----------------------------

The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities
and certain off-balance-sheet items as calculated under regulatory
accounting practices. Their capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as of
September 30, 2000, that the Company and the Bank meet all capital adequacy
requirements to which they are subject.

As of September 30, 2000 the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as
well capitalized the Bank must maintain minimum total risk-based, Tier 1
risk-based and Tier 1 leverage ratios as set forth in the table. There are
no conditions or events since that notification that management believes
have changed the Bank's category.

The Company's and the Bank's actual capital amounts and ratios are also
presented in the table.

<TABLE>
<CAPTION>

                                                                                                  To Be Well
                                                                                               Capitalized Under
                                                                        For Capital            Prompt Corrective
                                                    Actual          Adequacy Purposes:         Action Provisions:
                                               -----------------    -------------------        -------------------
                                               Amount     Ratio     Amount       Ratio         Amount       Ratio
                                               -------    ------    ------       ------        ------       ------
                                                               (Dollar amounts in thousands)

<S>                                            <C>        <C>       <C>         <C>           <C>         <C>
As of September 30, 2000:
  Total Capital (to Risk Weighted Assets):
    Consolidated                               $18,721    21.56%    $6,946      > or =8.0%       N/A
    Falmouth Co-Operative Bank                  17,520    20.33      6,893      > or =8.0      $8,616      > or =10.0%

  Tier 1 Capital (to Risk Weighted Assets):
    Consolidated                                17,966    20.69      3,473      > or =4.0        N/A
    Falmouth Co-Operative Bank                  16,765    19.46      3,446      > or =4.0       5,170      > or =6.0

  Tier 1 Capital (to Average Assets):
    Consolidated                                17,966    13.64      5,268      > or =4.0        N/A
    Falmouth Co-Operative Bank                  16,765    12.82      5,223      > or =4.0       6,541      > or =5.0

As of September 30, 1999:
  Total Capital (to Risk Weighted Assets):
    Consolidated                                19,700    27.88      5,652      > or =8.0        N/A
    Falmouth Co-Operative Bank                  15,880    22.98      5,529      > or =8.0       6,911      > or =10.0

  Tier 1 Capital (to Risk Weighted Assets):
    Consolidated                                19,131    27.08      2,826      > or =4.0        N/A
    Falmouth Co-Operative Bank                  15,311    22.15      2,764      > or =4.0       4,147      > or =6.0

  Tier 1 Capital (to Average Assets):
    Consolidated                                19,131    16.52      4,632      > or =4.0        N/A
    Falmouth Co-Operative Bank                  15,311    13.46      4,550      > or =4.0       5,688      > or =5.0
</TABLE>

The ability of the Company to pay dividends on its common stock is
restricted by Massachusetts banking law. No dividends may be paid if such
dividends would reduce stockholders' equity of the Company below the amount
of the liquidation account required by Massachusetts conversion regulations
and described in Note 17.

NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES
------------------------------------------------

The Company is obligated under certain agreements issued during the normal
course of business which are not reflected in the accompanying consolidated
financial statements.

The Company is obligated under a lease agreement covering office space for
its former East Falmouth branch (See Note 5). In addition, the Company is
obligated under lease agreements for two ATM locations and various
equipment. The total minimum rental payments due in future periods under
these agreements is as follows as of September 30, 2000:

<TABLE>

           <S>                                   <C>
           2001                                  $ 36,437
           2002                                    29,770
           2003                                    27,338
           2004                                    25,350
           2005                                    18,750
                                                 --------
                 Total minimum lease payments    $137,645
                                                 ========
</TABLE>

The total rental expense amounted to $25,291, $25,255 and $22,600 for the
years ended September 30, 2000, 1999 and 1998, respectively.

NOTE 13 - FINANCIAL INSTRUMENTS
-------------------------------

The Company is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to originate loans. The
instruments involve, to varying degrees, elements of credit risk in excess
of the amount recognized in the balance sheets. The contract amounts of
those instruments reflect the extent of involvement the Company has in
particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments is represented
by the contractual amounts of those instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it does
for on-balance sheet instruments.

Commitments to originate loans are agreements to lend to a customer provided
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the borrower.
Collateral held varies, but may include secured interests in mortgages,
accounts receivable, inventory, property, plant and equipment and income-
producing properties.

The estimated fair values of the Company's financial instruments, all of
which are held or issued for purposes other than trading, are as follows as
of September 30:

<TABLE>
<CAPTION>

                                                                2000                           1999
                                                    ----------------------------    --------------------------
                                                      Carrying          Fair         Carrying         Fair
                                                       Amount           Value         Amount          Value
                                                    ------------    ------------    -----------    -----------

<S>                                                 <C>             <C>             <C>            <C>
Financial assets:
  Cash and cash equivalents                         $  6,830,473    $  6,830,473    $ 7,277,360    $ 7,277,360
  Available-for-sale securities                        7,807,742       7,807,742     17,144,442     17,144,442
  Held-to-maturity securities                         10,776,000      10,781,002      9,641,817      9,631,547
  Federal Home Loan Bank stock                           720,700         720,700        720,700        720,700
  Loans                                              105,731,509     103,985,000     80,487,395     79,613,000
  Accrued interest receivable                            750,690         750,690        729,668        729,668
  Cooperative Central Bank
   Reserve Fund Deposit                                  395,395         395,395        395,395        395,395

Financial liabilities:
  Deposits                                           112,374,240     112,299,000     92,885,708     92,933,000
  Securities sold under agreements to repurchase         863,943         863,943        857,727        857,727
  Federal Home Loan Bank advances                      3,851,961       3,816,000      5,431,290      5,386,000
</TABLE>

The carrying amounts of financial instruments shown in the above table are
included in the balance sheet under the indicated captions. Accounting
policies related to financial instruments are described in Note 2.

Notional amounts of financial instrument liabilities with off-balance sheet
credit risk are as follows as of
September 30:

<TABLE>
<CAPTION>

                                                       2000           1999
                                                   -----------    -----------

<S>                                                <C>            <C>
Commitments to originate loans                     $ 7,045,750    $ 5,063,000
Unadvanced funds on construction loans               4,555,279      2,533,119
Unadvanced funds on home equity lines of credit      7,267,859      6,325,811
Unadvanced funds on commercial lines of credit       2,476,023      2,032,516
Unadvanced funds on overdraft lines of credit          299,553        125,953
Standby letters of credit                               12,000         12,000
                                                   --------------------------
                                                   $21,656,464    $16,092,399
                                                   ==========================
</TABLE>

There is no material difference between the notional amount and the
estimated fair value of the off-balance sheet liabilities.

The Company has no derivative financial instruments subject to the
provisions of SFAS No. 119 "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments."

NOTE 14 - EMPLOYMENT AGREEMENTS
-------------------------------

The Company has employment agreements with its President and Chief Executive
Officer and its Vice President and Treasurer. The employment agreements
generally provide for the continued payment of specified compensation and
benefits for specified periods after termination, unless the termination is
for "cause" as defined in the employment agreements. The employment
agreements provide for the payment, under certain circumstances, of lump-sum
amounts upon termination following a "change in control" as defined in the
Agreements. The employment agreements also provide for lump-sum payments in
the event of the officers' voluntary termination of employment on the
occurrence of certain specified events.

NOTE 15 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
---------------------------------------------------------

Most of the Company's business activity is with customers located within the
state. There are no concentrations of credit to borrowers that have similar
economic characteristics. The majority of the Company's loan portfolio is
comprised of loans collateralized by real estate located in the state of
Massachusetts.

NOTE 16 - EARNINGS PER SHARE (EPS)
----------------------------------

Reconciliation of the numerators and the denominators of the basic and
diluted per share computations for net income are as follows:

<TABLE>
<CAPTION>

                                                                 Income          Shares       Per-Share
                                                              (Numerator)    (Denominator)      Amount
                                                              -----------    -------------    ---------

<S>                                                           <C>              <C>              <C>
Year ended September 30, 2000
  Basic EPS
    Net income and income available to common stockholders    $1,176,742       1,009,475        $1.17
    Effect of dilutive securities, options                                         3,929
                                                              --------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversions                                              $1,176,742       1,013,404        $1.16
                                                              ==========================

Year ended September 30, 1999
  Basic EPS
    Net income and income available to common stockholders    $  968,913       1,243,925        $0.78
    Effect of dilutive securities, options                                        16,618
                                                              --------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversions                                              $  968,913       1,260,543        $0.77
                                                              ==========================

Year ended September 30, 1998
  Basic EPS
    Net income and income available to common stockholders    $1,185,076       1,375,057        $0.86
    Effect of dilutive securities, options                                        36,085
                                                              --------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversions                                              $1,185,076       1,411,142        $0.84
                                                              ==========================
</TABLE>

NOTE 17 - LIQUIDATION ACCOUNT
-----------------------------

At the time of conversion to stock form, the Bank established a liquidation
account in an amount equal to the Bank's net worth as of the date of the
latest financial statements included in the final Offering Circular used in
connection with the Conversion. In accordance with Massachusetts statutes,
the liquidation account is maintained for the benefit of Eligible Account
Holders who continue to maintain their accounts in the Bank after the
conversion. The liquidation account is reduced annually to the extent that
Eligible Account Holders have reduced their qualifying deposits. Subsequent
increases will not restore an Eligible Account Holder's interest in the
liquidation account. In the event of a complete liquidation, each Eligible
Account Holder is entitled to receive a distribution from the liquidation
account in a proportionate amount to the current adjusted qualifying
balances for the account then held. The balance in the liquidation account
was $1,224,600 as of September 30, 2000.

NOTE 18 - MINORITY INTEREST IN SUBSIDIARY
-----------------------------------------

In the fiscal year ended September 30, 2000, the Bank formed a subsidiary,
Falmouth Capital Corporation (FCC) which issued to the Bank 1,000 shares of
FCC common stock. No other shares of FCC common stock have been issued. FCC
also issued to the Bank 3,000 shares of FCC 8% Cumulative Non-Convertible
Preferred Stock (the "preferred stock"). No other shares of FCC preferred
stock have been issued. The minority interest in subsidiary on the balance
sheet consists of 108 shares of the preferred stock, at a stated value of
$500 per share. These 108 shares were part of the original 3,000 shares of
the preferred stock issued to the Bank. In the fiscal year ended
September 30, 2000, the Bank distributed the 108 shares to directors and
employees of the Bank, leaving the Bank with an ownership of 2,892 shares of
the preferred stock at September 30, 2000.

NOTE 19 - RECLASSIFICATION
--------------------------

Certain amounts in the prior years have been reclassified to be consistent
with the current year's statement presentation.

NOTE 20 - PARENT COMPANY ONLY FINANCIAL STATEMENTS
--------------------------------------------------

The following financial statements are presented for Falmouth Bancorp, Inc.
(Parent Company) and should be read in conjunction with the consolidated
financial statements.


                           FALMOUTH BANCORP, INC.
                           ----------------------
                            (Parent Company Only)

                               BALANCE SHEETS
                               --------------

                         September 30, 2000 and 1999
                         ---------------------------

<TABLE>
<CAPTION>

ASSETS                                                           2000           1999
------                                                       -----------    -----------

<S>                                                          <C>            <C>
Cash and due from banks                                      $    24,652    $     6,417
Federal funds sold                                               104,356      2,110,227
                                                             --------------------------
      Cash and cash equivalents                                  129,008      2,116,644
Investment in Falmouth Co-Operative Bank                      16,816,075     15,497,511
Investments in available-for-sale securities                     556,255      1,035,807
Loan to ESOP                                                     477,668        565,853
Other assets                                                      49,946         67,853
Prepaid expenses                                                   2,591          2,328
                                                             --------------------------
      Total assets                                           $18,031,543    $19,285,996
                                                             ==========================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Accrued expenses                                             $    39,481    $    26,544
                                                             --------------------------
      Total liabilities                                           39,481         26,544
                                                             --------------------------
Stockholders' equity:
  Preferred stock, par value $.01 per share;
   authorized 500,000 shares; none issued
  Common stock, par value $.01 pr share;
   authorized 2,500,000 shares;
   issued 1,454,750 shares                                        14,547         14,547
  Paid-in capital                                             23,235,523     23,241,883
  Unallocated Employee Stock Ownership Plan shares              (477,668)      (565,853)
  Retained earnings                                            2,335,805      1,484,384
  Treasury stock (418,912 shares as of September 30, 2000
   and 279,006 shares as of September 30, 1999)               (6,850,722)    (4,600,671)
  Unearned compensation                                         (291,097)      (443,284)
  Accumulated other comprehensive income                          25,674        128,446
                                                             --------------------------
      Total stockholders' equity                              17,992,062     19,259,452
                                                             --------------------------
      Total liabilities and stockholders' equity             $18,031,543    $19,285,996
                                                             ==========================
</TABLE>


                           FALMOUTH BANCORP, INC.
                           ----------------------
                            (Parent Company Only)

                            STATEMENTS OF INCOME
                            --------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

<TABLE>
<CAPTION>

                                                            2000         1999         1998
                                                         ----------    --------    ----------

<S>                                                      <C>           <C>         <C>
Interest and dividend income:
  Interest on taxable investment securities              $             $ 97,958    $  283,474
  Interest on loan to ESOP                                   38,094      44,487        33,215
  Dividends on Cooperative Bank Investment Fund              35,644     158,851       178,491
  Other interest                                             41,116      45,413        20,490
                                                         ------------------------------------
      Total interest and dividend income                    114,854     346,709       515,670
                                                         ------------------------------------
Other income                                                                109
                                                         ------------------------------------
Expenses:
  Legal and professional fees                                90,165      88,605        66,710
  Securities losses, net                                     40,614     149,880        53,482
  Other expense                                              30,385      57,223        30,899
                                                         ------------------------------------
      Total expenses                                        161,164     295,708       151,091
                                                         ------------------------------------
Income (loss) before income tax expense (benefit)
 and equity in undistributed net income of subsidiary       (46,310)     51,110       364,579
Income tax expense (benefit)                                (14,390)     37,000       149,247
                                                         ------------------------------------
Income (loss) before equity in undistributed
 net income of subsidiary                                   (31,920)     14,110       215,332
Equity in undistributed net income of subsidiary:
  Falmouth Co-Operative Bank                              1,208,662     954,803       969,744
                                                         ------------------------------------
      Net income                                         $1,176,742    $968,913    $1,185,076
                                                         ====================================
</TABLE>


                           FALMOUTH BANCORP, INC.
                           ----------------------
                            (Parent Company Only)

                          STATEMENTS OF CASH FLOWS
                          ------------------------

                Years Ended September 30, 2000, 1999 and 1998
                ---------------------------------------------

<TABLE>
<CAPTION>

                                                                  2000          1999          1998
                                                               ----------    ----------    ----------
<S>                                                            <C>           <C>           <C>
Cash flows from operating activities:
  Net income                                                   $1,176,742    $  968,913    $1,185,076
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Amortization net of accretion of investment securities                        6,116        25,485
    Losses on sales of available-for-sale securities               40,614       149,880        53,482
    Undistributed net income of subsidiary                     (1,208,662)     (954,803)     (969,744)
    Decrease in interest receivable                                              54,908        13,657
    (Increase) decrease in prepaid expenses                          (263)       11,679       (14,007)
    (Increase) decrease in other assets                             1,107       (15,720)      (19,613)
    Increase in accrued expenses                                   12,937         9,953        16,591
    Increase (decrease) in other liabilities                                     (2,578)        2,578
                                                               --------------------------------------

  Net cash provided by operating activities                        22,475       228,348       293,505
                                                               --------------------------------------

Cash flows from investing activities:
  Purchases of available-for-sale securities                                   (599,998)   (2,541,391)
  Proceeds from sales of available-for-sale securities            478,601     3,440,987     3,984,951
  Proceeds from maturities of available-for-sale securities                     500,000     1,000,000
  Purchases of held-to-maturity securities                                     (999,234)
  Proceeds from maturities of held-to-maturity securities                     2,200,000     1,200,000
  Payments received on ESOP loan                                   88,185        88,185        87,885
  Loan granted to ESOP                                                                       (741,923)
                                                               --------------------------------------

  Net cash provided by investing activities                       566,786     4,629,940     2,989,522
                                                               --------------------------------------

Cash flows from financing activities:
  Cash received from subsidiary on reorganization                                              10,000
  Proceeds from exercise of stock options                          11,554        14,310
  Dividends paid                                                 (325,321)     (355,194)     (314,350)
  Purchases of stock for RRP                                                     (9,558)     (751,433)
  Purchases of treasury stock                                  (2,263,130)   (3,665,778)     (952,668)
                                                               --------------------------------------

  Net cash used in financing activities                        (2,576,897)   (4,016,220)   (2,008,451)
                                                               --------------------------------------

Net increase (decrease) in cash and cash equivalents           (1,987,636)      842,068     1,274,576
Cash and cash equivalents at beginning of year                  2,116,644     1,274,576
                                                               --------------------------------------
Cash and cash equivalents at end of year                       $  129,008    $2,116,644    $1,274,576
                                                               ======================================

Supplemental disclosure:
  Securities received from subsidiary on reorganization                                    $9,389,377
</TABLE>


Directors and Officers of Falmouth Bancorp, Inc.
 and Falmouth Co-operative Bank

Directors

Walter A. Murphy
Chairman of the Board
Retired President, Falmouth Co-operative Bank

Santo P. Pasqualucci
President and Chief Executive Officer

John W. Holland, Jr.
Attorney at Law

James A. Keefe
Principal, Falmouth Ford

Wayne C. Lamson
Treasurer/Comptroller, Woods Hole, Martha's Vineyard and Nantucket
Steamship Authority

Gardner L. Lewis
Retired, Former Owner, The Pancake Man Family Restaurant

John J. Lynch, Jr.
President, Paul Peters Insurance Agency

Eileen C. Miskell, CPA
CPA, Principal and Treasurer, Wood Lumber Company

Robert H. Moore
Agent, Paul Peters Insurance Agency

William E. Newton
Principal, C. H. Newton Builders, Inc.

Executive Officers

Santo P. Pasqualucci
President and Chief Executive Officer

George E. Young, III
Vice President, Chief Financial Officer and Treasurer

Jeanne E. Alves
Secretary

Ronald Garcia
Vice President/Senior Loan Officer

Sharon L. Shoner
Vice President/Audit/Compliance Officer

Corporate Information

Transfer Agent and Registrar
Inquiries regarding stockholder administration and services should be
directed to:

Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
(800) 368-5948

Independent Auditors
Shatswell, MacLeod & Company, P.C.
83 Pine Street
West Peabody, MA 01960-3635
(978) 535-0206

Special Legal Counsel
Thacher Proffitt & Wood
1700 Pennsylvania Avenue, N.W., Suite 800
Washington, D.C. 20006
(202) 347-8400

Stock Information
The Company's common stock trades on the American Stock Exchange under the
symbol "FCB." Prices for the stock are reported in the American Stock
Exchange Composite Transactions section of The Wall Street Journal and
other major newspapers as "FalmthBcp."

Investor Relations
Inquiries regarding Falmouth Co-operative Bank and Falmouth Bancorp, Inc.
should be directed to:

Santo P. Pasqualucci
Falmouth Co-operative Bank
20 Davis Straits
Falmouth, MA 02540
(508) 548-3500

Annual Meeting of Stockholders
The Company's Annual Meeting of Stockholders will be held at 4:30 p.m.
Eastern Standard time on Tuesday, January 16, 2001, at Falmouth
Co-operative Bank, 20 Davis Straits, Falmouth, Massachusetts.  Holders of
common stock as of December 1, 2000 will be eligible to vote.