SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D. C. 20549

                                    FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


         For Quarter Ended June 30, 1998     Commission File Number 0-14550



                       NEW ENGLAND COMMUNITY BANCORP, INC.
                       -----------------------------------

                   DELAWARE                            06-1116165



                                OLD WINDSOR MALL
                                  P.O. BOX 130
                           WINDSOR, CONNECTICUT 06095


                            Telephone: (860) 610-3600


Indicate by check mark whether  registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding  twelve  months,   and  (2)  has  been  subject  to  such  filing
requirements for the past 90 days. YES  X    NO
                                       ---      ----


The number of shares of common stock of the  registrant  outstanding  as of July
31, 1998 was 5,171,626







The total number of pages in this report is 19.




                                    Page-1-

<PAGE>



                       NEW ENGLAND COMMUNITY BANCORP, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

        <S>                                                                                                    <C>
         Part I.        FINANCIAL INFORMATION                                                                  Page No.

         Item 1.        Financial Statements:

                        Consolidated Balance Sheets--June 30, 1998 (unaudited) and
                        December 31, 1997                                                                             4

                        Consolidated Statements of Income--three and six months ended June 30, 1998
                        and 1997 (unaudited)                                                                          5

                        Consolidated Statements of Cash Flows--six months ended June 30, 1998
                        and 1997 (unaudited)                                                                          6

                        Notes to Consolidated Financial Statements                                                    7

         Item 2.        Management's Discussion and Analysis of Financial Condition and
                        Results of Operations                                                                         9

        Part II.        OTHER INFORMATION                                                                            18

         Item 1.        Legal Proceedings                                                                            18
         Item 2.        Changes in Securities                                                                        18
         Item 3.        Defaults Upon Senior Securities                                                              18
         Item 4.        Submission of Matters to a Vote of Security Holders                                          18
         Item 5.        Other Information                                                                            18
         Item 6.        Exhibits, Financial Statement Schedules and Reports on Form 8-K                              18

                        SIGNATURES                                                                                   19

</TABLE>


                                    Page-2-
<PAGE>


<TABLE>
<CAPTION>

Part I--FINANCIAL INFORMATION
Item 1.  Financial Statements

                       NEW ENGLAND COMMUNITY BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                                                                  June 30,              December 31,
                                                                                     1998                      1997
(thousands of dollars)                                                         (Unaudited)
====================================================================================================================
Assets:
<S>                                                                             <C>                       <C>       
     Cash and due from banks                                                    $   32,112                $   35,201
     Short-term investments                                                          4,557                     7,858
     Federal funds sold                                                              6,600                     4,650
                                                                                ----------                ----------
         Cash and cash equivalents                                                  43,269                    47,709
     Securities held-to-maturity                                                     9,738                    11,336
     Securities available-for-sale                                                 115,699                   112,590
     Federal Home Loan Bank stock                                                    2,977                     2,977

     Loans outstanding                                                             400,356                   408,535
         Less: allowance for possible loan losses                                   (7,186)                   (9,257)
                                                                                ----------                ---------- 
              Net loans                                                            393,170                   399,278
     Loans held-for-sale                                                             8,622                     2,966
     Accrued interest receivable                                                     4,500                     4,395
     Premises and equipment                                                         11,167                    11,064
     Other real estate owned                                                         1,624                     2,870
     Goodwill 5,042                                                                  5,238
     Other assets                                                                    6,614                     5,747
                                                                                ----------                ----------
Total Assets  $                                                                 $  602,422                $  606,170
                                                                                ==========                ==========


Liabilities:
     Deposits:
         Noninterest bearing                                                    $  101,425                $  114,510
         Interest bearing                                                          401,586                   408,134
                                                                                ----------                ----------
              Total deposits                                                       503,011                   522,644
     Short-term borrowings                                                          18,617                    14,036
     Long-term debt                                                                 19,448                    11,612
     Other liabilities                                                               4,727                     4,055
                                                                                ----------                ----------
Total Liabilities                                                                  545,803                   552,347

Shareholders' Equity:
     Common Stock--$0.10 par value, authorized 20,000,000 shares:
     June 30, 1998, 5,171,626 outstanding; December 31, 1997
       5,160,626 outstanding                                                           517                       516
     Additional paid-in capital                                                     51,165                    51,064
     Retained earnings                                                               3,966                     1,107
     Net unrealized gain (loss) on securities available-for-sale                       971                     1,136
                                                                                ----------                ----------
Total Shareholders' Equity                                                          56,619                    53,823
                                                                                ----------                ----------
Total Liabilities & Shareholders' Equity                                        $  602,422                $  606,170
                                                                                ==========                ==========

</TABLE>


        The accompanying notes are an integral part of these statements.


                                    Page-3-

<PAGE>



                       NEW ENGLAND COMMUNITY BANCORP, INC.
                   CONSOLIDATED INCOME STATEMENTS (Unaudited)

<TABLE>
<CAPTION>


                                                                             Six Months Ended                  Three Months Ended
                                                                                  June 30,                           June 30,
(thousands of dollars; except per share data)                               1998             1997              1998             1997
====================================================================================================================================
Interest income:
<S>                                                                    <C>              <C>                <C>               <C>    
     Loans, including fees                                             $  18,069        $  15,246          $  9,034          $ 7,652
     Securities:
         Taxable interest                                                  3,799            3,661             1,987            1,843
         Interest exempt from federal income taxes                            97               58                60               22
         Dividends                                                            91              151                28               74
     Federal funds sold and other interest                                   107              237                47              153
                                                                       ---------        ---------          --------          -------
         Total interest income                                            22,163           19,353            11,156            9,744

Interest expense:
     Deposits 7,654                                                        6,221            3,789             3,100
     Borrowed funds                                                          792              368               430              202
                                                                       ---------        ---------          --------          -------
         Total interest expense                                            8,446            6,589             4,219            3,302
Net interest income                                                       13,717           12,764             6,937            6,442
Provision for possible loan losses                                           562              558               240              285
                                                                       ---------        ---------          --------          -------

Net interest income after provision for possible loan losses              13,155           12,206             6,697            6,157

Noninterest income:
     Service charges, fees and commissions                                 1,541            1,269               827              647
     Investment securities gains, net                                      1,403              161               174              163
     Gain on the sales of loans, net                                       1,367              415               826              118
     Other                                                                    99               71                55               34
                                                                       ---------        ---------          --------          -------
         Total noninterest income                                          4,410            1,916             1,882              962

Noninterest expense:
     Salaries and employee benefits                                        5,860            4,806             3,060            2,390
     Occupancy                                                             1,042            1,078               507              532
     Furniture and equipment                                                 772              643               418              341
     Outside services                                                        541              706               324              417
     Postage and supplies                                                    445              391               221              178
     Insurance and assessments                                               166               94                79               49
     Losses, writedowns, expenses - other real estate owned                   27              161               (41)             130
     Amortization of goodwill                                                195              157                97               78
     Loss on sale of portfolio loans                                         715
     Other                                                                 1,336            1,270               618              594
                                                                       ---------        ---------          --------          -------
         Total noninterest expense                                        11,099            9,306             5,283            4,709
                                                                       ---------        ---------          --------          -------
Income before taxes                                                        6,466            4,816             3,296            2,410
Income taxes                                                               2,622            1,814             1,344              910
                                                                       ---------        ---------          --------          -------
Net Income                                                             $   3,844        $   3,002          $  1,952          $ 1,500
                                                                       =========        =========          ========          =======
Net income per share--Basic                                            $     0.74       $     0.59         $    0.38         $  0.29
Net income per share--Diluted                                          $     0.73       $     0.59         $    0.37         $  0.29
Weighted average shares of
  Common Stock outstanding--Basic                                           5,167            5,086             5,172           5,086
Weighted average shares of
  Common Stock outstanding--Diluted                                         5,301            5,086             5,288           5,086

</TABLE>


        The accompanying notes are an integral part of these statements.

                                     Page-4-

<PAGE>



                       NEW ENGLAND COMMUNITY BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                               Six Months Ended June 30,
(thousands of dollars)                                                                         1998                  1997
-------------------------------------------------------------------------------------------------------------------------
Operating activities:
<S>                                                                                      <C>                   <C>       
     Net income                                                                          $    3,844            $    3,002
     Adjustment for noncash charges (credits):
       Provision for depreciation and amortization                                              450                   541
       Losses from sale or disposal and provisions to reduce the carrying value
          of other real estate owned, net                                                       (95)                   55
       Securities losses (gains), net                                                        (1,403)                 (161)
       Accretion of discounts and amortization of premiums on bonds, net                         11                   (15)
       Accretion, net of amortization, of purchase accounting adjustments                                            (107)
       Amortization of goodwill and other intangibles                                           195                   157
       Provision for possible loan losses                                                       562                   558
       Loss on sale of portfolio loans, net                                                     440                     0
       (Increase) decrease in accrued interest income and other assets, net                  (1,024)                  416
       Decrease (increase) in loans held-for-sale                                            (5,656)                  217
       (Decrease) increase in accrued interest payable and other liabilities, net               748                (2,139)
                                                                                          ---------             --------- 
              Net cash provided by (used for) operating activities                           (1,928)                2,283
                                                                                          ----------            ---------

Financing activities:
     Net decrease in noninterest-bearing accounts                                           (13,085)                2,510
     Net (decrease) increase in interest-bearing accounts                                    (6,506)               (8,626)
     Net increase in short-term borrowings                                                    4,581                 4,531
     Net increase in long-term borrowings                                                     7,843                 6,000
     Proceeds from issuance of common stock                                                     103                    21
     Cash dividends paid                                                                       (934)                 (751)
                                                                                          ---------             --------- 
              Net cash used for financing activities                                         (8,005)                3,685
                                                                                          ---------             ---------

Investing activities:
     Loans originated, net of principal collections                                          (7,607)               (7,537)
     Proceeds from sale of portfolio loans                                                   11,988
     Purchases of securities available-for-sale                                             (32,624)              (18,855)
     Proceeds from sales of securities available-for-sale                                    12,603                12,142
     Proceeds from maturities of securities available-for-sale                               18,012                 9,681
     Purchases of securities held-to-maturity                                                                         (25)
     Proceeds from maturities of securities held-to-maturity                                  1,598                   258
     Proceeds from sales of other real estate owned                                           2,403                 1,749
     Purchases of premises and equipment, net                                                  (599)                 (519)
     Sales of premises and equipment                                                             46
     Capitalization of expenditures on other real estate owned                                 (327)                  (65)
                                                                                          ---------             --------- 
              Net cash provided by (used for) investing activities                            5,493                 3,133
                                                                                          ---------             ---------
     Increase (decrease) in cash and cash equivalents                                        (4,440)                2,835
     Cash and cash equivalents, beginning of period                                          47,709                39,892
                                                                                          ---------             ---------
     Cash and cash equivalents, end of period                                            $   43,269            $   42,727
                                                                                          =========             =========

</TABLE>

        The accompanying notes are an integral part of these statements.



                                    Page-5-
<PAGE>



                       NEW ENGLAND COMMUNITY BANCORP, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

     The accompanying  condensed interim financial  statements are unaudited and
include the accounts of New England  Community  Bancorp,  Inc. (the "Company" or
"NECB") and its  subsidiaries,  New England Bank and Trust Company ("New England
Bank"),  The Equity Bank ("Equity Bank") and Community Bank  ("Community  Bank")
(together the "Subsidiaries").  The consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the instructions to SEC Form 10-Q and Article 10
of Regulation  S-X.  Accordingly,  they do not include all the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

     These  financial  statements  reflect,  in the opinion of  Management,  all
adjustments,  consisting of only normal recurring  adjustments,  necessary for a
fair  presentation  of the Company's  financial  position and the results of its
operations  and its  cash  flows  for the  periods  presented.  These  financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's 1997 Annual Report on Form 10-K.

Note 2 - Mergers and Acquisitions

     On August 8, 1997, NECB acquired First Bank of West Hartford ("First Bank")
by  issuing  995,355  shares  of  the  Company's  common  stock  for  all of the
outstanding  common  shares of First Bank and all fully  vested and  exercisable
stock  options.  First Bank was also merged with and into New England Bank.  The
acquisition  of First Bank was  accounted  for as a pooling of interests  and as
such all prior  results  have been  restated  as though the  companies  had been
combined as of the earliest period presented.

     On December 31, 1997,  NECB  acquired  Community  Bank  (formally  known as
Community  Savings Bank) by paying $4,832,000 in cash for all of the outstanding
common shares of Community Bank. The acquisition of Community Bank was accounted
for as a purchase.  Accordingly,  the consolidated  financial  statements of the
Company do not include prior operating results of Community Bank.

     On, July 10, 1998,  Olde Port Bank & Trust  Company  ("Olde  Port"),  a New
Hampshire  state-chartered  bank and trust company,  became NECB's fourth wholly
owned banking  subsidiary.  Under the terms of the Plan and Agreement of Merger,
for each share of Olde Port Common  Stock,  holders  were to receive NECB Common
Stock with a market  value of $200.00.  The final  exchange  ratio was  computed
based upon the average  closing  price of NECB  shares for the ten (10)  trading
days preceding final regulatory approval.  Based upon this average ($23.075), at
the Effective Time each share of Olde Port Common Stock outstanding  immediately
prior to the  Effective  Time was  converted  into the right to  receive  8.6674
shares of NECB common stock for each share of Olde Port common stock owned.  The
resulting transaction value was $13.7 million. The transaction was accounted for
as a pooling of  interests.  It occurred  after June 30, 1998 and as such NECB's
consolidated  financial  statements  included  in this  quarterly  report do not
reflect the results of Olde Port's operations.

     Olde Port serves  Portsmouth and the surrounding  communities.  At June 30,
1998, Olde Port had assets of $49 million,  deposits of $41 million, $30 million
in loans outstanding, and shareholders' equity of $5 million.


                                    Page-6-
<PAGE>



Note 3- Merger Agreements

     On March  19,  1998,  Bank of South  Windsor  ("South  Windsor"),  of South
Windsor,  Connecticut, and NECB entered into a Plan and Agreement of Merger (the
"Merger  Agreement")  whereby  South Windsor will be acquired by NECB and merged
with and into New England Bank.  Under the terms of the Merger  Agreement,  NECB
will acquire South  Windsor on a  stock-for-stock  basis in a tax-free  exchange
fixed at 1.3204  shares of NECB  common  stock for each  share of South  Windsor
common stock.  Using NECB's closing price on March 18, 1998 of $25.50 per share,
the  transaction  would  have a value of  $33.67  per  share  to  South  Windsor
shareholders and an aggregate  transaction value of approximately $32.8 million.
In the event that the average  closing price of NECB stock,  for the twenty days
ending  on the date of final  regulatory  approval,  is less  than  $23.48,  the
exchange ratio will (subject to certain qualifications) be adjusted to result in
the  receipt by South  Windsor  shareholders  of NECB  shares  having a value of
$31.00 per share of South Windsor common stock.

     At June 30, 1998,  South  Windsor had assets of $000  million,  deposits of
$000 million,  loans of $00 million,  and  shareholders'  equity of $00 million.
South Windsor is a Connecticut-chartered commercial bank with banking offices in
South Windsor, Vernon and East Hartford, Connecticut.


Note 4- Disclosure for Statements of Cash Flows
<TABLE>

Schedule of noncash investing and financing activities: 
<S>                                                           <C>                     <C> 
     Loans charged off, net of recoveries                     $2,633                  $515
     Real estate acquired through foreclosure                    735                   952
     Income tax paid                                           3,723                 1,041
     Interest paid                                             7,743                 6,788

</TABLE>

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations


Overview

     The Company's  earnings are largely  dependent upon net interest income and
noninterest  income from its  community  banking  operations--with  net interest
income providing the majority of the Company's revenues.  Net interest income is
the difference between interest earned on the loan and investment portfolios and
interest  paid on deposits and other  sources of funds.  Noninterest  revenue is
primarily derived from service charges,  fees and commissions related to deposit
accounts and the Company's  serviced loan  portfolio.  As noted in Note 2 above,
the  acquisition  of FBWH was accounted for as a pooling of interests.  As such,
all prior  results have been  restated as though the companies had been combined
as of the earliest period presented.

     NECB  reported  record  net  income  for  the  second  quarter  of  1998 of
$1,952,000, or $0.37 per diluted share, compared to net income of $1,500,000, or
$0.29 per  diluted  share,  reported  in 1997.  This  represents  an increase of
$476,000 or 32% over net income  reported in the previous  year.  On an earnings
per share basis,  second  quarter 1998 net income  increased 27% over the second
quarter  of  1997.  Two  important   measures  of  performance   also  increased
significantly  when  compared  to the same  period  last year.  Return on assets
("ROA") rose 11% while equity ("ROE") increased 22%. The ROA and ROE amounted to
1.33% and 14.12%,  respectively,  for 1998 compared to 1.20% and 11.62%, for the
second quarter of 1997. Growth in net income and earnings per share reflects the
additional  revenue  and  savings  achieved in  conjunction  with the  Company's
acquisitions  of First Bank and Community  Bank and strong growth in noninterest
income.

     Net interest  income on a fully  taxable-equivalent  ("FTE")  basis totaled
$6,983,000  for 1998  compared to $6,483,000  in 1997.  Reflecting  the downward
trend in  interest  rates  during  much of 1998  (e.g.,  the  benchmark  30-year
treasury  declined 30 basis points from 5.92% in December  1997 to 5.62% in June
1998),  NECB's  consolidated  net interest margin

                                    Page-7-

<PAGE>

remained a strong  5.14% in the  second  quarter of 1998.  This  compared  to an
historically  high 5.61% net interest  margin achieved during the second quarter
of 1997.

     The provisions for possible loan losses were $240,000  compared to $285,000
in the comparable  period in 1997.  Improving loan performance and increased use
of  government  guaranteed  loan  programs  slowed  the need  for new loan  loss
reserves in quarter  ended June 30, 1998  compared to last year.  With regard to
loan performance, the ratio of nonperforming assets to total assets decreased to
1.04% at June 30, 1998 compared to 1.27% a year earlier.

     Noninterest  income rose sharply and totaled $1,882,000 in 1998 compared to
$962,000 in 1997--an increase of $920,000, or 96%. Noteworthy increases occurred
in  gains  from  the  sale of  mortgage  loans  and  service  charges,  fees and
commissions which rose $920,000 and $180,000,  respectively. More significantly,
in the aggregate  noninterest  sources of income  accounted for 21% of operating
income (net  interest  income  plus  noninterest  income) in the second  quarter
compared to 13% for the same quarter in 1997.

     Noninterest  expense  totaled  $5,283,000  in the  second  quarter  of 1998
compared  to  $4,709,000  in 1997.  The  increase  primarily  resulted  from the
addition of Community  Bank which was  accounted  for as a purchase and thus the
results of its  operations  are only included from the date of the  acquisition.
NECB's  efficiency  ratio,  which measures how much a dollar of revenue costs to
produce,  equaled 59.3% for the second quarter of 1998 compared to 61.0% for the
same period in 1997.

     Through  the  first  six  months  of 1998,  NECB  reported  net  income  of
$3,844,000  or $0.73 per diluted  share,  an  increase  of $842,000  compared to
$3,002,000 or $0.59 per diluted share for the same period last year.  Returns on
average  assets and average  equity for the six months  ended June 30, 1998 were
1.31% and  13.95%,  compared  to 1.20%  and  11.87%  for the same  period a year
earlier.

     During  the  first  six  months  of 1998,  net  interest  income on a fully
taxable-equivalent  basis totaled  $13,821,000  compared to $12,845,000 in 1997.
While  provisions  for  loan  losses  were  essentially   unchanged  from  1997,
noninterest  income  increased  $2,494,000,  or more than 130% above last year's
total, and amounted to $4,410,000  compared to $1,916,000 for the same period in
1997. Gains from the sale of securities and gains for the sale of mortgage loans
each increased significantly compared to a year ago. Noninterest expense totaled
$11,099,000 in 1998 compared to $9,306,000 in 1997.

     Total assets at June 30, 1998 were $602,422,000 compared to $606,170,000 at
December  31,  1997.  Total  loans at June 30,  1998  amounted  to  $400,356,000
compared to  $408,535,000  at December 31,  1997.  Absent the effect of the bulk
loan sale  completed at the end of the first  quarter of 1998,  loans would have
increased  slightly  during the first half of 1998.  Total deposits  amounted to
$503,011,000  at June 30, 1998 compared to  $522,644,000 at December 31, 1997. A
decline in NECB's  deposit base during the first half of the year is a recurring
phenomenon observed by management.  Offsetting this outflow,  NECB increased its
use of alternative  funding sources by increasing its long-term debt outstanding
during  the year to  $19,448,000  at June 30 1998  compared  to  $11,612,000  at
year-end 1997.  Short-term  borrowings  (primarily  repurchase  agreements) also
increased substantially totaling $18,617,000 compared to $14,036,000 at December
31, 1997.

     Shareholders'  equity increased $2,796,000 from $53,823,000 at December 31,
1997 to  $56,619,000  at  quarter-end.  At June 30, 1998, the ratio of equity to
total  assets  equaled  9.40%.  When  goodwill  resulting  from the Equity Bank,
Manchester  State Bank and Community  Bank  acquisitions  is excluded,  tangible
equity capital is reduced to $51,577,000,or 8.56% of total assets. The resulting
tangible  book value per share  amounted to $9.88 at June 30,  1998  compared to
$8.92 at December 31, 1997.

     Note:  During  the  second  quarter  management   reclassified   short-term
investments  (e.g.,  money  market  funds)  to cash  and cash  equivalents  from
securities  available-for-sale.  These  short-term  instruments  (with  original
maturities of three months or less) are highly liquid and readily convertible to
known amounts of cash. The consolidated  statements of cash flows have also been
adjusted to reflect this reclassification.

                                    Page-8-

<PAGE>

Results of Operations--three months ended June 30, 1998 and 1997

     For the three months ended June 30, 1998,  the Company  reported net income
of $1,952,000,  or $0.37 per diluted share, compared to $1,500,000, or $0.29 per
diluted share, for the same period of 1997. Strong growth in noninterest sources
of income fueled much of this improvement which, as noted previously,  increased
96% over the same period in 1997.  Also  showing  improvement  was net  interest
income, which on an FTE basis increased $500,000,  or 7.7%, from the same period
in 1997. The acquisition of Community Bank,  increased  commission  payments and
expenses  related  to  systems  and  technology   upgrades  served  to  increase
noninterest expense by $574,000,  or 12%, to $5,283,000 in the second quarter of
1998 compared to 1997.


Net Interest Income

     The principal earning asset of the Company is its loan  portfolio--which is
comprised of loans to finance  operations of businesses located primarily within
its market  area,  mortgage  loans to finance  the  purchase or  improvement  of
properties  used by businesses and mortgage and personal  loans to  individuals.
Representing  approximately a quarter of the Company's  earning  assets,  NECB's
investment  portfolio  also plays an  important  part in the  management  of the
Company's  balance sheet.  While providing a source of revenue,  these funds are
used to provide  reserves and meet the  liquidity  needs of the Company.  Excess
reserves  are  available to meet the  borrowing  needs of the  communities  NECB
serves.  For the following  discussion,  interest income is presented on a fully
taxable-equivalent ("FTE") basis. FTE interest income restates reported interest
income on tax exempt loans and  securities as if such interest were taxed at the
statutory Federal income tax rate of 34% for all periods presented.

(Amounts in thousands)
<TABLE>
<CAPTION>

Three Months Ended June 30,                                       1998             1997             % Change
------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>                 <C>  
Interest income (financial statements)                           $11,156         $  9,744            14.5%
Tax equivalent adjustment                                             46               41            12.2%
                                                               ---------         --------                 
  Total interest income (on an FTE basis)                         11,202            9,785            14.5%
Interest expense                                                  (4,219)          (3,302)           27.8%
                                                               ---------         --------                 
Net interest income (on an FTE basis)                          $   6,983         $  6,483             7.7%
                                                               =========         ========                 

</TABLE>

     For the second  quarter of 1998,  net  interest  income on an FTE basis was
$6,983,000,  a 7.7% increase over the  $6,483,000  in the  comparable  period in
1997. A key factor in the $500,000  increase in 1998 was the increase in average
loans outstanding.  Internal growth and the acquisition of Community Bank (which
provided an  additional  $55,000,000  in loans  outstanding)  served to increase
interest  income  on loans by  $1,715,000  during  the  second  quarter  of 1998
compared to the same period a year earlier.

     The net interest  margin  measures the  difference in yield on, and the mix
of,  interest-earning assets and interest-bearing  liabilities.  As shown in the
table below,  the margin for the quarter ended June 30, 1998  decreased to 5.14%
from the historic high of 5.61% in 1997. With the economy still performing well,
competition  among area  lenders  remains  intense.  This coupled with a general
decline in borrowing rates served to reduce the yield on earning assets to 8.25%
in the quarter  ended June 30, 1998 compared to 8.47% for the same period a year
ago.  Helping to lessen the effect of the loan pricing  pressure was an improved
mix of interest-earning  assets. During the quarter ended June 30, 1998, average
loans outstanding represented 74% of earning assets compared to 72% for the same
period last year. Meanwhile, the yield on interest-bearing liabilities increased
13 basis points and equaled  3.96% for the quarter  ended June 30, 1998 compared
to 3.83% a year earlier. The acquisition of Community Bank, which typically paid
depositors higher rates than NECB's other affiliates,  served to increase NECB's
consolidated yield on interest-bearing liabilities. Management has observed that
its  depositors  have  become   increasingly  rate   sensitive--with  a  greater
percentage  of its customers  actively  seeking out the "best" deal. To minimize
this effect,  the Company has increased it use of  alternative  funding  sources
(e.g.,  FHLB borrowings).  Without the use of these borrowings,  NECB's yield on
interest-bearing liabilities would have increased further.

                                    Page-9-
<PAGE>



<TABLE>
<CAPTION>

Consolidated Average Balances/Interest Earned or Paid/Rates

Three Months Ended                                                   June 30, 1998                   June 30, 1997
----------------------------------------------------------------------------------------------------------------------
                                                           Average            Average      Average             Average
(Amounts in thousands)                                     Balance  Interest     Rate      Balance   Interest     Rate
----------------------------------------------------------------------------------------------------------------------
Assets:
<S>                                                     <C>          <C>        <C>      <C>         <C>         <C>  
   Federal funds sold                                   $    3,523   $    47    5.35%    $  11,319   $    153    5.42%
   Securities held-to-maturity                               9,887       174    7.06%       10,567        195    7.40%
   Securities available-for-sale                           123,397     1,947    6.33%      115,651      1,785    6.19%
   Mortgages held for sale                                   6,998        90    5.16%        1,866         30    6.45%
   Loans (A)                                               400,863     8,944    8.95%      323,991      7,622    9.44%
                                                        ----------   -------             ---------    -------         
      Total interest-earning assets                        544,668    11,202    8.25%      467,216      9,785    8.47%

   Allowance for loan losses                               (8,949)                         (7,337)
   Cash and due from banks                                  25,373                          16,615
   Other assets                                             26,264                          22,796
                                                        ----------                       ---------
Total Assets                                              $587,356                       $ 495,467
                                                          ========                        ========

Liabilities:
   Regular savings deposits                             $  121,376   $   670    2.15%    $ 104,843   $    514    1.97%
   NOW account deposits                                     52,951       215    1.63%       45,306        210    1.86%
   Money market deposits                                     2,211        14    2.54%        4,252         24    2.26%
                                                        ----------   -------             ---------    -------         
      Total savings deposits                               176,537       878    2.04%      154,402        748    1.94%
   Time deposits                                           218,360     2,987    5.31%      177,633      2,352    5.31%
   Short-term borrowings                                    12,070       146    4.25%        3,966         51    5.16%
   Long-term borrowings                                     20,204       216    6.00%        9,919        151    6.11%
                                                        ----------   -------             ---------    -------         
      Total interest bearing liabilities                   427,171     4,227    3.96%      345,919      3,302    3.83%
   Demand deposits                                         100,703                          95,963
   Other liabilities                                         4,059                           2,629
                                                        ----------                       ---------
      Total Liabilities                                    531,933                         444,512
   Equity                                                   55,422                          50,956
Total Liabilities & Equity                              $  587,356                       $ 495,467
                                                         =========                        ========

Net interest income--FTE basis                                       $  6,983                        $  6,483
                                                                      =======                         =======
Net interest margin                                                             5.14%                            5.61%
Net interest spread                                                             4.29%                            4.64%

</TABLE>

(A) Average loans include nonaccruing loans.

Rate/Volume Analysis

Changes in net  interest  income are divided  into two  components--the  changes
resulting   from  the  changes  in  average   balances  of  earning  assets  and
interest-bearing  liabilities  (or "volume") and the changes in the rates earned
or paid on those balances.  The changes in interest income and interest  expense
attributable  to changes in both volume and rate,  which  cannot be  segregated,
have been allocated proportionately to the absolute values of the changes due to
volume and rate. The following table is presented on a FTE basis.



                                    Page-10-
<PAGE>

<TABLE>
<CAPTION>

                                                                                        Change due to
                                                                  Total                   Change in:
                                                               Increase               --------------------
(amounts in thousands)                                       (Decrease)               Rate          Volume
----------------------------------------------------------------------------------------------------------
Interest earned on:
<S>                                                            <C>               <C>               <C>     
Federal funds sold                                             $   (106)         $     (2)         $  (104)
Securities held-to-maturity                                         (21)               (9)             (12)
Securities available-for-sale                                       162                40              122
Mortgages held for sale                                              60                (6)              66
Loans                                                             1,322              (393)           1,715
                                                               --------          --------          -------
Total interest-earning assets                                     1,417              (370)           1,787
                                                               --------          --------          -------

Interest paid on:
Regular savings deposits                                       $    156          $     65          $    91
NOW account deposits                                                  5               (26)              31
Money market deposits                                               (10)                3              (13)
                                                               --------          --------          ------- 
     Total savings deposits                                         151                42              109
Time deposits                                                       538                (1)             539
Short-term borrowings                                                77                (9)              86
Long-term borrowings                                                151                (3)             154
                                                               --------          ---------         -------
Total interest-bearing liabilities                                  917               (29)             888
                                                               --------          --------          -------
Net interest income change                                     $    500          $   (399)         $   899
                                                               ========          =========         =======

</TABLE>

Noninterest Income

     For the quarter ended June 30, 1998,  noninterest income increased $920,000
and totaled  $1,882,000,  compared to the second  quarter in 1997.  Much of this
increase,  $708,000,  was the result of increased  revenues from origination and
sale of mortgage loans. NECB considers mortgage lending an important part of its
core community banking franchise. New England Community Mortgage Corp. ("NECM"),
was formed earlier in the year to take better advantage of the company's ability
to  originate  residential  loans within the  communities  served by our banking
operations in Connecticut  while allowing  expansion into other  communities not
served by our Banks.  With an  emphasis on  efficiently  serving the home buying
public, during first half of 1998 the mortgage company originated $98 million in
mortgage loans and was ranked 21st among all lenders in Connecticut.

     Also contributing to the growth in noninterest  income was service charges,
fees and commissions. While the acquisitions have served to increase noninterest
income,  NECB's broader,  more  comprehensive  product choices  delivered with a
commitment to service have allowed the Company to forge many new small  business
relationships.  Reflecting the combined effect of the  acquisitions  and new and
expanded  relationships,  service charges, fees and commissions rose $180,000 or
28% to $827,000 in the quarter ended June 30, 1998 compared to a year earlier.

Noninterest Expense

     Noninterest  expenses  amounted to $5,283,000  during the second quarter of
1998. This is a $574,000 increase,  or 12%, over $4,709,000  reported during the
same  quarter in 1997.  In addition to the effect of Community  Bank,  increased
commission  payments--related  to growth  in both the  mortgage  subsidiary  and
mutual  fund  sales--and  expenses  related to systems and  technology  upgrades
offset the economies  achieved  following the August,  1997 acquisition of First
Bank.


Results of Operations--six months ended June 30, 1998

     Through  the  first  six  months  of 1998,  NECB  reported  net  income  of
$3,844,000  or $0.73 per diluted  share,  an  increase  of $842,000  compared to
$3,002,000 or $0.59 per diluted share for the same period last year.  Returns on
average  assets and average  equity for the six months  ended June 30, 1998 were
1.31% and  13.95%,  compared  to 1.20%  and  11.87%  for the same  period a year
earlier.  Growth in net income and  earnings  per share during the first half of
1998


                                    Page-11-

<PAGE>


reflects new revenue and cost savings achieved in conjunction with the Company's
acquisitions and strong growth in noninterest income. In particular,  gains from
the sale of mortgage  loans and gains from  investment  securities  rose sharply
compared to the  previous  year.  Provisions  for loan  losses were  essentially
unchanged from 1997.

     During  the  first  six  months  of 1998,  net  interest  income on a fully
taxable-equivalent  basis increased $976,000 and totaled $13,821,000 compared to
$12,845,000 in 1997.

<TABLE>
<CAPTION>
Net Interest Income
                                                  
(amounts in thousands)

Nine Months Ended June 30,                                   1998             1997            % Change
------------------------------------------------------------------------------------------------------
<S>                                                        <C>                <C>              <C>   
Interest income (financial statements)                     $22,163            $19,353          14.52%
Tax equivalent adjustment                                      104                 81          28.40%
                                                         ---------          ---------                
Total interest income (on an FTE basis)                     22,267             19,434          14.58%
Interest expense                                            (8,446)            (6,589)         28.18%
                                                         ---------          ---------                
Net interest income (fully taxable equivalent)           $13,821              $12,845           7.60%
                                                         =======              =======
</TABLE>

Noninterest Income

     Through the first six months of 1998,  noninterest income increased sharply
and totaled  $4,410,000,  compared to $1,916,000 reported for the same period in
1997.  Aided by moderate  interest rates (the  bellwether  30-year bond remained
under 6% for the quarter),  demand for home purchase  financing  remained strong
and enabled NECB's subsidiary to originate a record  $98,000,000 in loans during
the first half of 1998.  With the vast majority of these loans being fixed rate,
gains from their sale  increased  accordingly.  Compared  to first half of 1997,
gains form the sale of mortgage loans more than doubled and totaled  $1,367,000.
Gains from the sale of securities also increase  sharply compared to a year ago.
During the first half of 1998,  NECB realized  gains from the sale of securities
of  $1,403,000.  In addition to gains recorded by the  Subsidiaries,  the parent
company  recorded  a gain of  $898,000  from  the  sale  of its  own  investment
securities.

     Service  charges,  fees  and  commissions  also  increased   substantially,
totaling  $1,541,000 in the first half of 1998. This  represents a $272,000,  or
21%, increase  compared to the $1,269,000  recorded through the first six months
of 1997. This increase resulted from several factors. The inclusion of Community
Bank (which, as noted earlier, was accounted for as a purchase),  selected price
increases  and  increased  volume of services  provided  to our growing  base of
customers all contributed to this increase.

Noninterest Expense

     Noninterest expenses amounted to $11,099,000 during the first half of 1998.
Excluding  the  one-time  charge of $715,000  related to the bulk sale of loans,
other noninterest  expenses  increased by $1,078,000 or 11% from the same period
in 1997.  The inclusion of the expenses of Community  Bank,  for the first time,
accounted  for  $865,000  of this  increase.  The  remaining  $213,000  increase
represented a modest 2% on a year to year basis and was achieved through gaining
efficiencies  following  the  acquisitions  of First Bank of West  Hartford  and
Community Bank within the last 12 months.

Financial Condition

     Total  assets  at June 30,  1998  were  $602,422,000,  a  largely  seasonal
decrease of  $3,748,000  from  $606,170,000  at  year-end.  During the first six
months of 1998 loan production remained strong,  especially residential mortgage
loans.  These loans are typically sold in the secondary market upon closing.  As
interest rates declined during the first half of 1998 the Company  experienced a
moderate rise in prepayments, which has been noted throughout the industry. When
the effect of the March 30th bulk loan sale is excluded,  loans outstanding rose
$1,977,000. Loans consisted of the following:



                                    Page-12-

<PAGE>

(Amounts in thousands)                 
                                           June 30,       December 31,
                                             1998             1997
----------------------------------------------------------------------
Commercial and financial                $   116,424       $   102,105
Real estate:
    Construction                             17,940            19,620
    Residential                              98,766            111,32
    Commercial                              129,253           133,803
Consumer                                     37,973            41,686
                                        -----------       -----------
Gross loans outstanding                 $   400,356       $   408,535
                                        ===========       ===========

     Securities  available-for-sale  increased  from December 31, 1997 and ended
the second quarter at $115,699,000 while held-to-maturity  decreased and totaled
$9,738,000 at quarter end. This compares to  $120,448,000  and  $11,336,000  for
available-for-sale  and  held-to-maturity,  respectively,  at year-end.  Federal
funds increased and totaled $6,600,000 at quarter-end  compared to $4,650,000 at
December  31,  1997.   Federal   funds--which   are  overnight  loans  to  other
banks--represent  excess  reserves that are the Company's most liquid assets and
as such are available to meet  short-term cash flow needs of the Company and its
customers.

     The  $1,246,000  reduction in other real estate owned  brought this account
down to $1,624,000, or 0.27% of total assets, at June 30, 1998. During the first
six  months  of the  year  the  Company  acquired  properties  with a  value  of
$1,062,000 through foreclosure and disposed of properties with a market value of
$2,308,000.

     Total  deposits,  which  constitute  the  principal  funding  source of the
Company's assets,  decreased  $19,633,000 from December 31, 1997 and amounted to
$503,011,000  at June 30, 1998.  This is consistent with past years and reflects
seasonal  cash  flows  of  NECB's  deposit   customers--especially   noninterest
deposits.  In February,  management  increased  long-term debt (from the Federal
Home Loan Bank of Boston) with two amortizing notes:

<TABLE>

          Term                       Rate                Maturity Date                 Amount
--------------------------- ------------------------- ------------------------- -----------------
         <S>                         <C>                 <C>                          <C>
          5-Year                     5.95%               February 18, 2003             $4,000,000
         10-Year                     5.93%               February 19, 2008             $4,000,000
--------------------------- ------------------------- ------------------------- ------------------
</TABLE>

     Total shareholders' equity was $56,619,000 at June 30, 1998, an increase of
$2,796,000 over December 31, 1997.

Securities held-to-maturity

     Securities held-to-maturity are shown in the Company's balance sheets on an
amortized  cost basis.  Amortized  cost is the  original  cost  adjusted for the
effect of accumulated  amortization  of premiums and accretion of discounts.  As
summarized  in the  table  below,  investments  in  securities  held-to-maturity
decreased from $11,336,000 at December 31, 1997 to $9,738,000 at June 30, 1998.






                                    Page-13-

<PAGE>

<TABLE>
<CAPTION>

                                                
                                                                  June 30, 1998                     December 31, 1997
------------------------------------------------------------------------------------------------------------------------
                                                           Amortized                            Amortized
                                                                Cost           Fair                  Cost           Fair
(Amounts in thousands)                                         Basis          Value                 Basis          Value
<S>                                                        <C>            <C>                      <C>            <C>   
Debt securities issued by the U.S. Treasury
   and other U.S. government agencies                      $   5,399      $   5,416                $6,398         $6,430
Debt securities issued by states and
    political subdivisions of the states                       2,839          2,930                 2,841          2,944
Mortgage-backed securities                                     1,285          1,293                 1,882          1,885
Other debt securities                                            215            221                   215            219
                                                           ---------      ---------             ---------      ---------
                                                           $   9,738      $   9,860               $11,336        $11,478
                                                           =========      =========             =========      =========
</TABLE>

Securities available-for-sale

     Securities  available-for-sale are shown in the Company's balance sheets at
fair value.  The unrealized gain or loss resulting from such valuation,  reduced
by the effect of income taxes, is reflected as a separately  disclosed component
of shareholders' equity. At June 30, 1998, the net unrealized gain on securities
available-for-sale  was $1,630,000 while at December 31, 1997 the net unrealized
gain  was  $1,923,000,  representing  a  decrease  in net  unrealized  gains  of
$293,000.   As  shown   in  the   table   below,   investments   in   securities
available-for-sale  totaled $114,069,000 at June 30, 1998 versus $112,590,000 at
December 31, 1997:
<TABLE>
<CAPTION>


                                                                 June 30 1998                      December 31, 1997
------------------------------------------------------------------------------------------------------------------------
                                                           Amortized                            Amortized
                                                                Cost           Fair                  Cost           Fair
(Amounts in thousands)                                         Basis          Value                 Basis          Value
------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>                    <C>            <C>      
Marketable equity securities                              $   10,894     $   11,637             $  11,214      $  12,323
Debt securities issued by the U.S. Treasury
   and other U.S. government agencies                         78,714         79,351                76,373         76,948
Corporation debt securities                                   10,511         10,617                 9,968         10,053
Asset-based securities                                         1,312          1,314                   527            527
Mortgage-backed securities                                    12,638         12,780                12,585         12,730
                                                          ----------     ----------            ----------     ----------
                                                            $114,069       $115,699              $110,657       $112,590
                                                          ==========     ==========            ==========     ==========
</TABLE>

     Note:  During  the  second  quarter  management   reclassified   short-term
investments  (e.g.,  money  market  funds)  to cash  and cash  equivalents  from
securities  available-for-sale.  These  short-term  instruments  (with  original
maturities of three months or less) are highly liquid and readily convertible to
known amounts of cash.


Nonperforming Assets

     Nonperforming assets ("NPAs") are assets on which income recognition in the
form of  principal  and/or  interest  has either  ceased or is limited,  thereby
reducing the Company's earnings. Maintaining a low level of NPAs is important to
the ongoing  success of NECB.  The  Company's  comprehensive  credit  review and
approval  process is critical  to the  ability to  minimize  NPAs on a long-term
basis.  In addition to the  negative  impact on net  interest  income and credit
losses,  NPAs also increase  operating expenses due to the costs associated with
collection efforts.

     NPAs  include  nonaccrual  loans  and other  real  estate  owned  ("OREO").
Generally,  loans are placed in nonaccrual status when they are past due greater
than ninety days or the  repayment of interest or principal is  considered to be
in doubt. OREO consists of properties acquired through foreclosure  proceedings.
These  properties are recorded at the lower of the carrying value of the related
loans or the estimated fair market value less estimated  selling costs.  Charges
to the allowance for loan losses are made to reduce the carrying amount of loans
to the fair market value of the properties less estimated  selling expenses upon
reclassification  as OREO.  Subsequent  reductions,  if needed,  are  charged to
operating  income.  In addition to NPAs, the asset quality of the Company can be
measured by the amount of the

                                    Page-14-

<PAGE>


provision,  charge-offs  and several  credit  quality  ratios  presented  in the
discussion concerning "Provision and Allowance for Loan Losses."
<TABLE>
<CAPTION>

(Amounts in thousands)                 
                                                   June 30, 1998                   December 31,1997
---------------------------------------------------------------------------------------------------
<S>                                                  <C>                            <C> 

Nonaccrual loans                                      $    4,635                      $    9,075
OREO                                                       1,624                           2,870
                                                      ----------                      ----------
Total nonperforming assets                            $    6,259                      $   11,945
                                                      ==========                      ==========
Loans past due in excess of ninety days
  and accruing interest                               $      640                      $      951
</TABLE>

     NPAs decreased  $5,686,000 or 48% in the six months ended June 30, 1998 and
represented 1.04% of total assets. compared to 1.97%, at December 31, 1997. This
decrease in nonperforming  assets  primarily  resulted from a bulk sale of loans
completed  at the end of the first  quarter.  Taking  advantage  of a  favorable
secondary  market for such loans,  NECB sold $11,988,000 of problem assets to an
investor that  specializes in workout loans. The majority of the assets sold had
been  obtained  in  several  recent   acquisitions  (e.g.,  the  Community  Bank
acquisition brought with it approximately  $4,209,000 in NPAs). The sale had two
positive effects upon NECB's second quarter:  (i) net interest income was helped
by the  reemployment  of the sale proceeds and (ii) certain costs related to the
effort to work-out and/or collect these loans was avoided.

     OREO consists of properties acquired through foreclosure proceedings. These
properties  are recorded at the lower of the carrying value of the related loans
or the estimated fair market value less estimated selling costs.  Charges to the
allowance for loan losses are made to reduce the carrying amount of loans to the
fair  market  value of the  properties  less  estimated  selling  expenses  upon
reclassification  as OREO.  Subsequent  reductions when necessary are charged to
operating income.

Activity in Nonperforming Assets                       
(Amounts in thousands)                

Six Months ending June 30,                               1998             1997
------------------------------------------------------------------------------
December 31, 1997 and 1996                          $11,945$8,757
    Additions 4,755                                     1,306
    Reductions:
      Payments                                           (482)            (853)
      Charge-offs and writedowns                       (3,409)            (877)
      Sales, net                                       (6,550)          (1,687)
                                                    ---------        --------- 
Ending Balance, June 30, 1998 and 1997              $   6,259        $   6,646
                                                    =========        =========

     As noted above,  much of the decrease in nonperforming  assets results from
the bulk sale.

Provision and Allowance for Loan Losses

     NECB's allowance for loan losses  represents  amounts  available for future
credit losses. Management continually assesses the adequacy of the allowance for
loan losses in response to current and anticipated economic conditions, specific
problem loans,  historical net  charge-offs  and the overall risk profile of the
loan portfolio.  Management  allocates specific allowances to individual problem
loans  based upon its  analysis of the  potential  for loss  perceived  to exist
related to such loans.  In addition to the specific  allowances  for  individual
loans,  a portion of the  allowance is maintained  as a general  allowance.  The
amount of the general allowance is determined through  management's  analysis of
the  potential for loss inherent in those loans not  considered  problem  loans.
Among the factors  considered  by management in this analysis are the number and
type of loans,  nature and amount of collateral pledged to secure such loans and
current  economic  conditions.  The  allowance  for loan losses is not a precise
amount but is derived from judgments based on the above factors.


                                    Page-15-

<PAGE>



     The following  table  summarizes the activity in the allowance for possible
loan losses for the  quarters  ended March 31, 1998 and 1997.  The  allowance is
maintained  at a  level  consistent  with  identified  loss  potential  and  the
perceived risk in the portfolio.

<TABLE>
<CAPTION>

(In thousands)                                           
Six Months Ended June 30,                                                 1998               1997
-------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>      
Balance beginning of period                                           $  9,257         $   6,660
Provisions charged to operations                                           562               558
Recoveries on loans previously charged-off                                 340               280
Charge-offs taken in conjunction with bulk loan sale
 (i.e., specific allocated reserves)                                   (1,392)                 0
Loans charged-off                                                      (1,581)              (795)
                                                                      -------          --------- 
Balance end of period                                                 $  7,186         $   6,703
                                                                      ========         =========
</TABLE>

     Provisions for possible loan losses charged to operations for the first six
months  of 1998 were  essentially  unchanged  from a year  earlier  and  totaled
$562,000  compared to $558,00 for the same period in 1997.  During the six-month
period, total charge-offs increased by $2,178,000 and is largely due to the bulk
loan sale.

Capital

     The Company  endeavors to maintain an optimal  amount of capital upon which
an attractive  return to  shareholders  will be realized over the short and long
run while meeting all regulatory requirements for minimum levels of capital.

     As of June 30, 1998, the Company exceeded all regulatory capital ratios and
the  subsidiaries  were categorized as "well  capitalized."  The various capital
ratios of the Company for June 30, 1998 and 1997 were:
<TABLE>
<CAPTION>

                                                  Minimum Level           1998               1997
                                                  -------------           ----               ----
<S>                                                     <C>              <C>                <C>  
Total Risk-Based............................            8%               13.2%              14.4%

Tier 1 Risk-Based...........................            4%               12.0%              13.2%

Leverage....................................            4%                8.5%               9.4%
</TABLE>


Liquidity

     It is management's  objective to ensure the continuous ability to meet cash
needs as they  arise.  Such  needs  may  occur  from time to time as a result of
seasonal declines in deposit levels,  response to changes in interest rates paid
on deposits and interest rates charged for loans and  fluctuations in the demand
for the  Banks'  various  loan  products.  Accordingly,  the  Company  maintains
liquidity that provides the  flexibility  to meet its cash needs.  The liquidity
objective is achieved  through the maintenance of readily  marketable  assets as
well as a balanced  flow of asset  maturities  and  prudent  pricing on loan and
deposit agreements. The Company has alternative sources of liquidity,  including
repurchase  agreements  and  lines  of  credits  provided  by the  FHLBB  to the
Subsidiaries,  which together  provide the Company with  flexibility in managing
its liquidity position.  The maturities of investment  securities and cash flows
from the  repayments  of  outstanding  loans are expected to provide the Company
with adequate liquidity over the coming months.

The Year 2000 Problem

NECB,  like  all  institutions  that  utilize  computer  technology,  is  facing
challenges  associated with the possibility that some existing  computer systems
will be unable to process  time-sensitive  data accurately  beyond the year 1999
(referred to as the "Year 2000 Problem"). The Year 2000 Problem is the result of
computer  programs  using two digits rather than four in date fields that define
the year. Any computer programs used by NECB that have  time-sensitive  software
may  recognize  a date field  using "00" as the year 1900  rather  than the year
2000. If not modified or replaced, these programs could cause system failures or
miscalculations, which could adversely affect NECB's ability to process customer
transactions or provide customer service.

                                    Page-16-

<PAGE>


NECB is performing a  comprehensive  review of both its  information  technology
("IT") and non-IT systems (e.g.,  embedded technology such as micro-controllers)
to identify  those  systems  that could be  affected  by the Year 2000  Problem.
Further,  NECB is  developing a  comprehensive  multi-phase  project  management
process to modify or replace all affected IT systems and test them for Year 2000
compliance.  Thus far,  NECB has completed its written  testing  strategies  and
plans.

     NECB largely relies upon third-party providers for its IT software. NECB is
monitoring  the   activities  of  its  providers  to  ensure  that   appropriate
development  and  implementation  plans to address the Year 2000  Problem are in
place.  NECB has taken steps to identify  alternative  vendors in the event that
one or more of these  providers fail to become Year 2000  compliant.  While NECB
expects  its Year  2000  plan to be  completed  on a timely  basis (to allow for
adequate  testing in late 1998 and  1999),  there can be no  assurance  that the
systems  of other  companies  on which  NECB's  systems  may rely  also  will be
completed in a timely fashion. In addition, NECB exchanges data with a number of
other entities, such as credit bureaus and governmental entities. The failure of
these  entities to  adequately  address the Year 2000  Problem  could  adversely
affect NECB's ability to conduct its business.

     Costs associated with modifying existing system  applications have been and
will  continue to be expensed as  incurred.  While some  analysis  remains to be
completed, NECB does not expect incremental costs associated with any IT systems
modifications and/or IT equipment for Year 2000 compliance to be material.

Forward Looking Statements

     Certain  statements  contained  in this  Quarterly  Report  on  Form  10-Q,
including those contained in this Item 1, are forward looking  statements within
the meaning of the Private Securities Litigation Reform Act of 1995 and are thus
prospective. Such forward looking statements are subject to risks, uncertainties
and other factors  which could cause actual  results to differ  materially  from
future results express or implied by such statements.  Such factors include, but
are not limited to: changes in interest rates,  regulation,  competition and the
local and regional economy.

Part II: Other Information

Item 1.    Legal Proceedings - None

Item 2.    Changes in Securities - None

Item 3.    Default Upon Senior Securities - None

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

         The Annual Meeting of  Stockholders of New England  Community  Bancorp,
Inc.  was held on Tuesday,  April 21, 1998.  Stockholders  voted on and approved
each of the following proposals:

       1. To elect the following eight (8) individuals to the Company's Board of
Directors  until the next Annual Meeting and the election and  qualification  of
their successors:
<TABLE>
<CAPTION>

                                                              Number of                 Number of Shares
         Individual                                           Shares For                Withholding Authority
         ----------                                           ----------                ---------------------

<S>                                                           <C>                                 <C>   
         John C. Carmon                                       3,958,999                           64,501
         Gary J. DeNino                                       3,926,188                           97,312
         Frank A. Falvo                                       3,926,425                           97,075
         Dominic J. Ferraina                                  3,959,329                           64,171
         John R. Harvey                                       3,959,329                           64,171
         David A. Lentini                                     3,938,780                           84,720
         Angelina J. McGillivray                              3,924,950                           98,550
         Michael P. Solimene                                  3,916,171                          107,329


</TABLE>

                                    Page-17-

<PAGE>



       2.  To  approve  a  stock  option  plan of the  Company  for  non-officer
directors:
<TABLE>
<CAPTION>

            For Approval            Against Approval              Abstain              Non-Vote
            ------------            ----------------              -------              --------
              <S>                        <C>                       <C>                  <C>   
               3,373,232                 470,010                   130,783              49,475
</TABLE>

       3.  To increase the number of shares of Common Stock the Company is
authorized to issue from 10,000,000 to 20,000,000:

           For Approval              Against Approval              Abstain
           ------------              ----------------              -------
              3,733,379                    260,853                  29,268

       4.  To   eliminate   the  present   Article  XI,   relating  to  business
combinations:
<TABLE>
<CAPTION>

            For Approval             Against Approval               Abstain             Non-Vote
            ------------             ----------------               -------             --------
              <S>                        <C>                       <C>                  <C>   
               3,082,950                   76,206                   119,102              745,242
</TABLE>

       5. To  incorporate  prior  amendments,  reflect  revisions in the General
Corporation Law of Delaware and make minor changes in wording:

           For Approval              Against Approval               Abstain
           ------------              ----------------               -------
              3,933,486                     50,384                  39,630

       6. To ratify the resolution adopted by the Board of Directors  appointing
the independent public accounting firm of Shatswell,  MacLeod & Company, P.C. as
independent auditors of the Company for the fiscal year ending December 31, 1999

           For Approval              Against Approval                Abstain
           ------------              ----------------                -------
              3,954,711                      15,599                  53,190

       7. Conduct other such business properly brought before the meeting:

           For Approval              Against Approval                Abstain
           ------------              ----------------                -------
              3,907,893                       75,373                 40,234

Item 5.    Other Information - None

Item 6.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a)      Exhibits
                  Exhibit Number                 Exhibit
                  3                              Amended and Restated Articles
                                                 of Incorporation of New
                                                 England Community Bancorp, Inc.

                  27                             Financial Data Schedule

         (b) Form 8-K;  Current Reports.  The following  reports were filed with
the Securities and Exchange Commission during the quarter ended June 30, 1998:

             (i)    South Windsor Financial Statements


                                    Page-18-

<PAGE>


         In connection  with NECB's  acquisition of the South  Windsor,  certain
documents  filed by South  Windsor were  incorporated  by reference  into NECB's
Registration Statement filed on Form S-4. As such, South Windsor's Annual Report
on Form 10-K for the year ended  December 31, 1997 and South  Windsor  Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998 were filed on Form 8-K.




                                    Page-19-

<PAGE>




                       NEW ENGLAND COMMUNITY BANCORP, INC.



                                   Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                          NEW ENGLAND COMMUNITY BANCORP, INC.


Date:  August 12, 1998               By:  -------------------------------------
                                          Anson C. Hall
                                          Vice President and Treasurer