<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

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

          FOR THE TRANSITION PERIOD FROM ______ TO _______

Commission file number                                 0-7449
                                                       ------

                            PEOPLE'S BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

             MASSACHUSETTS                                    04-3272233
    -------------------------------                       -------------------
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                       Identification No.)

          545 PLEASANT STREET
       NEW BEDFORD, MASSACHUSETTS                                02740
----------------------------------------                       ----------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code           (508) 991-2601
                                                             --------------

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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].

The number of shares of Registrant's Common Stock, $0.10 par value, outstanding
as of September 30, 2000 was 3,221,734.



<PAGE>   2




                            PEOPLE'S BANCSHARES, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT

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

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
Facing Page                                                                   1

Table of Contents                                                             2

PART I.   FINANCIAL INFORMATION (*)

          Item 1.  Financial Statements:
                   Consolidated Balance Sheets                                3
                   Consolidated Statements of Income                          4
                   Consolidated Statements of Changes in Stockholders'
                    Equity                                                    5
                   Consolidated Statements of Cash Flows                      6
                   Notes to Unaudited Consolidated Financial Statements       7

          Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                       8

          Item 3   Quantitative and Qualitative Disclosures about
                    Market Risk                                              16

PART II   OTHER INFORMATION                                                  17

SIGNATURES                                                                   18

EXHIBITS                                                                     19
</TABLE>

(*)  The financial information at December 31, 1999 has been derived
     from the audited financial statements at that date and should be
     read in conjunction therewith. All other financial statements are
     unaudited.


                                      2


<PAGE>   3


                   PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                September 30,   December 31,
                                                                                    2000            1999
                                                                                 -----------     -----------
                                      ASSETS
<S>                                                                              <C>             <C>
Cash and due from banks                                                          $    17,217     $    11,875
Short-term investments                                                                 1,800              --
                                                                                 -----------     -----------
      Total cash and cash equivalents                                                 19,017          11,875
Interest-bearing deposits                                                              9,924           5,916
Securities available for sale                                                         37,499          42,068
Securities held to maturity (fair value of $471,551 in 2000 and
  $481,018 in 1999)                                                                  523,915         524,581
Restricted equity securities, at cost                                                 19,869          21,701
Loans held for sale                                                                   40,577          23,681
Loans, net of allowance for loans losses of $4,154 in 2000 and $4,096 in 1999        396,905         413,215
Other real estate owned, net                                                              50             285
Banking premises and equipment, net                                                   16,985          16,630
Accrued interest receivable                                                            7,787           7,051
Intangible assets                                                                      1,398           1,460
Other assets                                                                           3,074           2,713
                                                                                 -----------     -----------
         Total assets                                                            $ 1,077,000     $ 1,071,176
                                                                                 ===========     ===========


                          LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                         $   620,405     $   561,614
Borrowed funds                                                                       383,007         447,950
Mortgagors' escrow accounts                                                            1,131           1,106
Accrued expenses and other liabilities                                                 5,039           5,842
Subordinated debentures                                                               23,800          13,800
                                                                                 -----------     -----------
      Total liabilities                                                            1,033,382       1,030,312
                                                                                 -----------     -----------

Stockholders' equity:
   Serial preferred stock - par value $0.10 per share; authorized
   10,000,000 shares, none issued                                                         --              --
   Common stock - par value $0.10 per share; authorized 20,000,000
     shares; issued and outstanding 3,694,734 and 3,689,734 shares                       369             369
   Additional paid-in capital                                                         23,834          23,776
   Retained earnings                                                                  29,673          24,617
   Treasury stock, at cost - 473,000 shares in 2000 and 358,000
     shares in 1999                                                                   (8,364)         (6,269)
   Accumulated other comprehensive loss                                               (1,894)         (1,629)
                                                                                 -----------     -----------
      Total stockholders' equity                                                      43,618          40,864
                                                                                 -----------     -----------
         Total liabilities and stockholders' equity                              $ 1,077,000     $ 1,071,176
                                                                                 ===========     ===========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>   4


                     PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                            Three Months Ended        Nine Months Ended
                                                                September 30,           September 30,
                                                          ---------------------    ---------------------
                                                            2000        1999         2000        1999
                                                          ---------   --------     --------     --------
<S>                                                       <C>          <C>         <C>          <C>
Interest and dividend income:
   Interest and fees on loans                             $  9,268    $  8,762     $ 26,714     $ 25,864
   Interest and dividends on securities                     11,619       9,890       34,098       27,482
   Interest on short-term investments                           30           6          204          247
                                                          --------    --------     --------     --------
Total interest and dividend income                          20,917      18,658       61,016       53,593
                                                          --------    --------     --------     --------
Interest expense:
   Interest on deposits                                      7,368       5,350       20,226       14,491
   Interest on borrowed funds and subordinated
     debentures                                              6,187       6,253       18,885       18,633
                                                          --------    --------     --------     --------
      Total interest expense                                13,555      11,603       39,111       33,124
                                                          --------    --------     --------     --------
Net interest income                                          7,362       7,055       21,905       20,469
Credit for loan losses                                          --        (425)          --         (850)
                                                          --------    --------     --------     --------
Net interest income, after credit for loan losses            7,362       7,480       21,905       21,319
                                                          --------    --------     --------     --------

Other income:
   Customer service fees                                       323         308          959          948
   Gain on sales of securities available for sale, net          --          --           --           36
   Gain on sales of loans, net                               2,409       1,643        6,362        5,022
   Miscellaneous                                                49          34          166          142
                                                          --------    --------     --------     --------
      Total other income                                     2,781       1,985        7,487        6,148
                                                          --------    --------     --------     --------

Operating expenses:
   Salaries and employee benefits                            3,426       3,455       10,381        9,597
   Occupancy and equipment                                     898         702        2,818        1,870
   Data processing                                             341         310        1,016          935
   Professional fees                                           466         228        1,099          752
   Other real estate owned, net                                  2          15          (12)          48
   Other general and administrative                          1,342       1,329        3,581        3,617
                                                          --------    --------     --------     --------
      Total operating expenses                               6,475       6,039       18,883       16,819
                                                          --------    --------     --------     --------

Income before income taxes                                   3,668       3,426       10,509       10,648
Provision for income taxes                                   1,191       1,088        3,411        3,612
                                                          --------    --------     --------     --------
Net income                                                $  2,477    $  2,338     $  7,098     $  7,036
                                                          ========    ========     ========     ========

Net income per share:
   Diluted earnings per share                             $   0.76    $   0.69     $   2.16     $   2.08
   Basic earnings per share                                   0.77        0.71         2.19         2.12
Weighted average shares outstanding -
   assuming dilution for stock options                       3,270       3,389        3,293        3,386
Weighted average shares outstanding                          3,222       3,332        3,245        3,326
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>   5

                   PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                         Accumulated
                                                   Additional               Other
                                        Common      Paid-in   Retained  Comprehensive Treasury
                                         Stock      Capital   Earnings      Loss       Stock       Total
                                        --------   --------   --------    --------    ---------   --------

<S>                 <C> <C>             <C>        <C>        <C>         <C>         <C>         <C>
Balance at December 31, 1999            $    369   $ 23,776   $ 24,617    $ (1,629)   $ (6,269)   $ 40,864
                                                                                                  --------
Comprehensive income:
   Net income                                 --         --      7,098          --          --       7,098
   Change in net unrealized gain/loss
    on securities available for sale,
    after tax effects                         --         --         --        (265)         --        (265)
                                                                                                  --------
   Total comprehensive income                                                                        6,833
                                                                                                  --------
Purchase of treasury stock                    --         --         --          --      (2,095)     (2,095)
Cash dividends paid                           --         --     (2,042)         --          --      (2,042)
Exercise of stock options                     --         58         --          --          --          58
                                        --------   --------   --------    --------    --------    --------

Balance at September 30, 2000           $    369   $ 23,834   $ 29,673    $ (1,894)   $ (8,364)   $ 43,618
                                        ========   ========   ========    ========    ========    ========

Balance at December 31, 1998            $    368   $ 23,683   $ 17,948    $ (1,119)   $ (6,213)   $ 34,667
                                                                                                  --------
Comprehensive income:
   Net income                                 --         --      7,036          --          --       7,036
   Change in net unrealized gain/loss
    on securities available for sale,
    after tax effects and
    reclassification adjustment               --         --         --        (306)         --        (306)
                                                                                                  --------
   Total comprehensive income                                                                        6,730
                                                                                                  --------
Purchase of treasury stock                    --         --         --          --         (56)        (56)
Cash dividends paid                           --         --     (1,997)         --          --      (1,997)
Exercise of stock options                      1         93         --          --          --          94
                                        --------   --------   --------    --------    --------    --------

Balance at September 30, 1999           $    369   $ 23,776   $ 22,987    $ (1,425)   $ (6,269)   $ 39,438
                                        ========   ========   ========    ========    ========    ========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       5



<PAGE>   6


                   PEOPLE'S BANCSHARES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                              Nine Months Ended
                                                                                                  September 30,
                                                                                        ---------------------------
                                                                                          2000              1999
                                                                                        ---------        -----------
<S>                                                                                     <C>               <C>
Cash flows from operating activities:
   Net income                                                                           $   7,098         $   7,036
   Adjustments to reconcile net income to net cash provided (used) by
      operating activities:
     Credit for loan losses                                                                    --              (850)
     Depreciation and amortization                                                          1,422             1,032
     Net accretion on securities and purchased loans                                       (6,022)           (2,487)
     Gains on sales of securities available for sale, net                                      --               (36)
     Loss (gain) on sale of other real estate owned                                           (12)               10
     Net change in:
       Loans held for sale                                                                (16,896)           34,724
       Other assets, net of other liabilities                                              (1,469)           (3,566)
                                                                                        ---------         ---------
              Net cash provided (used) by operating activities                            (15,879)           35,863
                                                                                        ---------         ---------
Cash flows from investing activities:
    Net change in interest bearing deposits                                                (4,008)           (2,017)
    Activity in securities available for sale:
      Sales                                                                                    --            70,527
      Purchases                                                                                --           (77,985)
      Amortization of mortgage-backed securities                                            4,085             4,296
    Activity in securities held to maturity:
      Purchases                                                                           (31,544)         (190,368)
      Maturities, prepayments and calls                                                    15,774            11,369
      Amortization of mortgage-backed securities                                           23,042            41,765
    Redemption of restricted equity securities                                              1,832                 -
    Loan (originations and purchases) net of amortization and payoffs                      15,772             5,052
    Proceeds from sales of other real estate owned                                            297               262
    Additions to banking premises and equipment                                            (1,661)           (3,667)
                                                                                        ---------         ---------
           Net cash provided (used) in investing activities                                23,589          (140,766)
                                                                                        ---------         ---------

Cash flows from financing activities:
    Net increase in deposits                                                               58,791            72,469
    Net increase in borrowings with maturities of three months or less                      4,757             6,140
    Proceeds from issuance of borrowings with maturities in excess of three months        135,000            43,500
    Repayment of borrowings with maturities in excess of three months                    (204,700)          (39,200)
    Increase (decrease) in mortgagors' escrow accounts                                         25              (367)
    Proceeds from exercise of stock options                                                    58                94
    Proceeds from issuance of subordinated debentures                                       9,638                 -
    Payments to acquire treasury stock                                                     (2,095)              (56)
    Cash dividends                                                                         (2,042)           (1,997)
                                                                                        ---------         ---------
       Net cash provided (used) by financing activities                                      (568)           80,583
                                                                                        ---------         ---------
Net change in cash and cash equivalents                                                     7,142           (24,320)
Cash and cash equivalents at beginning of period                                           11,875            35,810
                                                                                        ---------         ---------
Cash and cash equivalents at end of period                                              $  19,017         $  11,490
                                                                                        =========         =========

Supplementary information:
   Interest paid                                                                        $  38,907         $  33,165
   Income taxes paid                                                                        4,017             4,972
   Transfer from loans to other real estate owned, net                                         50               473
   Transfers from securities available for sale to securities held to maturity                 --           150,261
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       6
<PAGE>   7


              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying financial statements of People's Bancshares, Inc. and
     Subsidiaries (the "Company") furnished in this report are unaudited. In the
     opinion of management, the information presented includes all adjustments,
     consisting of normal recurring accruals necessary for a fair statement of
     the results for the interim periods presented. Interim results are not
     necessarily indicative of results to be expected for the year.

     These interim financial statements have been prepared in accordance with
     the instructions for Form 10-Q and therefore do not include all information
     and footnotes necessary for a complete presentation of operations,
     financial position and cash flows of the Company in conformity with
     generally accepted accounting principles. The Company filed audited
     consolidated financial statements, which included information and footnotes
     necessary for such presentation, for the year ended December 31, 1999 as
     part of its Annual Report on Form 10-K filed with the Securities and
     Exchange Commission. These unaudited consolidated financial statements
     should be read in conjunction with the audited consolidated financial
     statements and notes thereto for the year ended December 31, 1999 included
     in the Company's Form 10-K Report.


(2)  EARNINGS PER SHARE

     Basic earnings per share is computed by dividing income available to common
     stock by the weighted-average number of common shares outstanding during
     the period. Diluted earnings per share reflect additional common shares
     issuable from the exercise of stock options calculated using the treasury
     stock method.

(3)  SUBORDINATED DEBENTURES

     On July 26, 2000, the Company completed the sale of $10 million in
     subordinated debentures to People's Bancshares Capital Trust II, a newly
     formed subsidiary of the Company. The Trust funded the purchase of the
     subordinated debentures through the sale of 10,000 trust preferred
     securities with a liquidation value of $10,000,000. The Trust would use
     interest payments made by the Company on the debentures in order to pay
     semi-annual dividends to preferred security holders. The annual percentage
     rate of the interest payable on the subordinated debentures and the
     distributions payable on the preferred securities is 11.695%. Dividends on
     the preferred securities will be cumulative and the Trust may defer the
     payments for up to five years. The preferred securities mature in July 2030
     unless the Company elects and obtains regulatory approval to accelerate the
     maturity date to as early as July 2010. The Company's ownership interest in
     the Trust may be included in regulatory Tier 1 capital, subject to a
     limitation that amounts with respect to such trusts not exceed 25% of Tier
     1 capital. All such ownership interests may be included in total risk-based
     capital. The net proceeds of this offering were used to increase the
     capital level of the Company's primary subsidiary, People's Savings Bank of
     Brockton. Reference is made to OTHER INFORMATION contained in MANAGEMENT'S
     DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     appearing elsewhere herein.


                                       7
<PAGE>   8


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                       OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


STATEMENTS REGARDING FORWARD-LOOKING INFORMATION. This report contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates",
"plans", "expects", "intends" and similar expressions are intended to identify
forward-looking statements. You should not rely on forward-looking statements,
because they involve known and unknown risks, uncertainties and other factors,
some of which are beyond the control of the Company. These expressed or implied
important risks, uncertainties and other factors may cause the Company's actual
results, performance or achievements to differ materially from those expressed
or implied by such forward-looking statements and could materially affect the
price of its common stock. Some of the factors that could cause actual results,
performance or achievements to differ materially from those expressed or implied
by such forward-looking statements were disclosed in the Company's 1999 Annual
Report on Form 10-K. These and other current risk factors, which include risks
associated with potential changes in the allowance for loan losses, potential
changes related to regulatory matters, potential changes limiting or prohibiting
the Company from paying dividends on its common stock or interest on its
subordinated debentures and potential changes resulting from strategic
initiatives being considered by management and described under "Other
Information" below, the Bank's continued ability to originate loans, fluctuation
of interest rates, real estate market conditions in the Bank's lending areas,
general and local economic conditions, the Bank's continued ability to attract
and retain deposits, the Company's ability to control costs, new accounting
pronouncements, changing regulatory requirements, new tax or other state or
national legislation, and others may not be exhaustive. Therefore, the
information in that Form 10-K should be read together with other reports and
documents that are filed by the Company with the SEC from time to time,
including quarterly reports on Form 10-Q and current reports on Form 8-K, if
any, which may supplement, modify, supersede or update these risk factors. The
Company does not promise to, and may decide not to, update any forward-looking
statements to reflect changes in underlying assumptions or factors, new
information, future events or other changes.

The Company's unaudited consolidated financial statements and notes included in
this report and the audited financial statements for the year ended December 31,
1999 and the notes included in the Company's annual report on Form 10-K should
be read in conjunction with the following discussion.

ASSETS

The Company's total assets at September 30, 2000 were $1.077 billion, an
increase of $5.8 million from December 31, 1999. This increase includes an
increase of $7.1 million in cash and due from banks, an increase of $4.0 million
in interest-bearing deposits and a $16.9 million increase in loans held for
sale, partially offset by an $16.3 million decrease in loans and a $5.2 million
decrease in securities.

LOANS

The Company's loans were as follows:

<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              2000                1999
                                          -------------       ------------
                                                   (in thousands)
<S>                                       <C>                 <C>
Residential mortgage loans, including
    home equity loans                       $ 298,627          $  317,393
Commercial, commercial real estate
    and construction loans                     95,647              94,508
Consumer loans                                  6,785               5,410
                                            ---------          ----------
    Total                                   $ 401,059          $  417,311
                                            =========          ==========
</TABLE>


                                       8
<PAGE>   9

DEPOSITS

Total deposits increased $58.8 million to $620.4 million at September 30, 2000
from $561.6 million at December 31, 1999. The increase in deposits reflects a
$16.8 million increase in IRAs and time certificates of deposit, a $29.3 million
increase in municipal deposits, and a $12.7 million increase in savings and
demand deposits.

NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses has been established to absorb estimated losses in
the loan portfolio. The provision (credit) for loan losses and the level of the
allowance are evaluated periodically by management and the Board of Directors.
These provisions (credits) are the results of the Company's internal loan
review, historical loan loss experience, trends in delinquent and non-accrual
loans, known and inherent risks in the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, collateral
values, an estimate of potential loss exposure on significant credits,
concentrations of credit, and economic conditions based on facts then known.

Periodically, management reviews the portfolio, classifying each loan into
categories by assessing the degree of risk involved. Considering this review,
the Company establishes the adequacy of its allowance and necessary adjustments
are charged (credited) to operations through the provision for loan losses. Loan
losses are charged against the allowance when management believes the
collectibility of the loan balance is unlikely.

The allowance is an estimate. Ultimate losses may vary from current estimates
and future additions to the allowance may become necessary. In addition,
regulatory agencies, as an integral part of their examination process, review
the Company's allowance and may require the Company to provide additions to the
allowance based on their assessment, which may differ from management's.

At September 30, 2000, the Company's allowance for loan losses totaled $4.2
million or 0.94% of total loans and loans held for sale and 1,180% of
non-performing loans compared to $4.1 million or 0.93% of total loans and loans
held for sale and 814% of non-performing loans at December 31, 1999, and
compared to $4.0 million or 0.90% of total loans and loans held for sale and
875% of non-performing loans at September 30, 1999. Net recoveries for the three
and nine months ended September 30, 2000 were $8 thousand and $58 thousand,
compared to net charge-offs of $44 thousand and net recoveries of $25 thousand
for the corresponding periods in 1999.

Non-performing assets were $402 thousand or 0.04% of total assets at September
30, 2000 compared to $788 thousand or 0.07% of total assets at December 31, 1999
and $768 thousand or 0.07% of total assets at September 30, 1999.


RESULTS OF OPERATIONS

EARNINGS

Net income for the three and nine months ended September 30, 2000 was $2.5
million, or $0.76 per diluted share, and $7.1 million, or $2.16 per diluted
share compared to $2.3 million, or $0.69 per diluted share, and $7.0 million, or
$2.08 per diluted share for the corresponding periods in 1999. Basic earnings
per share were

                                       9
<PAGE>   10


$0.77 and $2.19 per share for the three and nine months ended September 30, 2000
compared to $0.71 and $2.12 for the same periods in 1999. Non-recurring charges
included in the three months ended September 30, 2000 were $337 thousand and
related to the write-off of obsolete equipment, prepayment fees for the early
extinguishment of FHLB borrowings, and various professional fees associated with
regulatory issues. Return on average assets was 0.91% and 0.88%, and return on
average equity was 23.18% and 22.97%, respectively, for the three and nine
months ended September 30, 2000. Return on average assets during 1999 was 0.91%
and 0.95% for the respective three and nine month periods and return on average
equity was 24.13% and 25.48% for the same periods in 1999.

OVERVIEW

Operating results have been significantly affected by the growth of the Bank and
of its mortgage banking subsidiary, People's Mortgage Corporation ("PMC"). The
Company increased its asset size from $944.6 million at December 31, 1998 to
$1.077 billion at September 30, 2000. Operating results have been affected by
the Bank's increase in average investments to $592.0 million during the first
nine months of 2000, compared to $497.4 million during the first nine months of
1999. This growth in earning assets was primarily funded by the Bank's increase
in average deposits to $572.3 million in the first nine months of 2000, compared
to $475.7 million in the first nine months of 1999. Average loans for the first
nine months of 2000 were $439.4 million compared to $456.2 million for the
corresponding period in 1999. Average borrowings declined for the nine month
period from $435.9 million for 1999 to $417.4 million for 2000. Operating
results have also been significantly affected by the growth of PMC, including
the purchase of Allied Bancshares Mortgage Group, LLC ("Allied") on September 1,
1999. Combined results of PMC and Allied, for the first nine months of 2000,
resulted in gains on sales of loans of $6.4 million and net interest and other
income of $1.8 million, while operating expenses were $8.3 million, and the net
loss for PMC and Allied was $120 thousand. Comparable results for 1999 were $5.0
million, $1.2 million, $6.5 million, and $185 thousand, respectively. Included
in the 1999 third quarter results of PMC are $430 thousand of first month losses
at Allied.


NET INTEREST INCOME

Net interest income increased $307 thousand and $1.4 million for the three and
nine months ended September 30, 2000 compared to the same periods in 1999. This
change reflects growth in earning asset volume and mix partially offset by a
decrease in the net interest margin. For the first nine months of 2000, average
earning assets increased 8% over 1999. Net interest margin was 2.83% for the
nine months ended September 30, 2000, compared to 2.86% for the same period in
1999.

Interest and dividend income increased to $20.9 million and $61.0 million for
the three and nine months ended September 30, 2000 from $18.7 million and $53.6
million for the comparable 1999 periods. The yield on average earning assets
increased to 7.96% and 7.88% for the three and nine months ended September 30,
2000 from 7.47% and 7.48% for the 1999 quarter and year-to-date. Yields on loans
were 8.24% and 8.13% for the three and nine months ended September 30, 2000,
compared to 7.65% and 7.55% for the 1999 periods. Yields on investments
increased to 7.75% and 7.70% for the three and nine months ended September 30,
2000, compared to 7.29% and 7.39% for the comparable 1999 periods.

Interest expense increased to $13.6 million and $39.1 million for the three and
nine months ended September 30, 2000 from $11.6 million and $33.1 million for
the same periods in 1999. Deposit interest increased $2.0 million and $5.7
million for the three and nine month periods, compared to 1999. Interest expense
on borrowings decreased $66 thousand for the three months ended September 30,
2000 and increased $252 thousand for the nine months ended September 30, 2000.

                                       10
<PAGE>   11


During the first nine months of 2000, average borrowed funds amounted to $417.4
million compared to $435.9 million during the same period of 1999. Average
borrowed funds have decreased as the Company has experienced deposit growth. The
average rate paid on borrowed funds was 6.13% and 6.05% for the three and nine
months ended September 30, 2000 compared to 5.72% for the same periods in 1999.

Deposit interest expense increased due to an increase in average deposits to
$572.3 million for the nine month period ended September 30, 2000 compared to
$475.7 million for the same period in 1999. The average interest rate paid on
deposits increased to 4.91% and 4.72% for the three and nine month periods ended
September 30, 2000 from 4.15% and 4.07% for the same periods in 1999.

OTHER INCOME

Other income was $2.8 million and $7.5 million for the three and nine months
ended September 30, 2000, compared to $2.0 million and $6.1 million for the same
periods in 1999. The increases were primarily due to increases in the gains on
sales of loans.

OPERATING EXPENSES

Total operating expenses were $6.5 million and $18.9 million for the three and
nine months ended September 30, 2000 compared to $6.0 million and $16.8 million
for the same periods in 1999. These increases in operating expenses are
primarily due to additional costs associated with the acquisition of Allied and,
in the case of the nine month expenses, general increases of salary and
benefits.

Salaries and benefits expense decreased $29 thousand for the three months ended
September 30, 2000 and increased $784 thousand for the nine months ended
September 30, 2000 compared to the same periods in 1999. The decrease in
salaries and benefits for the three months reflects staff reductions at PMC and
decreased pension expense. The increase in salaries and benefits for the nine
months reflects general salary increases and the addition of Allied employees
for all nine months in 2000 compared with only one month during 1999.

Occupancy and equipment expense increased $196 thousand and $948 thousand for
the three and nine months ended September 30, 2000, compared to the same periods
in 1999. Professional fees increased $238 thousand and $347 thousand for the
three and nine months ended September 30, 2000 compared to the same periods in
1999. The increase primarily reflects costs associated with legal and regulatory
matters. Other general and administrative expenses decreased $13 thousand and
$36 thousand for the three and nine months ended September 30, 2000 compared to
the same periods in 1999.

The efficiency ratio for the Company for the three and nine months ended
September 30, 2000, was 57.34% and 59.79%. For the same periods in 1999, the
ratio was 59.61% and 58.34%. The efficiency ratio for the Company excluding PMC
was 45.83% and 44.70% for the three and nine months ended September 30, 2000.
For the same periods in 1999, the ratio was 48.84% and 47.25%.

PROVISION FOR INCOME TAXES

The Company recognized income tax expense of $1.2 million and $3.4 million in
the three and nine months ended September 30, 2000 compared to income tax
expense of $1.1 million and $3.6 million for the same periods in 1999. The
effective tax rates for the three and nine months ended September 30, 2000 were
32.5% and were 31.8% and 33.9% for the corresponding periods of 1999.

                                       11
<PAGE>   12

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity management strategy focuses upon the Company's ability
to provide the cash reserves and cash equivalents necessary to honor contractual
liabilities and commitments, meet depositors' withdrawal demands, fund
operations and provide customers with adequate available credit. The Company's
primary sources of liquidity are customer deposits, principal and interest
payments on loans, interest and dividends on investments and proceeds from the
maturity or sale of investments. The Company also has the ability to borrow from
the Federal Home Loan Bank of Boston on a collateralized basis. The Company
believes that it has adequate liquidity to meet its current needs.

At September 30, 2000, the Company's capital exceeded all applicable regulatory
requirements imposed by statute or regulations. Reference is made to OTHER
INFORMATION, below.
<TABLE>
<CAPTION>


                                                          Amount                                   Percent
                                         -----------------------------------------     --------------------------------------
                                                      Adequately         Well                     Adequately       Well
                                                      Capitalized     Capitalized                Capitalized    Capitalized
                                            Actual    Minimums        Minimums         Actual     Minimums       Minimums
                                         ---------    -----------     -----------     -------    -----------   -------------
<S>                                      <C>          <C>             <C>             <C>        <C>           <C>
People's Bancshares, Inc.
     Tier 1 Leverage Capital             $  59,285        $43,132         n/a           5.50%         4.00%        n/a
     Tier 1 Capital                         59,285         23,304         n/a          10.17%         4.00%        n/a
     Total Capital                          72,069         46,607         n/a          12.37%         8.00%        n/a

People's Savings Bank of Brockton
     Tier 1 Leverage Capital             $  67,400        $43,212       $ 54,015        6.24%         4.00%         5.00%
     Tier 1 Capital                         67,400         35,317         35,317       11.59%         4.00%         6.00%
     Total Capital                          71,554         47,089         58,862       12.30%         8.00%        10.00%
</TABLE>



OTHER INFORMATION

On October 31, 2000, the Company declared a dividend of $0.21 per share, payable
on December 7, 2000 to shareholders of record on November 17, 2000.

As previously announced, People's Savings Bank of Brockton, the primary
subsidiary of the Company (the "Bank"), has entered into an informal agreement
with its regulators (the Federal Deposit Insurance Corporation and the
Massachusetts Commissioner of Banks) (the "Bank Agreement") in which the Bank
has agreed, among other matters, to develop plans to reduce over time the level
of its investment in trust preferred securities to less than 100% of its Tier 1
Leverage Capital. In addition, the Bank has agreed to achieve and subsequently
maintain a Tier 1 Leverage Capital ratio of not less than 6.5% of total assets.
During the third quarter, the Company sold $10 million in subordinated
debentures to People's Bancshares Capital Trust II (the "Trust"), a newly formed
subsidiary of the Company. The Trust funded the purchase of the subordinated
debentures through a sale of trust-preferred shares with a liquidation value of
$10,000,000. The net proceeds of this sale were contributed by the Company to
the Bank in order to increase the Tier 1 Leverage Capital level of the Bank by
$9.64 million. At September 30, 2000 the actual Tier 1 Leverage Capital ratio of
the Bank was 6.24%.

Additional provisions of the Bank Agreement require the Bank to assess the
Bank's management and staffing

                                       12
<PAGE>   13


needs, develop revised strategic and capital plans, improve the quality of the
investment portfolio and investment administration, improve liquidity and the
management thereof, develop a plan for reducing interest rate risk exposure and
address other operational issues.

In addition to the Bank Agreement, the Company expects to enter into a formal
agreement (the "Company Agreement") with the Federal Reserve Bank of Boston (the
"Reserve Bank") that would require prior approval of the Reserve Bank and the
Division of Banking Supervision and Regulation of the Board of Governors of the
Federal Reserve System for the Bank to pay dividends to the Company or for the
Company to pay dividends on its common stock or interest on the subordinated
debentures the Company issued in 1997 and 2000. While the Company intends to
seek such approvals, there is no assurance that approval to pay all or any
portion of such dividends and/or interest will be received. In the event that
the required approvals are not received, the Company, to the applicable, will
reduce or eliminate dividends on its common stock and defer the payment of
interest on the debentures (to the extent required) to the relevant trusts
(pursuant to the terms of the instruments under which they were organized) and
the trusts will defer (to the extent required) paying dividends on the trust
preferred shares issued by them. During the term of any such deferral,
distributions to which holders are entitled will continue to accrue interest or
dividends at the stated annual rate, plus additional interest of 2% compounded
quarterly, on any unpaid distributions in accordance with the terms of the
underlying securities.

The Company has suspended its stock purchase program announced in 1998. In the
first half of 2000, the Company repurchased 115,000 shares of the outstanding
common stock at an average cost of $18.21 per share in open market transactions.
The Company anticipates that the terms of the Company Agreement will preclude
the purchase of any additional shares without the prior written approval of the
Reserve Bank and that the Company will be required to maintain a minimum
consolidated Tier 1 Leverage Capital ratio of not less than 5.0%. At September
30, 2000, the Company's consolidated Tier 1 Leverage Capital ratio was 5.50%.
The Company also anticipates that the terms of the Company Agreement will state
that it is the common goal of the Company and the Reserve Bank to restore and
maintain the financial soundness of the Company and will preclude the Company
from increasing its borrowings, incurring debt or renewing existing debt without
the prior approval of the Reserve Bank.

Management is currently evaluating a number of initiatives to improve and
maintain the financial soundness of the Company and the Bank. The Company may
restructure its consolidated balance sheet to reduce interest rate risk while
improving liquidity and balance sheet fundamentals. This strategy would enhance
the mix of earning assets and liabilities through the divestiture of higher risk
earning assets while reducing dependence on higher cost volatile liabilities. In
addition, such restructuring would improve asset quality and reduce the
Company's exposure to rising interest rates. While the financial impact of such
a strategy has not been quantified, and no decision has been reached as to the
manner in which such a strategy would be implemented, it is likely that such
initiatives would reduce the Company's future operating results.

People's maintains twelve banking locations in Southeastern Massachusetts and 12
loan production offices in Massachusetts, Connecticut, Maryland, and Virginia.
People's trades under the symbol "PBKB" and is quoted on the NASDAQ National
Market System.

                                       13

<PAGE>   14






                            People's Bancshares, Inc.
                          Supplementary Financial Data

<TABLE>
<CAPTION>


                                                   1st Quarter  2nd Quarter   3rd Quarter     9 months     4th Quarter
                                                       1999         1999          1999          1999           1999         1999
                                                   ------------------------------------------------------------------------------
<S>                                                <C>          <C>           <C>             <C>           <C>            <C>
Bank net of premium amortization, security gains
 and non-recurring items                            $   0.79    $   0.81      $   0.77       $   2.37      $   0.76     $   3.14
Premium amortization expense (1)                    $  (0.15)   $  (0.13)     $  (0.09)      $  (0.37)     $  (0.07)    $  (0.45)
                                                   ------------------------------------------------------------------------------
Bank net income, net of non-recurring item          $   0.64    $   0.68      $   0.68       $   2.00      $   0.69     $   2.69
Mortgage subsidiary net income (loss), net of
  non-recurring items                               $   0.02    $   0.01      $   0.01       $   0.04            --     $   0.04
                                                   ------------------------------------------------------------------------------
Bancshares, net of security gains and non-
 recurring items                                    $   0.66    $   0.69      $   0.69       $   2.04      $   0.69     $   2.73
Security gains and non-recurring items, net         $   0.01    $   0.03            --       $   0.04            --     $   0.04
                                                   ------------------------------------------------------------------------------
Reported diluted earnings per share                 $   0.67    $   0.72      $   0.69       $   2.08      $   0.69     $   2.77
                                                   ==============================================================================

Return on average equity                               25.91%      26.46%        24.13%         25.48%        23.00%       24.82%
Return on average assets                                0.96%       0.99%         0.91%          0.95%         0.86%        0.93%
Bank efficiency ratio (2)                              46.50%      45.51%        48.84%         47.25%        51.35%       48.32%
Company efficiency ratio (2)                           58.66%      56.70%        59.61%         58.34%        65.49%       60.32%
Net interest margin                                     2.87%       2.85%         2.82%          2.86%         2.82%        2.84%
Mortgage company core income (loss) as a
   percentage of Company core income                    3.03%       1.45%         1.45%          1.96%           --         1.44%
Gains on sales of loans (in thousands)              $  1,774    $  1,605      $  1,643       $  5,022      $  2,480     $  7,502
Mortgage loan applications (in thousands)           $209,795    $206,948      $180,632        597,375      $205,373     $802,748
Mortgage backlog at end of quarter (in
  thousands) (3)                                    $135,322    $141,482      $172,579                     $135,009
</TABLE>

(1) Premiums are from purchases of investment securities, primarily
    mortgage~backed securities, and loans, both purchased in the secondary
    market and through past acquisitions. Such premiums are subject to faster
    amortization in a mortgage refinancing market. The mortgage company has no
    assets subject to prepayment risk as all gains are "cash" gains and are
    recorded when investor payments are received.

(2) Equals non-interest expense divided by net interest income. Excludes
    provisions for loan losses, OREO expenses, non-recurring expenses, gains and
    losses on securities and purchased loan transactions, and interest expense
    on subordinated debentures.

(3) Equals 80% of the Company's loan applications in process plus all loans held
    for sale. Generally, this backlog will be sold in the following quarter.

                                       14

<PAGE>   15




                            People's Bancshares, Inc.
                          Supplementary Financial Data

<TABLE>
<CAPTION>

                                                                  1st Quarter   2nd Quarter    3rd Quarter      9 Months
                                                                      2000          2000           2000           2000
                                                                  -----------   -----------    -----------      --------
<S>                                                               <C>           <C>            <C>              <C>
Bank net of premium amortization, security gains
 and non-recurring items                                           $   0.84      $   0.83      $   0.78        $   2.45
Premium amortization expense (1)                                   $  (0.04)     $  (0.06)     $  (0.05)       $  (0.15)
                                                                  -----------------------------------------------------
Bank net income                                                    $   0.80      $   0.77      $   0.73        $   2.30
Mortgage subsidiary net income, net of non-
 recurring items                                                   $  (0.13)     $   0.01      $   0.10        $  (0.02)
                                                                  -----------------------------------------------------
Bancshares, net of security gains and non-
 recurring items                                                   $   0.67      $   0.78      $   0.83        $   2.28
Security gains and non-recurring items, net                              --      $  (0.05)     $  (0.07)       $  (0.12)
                                                                  -----------------------------------------------------
Reported diluted earnings per share                                $   0.67      $   0.73      $   0.76        $   2.16
                                                                  =====================================================

Return on average equity                                              22.05%        23.66%        23.18%          22.97%
Return on average assets                                               0.84%         0.90%         0.91%           0.88%
Bank efficiency ratio (2)                                             42.88%        45.41%        45.83%          44.70%
Company efficiency ratio (2)                                          62.32%        59.89%        57.34%          59.79%
Net interest margin                                                    2.80%         2.85%         2.80%           2.83%
Mortgage company core income (loss) as a percentage
 of Company core income                                              (16.25)%        1.39%        13.70%          (0.70)%
Gains on sales of loans (in thousands)                             $  1,798      $  2,155      $  2,409        $  6,362
Mortgage loan applications (in thousands)                          $272,364      $259,431      $212,780        $744,575
Mortgage backlog at end of quarter (in thousands) (3)              $200,187      $201,852      $173,385
</TABLE>

(1) Premiums are from purchases of investment securities, primarily
    mortgage~backed securities, and loans, both purchased in the secondary
    market and through past acquisitions. Such premiums are subject to faster
    amortization in a mortgage refinancing market. The mortgage company has no
    assets subject to prepayment risk as all gains are "cash" gains and are
    recorded when investor payments are received.

(2) Equals non-interest expense divided by net interest income. Excludes
    provisions for loan losses, OREO expenses, non-recurring expenses, gains and
    losses on securities and purchased loan transactions, and interest expense
    on subordinated debentures.

(3) Equals 80% of the Company's loan applications in process plus all loans held
    for sale. Generally, this backlog will be sold in the following quarter.


                                       15


<PAGE>   16






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The objective of the Bank's asset/liability management process is to monitor and
control the variation in repricing intervals between assets and liabilities. The
process monitors interest rate sensitivity by analyzing the estimated changes in
net interest margin assuming various interest rate scenarios over a two year
period. The Bank's current methodology incorporates a number of assumptions
concerning the timing between the repricing and maturity of interest earning
assets and interest bearing liabilities. These assumptions include changes in
the prepayment experience of mortgage related securities, callable features of
certain assets and liabilities and volume assumptions for certain categories of
assets and liabilities which may be at variance with actual changes in balances
as a result of changes in interest rates during a particular measurement period.

The Board has established limits on interest rate risk which specify that
changes in interest rates will not impact estimated net interest income for the
subsequent 12 and 24 months by more than 10% and 20%, respectively. Based upon
the Bank's current methodology, the Company was in compliance with this limit at
September 30, 2000.

                            2.0% Rate                  2.0% Rate
                            Increase                   Decrease
                            --------                   --------
Year 1                       (4.24)%                     5.25%
Year 2                      (11.19)%                     3.13%



                                       16
<PAGE>   17



                           PART II - OTHER INFORMATION



ITEM 6            EXHIBITS AND REPORTS ON FORM 8-K
-----

    (a)           Exhibits
<TABLE>
<CAPTION>
EXHIBIT           DESCRIPTION
<S>               <C>

    3.1           Restated Articles of Organization of the Company (filed as Exhibit 3.1 to the
                  Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
                  incorporated herein by reference)

    3.2           By-laws of the Company, as amended and restated (filed as Exhibit 3.2 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated
                  herein by reference)

    4.1           Specimen certificate for shares of Common Stock of the Company (filed as Exhibit 4.1
                  to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
                  incorporated herein by reference)

    4.2           Articles IV and VI(I)-(K) of Restated Articles of Organization of the Company (see
                  Exhibit 3.1)

    4.3           Articles I and IV of By-laws of the Company (see Exhibit 3.2)

   27             Financial Data Schedule (filed herewith).

    (b)           Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended September 30, 2000.
</TABLE>


                                       17
<PAGE>   18

                                   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.

                                          PEOPLE'S BANCSHARES, INC.


11/14/2000                                By:  /s/ Richard S. Straczynski
---------------------                     --------------------------------------
Date                                      Richard S. Straczynski
                                          President and Chief Executive Officer




11/14/2000                                By: /s/ James K. Hunt
---------------------                     --------------------------------------
Date                                      James K. Hunt
                                          Executive Vice President/Finance &
                                          Administration and
                                          Chief Financial Officer


                                       18


<PAGE>   19

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit           Description
-------           -----------
<S>               <C>
    3.1           Restated Articles of Organization of the Company (filed as Exhibit 3.1 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by
                  reference)

    3.2           By-laws of the Company, as amended and restated (filed as Exhibit 3.2 to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated
                  herein by reference)

    4.1           Specimen certificate for shares of Common Stock of the Company (filed as Exhibit 4.1 to the
                  Company's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated
                  herein by reference)

    4.2           Articles IV and VI(I)-(K) of Restated Articles of Organization of the Company (see Exhibit
                  3.1)

    4.3           Articles I and IV of By-laws of the Company (see Exhibit 3.2)

   27             Financial Data Schedule (filed herewith).
</TABLE>

                                       19