Exhibit 13.1







                            Bancorp Connecticut, Inc.



                                      1999

                                     Annual

                                     Report



                                ----------------
                                [IMAGES OMITTED]
                                ----------------



<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                                COMPANY PROFILE

Bancorp  Connecticut's wholly owned subsidiary,  Southington Savings Bank (SSB),
is a full-service  financial institution serving Southington,  Wallingford,  and
the surrounding  areas since 1860. SSB offers a wide range of superior  consumer
products and services,  business  banking,  and brokerage  services  through its
branch  network.  A  commitment  to blend  high-quality  service with the latest
technologies has fostered a unique brand of community banking.


                                              ----------------------------
                                                     [IMAGE OMITTED]

                                              OUR 3RD CENTURY IN BUSINESS

                                              SSB has been proudly serving
                                              the needs of its customers
                                              since 1860.
                                              ----------------------------


                               TABLE OF CONTENTS

                   1   Selected Consolidated Financial Data
                   2   To Our Shareholders
                   9   Management's Discussion and Analysis
                  21   Report of Independent Accountants
                  22   Consolidated Statements of Condition
                  23   Consolidated Statements of Income
                  24   Consolidated Statements of Shareholders' Equity
                  25   Consolidated Statements of Cash Flows
                  26   Notes to Consolidated Financial Statements
                  40   Shareholder Information
                  41   Bancorp Connecticut, Inc. Directors and Officers
                  42   SSB Directors and Officers

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                             SELECTED CONSOLIDATED
                                 FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                     -------------------
                                                                     [BAR GRAPHS OMITTED
                                                                      NET INCOME AND
                                                                      DIVIDEND GROWTH
                                                                      DATA BELOW]
                                                                     -------------------

                                          As of or for the Year Ended December 31,
                                    ----------------------------------------------------
(dollars in thousands,
 except per share data)                 1999       1998       1997       1996       1995
----------------------------------------------------------------------------------------
<S>                                 <C>        <C>        <C>        <C>        <C>
STATEMENT OF CONDITION DATA:*
  Assets                            $568,798   $521,356   $444,863   $419,398   $383,978
  Securities                         214,495    217,333    166,712    149,612    130,549
  Loans, net                         309,710    278,420    255,448    246,274    230,706
  Deposits                           348,441    347,410    319,137    311,837    297,627
  Funds borrowed                     171,129    121,146     75,998     62,879     42,217
  Shareholders' equity                41,532     49,916     46,947     42,731     43,210

STATEMENT OF INCOME DATA:*
  Net interest income               $ 19,335   $ 16,839   $ 15,677   $ 14,754   $ 13,896
  Provision for loan losses              491        268        600        435        180
  Net securities gains                   505      1,272        839        344        150
  Noninterest income                   3,227      2,192      1,484      1,315      1,093
  Noninterest expense                 12,035     10,398      8,701      8,573      8,625
  Provision for income taxes**         2,921      3,292      2,803      2,381      2,038
----------------------------------------------------------------------------------------

  Net income**                      $  7,620   $  6,345   $  5,896   $  5,024   $  4,296
========================================================================================
PER SHARE DATA:***
  Earnings--diluted                    $1.38      $1.14      $1.08      $0.89      $0.77
  Cash dividends                        0.60       0.54       0.46       0.37       0.30
  Book value                            7.98       9.72       9.22       8.31       7.95

SELECTED STATISTICAL DATA:
  Return on average assets              1.40%      1.28%      1.39%      1.26%      1.17%
  Return on average equity             16.12      13.07      13.48      11.69      10.67
  Average equity to average assets      8.67       9.83      10.34      10.71      10.95
  Net interest spread
    (tax equivalent basis)              3.21       3.18       3.50       3.48       3.53
  Net interest margin
    (tax equivalent basis)              3.79       3.80       4.13       4.10       4.15
  Dividend payout ratio                40.52      43.08      39.95      39.63      37.01
</TABLE>


*   Certain prior year amounts have been reclassified to conform with the 1999
    presentation. These reclassifications had no impact on net income.

**  Includes a $337,000 charge to 1998 earnings attributed to the formation of a
    passive investment company. Excluding this charge, 1998 net income would
    have been $6,682,000. This passive investment company was formed to reduce
    the Corporation's effective tax rate in future years.

*** Per share data has been restated to reflect a 6-for-5 stock split effected
    in the form of a stock dividend on June 19, 1996, and a 2-for-1 stock split
    effected in the form of a stock dividend on December 1, 1997.



                                        1
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                              TO OUR SHAREHOLDERS:

     Bancorp Connecticut,  Inc. and its principal subsidiary Southington Savings
Bank (SSB) had another very good year.  Net income for 1999 was  $7,620,000,  or
$1.38 per diluted share,  compared to $6,345,000,  or $1.14 per diluted share in
1998--up 20% for the year. A 7.3% expansion in earning assets,  a 14.8% increase
in net  interest  income  and a lower  effective  tax  rate  resulting  from the
formation of SSB Mortgage  Corporation,  were  primarily  responsible  for these
operating results. As we enter the new millennium,  the Company and SSB are well
positioned  to face  the  many  challenges  that  lie  ahead  for all  financial
institutions.

     During 1999, we introduced a new debit card and Internet banking (including
bill-paying  services) to our consumer  customers.  Early in 2000, we expect the
Bank will also unveil a comprehensive  Internet-based cash management system for
its business customers as well as additional insurance product offerings for all
of our customers  marketed  through a separate  subsidiary.  We strongly believe
that these products and services are necessary  ingredients in strengthening the
overall relationships that we have with our clients.

     We continually  review our ongoing  strategy(s)  and business  model, to be
successful in a very competitive financial environment.  Toward this end, in the
1999 third quarter,  the Bank's trust  operations were sold to the Trust Company
of Connecticut (TCC). Since the investment management component of this activity
had always been outsourced and many of SSB's customers were already working with
TCC, this business arrangement was a logical alternative for us. Trust services,
as a line of business,  did not meet the growth  potential and return hurdles of
our Company so this  transaction  made sense for our customers,  employees,  and
shareholders.  Looking ahead,  it will be very important to focus on the correct
mix of noninterest  sources of revenue and traditional  banking activities while
providing all of the necessary delivery channels to our customers. For instance,
our indirect auto finance  subsidiary  (BCI  Financial),  increased  emphasis on
brokerage and insurance products, and the unfolding role of the Internet must be
viewed within the context of how these products should and will be delivered.

     In late 1998, the Bank opened a branch facility in  Wallingford,  which has
been  extremely  successful.  This office has  exceeded  our  expectations  with
respect to loan and  deposit  growth--the  latter  having  exceeded  $20 million
during 1999. It will be difficult,  however,  to replicate this feat in light of
intense price  competition for both loans and deposits and the onset of at least
three start-up bank competitors in our area marketplace.  Even though the number
of banks in Connecticut  has declined  markedly from 150 in 1992 to around 70 at
the present time,  there are still over 1,100 bank branches in the state,  which
is clearly  "overbanked"--particularly  in central Connecticut. On two occasions
last year, the Bank bid  competitively on various branches being sold by a super
regional bank competitor. These branches would have provided a logical extension
of our market presence,  and although we believe that our bids were competitive,
we were not  successful.  In any event,  we will  continue  to  address  banking
opportunities  like a small  bank  acquisition,  and  whatever  makes  the  best
economic sense to extend the Company's franchise.

     As we enter our third century of doing business,  the Company  continues to
do exceedingly  well. We are among the top  half-dozen  publicly owned banks (in


                                        2
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


-------------------------------------
          [IMAGE OMITTED]

Robert D. Morton
President and Chief Executive Officer
of Bancorp Connecticut, Inc.
-------------------------------------


size) left in the state  while the  remaining  players  consist of  out-of-state
super regional banks, much smaller banks and medium-sized  mutual savings banks.
In  the  latter  instance,  quite  simply  put,  in  some  cases  the  financial
performance  requirements of some of these banks may not be as rigorous as those
of a publicly  owned  company and this is the genesis of increased  competition.
Certainly,  returns  inevitably  suffer  when  credit  quality  and  pricing are
compromised to generate  commercial loan volume. We have been, and will continue
to be, mindful of both parameters.

     The Company and SSB have established a consistently excellent track record.
Since 1994,  for example,  net income has more than doubled while cash dividends
paid have increased each year since  1992--having  almost tripled since 1994. In
terms of most financial measures, the Company continues to perform at the top of
the pack among  publicly  owned  financial  institutions  based in  Connecticut.
Nevertheless, we are keenly disappointed in our share price performance. Lately,
it seems as though  for  certain  companies,  there is little or no  correlation
between stock price movement and earnings growth or financial performance. Banks
and financial-related  stocks have, for the most part, been pummeled in 1999 and
this trend has  continued  into the new year.  As  reported  in the press,  bank
stocks are under a dark cloud for a litany of reasons,  most of which come under
the heading of "the sky is falling." We don't believe this to be true.  Although
no one can predict expectations or the stock market, our track record speaks for
itself and we plan to  continue  to perform at or near the top of our peer group
among publicly owned financial  institutions.  Only patience and time will prove
that our current operating mode is successful.

     In the meantime,  as SSB celebrates its 140th  anniversary  this year, it's
clear that we have a great full-service community-based banking company. We have
our eyes on the future as we continue to focus on improving shareholder value.

     Our directors, officers, and staff appreciate your interest and support.

Sincerely,


/s/ Robert D. Morton
--------------------------
Robert D. Morton
President and
Chief Executive Officer



                                        3
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                           BUILDING BUSINESS PARTNERS

SOUTHINGTON TOOL

     Southington  Tool  &  Manufacturing   Corporation,
located  in  Southington,   was  founded  in  1970  and
incorporated in 1975.  Edward Kalat (left),  President,     ---------------
founder,  and owner is seated with SSB's Daniel DeRosa,     [IMAGE OMITTED]
Vice President and  Relationship  Officer.  The company     ---------------
specializes in manufacturing  surgical  staples,  metal
stampings, wire forms, and springs. The company's sales
extend   throughout   the  United  States  and  include
international sales as well.

QS TECHNOLOGIES

     Founded in 1983, QS Technologies,  Incorporated is
a    Meriden-based    research,     engineering,    and
manufacturing  company that produces  specialized cable     ---------------
and  wire   products,   used  in  a  wide   variety  of     [IMAGE OMITTED]
industries,   including  electronics,   communications,     ---------------
medical, automotive, and aircraft. Don Schollin (left),
President,  co-founder,  and owner,  is  pictured  with
William  Taylor,   Senior  Vice  President  and  Senior
Commercial  Lending  Officer,  SSB. The company's sales
region extends across the United States.

     In Central Connecticut, SSB signifies Business Banking. Since 1860, we have
established a long-standing  tradition of  understanding  our customers'  needs,
providing our clients with  individual,  comprehensive  banking  services,  and,
combined with our knowledgeable professionals, producing creative solutions. SSB
offers  a full  array  of  business  services,  including  equipment  financing,
commercial lines of credit,  commercial mortgages, and employer/employee benefit
programs. With another solid year of service, we continue to excel at meeting or


                                        4
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                     BUILDING BUSINESS PARTNERS (continued)


exceeding the needs of our  customers.  Decisions are made locally,  not in some
remote,  out-of-state  location.  The  individuals  of our lending  team possess
extensive experience  fostering growth and prosperity with local businesses.  We
are  committed to the  communities  we serve and lead an active role in numerous
civic  and  charitable   organizations.   In  summary,   SSB  offers  efficient,
full-service  commercial  banking with the personal  attention only a local bank
can provide.

TOPPER & GRIGGS

     Topper   &   Griggs   Incorporated,   located   in
Plainville,  was founded in 1926, and  incorporated  in
1954. Ken Fogg (left), President, is pictured with John     ---------------
Cookley,  Vice President and Relationship Officer, SSB.     [IMAGE OMITTED]
The   company    fabricates    structural   steel   and     ---------------
miscellaneous   metals   (stairs  and   handrails)  for
commercial use in the construction  industry.  Topper &
Griggs, Inc. fabricates and erects beams,  columns, and
trusses,  primarily within Connecticut and occasionally
in the contiguous states.


                                 ---------------
                                 [IMAGE OMITTED]
                                 ---------------

CiDRA

     CiDRA  Corporation  is a high-tech  Wallingford-based  company,  founded in
1996. The company specializes in the manufacture of fiber optic sensors, used in
the oil, cable, and  telecommunication  industries.  The firm combines research,
development,  engineering, and manufacturing for an international customer base.
Pictured  are Kevin  Didden  (left),  President,  Ann  Iseley,  Chief  Financial
Officer, and SSB's Ray Jannelli, Vice President and Relationship Officer.



                                        5
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                     ----------------------------------------
                                 [IMAGE OMITTED]

                     "Working closely with my clients helps
                     them understand and select the best
                     products to meet their financial needs."

                     --Matt Rich, Southington Savings Bank
                     ----------------------------------------


                             BROKERAGE INVESTMENTS

     The  financial  services unit of SSB,  offering  products  through  Infinex
Financial Group, achieved notable results this year assisting clients with their
financial  planning  needs.   Managed  by  Matt  Rich,  a  seasoned   investment
professional  who joined  our team in June 1999,  our  financial  services  unit
offers a broad range of investment options including:

     o  Individual stocks and bonds
     o  Fixed, indexed, and variable annuities
     o  Mutual funds
     o  Life insurance products
     o  Retirement plans/IRAs
     o  Long-term planning

     We can provide  flexible  portfolios  with minimal or no transaction  fees.
Each  portfolio  is  individualized  and  simple  with  no  minimum  or  maximum
requirements  to  limit  your  investment  opportunities.  Developing  long-term
financial plans for retirement or college education are just two of the areas in
which  Matt and his staff  specialize.  Matt  works  closely  with his  clients,
meeting with them a minimum of twice per year to review investment strategies.

     SSB's  financial  services unit is responsible for clients' funds in excess
of $35 million.  We offer  low-cost  personalized  stock  trading with  flexible
service hours to meet the demands of an active  schedule.  Forging  partnerships
with  clients,   our  financial  services  team  proficiently   advises  on  the
investments of our customers to assist our clients in achieving  their financial
objectives.



                                        6
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                     ----------------------------------------
                                 [IMAGES OMITTED]

                     In 1999, SSB introduced online banking
                     with the ssbonline.com website, pictured
                     above, and the new SSB ATM/Debit card,
                     pictured below, which gives customers
                     the flexibility of a traditional ATM
                     card with the added purchase power of
                     the MasterCard logo.
                     ----------------------------------------


                              21ST CENTURY BANKING

     In the year 2000, SSB will remain committed to providing its customers with
distinguished  service and the latest  technologies.  This strategy of combining
personal  attention with  convenient  products and services has been the driving
force of success. The past year was no exception,  with the bank introducing the
new SSB ATM/Debit card and launching an online banking service program.

---------------
[IMAGE OMITTED]
---------------

     In August,  SSB  initiated  a campaign  to replace  existing  ATM cards for
checking  account  customers  with the SSB  MasterMoney  card.  The new offering
provided  customers  all the benefits of a  traditional  ATM card with the added
convenience to pay for purchases at over 15 million places worldwide that accept
MasterCard.

     Another  initiative SSB implemented at the end of 1999 was the introduction
of netBanking. NetBanking customers obtain access to pay all their bills online.
Automatic weekly or monthly bill payment schedules may be established as well as
one-time bill paying. Customers may also view account information, access online
statements,  transfer funds between accounts or establish  automatic  transfers,
and  reorder  checks.  With the  launch  of  netBanking,  SSB can now  offer its
consumer  and  business  customers  the same  convenience  of an online  service
provided by much larger financial institutions.

     Glancing ahead,  SSB intends to maximize its Internet  presence in the near
future by adding the ability to apply for loans  online,  retrieve  check images
online,  and offer  special  products  or  services  for  netBanking  customers.
Attention to technological improvements was a key factor throughout the year and
will  continue to be a critical  component as the  financial  industry  evolves.
Combining old-fashioned helpfulness and service with state-of-the-art technology
will position SSB as a strong competitor in the retail banking arena.


                                        7
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                             SERVING THE COMMUNITY

                                             ----------------------------------
-----------------------------                          [IMAGE OMITTED]

A BANK IS ONLY AS STRONG AND                 Richard Fracasso, Executive Vice
VIBRANT AS ITS PEOPLE AND THE                President, SSB, and Audrey Brown,
COMMUNITY THAT SURROUNDS IT.                 Director, Southington Public
                                             Library, are pictured above with a
-----------------------------                microfiche machine donated to the
                                             library by SSB.
                                             ----------------------------------


     Being a community  bank means  forming an  affiliation  with the cities and
towns that the  institution  services.  It means  connecting  with residents and
businesses to stay in tune with the needs of the community.  SSB is dedicated to
the areas it serves.

     SSB  continues to be a primary  supporter of the United Way of  Southington
and Wallingford  through corporate  donations,  bank sponsorships,  and employee
contributions. Many of our directors, officers, and staff are very involved in a
broad array of civic and charitable  activities in the greater  Southington  and
Wallingford  areas.  Another service  organization that SSB aids annually is the
YMCA.  Assisting on a local level, the Southington  community YMCA benefits from
SSB's  association  with the group and the common  belief that  building  strong
children and families is the foundation for strong communities.  SSB continually
exhibits  its  affinity for the youth of our  community.  Maintaining  a unique,
limited  access  training  branch at  Southington  High School and working  with
school-affiliated groups like the Distributive Education Club of America (DECA),
SSB clearly demonstrates the significance of investment in our youth.

     Supporting  local  community  and civic  groups has become an  extension of
SSB's business  philosophy  over the years.  Working with  organizations  in our
market,  like the Employment  Development Center (EDC),  making decisions at the
local level, and being actively involved in area chambers of commerce are all an
integral part of who we are.

       --------------------------------------------------------------
                              (from left to right): Robert Morton,
                              President and Chief Executive Officer,
       [IMAGE OMITTED]        SSB, and Donna Ierardi, Branch Manager,
                              Wallingford, SSB, present William
                              Wadsworth, representing the Wallingford
                              Foundation, with a check for $5,000.
       --------------------------------------------------------------


                                        8
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                 MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL

     The following  discussion  and analysis  presents a review of the financial
condition  and  results  of  operations  of  Bancorp   Connecticut,   Inc.  (the
"Corporation").  Since  Southington  Savings  Bank  (the  "Bank")  is  the  sole
subsidiary  of  the  Corporation,   the  Corporation's  earnings  and  financial
condition are predicated  almost  entirely on the  performance of the Bank. This
review should be read in conjunction with the consolidated  financial statements
and other financial data presented elsewhere herein.

     The Bank's  results of operations  depend  primarily  upon its net interest
income, which is the difference between the interest,  dividends and fees earned
on its loan and investment  portfolios and the interest paid on its deposits and
borrowings. In addition, the Bank's income is affected by the provision for loan
losses as well as the fees it charges for its financial services, security gains
and  losses,  administrative  and  foreclosed  real  estate  expenses,  and  the
provision for income taxes.

     The Bank has two subsidiaries,  BCI Financial  Corporation ("BCIF") and SSB
Mortgage  Corporation.  BCIF is an indirect auto finance company which commenced
operations  April 23, 1998.  SSB Mortgage  Corporation  is a passive  investment
company which was formed during the fourth  quarter of 1998 to take advantage of
changes in  Connecticut  State tax  statutes,  which  reduced the  Corporation's
effective tax rate beginning in 1999.

INVESTMENTS

     Securities available-for-sale decreased $2,838,000 or 1.31% to $214,495,000
as of December 31, 1999 from  $217,333,000  at year-end 1998. A reduction in the
market  value of the  portfolio  in the  amount of  $18,842,000,  as a result of
rising  interest  rates,  was the primary  cause of the  decrease in  securities
available-for-sale.  Net unrealized gains totaled  $1,251,000 as of December 31,
1998 compared to net  unrealized  losses of $17,591,000 as of December 31, 1999.
Purchases of securities  net of proceeds from  maturities  and sales  (excluding
realized  gains)  and  paydowns  on  mortgage-backed   securities  amounting  to
$13,025,000 partially offset the decrease in the securities portfolio.

     Deferred income taxes increased $6,634,000 to $8,535,000 as of December 31,
1999 from  $1,901,000  as of  December  31,  1998  mainly as a result of the tax
benefit  associated  with the $18,842,000  increase in unrealized  losses in the
securities portfolio noted above.

     As of  December  31,  1999,  approximately  58.3%  or  $27,500,000  of  the
marketable equities securities portfolio was comprised of money market preferred
stocks.  These  securities  are  highly  liquid,  reprice  every 49 days and are
subject to the tax  advantages of the Federal  dividends  received  deduction in
1999, and Federal and state dividends received deduction in 1998 and 1997.

     The  following   table  sets  forth  the  carrying   amount  of  securities
available-for-sale at the dates indicated.

                                                             December 31,
                                                  ------------------------------
(in thousands)                                        1999       1998       1997
--------------------------------------------------------------------------------
United States Government and agency obligations   $ 49,928   $ 47,755   $ 27,617
Municipal bonds                                      5,232      3,683      3,432
Corporate bonds                                        923         --         --
Mortgage-backed securities                          83,568     93,132     65,496
Capital trust preferreds                            26,599     12,966      4,052
Marketable equity securities                        47,192     59,203     61,815
Mutual funds                                         1,053        594      4,300
--------------------------------------------------------------------------------
  TOTAL                                           $214,495   $217,333   $166,712
================================================================================

LOANS

     Loans  increased  $31,274,000 or 11.0% to  $316,093,000  as of December 31,
1999 from  $284,819,000 as of December 31, 1998 primarily due to a higher volume
of commercial  loan  originations  and loans closed by BCIF, the Bank's indirect
auto loan financing  subsidiary.  Commercial  loans and  commercial  real estate
loans increased $19,545,000 or 22.9% and represented 33.2% of the loan portfolio
as of December 31, 1999. Consumer loans increased $17,552,000 or 30.0% primarily
due to loans  closed  by BCIF.  As of  December  31,  1999,  the  consumer  loan
portfolio  of  $76,112,000  consisted of 42.7% of home equity loans and lines of
credit, 48.9% automobile loans and 8.4% other consumer loans.

     At  year-end  1999,  loans   collateralized  by  residential  real  estate,
including home equity loans and lines of credit,  represented 52.0% of the total
loan portfolio.


                                        9
                                     -------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     The following table  summarizes the Bank's loan portfolio at the end of the
last five years.

                                                December 31,
                            ----------------------------------------------------
(in thousands)                  1999       1998       1997       1996       1995
--------------------------------------------------------------------------------
Commercial                  $ 56,828   $ 42,837   $ 37,292   $ 37,050   $ 31,971
Commercial real estate        47,961     42,407     39,043     35,472     34,598
Residential real estate      131,942    137,326    134,494    134,000    132,566
Real estate construction       3,250      3,689      3,003      6,234      2,463
Consumer                      76,112     58,560     47,872     39,388     35,556
--------------------------------------------------------------------------------
  TOTAL                     $316,093   $284,819   $261,704   $252,144   $237,154
================================================================================

     The following  table shows the maturity and  repricing of loans  (excluding
commercial and residential real estate mortgages and consumer loans outstanding)
as of  December  31,  1999.  Also  provided  are the  amounts due after one year
classified according to the sensitivity to changes in interest rates.

                                               Maturing or Repricing
                                    --------------------------------------------
                                               After one
                                      Within  but within  After five
(in thousands)                      one year  five years       years       Total
--------------------------------------------------------------------------------
Commercial                           $37,344     $17,209     $ 2,275     $56,828
Real estate construction               3,250          --          --       3,250
--------------------------------------------------------------------------------
  TOTAL                              $40,594     $17,209     $ 2,275     $60,078
================================================================================

Loans maturing/repricing after
  one year with:
    Fixed interest rates                         $10,482      $2,275
    Variable interest rates                        6,727          --
--------------------------------------------------------------------------------
      TOTAL                                      $17,209      $2,275
================================================================================

NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

     Total  nonperforming  assets  remained  unchanged at $1,599,000 at year-end
1999  compared  to 1998.  Nonperforming  loans  increased  to  $1,404,000  as of
December  31, 1999 or 0.4% of total loans as compared to  $1,265,000  or 0.4% of
total loans as of December 31,  1998.  Foreclosed  real estate at year-end  1999
declined to $195,000 from $334,000 at year-end 1998.

     The following table reflects the Bank's  nonperforming assets at the end of
the last five years.

<TABLE>
<CAPTION>
                                                            December 31,
                                          ----------------------------------------------
(dollars in thousands)                      1999      1998      1997      1996      1995
----------------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>       <C>       <C>
Nonaccrual loans
  Commercial                              $  420    $   60    $  387    $  306    $1,062
  Commercial real estate                      --       402       258       337     1,134
  Residential real estate                    857       705     1,988     2,060     3,650
  Consumer                                   127        98       228       236       410
----------------------------------------------------------------------------------------
    Total nonaccrual loans                 1,404     1,265     2,861     2,939     6,256
Accruing loans past due 90 days or more       --        --        --        --        --
----------------------------------------------------------------------------------------
    Total nonperforming loans              1,404     1,265     2,861     2,939     6,256
Foreclosed real estate                       195       334     1,178     1,367       872
----------------------------------------------------------------------------------------
    TOTAL NONPERFORMING ASSETS            $1,599    $1,599    $4,039    $4,306    $7,128
========================================================================================
Nonperforming loans as a
  percentage of total loans                 0.44%     0.44%     1.09%     1.17%     2.64%
========================================================================================
Nonperforming assets as a
  percentage of total assets                0.28%     0.31%     0.91%     1.03%     1.86%
========================================================================================
Restructured loans in compliance with
  modified terms not included above       $  487        --        --        --        --
========================================================================================
</TABLE>


                                       10
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     The Bank classifies loans as being on nonaccrual status when they become 90
days or more past due. Interest income is then reversed and not recognized until
received.  Interest  income that would have been recorded  during 1999, 1998 and
1997 on all  nonaccrual  loans under the original  loan terms was  approximately
$183,000, $203,000 and $335,000, respectively.  Actual income collected on these
loans  during  1999,   1998  and  1997  was  $73,000,   $90,000  and   $201,000,
respectively.

     Management  reviews the loan  portfolio  on a  quarterly  basis to identify
loans that are  impaired.  A loan is  considered  impaired  if, based on current
information and events,  it is estimated that the Bank will be unable to collect
the  scheduled  payments of principal  and interest  when due,  according to the
existing contractual terms of the loan facility. Generally,  nonaccrual loans as
well as  loans  past  due  greater  than 60 days  are  reviewed  for  impairment
including  other loans that present a possible  credit risk.  Homogeneous  loans
which  consist  of  residential  mortgages  and  consumer  loans  are  evaluated
collectively  and  reserves  established  based on the  Bank's  historical  loss
experience.  The  measurement of impairment is based on the fair market value of
respective  loan collateral and the present value of future cash flows for other
loans.

     The following table  illustrates the amount of loans identified as impaired
and the basis used for measuring impairment as of December 31, 1999.

                                                  Basis of measurement
                                      ------------------------------------------
                                                     Present value
                                                       of expected
                                          Fair value        future
(in thousands)                         of collateral     cash flow         Total
--------------------------------------------------------------------------------
Commercial                                    $  380        $   94        $  474
Commercial real estate                         1,170            --         1,170
--------------------------------------------------------------------------------
  TOTAL                                       $1,550        $   94        $1,644
================================================================================

     The Bank also has  potential  problem  loans of  $4,405,000  in real estate
loans and  $727,000  in other  loans that are  current or less than 90 days past
due. These loans were not deemed impaired but were considered  potential problem
loans.  A loan is  considered  a  potential  problem  loan  if it is  risk-rated
substandard  or  doubtful  in  accordance  with  regulatory  definitions  or has
demonstrated a pattern of past due payments and/or  deterioration  of collateral
value. A decline in  Connecticut's  economy and local real estate values as well
as the impact of higher interest rates on adjustable rate notes could hasten the
movement of loans from potential problem loan status to nonperforming  loans and
negatively  impact earnings.  Management is constantly  monitoring the status of
these loans and reviews their classification quarterly.

     The  allowance  for loan losses is  maintained  at a level that  management
believes is prudent and adequate to absorb losses within the loan portfolio.  As
of December 31, 1999,  the allowance was  $5,681,000 or 404.6% of  nonperforming
loans as compared to $5,549,000 and 438.7% of nonperforming loans as of December
31, 1998.

     Management  regularly  monitors and has  established  a formal  process for
determining the adequacy of the allowance for loan losses.  This process results
in an allowance that consists of two components,  allocated and unallocated. The
allocated  component  includes  allowance  estimates  that result from analyzing
certain  individual loans (including  impaired loans),  and specific loan types.
The policy of the Bank is to review all commercial loans and delinquent consumer
loans quarterly.  Up to a total of nine risk rating  classifications are used to
describe the credit risk associated with commercial and consumer loans. Of these
classifications,  the problem loan categories are: "substandard," "doubtful" and
"loss."  Loans  designated  loss are  charged-off  quarterly.  A risk  factor is
assigned by loan type to loans within each  classification  in  determining  the
respective  allowance.  For loans that are  analyzed  individually,  third-party
information such as appraisals may be used to supplement  management's analysis.
For loans that are analyzed on a pool basis, such as residential  mortgage loans
(1-4 family),  management's  analysis consists of reviewing  delinquency trends,
historical  charge-off  experience,  prevailing  economic  conditions,  size and
current  composition of the loan  portfolio,  collateral  value trends and other
relevant factors. The unallocated  component of the allowance for loan losses is
intended to  compensate  for the  subjective  nature of  estimating  an adequate
allowance  for loan  losses,  economic  uncertainties,  and  other  factors.  In
addition to the assessment performed by management, the Bank's loan portfolio is
subjected  to an  external  credit  review  function  and  is  examined  by  its
regulators. The results of these examinations are incorporated into management's
assessment of the allowance for loan losses.



                                       11
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     The  following  table  summarizes  changes in the allowance for loan losses
arising from loans  charged-off and recoveries on loans previously  charged-off,
by loan  category,  and  additions to the  allowance  which have been charged to
expense.

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                               -------------------------------------------------------
(dollars in thousands)            1999        1998        1997        1996        1995
--------------------------------------------------------------------------------------
<S>                            <C>         <C>         <C>         <C>         <C>
Balance at beginning of year   $ 5,549     $ 5,306     $ 4,875     $ 5,488     $ 6,136
Charge-offs:
  Commercial                      (100)         --         (94)       (446)       (227)
  Commercial real estate            --          --          --        (169)       (161)
  Residential real estate         (238)        (29)       (219)       (264)       (341)
  Consumer                        (134)       (126)        (76)       (334)       (312)
--------------------------------------------------------------------------------------
    Total                         (472)       (155)       (389)     (1,213)     (1,041)
--------------------------------------------------------------------------------------
Recoveries:
  Commercial                        37          30          96          51          98
  Commercial real estate            --          --          18          20          --
  Residential real estate            2          35          14           8           2
  Consumer                          74          65          92          86         113
--------------------------------------------------------------------------------------
    Total                          113         130         220         165         213
--------------------------------------------------------------------------------------
Net charge-offs                   (359)        (25)       (169)     (1,048)       (828)
Provision for loan losses          491         268         600         435         180
--------------------------------------------------------------------------------------
Balance at end of year         $ 5,681     $ 5,549     $ 5,306     $ 4,875     $ 5,488
======================================================================================
Ratio of net charge-offs to
  average loans outstanding       0.12%       0.01%       0.07%       0.43%       0.36%
======================================================================================
</TABLE>

     The following  table  illustrates  the allocation of the allowance for loan
losses to each loan  category for the last five years.  Actual losses from loans
of any type,  however,  may be charged against the total amount of the allowance
regardless of the allocations.

<TABLE>
<CAPTION>
                                                                   December 31,
                           -------------------------------------------------------------------------------------------
                                 1999               1998               1997               1996               1995
                           -------------------------------------------------------------------------------------------
                                   Percent            Percent            Percent            Percent            Percent
                                  of Loans           of Loans           of Loans           of Loans           of Loans
                                  to Total           to Total           to Total           to Total           to Total
(dollars in thousands)     Amount    Loans    Amount    Loans    Amount    Loans    Amount    Loans    Amount    Loans
----------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>    <C>         <C>    <C>         <C>    <C>         <C>    <C>         <C>
Commercial                 $1,309       18%   $1,343       15%   $1,194       14%   $1,162       15%   $1,209       13%
Commercial real estate        795       15       847       15       804       15       752       14       803       15
Residential real estate       526       42       559       48       652       52       659       53       367       56
Real estate construction       46        1        48        1        38        1        83        2        35        1
Consumer                    1,425       24       962       21       756       18       620       16       541       15
Unallocated                 1,580       --     1,790       --     1,862       --     1,599       --     2,533       --
----------------------------------------------------------------------------------------------------------------------
  TOTAL                    $5,681      100%   $5,549      100%   $5,306      100%   $4,875      100%   $5,488      100%
======================================================================================================================
</TABLE>

DEPOSITS

     Total  deposits  as of  December  31,  1999 in the  amount of  $348,441,000
remained  relatively  unchanged  compared to the $347,410,000 as of December 31,
1998.  Decreases  in  money  market  savings  and  certificates  of  deposit  of
$7,493,000 and  $3,488,000,  respectively,  were offset by an increase in demand
and NOW accounts of $4,649,000 and $6,852,000, respectively. The increase in NOW
accounts  principally  reflects an increase  in the Bank's  money fund  checking
product  that  pays a rate of  interest  comparable  to  rates  paid on  similar
products at other banks.

     Time  certificates  of  deposit,  which  range  from terms of 3 months to 5
years,  declined  $3,488,000  or 2.2% at year-end  1999  compared to 1998. As of
December 31, 1999,  approximately  74.6% of the  certificates  of deposit either
mature or reprice  within  one year.  At this  time,  the Bank does not  utilize
brokered deposits as a funding source.



                                       12
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     The average  daily amount of deposits  and rates paid on such  deposits for
the past three years are summarized in the following table.

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                       -------------------------------------------------------
(dollars in thousands)                        1999                1998                1997
----------------------------------------------------------------------------------------------
                                        Amount    Rate      Amount    Rate      Amount    Rate
----------------------------------------------------------------------------------------------
<S>                                   <C>         <C>     <C>         <C>     <C>         <C>
Noninterest-bearing demand deposits   $ 35,201    0.00%   $ 31,576    0.00%   $ 23,368    0.00%
NOW accounts                            46,893    2.77      32,846    2.94      19,301    2.35
Regular savings                         69,669    2.01      65,778    2.07      62,758    2.26
Money market savings                    35,999    3.31      36,555    3.54      33,950    3.34
Certificates of deposit                156,879    4.86     163,196    5.33     171,471    5.45
Club accounts                              464    3.02         435    2.99         426    3.29
----------------------------------------------            --------            --------
  TOTAL                               $345,105            $330,386            $311,274
==============================================            ========            ========
</TABLE>

     Maturities of time  certificates  of deposit in amounts of $100,000 or more
outstanding as of December 31, 1999 are summarized as follows:

                  (in thousands)
                  -------------------------------------------
                  3 months or less                    $ 6,495
                  Over 3 months  through 6 months       6,013
                  Over 6 months through 12 months       4,703
                  Over 12 months                        3,784
                  -------------------------------------------
                    TOTAL                             $20,995
                  ===========================================

BORROWINGS

     Federal funds purchased and securities sold under  agreements to repurchase
increased  $6,283,000  or 7.8% to  $86,799,000  at year-end  1999 as compared to
year-end 1998.  Repurchase  agreements  involve the sale of securities to either
broker/dealers  or retail customers under agreements to repurchase the identical
securities at a future date. The Bank uses broker/dealer  repurchase  agreements
to fund specific investment securities transactions.  Such repurchase agreements
have  maturities  of up to 9  years;  however,  those  with  terms of 3 years or
greater  may be  callable 1 year after  issuance  by the  broker/dealer.  Retail
repurchase  agreements are offered primarily to commercial customers as a method
of providing  collateral for funds that exceed the maximum regulatory  insurance
coverage.  As of December  31, 1999,  broker/dealer  repurchase  agreements  and
retail repurchase agreements totaled $67,880,000 and $16,819,000, respectively.

     The Bank also uses the  Federal  Home Loan Bank of Boston  and the  Federal
Reserve Bank of Boston as sources of funds. Advances (i.e.  borrowings) are used
primarily to match certain loan originations and securities purchases, to manage
the maturities of interest-bearing  liabilities,  and to meet certain short-term
liquidity  needs  as  part  of the  Bank's  overall  asset/liability  management
strategy.  Federal Home Loan Bank advances totaled  $72,830,000 at year-end 1999
as compared to $40,630,000 at year-end 1998.  Federal Reserve Bank advances were
$11,500,000 as of December 31, 1999. There were no Federal Reserve Bank advances
outstanding as of year-end 1998.

ASSET/LIABILITY MANAGEMENT AND INTEREST RATE RISK

     Market risk is the  exposure  to loss  resulting  from  changes in interest
rates, foreign currency exchange rates,  commodity prices and equity prices. The
primary  market  risk to which the Bank is exposed is  interest  rate risk.  The
majority of the Bank's interest rate risk arises from the instruments, positions
and  transactions  entered into for purposes  other than  trading.  They include
loans, securities available-for-sale, deposit liabilities, short-term borrowings
and  long-term  debt.  Interest  rate risk occurs  when  assets and  liabilities
reprice at different times as interest rates change.

     Interest rate risk is managed within an overall  asset/liability  framework
for the Bank.  The Bank's  assets and  liabilities  are managed to maximize  net
interest income while  maintaining a level of interest rate risk that is prudent
and manageable.  Interest rate risk is the sensitivity of net interest income to
fluctuations in interest rates over both short-term and long-term time horizons.


                                       13
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



Management  establishes  overall policy and interest rate risk tolerance  levels
which are administered by the Bank's  Asset/Liability  Management Committee on a
monthly  basis.  Interest  rate  risk is  measured  through  the use of a static
interest rate sensitivity report and a dynamic simulation model.

     The  interest  rate  sensitivity  report  measures the  difference  between
interest-earning  assets that reprice or mature within various time horizons and
interest-bearing  liabilities  that  reprice  or  mature  within  the same  time
horizons.  Assumptions  are also made on the rate of  prepayment of principal on
loans and mortgage-backed  securities. To limit exposure to fluctuating interest
rates,  it is the policy of the Bank to maintain the  difference  (GAP)  between
interest rate-sensitive assets and interest rate-sensitive  liabilities within a
range of +/- 20% of total assets in the one-year time frame.  As of December 31,
1999,  rate-sensitive  liabilities exceeded  rate-sensitive assets in a one-year
time frame by $74,808,000 or 13.2% of total assets.

     Although the rate sensitivity  analysis indicates how well matched maturing
or  repricing  assets and  liabilities  are in a given time  frame,  it does not
measure  the  asymmetrical  movement  of asset and  liability  yields.  The Bank
utilizes a simulation  model to measure the estimated  percentage  change in net
interest income due to an increase or decrease in market interest rates of up to
200 basis points, spread evenly over the next twelve months. Various assumptions
regarding the shape of the yield curve, the pricing  characteristics of loan and
deposit  products and borrowings and  prepayments of loans and  investments  are
built  into  the  model.  The  following  table  indicates  that  the  estimated
percentage  change in net  interest  income for the next  twelve  months  from a
change in interest  rates of 200 basis points is within the 10% tolerance  limit
set by management.

Change in Rate    % Change in Net Interest Income
-------------------------------------------------
+200 bp                                    -4.01%
-200 bp                                     0.45%

     Due to the numerous  assumptions  built into the simulation  model,  actual
results  differ from estimated  results.  Factors other than changes in interest
rates could also impact net interest  income.  For example,  the majority of the
Bank's  deposit base is composed of local retail  customers  who tend to be less
sensitive to interest rate changes than other funding sources.  In addition,  an
increase in  competitive  pricing could cause loan yields to decline and deposit
costs to rise.

     Both the rate  sensitivity  analysis and  simulation  model indicate that a
rise  in  interest  rates  would  negatively  impact  earnings.  Strategies  for
maintaining risk limits may include but are not limited to the purchase and sale
of loans,  borrowing from the Federal Home Loan Bank of Boston, the purchase and
sale  of  available-for-sale  securities  and a  change  in the  composition  of
deposits.  Interest  rate  swaps  may  also  be used to  correct  interest  rate
mismatches.  Strategies  utilized  in 1999  include the sale of fixed rate newly
originated  30-year mortgages into the secondary  mortgage market with servicing
released,  the  addition  of  intermediate  term  fixed  rate  home  equity  and
automobile loans and the promotion of the Bank's money fund checking product. In
addition,  to increase  net  interest  income,  in 1998 the Bank  purchased  $43
million  of  U.  S.  Government  and  agency  obligations,   including  mortgage
participation  certificates,  which were  funded by  repurchase  agreements  and
Federal Home Loan Bank borrowings.

     The Bank maintains a trading account, designated as trading securities, for
the purpose of generating  gains on short-term  fluctuations in the market price
of bond and equity  securities.  The Bank's Board of Directors  approves trading
policy  limits,  which include the type of  securities  that can be purchased as
well as maximum  size and maturity  limits.  In  addition,  they also  establish
monthly and quarterly net trading loss limits. If the monthly or quarter-to-date
net trading losses exceed the  predetermined  loss limit,  trading activity will
cease and will not resume until the Board approves continuance.



                                       14
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>
                                                                              December 31, 1999
                                                  -------------------------------------------------------------------
                                                       1-3         4-6        7-12          1-5       5+
(dollars in thousands)                               months      months      months        years     years      Total
---------------------------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>         <C>         <C>        <C>        <C>
Assets subject to interest rate adjustment:
  Short-term investments                          $      --    $     --    $     --    $     --   $    348   $    348
  Investment securities                              38,903       1,793       6,514      30,218    143,489    220,917
  Adjustable rate mortgages                          20,624      12,804      28,040      50,056         --    111,524
  Fixed rate mortgages                                6,917       3,497       6,745      35,260     25,886     78,305
  Consumer and commercial loans                      49,246       4,320      11,283      51,061     10,378    126,288
---------------------------------------------------------------------------------------------------------------------
    TOTAL RATE-SENSITIVE ASSETS                   $ 115,690    $ 22,414    $ 52,582    $166,595   $180,101   $537,382
=====================================================================================================================
Liabilities subject to interest rate adjustment:
  NOW accounts                                    $  27,781    $     --    $     --    $     --   $ 21,599   $ 49,380
  Regular savings                                        --          --          --          --     69,534     69,534
  Federal funds purchased and
    repurchase agreements                            18,919       2,880          --      40,000     25,000     86,799
  Money market deposits                              31,947          --          --          --         --     31,947
  Certificates of deposit                            43,455      44,048      29,464      39,830         --    156,797
  Other borrowings                                   25,000      12,000      30,000       5,830     10,000     82,830
---------------------------------------------------------------------------------------------------------------------
    TOTAL RATE-SENSITIVE LIABILITIES              $ 147,102    $ 58,928    $ 59,464    $ 85,660   $126,133   $477,287
=====================================================================================================================
  Excess (deficiency) of rate-sensitive assets
    over rate-sensitive liabilities               $ (31,412)   $(36,514)   $ (6,882)   $ 80,935   $ 53,968   $ 60,095
---------------------------------------------------------------------------------------------------------------------
  Cumulative excess (deficiency)                  $ (31,412)   $(67,926)   $(74,808)   $  6,127   $ 60,095
==========================================================================================================
  Cumulative rate-sensitive assets as a
    percentage of rate-sensitive liabilities           78.6%       67.0%       71.8%      101.7%     112.6%
  Cumulative excess (deficiency) as a
    percentage of total assets                         (5.5)%     (11.9)%     (13.2)%       1.1%      10.6%
==========================================================================================================
Excluding regular savings:
  Excess (deficiency) of rate-sensitive assets
    over rate-sensitive liabilities               $ (31,412)   $(36,514)   $ (6,882)   $ 80,935   $123,502   $129,629
---------------------------------------------------------------------------------------------------------------------
  Cumulative excess (deficiency)                  $ (31,412)   $(67,926)   $(74,808)   $  6,127   $129,629
==========================================================================================================
  Cumulative rate-sensitive assets as a
    percentage of rate-sensitive liabilities           78.6%       67.0%       71.8%      101.7%     131.8%
  Cumulative excess (deficiency) as a
    percentage of total assets                         (5.5)%     (11.9)%     (13.2)%       1.1%      22.8%
==========================================================================================================
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

     Liquidity  represents the ability of the Bank to meet customer loan demand,
depositor  requests  for  withdrawals  and pay  operating  expenses.  The Bank's
sources  of  funding  are from  deposit  growth,  loan  repayments,  borrowings,
maturities,  prepayment and sales of its  securities  and income  generated from
operations.

     The Bank also has the  capacity to borrow  funds from the Federal Home Loan
Bank of Boston (the  "FHLB"),  of which it is a member.  The Bank is eligible to
borrow  against its assets in an amount not to exceed  collateral  as defined by
the FHLB. As of December 31, 1999,  qualified  collateral totaled  $117,842,000.
The Bank's actual borrowings on that date were $72,830,000.

     As of December 31, 1999,  the Bank had liquid  assets  consisting  of cash,
Federal funds sold, money market  preferred stock and unpledged U.S.  Government
and agency obligations totaling $56,905,000 or 10.0% of total assets, indicating
an acceptable  level of liquid assets and within the Bank's policy  limits.  The
Bank also had additional  marketable  equity  securities  with a market value of
$16,499,000  that could be  converted to cash if  necessary.  As of December 31,
1999,   commitments  to  extend  credit  totaled   $41,126,000  as  compared  to
$33,683,000 as of December 31, 1998.

     The Corporation's improvement in earnings during 1999 led to an increase in
dividend payments to shareholders.  Dividends paid in 1999 totaled $3,088,000 or
$0.60 per share as compared to $2,773,000 or $0.54 per share in 1998. See Note 9
of  Notes  to  Consolidated  Financial  Statements  for  a  description  of  the
applicable restrictions on the Corporation's ability to pay dividends.

     Shareholders'  equity at year-end 1999 decreased to $41,532,000 as compared
to $49,916,000 as of the prior year-end primarily as a result of the $12,436,000
increase in unrealized losses, net of tax benefits,  in the security  portfolio.
Under regulatory definitions, an institution is considered well capitalized (the
highest  rating) if its  leverage  capital  ratio is 5% or higher,  its tier one
risk-based  capital ratio is 6% or higher and its total risk-based capital ratio
is 10% or higher. On December 31, 1999, the Bank had a leverage capital ratio of



                                       15
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



8.30%,  a tier one  risk-based  capital  ratio of 13.04% and a total  risk-based
capital  ratio of 14.29% as  compared  to 9.48%,  16.02%  and  17.27%  for 1998,
respectively.  With the exception of marketable  equity  securities,  the Bank's
regulatory  capital is not affected by changes in unrealized  gains or losses in
its securities portfolios.

YEAR 2000

PROJECT PLAN

     Management  recognized the major impact the Year 2000 computer chip problem
would  have  on  all  corporations  doing  business.   The  following  plan  was
implemented  to identify  critical  systems that had to be modified to avoid any
disruption of daily business.  The  implementation  of the project plan has been
successfully completed.

     AWARENESS PHASE:  Management created a Year 2000 project team to develop an
overall Year 2000  strategy,  provide  education  to employees  and to establish
corporate accountability. The awareness phase was completed February 28, 1998.

     RISK  ASSESSMENT  PHASE:  Beginning  in March 1998,  an  assessment  of all
hardware,  software, networks and other processing platforms was performed. Year
2000 problems were identified and mission critical applications prioritized.  In
July 1998,  the Bank completed the  conversion to a new core  processing  system
utilizing Jack Henry & Associates software and IBM AS400 hardware, both of which
have been  certified  Year 2000  compliant.  This new data  processing  solution
addressed many of the Bank's mission critical applications.  The risk assessment
phase included the  development of  contingency  plans for all mission  critical
applications.  The risk assessment  phase was completed on December 31, 1998 and
the contingency plan was completed by June 30, 1999.

     RENOVATION  PHASE:  Management  established a December 31, 1998 target date
for  replacement  or  modification  of  the  Bank's  mission  critical  internal
applications  to allow for a full year of  testing.  This phase was  essentially
completed ahead of time with the replacement of the core data processing system.

     VALIDATION  PHASE:  This  phase  provides  for  the  testing  of  hardware,
software,  interfaces  and  integration  with other  systems.  It also  included
testing and  certifying  third parties for Year 2000  readiness.  The Bank's new
core   processing   system  has  been  certified  Year  2000  compliant  by  its
manufacturer.  However, the Bank performed its own independent tests rather than
utilize proxy testing  results from the vendor.  In addition,  the Bank retained
the services of an independent  party to review overall plan  effectiveness  and
the  results of  testing.  The  validation  phase on all  critical  systems  was
completed by June 30, 1999.

     IMPLEMENTATION PHASE: As applications became certified they were considered
to be placed into service.  Management assessed the impact of any system failing
the certification  tests and implemented the contingency plan developed for that
application.  The Bank's primary internal  technological  systems including core
processing  system,  teller  equipment  and local area network have already been
placed in service.  Implementation of all critical systems was completed by June
30, 1999.

COSTS

     In 1997,  the Bank completed an extensive  analysis of its data  processing
systems and decided to bring its core  processing  system  in-house  rather than
continue in a service bureau relationship  environment.  The decision to move to
an  in-house   solution  was   primarily   based  on  the   improved   operating
effectiveness,   enhanced  new  product   development  and  expanded  management
reporting the new system could provide.  However,  the additional benefit of the
decision  was  the  purchase  of a  mainframe  computer,  banking  software  and
peripheral  devices that have already been  certified Year 2000  compliant.  The
cost of the new software and hardware (which includes all new teller  equipment)
acquired  for the July 1998  conversion  totaled  $1,991,000.  The cost has been
capitalized  and is being  depreciated  over  the  useful  lives of the  assets.
Related  amortization  and depreciation  amounts to  approximately  $437,000 per
year.

     The  Corporation  does not separately  track the internal costs  associated
with its Year 2000 readiness  project,  and such costs are primarily the portion
of an employee's time spent on Year 2000 related issues.

     Year 2000 external readiness costs,  consisting primarily of labor costs in
the  testing  and  validation  of  systems,  professional  consulting  costs and
marketing costs to keep customers  informed of Year 2000 progress,  approximated
$100,000 in 1999. The Bank does not expect to incur any  additional  significant
Year 2000 costs.

RISKS AND CONTINGENCIES

     Based upon a self-assessment of its current Year 2000 readiness, management
believed that the greatest Year 2000 uncertainties and exposures were not within
its own technological  systems but within its third-party  vendor  relationships
and its commercial  borrowers.  Since the Year 2000 date change, there have been
no technological problems with third-party vendors and the Bank's loan portfolio
has not been  adversely  affected by Year 2000 issues  related to its commercial
borrowers.

     As of year-end  1998,  the Bank had devoted the  majority of its efforts to
convert to the new core processing system.  Since the Year 2000 date change, the
Bank has not experienced any disruptions to customer  service or system failures
related to its core processing system.

     The Bank is also  subject to the safety and  soundness  standards  for Year
2000 readiness  established by the Federal Deposit Insurance Corporation and the
State  of  Connecticut   Banking  Department  and  has  completed  the  Phase  2
examinations by these agencies to date. Management believes it has complied with
all standards set forth by the regulatory agencies.

COMPARISONS OF YEARS ENDED DECEMBER 31, 1999 AND 1998

OVERALL

     For the year 1999,  the  Corporation  reported net income of  $7,620,000 as
compared to $6,345,000  in 1998,  an increase of 20.1%.  On a diluted per common


                                       16
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



share basis,  the  Corporation  earned $1.38 per share in 1999 compared to $1.14
per share in 1998. A higher base of earning assets led by loan growth, increased
net  interest  income and  noninterest  sources of revenue  partially  offset by
increases in  noninterest  expenses and a reduced  effective tax rate  resulting
from the formation of a passive investment company were principally  responsible
for the improved  operating  results.  Net income  generated an annual return on
average  assets of 1.40% for 1999 as compared to 1.28% for 1998 while the return
on average equity rose to 16.12% from 13.07% the previous year.

NET INTEREST INCOME

     Net  interest   income,   the  difference   between   interest   earned  on
interest-earning  assets  and  interest  expense  incurred  on  interest-bearing
liabilities,  is a  significant  component  of  the  Corporation's  consolidated
statements of income.  Net interest income is affected by changes in the volumes
of and rates on interest-earning  assets and interest-bearing  liabilities,  the
volume of interest-earning assets funded with  noninterest-bearing  deposits and
shareholders' equity, and the level of nonperforming assets.

     Average  interest-earning  assets  increased  by  $54,136,000  or  11.3% to
$532,477,000 for 1999 from $478,341,000 in 1998. This increase was mainly due to
a rise in the  average  volume of the loan  portfolio  of  $37,842,000  and to a
lesser  extent  a  $16,294,000  higher  average  volume  of the  invested  funds
portfolio.

     For the year  ended  December  31,  1999,  net  interest  income,  on a tax
equivalent  basis,  increased  $2,010,000 or 11.1% compared to the previous year
primarily as a result of the  $37,842,000  increase in the average volume of the
loan  portfolio.  In  addition,  average   noninterest-bearing  demand  deposits
increased  by  $3,625,000  or 11.5%  during 1999  compared to 1998 which  helped
reduce the average cost of funds and thus had a positive  effect on net interest
income.

     The  decline in the  overall  yield on earning  assets was  proportionately
offset by the decrease in interest  rates on sources of funds which  resulted in
the interest  rate  spread,  on a tax  equivalent  basis,  remaining  relatively
unchanged at 3.21% for 1999 compared to 3.18% for 1998. Similarly,  the ratio of
net interest  income,  on a tax equivalent  basis,  to average  interest-earning
assets was 3.79% for 1999 compared to 3.80% for 1998.

PROVISION FOR LOAN LOSSES

     The provision for loan losses for 1999 was $491,000 compared to $268,000 in
1998, an increase of 83.2%.  Management determines the provision for loan losses
based upon an  evaluation  of the credit  risk  associated  with the  portfolio,
current  market  conditions,  the  level of the  allowance  for loan  losses  as
compared  to  nonperforming  loans  and  related   collateral,   the  amount  of
charge-offs during the year and other relevant factors.

     Net loan  charge-offs  for 1999  totaled  $359,000  compared to $25,000 for
1998. The allowance for loan losses was $5,681,000 or 1.8% of outstanding  loans
as of December  31, 1999  compared to  $5,549,000  or 1.9% as of year-end  1998.
Nonperforming loans were $1,404,000 as of December 31, 1999 and $1,265,000 as of
December 31, 1998,  representing  0.44% of outstanding  loans at the end of each
year. As of December 31, 1999, the ratio of loan loss reserves to  nonperforming
loans was 404.6% as compared to 438.7% for year-end 1998.

     Management  increased the provision for loan losses during 1999 compared to
1998 in light of the  increased  charge-offs  during  the year and growth in the
loan portfolio.

NONINTEREST INCOME

     Noninterest  income  increased  $268,000 or 7.7% to  $3,732,000  in 1999 as
compared to $3,464,000 for 1998. During the third quarter of 1999, a gain in the
amount of $356,000  was realized  from the sale of the Bank's trust  operations.
This  gain  was  approximately  offset  by  security  losses  resulting  from  a
restructuring of a portion of the securities portfolio.  Excluding this gain and
the  $767,000  decrease  in net  securities  gains  in 1999  compared  to  1998,
noninterest  income rose  $679,000 or 31.0%.  This  increase was  primarily  the
result of a $191,000  increase in option call premiums,  increased fee income of
$290,000  from the  sale and  servicing  of loans  generated  by BCIF as well as
increased insurance fees recorded by the Bank in the amount of $119,000.

NONINTEREST EXPENSE

     Noninterest  expenses increased  $1,637,000 or 15.7% in 1999 as compared to
1998.  Salaries and  benefits  rose  $1,050,000  or 18.6% in 1999 as compared to
1998. This increase  reflects higher staffing levels due to the start-up of BCIF
and the new Wallingford  branch facility during the second and third quarters of
1998, respectively, and scheduled employee annual salary increases. In addition,
higher group medical,  group life insurance and retirement  benefit costs in the
amount  of  $268,000  as well as  increased  expense  from  the  utilization  of
temporary  employees  during  1999 in the amount of $41,000  contributed  to the
higher level of employee expense.

     Expenses  related to  furniture  and  equipment  totaled  $999,000  in 1999
compared to $799,000  the prior year,  an increase of $200,000 or 25.0%.  Higher
depreciation and computer  maintenance  charges in 1999 of $219,000 and $84,000,
respectively,  related  to the  Bank's  maintenance  of its  new  in-house  core
processing  system  were  partially  offset by 1998  charges for  scrapped  data
processing  equipment  with a  remaining  book value of $57,000  and an unusable
software write-off in the amount of $49,000.


                                       17
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     Data processing expenses decreased by $134,000 or 19.4% to $557,000 in 1999
compared to $691,000 in 1998. This decrease was primarily due to the change to a
new in-house core processing system from a service bureau environment in 1998.

     Foreclosed  real  estate  expense  increased  $187,000  in 1999 to $110,000
compared to a net recovery of $77,000 in 1998.  This  increase was primarily due
to gains on the sale of foreclosed  properties  in 1998 of $210,000  compared to
$18,000 in 1999.

     The 1999  increase  in other  noninterest  expenses  of  $281,000  or 12.0%
reflected a net  increase in a number of  miscellaneous  expense  categories  as
compared to 1998.

PROVISION FOR INCOME TAXES

     The  provision  for income taxes for the years ended  December 31, 1999 and
1998 was $2,921,000 and  $3,292,000,  respectively,  representing  effective tax
rates of 27.7% and 34.2%,  respectively.  In 1998,  the  Corporation  recorded a
$242,000  income  tax  credit  as a  result  of the  receipt  of an  income  tax
settlement from the State of Connecticut for the tax years 1992 through 1994 and
a  $337,000  charge  related  to the  recording  of a state  deferred  tax asset
valuation  allowance due to the establishment of a passive investment company as
discussed below. The effective income tax rate for 1998 exclusive of these items
was 33.2%. The effective income tax rates are below statutory rates primarily as
a result of the dividends  received deduction and, in 1999, the establishment of
the passive investment company.

     As of December 31, 1999,  the  Corporation  had a net deferred tax asset of
$8,535,000 which was comprised of two separate components.  A deferred tax asset
based  on  the  tax  effect  of  the  net  unrealized   holding  losses  in  the
Corporation's  available-for-sale  investment portfolio totaling $5,981,000. The
change in this component directly impacts  shareholders'  equity. In addition, a
net deferred asset representing the net effect of temporary  differences between
the carrying amounts of assets and liabilities for financial  reporting purposes
and those for income tax  purposes  amounted to  $2,554,000.  The change in this
component  directly  impacts  earnings.  As  of  year-end  1999  and  1998,  the
Corporation has recorded no valuation  allowance  against  Federal  deferred tax
assets. A valuation  allowance is not considered  necessary for Federal purposes
based on sufficient available Federal taxable income in the carryback period.

     On May 19, 1998, the  Connecticut  state  legislature  enacted  legislation
which  permits  financial   services  companies  which  maintain  an  office  in
Connecticut,  and have a minimum of five employees  (among other  requirements),
the authority to create a limited  passive  investment  company  ("PIC") for the
purpose of holding for investment loans  collateralized by real estate free from
Connecticut corporation business tax. The regulation is effective for income tax
years  beginning  January 1, 1999.  During the fourth  quarter of 1998, the Bank
formed a passive investment company, SSB Mortgage  Corporation.  The creation of
the PIC required the recording of a valuation  allowance of $477,000 against the
Bank's  deferred  Connecticut  tax asset and a related  increase  in income  tax
expense of $337,000 for the fourth quarter of 1998. Subsequently,  for tax years
beginning January 1, 1999, the  Corporation's  effective state tax rate has been
eliminated  resulting in the reduced effective tax rate for 1999 compared to the
same period in 1998.

COMPARISONS OF YEARS ENDED DECEMBER 31, 1998 AND 1997

OVERALL

     For 1998,  the  Corporation  had net income of  $6,345,000  as  compared to
$5,896,000  in 1997,  an increase of 7.6%.  The  increase was  primarily  due to
higher net interest income and net security gains partially  offset by increases
in noninterest expenses and establishment of a valuation allowance against state
deferred  tax assets as a result of creating a passive  investment  company (see
"Provision  for  Income  Taxes" and Note 11 of Notes to  Consolidated  Financial
Statements).  Net income  generated an annual return on average  assets of 1.28%
for 1998 as  compared to 1.39% for 1997.  Return on average  equity for 1998 was
13.07% as compared to 13.48% for 1997.

INTEREST INCOME

     Interest  income  increased  $3,442,000 or 10.8% to  $35,345,000 in 1998 as
compared  to  $31,903,000  in 1997.  This  increase  was  attributed  to a 15.7%
increase in average  interest-earning assets partially offset by lower yields on
taxable  investment  securities,  resulting in the tax equivalent yield on total
interest-earning  assets  decreasing  to 7.67% for 1998 as compared to 8.06% for
1997.

INTEREST EXPENSE

     Interest  expense  increased  $2,280,000 or 14.1% to $18,506,000 in 1998 as
compared to $16,226,000  for 1997. The rise in interest  expense was largely due
to a 15.7% increase in average interest-bearing liabilities, partially offset by
a reduction in the rates paid primarily  resulting from a decline in the general
level of interest  rates.  In  addition,  a greater  utilization  of  repurchase
agreements  and FHLB  borrowings as a funding source caused the cost of funds to
decrease slightly to 4.49% for 1998 as compared to 4.56% for 1997 as the average
rates  on  these  borrowings  declined  4  basis  points  and  9  basis  points,
respectively, from 1997 average rates.

NET INTEREST INCOME

     Net interest  income  increased  $1,162,000  or 7.4% in 1998 as compared to
1997. The tax equivalent net interest margin for 1998 was 3.80%, down from 4.13%
in 1997.


                                       18
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



PROVISION FOR LOAN LOSSES

     The provision for loan losses for 1998 was $268,000 as compared to $600,000
in 1997,  a decrease of 55.3%.  Management  determines  the  provision  for loan
losses  based  upon  an  evaluation  of the  credit  risk  associated  with  the
portfolio,  current  market  conditions  and the level of the allowance for loan
losses as compared to  nonperforming  loans.  The decrease in the  provision for
1998 is commensurate with the reduction in nonperforming  loans to $1,265,000 at
December 31, 1998 from $2,861,000 at December 31, 1997,  representing  0.44% and
1.09% of total loans, respectively. Net charge-offs for 1998 declined to $25,000
as compared to $169,000 for 1997.  As of December  31,  1998,  the ratio of loan
loss  reserves  to  nonperforming  loans was  438.7% as  compared  to 185.5% for
year-end 1997.

NONINTEREST INCOME

     Noninterest  income increased  $1,141,000 or 49.1% to $3,464,000 in 1998 as
compared to  $2,323,000  for 1997.  The increase was  primarily  the result of a
$433,000 or 51.6% increase in investment  securities gains partially offset by a
$190,000 or 182.7%  decrease  in net trading  account  gains.  Favorable  market
conditions  and a strategic  shift in the mix of securities  contributed  to the
higher  level of net  realized  security  gains.  A higher level of assets under
management  and an increase  in estate  settlement  fees  resulted in trust fees
increasing  $134,000  or 27.5% from the prior  year.  Brokerage  fees  increased
$272,000 or 191.5% for 1998 as compared to 1997 due to higher  sales  volume and
greater fee retention.

NONINTEREST EXPENSE

     Noninterest  expenses increased  $1,697,000 or 19.5% in 1998 as compared to
1997.  Salaries  and  benefits  rose  $859,000  or 17.9%  primarily  from higher
brokerage  commissions  attributed to higher sales volume,  staff additions from
the  start-up of BCIF and the new  Wallingford  branch  facility  and  temporary
employee cost  associated with the conversion  process.  Furniture and equipment
expense increased $284,000 or 55.3% due to higher  depreciation  charges and the
write-off of data processing equipment as a result of the Bank's installation of
the new  in-house  core  processing  system.  Data  processing  expense  rose to
$691,000,  an  increase  of  $123,000  or 21.7%,  due to the  conversion  to and
outsourcing of check image processing and proof of deposit.  Advertising expense
increased  $99,000  or 26.9% as  compared  to 1997 due to the  promotion  of the
Bank's demand  deposit  image  statements,  money fund checking  product and new
branch  facility.   Other  noninterest  expense  increased  $456,000  or  27.1%,
reflecting increased fees for professional services, printing and form supplies,
telephone expense, postage and a number of miscellaneous expense categories. The
increases in these expense  categories  are largely  associated  with BCIF,  the
Wallingford facility and data processing. Noninterest expenses in 1998 benefited
from a  reduction  of  $124,000 or 263.8% in  foreclosed  real estate  expenses,
resulting  from  fewer  properties  under  management  and  gains  on  sales  of
foreclosed properties.

PROVISION FOR INCOME TAXES

     The  provision  for  income  taxes  increased  to  $3,292,000  in 1998 from
$2,803,000 in 1997.  The increase was primarily due to the  generation of income
before taxes of $9,636,000 in 1998 as compared to $8,698,000  earned in 1997 and
a  $337,000  charge  related  to the  recording  of a state  deferred  tax asset
valuation allowance due to the establishment of a passive investment company. As
a result, the effective income tax rates for 1998 and 1997 were 34.2% and 32.2%,
respectively, and were lower than the expected statutory rate due to the Federal
and state dividends  received deduction and the Federal tax-exempt status of the
Bank's municipal bond investments.

     As of December 31, 1998,  the  Corporation  had a net deferred tax asset of
$1,901,000  which was  comprised  of two  separate  components.  A deferred  tax
liability  based on the tax effect of the net  unrealized  holding  gains in the
Corporation's  available-for-sale  investment  portfolio totaled  $425,000.  The
change in this component directly impacts  shareholders'  equity. In addition, a
deferred asset representing the net effect of temporary  differences between the
carrying amounts of assets and liabilities for financial  reporting purposes and
those for  income  tax  purposes  amounted  to  $2,326,000.  The  change in this
component  directly  impacts  earnings.  As of  year-end,  the  Corporation  has
recorded no valuation allowance against Federal deferred tax assets. A valuation
allowance is not considered  necessary for Federal  purposes based on sufficient
available Federal taxable income in the carryback period.

IMPACT OF INFLATION

     The  financial  statements  and  related  data  presented  herein have been
prepared in accordance  with  generally  accepted  accounting  principles  which
require the measurements of financial position and operating results in terms of
historical dollars without  considering changes in the relative purchasing power
of money over time and due to inflation. Virtually all assets and liabilities of
a financial  institution  are monetary in nature.  As a result,  interest  rates
typically  have  a  more  significant   impact  on  a  financial   institution's
performance than the effects of general levels of inflation. Inflation, however,
may  impact a  creditor's  ability to service  debt if the loan is  variable  in
nature or if the creditor's  income stream were to be adversely  affected due to
inflationary  cycles.  The  impact of  inflationary/deflationary  pressures  are
considered in the Bank's allowance for loan losses. See Nonperforming Assets and
Allowance for Loan Losses.


                                       19
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



ACCOUNTING PRONOUNCEMENTS

     In June 1999, the FASB issued Statement of Financial  Accounting  Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral
of the Effective Date of FASB  Statement No. 133" ("SFAS 137").  SFAS 137 delays
the effective  date for the  implementation  of FASB Statement No. 133 to fiscal
years  beginning  after December 15, 2000 (January 1, 2001 for the  Corporation)
and  requires all  derivative  instruments  be recorded on the balance  sheet at
their fair value. Changes in the fair value of derivative  instruments are to be
recorded  each  period  in  current  earnings  or  other  comprehensive  income,
depending on whether a derivative is  designated as part of a hedge  transaction
and, if it is, the type of hedge  transaction.  Management  anticipates that the
adoption  of SFAS 133 will not have a  significant  effect on the  Corporation's
results  of  operations  or  its  financial  position  because  the  Corporation
presently does not hold or utilize any derivative instruments.

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY: INTEREST RATES AND
INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                     -------------------------------------------------------------------------------

(dollars in thousands)                          1999                       1998                        1997
--------------------------------------------------------------------------------------------------------------------
                                      Average           Yield/   Average           Yield/    Average           Yield/
                                      Balance Interest Rate (c)  Balance Interest Rate (c)   Balance Interest Rate (c)
--------------------------------------------------------------------------------------------------------------------
<S>                                  <C>       <C>       <C>    <C>       <C>       <C>     <C>       <C>       <C>
ASSETS
Interest-earning assets:
  Loans (a)(b)                       $303,161  $24,303   8.02%  $265,319  $22,617   8.52%   $256,944  $22,255   8.66%
  Taxable investment securities (c)   215,156   14,353   6.67    201,542   13,372   6.63     146,263   10,469   7.16
  Municipal bonds (c)                   4,184      299   7.15      3,446      243   7.05       3,287      232   7.06
  Federal funds sold                    6,434      325   5.05      5,028      267   5.31       3,859      207   5.36
  Other interest-earning assets         3,542      221   6.24      3,006      182   6.05       2,917      145   4.97
------------------------------------------------------          -----------------           -----------------
TOTAL INTEREST-EARNING ASSETS         532,477   39,501   7.42    478,341   36,681   7.67     413,270   33,308   8.06
------------------------------------------------------                    -------                     -------
Noninterest-earning assets             12,920                     15,556                      11,967
---------------------------------------------                   --------                    --------
TOTAL ASSETS                         $545,397                   $493,897                    $425,237
=============================================                   ========                    ========

LIABILITIES AND EQUITY
Interest-bearing liabilities:
  NOW and savings deposits           $152,561    3,891   2.55   $135,179    3,625   2.68    $116,009    3,008   2.59
  Time deposits                       157,343    7,646   4.86    163,631    8,703   5.32     171,897    9,356   5.44
  FHLB of Boston advances              54,790    2,866   5.23     32,525    1,795   5.52      24,805    1,491   6.01
  Other borrowings                     93,881    4,913   5.23     80,592    4,383   5.44      43,244    2,371   5.48
------------------------------------------------------          -----------------           -----------------
TOTAL INTEREST-BEARING LIABILITIES    458,575   19,316   4.21    411,927   18,506   4.49     355,955   16,226   4.56
------------------------------------------------------                    -------                     -------
Noninterest-bearing liabilities:
  Demand deposits                      35,201                     31,576                      23,368
  Other                                 4,348                      1,860                       2,173
Shareholders' equity                   47,273                     48,534                      43,741
---------------------------------------------                   --------                    --------
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY               $545,397                   $493,897                    $425,237
=============================================                   ========                    ========
Net interest income before
  Federal tax equivalent adjustment             20,185                     18,175                      17,082
Federal tax equivalent adjustment                 (850)                    (1,336)                     (1,405)
------------------------------------------------------                    -------                     -------
Net interest income                            $19,335                    $16,839                     $15,677
======================================================                    =======                     =======
Net interest spread (tax equivalent basis)               3.21%                      3.18%                       3.50%
=============================================================                       ====                        ====
Net interest margin (tax equivalent basis)               3.79%                      3.80%                       4.13%
=============================================================                       ====                        ====
</TABLE>

(a)  Average balances for loans include nonaccrual and renegotiated balances.
(b)  Included in interest income are loan fees of $392,000, $454,000 and
     $387,000 for the years ended December 31, 1999, 1998 and 1997,
     respectively.
(c)  Yields/Rates are calculated on a tax equivalent basis using a Federal
     income tax rate of 34% and state income tax rates of 0%, 9.50% and 10.50%,
     for the three years ended December 31, 1999, respectively.



                                       20
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



NET INTEREST INCOME; RATE/VOLUME ANALYSIS

<TABLE>
<CAPTION>
                                       1999 Compared to 1998            1998 Compared to 1997
                                    Increase (Decrease) Due to       Increase (Decrease) Due to
------------------------------------------------------------------------------------------------
(in thousands)                     Volume       Rate    Net (1)     Volume       Rate     Net (1)
------------------------------------------------------------------------------------------------
<S>                               <C>        <C>        <C>        <C>        <C>        <C>
Interest earned on:
  Loans                           $ 3,090    $(1,404)   $ 1,686    $   718    $  (356)   $   362
  Taxable investment securities       908         73        981      3,714       (811)     2,903
  Municipal bonds                      53          3         56         11         --         11
  Federal funds sold                   72        (14)        58         62         (2)        60
  Other interest-earning assets        33          6         39          5         32         37
------------------------------------------------------------------------------------------------
    Total interest income           4,156     (1,336)     2,820      4,510     (1,137)     3,373
------------------------------------------------------------------------------------------------
Interest paid on:
  NOW and savings deposits            450       (184)       266        511        106        617
  Time deposits                      (326)      (731)    (1,057)      (443)      (210)      (653)
  FHLB of Boston advances           1,169        (98)     1,071        434       (130)       304
  Other borrowings                    701       (171)       530      2,031        (19)     2,012
------------------------------------------------------------------------------------------------
    Total interest expense          1,994     (1,184)       810      2,533       (253)     2,280
------------------------------------------------------------------------------------------------
Change in net interest income     $ 2,162    $  (152)   $ 2,010    $ 1,977    $  (884)   $ 1,093
================================================================================================
</TABLE>

(1)  The change in interest due to both tax equivalent  rate and volume has been
     allocated to changes due to volume and changes due to tax  equivalent  rate
     in proportion to the  relationship  of the absolute  dollar  amounts of the
     change in each.



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



                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of Bancorp Connecticut, Inc.:

     In our opinion, the accompanying  consolidated  statements of condition and
the related  consolidated  statements of income,  shareholders'  equity and cash
flows  present  fairly,  in all material  respects,  the  financial  position of
Bancorp Connecticut,  Inc. and subsidiary at December 31, 1999 and 1998, and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 1999, in conformity  with  accounting  principles
generally  accepted in the United  States.  These  financial  statements are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  statements in  accordance  with  auditing  standards  generally
accepted in the United States,  which require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP

Hartford, Connecticut
January 20, 2000



                                       21
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                      CONSOLIDATED STATEMENTS OF CONDITION
                                                              December 31,
                                                      -------------------------
(dollars in thousands)                                     1999            1998
-------------------------------------------------------------------------------
ASSETS:
  Cash and due from banks                             $  13,548       $  11,163
  Interest-bearing deposits with banks                      346              15
  Federal funds sold                                      6,725              --
-------------------------------------------------------------------------------
    Cash and cash equivalents                            20,619          11,178
-------------------------------------------------------------------------------
  Securities available-for-sale
    (at market value)                                   214,495         217,333
  Trading account securities                                348             172
  Federal Home Loan Bank stock                            4,392           2,832
  Loans                                                 316,093         284,819
  Less:
    Deferred loan fees                                     (702)           (850)
    Allowance for loan losses                            (5,681)         (5,549)
-------------------------------------------------------------------------------
      Net loans                                         309,710         278,420
-------------------------------------------------------------------------------
  Deferred income taxes                                   8,535           1,901
  Premises and equipment, net                             3,971           4,524
  Accrued income receivable                               3,482           3,077
  Foreclosed real estate, net                               195             334
  Other assets                                            3,051           1,585
-------------------------------------------------------------------------------
    Total assets                                      $ 568,798       $ 521,356
===============================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
  Deposits                                            $ 348,441       $ 347,410
  Funds borrowed                                        171,129         121,146
  Other liabilities                                       7,696           2,884
-------------------------------------------------------------------------------
    Total liabilities                                   527,266         471,440
-------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES                                --              --

SHAREHOLDERS' EQUITY:
  Preferred stock, no par value:
    authorized 1,000,000 shares;
    none issued and outstanding                              --              --
  Common stock, $1.00 par value:
    authorized 7,000,000 shares;
    issued 5,830,811 shares in 1999
    and 5,653,406 in 1998                                 5,831           5,653
  Additional paid-in capital                             18,507          17,421
  Retained earnings                                      36,293          31,761
  Accumulated other comprehensive
    (loss) income                                       (11,611)            825
  Treasury stock at cost:
    625,836 shares in 1999
    and 519,498 shares in 1998                           (7,488)         (5,744)
-------------------------------------------------------------------------------
      Total shareholders' equity                         41,532          49,916
-------------------------------------------------------------------------------
      Total liabilities and
        shareholders' equity                          $ 568,798       $ 521,356
===============================================================================

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



                                       22
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



                       CONSOLIDATED STATEMENTS OF INCOME

                                               For the Years Ended December 31,
                                               --------------------------------
(in thousands, except per share data)              1999        1998        1997
-------------------------------------------------------------------------------
INTEREST INCOME:
  Interest on loans, including fees            $ 24,303    $ 22,617    $ 22,255
-------------------------------------------------------------------------------
  Interest and dividends on
    investment securities:
      Interest income                            11,520       9,074       6,128
      Dividend income                             2,282       3,216       3,147
      Interest on trading account                     7          12          30
-------------------------------------------------------------------------------
                                                 13,809      12,302       9,305
-------------------------------------------------------------------------------
  Interest on Federal funds sold                    325         267         207
  Other interest and dividends                      214         159         136
-------------------------------------------------------------------------------
        Total interest income                    38,651      35,345      31,903
-------------------------------------------------------------------------------
INTEREST EXPENSE:
  Savings deposits                                2,591       2,658       2,553
  Time deposits                                   7,646       8,704       9,357
  NOW accounts                                    1,300         966         454
-------------------------------------------------------------------------------
                                                 11,537      12,328      12,364
  Interest on borrowed money                      7,779       6,178       3,862
-------------------------------------------------------------------------------
        Total interest expense                   19,316      18,506      16,226
-------------------------------------------------------------------------------
        Net interest income                      19,335      16,839      15,677
Provision for loan losses                           491         268         600
-------------------------------------------------------------------------------
        Net interest income after
          provision for loan losses              18,844      16,571      15,077
-------------------------------------------------------------------------------
NONINTEREST INCOME:
  Net securities gains                              505       1,272         839
  Net trading account (losses) gains                 (4)        (86)        104
  Service charges on deposit accounts               767         686         555
  Trust fees                                        513         621         487
  Option call premiums                              439         248         (35)
  Brokerage servicing fees                          348         414         142
  Other                                           1,164         309         231
-------------------------------------------------------------------------------
        Total noninterest income                  3,732       3,464       2,323
-------------------------------------------------------------------------------
NONINTEREST EXPENSE:
  Salaries and employee benefits                  6,698       5,648       4,789
  Furniture and equipment                           999         799         514
  Net occupancy                                     594         525         537
  Data processing                                   557         691         568
  Advertising                                       451         467         368
  Foreclosed real estate
    (recoveries), net                               110         (77)         47
  Other                                           2,626       2,345       1,878
-------------------------------------------------------------------------------
        Total noninterest expense                12,035      10,398       8,701
-------------------------------------------------------------------------------
        Income before income taxes               10,541       9,637       8,699
Provision for income taxes                        2,921       3,292       2,803
-------------------------------------------------------------------------------
        NET INCOME                             $  7,620    $  6,345    $  5,896
===============================================================================
NET INCOME PER COMMON SHARE:
  Basic                                        $   1.47    $   1.24    $   1.16
===============================================================================
  Diluted                                      $   1.38    $   1.14    $   1.08
===============================================================================

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



                                       23
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



<TABLE>
<CAPTION>
                                           CONSOLIDATED STATEMENTS OF
                                              SHAREHOLDERS' EQUITY

                                                     For the Years Ended December 31, 1999, 1998 and 1997
                                              ------------------------------------------------------------------
                                                                              Accumulated
                                                                                    Other
                                                                            Comprehensive
                                                                                   Income
                                                       Additional              Unrealized                  Total
(dollars in thousands,                         Common     Paid-In    Retained       Gains   Treasury Shareholders'
except per share data)                          Stock     Capital    Earnings     (Losses)     Stock      Equity
----------------------------------------------------------------------------------------------------------------
<S>                                           <C>        <C>         <C>         <C>         <C>        <C>
Balance, December 31, 1996                    $ 2,768    $ 19,189    $ 24,609    $    504    $(4,339)   $ 42,731
                                                                                                        --------
  Net income                                       --          --       5,896          --         --       5,896
  Increase in net unrealized gain on
    securities available-for-sale                  --          --          --       1,375         --       1,375
                                                                                                        --------
      Total comprehensive income                                                                           7,271
                                                                                                        --------
  Stock options exercised (40,560 shares)          41         475          --          --         --         516
  Cash dividends declared
    ($0.4625 per share)                            --          --      (2,356)         --         --      (2,356)
  2-for-1 stock split effected in the form
    of a stock dividend                         2,803      (2,803)         --          --         --          --
  Treasury stock purchased (124,394 shares)        --          --          --          --     (1,405)     (1,405)
  Tax benefits related to common stock
    options exercised                              --         190          --          --         --         190
----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                      5,612      17,051      28,149       1,879     (5,744)     46,947
  Net income                                       --          --       6,345          --         --       6,345
  Decrease in unrealized gain on
    securities available-for-sale                  --          --          --      (1,054)        --      (1,054)
                                                                                                        --------
      Total comprehensive income                                                                           5,291
                                                                                                        --------
  Stock options exercised (41,820 shares)          41         260          --          --         --         301
  Cash dividends declared
    ($0.535 per share)                             --          --      (2,733)         --         --      (2,733)
  Tax benefits related to common stock
     options exercised                             --         110          --          --         --         110
----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                      5,653      17,421      31,761         825     (5,744)     49,916
                                                                                                        --------
  Net income                                       --          --       7,620          --         --       7,620
  Decrease in unrealized gain on
    securities available-for-sale                  --          --          --     (12,436)        --     (12,436)
                                                                                                        --------
      Total comprehensive loss                                                                            (4,816)
                                                                                                        --------
  Stock options exercised (177,405 shares)        178         866          --          --         --       1,044
  Cash dividends declared
    ($0.595 per share)                             --          --      (3,088)         --         --      (3,088)
  Treasury stock purchased (106,338 shares)        --          --          --          --     (1,744)     (1,744)
  Tax benefits related to common stock
    options exercised                              --         220          --          --         --         220
----------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                    $ 5,831    $ 18,507    $ 36,293    $(11,611)   $(7,488)   $ 41,532
================================================================================================================
</TABLE>

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



                                       24
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



<TABLE>
<CAPTION>
                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   For the Years Ended December 31,
                                                   --------------------------------
(in thousands)                                          1999        1998       1997
-----------------------------------------------------------------------------------
<S>                                                <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $   7,620   $   6,345   $  5,896
-----------------------------------------------------------------------------------
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Amortization of bond premiums
        (accretion of discounts), net                 (2,474)       (573)        78
      Deferred income tax provision (benefit)           (228)        452       (231)
      Provision for loan losses                          491         268        600
      Provision for foreclosed real estate losses         93          53        140
      Gain on sale of foreclosed real estate             (18)       (210)      (196)
      Gain on sale of loans                             (346)        (79)       (42)
      Gain on sale of trust operations                  (356)         --         --
      Amortization of deferred loan points              (219)       (283)      (174)
      Net securities gains                              (505)     (1,272)      (839)
      Net trading account losses (gains)                   4          86       (104)
      Depreciation and amortization                      833         570        454
      (Increase) decrease in trading account            (180)        354      1,921
      Increase in accrued income receivable             (405)       (317)       (43)
      Increase in other assets                        (1,258)       (879)      (226)
      Increase (decrease) in other liabilities         5,032         (13)     2,543
-----------------------------------------------------------------------------------
        Total adjustments                                464      (1,843)     3,881
-----------------------------------------------------------------------------------
        Net cash provided by operating activities      8,084       4,502      9,777
-----------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of securities held-to-maturity                --          --    (19,495)
  Purchases of securities available-for-sale        (144,988)   (177,016)   (76,218)
  Proceeds from sales of securities
    available-for-sale                                91,141      83,147     50,353
  Proceeds from maturities of securities
    available-for-sale                                26,159      23,623     23,759
  Paydowns on mortgage-backed securities              14,663      19,845      7,553
  Purchases of Federal Home Loan Bank stock           (1,560)       (737)       (55)
  Proceeds from sale of loans                         28,146       5,172      1,653
  Net increase in loans                              (59,499)    (28,225)   (11,658)
  Purchases of premises and equipment, net              (237)     (1,943)      (481)
  Proceeds from sale of trust operations                 106          --         --
  Proceeds from sales of foreclosed real
    estate, net                                          200       1,104        715
-----------------------------------------------------------------------------------
    Net cash used for investing activities           (45,869)    (75,030)   (23,874)
-----------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net decrease in time deposits                       (3,482)     (8,816)    (6,277)
  Net increase in other deposits                       4,513      37,089     12,062
  Proceeds from borrowings                            89,501     116,269     35,351
  Repayment of borrowings                            (45,801)    (96,269)   (35,721)
  Net increase in Federal funds purchased and
    repurchase agreements                              6,283      25,148     13,489
  Proceeds from exercise of stock options              1,044         301        516
  Repurchase of common stock                          (1,744)         --     (1,405)
  Cash dividends paid                                 (3,088)     (2,733)    (2,356)
-----------------------------------------------------------------------------------
    Net cash provided by financing activities         47,226      70,989     15,659
-----------------------------------------------------------------------------------
    Net increase in cash and cash equivalents          9,441         461      1,562
Cash and cash equivalents at beginning of year        11,178      10,717      9,155
-----------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR           $  20,619   $  11,178   $ 10,717
===================================================================================
NONCASH INVESTING AND FINANCING ACTIVITIES:
  Increase (decrease) in net unrealized gain
    on securities available-for-sale, net of
    $6,406, $842 and $915 of deferred taxes
    in 1999, 1998 and 1997, respectively           $ (12,436)  $  (1,054)  $  1,375
  Transfer of loans to foreclosed real estate            137         175        682
  Transfer of held-to-maturity securities to
    available-for-sale securities                         --          --     53,455
</TABLE>

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



                                       25
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

     The consolidated  financial  statements of Bancorp  Connecticut,  Inc. (the
"Corporation") include the accounts of its wholly owned subsidiary,  Southington
Savings  Bank (the  "Bank").  The Bank  operates  four  branches  and a mortgage
lending  center  in  Southington,   Connecticut,   one  branch  in  Wallingford,
Connecticut and BCI Financial  Corporation,  an indirect auto finance subsidiary
located in Southington, Connecticut. During the fourth quarter of 1998, the Bank
formed a passive investment company, SSB Mortgage Corporation, to take advantage
of  changes  in  Connecticut  State tax  statutes  (see Note 11).  SSB  Mortgage
Corporation  commenced  operations  during the first quarter of 1999. The Bank's
primary source of revenue is providing loans to customers,  who are either small
and  middle-market  businesses  or  individuals.  All  significant  intercompany
balances and transactions have been eliminated in consolidation.

Basis of Financial Statement Presentation
-----------------------------------------

     The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. In preparing the financial statements,
management is required to make extensive use of estimates and  assumptions  that
affect the  reported  amounts of assets  and  liabilities  as of the date of the
statements  of  condition,  and revenues  and  expenses  for the period.  Actual
results could differ significantly from those estimates.

     Material estimates that are particularly  susceptible to significant change
in the near term relate to the valuation of investments and the determination of
the  allowance  for  loan  losses  and  valuation  of real  estate  acquired  in
connection  with  foreclosures.  In  connection  with the  determination  of the
allowance for loan losses and valuation of  foreclosed  real estate,  management
obtains independent appraisals for significant properties. A substantial portion
of  the  Bank's  loans  is   collateralized   by  real  estate  in  Connecticut.
Accordingly,  the ultimate collectibility of a substantial portion of the Bank's
loan portfolio is  particularly  susceptible to changes in market  conditions in
Connecticut.

     Management  believes  that the  allowance  for loan losses and valuation of
foreclosed real estate are adequate. While management uses available information
to recognize losses on loans and foreclosed real estate, future additions to the
allowance  or  write-downs  may  be  necessary  based  on  changes  in  economic
conditions,   particularly  in  Connecticut.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the Bank's  allowance for loan losses and  valuation of foreclosed  real estate.
Such  agencies may require the Bank to recognize  additions to the  allowance or
additional  write-downs on foreclosed  real estate based on their  judgements of
information available to them at the time of their examination.

Investments
-----------

     Securities that the Corporation has the ability and positive intent to hold
to maturity are classified as held-to-maturity and carried at amortized cost. As
of  December  31,  1999  and  1998,  there  were  no  securities  classified  as
held-to-maturity.  Securities  that  may be sold  as  part of the  Corporation's
asset/liability or liquidity  management or in response to or in anticipation of
changes in interest  rates and resulting  prepayment  risk, or for other similar
factors, are classified as available-for-sale  and carried at fair market value.
Unrealized  gains and losses on such  securities  are  reported net of tax, as a
separate  component  of  shareholders'  equity.  The  Corporation  classifies  a
security as a trading  security  when the intent is to sell the  security in the
near  future to  generate  profits.  Any  unrealized  gains or losses in trading
securities are included in income. Realized gains and losses on the sales of all
securities   are  reported  in  earnings   and   computed   using  the  specific
identification  cost basis.  Amortization of premiums and accretion of discounts
is computed  over the  estimated  term of the  securities  using a method  which
approximates the level yield method.

Interest and Fees on Loans
--------------------------

     Interest on loans is included  in income  monthly as earned  based on rates
applied to principal  amounts  outstanding,  except that interest on loans 90 or
more days past due or impaired loans is not recognized as income until received.
Loan origination fees and certain direct loan origination costs are deferred and
the net amount  amortized as an adjustment to the related  loan's yield over the
life of the loan or taken into income when the related loan is sold.

Loans and Allowance for Loan Losses
-----------------------------------

     Loans are stated at  principal  balance  and are net of  unearned  interest
income.

     The  allowance  for loan  losses  is  maintained  at levels  considered  by
management  to be adequate  to absorb  losses  inherent  in the loan  portfolio.
Management's  determination  of the  adequacy  of the  allowance  is based on an
evaluation  of the  portfolio,  past  loan  loss  experience,  current  economic
conditions,  volume,  growth and  composition  of the loan  portfolio  and other
relevant  factors.  The  allowance is increased  by  provisions  for loan losses
charged  against  income.  When a loan or portion of a loan is  determined to be
uncollectible, the portion deemed uncollectible is charged against the allowance
and subsequent recoveries, if any, are credited to the allowance.

     Management  considers a loan impaired if, based on current  information and
events,  it is  probable  that the  Corporation  will be unable to  collect  the
scheduled  payments  of  principal  and  interest  when  due,  according  to the
contractual  terms of the loan agreement.  The measurement of impaired loans and
the related allowance for loan losses is generally based on the present value of
expected future cash flows discounted at the historical effective interest rate,


                                       26
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



except that all collateral-dependent  loans are measured for impairment based on
the fair value of the collateral.  Smaller-balance  homogeneous loans consisting
of  residential   mortgages  and  consumer  loans  are  evaluated  for  reserves
collectively based on historical loss experience.

Premises and Equipment
----------------------

     Premises and equipment,  excluding  land, are stated at original cost, less
accumulated  depreciation and  amortization.  Land is reported at original cost.
Depreciation   and   amortization   is   computed  on  the   straight-line   and
declining-balance  methods over the estimated useful lives of the assets, except
for leasehold  improvements which are amortized over the shorter of the terms of
the respective leases or the estimated useful lives of the  improvements.  Major
improvements are capitalized,  and recurring repairs and maintenance are charged
to noninterest expense.

Foreclosed Real Estate
----------------------

     Foreclosed real estate  consists of properties  acquired  through  mortgage
loan foreclosure proceedings.  These properties are recorded at the lower of the
carrying  value  of the  related  loans,  including  costs  of  foreclosure,  or
estimated fair value,  less estimated costs to sell, of the real estate acquired
or repossessed.  An allowance for losses on foreclosed real estate is maintained
for subsequent valuation adjustments on a specific-property basis.

Loan Servicing Rights
---------------------

     In accordance with Statement of Financial  Accounting Standards (SFAS) 125,
loan  servicing  rights are amortized over the period of estimated net servicing
revenue.  They are evaluated for impairment by comparing the aggregate  carrying
amount of the  servicing  rights to their fair  value.  Fair value is  estimated
using market prices of similar loan servicing  assets and discounted  future net
cash flows considering market prepayment estimates, historical prepayment rates,
portfolio  characteristics,  interest  rates and  other  economic  factors.  For
purposes of measuring  impairment,  the loan servicing  rights are stratified by
the  predominant  risk  characteristics  which  include  product  types  of  the
underlying  loans and interest rates of the loan notes.  Any impairment would be
recognized  through a valuation  reserve and  included in  amortization  of loan
servicing rights.

Income Taxes
------------

     The Corporation  and its subsidiary file a consolidated  Federal income tax
return. Deferred income taxes and tax benefits are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The  Corporation  provides
deferred taxes for the estimated  future tax effects  attributable  to temporary
differences and carryforwards when realization is more likely than not.

Earnings Per Share
------------------

     Effective  December 31, 1997,  the  Corporation  adopted the  provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"). SFAS 128 establishes  standards for computing and presenting earnings per
share ("EPS").  It replaces the  presentation of primary EPS with a presentation
of basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income  statement for all entities with complex capital  structures.
This statement was effective for financial  statements issued for periods ending
after December 15, 1997 and has been applied for all periods presented.

     Basic  earnings  per share is computed  using the  weighted-average  common
shares  outstanding  during the year. The  computation  of diluted  earnings per
share is similar  to the  computation  of basic  earnings  per share  except the
denominator is increased to include the number of additional  common shares that
would have been outstanding if dilutive potential common shares had been issued.
The shares used in the  computations for the three years ended December 31, 1999
were as follows:

                                            1999            1998            1997
--------------------------------------------------------------------------------
Basic                                  5,191,550       5,110,191       5,093,588
Effects of dilutive
  stock options                          336,671         438,085         384,783
--------------------------------------------------------------------------------
Diluted                                5,528,221       5,548,276       5,478,371
================================================================================

     The number of common shares used in the calculation  have been restated for
1997 to reflect a 2-for-1 stock split  effected in the form of a stock  dividend
on December 1, 1997.
<PAGE>

Segments of an Enterprise and Related Information
-------------------------------------------------

     Statement of Financial  Accounting  Standards No. 131,  "Disclosures  about
Segments of an Enterprise and Related Information" ("SFAS 131"), requires public
companies  to report  financial  and  descriptive  information  about  operating
segments in annual financial  statements and requires selected information about
operating  segments  to be  reported  in  interim  financial  reports  issued to
shareholders. Operating segment financial information is required to be reported
on the basis that it is used internally for evaluating  segment  performance and
allocation of resources.  The Corporation does not have any operating  segments,
as  defined  by SFAS  131,  and  therefore,  has not  disclosed  the  additional
information.

Cash Flows
----------

     For purposes of reporting  cash flows,  cash and cash  equivalents  include
cash, interest and noninterest-bearing deposits due from banks and Federal funds
sold.  The Bank paid interest of  $18,637,000,  $19,269,000  and  $16,106,000 on
deposits and borrowings in 1999, 1998 and 1997, respectively.



                                       27
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



Reclassification
----------------

     Certain 1998 and 1997 amounts  have been  reclassified  to conform with the
1999 presentation. These reclassifications had no impact on net income.

2.   RESTRICTION ON CASH AND DUE FROM BANKS

     The  Bank  is  required  to  maintain   reserves  against  certain  deposit
transaction  accounts.  As of December 31,  1999,  the Bank was required to have
cash and liquid assets of approximately $4,957,000 to meet these requirements.

3.   INVESTMENT SECURITIES

     The amortized cost,  gross unrealized gains and losses and estimated market
values of securities available-for-sale were as follows (in thousands):

                                                Gross         Gross    Estimated
                                Amortized  Unrealized    Unrealized       Market
December 31, 1999                    Cost       Gains        Losses        Value
--------------------------------------------------------------------------------
United States Government
  and agency obligations         $ 60,867    $     --     $ (10,939)    $ 49,928
Municipal bonds                     5,356           8          (132)       5,232
Corporate bonds                       944          --           (21)         923
Mortgage-backed securities         87,378           1        (3,811)      83,568
Capital trust preferreds           29,131          50        (2,582)      26,599
Marketable equity securities       47,670       1,461        (1,939)      47,192
Mutual funds                          740         326           (13)       1,053
--------------------------------------------------------------------------------
                                 $232,086    $  1,846     $ (19,437)    $214,495
================================================================================

December 31, 1998
United States Government
  and agency obligations         $ 47,547    $    277     $     (69)    $ 47,755
Municipal bonds                     3,584         101            (2)       3,683
Mortgage-backed securities         93,034         168           (70)      93,132
Capital trust preferreds           13,174         130          (338)      12,966
Marketable equity securities       58,141       1,925          (863)      59,203
Mutual funds                          602          15           (23)         594
--------------------------------------------------------------------------------
                                 $216,082    $  2,616     $  (1,365)    $217,333
================================================================================

     The  amortized  cost  and  estimated   market  value  of  debt   securities
available-for-sale as of December 31, 1999, by contractual  maturity,  are shown
below.  Actual  maturities  will  differ  from  contractual  maturities  because
borrowers may have the right to call or repay  obligations  with or without call
or prepayment penalties:

                                                          Estimated
                                            Amortized        Market
             (in thousands)                      Cost         Value
             ------------------------------------------------------
             Due in one year or less         $  2,999      $  2,992
             Due after one year
               through five years               4,208         4,173
             Due after five years
               through ten years                2,500         2,450
             Due after ten years               86,591        73,067
             ------------------------------------------------------
                                               96,298        82,682
             Mortgage-backed securities        87,378        83,568
             ------------------------------------------------------
                                             $183,676      $166,250
             ======================================================

     Proceeds  from sales of  securities  available-for-sale  were  $91,141,000,
$83,147,000 and $50,353,000 in 1999, 1998 and 1997, respectively.  There were no
sales of  securities  held-to-maturity  in 1999,  1998 or 1997.  Gross  gains of
$1,632,000,  $1,760,000 and $1,227,000 and gross losses of $1,127,000,  $488,000
and $388,000 were realized on sales of  securities  available-for-sale  in 1999,
1998 and 1997, respectively. During 1997, the entire securities held-to-maturity
portfolio,  which  totaled  $53,455,000,   was  transferred  to  the  securities
available-for-sale  portfolio.  The transfer was performed by the Corporation to
provide the flexibility to actively manage the investment  portfolio for optimal
return. The transfer resulted in a gross unrealized gain of $163,000.

     As of December 31, 1999,  investment  securities  with a carrying amount of
$114,461,000  were  pledged  as  collateral  to secure  public  deposits,  funds
borrowed and for other purposes.



                                       28
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



4.   LOANS AND THE ALLOWANCE FOR LOAN LOSSES

     Loans consisted of the following as of December 31:

         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Commercial                               $ 56,828    $ 42,837
         Commercial real estate                     47,961      42,407
         Residential real estate                   131,942     137,326
         Real estate construction                    3,250       3,689
         Consumer                                   76,112      58,560
         -------------------------------------------------------------
                                                   316,093     284,819
         Less: Deferred loan fees                     (702)       (850)
               Allowance for loan losses            (5,681)     (5,549)
         -------------------------------------------------------------
                                                  $309,710    $278,420
         =============================================================

     Activity in the allowance for loan losses was as follows:

                                            Year Ended December 31,
                                       -------------------------------
         (in thousands)                   1999        1998        1997
         -------------------------------------------------------------
         Balance, beginning of year     $5,549      $5,306      $4,875
         Provision for loan losses         491         268         600
         Loans charged-off                (472)       (155)       (389)
         Recoveries                        113         130         220
         -------------------------------------------------------------
         Balance, end of year           $5,681      $5,549      $5,306
         =============================================================

     Information,  with  respect to  impaired  loans,  consisting  primarily  of
commercial real estate and commercial loans, was as follows:

                                                        December 31,
                                                    ------------------
         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Investment in impaired loans               $1,644      $1,946
         Impaired loans with no
           valuation allowance                       1,546       1,375
         Impaired loans with a
           valuation allowance                          98         571
         Valuation allowance                            68          92
         Average recorded investment
           in impaired loans                         1,651       2,010
         Commitments to lend additional
           funds for loans considered impaired          --          --

                                                         Year Ended
                                                        December 31,
                                                      ----------------
         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Interest income, recognized
           on a cash basis                            $144        $195

     Information with respect to nonaccrual loans is as follows:

                                                        December 31,
                                                    ------------------
         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Nonaccrual loans                           $1,404      $1,265

                                            Year Ended December 31,
                                       -------------------------------
         (in thousands)                   1999        1998        1997
         -------------------------------------------------------------
         Interest income that would
           have been recorded under
           original terms                 $183        $203        $335
         Interest income recorded
           during the period                73          90         201

     Information  regarding  capitalized  originated loan servicing assets is as
follows:

                                                        December 31,
                                                    ------------------
         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Balance, beginning of year                   $ 18         $23
         Additions                                      45          --
         Amortization                                  (11)         (5)
         -------------------------------------------------------------
         Balance, end of year                         $ 52         $18
         =============================================================

         As of  December  31, 1999 and 1998,  the fair value of the  capitalized
loan servicing assets approximated cost.

                                       29
                                    -------
<PAGE>

5.   FORECLOSED REAL ESTATE

     Changes in the allowance for foreclosed real estate losses were as follows:

                                           Year Ended December 31,
                                       -------------------------------
         (in thousands)                   1999        1998        1997
         -------------------------------------------------------------
         Balance, beginning of year       $ 50        $ 25       $  --
         Provision for losses               93          53         140
         Write-downs, net                  (93)        (28)       (115)
         -------------------------------------------------------------
         Balance, end of year             $ 50        $ 50       $  25
         =============================================================

6.   PREMISES AND EQUIPMENT

     The net book value of premises and equipment was comprised of the following
as of December 31:

         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Land                                      $   589     $   589
         Buildings                                   2,910       2,894
         Leasehold improvements                        247         247
         Furniture and equipment                     3,989       3,808
         -------------------------------------------------------------
                                                     7,735       7,538
         Less accumulated depreciation
           and amortization                         (3,764)     (3,014)
         -------------------------------------------------------------
                                                   $ 3,971     $ 4,524
         =============================================================

     As of December 31, 1999, the Bank was obligated under several noncancelable
operating  leases for office space which expire on various  dates  through 2008.
The leases  contain  rent  escalation  clauses for real  estate  taxes and other
operating  expenses and renewal  option  clauses  calling for  increased  rents.
Future minimum rental payments  required under  operating  leases as of December
31, 1999 were as follows (in thousands):

                   Year                                Amount
                   ------------------------------------------
                   2000                                  $ 58
                   2001                                    45
                   2002                                    45
                   2003                                    52
                   2004                                    55
                   After                                  239
                   ------------------------------------------
                   Total minimum lease payments          $494
                   ==========================================

     Total rental  expense  amounted to $142,000,  $121,000 and $91,000 in 1999,
1998 and 1997, respectively, net of sublease income of $4,000 in 1999.

                                       30
                                    --------


<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



7.   DEPOSITS

     Deposits consisted of the following as of December 31:

         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Noninterest-bearing
           demand deposits                        $ 40,905    $ 36,256
         NOW accounts                               49,380      42,528
         Regular savings                            69,534      69,029
         Money market savings                       31,825      39,318
         Certificates of deposit                   156,530     160,018
         Club accounts                                 267         261
         -------------------------------------------------------------
                                                  $348,441    $347,410
         =============================================================

     The amount of  individual  certificates  of  deposit in excess of  $100,000
included  in  certificates  of  deposit  as of  December  31,  1999 and 1998 was
$20,995,000 and $18,277,000, respectively.

8.   FUNDS BORROWED

     Funds borrowed consisted of the following as of December 31:

         (in thousands)                               1999        1998
         -------------------------------------------------------------
         Federal funds purchased                  $  2,100    $  1,775
         Securities sold under
           repurchase agreements                    84,699      78,741
         Federal Home Loan Bank advances            72,830      40,630
         Federal Reserve Bank advances              11,500          --
         -------------------------------------------------------------
                                                  $171,129    $121,146
         =============================================================

     Funds borrowed are shown below based upon  contractual  maturities.  Actual
maturities will differ from contractual  maturities because lenders may have the
right to call  obligations  on earlier  dates.  The following  table  summarizes
Federal  funds  purchased,  repurchase  agreements  and Federal  Reserve Bank of
Boston advances by contractual maturity as of December 31:

         (in thousands)                   1999        1998        1997
         -------------------------------------------------------------
         Federal funds purchased:
           Overnight                   $ 2,100     $ 1,775     $ 1,040
           Within 30 days                   --          --       1,000
           60--90 days                      --          --       1,000
         -------------------------------------------------------------
                                         2,100       1,775       3,040
         -------------------------------------------------------------
         Repurchase agreements
           with broker/dealers:
             Within 89 days                 --       1,880       5,880
             90 days--one year           2,880       2,800       9,870
             Over one year              65,000      57,880      24,760
         -------------------------------------------------------------
                                        67,880      62,560      40,510
         -------------------------------------------------------------
         Repurchase agreements
           with customers:
             Overnight                   6,566       6,481       7,325
             Within 30 days              9,526       7,580       1,646
             30-90 days                    727       2,120       2,847
         -------------------------------------------------------------
                                        16,819      16,181      11,818
         -------------------------------------------------------------
         Federal Reserve Bank
           advances:
             Within 30 days             11,500          --          --
         -------------------------------------------------------------
                                       $98,299     $80,516     $55,368
         =============================================================

                                       31
                                    --------

<PAGE>

     The following table  summarizes  average  outstandings,  maximum  month-end
outstandings,  daily  average  interest  rates  and  average  interest  rates on
year-end balances for Federal funds purchased, repurchase agreements and Federal
Reserve Bank of Boston  advances.  Average  interest  rates during the year were
computed by dividing total interest expense by the average amount outstanding.

         (dollars in thousands)           1999        1998        1997
         -------------------------------------------------------------
         Average outstanding          $ 93,881     $80,592     $43,244
         Maximum outstanding at
           any month-end               104,792      89,739      57,137
         Average interest rate
           during the year                5.23%       5.44%       5.48%
         Average interest rate
           at year-end                    5.18%       5.35%       5.54%

     The following  table  summarizes  repurchase  agreements  outstanding  with
broker/dealers:

         (in thousands)                   1999        1998        1997
         -------------------------------------------------------------
         Morgan Stanley                $12,880     $15,680     $ 7,650
         Salomon Brothers               55,000      46,880      30,860
         Merrill Lynch                      --          --       2,000
         -------------------------------------------------------------
                                       $67,880     $62,560     $40,510
         =============================================================

     Securities   sold  under   agreements  to  repurchase  are  generally  U.S.
Government Agency obligations and mortgage-backed  securities.  The market value
of securities exceeds the face value of the repurchase agreements.

     Accrued interest payable on Federal funds purchased,  repurchase agreements
and Federal  Reserve  Bank of Boston  advances  was  $481,000 and $397,000 as of
December 31, 1999 and 1998, respectively.

     Advances  from the  Federal  Home  Loan  Bank of  Boston  consisted  of the
following as of December 31:

           (dollars in thousands)                 1999           1998
           ----------------------------------------------------------
           5.95% due February 4, 1999          $    --        $ 2,000
           5.95% due August 20, 1999                --            800
           6.70% due June 11, 2001                 830            830
           5.79% due August 30, 2004             5,000             --
           5.44% due April 25, 2005              2,000          2,000
           5.27% due August 16, 2006             5,000             --
           5.29% due September 1, 2006          10,000             --
           5.22% due September 15, 2006         10,000             --
           5.36% due October 12, 2006            5,000             --
           4.99% due January 14, 2008               --          5,000
           5.09% due July 7, 2008                   --          5,000
           4.99% due September 1, 2008              --         10,000
           4.59% due September 15, 2008             --          5,000
           5.29% due September 21, 2009          5,000             --
           5.35% due October 8, 2009            10,000             --
           5.35% due October 19, 2009            5,000             --
           5.25% due August 25, 2014            15,000             --
           4.99% due June 18, 2013                  --         10,000
           ----------------------------------------------------------
                                               $72,830        $40,630
           ==========================================================


                                       32
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     As a member  of the  Federal  Home Loan  Bank of  Boston  ("FHLB"),  and in
accordance  with an  agreement  with  them,  the Bank is  required  to  maintain
qualified  collateral,  as defined in the FHLB Statement of Credit Policy,  free
and clear of liens, pledges and encumbrances as collateral for the advances. The
Bank  maintains  qualified  collateral  as  defined by the FHLB in excess of the
amount required to  collateralize  the  outstanding  advances as of December 31,
1999.  The Bank also  participates  in the IDEAL Way Line of Credit Program with
the FHLB.  These  advances  are  one-day  variable  rate  loans  with  automatic
rollover. The Bank has a pre-approved line up to 2% of total assets.

9.   SHAREHOLDERS' EQUITY

     The  Corporation's  ability to pay  dividends  is  dependent  on the Bank's
ability to pay dividends to the Corporation.  There are certain  restrictions on
the payment of  dividends  and other  payments  by the Bank to the  Corporation.
Under  Connecticut law, the Bank is prohibited from declaring a cash dividend on
its common  stock except from its net earnings for the current year and retained
net profits for the preceding two years. In some instances, further restrictions
on  dividends  may be imposed on the Bank by the  Federal  Reserve  Bank.  As of
December 31, 1999,  approximately  $8,234,000 of the Bank's retained net profits
was available for dividends.

     In February 1996, the  Corporation  announced that it planned to repurchase
up to 15%  (788,000) of its  outstanding  common shares over the next 18 months.
During the eighteen-month period ended August 1997, the Corporation  repurchased
519,498 shares.  These shares were repurchased at an average price of $11.05 per
share.

     In April 1999, the  Corporation  announced that it planned to repurchase up
to 5% (260,000) of its outstanding  common shares over the next 12 months. As of
December 31, 1999,  the  Corporation  repurchased  106,338  shares at an average
price of $16.40 per share.

     Statement of Financial Standards No. 130, "Reporting  Comprehensive Income"
("SFAS 130"),  establishes  standards for reporting and display of comprehensive
income,  which is defined  as the change in net equity of a business  enterprise
during  a period  from  non-owner  sources.  The  Corporation's  one  source  of
comprehensive income is the unrealized gain or loss on investment securities.

     The  following  table  presents  the  components  and  related  tax effects
allocated to other comprehensive income for the year ended December 31, 1999.

                                 Before Tax   Tax (Benefit)     Net of Tax
    (in thousands)                   Amount        Expense          Amount
    ----------------------------------------------------------------------
    Net unrealized losses
      on securities arising
      during the year              $(18,337)       $(6,235)       $(12,102)
    Less: reclassification
      adjustment for gains
      realized in net income            505            171             334
    ----------------------------------------------------------------------
    Net unrealized losses
      on securities                $(18,842)       $(6,406)       $(12,436)
    ======================================================================

     The  following  table  presents  the  components  and  related  tax effects
allocated to other comprehensive income for the year ended December 31, 1998.

                                 Before Tax   Tax (Benefit)     Net of Tax
    (in thousands)                   Amount        Expense          Amount
    ----------------------------------------------------------------------
    Net unrealized losses
      on securities arising
      during the year              $   (624)       $  (330)       $   (294)
    Less: reclassification
      adjustment for gains
      realized in net income          1,272            512             760
    ----------------------------------------------------------------------
    Net unrealized losses
      on securities                $ (1,896)       $  (842)       $ (1,054)
    ======================================================================

     The  following  table  presents  the  components  and  related  tax effects
allocated to other comprehensive income for the year ended December 31, 1997.

                                 Before Tax   Tax (Benefit)     Net of Tax
    (in thousands)                   Amount        Expense          Amount
    ----------------------------------------------------------------------
    Net unrealized gains
      on securities arising
      during the year              $  3,129        $ 1,258        $  1,871
    Less: reclassification
      adjustment for gains
      realized in net income            839            343             496
    ----------------------------------------------------------------------
    Net unrealized gains
      on securities                $  2,290        $   915        $  1,375
    ======================================================================

10.  BENEFIT PLANS

     As of January 1, 1998,  the  Corporation  adopted  Statement  of  Financial
Standards   No.  132,   "Employers'   Disclosures   about   Pensions  and  Other
Postretirement  Benefits"  ("SFAS 132").  SFAS 132  standardizes  the disclosure
requirements  for  pensions  and  other  postretirement  benefits  by  requiring
additional  information to facilitate  financial  analysis and eliminate certain
disclosures that are considered no longer useful.



                                       33
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



Employee Pension Plan
---------------------

     The Corporation has a trusteed  noncontributory  defined benefit retirement
plan covering all employees  eligible as to age and length of service.  Benefits
are based on a covered  employee's  final average  compensation,  primary Social
Security benefit and credited service.  The  Corporation's  funding policy is to
contribute amounts to the plan sufficient to meet the Employee Retirement Income
Security Act's minimum funding requirements.

     The  following  table sets forth  information  regarding  the plan's funded
status and amounts recognized in the financial statements as of December 31:

    (in thousands)                                     1999           1998
    ----------------------------------------------------------------------
    Change in benefit obligation:
      Benefit obligation at beginning of year       $ 4,249        $ 3,513
      Service cost                                      299            233
      Interest cost                                     270            257
      Plan participants' contributions                   --             --
      Actuarial (gain) loss                            (643)           419
      Benefits paid                                    (187)          (173)
    ----------------------------------------------------------------------
      Benefit obligation at end of year               3,988          4,249
    ----------------------------------------------------------------------
    Change in plan assets:
      Fair value of plan assets at
        beginning of year                             4,485          4,793
      Actual return (loss) on plan assets               433           (135)
      Employer contribution                              --             --
      Plan participants' contributions                   --             --
      Benefits paid                                    (187)          (173)
    ----------------------------------------------------------------------
      Fair value of plan assets
        at end of year                                4,731          4,485
    ----------------------------------------------------------------------

      Funded status                                     743            236
      Unrecognized net actuarial gain                (1,416)          (711)
      Unrecognized prior service cost                   117            140
      Unrecognized transition
        (asset) obligation                               17             21
    ----------------------------------------------------------------------
      Accrued pension cost                          $  (539)       $  (314)
    ======================================================================

     The components of net periodic pension cost were as follows:

                                             Year Ended December 31,
                                   ---------------------------------------
    (in thousands)                     1999           1998            1997
    ----------------------------------------------------------------------
    Service cost                   $    299        $   233        $    215
    Interest cost                       270            257             242
    Actual (return) loss
      on plan assets                   (433)           135            (877)
    Net amortization and deferral        89           (487)            590
    ----------------------------------------------------------------------
                                   $    225        $   138        $    170
    ======================================================================

     Weighted-average assumptions as of December 31:

                                       1999           1998            1997
    ----------------------------------------------------------------------
    Discount rate                      7.50%          6.50%           7.50%
    Expected return on plan assets     8.50%          8.50%           8.50%
    Rate of compensation increase      4.00%          4.00%           5.00%


Employee Savings and Profit Sharing Plan
----------------------------------------

     The  Corporation  sponsors a savings and profit  sharing plan (the "Savings
Plan") under Section  401(k) of the Internal  Revenue  Code.  Employees who have
completed  one year of service and have  attained  the age of 21 are eligible to
participate in the Corporation's  defined contribution Savings Plan. The Savings
Plan has a  discretionary  non-contributory  profit  sharing  feature,  and also
allows for voluntary employee  contributions.  Eligible employees may contribute
up  to  15%  of  their  compensation.   The  Corporation  may  make  a  matching
contribution of up to 6% of the participant's compensation. Contributions by the
Corporation  for the years ended December 31, 1999,  1998 and 1997 were $91,000,
$86,000 and $80,000, respectively.

Supplemental Pension Plan
-------------------------

     In 1996 and 1998, the Corporation adopted supplemental executive retirement
plans  ("SERP")  to provide  certain  designated  executives  with  supplemental
retirement  benefits.  In  conjunction  with  the  SERP,  the  Corporation  is a
beneficiary  under  a  life  insurance  policy  that  it  has  purchased  on the
respective  participant  and has funded its  obligations  with  assets held in a
grantor  trust of $100,000 as of December  31,  1999.  The assets in the grantor
trust remain  assets of the  Corporation  but are  restricted in their use until
such time as the obligation  under the SERP has been  satisfied.  As of December
31, 1999 and 1998, the  supplemental  retirement plan liability was $124,000 and
$33,000,  respectively.  In addition,  there is a minimum  liability  balance of
$107,000 as of December  31, 1999 offset by a  corresponding  intangible  asset.
This  asset is a result of an  unrecognized  prior  service  cost which is being
amortized over the participant's  remaining service period with the Corporation.
For the years ended December 31, 1999,  1998 and 1997,  supplemental  retirement
plan expense was $90,000, $12,000 and $11,000, respectively.

     The  Corporation  does  not  offer  any  postretirement  or  postemployment
benefits other than pensions.



                                       34
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



11.  FEDERAL AND STATE TAXES ON INCOME

     For the years ended  December  31,  1999,  1998 and 1997,  the  significant
components of the provision for income taxes were:

    (in thousands)                     1999           1998            1997
    ----------------------------------------------------------------------
    Current:
      Federal                      $  3,149        $ 2,378        $  2,256
      State                              --            462             778
    ----------------------------------------------------------------------
        Total current                 3,149          2,840           3,034
    ----------------------------------------------------------------------
    Deferred:
      Federal                          (228)          (206)           (230)
      State                              --            658              (1)
    ----------------------------------------------------------------------
        Total deferred                 (228)           452            (231)
    ----------------------------------------------------------------------
                                   $  2,921        $ 3,292        $  2,803
    ======================================================================

     Following  is a  reconcilement  of the  statutory  Federal  income tax rate
applied  to pretax  accounting  income  with the income  tax  provisions  in the
statements of income:

                                            Year Ended December 31,
                                   ---------------------------------------
    (in thousands)                     1999           1998            1997
    ----------------------------------------------------------------------
    Income tax at statutory rate   $  3,584        $ 3,276        $  2,958
    Increase (decrease)
      resulting from:
        Dividends received
          deduction                    (506)          (623)           (636)
        Connecticut corporation
          tax, net of Federal
          tax benefit                    --            402             513
        Impact of
          establishment of
          Connecticut passive
          investment company             --            337              --
    Other items, net                   (157)          (145)            (73)
    Impact of state
      tax rate change                    --             45              41
    ----------------------------------------------------------------------
    Provision for income taxes     $  2,921        $ 3,292        $  2,803
    ======================================================================


     The  components  of net  deferred  tax  assets  as of  December  31 were as
follows:

                                                 1999                 1998
                                         --------------------------------------
(in thousands)                           Federal     State    Federal     State
-------------------------------------------------------------------------------
Deferred tax assets:
  SFAS 115 mark-to-market                $ 5,981   $ 1,319    $    --   $    --
  State net operating losses                  --       255         --        --
  Loan loss provisions                     1,931       426      1,887       472
  Reserve--foreclosed real estate             17         4         17         4
  Basis difference on foreclosed
    real estate                               27         6         --        --
  Net mortgage origination fees              114        25        150        37
  Accrued interest payable                   444        98        324        81
  Other                                      355        78        246        64
-------------------------------------------------------------------------------
    Total deferred tax assets              8,869     2,211      2,624       658
-------------------------------------------------------------------------------

Deferred tax liabilities:
  Tax loan loss reserve in excess
    of base year                              79        17         84        21
  SFAS 115 mark-to-market                     --        --        425       106
  Other                                      255        53        214        54
-------------------------------------------------------------------------------
    Total deferred tax liabilities           334        70        723       181
-------------------------------------------------------------------------------
    Deferred tax assets                    8,535     2,141      1,901       477
    Valuation allowance                       --    (2,141)        --      (477)
-------------------------------------------------------------------------------
    Net deferred tax assets              $ 8,535   $    --    $ 1,901   $    --
===============================================================================

     The  allocation  of deferred tax  involving  items  charged to current year
income and items  charged  directly to  shareholders'  equity for the year ended
December 31, were as follows:

                                                 1999                 1998
                                         --------------------------------------
(in thousands)                           Federal     State    Federal     State
-------------------------------------------------------------------------------
Deferred tax (benefit) allocated
  to shareholders' equity                $(6,406)  $    --    $  (543)  $  (299)
Deferred tax (benefit) allocated
  to income                                 (228)       --       (206)      658
-------------------------------------------------------------------------------
  Total deferred tax (benefit)           $(6,634)  $    --    $  (749)  $   359
===============================================================================



                                       35
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     The Corporation  will only recognize a deferred tax asset when,  based upon
available  evidence,  realization  is more  likely  than  not.  Accordingly,  at
December 31, 1999 and 1998, the  Corporation  has recorded no Federal  valuation
allowance  against  deferred tax assets based on  sufficient  available  Federal
taxable income in the carryback period.

     As of December  31,  1999 and 1998,  the  Corporation  recorded a valuation
allowance for the entire amount of its state  deferred tax asset.  The valuation
allowance  was  established  as  a  result  of  the  creation  of  SSB  Mortgage
Corporation,  a  Connecticut  passive  investment  company.  Income  earned by a
passive investment company is exempt from Connecticut  Corporation Business Tax.
In  addition,  dividends  paid  by  SSB  Mortgage  Corporation  to  its  parent,
Southington  Savings  Bank,  are also exempt from  Corporation  income tax.  The
Corporation  expects the passive investment company to earn sufficient income to
eliminate  Connecticut income taxes in future years. As such, the state deferred
asset has been fully reserved.

     The Corporation made Federal and state income tax payments (net of refunds)
of $3,051,000, $2,912,000 and $2,848,000 in 1999, 1998 and 1997, respectively.

     The Corporation has not provided deferred taxes for the tax reserve for bad
debts of  approximately  $1.2 million,  that arose in tax years beginning before
1988  because it is expected  that the  requirements  of Internal  Revenue  Code
Section 593 as amended by the Small Business Protection Act of 1996, will be met
in the foreseeable future.

12.  LOANS TO RELATED PARTIES

     Certain  directors and  executive  officers of the  Corporation,  including
their immediate families and companies in which they are principal owners,  were
loan customers of the Bank during 1999 and 1998. Loans to such parties were made
in the ordinary course of business at the Bank's normal credit terms,  including
interest rate and  collateralization,  and did not represent  more than a normal
risk of  collection.  Such  loans at  December  31,  1999 and 1998  amounted  to
$3,783,000 and $3,911,000,  respectively. New loans of $1,484,000 were made, and
repayments totaled  $1,612,000 during 1999. In addition,  unused lines of credit
to related parties as of December 31, 1999 were $907,000.

13.  STOCK OPTION PLAN

     The  Corporation has a stock option plan offered to employees and directors
of the  Bank  (the  "Plan").  A total  of  1,225,191  shares  can be  issued  to
participants at an exercise price equal to the market price of the Corporation's
stock on the date of grant with a maximum term of ten years. Options are granted
upon the  approval of the Board and vest 100% in one year.  As of  December  31,
1999, a total of 257,120 shares are available for future grants.

     As  permitted  by Statement  of  Financial  Accounting  Standards  No. 123,
"Accounting  for  Stock-Based  Compensation"  ("SFAS 123"),  the Corporation has
chosen to apply APB Opinion No. 25,  "Accounting  for Stock Issued to Employees"
and  related  interpretations  in  accounting  for  its  Plan.  Accordingly,  no
compensation  cost has been  recognized for options  granted under the Plan. Had
compensation cost for the  Corporation's  Plan been determined based on the fair
value at the grant dates for awards under the Plan consistent with the method of
SFAS 123,  the  Corporation's  net income and net income per share for the years
ended December 31, 1999,  1998 and 1997 would have been reduced to the pro forma
amounts indicated below.

<TABLE>
<CAPTION>
                                          1999                      1998                     1997
(in thousands,                  --------------------------------------------------------------------------
except per share data)          As Reported  Pro Forma   As Reported   Pro Forma   As Reported   Pro Forma
----------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>          <C>          <C>          <C>          <C>
Net income                       $ 7,620      $ 7,230      $ 6,345      $ 5,597      $ 5,896      $ 5,510
Net income per share--diluted       1.38         1.31         1.14         1.01         1.08         1.01
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model  with the  following  weighted-average
assumptions used for grants:

<TABLE>
<CAPTION>
                                                                           1999         1998         1997
----------------------------------------------------------------------------------------------------------
<S>                                                                     <C>          <C>          <C>
Dividend yield                                                             3.60%        3.60%        3.75%
Expected volatility                                                       42.67        40.75        35.00
Risk-free interest rate                                                    6.20         4.67         6.26
Expected lives                                                          6 years      7 years      7 years
</TABLE>



                                       36
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     A summary of the status of the Corporation's  Plan as of December 31, 1999,
1998 and 1997 and changes  during the years  ended on those  dates is  presented
below:

<TABLE>
<CAPTION>
                                              1999                   1998                    1997
                                     -------------------------------------------------------------------
                                               Weighted-               Weighted-               Weighted-
                                                 Average                 Average                 Average
                                                Exercise                Exercise                Exercise
                                        Shares     Price       Shares      Price       Shares      Price
--------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>       <C>          <C>        <C>          <C>
Outstanding,
  beginning of year                  1,113,976    $10.23    1,042,296    $  9.53      890,616    $  6.97
Granted                                 51,000     15.79      116,000     15.625      237,000      18.30
Exercised                             (177,405)     5.88      (41,820)      7.22      (76,320)      7.32
Forfeited                              (19,500)    17.40       (2,500)    19.375       (9,000)     11.16
----------------------------------------------              ---------               ---------
Outstanding,
  end of year                          968,071    $11.17    1,113,976    $ 10.23    1,042,296    $  9.53
========================================================================================================

Options exercisable at year-end        917,071                998,976                 836,796

Weighted-average fair value of
  options granted during the year                 $ 5.67                 $  5.39                 $  5.76
</TABLE>

     The following table summarizes  information  about the Plan's stock options
at December 31, 1999:

<TABLE>
<CAPTION>
                                 Options Outstanding                        Options Exercisable
                     -------------------------------------------------------------------------------
                        Number     Weighted-Average      Weighted-         Number       Weighted-
Range of             Outstanding       Remaining         Average        Exercisable      Average
Exercise Prices      at 12/31/99   Contractual Life   Exercise Price    at 12/31/99   Exercise Price
----------------------------------------------------------------------------------------------------
<S>                    <C>               <C>             <C>              <C>            <C>
$ 1.00 - $  7.50       406,971           4.2             $ 5.52           406,971        $ 5.52
  7.50 -   15.00       244,600           7.2              11.70           210,600         11.17
 15.00 -   22.50       316,500           7.9              18.02           299,500         18.06
------------------------------                                            -------
                       968,071                                            917,071
==============================                                            =======
</TABLE>

14.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

     The Bank is party to financial  instruments with  off-balance-sheet  credit
risk in the  normal  course  of  business  to meet  the  financing  needs of its
customers.  These  instruments  expose the Bank to credit  risk in excess of the
amount recognized in the statement of condition.

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

     Total credit exposure related to those items is summarized as follows:

          (in thousands)                         1999            1998
          -----------------------------------------------------------
          Loan commitments:
            Approved loan commitments         $ 1,114         $ 2,311
            Unadvanced portion of
              construction loans                6,470           5,400
            Unused home equity
              lines of credit                  13,623          10,977
            Unused commercial
              lines of credit                  17,007          11,688
            Standby letters of credit           2,912           3,307
          -----------------------------------------------------------
                                              $41,126         $33,683
          ===========================================================

     Commitments  to extend credit are  agreements to lend to a customer as long
as  there  is no  violation  of  any  condition  established  in  the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash   requirements.   The  Bank  evaluates  each  customer's
creditworthiness  on a case-by-case  basis. The amount of collateral obtained if
deemed  necessary by the Bank upon extension of credit is based on  management's
credit evaluation of the counterparty.  Collateral held is primarily residential
property.  Interest  rates on home equity  lines of credit are  variable and are
available for terms of 10 or 15 years.  All other  commitments are a combination
of fixed and variable interest rates with maturities of one year or more.

15.  RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1999, the FASB issued Statement of Financial  Accounting  Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral
of the Effective Date of FASB  Statement No. 133" ("SFAS 137").  SFAS 137 delays
the effective  date for the  implementation  of FASB Statement No. 133 to fiscal
years  beginning  after December 15, 2000 (January 1, 2001 for the  Corporation)
and  requires all  derivative  instruments  be recorded on the balance  sheet at



                                       37
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



their fair value. Changes in the fair value of derivative  instruments are to be
recorded  each  period  in  current  earnings  or  other  comprehensive  income,
depending on whether a derivative is  designated as part of a hedge  transaction
and, if it is, the type of hedge  transaction.  Management  anticipates that the
adoption  of SFAS 133 will not have a  significant  effect on the  Corporation's
results  of  operations  or  its  financial  position  because  the  Corporation
presently does not hold or utilize any derivative instruments.

16.  SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

     The Bank  primarily  grants  residential,  commercial and consumer loans to
customers  located within its primary  market area in the State of  Connecticut.
The majority of the Bank's loan portfolio is  collateralized by residential real
estate.

17.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     FASB Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial  Instruments" ("SFAS 107"),  requires disclosure of fair
value information about financial instruments,  whether or not recognized in the
statement of condition,  for which it is practicable to estimate that value.  In
cases where quoted  market  prices are not  available,  fair values are based on
estimates using present value or other valuation  techniques.  Those  techniques
are significantly  affected by the assumptions used, including the discount rate
and  estimates  of future cash flows.  In that  regard,  the derived  fair value
estimates cannot be  substantiated by comparison to independent  markets and, in
many cases,  could not be realized in immediate  settlement  of the  instrument.
SFAS 107 excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements.  Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Corporation.

     The  following  methods and  assumptions  were used by the  Corporation  in
estimating its fair value disclosures for financial instruments:

Cash and Cash Equivalents
-------------------------

     The carrying  amounts  reported in the  statement of condition for cash and
short-term instruments approximate those assets' fair values.

Securities Available-for-Sale
-----------------------------

     Fair values for securities  available-for-sale,  which also are the amounts
recognized  in the  consolidated  statement  of  condition,  are based on quoted
market prices, where available.

Trading Account Securities
--------------------------

     Fair values for the Bank's trading account  securities,  which also are the
amounts  recognized in the  consolidated  statement of  condition,  are based on
quoted market prices where available.

Federal Home Loan Bank Stock
----------------------------

     The carrying  value of Federal Home Loan Bank stock  approximates  its fair
value.

Loans Receivable
----------------

     The fair values for loans (excluding  nonaccrual loans) are estimated using
discounted cash flow analyses,  using interest rates currently being offered for
loans with similar terms to borrowers of similar credit  quality.  The Bank does
not  believe  an  estimate  of the fair  value of  nonaccrual  loans can be made
without incurring excessive cost.

Accrued Income Receivable
-------------------------
<PAGE>

     The carrying amount of accrued income approximates its fair value.

Deposit Liabilities
-------------------

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

     SFAS 107 defines the fair value of demand deposits as the amount payable on
demand, and prohibits  adjusting fair value for any value derived from retaining
those deposits for an expected future period of time. That component is commonly
referred  to as a deposit  base  intangible.  This  intangible  asset is neither
considered in the fair value  amounts nor is it recorded as an intangible  asset
in  the  statement  of  condition.   The   Corporation  has  not  performed  the
calculations to estimate the amount of this intangible  asset due to the absence
of certain information required and the complexity of the computation.

Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
--------------------------------------------------------------------------

     Federal funds purchased are short-term liabilities and the carrying amounts
approximate  their  fair  values.  The fair  values  for  securities  sold under
agreements to repurchase  are estimated  using  discounted  cash flow  analyses,
based on the Bank's  current  incremental  borrowing  rates for similar types of
borrowing arrangements.

Other Borrowings
----------------

     The fair values of the Bank's borrowings from the Federal Home Loan Bank of
Boston and Federal  Reserve Bank of Boston are estimated  using  discounted cash
flow  analyses,  based on the Bank's  current  incremental  borrowing  rates for
similar types of borrowing arrangements.



                                       38
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



Commitments to Extend Credit and Letters of Credit
--------------------------------------------------

     Fair values for the Bank's off-balance-sheet instruments (primarily lending
commitments)  are  based  on  fees  currently  charged  to  enter  into  similar
agreements,  taking into account the remaining  terms of the  agreements and the
counterparties' credit standing (guarantees, loan commitments).

     The  following  table  presents  a  comparison  of the  carrying  value and
estimated fair value of the Corporation's  financial  instruments as of December
31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                           1999                    1998
                                                   ---------------------------------------------
                                                   Carrying    Estimated   Carrying    Estimated
(in thousands)                                       Amount   Fair Value     Amount   Fair Value
------------------------------------------------------------------------------------------------
<S>                                                <C>         <C>         <C>         <C>
Financial assets:
  Cash and due from banks                          $ 13,548    $ 13,548    $ 11,163    $ 11,163
  Interest-bearing deposits with banks                  346         346          15          15
  Federal funds sold                                  6,725       6,725          --          --
  Securities available-for-sale                     214,495     214,495     217,333     217,333
  Trading account securities                            348         348         172         172
  Federal Home Loan Bank stock                        4,392       4,392       2,832       2,832
  Loans, gross (excluding nonaccrual loans)         314,689     313,047     283,554     285,520
  Accrued income receivable                           3,482       3,482       3,077       3,077

Financial liabilities:
  Deposits:
    Noninterest-bearing demand deposits              40,905      40,905      36,256      36,256
    NOW accounts                                     49,380      49,380      42,528      42,528
    Regular savings                                  69,534      69,534      69,029      69,029
    Money market savings                             31,825      31,825      39,318      39,318
    Certificates of deposit                         156,530     156,864     160,018     161,902
    Club accounts                                       267         267         261         261
  Federal funds purchased and securities sold
      under agreements to repurchase                 86,799      85,673      80,516      81,160
  Other borrowings:
    Federal Home Loan Bank of Boston                 72,830      69,237      40,630      38,096
    Federal Reserve Bank of Boston                   11,500      11,493          --          --
  Unrecognized financial instruments:
    Commitments to extend credit                         --         382          --         304
    Letters of credit                                    --          29          --          33
</TABLE>


18.  CONTINGENCIES

     The  Corporation  and its subsidiary are defendants in proceedings  arising
out of,  and  incidental  to,  activities  conducted  in the  normal  course  of
business.  In the opinion of  management,  resolution  of these matters will not
have a material effect on the  Corporation's  financial  condition or results of
operations.

19.  REGULATORY MATTERS

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

     Quantitative  measures established by regulation to ensure capital adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1999, that the Bank
meets all capital adequacy requirements to which it is subject.

     As of December 31, 1999, the Bank is categorized as well capitalized  under
the regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage  ratios as set forth in the table below.  The Bank's  actual
capital amounts and ratios are also presented in the table.



                                       39
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



<TABLE>
<CAPTION>
                                                                  To Be Well Capitalized
                                                                  Under Prompt Corrective
                                                   Actual            Action Provisions
                                             --------------------------------------------
(dollars in thousands)                        Amount   Ratio         Amount       Ratio
-----------------------------------------------------------------------------------------
<S>                                          <C>       <C>      <C>            <C>
As of December 31, 1999:
  Total Capital (to Risk-Weighted Assets)    $51,617   14.29%   >/= $36,115    >/= 10.0%
  Tier I Capital (to Risk-Weighted Assets)    47,088   13.04    >/=  21,669    >/=  6.0
  Tier I Capital (to Average Assets)          47,088    8.30    >/=  28,352    >/=  5.0

As of December 31, 1998:
  Total Capital (to Risk-Weighted Assets)    $52,942   17.27%   >/= $30,648    >/= 10.0%
  Tier I Capital (to Risk-Weighted Assets)    49,090   16.02    >/=  18,389    >/=  6.0
  Tier I Capital (to Average Assets)          49,090    9.48    >/=  25,878    >/=  5.0
</TABLE>


20.  PARENT COMPANY ONLY FINANCIAL STATEMENTS

     As of December 31, 1999 and 1998, the condensed  statements of condition of
Bancorp Connecticut, Inc. (parent only) were:

                                                                 December 31,
                                                            --------------------
(in thousands)                                                 1999         1998
--------------------------------------------------------------------------------
Assets:
  Cash and due from banks                                   $   122      $   156
  Securities available-for-sale (at market value)             3,194        1,525
  Investment in subsidiary                                   38,206       48,151
  Due from subsidiary                                            80          118
  Other assets                                                   47           52
--------------------------------------------------------------------------------
    Total assets                                            $41,649      $50,002
================================================================================

Liabilities and shareholders' equity:
  Accrued expenses                                          $   117      $    86
  Shareholders' equity                                       41,532       49,916
--------------------------------------------------------------------------------
    Total liabilities and shareholders' equity              $41,649      $50,002
================================================================================

     For the years ended December 31, 1999, 1998 and 1997, the operating results
are summarized below in the condensed statements of income:

                                                     Year Ended December 31,
                                                --------------------------------
(in thousands)                                     1999        1998        1997
--------------------------------------------------------------------------------
Dividends from subsidiary                       $ 5,301     $ 3,167     $ 3,594
Interest and dividends                              174          33          30
--------------------------------------------------------------------------------
  Total income                                    5,475       3,200       3,624
Operating expenses                                  317         360         289
Income tax benefit                                  (87)       (119)        (87)
--------------------------------------------------------------------------------
  Income before equity in undistributed
    net income of subsidiary                      5,245       2,959       3,422
Equity in undistributed net income
  of subsidiary                                   2,375       3,386       2,474
--------------------------------------------------------------------------------
  Net income                                    $ 7,620     $ 6,345     $ 5,896
================================================================================


                                       40
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.



     For the years ended  December  31,  1999,  1998 and 1997, a summary of cash
flows is:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                          -------------------------------
(in thousands)                                               1999        1998        1997
-----------------------------------------------------------------------------------------
<S>                                                       <C>         <C>         <C>
Operating activities:
  Net income                                              $ 7,620     $ 6,345     $ 5,896
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Equity in undistributed net income of subsidiary     (2,375)     (3,386)     (2,474)
      Amortization of organization costs                       36          40          40
      (Increase) decrease in other assets                     (31)        (11)          5
      (Decrease) increase in accrued expenses                  (6)          8          (3)
-----------------------------------------------------------------------------------------
        Net cash provided by operating activities           5,244       2,996       3,464
-----------------------------------------------------------------------------------------

Investing activities:
  Purchase of securities available-for-sale                (1,528)     (1,000)        (48)
  Decrease (increase) in advances to subsidiary                38          17         (21)
-----------------------------------------------------------------------------------------
        Net cash used for investing activities             (1,490)       (983)        (69)
-----------------------------------------------------------------------------------------

Financing activities:
  Dividends paid                                           (3,088)     (2,733)     (2,356)
  Net decrease (increase) in repurchase agreements             --         575        (150)
  Repurchase of common stock                               (1,744)         --      (1,405)
  Issuance of common stock                                  1,044         301         516
-----------------------------------------------------------------------------------------
        Net cash used for financing activities             (3,788)     (1,857)     (3,395)
-----------------------------------------------------------------------------------------

        Net (decrease) increase in cash                       (34)        156          --

Cash at beginning of year                                     156          --          --
-----------------------------------------------------------------------------------------

Cash at end of year                                       $   122     $   156     $    --
=========================================================================================
</TABLE>


21.  QUARTERLY FINANCIAL DATA (UNAUDITED)

                                                   Three Months Ended
                                        ----------------------------------------
(in thousands, except per share data)   March 31   June 30  Sept. 30    Dec. 31
--------------------------------------------------------------------------------
1999
  Interest income                        $ 9,073   $ 9,421   $ 9,893    $10,264
  Interest expense                         4,586     4,656     4,865      5,209
--------------------------------------------------------------------------------
    Net interest income                    4,487     4,765     5,028      5,055
  Provision for loan losses                   30        35       157        269
  Net securities gains (losses)              402       352      (262)        13
  Noninterest income                         575       674     1,213        765
  Noninterest expense                      2,863     2,968     3,151      3,053
  Provision for income taxes                 736       831       700        654
--------------------------------------------------------------------------------
    Net income                           $ 1,835   $ 1,957   $ 1,971    $ 1,857
================================================================================
    Net income per diluted share         $  0.33   $  0.35   $  0.36    $  0.34
================================================================================

1998
  Interest income                        $ 8,589   $ 8,661   $ 8,942    $ 9,153
  Interest expense                         4,487     4,475     4,764      4,780
--------------------------------------------------------------------------------
    Net interest income                    4,102     4,186     4,178      4,373
  Provision for loan losses                  100        68        50         50
  Net securities gains                       474       338       354        106
  Noninterest income                         520       624       424        624
  Noninterest expense                      2,310     2,477     2,852      2,759
  Provision for income taxes                 941       852       525        974
--------------------------------------------------------------------------------
    Net income                           $ 1,745   $ 1,751   $ 1,529    $ 1,320
================================================================================
    Net income per diluted share         $  0.31   $  0.31   $  0.28    $  0.24
================================================================================

     Income  per share  calculations  for each of the  quarters  is based on the
weighted   average  number  of  shares   outstanding,   including  common  stock
equivalents  for each period.  The sum of the quarters  may not  necessarily  be
equal to the full year income per share amount.



                                       41
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                            SHAREHOLDER INFORMATION

ANNUAL MEETING
The Annual Meeting of Shareholders will be held at
2:00 p.m. on Friday, April 28, 2000 at:
     The Aqua Turf Club
     556 Mulberry Street
     Plantsville, Connecticut 06479

FORM 10-K REPORT
A copy of the  Corporation's  1999 Annual Report to the  Securities and Exchange
Commission on Form 10-K may be obtained  without charge at  www.bkct.com or upon
written request to:
     Thomas A. Sebastian
     Bancorp Connecticut, Inc.
     121 Main Street
     Southington, Connecticut 06489-2533

STOCK TRANSFER AGENT:
     American Stock Transfer & Trust Company
     40 Wall Street - 46th Floor
     New York, New York 10005
     1-800-937-5449

INDEPENDENT ACCOUNTANTS:
     PricewaterhouseCoopers LLP
     100 Pearl Street
     Hartford, Connecticut 06103

MARKET MAKERS
The  following  companies  have  generally  been market makers in the trading of
Bancorp Connecticut, Inc. stock as of December 31, 1999:
     Advest, Inc.
     Keefe, Bruyette & Woods, Inc.
     Sandler O'Neill & Partners
     Tucker Anthony Incorporated

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
For more information contact:
     American Stock Transfer & Trust Company
     Dividend Reinvestment Dept.
     40 Wall Street - 46th Floor
     New York, New York 10005
     1-800-278-4353

BANCORP CONNECTICUT, INC. INTERNET ADDRESS:
www.bkct.com

MARKET PRICE AND DIVIDENDS
The Corporation's  common stock trades on the Nasdaq National Market tier of the
Nasdaq  Stock  Market  under the symbol  BKCT.  There were  approximately  1,810
shareholders  of record on February  16,  2000.  The high and low bid and end of
period  closing  prices and cash dividends per share for each quarter during the
last two calendar years were as follows:

                                                            Dividend
       Quarter Ended      High        Low        Close     per Share
       -------------------------------------------------------------
          3/31/98       $ 21.88    $ 17.25     $ 20.38     $ 0.130
          6/30/98         21.50      19.25       19.25       0.135
          9/30/98         19.75      14.94       16.50       0.135
         12/31/98         17.88      14.75       15.00       0.135

          3/31/99         16.63      13.00       14.00       0.140
          6/30/99         17.50      13.75       17.25       0.150
          9/30/99         17.88      16.25       16.50       0.150
         12/31/99         17.50      14.00       15.50       0.155

SOUTHINGTON SAVINGS BANK OFFICE LOCATIONS:

SOUTHINGTON OFFICES
MAIN OFFICE
121 Main Street

MAIN OFFICE DRIVE-IN CENTER
Berlin Avenue behind Main Office

QUEEN CORNER OFFICE
900 Queen Street

SOUTH END OFFICE
921 Meriden-Waterbury Turnpike

SOUTHINGTON HIGH SCHOOL TRAINING BRANCH
720 Pleasant Street

WALLINGFORD OFFICE
950 North Colony Road

MORTGAGE CENTER
188 North Main Street
Southington, Connecticut

BRADLEY MEMORIAL HOSPITAL ATM FACILITY
81 Meriden Avenue
Southington, Connecticut

SSB INTERNET ADDRESS:
www.ssbonline.com


                                       42
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                            BANCORP CONNECTICUT, INC.
                              DIRECTORS & OFFICERS

BOARD OF DIRECTORS

Walter J. Hushak
Chairman,
Southington Savings Bank
Retired Senior Vice President,
Janazzo Services, Inc.

Andrew J. Meade
Vice Chairman,
Southington Savings Bank
Consultant, International Security
Products, Inc. dba Lori Lock
(Manufacturer of Security Products)

Norbert H. Beauchemin
Retired
Dudzik & Beauchemin, P.C.
(Certified Public Accountants)

Michael J. Karabin
President,
Acme-Monaco Spring Corporation
(Manufacturer of springs, stampings, forms, orthodontic hardware and
medical assemblies)

David P. Kelley
Counsel, Southington Savings Bank
Partner, Kelley, Crispino & Kania
(Attorneys at Law)

Frederick E. Kuhr
President and controlling shareholder,
Evergreen Nursery, Inc.

Joseph J. LaPorte
Retired Manufacturers Representative,
B.C.S. Company
(Distributor of industrial metal finishing chemicals and equipment)

Ralph G. Mann
Retired President,
Southington Savings Bank

Frank R. Miller
Managing Partner, Miller,
Moriarty and Company, L.L.C.
(Certified Public Accountants)

Robert D. Morton
President and Chief Executive Officer,
Bancorp Connecticut, Inc.
President and Chief Executive Officer,
Southington Savings Bank

Anthony S. Pizzitola
Retired President and Treasurer,
Pizzitola Electric Co., Inc.

Dennis J. Stanek
Senior Vice President - Investments
Tucker Anthony Incorporated
(Investment Banking Firm)

OFFICERS

Robert D. Morton
President and Chief Executive Officer

Phillip J. Mucha
Chief Financial Officer and Treasurer/Secretary


This Annual Report contains  forward-looking  statements,  including  statements
regarding the Corporation's future earnings and operations.  All forward-looking
statements  are  subject  to risks and  uncertainties  that could  cause  actual
results to differ materially from those projected. Factors that could cause such
a difference  include,  without  limitation,  general risks  associated with the
delivery of financial  products and services,  fluctuating  investment  returns,
rapid technological change, and competition, as well as other risks set forth in
the  Corporation's  filings with the  Securities  and Exchange  Commission.  The
Corporation expressly disclaims any obligation or undertaking to update publicly
any  forward-looking  statement  to  reflect  any  change  in the  Corporation's
expectations or any change in events,  conditions or  circumstances on which any
such statement is based.



                                       43
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.


                            SSB DIRECTORS & OFFICERS

BOARD OF DIRECTORS

Walter J. Hushak
Chairman

Andrew J. Meade
Vice Chairman

Norbert H. Beauchemin

Michael J. Karabin

David P. Kelley

Frederick E. Kuhr

Joseph J. LaPorte

Ralph G. Mann

Frank R. Miller

Robert D. Morton

Anthony S. Pizzitola

Dennis J. Stanek

OFFICERS

Robert D. Morton
President and Chief Executive Officer

Richard A. Fracasso
Executive Vice President
Consumer Banking

Phillip J. Mucha
Senior Vice President and Treasurer

Barry J. Abramowitz
Senior Vice President
Chief Information Officer

William R. Della Vecchia
Senior Vice President
New Business Development

Charles J. DeSimone, Jr.
Senior Vice President
Chief Credit Officer

William Taylor
Senior Vice President
Commercial Banking

ACCOUNTING AND FINANCE

Kathleen H. Demers
Senior Financial Analyst

Thomas A. Sebastian
Controller

COMMERCIAL LENDING

John E. Cookley
Vice President

Daniel R. DeRosa
Vice President

Raymond D. Jannelli
Vice President

Vincent L. Ruggiero
Vice President

Duane L. Beale
Assistant Vice President

                                       44
                                    --------

<PAGE>

CONSUMER BANKING

Paul E. MacDonald
Vice President
Retirement Plans Manager

Richard P. Dextraze
Assistant Vice President
Consumer Loan Manager
Community Reinvestment
Act Officer

Donna M. Ierardi
Assistant Vice President
Manager, Wallingford Office

Sue A. Kasek
Assistant Vice President
Consumer Loan Officer

Kenneth G. Penfield, Jr.
Assistant Vice President
Residential Loan Manager

Claudia A. Crooker
Assistant Treasurer

Joan E. Morelli
Assistant Treasurer
Manager, Queen Corner Office

Carol Vreeland
Assistant Treasurer
Manager, Main Office

Elizabeth K. Zimmitti
Assistant Treasurer
Manager, South End Office

Christine S. Matteo
Consumer Loan Officer

CREDIT AND LOAN ADMINISTRATION

Diane L. Hoadley
Assistant Vice President
Credit & Loan Review

Diane McCoy
Loan Operations Manager

Maria M. Goncalves
Managed Assets Manager

HUMAN RESOURCES

Donna M. Schaefer
Vice President
Director of Human Resources

OPERATIONS AND INFORMATION SYSTEMS

Donna M. Glatz
Vice President
Branch and Deposit Operations

Susan M. Dobratz
Assistant Vice President
Net Banking Manager

Therese G. Kelly
Assistant Vice President
Trainer/Analyst

INVESTMENT SERVICES

Matthew R. Rich
Brokerage Officer

BCI FINANCIAL CORPORATION

Timothy W. Rourke
President and Chief Executive Officer

Joseph M. DeAngelo
Vice President Operations

Michael J. Coleman
Loan Officer

Carol M. Montagna
Loan Officer


                                       45
                                    --------

<PAGE>
                            -------------------------
                            BANCORP CONNECTICUT, INC.

















BANCORP CONNECTICUT, INC.
121 Main Street
Southington, Connecticut 06489-2533